Chief Assessor v First DCS: Property Tax on District Cooling Machinery & Pipelines
The Court of Appeal of Singapore heard an appeal by the Chief Assessor and the Comptroller of Property Tax against First DCS Pte Ltd regarding the property tax assessment of a district cooling plant. The appellants had included the district cooling machinery and pipelines in the assessment of the subject property's annual value. The court, with V K Rajah JA delivering the grounds of decision, dismissed the appeal, holding that the cooling machinery was used for adapting chilled water for sale and that the pipelines were an integral part of the cooling machinery, thus exempting both from property tax under Section 2(2) of the Property Tax Act.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Dismissed
1.3 Case Type
Tax
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal held that district cooling machinery and pipelines used to distribute chilled water are exempt from property tax assessment.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Chief Assessor | Appellant | Government Agency | Appeal Dismissed | Lost | Joanna Yap of Inland Revenue Authority of Singapore Ong Keng Loon of Inland Revenue Authority of Singapore |
| Comptroller of Property Tax | Appellant | Government Agency | Appeal Dismissed | Lost | Joanna Yap of Inland Revenue Authority of Singapore Ong Keng Loon of Inland Revenue Authority of Singapore |
| First DCS Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | Yes |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | Yes |
| V K Rajah | Justice of the Court of Appeal | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Joanna Yap | Inland Revenue Authority of Singapore |
| Ong Keng Loon | Inland Revenue Authority of Singapore |
| Tan Kay Kheng | WongPartnership |
| Leung Yew Kwong | WongPartnership |
4. Facts
- First DCS Pte Ltd owns a district cooling plant in Changi Business Park.
- The plant distributes chilled water to customers for air-conditioning.
- Water is chilled by cooling machinery and distributed via underground pipelines.
- The Chief Assessor included the cooling machinery and pipelines in the property tax assessment.
- The pipelines extend beyond the boundaries of the subject property.
- The chilled water returns to the cooling plant for re-chilling via the pipelines.
- The temperature difference in the water is essential for the cooling plant's function.
5. Formal Citations
- Chief Assessor and Another v First DCS Pte Ltd, CA 77/2007, [2008] SGCA 15
6. Timeline
| Date | Event |
|---|---|
| Valuation Review Board agreed with the appellants. | |
| High Court judge took the contrary view. | |
| Court of Appeal dismissed the appeal. |
7. Legal Issues
- Whether District Cooling Machinery is Assessable for Property Tax
- Outcome: The court held that the cooling machinery was used for adapting chilled water for sale and was therefore exempt from property tax assessment under Section 2(2) of the Property Tax Act.
- Category: Substantive
- Whether Pipelines are Part of District Cooling Machinery for Property Tax Exemption
- Outcome: The court held that the pipelines were an integral part of the cooling machinery and were therefore also exempt from property tax assessment under Section 2(2) of the Property Tax Act.
- Category: Substantive
- Purposive Interpretation of Statute
- Outcome: The court applied a purposive interpretation to Section 2(2) of the Property Tax Act, considering the historical context and legislative intent to encourage investment in machinery.
