Re Commissioner of Australian Capital Territory Revenue Collections v Nelson Tobacco Company Pty Limited [1991] FCA 99; 28 FCR 413 (27 March 1991)

FEDERAL COURT OF AUSTRALIA

Re: COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY REVENUE COLLECTIONS
And: NELSON TOBACCO COMPANY PTY LIMITED
No. ACT G58 of 1989
FED No. 114
Administrative Law
[1991] FCA 99; 28 FCR 413

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Administrative Law - Administrative Appeals Tribunal - Appeal - Fee payable in respect of wholesale tobacco merchant's licence - Fee assessed by reference to value of tobacco sold in course of trade carried on in the Australian Capital Territory that would be trade and commerce among the States within the meaning of s.92 of the Constitution if the Territory were a State - Fee not payable in respect of tobacco sold for delivery and consumption inside the Australian Capital Territory - Reassessment of fee permissible only if fee originally assessed were assessed incorrectly - Material insufficient to enable Administrative Appeals Tribunal to make findings of fact - Consequences - Whether certain provisions of Ordinance operated by way of definition or as a proviso, exception or saving - Whether error of law in determining that trade carried on by licensee interstate trade as defined

Administrative Appeals Tribunal Act 1975 (Cth), s.44(1)

Business Franchise (Tobacco and Petroleum Products) Ordinance 1984 (A.C.T.), ss.3(5), 3(9), 28, 33(2)

HEARING

CANBERRA
27:3:1991

Counsel for the applicant: Mr T.J. Higgins, QC

and Mr C.J. Stevens

Solicitor for the applicant: A.C.T. Government Solicitor

Counsel for the respondent: Mr A. Robertson

Solicitors for the respondent: Mallesons Stephen Jaques

ORDER

The application be dismissed.

The applicant pay the respondent's costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is an application by way of appeal pursuant to s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) by the Commissioner for Australian Capital Territory Revenue Collections appointed under s.5(1) of the Taxation (Administration) Act 1987 (A.C.T.) ("the applicant"). The appeal is from a decision of the Administrative Appeals Tribunal ("the Tribunal") given on 14 September 1989 upon an application made to it by Nelson Tobacco Company Pty Limited, the respondent to the present application.

2. The decision under review by the Tribunal was a decision of which notice was given to the respondent by letter dated 2 May 1986. That decision was made by John Thomas Moon who was then the Commissioner for Business Franchises ("the Commissioner"), he having been appointed to that office pursuant to s.11(1) of the Business Franchise (Tobacco and Petroleum Products) Ordinance 1984 (A.C.T.) ("the Ordinance") on 9 September 1985. By the decision, the Commissioner reassessed, pursuant to s.33(2) of the Ordinance, the licence fees payable by the respondent in respect of its wholesale tobacco merchant's licence, or the renewal thereof, in respect of the licence periods, each of a duration of one month, that commenced respectively on 28 October, 28 November and 28 December 1984 and 28 January, 28 February, 28 March and 28 April 1985. The effect of the decision was to require the respondent to pay to the Commissioner additional amounts by way of licence fees totalling $96,453.46.

3. The Tribunal set aside the decision of the Commissioner and, in substitution therefor, decided that the sales by the respondent during the relevant periods of the tobacco the subject of the decision under review did not attract a franchise fee under the Ordinance.

4. The Ordinance came into operation on 1 August 1984. It provided, inter alia, that on or after 1 September 1984, a person other than the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence who carried on tobacco wholesaling was guilty of an offence (s.24(1)). The expression "tobacco wholesaling" was defined in s.3(1) to mean the business of selling tobacco for the purpose of resale either alone or in conjunction with any other merchandise, and to include that business carried on as part of or in conjunction with any other business.

5. Section 26 provided for the granting to an applicant of a tobacco licence, an expression which included a wholesale tobacco merchant's licence (s.3(1)) . Such a licence authorised the licensee to carry on tobacco wholesaling at the premises (an expression defined in s.3(1) to include any place, vehicle, vessel or aircraft) specified in the licence (s.26(3)). A licence was only to be granted upon payment by the applicant of the fee assessed by the Commissioner in accordance with s.28. A licence was to be in force on and from the date specified in the licence as the date on which the licence was to come into force (s.26(6)). Section 35(3) provided that a wholesale tobacco merchant's licence, unless surrendered in the meantime pursuant to s.34, was to expire -

"(a) in the case of a licence that was first in force on a day in
a month occurring before the 28th day of the month - on the
27th day of the month in which it was first in force; and
(b) in any other case - on the 27th day of the next succeeding
month after the month during which it was first in force."

