Court allows appeal finding cross-border bus services qualify as passenger road services for excise duty rebate.

THE SUPREME COURT

REVENUE

117/2003

Denham J

Geoghegan J

McCracken J

Between:

The Revenue Commissioners

Appellants/ Respondents to the Appeal

AND

Bus Eireann-Irish Bus

Respondent/ Appellant in the Appeal

Judgment of Mr Justice McCracken delivered the 18th day of November 2004

1. This is an appeal from a decision of Kearns J on a case stated by an appeal commissioner. The question for determination by the

High Court was:-

“Is Bus Eireann, while operating bus routes between places in the State and places in the United Kingdom carrying on a road

passenger service within the meaning of Section 2 of the Road Transport Act 1932?”

2. The factual background to the case stated is quite simple. The Appellant (herein referred to as “Bus Eireann”), while largely

providing bus services within the State, also provides such services between points in the State and points in the United Kingdom.

When purchasing fuel within the State for such services, Bus Eireann pays the relevant excise duty on such fuel to the Respondent

(hereinafter called “the Revenue”). By virtue of the legislation set out below, Bus Eireann is entitled to a rebate on such excise duty

where it is carrying on a passenger road service within the meaning of Section 2 of the Road Transport Act 1932. The net issue in this

case is whether Bus Eireann is entitled to such a rebate in respect of fuel purchased in the State, and upon which excise duty has

been paid, but actually consumed or combusted on that part of its service which takes place outside the State.

3. This rebate is granted under the provisions of Article 12(11) of the Imposition of Duties (Excise Duties) Order 1975 as amended.

The relevant portion of the Article reads:-

“Where a person who carries on a passenger road service within the meaning of Section 2 of the Road Transport Act 1932 (No.

2 of 1932), and who either is the licensee under a passenger licence granted under Section 11 of that Act in respect of the

passenger road service or is exempted from the application of Section 7 of that Act shows to the satisfaction of the Revenue

Commissioners that hydro/carbon oil on which the duty of excise imposed by this paragraph has been paid has been used by

him for combustion in the engine of a mechanically propelled vehicle used in a passenger road service in respect of which the

licence was granted, the Revenue Commissioners may, subject to compliance with such conditions as they may think to

impose, repay to the licensee duty ….. on hydro/carbon oil so used ….”

“Passenger road service” is defined in Section 2 of the Road Transport Act 1932 as amended as follows:-

“A service of one or more mechanically propelled vehicles travelling wholly or mainly on public roads and carrying passengers

(whether the passengers’ luggage, merchandise, and mails, or any of them are or are not also carried) between specified

terminal points or along a specified route or otherwise for separate charges in respect of each passenger.”

4. The findings of the Appeal Commissioner are set out at paragraphs 10 and 11 of the case stated as follows:-

“10 At the conclusion of the parties’ submissions, I reached the conclusion (and so decided) that:-

(a) Bus Eireann had met all of the appropriate tests laid down in the legislation;

(b) The legislation required that the hydro carbon fuel must be used in the engine of the motor vehicle providing

passenger road services. It is clear that this was the way in which the fuel was being used by Bus Eireann in this case;

(c) The legislation did not require the use to be made of the fuel in any particular geographic area;

(d) I also ruled that the directive and decision relied upon by the Revenue Commissioners were not relevant and that

they did not have direct effect in the State;

(e) I confirm that Bus Eireann was entitled to a rebate in the sum of £139,562;

(f) I also found as a fact that no fuel purchased by Bus Eireann in the United Kingdom had been included in the claim

made by Bus Eireann for a rebate under the 1975 Order.

11 I came to the conclusion which I did on the basis of the following primary facts:-

(a) All fuel in issue in the appeal before me was fuel which had been purchased by Bus Eireann in the State;

(b) Bus Eireann carries on a passenger road service;

(c) Part of that service involves travel outside the State (and in particular in Britain). However, there is nothing in the

legislation which indicated to me that as a matter of law this invalidated the claim made by Bus Eireann.”

