Faiz Rizvi Pty Limited v the Commissioner of Australian Capital Territory Revenue [1994] ACTSC 124; (1994) 94 ATC 4918; (1994) 123 ACTR 1; (1994) 29 ATR 595 (1 December 1994)

SUPREME COURT OF THE ACT

FAIZ RIZVI PTY LIMITED v THE COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY
REVENUE
No. SCA41 of 1994
Number of pages - 6
Administrative Law - Taxation And Revenue
[1994] ACTSC 124; (1994) 94 ATC 4918
(1994) 123 ACTR 1, (1994) 29 ATR 595

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Administrative Law - appeal.

Taxation And Revenue - stamp duty - assessment - meaning of "sale" for purposes of assessment - agency.

Stamp Duties and Taxes Act 1987(ACT), ss56A, 56B(e), 56D(a)(ii), 56EA, 57, 58
Taxation (Administration) Act 1987 (ACT)

Motor Traffic Act
Sale of Goods Act 1954 (ACT), s6(5)

Keighley, Maxted and Co v Durant [1985] UKHL 8; (1901) AC 240

HEARING

CANBERRA, 24 October 1994
1:12:1994

Counsel for the appellant: Mr Byrne

Instructing solicitors: Gillespie-Jones and Co

Counsel for the respondent: Mr R Killalea

Instructing solicitors: ACT Government Solicitor

ORDER

THE COURT ORDERS THAT:

The appeal and cross-appeal be dismissed.

DECISION

HIGGINS J This is an appeal from a decision of the Australian Capital Territory Administrative Appeals Tribunal (ACT AAT) given on 22 April 1994 by the President, Professor L J Curtis.

2. The application before the Tribunal concerned the proper basis upon which the respondent was entitled to assess the liability to stamp duty of the appellant, a licensed motor vehicle dealer.

3. The Stamp Duties and Taxes Act 1987 (ACT) (SD and T Act) provided for a tax to be paid upon the registration of a vehicle in the following terms:

57. The determined amount of tax is payable on the registration of
a vehicle under the Motor Traffic Act by the person or persons in
whose name or names the vehicle is to be registered unless:
(a) the vehicle has previously been registered under that Act or a
corresponding law; and
(b) the last previous registration was solely in the name of that
person or those persons.

4. In 1990 the SD and T Act was amended so as to impose a tax in the following terms:

56A The determined amount of tax is payable on each sale of a used
vehicle by a licensed vehicle dealer.

5. The reference in s57 and in s56A to "the determined amount of tax", is a reference to a rate of tax imposed by virtue of the Taxation (Administration) Act 1987 (ACT).

6. The purpose of s57 was to impose a pro rata tax on the transfer of registration or the registration in the Territory of a vehicle registered outside the Territory following the sale or other transfer of property in the vehicle to a new registered owner.

7. There are other exemptions under s58 but they are not relevant for present purposes.

8. Some difficulties with s57 were identified in 1990. It was to meet those difficulties that the then responsible Minister, Mr Craig Duby, proposed the amendments which included s56A. He told the Legislative Assembly in his second reading speech:

There is evidence that revenue is being lost by purchasers
understating vehicle values and for payment of the duty being
deferred by delaying registration until the renewal date.

9. The remedy proposed for this situation was to enact s56A and for various other ancillary provisions to be inserted into the SD and T Act. These provisions were intended to alter the incidence of the tax in question in the case of sales of vehicles by licensed dealers from the purchaser to the dealer.

10. The amendment did not attempt to deal with possible avoidance of tax in the case of private sales or other transfers of registration of motor vehicles.

11. A purchaser from a licensed dealer is, by virtue of s58 of the SD and T Act, exempt from the obligation to pay the tax otherwise payable under s57 when the vehicle is presented for registration: see Schedule 6, item (f).

12. In 1992, a further problem was identified. If a non-ACT resident purchased a vehicle from a dealer in the ACT, then it appeared that the dealer would have had to pay the tax imposed by s56A. However, if the purchaser then presented the vehicle for transfer of registration, say in New South Wales, no credit would be given and no exemption received by that purchaser in New South Wales in respect of a similar tax or duty imposed in that State. That was seen as a disincentive for purchasers resident out of the Territory purchasing a vehicle from a dealer in the Territory.

13. Section 56EA was also proposed so as to confer on dealers a legal right to recover from a non-exempt purchaser, the amount of tax paid or payable by them in respect of the sale of a vehicle.

14. Other concerns referred to in the Chief Minister's second reading speech are not relevant for present purposes.

15. The perceived problem was addressed by declaring a sale of a vehicle registered under a corresponding law to the Motor Traffic Act, purchased by a non-resident to be an exempt sale: see s56B(e) SD and T Act.

16. A number of questions are now presented for decision on this appeal.

1. Whether the statutory liability of a dealer may be satisfied by another person other than through an agency relationship between that person and the dealer.
17. In some cases, apparently, a dealer, instead of personally receiving the tax and paying it at the Motor Registry, will permit a purchaser to pay the equivalent sum on obtaining registration. That differs from the usual case where the dealer pays the tax and that fact is noted on the registration certificate. In that latter case, a purchaser seeking transfer of registration would not be required to pay the tax: see s57, SD and T Act.

