Case Summaries

Skyventure VWT Singapore Pte Ltd v Chief Assessor and another and another matter [2021] SGCA 40

SUPREME COURT OF SINGAPORE

21 April 2021

Case summary

Skyventure VWT Singapore Pte Ltd v Chief Assessor and another and another matter [2021] SGCA 40
Civil Appeal No 17 of 2020 and Summons No 1 of 2021

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Decision of the Court of Appeal (delivered by Justice of the Court of Appeal Andrew Phang Boon Leong):

Outcome: The court dismissed both the appeal and the application.

Pertinent and significant points of the judgment

  1. The meaning of the term “article” in s 2(2) of the Property Tax Act (Cap 254, 2005 Rev Ed) (“the Act”) was to be determined with regard to the particular statutory context of, and the legislative intention underlying, that provision. The underlying legislative intention of s 2(2) of the Act may be gleaned from the text of the provision itself and from extraneous material.
  2. It is presumed that Parliament intended a consistent definition of the term “article” throughout s 2(2) of the Act, namely, matter which is intended to be sold or which is the subject-matter of a sale of services to make, alter, repair, ornament, finish or adapt for sale the same.
  3. Tax is a creature of statute and the courts will not stretch statutory provisions beyond what their language and context could reasonably bear.
  4. The reasoning as well as the decision in Chief Assessor and another v First DCS Pte Ltd [2008] 2 SLR(R) 724 (“First DCS”) stood at the very border of what would pass legal muster under s 2(2)(c) of the Act.

Background

1. The appellant, Skyventure VWT Singapore Pte Ltd, owns and operates “iFly Singapore”, a tourist attraction providing a simulated skydiving experience to its guests. The skydiving experience is created by a “Wind Tunnel” housed within a concrete structure. The Wind Tunnel consists of four wind turbines, a primary diffuser, water-cooled turning vents, an inlet contractor and a flight chamber, which generates and controls continuous airflow enabling simulated skydiving within the flight chamber. The respondents assessed the entire tourist attraction, including the Wind Tunnel, to property tax.

2. The appellant appealed the respondents’ decision to assess the Wind Tunnel to property tax to the Valuation Review Board (“VRB”), contending that the Wind Tunnel was qualifying machinery under s 2(2) of the Act, which consequently meant that the value of the Wind Tunnel was not to be taken into account in assessing the annual value of the tourist attraction chargeable to property tax. The VRB allowed the appeal by a two-to-one majority. The majority found that the Wind Tunnel was machinery which altered and adapted the air within it such that the lifting effect of the cooled airflow could be sold. It therefore fell within the scope of s 2(2) of the Act.

3. The respondents appealed the VRB’s decision to the High Court. Their appeal was allowed by the High Court judge (“the Judge”). While the Judge agreed with the VRB that the Wind Tunnel was machinery, he took the view that s 2(2) of the Act did not apply to machinery used for social events (as opposed to machinery used for industrial purposes). The Wind Tunnel therefore fell outside the scope of s 2(2) of the Act and consequently was not exempt from property tax. The appellant appealed from the Judge’s decision. The appellant also brought an application for leave to tender various materials relating to the state of the Singapore economy in 1960 as well as evidence of the way the respondents had applied s 2(2) of the Act to support its case (“the Application”).

The courts' decision

 

4. The court held that s 2(2) of the Act applies only to machinery falling within the scope of ss 2(2)(a), 2(2)(b) and 2(2)(c) of the Act, namely machinery used for the purposes of making, altering, repairing, ornamenting, finishing or adapting for sale any article. The type of machinery and the premises in or upon which it is situated are not relevant considerations: at [21].

5. The court observed that, while the word “article” was notionally capable of referring to any matter in existence, its definition in the context of s 2(2) of the Act depended on the particular statutory context of, and the legislative intention underlying, that provision, which was in turn primarily embodied in the text of the provision itself. Alternatively, the legislative intention underlying s 2(2) of the Act could be gleaned from extraneous material: at [28] and [32].

6. In ascertaining the legislative intention underlying s 2(2) of the Act, the court was of the view that non-legislative articles relating to the general state of the economy in or around 1960 (when the Property Tax Ordinance (No 72 of 1960), the predecessor to the Act containing what eventually became s 2(2) of the Act, was enacted) and academic opinions on how that economy ought to be developed were not relevant to the question of Parliament’s specific intention regarding s 2(2) of the Act. Unenacted legislative amendments to the Act and the way the respondents had applied s 2(2) of the Act were also unhelpful in determining such an intention. The court therefore dismissed the Application: at [34][35].

7. The court found that, in enacting s 2(2) of the Act, Parliament intended to incentivise the use of machinery for manufacturing processes. Seen in that light, the term “article” as used throughout that provision referred to matter which is intended to be sold or which is the subject-matter of a sale of services to make, alter, repair, ornament, finish or adapt for sale the same: at [37][43].

8. The court held that the Wind Tunnel was machinery because, taken as a whole, its predominant function was to create, modify and control airflow. However, it was not machinery which fell within the scope of s 2(2)(c) of the Act because there was no sale of the skydiving-friendly airflow which the Wind Tunnel adapted. Instead, such adaptation was the means by which the skydivers could enjoy the experience of skydiving: at [51][59].

9. The court cautioned that the reasoning as well as the decision in First DCS stood at the very border of what would pass legal muster under s 2(2)(c) of the Act. Tax is a creature of statute and the courts would not stretch provisions such as s 2(2)(c) of the Act beyond what their language and context could reasonably bear: at [61].

10. The court also held that the Wind Tunnel did not fall within the scope of s 2(2)(b) of the Act even though it did alter airflow so as to induce its skydiving-friendly aerodynamic properties because such altered airflow was not an article which was intended to be sold. There was also no sale of services to the skydivers for the alteration of the airflow in the Wind Tunnel. The appellant, instead, used the Wind Tunnel to alter the airflow which existed at all material times in its own premises in order to charge the skydivers a fee for the enjoyment of said altered airflow: at [62].

11. The court therefore dismissed the appeal with costs: at [63].

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.

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