5. In the High Court the learned trial Judge determined the question raised in the case stated in favour of the Revenue and held that

Bus Eireann, while operating bus routes between places in the State and places in the United Kingdom, is not carrying on a

“passenger road service” within the meaning of Section 2 of the Road Transport Act 1932.

6. There is no doubt that the Appeal Commissioner in posing the case stated correctly assessed the central issue, namely the

interpretation of the definition of “road passenger service” in Section 2 of the 1932 Act. While it does not appear to have been

expressly considered in the case stated, it has been stated in argument that there were bus services between the State and points

in Northern Ireland at the time of the coming into effect of the 1932 Act, and the Court is certainly prepared to accept that, whether

such services did or did not actually exist, they certainly would have been within the contemplation of the Oireachtas at the time of

the passing of that Act.

7. While there is no doubt that the exempting provision in the 1975 statutory instrument is part of a taxation statute, and must be

interpreted in accordance with the strict rules of interpretation applied to such statutes, the Road Transport Act 1932 is not such a

statute and is subject to the more general rules of interpretation. The fact that the definition of “road passenger service” in Section

2 of the 1932 Act may have been incorporation into the 1975 statutory instrument does not mean that such definition must be

interpreted as if it were part of a taxation statute. Its meaning must be the meaning which it was intended to have in the 1932

legislation, and that meaning must remain the same even when it is incorporated into a later statutory provision. The real issue is to

determine the intention of the legislature at the time of the passing of the 1932 Act.

8. I fully accept the submission on behalf of the Revenue that the definition must be interpreted in the light of the 1932 Act as a

whole. The Revenue point to the long title to the Act, which certainly can provide an aid to interpretation, which reads:-

“An Act to provide for the regulation and control of the carriage of passengers by road and to confer on certain companies

authority to carry passengers and merchandise by road and to make provisions for other matters connected with the matters

aforesaid.”

9. The Revenue submit that the legislature can only regulate and control the carriage of passengers within the State, and that the

long title therefore clearly indicates that there could be no extra territorial effect intended to be imposed by any provision of the Act.

They also point to Section 7 of the Act which makes it an offence to carry on a road passenger service other than under and in

accordance with a licence, which at least by implication must be restricted to a licence to operate within the State. They also point

to Section 11 which requires, inter alia, that in considering whether to grant a licence the Minister must have regard to:-

“Whether the service …. in respect of which such application is made is required in the public interest having regard to the

passenger road services and other forms of passenger transport available to the public on or in the neighbourhood of the

route of the proposed service.”

10. Finally, the Revenue referred to Section 12 of the Act which lists certain conditions which may be attached to a licence. It is

argued that a number of these conditions would not be appropriate to services operating outside the State, as they might conflict

with regulatory provisions in force elsewhere.

11. I fully accept that it is proper to consider other provisions in the Act as an aid to interpreting the definition of “passenger road

service”. However, I am not convinced that the provisions referred to by the Revenue have the restrictive effect which is argued for.

The purpose of looking at the Act as a whole is to try to ascertain the intention of the legislature as expressed within the Act.

Section 11(3) is particularly relevant in that it shows that a primary concern of the legislature was to provide services which would be

in the public interest. I accept that this must only refer to the interest of the public within the State, but surely it is in the interest of

considerable sections of the public to provide a passenger road service to points outside the State. In more recent years there have

been a considerable number of Irish residents with family members living or working in the United Kingdom in whose interest it is to

have an efficient bus service to enable them to visit those members of their family, and indeed there are a number of people living in

the State who may work seasonally in the United Kingdom. Even if one goes back to the time of the passing of the Act, if one takes

the example of members of the public living in Country Donegal, their traditional commercial centre had probably for centuries been

the city of Derry, and it was in their interest that they should continue to have efficient transport to enable them to travel to Derry.

