The Chief Justice has accused the Revenue Commissioners of wasting taxpayers' money after it pursued a case for eight years despite consistently adverse judgments, writes Dominic Coyle

Mr Justice Keane took the unusual step of issuing a separate statement criticising the Revenue along with a unanimous judgment delivered by his colleague, Mr Justice Nial Fennelly, last week.

The court was ruling on the refusal of the Revenue to repay VAT to a company that bought premises and fittings from a third party. UK-based Stylo Barratt Shoes Ltd, which operates a chain of Barratt's stores around Ireland, paid £1 million sterling (€1.5 million) for the premises in 1994. In addition, it paid VAT of £17,885.92 on the transaction.

Companies that are registered for VAT can claim refunds on VAT paid in the course of carrying out their business.

However, the Revenue refused to repay the VAT in this case, arguing that because Stylo Barratt had bought the premises from another shoe retail group, the transaction was effectively a transfer of business. As such, it was not liable to VAT and, therefore, no rebate could be paid.

Stylo appealed the refusal by the Revenue inspector to the Appeals Commissioners in 1996 and won a ruling that there had been no agreement for the transfer of the business or any part of it.

Mr Justice Keane said the court had received no satisfactory explanation from counsel for the Revenue as to why it had subsequently pursued "what was at best a dubious argument which, if successful, would have resulted in a significant loss of tax to the Revenue".

He also noted that the Revenue had failed to explain why it took six years following the initial ruling by the Appeals Commissioner to trigger High Court proceedings.

Industry sources said the delay was extraordinary, with such processes usually taking a matter of months.

By the time the Stylo case got to the High Court, the court had already ruled that a similar transaction in another case was not exempt from VAT - a judgment that undermined the Revenue case.

The High Court ruled in favour of Stylo. In Mr Justice Keane's words, "undaunted, the appellant [the Revenue\] pursued an appeal to this [the Supreme\] court".

They did so despite a judgment by the European Court of Justice in another unrelated case, which held that transactions such as the one at the centre of the dispute between the Revenue and Stylo did not come within the terms of the exemption claimed by the Revenue.

"Far from accepting that there was no point in wasting the taxpayers' money any further on this curious enterprise," writes the Chief Justice in his observations, "the response of the appellant was to invite the \ court to send the entire matter back to the Appeal Commissioner."

He suggests that this would merely be a prelude to the case running back up through the court system unless the Revenue won a ruling in its favour.

The Chief Justice adds that "the law is now so plainly against the appellant that, if by any chance, the decision had been in favour of the Revenue at any stage", the case would have to be referred to the European Court of Justice.

The position, Mr Justice Keane writes, is that since the earlier European court judgment, the legal battle between Stylo and the Revenue, "which has involved so much time and money", is an "acte clair" - an issue free from doubt.

"It may be that there is some explanation for this extraordinary sequence of events but I find it disquieting that, if there is, it was never indicated to the court," the Chief Justice concludes.