Upon application being made and the fee assessed by the Commissioner in accordance with s.28 being paid, a licence might be renewed for successive periods of one month expiring on the 27th day of the next succeeding month after the month in which the licence was renewed (s.35(4)).

6. Section 28(1) provided for fees to be paid for tobacco licences. For a wholesale tobacco merchant's licence which was in force for any period after 31 August 1984 the fee payable was expressed in s.28(1)(a)(ii) in the following terms:

"a fee of the specified amount together with an amount equal
to the specified percentage of the value of tobacco sold by
the applicant in the course of tobacco wholesaling during
the relevant period (other than tobacco sold to the holder
of a wholesale tobacco merchant's licence or a group
wholesale tobacco merchant's licence)".

Section 28(13) provided that a reference in s.28 to tobacco sold was to be read as a reference "to tobacco sold in the course of interstate trade". Section 3(5) provided:

"A reference in this Ordinance to interstate trade is a
reference to trade carried on in the Territory that would be
trade and commerce among the States within the meaning of
section 92 of the Constitution if the Territory were a State."

Section 3(9) provided:

"Where ... tobacco is, sold in the Territory for the purpose
of resale outside the Territory, the first-mentioned sale
shall, for the purposes of this Ordinance, be taken to have
been made in the course of interstate trade."

Section 28(8) provided that the value of any tobacco sold for delivery and consumption inside the Territory was to be disregarded in determining fees payable under s.28.

7. At all material times the specified amount for the purposes of s.28(1) was $50 per month and the specified percentage was 15 per cent. (see s.28(12) and Commonwealth of Australia Gazette No. S.309 dated 7 August 1984). The expression "value" was defined in s.3(1) to mean, in relation to any tobacco sold, the value attributed to that tobacco pursuant to s.30. That section provided:

"The Minister may, in accordance with the regulations, from
time to time determine the value to be attributed to tobacco
sold during any period and for the purposes of this
Ordinance the value of that tobacco shall be the value so
attributed."

Regulation 3(1)(a) of the Business Franchise (Tobacco and Petroleum Products) Regulations (being Regulations 1984, No.18) provided that the value to be attributed to tobacco for the purposes of an application for a wholesale tobacco merchant's licence was to be the wholesale price payable to the applicant in respect of tobacco sold by him in the course of tobacco wholesaling by way of interstate trade during the relevant period. The words "by way of interstate trade" were omitted by the Business Franchise (Tobacco and Petroleum Products) Regulations (Amendment) Regulations (being Regulations 1985, No.20). However, the amendment so effected did not come into operation until 20 August 1985, a date after the period with which this case is concerned.

8. In relation to an applicant for a wholesale tobacco merchant's licence or for the renewal of such a licence, the reference in s.28(1) to the "relevant period" was a reference, in respect of a particular named month specified in column 1 of the Schedule to the Ordinance, to the preceding month specified in column 2 of that Schedule opposite that particular month (s. 3(1)). The Schedule was in the following terms:

"SCHEDULE
RELEVANT PERIODS FOR LICENCES
Column 1 Column 2
July . . . . . . . . . . . . May
August . . . . . . . . . . . June
September. . . . . . . . . . July
October. . . . . . . . . . . August
November . . . . . . . . . . September
December . . . . . . . . . . October
January . . . . . . . . . . November
February . . . . . . . . . . December
March . . . . . . . . . . . January
April . . . . . . . . . . . February
May. . . . . . . . . . . . . March
June . . . . . . . . . . . . April"

Section 28(6) provided:

"Where an application is made for a tobacco licence and the
applicant carried on the business in respect of which the
application for the licence was made during the whole of the
relevant period and the Commissioner is of the opinion that
he is unable for any reason accurately to assess the fee
payable by the applicant under sub-section (1), the fee
payable by the applicant in respect of the licence shall be
such amount as is assessed by the Commissioner as being just
and reasonable in the circumstances of the case, having
regard to the tobacco that in the opinion of the
Commissioner was sold by the applicant during that period,
and the relevant principles of determining fees under this
section."

The Commissioner was required by s.28(14) to notify the applicant of the terms of his decision assessing the amount of fees under s.28, such notification to include a statement specifying the assessment, and the findings of material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision (s.28(15)).

