Re Shell'S Self Service Pty Ltd v Deputy Commissioner of Taxation [1989] FCA 51; 98 ALR 165 (8 March 1989)

FEDERAL COURT OF AUSTRALIA

Re: SHELL'S SELF SERVICE PTY. LTD
And: DEPUTY COMMISSIONER OF TAXATION
No. VG76 of 1987
FED No. 71
Administrative Law - Income Tax
[1989] FCA 51; 98 ALR 165

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Ryan(1) J.

CATCHWORDS

Administrative law - administrative Decisions (Judicial Review) Act 1977 (Cth) - grounds for review - error of law by decision maker - statutory interpretation - effect of amendments to Income Tax Assessment Act 1936 (Cth) - whether Deputy Commissioner in error in exercising discretion granted by amending Act instead of that conferred by repealed section or transitional provision.

Income Tax - Objections and appeals - judicial review of administrative decisions - penalty tax - discretion of Commissioner to enter into arrangement to remit part of additional tax - effect on discretion of amendments to Income Tax Assessment Act.

Administrative Decisions (Judicial Review) Act 1977 (Cth) s.5

Acts Interpretation Act 1901 (Cth) s.15AB

Income Tax Assessment Act 1936 (Cth) ss.206, 207

Income Tax Assessment Amendment Act (No. 6) 1982 ss. 9, 15

HEARING

MELBOURNE
8:3:1989

DECISION

By these proceedings the applicant seeks an order of review pursuant to s.5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), ("the ADJR Act"). The decision of which the applicant complains was made by the Deputy Commissioner of Taxation. As set forth in a letter dated 5 March 1987 from the Australian Taxation Office, the decision was that remission of additional tax for late payment should be granted in the sum of $32,754.09, but that remission of other additional tax for late payment in the sum of $45,241.49 should not be granted. The additional tax had been incurred as a result of the late payment of outstanding tax in respect of the applicant's 1979, 1980 and 1981 assessments, in which the Commissioner had disallowed certain deductions in respect of losses carried forward.

2. The relevant assessment for the year ended 30 June 1979 was issued on 22 April 1980. Tax was assessed in the sum of $101,628.26 and became due and payable on 26 May 1980. On 5 May 1980, the applicant notified the Commissioner of its objection against the assessment. By letter dated 3 September 1980 the Deputy Commissioner advised the applicant that:-
"Reference is made to representations in regard to

a deferment pending finalization of matters in
dispute.
Provided payment of the tax subject to appeal is
paid to the extent of $16,232.40, the balance may
be deferred until further advised by this office.
Payment of the tax subject to objection is
required to the extent of $50,814.13 pending
determination of the objection.
This deferment is granted subject to the
imposition of additional tax for late payment
calculated at the rate of 10% per annum from the
due dates of the relevant assessments or the
amount of tax ultimately found to be payable."

3. At that time, s.207 of the Income Tax Assessment Act 1936 ("the Assessment Act") provided:-

"(1) If any tax remains unpaid after the time
when it becomes due and payable, additional tax
shall be due and payable at the rate of ten per
centum per annum on the amount unpaid, computed
from that time or, where an extension of time has
been granted under the last preceding section,
from such date as the Commissioner determines,
not being a date prior to the date on which the
tax was originally due and payable:
Provided that the Commissioner may in any
case, for reasons which he thinks sufficient,
remit the additional tax or any part thereof."

4. The applicant's accountants, Messrs Fordham, Williams & Co, by letter dated 17 September 1980, indicated that they were aware that in other cases the Commissioner had agreed to either:-

"(a) Payment of 50% of the alleged tax owing and
the balance of tax ultimately found to be
payable is paid without the imposition of
additional tax for late payment; or
(b) Deferment of payment of tax until the matter
is finally determined with the imposition of
additional tax for late payment."

5. They suggested that, in accordance with (b), the respondent should, pursuant to s.206 of the Assessment Act, grant a deferment of the payment of all tax, pending determination of the objection after which the respondent could consider the imposition of additional tax for late payment. Section 206, at the relevant time, provided:-

"The Commissioner may in any case grant such
extension of time for payment, or permit payment
to be made by such instalments and within such
time as he considers the circumstances warrant;
and in such case the tax shall be due and payable
accordingly."

6. It is common ground in these proceedings that the type of practice adverted to in (a) (above) was known as a 50/50 arrangement, or otherwise as the 50% payment and 50% deferment rule, and was supported by the discretion conferred on the Commissioner by s.207 of the Assessment Act to remit part or all of the additional tax. However, as shall become apparent from these reasons, the applicant and the Deputy Commissioner did not share a common understanding of how the 50/50 arrangement operated in practice. It is sufficient for present purposes to say that it allowed a taxpayer the option of avoiding any additional tax for late payment under s.207 by immediately paying half of the amount of tax the subject of any objection or appeal. Full recovery by the Commissioner would accordingly be stayed pending determination of the matters in dispute.

