§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. George Wallace.]
§ 10.1 p.m.
§ Sir John Mellor (Sutton Coldfield)
I rise to protest against the retention by the Government of Purchase Tax which has been illegally collected. This obviously raises a very big question of principle, but I shall concentrate tonight on the levying of Purchase Tax upon car radios, that is to say, wireless-receiving sets designed for use on road vehicles. The Finance (No. 2) Act, 1940, imposed Purchase Tax upon wireless-receiving sets of 787 the domestic or portable type. The question of whether or not car radios came within that definition did not, so far as I know, arise until 1946. Presumably, the reason was that between 1940 and 1944 the use of car radios was prohibited, and apparently car radios did not come on to the market in any quantity until 1946. In 1946, the matter was certainly raised. The solicitor of the Society of Motor Manufacturers and Traders, Limited, has written to me a letter, in which he says:In July, 1946, I was asked to advise on the matter, and, fortified with the opinion of the Postmaster-General that he did not agree that a car radio, bolted on to a car and using battery current, was either a domestic or portable set, I took up the matter with the Customs and Excise, and contended that car radios were not chargeable with Purchase Tax. On 8th August, 1946, I received a reply reading:'I am directed by the Commissioners of Customs and Excise to inform you that car radios are regarded as being included in the description "wireless-receiving sets of the domestic or portable type," and as such are chargeable for Purchase at the rate of 33⅓ per cent. of the wholesale value.'Nearly a year later, in May, 1947, that ruling was reversed by the Commissioners of Customs and Excise. The position is described in a letter written by the Financial Secretary to the Treasury to my hon. Friend the Member for Aylesbury (Sir S. Reed), which I quote with his permission. The Financial Secretary wrote:Further consideration led to the conclusion that the statutory heading was not in fact wide enough technically to catch these articles.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
In order to refresh my memory, will the hon. Member state the date of that letter?
§ Sir J. Mellor
The date of the letter was 12th November, 1947. From that point, that is to say from May, 1947, collection of Purchase Tax ceased, and Purchase Tax was not charged until 11th August, 1947. An order was made by the Treasury, which came into effect on that date, imposing Purchase Tax upon car radios, but it was not retrospective. The point is that after that order came into effect, which was 11th August, 1947, car radios were taxable, but before that date they were not taxable. I am sure that the Financial Secretary will agree with 788 that proposition. I am willing to give way if he wishes to interrupt me, but I think that that proposition is fairly obvious. In my contention, the Purchase Tax which had been levied up to April, 1947, was levied illegally, and should have been repaid. It was levied without the authority of Parliament. A very large amount indeed was collected from the customers of one company alone. In the case of Radio-Mobile, Limited, over £12,000 was collected, and, as I have said, was collected illegally.
When an application was made for the repayment of this tax, illegally collected, the reply was, "It cannot be repaid because it was paid under mistake of law." I would like to quote a letter from the Secretary of the Customs and Excise, dated 10th December, 1947, in which he says:It is an established legal principle that sums paid to the Revenue under mistake of law are not recoverable.That may or may not be good law, but it seems to me to be shocking morals, and on 18th December the Financial Secretary, on this point, saidAt the Treasury we deal with finance and not with morals."—[OFFICIAL REPORT, 18th December, 1947; Vol. 445, c. 1878.]That may be the case, but, at least, I think we expect the Treasury to deal with finance according to the ordinary standards of commercial honesty. This is not a question which touches the manufacturers, the wholesalers or the distributors financially. It touches only the ultimate customers, and it is the ultimate customers who have been robbed by the Treasury.
Roth the Chancellor of the Exchequer and the Financial Secretary have sought to make a defence that it is impossible to repay this money; that it is impossible to trace the individuals concerned. That is a bogus proposition. I am not asking that they should pay except against proof positive by the ultimate customer who has borne the Tax. Surely, if a customer who has borne the Tax produces a receipted account, showing that he has paid the Tax, he ought to be repaid, and, even if he cannot produce a receipted account, if the books of the firm who supplied him show that he paid the Tax, and that Tax has duly been accounted to the Commissioners of Customs and Excise, 789 then that amount should be refunded to the ultimate customer.
I have not raised this matter because I was approached by the manufacturers, the wholesalers or the distributors. I raise it because one of my constituents who lives in Castle Bromwich wrote to me. He sent to me a receipted account, and expressed his astonishment that he was unable to recover the Purchase Tax. It was I who approached the manufacturers, wholesalers and distributors and obtained from them the information which I have presented to the House. In the information which I received, I was informed by one dealer that he had already repaid to his customer the Tax, and had been refused a refund by the Treasury. It seems to me to be very unfair business.