9. Where, in the opinion of the Commissioner, the fee assessed in respect of any licence was assessed incorrectly, the Commissioner was empowered by s.33(2) at any time to reassess the fee. Such a reassessment was to be carried out in accordance with the principles of assessing fees under s.28 (s.33(5)). The Commissioner was required (s.33(9)) to notify the applicant or the holder of the licence of the terms of his decision reassessing the fee in respect of the licence. The notice was to include a statement setting out the reassessment and the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision (s.38(1)). A decision of the Commissioner reassessing a fee under s.33 was reviewable by the Tribunal (s.37).

10. It may be noted that the definition of "relevant period" and the Schedule to the Ordinance proceeded on the basis, contrary to the provisions of s.35(3), that the licence period in respect of a wholesale tobacco merchant's licence or the renewal thereof coincided with a calendar month. It was not argued that the legislative scheme was deficient in that there had been a failure to fix a "relevant period" in respect of a licence period which commenced on the 28th day of one month and ended on the 27th day of the succeeding month. The matter has proceeded throughout on the basis that, although each of the references to a named month in column 2 of the Schedule was a reference to the calendar month of that name, each of the references to a named month in column 1 of that Schedule was to be read as a reference to the period of one month which commenced on the 28th day of the month preceding that named month. Thus, to take one example, the fee payable in respect of the licence period that commenced on 28 October 1984 was to be calculated by reference to the value of tobacco sold during the calendar month September 1984. The Tribunal was, therefore, concerned with sales of tobacco by the respondent during the months of September 1984 to March 1985 inclusive.

11. It was not in dispute before the Tribunal that at all material times the respondent carried on the business of selling tobacco for the purpose of resale (see the definition of "tobacco wholesaling in s.3(1)) and was the holder of a wholesale tobacco merchant's licence which had been granted under s.26(1) of the Ordinance and renewed under s.35(4). The material before the Tribunal did not include a copy of the licence or any renewal thereof. That material did not show what amounts by way of fees, other than the specified amount of $50 per month, had been paid by the respondent to the Commissioner for the grant or renewal of the licence in respect of the licence periods the subject of the present proceeding.

12. Mr Paul Stephen Nelson who was, at the relevant time, a regional general manager of the respondent, gave evidence before the Tribunal. His evidence as to the manner in which the respondent's business was conducted was not challenged. He described the respondent as operating "a decentralised business around Australia in the sale of tobacco products as well as many other different and diverse businesses". The head office of the respondent was in Sydney. The respondent had, he said, "a tobacco wholesaling and vending operating company, operating from premises in Canberra, A.C.T., to wholesale tobacco products as well as retail tobacco products through vending machines". He also said that the "Canberra domiciled operation controlled a group of selling representatives, or van salesmen, which reported to Canberra though they may have sold in New South Wales, such as Wagga, Griffith". He added "Areas such as that were responsible to the Canberra decentralized management structure". Van sales were made both in the Australian Capital Territory and in New South Wales.

13. According to Mr Nelson, the majority of the tobacco products which came to Canberra "were sourced in Sydney through the tobacco manufacturers and brought into our Sydney major warehouse and redespatched by way of a transfer document to our Canberra depot". He also said that once they reached Canberra, "they were either sold within Canberra through sales that were made at the Canberra location or just further despatched to other country van salesmen (in) these Wagga and Griffith type locations via Canberra transport companies". It was more convenient, he said, to service these areas in New South Wales from Canberra rather than from Sydney, particularly because direct transport services to those areas were more readily available in Canberra. Deliveries to Canberra from Sydney were said to be made "probably three to four times a week". The goods, he said, were unpacked and checked off against the transfer document and put into a warehouse at Fyshwick in brand order. They were then available to meet orders. It was from the Fyshwick warehouse that the country van salesmen drew their stock. Generally speaking the stock turned over within two to three days. Mr Nelson estimated that in the relevant period the value of van sales was about five times as much as the value of sales made directly from the warehouse. Overall, approximately 50 to 70 per cent. of total sales during the relevant period were made outside the Australian Capital Territory.