7. It appears that this type of arrangement was offered to the applicant in respect of its assessment for the financial year ending 30 June 1978, when it was assessed to pay an amount of $34,741.50. An objection against that assessment was disallowed and the applicant then requested the respondent to treat its objection as an appeal and forward it to the Supreme Court. Initially, in the letter dated 3 September 1980, the Deputy Commissioner had offered the applicant the option of paying an amount of $16,232.40 with the balance to be deferred pending the appeal. It is unclear whether the last paragraph of that letter (as quoted above) which advised that the deferment "is granted subject to the imposition of additional tax ..." was applicable to the 1978 assessment or referable only to the 1979 assessment. In any event, the Deputy Commissioner, by letter dated 11 December 1980 and in response to the letter of 17 September from the applicant's accountants, advised:-

"... that provided payment of the account is
effected to the extent of $16,232.40, the balance
may be deferred without the imposition of
additional tax for late payment, pending further
advice by this office."

In that letter no reference was made to the amount outstanding in respect of the assessment of $101,628.26 in respect of the year ended 30 June 1979.

8. On 21 April 1981, a Notice of Assessment was issued to the applicant for the year ending 30 June 1980, stating that an amount of tax in the sum of $112,074.40 would become due on 25 May 1981, thereby increasing the applicant's liability to $248,444.16. Again, the applicant lodged a notice of objection and its accountants, by letter dated 29 April 1981, requested the Deputy Commissioner "... that an extension of time be granted for the payment of tax outstanding until such time as the objection has been determined". The following response came in a letter dated 5 June 1981:-

"It is confirmed that the following amounts of tax
are presently outstanding to the account viz:
Year ended 30 June 1978 $ 34,741.50
Year ended 30 June 1979 $101,628.26
Year ended 30 June 1980 $112,074.40
-----------
$248,444.16
-----------
Provided payment of this account to the extent of
$124,222.08 is effected immediately the balance
may remain outstanding, without the imposition of
additional tax for late payment, pending
finalisation of matters in dispute."

9. The applicant made no reply to this letter, nor any attempt to accept the respondent's proposal in respect of the amount outstanding for the 1978, 1979 and 1980 financial years. In the meantime, the applicant's tax liability had further increased as a result of an assessment to pay income tax in the sum of $34,735.12 for the year ended 30 June 1981. Again, it appears that certain losses claimed by the applicant had been disallowed and the due date for payment was 25 May 1982. As a result of the applicant's failure to respond to his letter of 5 June 1981, the Deputy Commissioner issued the following warning, by letter dated 7 July 1982:-

"You are advised that unless payment of the
$124,222.08 requested is forwarded forthwith,
legal proceedings will commence to recover the
full amount outstanding for those years in
dispute.
In respect of the assessment for the year ended
30 June 1981, provided payment of $3,513.31 is
made, the balance of $31,221.81, representing 50%
of the tax in dispute, may be deferred until
further notice is received from this office.
Additional tax for late payment continues to
accrue at the rate of 10% per annum from the
original due date."

The applicant's accountants replied by letter dated 12 July in the following terms:-

"We refer to your letter of 7th July and request
again on behalf of the abovenamed taxpayer, that
you grant pursuant to the powers granted to the
Commissioner of Taxation under Section 206 of the
income tax assessment act, an extension of time
to pay the alleged tax due, until the matters in
dispute are resolved.
Pending resolution of these matters it is
requested that no legal proceedings be commenced
to recover the alleged tax due.
You refer in your letter to a letter issued from
your office on 5th June, 1982. We have not
received this letter and would request a copy.
Pending receipt of a copy of this letter it is
again requested that no legal proceedings be
commenced.
Your favourable consideration to these requests
would be appreciated."

10. On 21 September, the Commissioner disallowed the objections against assessment for the financial years ending 1979, 1980 and 1981. The applicant, by its accountants, then requested that those objections be treated as appeals and referred to the Supreme Court. (A statement of case was later referred on 23 December 1982.)

