Reliance Globalcom Ltd v Minister of Finance
| Jurisdiction | Bermuda |
| Judge | Smellie JA,Bell JA,Clarke P |
| Judgment Date | 18 March 2022 |
| Neutral Citation | BM 2022 CA 5 |
| Docket Number | Case No: Civ/2021/18 |
| Court | Court of Appeal (Bermuda) |
| Year | 2022 |
Neutral Citation Number: [2022] CA (Bda) 4 Civ
THE HON. Mr Justice Mussenden
THE PRESIDENT, Sir Christopher Clarke
JUSTICE OF APPEAL Geoffrey Bell
JUSTICE OF APPEAL Anthony Smellie
Case No: Civ/2021/18
CASE NUMBER 2020: No. AA348
IN THE COURT OF APPEAL (CIVIL DIVISION)
COMMERCIAL JURISDICTION
Dame Lois Browne-Evans Building
Hamilton, Bermuda HM 12
Mr. David Kessaram of Cox Hallett Wilkinson Limited for the Appellant
Mr. Jeffery Elkinson of Conyers Dill and Pearman Limited for the Respondent
Hearing date(s): 2 March 2022
By this appeal, the Appellant challenges a production order which was obtained by the Respondent, the Minister of Finance, requiring the Appellant to disclose information relating to its financial affairs. The Production Order (“ PO”) was obtained pursuant to the International Cooperation (Tax Information Exchange Agreements) Act 2005, (“the Act”) and in furtherance of a request from the Indian Tax Authorities under the Tax Information Exchange Agreement concluded between Bermuda and India at Delhi, on 7 October 2010 (“the TIEA”).
The PO was first issued by the Supreme Court (per the learned Chief Justice) on the ex parte basis on 4 March 2020 and later upon review, reaffirmed by Justice Mussenden by his judgment of 10 November 2021. It is Mussenden J's judgment which is therefore the immediate subject of this appeal.
The PO was obtained upon an application made on behalf of the Minister under section 5(1) of the Act which reads as follows:
“(1) Where the Minister has received a request in respect of which information from a person in Bermuda is required, the Minister may apply to the Supreme Court for a production order to be served upon the person referred to in the request directing him to deliver to the Minister the information referred to in the request”.
This provision, which was introduced by amendment to the Act in 2013, replaced that which had allowed the Minister to issue Production Notices directly to respondents. Instead it vested in the Supreme Court, the jurisdiction to grant production orders for the enforcement of requests under Tax Information Exchange Agreements (“the Agreements”), upon application by the Minister to the Court for those purposes. Thus, without the grant of a production order by the Court, the Minister, although by section 3(1) of the Act deemed the “ competent authority” for Bermuda for the purposes of the Agreements, may not, himself, compel the production of information for the purposes of complying with requests.
Section 5(2) of the Act explains the manner of the exercise of the jurisdiction by the Court upon an application for a production order, in the following terms:
“(2) The Supreme Court may, if on such an application it is satisfied that conditions of the applicable agreement relating to a request are fulfilled or where the court is satisfied with the Minister's decision to honour a request in the interest of Bermuda (sic), make a production order requiring the person referred to in the request –
(a) To deliver to the Minister the information referred to in the request; or
(b) To give the Minister access to such information,
Within 21 days of the making of the production order.” [Emphases supplied].
The words in emphasis from section 5(2) identify what may be regarded as the first limb of the Court's jurisdiction, describing as they do the Court's primary responsibility to ensure that it is satisfied that the conditions of the applicable agreement relating to a request are fulfilled, before it may grant a production order.
Whether this responsibility was properly undertaken and fulfilled by the Supreme Court is the central issue in dispute on this appeal.
The second limb of the jurisdiction – that which speaks, it must be noted, in somewhat vague terms to the Court being satisfied with the Minister's decision – is not in issue on this appeal because it was not the basis of the Minister's application to the Court, nor was it the basis upon which the Court granted the PO, either at the ex parte hearing or upon the review.