14. Mr Nelson also gave evidence, which was not disputed, that on or shortly before 1 August 1984 Mr J.F. Giles, the joint general manager of the respondent, sent to the manager of the Canberra branch, Mr R. Hannett, a memorandum reading as follows:

"As from 01.08.84 we are required to be licenced (sic) to
sell tobacco products in the ACT and a licence will be
issued in due course.
Under the enabling ordinance the NGC will be subject to an
assessment of 15% on all interstate sales that are made in
the ACT. As from 01.08.84 (unless a purchaser is another
licenced wholesaler) we require any person or body who
purchases tobacco products at our Canberra depot to supply
us with his name and address and to declare the area where
the tobacco products are being re-sold. If the address is
outside the ACT then the invoice value must be increased by
15% to cover our licence fee liability. Alternatively, it
the purchaser declares his address to be in the ACT and
declares that the tobacco products are for re-sale outside
the ACT then this purchase must also be increased by 15% to
cover our licence fee liability.
If there is any uncertainty regarding this instruction you
are to contact me immediately."

Mr Nelson further said that the respondent had procured a stamp by the use of which the following could be endorsed on the invoice evidencing a relevant sale:

"I declare that the tobacco products on this invoice are for
resale solely in the A.C.T.
Signed . . . . . . . . . . . . ."

In appropriate cases the endorsement was to be signed by the purchaser or a representative of the purchaser. Mr Nelson was clearly asserting that, so far as sales of tobacco directly from the warehouse were concerned, if the purchaser or his representative did not sign the endorsement or otherwise satisfy the respondent that the goods being purchased were for resale in the Territory, the purchaser would be charged an additional amount representing 15 per cent. of the wholesale price of the tobacco sold. There was no evidence to show that, in the case of the sales in question, the additional 15 per cent. of the wholesale price had been charged or collected by the respondent. It was not suggested that Mr Nelson had any personal knowledge of the transactions in question or was involved in the preparation of the relevant invoices.

15. Apart from the evidence of Mr Nelson, the only oral evidence before the Tribunal was that of Douglas John May and Alan David Wallace. They were officers of the Commissioner who had conducted an investigation into sales of tobacco made by the respondent from its Fyshwick warehouse (referred to as "office sales") during the period September 1984 to April 1985 inclusive. Although the Commissioner did not give evidence before the Tribunal, it appears that, on the basis of the reports made by Messrs May and Wallace, he concluded that, although sales had taken place of the quantities of tobacco shown on certain office sales invoices, those invoices were false in so far as they identified the customers to whom the sales were made. The Commissioner further concluded, on the basis of those reports, that, although the invoices on their face recorded sales to customers in the Australian Capital Territory and in most cases bore a signed endorsement that the tobacco sold was for resale solely in the Territory, it was more likely that the invoices covered sales of tobacco for delivery and consumption outside the Territory and that the sales attracted a licence fee of 15 per cent. on the value of the tobacco sold. Consequently, he reassessed the licence renewal fees for the relevant months.

16. A question was raised before the Tribunal whether, in relation to sales where a volume discount had been allowed to the purchaser, that discount had been taken into account in ascertaining the wholesale price payable in respect of the tobacco sold. Subject to that question - which may be put aside for present purposes - the amount of $96,453.46, being the additional amount which the Commissioner required the respondent to pay, was the total of amounts representing 15 per cent. of the value attributed to certain sales of tobacco at the respondent's Fyshwick premises during the calendar months of September 1984 to March 1985 inclusive. The total of the values so attributed was $643,023.08, the value for each of the relevant months being as set out in the following table:

1984
September $72,335.32
October 88,069.13
November 82,061.93
December 138,895.90
1985
January 75,511.24
February 104,309.13
March 81,840.43
$643,023.08

17. Messrs May and Wallace gave evidence of an inspection having been made of office copies of invoices held by the respondent recording office sales at its Fyshwick warehouse, of a list having been prepared of the purchasers shown on those invoices, and of inquiries made with a view to verifying the details there recorded. As a result of their investigation they concluded that the tobacco the subject of the sales recorded on the "suspect" invoices must have been sold in the Territory for the purpose of resale outside the Territory. The Tribunal referred in some detail to their evidence and to their cross-examination which the Tribunal described as having been conducted "vigorously" by counsel for the respondent. No evidence was given before the Tribunal by those whose names appeared as purchasers on the relevant invoices or by any of their respective servants or agents.