11. On 13 December 1982, the Income Tax Assessment Amendment Act (No. 6) 1982, received Royal Assent. By s.9 of that Act, sub-section (1) of s.207 of the Assessment Act was repealed and the following sub-section was substituted:-

"(1)If any tax remains unpaid after the
time when it became due and payable or would, but
for section 206, have become due and payable,
additional tax is due and payable at the rate of
20% per annum on the amount unpaid, computed from
that time or, where, under section 206, the
Commissioner has granted an extension of time for
payment of the tax or has permitted payment of
the tax to be made by instalments, from such date
as the Commissioner determines, not being a date
prior to the date on which the tax was originally
due and payable.
(1A) Where additional tax is due and
payable by a person under sub-section (1) in
relation to an amount of tax and-
(a) the Commissioner is satisfied that-
(i) the circumstances that
contributed to the delay in
payment of the tax were not
due to, or caused directly or
indirectly by, an act or
omission of the person; and
(ii) the person has taken
reasonable action to
mitigate, or mitigate the
effects of, those
circumstances;
(b) the Commissioner is satisfied that-
(i) the circumstances that
contributed to the delay in
payment of the tax were due
to, or caused directly or
indirectly by, an act or
omission of the person;
(ii) the person has taken
reasonable action to
mitigate, or mitigate the
effects of, those
circumstances; and
(iii) having regard to the nature
of those circumstances, it
would be fair and reasonable
to remit the additional tax
or part of the additional
tax; or
(c) the Commissioner is satisfied that
there are special circumstances by
reason of which it would be fair and
reasonable to remit the additional tax
or part of the additional tax,
the Commissioner may remit the additional tax or
part of the additional tax."

12. Section 15 of the amending Act is also relevant:-

"15. Notwithstanding the amendment made by this
Act to section 207 of the Principal Act, where,
in relation to an amount of additional tax that
is payable, or will become payable, by a taxpayer
under that section in relation to an amount of
tax payable under an assessment against which an
objection has been lodged under section 185 of
the Principal Act, the Commissioner has, before
the commencement of this Act, entered into an
agreement or arrangement with the taxpayer, or
otherwise indicated his intention to the
taxpayer, to remit the whole or a part of the
additional tax, either unconditionally or subject
to conditions, sub-section 207(1A) of the
Principal Act as amended by this Act does not
apply in relation to that additional tax but the
Commissioner may, for reasons that he thinks
sufficient, remit that additional tax or any part
of that additional tax."

13. There was no further communication between the parties until 20 December 1982, when Mr Price Williams of Fordham, Williams & Co spoke with Mr Martin Tayler, a Recovery Officer in the Australian Taxation Office. In discussing the recent amendments to the Assessment Act, Mr Tayler stated, in effect, that the Australian Taxation Office was still prepared to offer to the Applicant a 50/50 arrangement as it had in the past. Mr Tayler also said that if the applicant accepted the offer, payment of $124,077.44 would be required by 27 December 1982. This amount represented half of the outstanding tax in respect of the 1979, 1980 and 1981 tax years. The of $124,222.08 which has previously been referred to represented half of the outstanding tax in respect of the 1978, 1979 and 1980 tax years. There is evidence to the effect that the appeal to the Supreme Court against the assessment for the financial year ending 30 June 1978 was heard at some time between July and December 1982 and was successful.

14. Mr Williams replied that he would seek instructions from the applicant and report back to Mr Tayler before the end of the week.

15. After obtaining instructions from the applicant, Mr Williams told Mr Taylor on the following day that the applicant was willing to pay the sum of $124,077.44, but that it could not do so within seven days. He requested the Deputy Commissioner to extend the time for payment to mid-January 1983.

16. Mr Tayler has deposed that "... (b)ecause I was not prepared to commit the Australian Taxation Office to such an arrangement I asked Mr. Williams to put his counter-offer in writing, setting out exactly when it was envisaged that the Applicant would pay the sum of $124,077.44 ... I said to Mr. Williams that any such counter-offer may be considered, but that I could give no guarantee that the counter-offer would be accepted."

17. On 31 December 1982, the Deputy Commissioner received from Fordham, Williams & Co a letter dated 21 December 1982 which read, in part:-

"We are writing to confirm todays telephone
conversation regarding the abovenamed taxpayer
and arrangements to pay the outstanding tax.
We would ask you to confirm that provided
$124 077.44 is paid during the week commencing
17th January, 1983 the balance may remain
outstanding without the imposition of additional
tax for late payment, pending finalization of the
matters in dispute.
The directors of the company have made arrange
ments to visit their bank early in January and
are confident that funds will become available by
the specified time.
We look forward to receiving your confirmation of
these arrangements."

18. Early in January, Mr Tayler sought instructions from Mr Damien Hynes who is the Manager of the Deferred Tax Unit, and, in accordance with those instructions, he sent a letter dated 7 January 1983, which read, in part:-

"You are advised that the representations
contained in your letter have been considered and
payment of $124,077.44 will be accepted on or
before 17 January 1983.
However, in view of the recent legislation which
was given royal assent on 13 December 1982, such
an arrangement whereby interest does not accrue
can no longer be entered into by this office.
The Tax Agents Circular No. 4 of 1982 will
explain this in more detail.
Accordingly, the above arrangement will be
subject to the accrual of additional tax for late
payment at the rate of 10% per annum from the
original due date until 14 February 1983, at
which time the interest rate will increase to 20%
per annum."

