Home appliance firm is fined $5000

Press, 27 April 1983, Page 26

Home appliance firm is fined $5000

PA Palmerston North

The home appliance manufacturer, Ralta, Ltd, was fined $5OOO after admitting defrauding the Customs Department. The company, in the District Court at Palmerston North, was fined $2500 on each of the two charges of making an erroneous declaration to the department and defrauding it under the Sales Tax Act.

The charges related to a 10 per cent sales tax imposed by the Government in its May, 1979, Budget. Appearing for the Collector of Customs, Mr J. H. C. Larson said that Ralta had backdated sales after the new tax was introduced so that they were treated as sales made before the new rate was imposed at midnight on May 16, 1979. It thus avoided payment on sales totalling $179,983. Tax avoided was $17,998. Mr Larsen said that the day after the Budget announcement Ralta’s national sales manager was in Christchurch.

“After making inquiries about the new tax he instructed his sales supervisors to telephone customers suggesting they backdate orders so that they predated the introduction of the tax. The supervisors were then to complete the company’s documentation with the dates shown as

May 16 and to process them accordingly.”

Mr Larsen said that transactions with 12 different companies were, involved.

“The investigation has been a particularly complex one involving many interviews in different parts of the country and the minute examination of documents from customers and the company, and was complicated by the reluctance of most witnesses to volunteer information,” he said. Mr Larsen told Judge Gilbert that avoiding the sales tax gave Ralta an edge on the opposition and that there was nothing unsophisticated about the scheme. Counsel for Ralta, Mr J. H. Williams, submitted that the false sales tax return was a mere mechanical translation by a low-level employee of figures furnished by another employee. The matters which gave rise to the charges were unsophisticated alterations.

They were easily detectable, and some of them dealt with trifling amounts. The charges arose, said Mr Williams, from overzealousness on the part of middle-order employees translated into the return by lower-order employees. Mr Williams criticised the Customs Department for taking so long to bring the charges — “The defendant has been seriously prejudiced in its defence by the passage of time,” he said. Mr Williams said that if there had been a defended hearing there would have been a real possibility of acquittal. As well, there were customers of Ralta who could have been charged as well. “They’re getting away scotfree.”

Mr Williams said that Ralta had almost no previous experience in the management of sales tax before May 16,1979, and would still have to pay the nearly $lB,OOO sales tax due.