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IN
THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
|
|
CO
629/99
|
Royal Courts of Justice
Strand
London WC2A 2LL
Thursday, 20th January 2000
B e f o r e
MR JUSTICE LIGHTMAN
BETWEEN:
SIDNEY TEMPEST
trading as
CESSPOOL SID
Appellant
and
COMMISSIONERS OF CUSTOMS & EXCISE
Respondents
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
_________
Mr A SHIPWRIGHT (Instructed by Messrs Chattertons, 5 South Street,
Horncastle, Lincolnshire, LN9 6DS) appeared on behalf of the Appellant.
Mr N POOLE (Instructed by Solicitor of Commissioners of Customs &
Excise, Ralli Quays West, 3 Stanley Street, Salford M60 9LB) appeared on behalf
of the Respondents.
Judgment
As Approved by the Court
Crown Copyright ©
Thursday, 20th January 2000
JUDGMENT
MR JUSTICE LIGHTMAN:
INTRODUCTION
1. This is an appeal by Sidney Tempest (trading as Cesspool Sid) ("the
Appellant") against a decision ("the Decision") of the VAT and Duties Tribunal
("the Tribunal") dated the 17th December 1998. The Tribunal dismissed the
Appellant's appeal against a decision on review to uphold an assessment in
respect of the period 9 July 1995 to 17 November 1997 representing the rebate
of £15,928.54 on fuel recoverable by the Commissioners of Customs and
Excise ("the CCE") under Section 13(i) of the Hydrocarbon Oil Duties Act 1979
(as amended) ("the Act"). The essential issue is whether two vehicles used by
the Appellant are by reason of their design and construction "off-road
tractors" within the meaning of Section 27 and Schedule 1 of the Act for which
rebated oil (known as "red diesel") can be used. Unless the answer is in the
affirmative the assessment must stand and the rebate is recoverable.
BACKGROUND FACTS
2. The Appellant owns and uses two tractors ("the Tractors") for the purpose of
his business of emptying cesspools and discharging the waste on agricultural
land. One vehicle is a Mercedes Benz tractor MB-Trac ("the MB Tractor") and
the other a Massey Ferguson 3085. For the purpose of this appeal the parties
are agreed that the relevant characteristics of the Tractors are the same and
that I can accordingly concentrate on the evidence relating to the MB Tractor
alone. The Appellant obtained a rebate on heavy oil delivered to him as fuel
for the Tractors. The CCE made an assessment seeking to recover this rebate as
a rebate to which he was not entitled. The Tribunal dismissed his appeal. It
did so on a ground which (as both parties agree) is unmaintainable for reasons
set out in paragraph 4(3) below. With a view to saving costs the parties have
asked me, not to remit the case to the Tribunal, but to decide myself the mixed
question of law and fact whether the Appellant was entitled to the rebate which
he claimed and received, and I have agreed to do so.
THE LEGISLATION
3. Section 11 of the Act allows at the time of delivery a rebate on heavy oil
delivered for home use. Section 12(2) goes on to provide as follows:
"No heavy oil on whose delivery for home use rebate has been allowed shall-
(a) be used as fuel for a road vehicle; or
(b) be taken into a road vehicle as fuel,
unless an amount equal to the ... rebate ... has been paid to the
Commissioners."
Section 27 defines the term "road vehicle" as:
"... a vehicle constructed or adapted for use on roads, but does not include
any vehicle which is an excepted vehicle within the meaning given by Schedule 1
to this Act ...."
Schedule 1 of the Act (in paragraph 2) provides:
"... (1) A vehicle is an excepted vehicle if it is -
(a) an agricultural tractor, or
(b) an off-road tractor.
(2) In subparagraph (1) above `agricultural tractor' means a tractor used on
public roads solely for purposes relating to agriculture, horticulture,
forestry or activities falling within sub-paragraph (3) below.
...
(4) In sub-paragraph (1) above `off-road tractor' means a tractor which is not
an agricultural tractor (within the meaning given by sub-paragraph (2) above)
and which is-
(a) designed and constructed primarily for use otherwise than on roads, and
(b) incapable by reason of its construction of exceeding a speed of twenty-five
miles per hour on the level under its own power."
4. The following observations should be made about these statutory
provisions:
(1) the question whether a vehicle is an "agricultural tractor" turns, not on
the character of the tractor, but on the character of the use of the tractor:
the use must be solely for the purposes specified in Schedule 1 paragraph 2(2).