19. Mr Williams telephoned Mr. Tayler on 11 January. He complained that the decision to impose penalty interest on outstanding amount was not in accordance with what he had thought to be the Deputy Commissioner's earlier advice that he would extend the time for payment. Mr Tayler replied that his earlier offer of a "50/50 arrangement" had required payment by 27 December 1982, and, as this had not been made, the offer was no longer open, because the Melbourne office had no power to further extend the time for payment. He also said that the request made in the applicant's letter of 21 December had been considered as promised, but that it had been rejected after consultation with Mr Hynes and a Mr Paul Noone, the officer handling the case.

20. By letter dated 12 January 1983, Fordham, Williams & Co made a submission to the Deputy Commissioner. It set out the events which had occurred since 21 December 1982, and proceeded:-

"We confirmed we would make the necessary
arrangements to have the moneys paid to your
office by the week commencing 17th January and
notwithstanding your letter of 7th January, we
now enclose the taxpayer's cheque for $124,077.44
in good faith and again request that this amount
be accepted in accordance with the terms set out
in our letter of 21st December. In support of
this request we make the following submissions:
1. No indication was given that head office did
not allow any discretion in this matter and
we were left with the distinct impression
that an extension of the proposal was capable
of being considered by Melbourne and in fact,
this would be done.
2. The objection for 1978 has now been allowed
in full which supports the taxpayer's
contention that the objection against the
disallowance of prior year losses has merit
and should be resolved in the taxpayer's
favour.
3. The taxpayer has been fully co-operative in
providing any information requested promptly
and has gone out of his way to ensure that no
delays occur in resolving this matter.
4. The delays in bringing this matter to the
Court for hearing are not the fault of the
taxpayer. We understand that all the papers
regarding this matter have been to Canberra
on more than one occasion and that delays in
having this matter listed are within your
department.
5. The taxpayer is anxious to have this matter
resolved as soon as possible and we should be
pleased to receive any suggestions as to how
we may assist to have the matter listed for
hearing at the earliest possible date.
6. The taxpayer was given the impression that
provided he agreed to a certain course of
action insofar as arrangements to pay part of
the tax (which he has now done) consideration
would be given to remitting the late payment
penalties on the balance (which has not been
done).
We trust in light of the facts you will accept
this cheque pursuant to the terms of our letter
of 21st December. We look forward to receiving
your favourable ruling in this matter."

21. Along with the cheque for $124,077.44 there was, on an assumption that the Melbourne office had no discretion to deal with the matter, a request that the submission be referred to the Head Office in Canberra.

22. The decision not to enter into a 50/50 arrangement was made on or about 1 March 1983, which appears from the following notation of that date on the applicant's file in the Australian Taxation Office:-

"The offer which was put to the coy. on 20/12/82
which would have allowed interest free deferment
provided payment was made by 27/12/82 placed the
coy in a preferential position. To the best of my
knowledge no other Victorian taxpayer was offered
such an arrangement. I do not believe that
anything has been said or done which would
justify the agent believing that we would extend
the required date for payment.
I support Mr. Hynes' recommendation. The coy.
should be advised by phone of decision and that
the matter has not been referred to H.O. The
decision should then be confirmed in writing."

The notation suggests that the decision was made within the Melbourne office without reference to Canberra.

23. Accordingly, on 11 March 1983 the Deputy Commissioner notified the applicant's accountants that he confirmed his advice of 7 January that the payment of the outstanding sum of $122,077.44 would be deferred pending the hearing of the appeal to the Supreme Court, but that it would attract additional tax for late payment.

24. On 1 August 1984, the applicant's appeal in respect of the assessments for the years 1979, 1980 and 1981 was dismissed by Tadgell J in the Supreme Court of Victoria. The applicant then paid $124,077.44 on 7 August, which was the balance of the tax in dispute. The additional tax which had accrued to that date and which had remained outstanding amounted in all to $77,995.58, being comprised of:-

1. $46,241.49; being an amount which had accrued from the
due dates for payment until 13 January 1983, in respect
of which an amount of $1000 had been paid by the
applicant on 21 November 1983.
2. $32,754.09; being an amount calculated on the balance
outstanding from 14 January to 7 August 1984.

A notice for this amount was issued under s.364(2) of the Act.

