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Federal Court of Australia - Full Court |
Last Updated: 30 June 2009
FEDERAL COURT OF AUSTRALIA
Suntory (Aust) Pty Ltd v Commissioner of Taxation [2009] FCAFC 80
TAXATION – Excise Act 1901
(Cth) – s 114 – whether s 114 ceases to operate when Bill
giving retrospective effect to an Excise Tariff alteration is rejected by the
Senate – s 61C – permission under s 61C subject to
condition – condition required payment of an increased amount in
accordance with proposed Excise Tariff alteration
from date of proposal –
condition valid as exercise of power incidental to taxation power
Customs Act 1901 (Cth),
s 262
Commonwealth Constitution, ss 51(ii), 51(xxxi) and
75(v)
Excise Act 1901 (Cth), ss 4, 54, 58, 59, 61C, 160B, 109,
114 and 115
Excise Tariff Act 1921 (Cth), s 2
Excise Tariff
Amendment (2009 Measures No. 1) Bill 2009 (Cth)
Federal Court of
Australia Act 1976 (Cth), s 24(1A)
Judiciary Act 1903 (Cth),
s 39B
War Precautions Act 1914-1916 (Cth)
APLA v Legal Services Commissioner of New
South Wales [2005] HCA 44; (2005) 224 CLR 322
Attorney-General v Wilts United Dairies
(1922) 91 LJ KB 897
Bowles v Bank of England (1913) 1 Ch
57
Colonial Sugar Refining Co Ltd v Irving (1903) SR Qd
261
Commissioner of Stamps (SA) v Telegraph Investment Company Pty Limited
[1995] HCA 44; (1995) 184 CLR 453
Commonwealth v Colonial Combing, Spinning and
Weaving Company Limited (Wool Tops) [1922] HCA 62; (1922) 31 CLR
421
Cowan and Sons Ltd v Lockyer [1904] HCA 19; (1904) 1 CLR 460
Ex parte
Wallace and Co (1892) 13 NSWLR 1
Fairfax v The Commissioner of
Taxation of the Commonwealth of Australia [1965] HCA 64; (1965) 114 CLR 1
Grannall v
Marrickville Margarine Proprietary Limited [1955] HCA 6; (1955) 93 CLR 55
Matthews v
The Chicory Marketing Board (Victoria) [1938] HCA 38; (1938) 60 CLR 263
Nationwide
News Pty Limited v Wills (1992) 177 CLR 1
Re Refugee Review Tribunal:
ex parte Aala [2000] HCA 57; (2000) 204 CLR 82
Re Wakim; Ex Parte McNally [1999] HCA 27; (1999)
198 CLR 511
Ruddock v Vadarlis (2001) 115 FCR 229
Saga Holidays
Limited v Commissioner of Taxation [2006] FCA 128
Sargood Brothers v
The Commonwealth [1910] HCA 45; (1910) 11 CLR 258
Suntory (Aust) Pty Ltd v
Commissioner of Taxation [2009] FCA 348
SZAJB v Minister for
Immigration and Citizenship [2008] FCAFC 75; (2008) 168 FCR 410
Victoria v The
Commonwealth (1996) 187 CLR 416
SUNTORY
(AUST) PTY LIMITED v COMMISSIONER OF TAXATION
NSD 319 of
2009
FINN, EMMETT AND STONE JJ
30 JUNE
2009
SYDNEY
THE COURT ORDERS THAT:
1. The appellant be granted leave to appeal from the interlocutory orders made on 15 April 2009.
2. The appeal be dismissed.
3. The appellant pay the respondent's costs of the appeal as taxed or agreed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal
Court Rules.
The text of entered orders can be located using eSearch on the
Court’s website.
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ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
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BETWEEN:
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SUNTORY (AUST) PTY LIMITED
Appellant |
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AND:
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COMMISSIONER OF TAXATION
Respondent |
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JUDGES:
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FINN, EMMETT AND STONE JJ
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DATE:
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30 JUNE 2009
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PLACE:
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SYDNEY
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REASONS FOR JUDGMENT
1 On 15 April 2009 a judge of this Court ordered that the present proceeding be stayed until after midnight on 13 May 2009; Suntory (Aust) Pty Ltd v Commissioner of Taxation [2009] FCA 348. As the order made by her Honour is interlocutory leave to appeal is required; Federal Court of Australia Act 1976 (Cth) s 24(1A). The application for leave and the appeal were heard together on 4 May 2009. At the conclusion of the hearing the Court ordered that the appellant be granted leave to appeal and that the appeal be dismissed. We indicated that we would make an order in relation to costs and provide written reasons for our orders at a later date. These are our reasons.