I hope the Treasury will not say that they have no power to repay this money. Only this week we were told that a large amount of Purchase Tax was waived, and quite properly, by the Treasury. But should it be that there is any technical difficulty about the repayment of money that has been improperly collected, surely the Government have only to come to this House and ask for power, and the House will be only too glad to put them into a position where they can behave like honourable men. I feel that this is a grave matter. Whether it has happened in other cases I do not know, but a high question of principle is involved, and I am sure that we all desire that the Treasury should rank high in the estimation of this country. I hope that the Treasury will be prepared to make amends in this matter in an honourable way.
§ 10.11 p.m.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
The hon. Baronet the Member for Sutton Goldfield (Sir J. Mellor) has raised this matter twice at Question time, and again tonight on the Adjournment. I am glad that he has had a chance of ventilating the matter in this way. It gives me a somewhat longer opportunity to give the facts to the House than I would have had if it had been raised again at Question time. The hon. Baronet talks as though the Treasury have behaved in a rather dishonest manner, not only illegally, but also immorally. I was rash enough, in answer to a supplementary question put to me before Christmas, to indulge in a humorous aside, which has been taken 790 up not only by the hon. Member—and I am not complaining—but, as I have seen from the cuttings which have been brought to my notice, by certain writers in the Press—
§ Sir J. Mellor
Does the right hon. Gentleman think it humorous from the point of view of the person who has had to pay the tax?
§ Mr. Glenvil Hall
The hon. Baronet is up to his old tricks of interrupting me almost before I have begun to put the Treasury case. I did not interrupt the hon. Member once, except upon a point of information. I wish only to put the case for the Government, for any Government, and to let the House judge it upon its merits.
By way of preliminary, I would like to say that this matter has attracted a good deal of attention for which I was perhaps responsible. The right to ventilate the grievances of the subject in this House is old and well established. We all believe that it should be used where necessary, and that nothing should be done to curtail that right. But we must remember that this House is a considerable sounding board, and that the publicity accorded to anything which is said here is formidable and goes a long way. It frequently commands great attention and support on the part of those who hear perhaps only one side of the case. I want to make it quite clear that, so far as I can judge, only one side of this case has been ventilated in the Press and, indeed, in this House. The fact that we can ventilate grievances in this way should make us doubly careful to be certain of our facts before we begin to throw charges about.
The hon. Member for Sutton Goldfield has been less than fair to the Government and the Treasury in the way that he has, without realising that there is another side to the case, both before Christmas and tonight, charged the Treasury for dishonesty, for lack of humanity, for acting illegally and all the rest of it. What are the facts? He stated them fairly correctly. In 1940 Purchase Tax was placed on a large variety of articles. Amongst these were wireless sets of a domestic or portable type. At that time it was the intention of Parliament to place Purchase Tax on wireless sets which had 791 begun to be used in cars. There is not the slightest doubt about that. Customs and Excise, Parliamentary draftsmen, the Government, the House, and the public were firmly of the impression that wireless sets of a portable type used in the home or in a car or wherever they might be used should be subject to this tax. If that were not so, it would have been grossly unfair. If Parliament had taxed a wireless set in the home of a poor cottager in some rural village and had let off the rich owner of a Rolls Royce who could have afforded a portable set in his car, it would have been unjust.
In any case, non-portable wireless sets which were part of a car had always been subject to tax and no one denies it. In addition to that, we have now made an order to put beyond any doubt that portable wireless sets of this kind should be subject to tax. However, there is still a high legal opinion which states that the heading which has been quoted by the hon. Member for Sutton Coldfield did, in fact, cover portable wireless sets which are used in a car. Therefore, it is by no means certain that these radio sets would not, in fact, still be caught by the words which were used in the original Act of 1940, even if we had never made this new Order in July, 1947. We must look at this matter against that background, and that is all I am asking the House to do.
The hon. Member for Sutton Coldfield said quite correctly that somewhere about a year ago somebody studied the words in the original statute and said "This wording really does not cover certain types of portable wireless sets that are bought and then bolted into a car." The authorities looked at it, and said, "Yes, they do." And the argument continued. The matter was looked at further, and very properly it was decided that the doubt should be given to the subject. It was agreed to issue a new order to put the matter beyond doubt. For a few months temporarily, as the hon. Member for Sutton Coldfield has said, the tax was taken off. I gather from what he said that he is not complaining that the tax in that period at any rate was not taken off by the Customs and Excise. For a time then, they were free. Nothing was done by way of collecting the tax although it was the opinion of the Customs and Excise that the words of the Statute covered these sets.
792 How could that doubt have been resolved? It could have been done by taking a test case to the courts, or by making a new order. If the matter had gone to the courts, as the Government could have quite easily allowed, it would have been an expensive and long-drawn-out process, and it would have been unfair to all concerned. As, in our view, the intention of Parliament was clear and plain, we resolved the doubt by issuing a new order which expressly included these new sets. Nothing was said at that time about this firm claiming a refund of the tax. The claim now is that the amount of the tax should be refunded to the firm—
§ Mr. Glenvil Hall
No. Let me take this matter in my own way. I am taking it according to the Questions which the hon. Gentleman put to me and to the Chancellor of the Exchequer. Tonight he has spoken of the tax being passed on to the customer, but I understand his request to be that this £12,000 should be returned to the firm. The firm will no doubt do its best—
§ Sir J. Mellor
I am not confining myself to the £12,000. I am saying that any customer who paid the tax when it could not be legally levied should have that tax refunded.