25. On 26 February 1986, Mr Williams and the solicitor acting for the applicant, Mr Mapleback, met with Messrs Thurling and Johnson, who were officers employed in the Recovery Section of the Australian Taxation Office, for the purpose of making further submissions for the remission of the outstanding amount. They there raised the following grounds as support for that claim:

1. That Mr Tayler had failed to advise that 27 December
1982 was the final date on which the applicant could
avail itself of a 50/50 arrangement and that this
amounted to an innocent misrepresentation.
2. That Mr Williams had been led to believe that it was
within the Department's discretion to enter into a
50/50 arrangement upon receipt of a written request.
3. That the written request to extend the time for payment
dated 21 December 1982 had not been received by the
Department until 31 December. Accordingly, the
applicant had had no chance of discovering the real
situation and making payment by 27 December.

Despite these submissions, the Deputy Commissioner refused to accede to the applicant's request and he informed the applicant, through its accountants, of this decision by letter dated 27 March 1986.

26. The applicant sought a statement of reasons for the decision under s.13 of the Act, which was provided by the Deputy Commissioner on 21 July 1986. That statement contained, in one of three prefatory paragraphs, the following statement about the effect of the amendments to the Assessment Act made by Act No 123 of 1982:-

"The amendments made on 13 December 1982 set out
(in section 207(1A) the circumstances in which
the Commissioner could remit additional tax for
late payment imposed by section 207(1). Having
regard to the limitations imposed upon the
Commissioner's power of remission the former
administrative practice, which allowed
arrangements to be made upon the basis that if
one half of a disputed debt was paid payment of
the other half was deferred free of additional
tax, was terminated. Recognising administrative
practicalities, transitional arrangements were
adopted which allowed any taxpayer who, prior to
13 December 1982, had agreed to pay one half of
disputed tax, until 27 December 1982 to make
payment."

There then followed a series of findings on material questions of fact which did not differ significantly from those already set out in these reasons. The statement concluded:-

"The reasons for the decision not to remit the
additional tax for late payment were:
(o) The taxpayer had on a number of occasions
ignored invitations ... to enter into an
arrangement free of the imposition of
additional tax for late payment.
(p) In the conversation which took place on 21
December 1982 the company was not advised
that its proposal, to pay one half of the
income tax outstanding by mid January 1983
with the balance to remain outstanding free
of the imposition of additional tax pending
the resolution of matters then in dispute,
was approved.
(q) Statements by Mr Mapleback (solicitor) and
Mr Williams (accountant) that, had the
taxpayer fully understood the significance
of payment by 27 December 1982, the taxpayer
would have found funds with which to pay by
that date, contradicted verbal advice given
by Mr Williams, on 21 December 1982, that
the taxpayer could not make the required
payment before mid January 1983.
(r) In as much as the request was based upon a
claim that an officer was negligent in
failing to explain the full implications of
the amended legislation, no conduct on the
part of the Commissioner could operate as an
estoppel against the operation of the Act.
(s) The Commissioner is not satisfied as to any
of the matters of which he must be satisfied
before he is permitted to remit the
additional tax (section 207(1A)).
(t) The taxpayer offered no grounds which would
justify remission of that part of the
additional tax which had accrued up to 13
January."

27. By application filed 26 August 1986, the applicant sought a review of the Deputy Commissioner's decision not to remit any of the outstanding tax. That application, number VG 318 of 1986, was subsequently discontinued by the applicant on 6 April 1987 after the Deputy Commissioner had advised by letter dated 5 March 1987 that:-

"... (T)he decision of 27 March 1986 not to remit
additional tax for late payment under s.207 of
the Income Tax Assessment Act 1936 ... has been
reviewed, and the taxpayer will be accorded a
partial remission of $32,754.09.
The amount of $32,754.09 consists of additional
tax which accrued after 13 January 1983, the date
upon which the amount of $124,077.44 (being
one-half of the primary tax in dispute with this
office) was paid. The balance of additional tax,
an amount of $45,241.49, remains outstanding in
the taxpayer's account. The amount of $45,241.49
consists of additional tax which accrued from the
due dates for payment until 13 January 1983.
The decision to grant the taxpayer a partial
remission of additional tax for late payment has
made (sic) in view of an apparent mis
understanding arising from telephone discussions
on 20 and 21 December 1982 between Mr Tayler of
this office and Mr Price Williams of Fordham
Williams and Co.
The taxpayer has offered no grounds which would
justify remission of that part of the additional
tax which had accrued up to 13 January 1983."

The present application seeks a review of that decision to remit only part of the outstanding tax.