18. In its reasons for decision, the Tribunal recorded that, after lengthy consideration of the evidence, it had found "the criticisms made by each party of the evidentiary strength of its opponent's case unanswerable" and that it was unable to make findings of fact "having any degree of certainty". After setting out what was said in McDonald v. Director-General of Social Security [1984] FCA 57; (1984) 1 FCR 354 per Woodward J. at p 358 and per Jenkinson J. at pp 368-9, the Tribunal stated that it was "unpersuaded" that certain circumstances existed, or did not exist, as contended for by the parties. Essentially, the Tribunal said, the present respondent could really do no more than refer to the notations on the invoices while the present applicant was, in turn, forced to rely "on the evidence of the inspectors which was, in respect of so great a proportion of the transactions the subject of that evidence, so riddled with problems as to cast very substantial doubt on the evidentiary integrity of the corpus of the evidence as a whole".

19. As I understand the Tribunal's reasons for decision, it accepted, as indeed was common ground between the parties, that wholesale sales were made by the respondent at its Fyshwick premises of the quantities of tobacco recorded on the relevant invoices on or about the dates respectively shown thereon. The Tribunal was, however, unable to determine, on the material before it, whether the tobacco the sale of which had been recorded on the invoices had in fact been sold for delivery and consumption inside the Territory or whether, contrary to what was shown on the invoices, the tobacco had been sold for the purpose of resale outside the Territory.

20. The Tribunal then embarked upon a careful analysis of the decision it was reviewing in terms of the relevant legislation to establish upon which party fell the consequence of the Tribunal "finding itself in a state of uncertainty after considering all the available material, unable to decide a question of fact either way on the balance of probabilities". It rejected the submission made on behalf of the present applicant that the Ordinance required that the licence fee payable in respect of a licence period be an amount calculated by reference to the value of all tobacco sold by the licensee in the Australian Capital Territory in the course of tobacco wholesaling during the relevant period except in so far as the licensee satisfied the Commissioner (or, in the case of a review, the Tribunal) that the whole or part of the tobacco so sold was tobacco sold for delivery and consumption inside the Territory. In rejecting that submission, the Tribunal said:

"41. On my analysis of the legislation, I do not agree with
the respondent's (the present applicant's) submission. It
does not reflect the relatively simple requirements of the
legislation as set out in paragraph 38 above in the
compounded expression of ss.28(1)(a)(ii), 28(13) and 3(5)
that is there set out. To do otherwise would be to torture
the legislation so as to create out of positive words a
negative statement of onus of proof. I agree with the
submission for the applicant (the present respondent) that
the first question is whether that part of the tobacco sold
by the applicant between September 1984 and March 1985 which
is presently in dispute was tobacco sold in the course of
interstate trade (ss.28(1)(a)(ii), 28(13) and 3(5))."

Paragraph 38 of the Tribunal's reasons for decision was in the following terms:

"38. The respondent (the present applicant) argued that it
was for a party seeking to be excluded from the application
of s.28 to show 'entitlement' to the exclusion provision ...
The legislation has been set out in paragraph 4 above. To
appreciate the situation better however, the definitional
character of ss.28(13) and 3(5) is displayed more readily if
their terms are written into the relevant portion of
s.28(1)(a)(ii). The words within square brackets are taken
from s.28(13) and the words within round brackets are taken
from s.3(5):
' - a fee of the specified amount together with
an amount equal to the specified percentage of
the value of tobacco sold (in the course of
interstate trade) (carried on in the Territory
that would be trade and commerce among the
States within the meaning of section 92 of the
Constitution if the Territory were a State) in
the course of tobacco wholesaling during the
relevant period.'"

21. It is convenient to interrupt the examination of the Tribunal's reasons for decision at this stage to deal with the submission made on the hearing of the present application by counsel for the applicant that the Tribunal fell into error in its construction of the legislation. The Court was invited to hold that, on the true construction of the Ordinance, the fee to which s.28(1)(a)(ii) referred was imposed "by reference to all tobacco sold by the wholesaler in the relevant period" and that the Tribunal erred in holding that "(sec.28(13), as aided by sec.3(5), transforms the above into a positive requirement on the Commissioner to demonstrate that the tobacco sold pursuant to the disputed invoices was sold 'in the course of interstate trade'" as explained in s.3(5).

22. In my opinion, the applicant's submission cannot be accepted. A reading of the Ordinance as a whole leads to the inescapable conclusion that the intention of the legislature was to impose the licence fee only in respect of tobacco sold "in the course of interstate trade" in the sense in which that expression was used in s.28(13). That sub-section was clearly intended to cut down the general language which is to be found in s.28(1)(a)(ii) and to do so by way of definition rather than by way of proviso, exception or saving: see Director of Public Prosecutions v. United Telecasters Sydney Ltd [1990] HCA 5; (1990) 168 CLR 594 per Brennan, Dawson and Gaudron JJ. at p 601 and per Toohey and McHugh JJ. at p 611. The same may, I think, be properly said of s.28(8).