- Category: Procedural
8. Remedies Sought
- No remedies sought
9. Cause of Actions
- No cause of actions
10. Practice Areas
- Tax Law
- Property Law
11. Industries
- Utilities
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| First DCS Pte Ltd v Chief Assessor | Valuation Review Board | Yes | [2006] SGVRB 2 | Singapore | The High Court judge took the contrary view to the Valuation Review Board. |
| First DCS Pte Ltd v Chief Assessor | High Court | Yes | [2007] 3 SLR 326 | Singapore | The High Court judge held that the Cooling Machinery and the Pipelines should not have been taken into account. |
| PP v Low Kok Heng | N/A | Yes | [2007] 4 SLR 183 | Singapore | Cited for the principle that the purposive approach is the paramount rule of construction in Singapore jurisprudence. |
| Bailey v Stoke-on-Trent Assessment Committee and Potteries Electric Traction Company, Limited | N/A | Yes | [1931] 1 KB 385 | United Kingdom | Cited for the rationale underlying the English courts’ approach to a generous interpretation of provisions containing the terms “making”, “altering” and “adapting for sale”. |
| Fuller’s Case | N/A | Yes | [1901] 2 KB 209 | United Kingdom | Cited as an example of 'adapting for sale' to protect the workpeople employed in that occupation. |
| Hoare v Robert Green, Ld | N/A | Yes | [1907] 2 KB 315 | United Kingdom | Cited as an example of 'adapting for sale' to protect the workpeople employed in that occupation. |
| Macduff-Duncan, Limited v Assessor for Perthshire | Scottish Lands Valuation Appeal Court | Yes | (1947) SC 346 | Scotland | Considered whether a chicken egg hatchery was a “factory” or “workshop” for the purposes of the 1928 UK Rating Act. |
| Inland Revenue v Howietoun and Northern Fisheries Company Limited | N/A | Yes | [1930] SLT 240 | Scotland | Argued that a fish hatching process had “adapted” fish ova into trout and salmon for sale. |
| Assessor for Lanarkshire v Geest Industries Ltd | N/A | Yes | [1962] SLT 189 | Scotland | The question there was whether the process of allowing unripe bananas from the tropics to ripen in special “ripening rooms” in Scotland constituted an “adaptation” of the bananas for sale. |
| Tenaga Nasional Bhd v Majlis Perbandaran Seberang Prai | High Court | Yes | [2003] 4 MLJ 781 | Malaysia | Cited as authority for the proposition that each item of machinery found on the subject property should be considered differently. |
| Majlis Perbandaran Seberang Perai v Tenaga Nasional Bhd | Federal Court | Yes | [2005] 1 MLJ 1 | Malaysia | Affirmed the High Court’s decision in Tenaga Nasional Bhd v Majlis Perbandaran Seberang Prai. |
| The Shell Company of the Federation of Malaya Ltd v Commissioner of the Federal Capital of Kuala Lumpur | N/A | Yes | [1964] 1 MLJ 302 | Malaysia | States the correct position, namely, that “all machinery which are fixtures are rateable, saving only the express exceptions”. |
| The Mayor & Councillors of Perth v Perth Gas Company, Ltd | N/A | Yes | (1903) 5 WAR 28 | Australia | A gas company which produced gas for sale to consumers had pipes that extended for several miles beyond the land occupied by the company. The question was whether the pipes were “machinery”. |
| Chief Assessor & Comptroller of Property Tax v Van Ommeren Terminal (S) Pte Ltd | N/A | Yes | [1993] 3 SLR 489 | Singapore | Considered the question of whether pipelines connected to certain storage tanks on the subject property were “necessary adjuncts” to the storage tanks so as to be rateable together with them. |
| Air Products Ltd v Case | N/A | Yes | (1970) 16 RRC 194 | England | Pipelines carrying pressurised oxygen and nitrogen manufactured in the ratepayer’s factory to the ratepayer’s customer were held to be part of the equipment of the factory because the oxygen and the nitrogen were continuously being “made” or “adapted for sale” while in the pipelines. |
| Edwards v BP Refinery (Llandarcy), Ltd | N/A | Yes | (1974) 19 RRC 223 | England | Concerned an oil refinery with many pipelines connecting its different parts. The particular question before the Tribunal which is pertinent to the present appeal was whether the SCOW line formed “part of the equipment of … a factory” so as to be excluded from rating under Class 5(1)(c) of the 1960 Order |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Property Tax Act (Cap 254, 2005 Rev Ed) s 2(2) | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) s 9A | Singapore |
| District Cooling Act (Cap 84A, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- District Cooling Plant
- Cooling Machinery
- Pipelines
- Annual Value
- Property Tax
- Chilled Water
- Adaptation for Sale
- Purposive Interpretation
- Manufacturing Process
15.2 Keywords
- property tax
- district cooling
- machinery
- pipelines
- annual value
- statutory interpretation
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Revenue Law | 90 |
| Statutory Interpretation | 70 |
16. Subjects
- Property Tax
- Statutory Interpretation
- Revenue Law