28. Reasons for the later decision to remit only part of the additional tax have been set out in an affidavit sworn 2 July 1987 by Christopher John Richard Adams who, at the relevant time, was the Director (Outstanding Taxes) in charge of the Recovery Section within the Australian Taxation Office. In paragraphs 2, 3 and 4 of that affidavit Mr Adams deposed:-

"2. Representations were made by the Applicant's
solicitors, Messrs Akehurst, Friend and Allaway
on or about the 10th day of February 1987 to
remit additional tax for late payment totalling
$77,995.58.
3. As the Director (Outstanding Taxes) the
question of remission was referred for direction.
After careful examination of the Applicant's
file, the request was acceded to in part. Of the
total amount of $77,995.58, an amount of
$32,754.09 was remitted. The amount of $32,754.09
consisted of additional tax for late payment
which accrued after the 13th day of January 1983,
the date upon which an amount of $124,077.44
primary tax (being one half of the primary tax
then in dispute) was paid.
4. The balance of additional tax, an amount of
$45,241.49 consisting of additional tax which had
accrued from the due dates for payment until the
13th day of January 1983, remained outstanding on
the Applicant's account. The only ground given by
the Applicant why remission should be granted in
relation to the additional tax which had accrued
up to the 13th day of January 1983 was that such
additional tax could not be recovered as a matter
of law. I did not consider that this ground was
sufficient and justify (sic) any further
remission of additional tax for late payment."

29. After identifying all of the documentary material which he had examined in coming to his decision, Mr Adams gave these reasons for it:-

"6. My reasons for the decision to remit only
part of the additional tax for late payment are
as follows:
(a) In deciding to remit the amount (viz
$32,754.09) which accrued after the
13th day of January 1983, I took into
account the facts that even though in
the conversation which took place on
the 21st day of December 1982 the
Applicant was not advised that its
proposal to pay 50% of the primary tax
by mid-January 1983 would result in
additional tax ceasing to accrue on the
balance outstanding, until resolution
of the matters in dispute; the
Applicant was not advised, on the other
hand, that a failure to pay by the 27th
day of December 1982 would result in
the taxpayer losing the opportunity to
enter into an arrangement to pay 50% of
the tax in dispute and in return
additional tax would cease to accrue on
the balance oustanding, until
resolution of the matter in dispute.
(b) In deciding not to remit the amount
(viz $45,241.49) which accrued prior to
the 13th day of January 1983, I took
into account the facts that:
(i) The Applicant did not avail
himself of several written
offers made to him to pay 50% of
the tax outstanding on the
condition that additional tax
for late payment would cease to
accrue on the balance out
standing;
(ii) It was never represented or
intended that these offers were
to have any effect on the
accrual of additional tax for
late payment which had accrued
prior to the Applicant accepting
the offer and making the part
payment. In that regard, I crave
leave to refer to the letter of
5 June 1981 (to the) Applicant
and the letter of 21 December
1982 from the Applicant being
part of Exhibits CJR A1(b) and
(c).
(iii) The question of whether the
additional tax could not be
recovered as a matter of law was
not a valid matter to be taken
into consideration in
determining whether remission
pursuant to section 207(1A)
should be granted.
(iv) In as much as the request was
based upon a claim that an
officer was negligent in failing
to explain the full implications
of the amended legislation, I
did not consider that the
officer had failed to explain
the full implications or other
wise been negligent and I did
not consider the officer's
conduct did or could estop the
Respondent from administering
the Act in accordance with its
terms.
(v) The Commissioner is not fully
satisfied as to any of the
matters of which he must be
satisfied before he is permitted
to remit the additional tax in
full (section 207(1A)).
(vi) The Applicant offered us (no)
grounds which would justify
remission of that part of the
additional tax which had accrued
up to 13 January 1983."

That decision, as notified by the letter of 5 March 1987, is the subject of the later application under the ADJR Act on the following grounds:-

"1. The decision involved the improper exercise
of the powers conferred by the Income Tax
Assessment Act (1936) (as amended) ("the
Act") and section 15 of the Income Tax
Assessment Amendment Act (No. 6) 1982 ("the
amending Act").
PARTICULARS
(a) The decision-maker erroneously exercised
his discretion in making the decision
pursuant to s.207(1A) of the Act.
(b) The decision-maker erroneously failed to
make the decision pursuant to s.15 of
the amending Act.
(c) The decision-maker took into account
(inter alia) the following irrelevant
considerations:-
(i) that the Applicant did not avail
himself of several written offers
made to him to pay 50% of the tax
outstanding;
(ii) that the sum of $124,077.44 was
not paid before 27th December
1982.
(d) The decision-maker wrongly considered
that the only ground given by the
Applicant as to why remission should be
granted in respect of the additional tax
which had accrued pursuant to s.207 of
the Act up to 13th January 1983 was that
such additional tax could not be
recovered as a matter of law and failed
to take into account the matters set out
in the Application for Review No. VG 318
of 1986 and the supporting affidavits.
(e) The decision-maker wrongly considered
that the fact that additional tax could
not be recovered as a matter of law was
not a valid matter to take into
consideration.
(f) The Applicant refers to and repeats the
particulars subjoined to paragraphs 1
and 2 of the Application.
(g) The decision-maker failed to take into
account the fact that on 21st December
1982 the Respondent advised the
Applicant that discretions which would
be exercised prior to 27th December 1982
would not be exercised after that date.
(h) In taking into account that the sum of
$124,077.44 was not paid before 27th
December 1982 the decision-maker
exercised a discretionary power in
accordance with a rule of policy without
regard to the merits of the case.
2. The decision was not authorised by the
enactment, namely s.207(1A) of the Act,
pursuant to which it was purported to be
made.
3. The decision involved an error of law namely
that it was erroneously made pursuant to
s.207(1A) of the Act."