12. With regard to the conditions which may be imposed under Section 12, I cannot see that they must of necessity be limited to

conditions which must be complied with within the State. I accept that on the face of it it would be possible for the Minister to

impose a condition which would conflict with the laws or regulations of a foreign country through which the service was to operate,

but presumably it would be a matter for negotiation between the licensee and the Minister as to whether such conditions would be

imposed, and if they were imposed, the effect might simply be that it would be impossible for the licensee to operate in the foreign

country. Indeed, under Section 12 it would be quite possible for the Minister to prevent or prohibit a service operating outside the

State, simply by imposing conditions that the terminal points and the route of the service were all within the State. However, this

does not preclude him from also imposing conditions permitting the terminal points and route of the service to be partially outside the

State.

13. In my view it is incorrect to argue, as the Revenue does, that the interpretation sought by Bus Eireann involves extra-territorial

legislation. Of course the legislation cannot cover passenger road services which operate entirely outside the State, but it is not

extra-territorial legislation to grant a licence to operate a service partially within the State and partially outside the State. That would

not be granting a licence to carry on a service in another country, but granting a licence to carry on a service within the State to a

point outside the State. Such a licence would not in any way be purporting to legislate for bus services in other countries, it would

merely provide that such a service could not commence within the State unless it complied with certain conditions laid down in the

licence. It would not in any way impinge on the jurisdiction of the foreign country to impose its own regulations on a passenger

service operating within its boundaries.

14. This whole problem arises because there are services between points within the State and points in the United Kingdom. If the

Revenue are correct in their arguments then one or other of two situations must arise. Either the service is not licensed at all, even in

relation to the portion of the route that is within the State or the licence only operates as far as the border of the State, and the

Minister has no control whatever over what happens when the service is continued into the United Kingdom. The Revenue do not

argue for the former proposition, but in effect argue that there are two road passenger services, one from within the State to the

border, and the other, which is not a passenger road service within the Act, which operates within the United Kingdom. In my view it

is most unlikely that this was the intention of the legislature. The purpose of the licensing provisions is for the protection of the

public, and no doubt many of the conditions imposed would be imposed to protect the public. It seems to me incomprehensible it

should have been intended that a member of the public travelling by bus from Ireland to the United Kingdom should be protected by

provisions and regulations which are for their benefit as far as the border, but that such provisions may safely be ignored by the

licensee once the bus reaches the United Kingdom.

15. I am also somewhat influenced by the wording of Section 11(3)(a) which requires the Minister to have regard as to whether the

service is required in the public interest having regard, inter alia, to other forms of passenger transport available to the public on or in

the neighbourhood of the route of the proposed service. This is certainly applicable to services commencing in the State and

terminating in the United Kingdom. For example, the Minister might consider that there is ample other forms of public transport

available to the public on the route between Dublin and London via Holyhead, as there is a train service available, but might well

consider that it was in the public interest to provide a bus service to certain provincial cities in the United Kingdom which are not well

served from Holyhead.

16. If it had been intended that the definition of “passenger road service” in Section 2 was restricted to services which were entirely

within the State, it would have been a simple matter to provide in the definition that the service should be between specified terminal

points “in the State” or along a specified route “in the State”. In my view there is nothing in the general scheme of the Act or in any

specific provision which would require such a limitation to be implied.

17. I should add, although it is not strictly relevant to the interpretation of the definition section, or indeed to the question asked in

the case stated, that logic would also seem to dictate that the provision of the rebate should in any event be applicable wherever

the fuel is actually used. The duty is paid on the purchase of the fuel within the State, and the purpose of the rebate is to reduce

the overheads of a provider of a bus service which is used by the Irish public. A bus service between Ireland and the United Kingdom

will be used by the Irish public, not just within the State, but also on that portion of the service which is in within the United

Kingdom. One can only ask why should the public interest cease at Dun Laoghaire Harbour. If the bus takes on fuel in the United

Kingdom then the operator will pay excise duty in the United Kingdom, and that duty will not be refunded by the Revenue even though

the fuel is used for the part of the journey which takes place within the State. It would seem, therefore, that the relevant test ought

to be where the fuel is purchased rather than where it is used. However, I appreciate that this is not an argument which can effect

the interpretation of the 1932 Act.

18. Accordingly, I would allow this appeal and I would answer the question raised in the case stated “yes”.