But given the vagueness of the language used, it may be helpful in future to note this Court's understanding of it here. As it is expressed in the disjunctive, it appears to envisage the Supreme Court being able to grant a production order, even while itself not being satisfied under the first limb that the conditions of the applicable Agreement are fulfilled, but if it is satisfied (presumably by appropriate certification to that effect) that the Minister is so satisfied and has decided, that it is in the interest of Bermuda to grant the request. Whether and to what extent any such decision of the Minister might be open to challenge will have to be determined by reference to the facts of any case in which he does so.
For the exercise of either limb of the jurisdiction, the “ conditions of the applicable agreement relating to the request” referenced in section 5(2) of the Act must be satisfied. These are, of course, to be found in the Agreements and in this regard, the TIEA (typically of the Agreements) provides at Article 1 as follows:
“ The competent authorities of the Contracting Parties shall provide assistance through exchange of information that is relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement. Such information shall include information that is relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters. The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable to the extent that they do not unduly prevent or delay effective exchange of information.” [emphases supplied]
Article 4.2 explains that
“ The term “relevant” wherever used in the Agreement with respect to information, shall be interpreted in a manner that ensures that information will be considered relevant notwithstanding that a definite assessment of the pertinence of information to an on-going investigation could only be made following the receipt of the information.”
Of further significance to this appeal, while at Article 5.1 of the TIEA it is stated that:
“1. The competent authority of the requested Party shall provide upon request information for the purposes referred to in Article 1…”
at Article 5.6 it is also stated that:
“ The competent authority of the requesting Party shall provide the following information to the competent authority of the requested Party when making a request for information under the Agreement to demonstrate the relevance of the information to the request:
(a) …
(b) …
(b) …
(d) the tax purpose for which the information is sought…”
[emphasis supplied].
It follows from all the foregoing, that the relevance of the information sought to the tax purposes of the request, must be explained by the requesting authority and will be of pivotal importance to the enquiry to be undertaken by the requested authority — here first by the Minister and later by the Court — for the purposes of the proper enforcement of a request in compliance with the TIEA. In other words, the information requested must be relevant to the “ determination, assessment and collection or the investigation or prosecution of the tax matters” identified as being the subject of the request. And this will be required although, by Article 4.2, the definite assessment of the pertinence of the information to an on-going investigation, must be left to the requesting authority following receipt of the information.
The contents of the request from India (the “Request”), provide the context for examining whether first the Minister and subsequently the Court, in considering the grant of the Request, fulfilled the requirements of section 5(2) of the Act and the TIEA.
The Request, although dated 10 December 2018, was sent on behalf of the Competent Authority of India under cover of a letter dated 27 December 2018 addressed to the Assistant Financial Secretary within the Ministry of Finance. The Covering Letter contained certain representations which have come to be of importance on the appeal and these are excerpted following 1:
...“ Indian Tax Authorities are carrying out enquiries in the case of M/s Reliance Globalcom Limited (Formerly known as M/s Flag Telecom Group Limited). In the course of enquiries, it has been found by the Indian Tax Authorities that the Indian taxpayer has certain transactions with M/s Reliance Global Limited) … a taxpayer of your country. 2. The Indian Tax Authorities have requested for Information as per the ‘Annexure’ to this letter, which we believe is foreseeably relevant for the purposes of implementation of the Indian Income-Tax Act, 1961. It is informed that the Statute of limitations in this case is on 31.12. 2018. It may please be noted that the information sought in this case would be useful even beyond the date given at St No. 6 of the Annexure during Appellate stages and/or for other proceedings under the Indian Income-Tax laws in this case. Further, the information requested in this request is to ascertain the location of revenue related to certain transactions between M/s Reliance Globalcom Limited and an Indian company, M/s Tata Communications Limited in FY 2015–16. Thus the matter is different from the Investigation
based on which another request for the same Bermuda entity bearing ref No 170660/-BM-OE-0078–31 was made earlier. Accordingly, your assistance is solicited to provide the specific information as per the ‘Annexure’ attached to this letter as per the provisions of ‘Exchange of
To continue reading
Request your trial