30. It will be seen that the principal complaint raised on behalf of the applicant on this application is that in reviewing the decision whether to remit the penalty tax, the Deputy Commissioner proceeded under s.207(1A) of the Assessment Act as amended, instead of exercising the wider discretion conferred by s.207(1) as in force before 15 December 1982. To determine whether that complaint has been made out requires the Court to construe s.15 of Act No 123 of 1982 which I have already reproduced.

31. In my view, the effect of that transitional provision is to preserve to the Commissioner the wider discretion conferred by s.207(1) of the Assessment Act, as in force before 13 December 1982, in respect of all assessments the subject of pending objections at that date in respect of which the Commissioner had, at any time before 13 December 1982, entered into an agreement or arrangement to remit the whole or part of the additional tax, or otherwise indicated his intention to grant such a remission.

32. Mr Whelan of Counsel for the Deputy Commissioner contended first that the expression in s.15 of the amending Act, "... or otherwise indicated his intention to remit the whole or a part of the additional tax" should be read as limited to an indication of intention by the Commissioner "so as to bind himself in some way so it would be misleading for the taxpayer if the ground rules were then to be changed beneath him".

33. Pursuant to s.15AB of the Acts Interpretation Act 1901, reliance was placed in support of this first contention, on behalf of the Deputy Commissioner, on certain passages from the supplementary explanatory memorandum which was circulated before the passage of the Bill for the amending Act. At p 7 of that memorandum it was recited:-

"Arrangements entered into by the Commissioner,
prior to the date on which the amendments
proposed by this Bill become law, to remit
additional tax in disputed liability cases will
not be overturned and will be allowed to continue
according to their terms."

Then at p 17 it was indicated of the clause which became s.15 of the amending Act:-

"Clause 15 will, however, retain for the
Commissioner a general authority to remit an
amount of late payment penalty in any case where,
prior to the date on which the Bill becomes law,
he has entered into an arrangement with a
taxpayer to remit additional tax in respect of an
amount of assessed income tax that has remained
unpaid pending the resolution of a disputed
assessment. In other words, these existing
arrangements will not be overturned and will be
allowed to continue according to their terms."

Those passages manifest an intention to preserve agreements and arrangements into which the Commissioner had entered before the date on which the Bill should become law. However, they throw no light on what was intended to be achieved by the reference in cl.15 to the Commissioner having "otherwise indicated his intention to the taxpayer, to remit the whole or a part of the additional tax". To confine the application of cl.15 to the arrangements described in the explanatory memorandum would be to render the words which I have just quoted surplusage. Section 15AB of the Acts Interpretation Act could only require that extraordinary result if the explanatory memorandum were regarded as an exhaustive statement of the legislative intention underlying cl.15. I do not so regard it.

34. If the indication of intention contemplated by s.15 be limited to one which has given rise to an obligation or estoppel legally binding on the Commissioner, it adds nothing to the alternative basis for the operation of s.15 of the amending Act, i.e. the Commissioner's having entered into an agreement or arrangement with the taxpayer to remit some additional tax either unconditionally or subject to conditions. I consider that upon the indication having been given before 13 December 1982, s.15 of the amending Act applied, even if the taxpayer had not acted on the indication to his detriment or at all.

35. It was next argued on behalf of the Deputy Commissioner that the use of the perfect tense, "has otherwise indicated an intention", signifies a requirement that the intention should still have subsisted at the date of commencement of the amending Act. Accordingly, so it was argued, any indication of intention to remit additional tax which accompanied an offer to a taxpayer was no longer operative for the purposes of s.15 of the amending Act if the offer had been rejected or had lapsed before 13 December 1982. It is true that the use of the perfect tense denotes an action which is complete at the date on which it is viewed, but the action contemplated by the relevant part of s.15 is that of the Commissioner indicating.

