A car importer has taken a High Court action to challenge the Revenue Commissioners' decision to increase the open market price of a new Volkswagen Passat 1.6 petrol engine car.

In May 1999, Motor Distributors Ltd (MDL) declared the Passat to have an open market selling price (OMSP) of £16,110 (€20,455). The Revenue disputed that figure and asked for a revised price declaration. When MDL indicated its unwillingness to do so, the Revenue, in October 1999, determined an OMSP for the vehicle of £16,520.

The Revenue said it was amending the figure because it believed the OMSP declared by MDL was lower than the price at which the relevant model was being offered for sale.

In judicial review proceedings before Mr Justice Kearns, MDL is seeking an order quashing the Revenue's higher price Passat decision, made under the 1992 Finance Act. It also wants a declaration that the decision is void and of no legal effect.

The judge is further asked to declare that the opinion of Mr John O'Leary, an assistant principal with the Revenue but not a commissioner, on what should be the OMSP price of the Passat, is at variance with fundamental reason and common sense. MDL also seeks an order directing the Revenue to state the grounds on which it decided the OMSP. Mr Paul Gallagher SC, for MDL, said the Revenue had exceeded its powers. The Revenue Commissioners is contending the proceedings should be dismissed. It says MDL does not have the required standing to challenge its decision and is not entitled to the relief sought. The hearing continues today.