Law: Income Tax Act, 1922

Section:

Income-tax---Restitution---Money paid to Revenue---Payment of unlawful demand for tax---Recovery of money paid and interest---Building Society paying tax in response to demand made under ultra vires regulations---Whether Society immediately acquiring prima facie right to be repaid the amount paid--­Whether interest payable from date of payment---Whether general restitutionary principle that if subject pays in response to unlawful demand for tax he immediately acquires right to be repaid. The Revenue issued a demand under the Income Tax (Building Societies) Regulations, 1986 to the plaintiff building society for payment of tax amounting to Ã… 56,998,21 on interest and dividends paid to investors between 30th'September 1985 and 1st March, 1986. The plaintiff disputed the validity of the 1986 Regulations but paid the amount assessed in three instalments commencing on 16th June, 1986. The next day it applied for judicial review of the Regulations and also issued a writ on 15th July to recover the amount paid as money had and received, together with interest thereon. The judicial review proceedings were decided in the plaintiff's favour at first instance on 31st July 1987 and the Crown repaid the capital with int6rest from 31st July, 1987 pending an appeal. The Crown's appeal was ultimately unsuccessful when the relevant 1986 Regulations were held to be ultra vires and void. The plaintiff then continued its action for repayment seeking payment of interest on the capital from the dates of payment of the three instalments until was given at first instance on 31st July, 1987. The Judge dismissed the plaintiffs claim, holding that since the capital payments were recoverable under an implied agreement that they would be repaid if the plaintiff's contentions as to the invalidity of the 1986 Regulations proved to be correct and not under any general principle of restitution the plaintiffs right to repayment arose only from the date of his decision as to the invalidity of the regulations. The plaintiffs appealed to the Court of Appeal which allowed the appeal on the ground that there was at common law a general restitutionary principle that where a subject made a payment…

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