36. I therefore discern no temporal limitation on the operation of that part of the section other than the requirement for an indication to have been given at some time in respect of additional tax referable to tax payable under an assessment to which an objection remained "live" on 13 December 1982. Had the legislature intended to confine the operation of s.15 to concluded agreements or arrangements, or offers to remit additional tax which remained open on 13 December 1982, it would have been easy enough to say so. Of course, the fact that a taxpayer has rejected or failed to respond to an indication by the Commissioner of an intention to grant some remission may well influence the Commissioner in the exercise of the discretion preserved by s.15 of the amending Act to grant a smaller remission or no remission at all. However, that does not mean that the Commissioner is relieved altogether of the need to exercise the discretion.

37. I am reinforced in the construction which I have adopted of s.15 by the consideration that it is a transitional provision designed to preserve for a limited class of taxpayers the more ample discretion previously reposed in the Commissioner by s.207(1) of the Assessment Act. In accordance with the principle enunciated, e.g., in Burt v Commissioner of Taxation [1912] HCA 74; (1912) 15 CLR 469 at 482, any serious doubt as to which of two interpretations should be adopted ought to be resolved in favour of that which extends the benefit to the wider class of taxpayers.

38. It is clear that the Commissioner had, by the letter of 5 June 1981, indicated an intention to remit additional tax in respect of the tax payable by the applicant on the assessments for the 1978, 1979 and 1980 tax years, subject to the condition specified in that letter that the taxpayer immediately pay the sum of $124,222.08. Accordingly, on the construction which I have adopted of s.15 of the amending Act, the Commissioner was bound after 13 December 1982 to consider whether, for reasons he might think fit, he should remit the additional tax payable by the applicant in respect of those years or any part of that additional tax. It is equally clear that the Deputy Commissioner, when he made the decision of 27 March 1986 for which a statement of reasons was provided on 21 July 1986, considered that he was required to apply s.207(1A) of the Assessment Act as amended, and not s.15 of the amending Act or s.207(1) of the Assessment Act before its amendment, in deciding whether to remit any additional tax payable by the taxpayer in respect of the 1978, 1979 and 1980 tax years. As emerges from sub-paragraph 6(v) of his affidavit quoted at p 19 of these reasons, that misapprehension remained when Mr Adams came to review the earlier decision whether to remit all or any part of the additional tax. It follows, therefore, that the applicant has made out what I have identified as its principal complaint, that in terms of s.5(1)(f) of the ADJR Act, the decision of 27 March 1986 involved an error of law.

39. Mr Whelan, for the Deputy Commissioner, argued that, even if the applicant had made out one of the grounds on which it sought review under the ADJR Act, relief should be refused as an exercise of the discretion implicit in s.16(1) of that Act because the applicant had received everything by way of remission of additional tax which it had requested. He referred to Excell v Harris (1983) 51 ALR 137 where an applicant for promotion to a temporary position of senior teacher established that "... the Promotions Appeal Board failed to conduct its proceedings in accordance with the dictates of fairness which the applicable principles of law require" (at 165.2). However, Neaves J. declined to grant relief because, by the date of his judgment, the temporary appointment to which the applicant aspired had only a matter of a few weeks to run. By contrast, the amplitude of the benefit which the present applicant could achieve if the Commissioner's discretion were exercised as favourably to the applicant as it could be, has not been cut down by the effluxion of time. Nor are there present in this case considerations of the kind which would have led Woodward J to have exercised his discretion adversely to the applicant in Visy Board Pty Ltd v Attorney-General (Cth) (1983) 51 ALR 705 had his Honour found a prima facie case for relief made out. Nor can I discern in this case any factors like those which Peko-Wallsend Ltd v Minister for Aboriginal Affairs (1985) 59 ALR 51 provided a basis for the exercise by this Court of its discretion to refuse relief, notwithstanding that a ground afforded by the ADJR Act for review of the decision had been made out.

40. Mr Whelan also referred to several cases where a discretion analogous to that conferred by s.16 of the ADJR Act has been invoked as justifying a refusal to order the issue of one or other of the prerogative writs. Those authorities which included R. v Wasley; Ex parte Frankel (1914) VLR 635 and Reg v Aston University Senate (1969) 2 QB 538 serve as a useful reminder that this Court should not automatically quash or set aside a decision upon finding that it has been vitiated by an error of law. It is also necessary to have regard to the conduct of the applicant for review including any delay in bringing the proceedings or acquiescence in the decision-maker's error. As well, it may be appropriate to examine whether, on further consideration, the decision-maker could reasonably come to some other decision more favourable to the applicant for review. In the present case there is nothing in the conduct of the applicant which disentitles it to reconsideration of its request for remission of the additional tax. Nor can I conclude that on such a reconsideration no result other than a remission of $32,754.09 would reasonably be open to the Deputy Commissioner.

41. Accordingly, I order that the Deputy Commissioner's decision of 5 March 1987 be set aside and the matter to which the decision relates be referred to the respondent for further consideration. The respondent must pay the applicant's costs.