§ Mr. Glenvil Hall
I have taken the hon. Baronet's point. I do not wish to misrepresent him in any way. I hope that he will believe that. All that I have to go on is what he said in his Questions, fortified and extended by what he has said tonight. Originally he asked that the £12,000 or thereabouts should be paid back to the firm, which he called by two different names—one of which is the name of a subsidiary—in his two questions. He said that the amount which that firm alone paid over in this way was something like £12,000.
First of all, has the firm any legal right to repayment? The answer is that it has not. This is a well established rule. I do not know whether the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) will bear out what I say. Perhaps it is not a side of the law with 793 which he is particularly familiar. There is the case, well established, of William Whiteley v. Rex, in which it was laid down definitely that tax paid in this way, under a mistake of law or because of the way in which the law had been worded, could not legally be demanded back as of right by the person who had paid it. As far as the law is concerned and apart altogether from the moral aspect of the matter, the firm have no right whatever to ask for or to demand the return of the amount which they have paid.
Has this firm any moral right? In my view, the firm have no moral right. To begin with, the money is not theirs. They simply acted as collecting agents for the Government. They suffered no loss whatever. They collected on behalf of the Government, and they passed the money over in the usual way. What about their customers, the retailers? They in turn will have passed the tax on to the consumer, the persons who actually bought the radio sets in their shops. How can those retailers find the customers, let alone pass on to those customers this money, received all down the months and the years from 1940? There must be a very large number of retailers, for the amount of money referred to in connection with the one firm above comes to £12,000 in Purchase Tax, which was then not nearly as high as it is now. I may inform the hon. Baronet that some of the sets were bought before 1944. We have had queries which go back certainly to 1943. It will be impossible for the various retailers at this juncture to find the purchasers who bought those sets, to whom a return of Purchase Tax should be made.
§ Sir J. Mellor
May I ask one straight question? Will the right hon. Gentleman agree with this: that any ultimate customer who can produce a receipted invoice showing that he paid the tax during the period before the Order came into effect, shall have the Tax refunded?
§ Mr. Glenvil Hall
But why on earth should that be done? As I have tried to explain—and I hope the hon. Baronet will take this in—this Tax was in our view legally exacted. There may have been some fault in the wording, but Parliament intended these sets to be taxed. There is not the slightest doubt about this. Why, at this juncture, should 794 we go to all that labour of going back over those years when people paid the tax in the belief that they should pay it, and when it was the desire of Parliament that they should do so? On what moral grounds should they get the return of this money, even if they can be found, when somebody who did not put their radio set into a car had to stand the racket?
§ Mr. Challen (Hampstead)
Is the right hon. Gentleman really saying that what Parliament intended is regarded as being the intention of an Act of Parliament?
§ Mr. Glenvil Hall
What Parliament intended was that these sets should pay tax, and so far as we know the liability then passed still holds and they were liable. That is part of my case. In order to put the matter completely beyond doubt; in order to express, in other words, the will of Parliament, a new order was made last year which puts it beyond any doubt whatever.
Therefore, to sum up, the case for the Treasury and for the Government, and for Parliament, if I may say so, is this: it is not admitted or proved that car radios were not liable from the start to Purchase Tax. Secondly, even if they were not, supposing a case had been brought in the courts and it had gone against the Customs and Excise, the rule of law prevents repayment and we could only repay these sums by abrogating what is now definitely laid down as a rule of law. Thirdly, to refuse repayment is not contrary to natural justice, for Parliament clearly intended these radios to be taxed, and it is impossible now to trace the claims, supposing they came forward, of those who have paid it. Therefore, as these transactions go back over a long period, and as the money was paid in good faith and in the knowledge by the Government that it should be paid, it seems right and fair that it should remain where it now is, in the Exchequer. It will go to the relief of the general body of taxpayers and not be returned to people who never suffered its loss in the first instance and who, in any case, have no right whatever to it.
§ Mr. Challen
I would like to make a violent protest against the fundamental assumption of the Financial Secretary, which appears to be that these payments, 795 as he was pleased to call them, were made under a mistake of law and not under a mistake of fact. He has elaborated some vague theory about the intention of Parliament as distinct from what the Act of Parliament says it is, which any lawyer knows is a fundamental distinction, and he has endeavoured to persuade this House that 796 somehow or other Parliament intended something which the Order itself—
The Question having been proposed after Ten o'Clock and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at Twenty-nine Minutes to Eleven o'Clock.