18. The respondent's contention was that as the liability to pay the tax is imposed on the dealer personally it cannot be discharged by any other person paying it. This, it was submitted, followed from the terms of s56D(a)(ii) which requires the dealer to "pay the tax payable in respect of the sale".

19. The learned President rejected this contention.

20. The respondent conceded that if the purchaser paid the tax on the dealer's behalf at the request of the latter, then there would be an agency arrangement and the dealer's obligation would be satisfied. However, it was contended that if, without such an agreement, the purchaser paid the tax, the dealer, even if not receiving the amount of the tax from the purchaser, would remain liable for it. This was notwithstanding that the ACT Revenue had already received an equivalent sum from the purchaser.

21. The case of Keighley, Maxted and Co v Durant [1985] UKHL 8; (1901) AC 240 was relied upon by the respondent as authority for this proposition. However, that case related to the capacity of persons to sue on a contract made on their behalf, but without their authority, and without disclosure that the contract was being made on their behalf. It does not assist to resolve the present question.

22. If a vehicle is presented for registration by a purchaser when the vehicle was previously registered in the name of a dealer, then Motor Registry will, as the AAT was informed by the respondent, require payment, or evidence of prior payment by the dealer, of the tax.

23. It would seem to me entirely absurd if the amount of the tax having been paid by the purchaser, the respondent could also recover the same sum from the dealer. Of course, there may be cases where the purchaser will be entitled to a refund from the dealer or where, due to inadequate documentation, both the dealer and the purchaser pay the tax. That, however, is only because the true facts are not known to the relevant parties.

24. The true position, in my opinion, is as the learned President found it to be.

2. Whether a taxable sale takes place when the agreement is conditional upon the purchaser (or the dealer) fulfilling a condition, it being agreed that the dealer will not release the vehicle until the condition is satisfied (or the purchaser will not accept it.
25. There is no definition in the SD and T Act of a "sale". It therefore follows the word is to be given its usual legal meaning. The provisions of the Sale of Goods Act 1954 (ACT) are relevant to determine whether a sale has occurred. In particular, s6(5) thereof is relevant.

26. The essence of a sale is that property in the vehicle should pass. If there is a condition to be fulfilled before that happens, whether or not possession passes to the purchaser, the "sale" has yet to occur.

27. I agree, therefore, with the answer offered by the learned President on this issue.

3. Whether the tax imposed by s56A of the SD and T Act is the same tax as and to be leviable only if tax would otherwise be levied under s57.
28. This was the central issue argued upon the hearing of this appeal.

29. Under s56B, an exemption is provided for a non-ACT registered vehicle sold by a dealer in the Territory to a non-resident. That vehicle will then be presented, it is to be assumed, for registration or transfer of registration out of the Territory. A duty or tax will then be payable in that place. However, the appellant points out that an ACT registered vehicle sold in the Territory to a non-resident is not exempt by virtue of s56B. When presented for registration or transfer of registration out of the Territory, the purchaser will have to pay the tax or duty levied in that place in addition to paying to the dealer the amount of tax the dealer is liable for, assuming that the dealer demands such payment.

30. This, it is suggested, is the same mischief as was identified when s56A was proposed and enacted. Purchasers will face payment of a tax or duty in their place of residence when they register the vehicle there. But for s56A, tax would not have been payable by a purchaser on the transfer of registration unless the purchaser was an ACT resident presenting the vehicle for transfer of registration in the Territory. A non-resident could not lawfully apply for such a transfer. If a non-ACT resident wished to have a vehicle purchased in the Territory registered outside the Territory, there would ordinarily then be a surrender of ACT registration and plates and an application for re-registration elsewhere at which point tax or duty would be payable under the laws of that place.

31. The learned President, albeit without expanding on the arguments put to him, held that such a transaction was not exempt from tax in the Territory so that the dealer remains liable to pay the tax imposed by s56A of the SD and T Act.

32. The appellant submitted that a purposive construction of the SD and T Act would lead to a conclusion that s56A was not intended to impose an additional tax but rather to enhance collection of an existing tax, transferring merely the point of collection.

33. I respectfully agree that this conclusion is justified by a perusal of the relevant Second Reading Speeches and explanatory memoranda. However, the same argument was applicable with equal force to the 1992 amendment which exempted vehicles not registered in the Territory but sold by a dealer in the Territory to a non-resident.

34. That amendment did not purport to exempt sales by a Territory dealer of ACT registered vehicles to non-residents. I have to conclude, therefore, that either there was an oversight or there was then a deliberate decision not to extend the 1992 exemption further.

35. The extrinsic material does not address that dilemma.

36. It seems to me, however, that I am bound by the clear words of the legislature even if I am persuaded that it is possible, even likely, that the legislature did not intend the result of the legislation. It is possible that it did intend this result. Certainly in 1992 it was considered that the appropriate course to remedy the situation if the incidence of tax was then perceived as falling wider than had been intended, was to request the Legislative Assembly to amend the SD and T Act.

37. In my view, it is not for the Court to ignore the unambiguous words of the Act. I agree with the learned President.

38. No other issues were raised in relation to the decision of the learned President. Accordingly, both the appeal and cross-appeal are dismissed.