No suggestion has been made in this case that the Tractors have been so used
and accordingly qualify for rebate as agricultural tractors. The issue is
whether they qualify for rebate as off-road tractors;
(2) a "road vehicle" constructed or adapted for use on roads will qualify as an
"off-road tractor" if three conditions are satisfied: (a) it must not otherwise
qualify for rebate as an "agricultural tractor"; (b) it must be designed and
constructed primarily for use otherwise than on roads; and (c) it must be
incapable by reason of its construction of exceeding a speed of twenty five
miles per hour on the level under its own power. It is common ground that the
Tractors satisfy the first and third of these conditions. Nonetheless it is
necessary to say a word on the first of these conditions;
(3) the Tribunal held that a vehicle could not qualify as an off-road tractor
if it bore the physical character of an agricultural tractor but did not
qualify as an agricultural tractor because it had not been used solely for the
purposes specified in Schedule 1 paragraph 2. This holding was erroneous. The
term "agricultural tractor" has the same meaning in paragraphs 2 and 4 of
Schedule 1, and accordingly a tractor, which is designed and constructed as an
agricultural tractor but has not been used solely for the purposes set out in
paragraph 2 and accordingly does not qualify as an excepted vehicle by being an
agricultural tractor, may yet qualify by being an off-road tractor;
(4) the second condition to be satisfied for a vehicle to be an off-road
tractor, (namely that it is designed and constructed primarily for use
otherwise than on roads) requires an objective examination of the tractor
itself and its physical properties. The word "primary" means preponderant,
main or foremost in contradistinction to secondary, incidental or ancillary.
Subjective intentions as to its intended use are not relevant, whether they are
those of the manufacturer or the current or previous owner. The manufacturer's
description (both in evidence and brochures) of the tractor's features and
capabilities are however relevant so far as they illuminate the uses for which
it is suitable and primarily designed and constructed. Likewise the form of
use made by owners of the tractor may be relevant as shedding light on the uses
which it is equipped to serve:
(5) the issue whether a vehicle is an off-road tractor assumes that the vehicle
(a) is a tractor (i.e. a vehicle to be used for hauling heavy loads); (b) is a
dual purpose vehicle constructed and designed for use on and off roads; and (c)
(since this is a legal requirement for use on roads) is designed and
constructed to comply with statutory regulations governing road vehicles,
namely the Road Vehicle (Construction and Use) Regulations 1986. These
features of the vehicle are accordingly merely the starting points for the
inquiry as to the primary use for which it is designed and constructed;
(6) a maximum speed of 25 miles per hour (besides being an independent
condition for qualification as an off-road tractor) may be indicative of the
use for which the vehicle is designed and constructed.
THE FEATURES OF THE TRACTORS
5. It is sufficient to examine the features of the MB Tractor as revealed in
the statement of Mr Owen, the area sales manager of Mercedes Benz (United
Kingdom) Ltd, and the brochure for the MB Tractor. This tractor is more than a
vehicle to be used for hauling heavy loads equally on and off roads. Beyond
this: (a) it is a mobile power unit fitted with a powerful diesel engine to
which farming implements such as mowers, trailers, forage harvesters, ploughs
and powered harrows can be attached both at the front or rear or both; (b) to
cope with the needs of farmers' work, it is provided with a gearbox with two or
more ranges of suitable low ratio gears; (c) to cope with rough, uneven, hilly,
sloping and slippery ground it has four wheel drive, four wheel hydraulic
brakes, large drive wheels and heavy duty tyres with suitable patterns of tread
which provide traction without causing damage to the land or soil compaction;
(d) to guard against the ever present danger to the operator on agricultural
terrain of the tractor turning over the operator's cab has a rigid safety cage;
(e) its close-ratio gearbox allows speeds ranging from a mere 100 metres per
hour up to 25 miles per hour; (f) the maximum speed of 25 mph makes this
tractor (unlike the fast tractors available on the market) unsuitable for any
lengthy journey; (g) the four point mounting makes is safer on wet roads and
hillsides; and (h) spring suspension of the front axle provides optimum driving
comfort on ploughed lands, ruts or bad country roads.
DECISION
6. The MB Tractor is a dual purpose vehicle designed and constructed for use on
farms and on roads, but the primary use for which it is designed and
constructed is for farm purposes off roads on farmland and the possible use on
roads is only a secondary purpose. The design and construction features
(including the speed) of the tractor are indicative of vehicles intended to
meet and fulfil the special requirements of a grassland farmer and in
particular for its use on difficult terrain and in adverse weather conditions
and these features are at the expense of, and in priority to, the features
calculated to meet the requirement of the road user. An examination of the
Tractors leads to their characterisation as farm tractors affording scope for
limited use on the roads. Accordingly the Tractors are for the purpose of the
Act off-road tractors and the Appellant is entitled to retain the rebate he
received. The fact that his use of the Tractors is not primarily for
agricultural purposes may raise the question whether Parliament can really have
intended that the Appellant should receive the rebate but on the statutory
language this is no bar to his entitlement. I accordingly allow the appeal.
*****
Thursday, 20th January 2000
HANDED DOWN JUDGMENT
MR JUSTICE LIGHTMAN: For the reasons set out in the judgment which I
have handed down, in my judgment Cesspool Sid is entitled to his rebate and I
therefore allow the appeal. I believe there is a consent order?
MR SHIPWRIGHT: There is an agreed order, yes.
MR JUSTICE LIGHTMAN: I make the consent order, the agreed order as to
costs.
MR SHIPWRIGHT: Thank you, my Lord.
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