DUNNES STORES has lost its High Court claim that the lighter plastic bags used in its stores for wrapping fish, meat and other products should not fall within the scope of the plastic bag levy.
Dunnes claimed that the levy should only apply to the plastic bags for carrying goods home given out at the checkout.
The company’s appeal to the Revenue Appeals Commissioners against the tax assessments involving a disputed amount of €36.4 million had been put on hold pending the outcome of its challenge.
Mr Justice John Hedigan rejected arguments the levy was intended only to apply to plastic carrier bags supplied at checkouts.
He said the point of the law was “to reduce as much as possible the presence of discarded plastic bags littering our towns and countryside”. It was “most improbable” the legislature would exempt plastic bags supplied anywhere apart from point of sale, he added.
The levy was applicable to all plastic bags provided at supermarkets, shops and service stations except for bags that fall within exemptions provided for in the legislation, he ruled.
The relevant regulations exempt plastic bags of a particular size – 250mm wide by 345mm deep by 450mm long – which are used solely to contain fresh fish, meat, poultry, fruit, nuts, vegetables, dairy products or cooked food.
The State had argued the disputed “pinch and pull” bags used by Dunnes were suitable for use at point of sale and presented litter and waste problems when available free in large quantities. It was claimed the bags were robust enough to carry an extensive range of goods and customers could use them for certain products by double and triple bagging them.
The case arose after Dunnes received tax assessments totalling some €36.4 million relating to four years from July 2004 to June 2008.
The Revenue complained the levies due for plastic bags had not been collected.
The company did not accept the assessments – made under the Waste Management (Environmental Levy Plastic Bag) Regulations of 2001 – and brought proceedings against the Revenue, the Minister for the Environment and Local Government and the State.
In his reserved judgment, Mr Justice Hedigan rejected Dunnes’ claim that the law providing for the imposition of the levy – section 72 of the Waste Management Act 1996 – was unclear.
While “somewhat awkwardly phrased”, the section was clear when carefully read and meant the levy related not just to carrier bags given to customers at point of sale for their shopping, he said.
If the requirement for applicability of the levy was supply at point of sale, there would be no point in the law providing for exemptions from the levy in relation to certain bags provided for wrapping products, he said. A point of sale requirement for applicability of the levy would have obviated the need for such exemptions.
The judge dismissed claims there was no valid legal basis for the 2001 regulations and found those regulations were based on several provisions of the 1996 Act.
Additional arguments by Dunnes that the Revenue breached fair procedures in allegedly failing to provide the company with the necessary information as to how the levy was calculated were also rejected.
Dunnes was a well-resourced and professionally advised company, there was extensive communication between its advisers and the Revenue and it was “hard to understand” what it was that Dunnes did not know, he said.
Dunnes had not disputed Revenue evidence that, at a meeting in November 2009, Larry Howard and Noel Fox of Dunnes were provided with details on foot of which the assessments were calculated, he said.
The Revenue had also made allowances for stolen and damaged plastic bags and bags sent to Northern Ireland. The judge also ruled Dunnes did not have the necessary legal standing to make arguments as to whether the use of the tax code to collect the levy amounted to an unconstitutional delegation of legislative power to the Minister.
Dunnes was unable to show how it was adversely affected by the use of the tax code as opposed to another unspecified system of estimating and collecting the levy, he said.
The judge went on to express his view that the adaptation of the tax code for recovery of the levy was not constitutionally flawed.
The case has been adjourned for a week to allow the sides to consider the judgment.