23. In considering the consequence of the Tribunal being unable to determine the factual questions to which reference has been made, it is important to bear in mind that, as the decision under review was not an original assessment of the renewal licence fees payable by the respondent but a reassessment of those fees pursuant to s.33(2) of the Ordinance, the threshold question for the Tribunal was whether the facts established a situation in which the power to reassess was enlivened. That, in turn, depended upon whether, in terms of s.33(2), the Tribunal was of opinion that the fees originally assessed had been assessed incorrectly. It was only if that question were answered in the affirmative that it would fall to the Tribunal to reassess the licence fee properly payable by the respondent in respect of each of the relevant licence periods. It followed that, if the Tribunal was left in a state of uncertainty whether the fees originally assessed had been assessed incorrectly, the decision of the Commissioner under review could not stand.

24. To return to the examination of the Tribunal's reasons for decision, the Tribunal proceeded to consider the question whether "the general course of the applicant's (the present respondent's) trade in the ACT can be seen to have been in interstate trade". The Tribunal answered that question in the negative and expressed itself as having reached that conclusion for the reasons set out in written submissions made to the Tribunal on behalf of the present respondent which it adopted with some adaptations. After summarising the evidence of Mr Nelson to which reference has already been made, the Tribunal set out, in par.42 of its reasons, the submissions which it adopted in the following terms:

"(a) The trade as so described would not of itself constitute
trade and commerce among the States within the meaning of
s.92 if the Territory were a State. In this regard Re
Canberra Fuel Distributors ((1985) 7 ALN N326) was
distinguishable. In the present case the goods were brought
to the ACT for warehousing and then, of that
undifferentiated quantity, 50 per cent to 70 per cent was
later transported onwards. There could thus, it was
submitted, be no question here of all the sales being sales
in the ACT since 50 per cent to 70 per cent of them were not.
(b) There is no authority holding that the mere sale of goods in
a State in those circumstances, there being no contractual
requirement or specification that the goods be from
interstate, constitutes interstate trade within the meaning
of s.92. North Eastern Dairy Co. Ltd. v Dairy Industry
Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559 was to be
distinguished. There, by design, the shops in Albury were
the agents for North Eastern Dairy. The whole trade was
seen as inseverable and complete or concluded by the first
sale in New South Wales.
(c) An interstate movement of goods ends, and with it the
protection of s.92, where goods reach a distribution centre
from which they are distributed intrastate: Russell v
Walters [1957] HCA 21; (1957) 96 CLR 177. Likewise where the goods are
unloaded and stored for the owner's use: Grannall v
Kellaway and Sons Pty Ltd [1955] HCA 5; (1955) 93 CLR 36; and similarly
where the goods are mixed with other goods in the State of
destination: S.O.S. (Mowbray) Pty Ltd v Mead [1972] HCA 18; (1972) 124 CLR

529.

(d) Since it did not appear in the evidence that the first sale
of such tobacco products as were sold in the ACT was of
goods imported from New South Wales for the purpose of sale
in the ACT, the sale of particular tobacco products did not
form part of the applicant's interstate trade. The sales
were not interstate sales by reason of s.3(5) merely by
reason of the goods having their origin interstate."

The Tribunal continued:

"43. ... In relation to the sales made from the Canberra
depot, should it be said that this part of the applicant's
(the present respondent's) trade constituted interstate
trade as a 'first sale' after importation? In the North
Eastern Dairy Case the majority of the Court found that the
first sale by the importer in that case was a part of
interstate trade and inseverably connected with it. In that
case the owner of a milk processing plant in Victoria
distributed milk and milk products from a depot in Wodonga
to persons in Albury, using its own vehicles. It also
delivered to agents in Albury. It was held by the majority,
looking at the whole process, that the end sale was a
'consequence of the transaction' (p 599) and 'the purpose of
the transaction' (p 633). This was reinforced in Permewan
Wright Consolidated Proprietary Limited v Trewhitt [1979] HCA 58; (1977)
145 CLR 1, where Permewan Wright acted as agent for a New
South Wales egg producer and sold eggs in Victoria which had
been brought from New South Wales into Victoria. The test
of inseparable connection was applied. The same point
underlay the decision in Re Canberra Fuel Distributors.
44. The differences in the present case have been referred
to in my setting out of the applicant's (the present
respondent's) submission. But I would emphasise that in
Re Canberra Fuel Distributors, in Permewan Wright and in the
North Eastern Dairy Case the first sale of goods after
import were (sic) always an inseparable part of the
interstate trade. Here, the whole of the goods were brought
into the ACT and 50 per cent to 70 per cent of them were
moved on, leading to great difficulty in identifying sales
in the ACT as an inseparable part of an entire interstate
transaction."

25. It followed, so the Tribunal concluded, that the respondent would not be liable for the additional fees claimed unless the Tribunal was persuaded that s.3(9) applied. The Tribunal was of the view, however, that none of the material before it went close to showing what was the respondent's purpose in making the sales. In particular, the material did not show that the purpose was that the tobacco be for resale outside the Australian Capital Territory. Consequently, it was not persuaded that s.3(9) applied. The Tribunal also concluded that it was unnecessary to consider the provisions of s.28(8) as that provision could operate only if, contrary to the Tribunal's conclusion, the respondent's trade in the Territory was found to be "interstate trade" in the defined sense. Finally, in the light of the construction which it had placed on the Ordinance, the Tribunal was unable to see a basis for the application of s.28(6).

26. Counsel for the applicant challenged the finding of the Tribunal that the respondent's trade in the Territory was not "interstate trade" in the defined sense. It must be borne in mind, however, that the appeal to the Court under s.44(1) of the Administrative Appeals Tribunal Act is limited to an appeal on a question of law and counsel's formulation of the submission in that general way failed to identify what the question of law was which the Court was being asked to determine. It may be accepted that the meaning of s.3(5) of the Ordinance is a question of law but it was not suggested that the Tribunal had erred as to the proper meaning of that provision. What s.3(5) of the Ordinance required was that the relevant trade being carried on by the respondent in the Territory be identified and the question asked whether that trade would have been trade and commerce among the States within the meaning of s.92 of the Constitution if the Territory were a State. Those were the matters to which the Tribunal clearly directed its attention so that, in relation to that aspect of the matter, no error of law is disclosed.

27. The question whether, in any particular case, trade carried on in the Australian Capital Territory would be trade and commerce among the States within the meaning of s.92 of the Constitution if the Territory were a State is essentially a question of fact, the answer depending upon the circumstances of the case. So that, in the final analysis, the submission made on behalf of the applicant came to this, that the Tribunal was, on the material before it, bound, as a matter of law, to reach the conclusion that all sales of tobacco made by the respondent in the Australian Capital Territory in the relevant period were sales made in the course of trade that would have been trade and commerce within the meaning of s.92 of the Constitution if the Territory were a State. That conclusion was said to follow from the circumstance that each of those sales answered the description of the first sale within the Territory of tobacco that the respondent had brought into the Territory from New South Wales.

28. In North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W.) [1975] HCA 45; (1975) 134 CLR 559 Mason J. (as he then was) observed at pp 604-5 that the question whether, in the circumstances of that case, it was correct to conclude that sales of milk made by the plaintiff to householders and to shops were interstate sales raised a question on which different opinions had been expressed. Equally, in the present case, it cannot be said that only one conclusion was open to the Tribunal. Clearly, the fact that the tobacco sold was tobacco which had been brought into the Territory by the respondent was not, of itself, sufficient to warrant the conclusion that the relevant sales were made in the course of interstate trade in the sense in which that expression was used in the Ordinance. The other matters to which the Tribunal referred in the passages from its reasons for decision set out above were clearly relevant to the question which s.3(5) posed for its consideration and I am unable to conclude that it was bound, as a matter of law, to reach a conclusion contrary to that to which it came.

29. But even if the Tribunal had reached the contrary conclusion, it would not, in my opinion, have followed that the decision to reassess the licence fees payable in respect of the licence periods in question should have been affirmed. The question posed by s.28(8) of the Ordinance would have remained, namely whether the tobacco was sold for delivery and consumption inside the Territory. That was a question upon which the Tribunal was unable to make a finding and the consequence of being in that position would be that it could not be satisfied that the fees originally assessed were, in terms of s.33(2), assessed incorrectly.

30. For the reasons set out above, the application is dismissed. The applicant must pay the respondent's costs of the application.