2 The proceeding concerned an application filed on 3 April 2009 whereby the appellant, Suntory (Aust) Pty Ltd, sought declarations and related orders in respect of monies collected by the respondent. The monies have been collected pursuant to what may be described as a scheme under the Excise Act 1901 (Cth) whereby the amount of a proposed excise duty can be collected in anticipation of subsequent ratification by legislation authorising the tax (commonly referred to as the "alcopops tax").
3 The primary judge identified ss 4(3), 54, 58, 59, 61C, 160B, 109, 114 and 115 of the Excise Act as constituting the components of the scheme. The starting point is the definition of excisable goods in s 4(1) of the Excise Act:
Excisable goods means goods in respect of which excise duty is imposed by the Parliament, and includes goods the subject of an Excise Tariff or Excise Tariff alteration proposed in the Parliament.4 The terms, "Excise Tariff" and "Excise Tariff alteration" are defined in s 4(3) of the Excise Act:
A reference in this Act or in any other Act to an Excise Tariff or Excise Tariff alteration proposed in the Parliament shall be read as a reference to an Excise Tariff or Excise Tariff alteration proposed by a motion moved in the House of Representatives, and an Excise Tariff or Excise Tariff alteration proposed by a motion so moved shall be deemed to have been proposed in the Parliament at the time at which the motion was moved.5 Pursuant to s 160B of the Excise Act, the Commissioner of Taxation may, in certain circumstances, publish a notice of intention to propose an Excise Tariff or an Excise Tariff alteration. Section 160B(2) provides that where such a notice has been published in accordance with the section, "the Excise Tariff or Excise Tariff alteration shall, for the purposes of this Act (other than section 114) and any other Act, be deemed to be an Excise Tariff or an Excise Tariff alteration, as the case may be, proposed in the Parliament".
6 It is s 54 that imposes the liability to pay excise duty on the "licensed manufacturer of excisable goods, or, where the owner of excisable goods enters them for home consumption, the owner". Section 58 deals with the entry of goods for home consumption. It provides in s 58(1A) that entry "shall be made in accordance with an approved form, or in a manner approved by the CEO", that is by the Commissioner. Section 59 provides that excise duty must be paid at the times specified "at the rate in force" at that time, however the obligation is expressly subject to ss 59A and 59AA.
7 Under s 59A the Commissioner has power to take steps to protect the revenue in anticipation of an increase in the duty applicable to goods of a particular kind. The regime is complex and it is not necessary here to describe it in detail. It is sufficient to note that the Commissioner "shall have the right, before the entry is passed, in addition to requiring Excise duty to be paid on the goods at the rate in force at the time of entry of the goods, to require and take, for the protection of the revenue in relation to any additional amount of duty that may become payable on the goods, or the part of the goods ... security by way of cash deposit of an amount equal to the amount of duty payable on the goods, or on that part of the goods at the rate in force at the time of entry of the goods"; s 59A (8).
8 As an alternative to entry for home consumption pursuant to s 58, the Commissioner (or authorised officer) may give a person written permission to deliver the goods for home consumption "notwithstanding that an entry of the goods for home consumption has not been made and passed under this Act"; s 61C(1). This permission may be subject to such conditions as, in the opinion of the Commissioner, "are necessary for the protection of the revenue or for the purpose of ensuring compliance with the Excise Acts"; s 61C(3).
9 Suntory availed itself of the procedure under s 61C and agreed to certain conditions. Condition 3 of the conditions set out in the permission dated 24 December 2004 given to Suntory is as follows:
3. Liability to pay excise duty
(a) You are liable to pay the excise duty on all the excisable goods which you deliver for home consumption. The liability arises on the day of delivery and is a tax-related liability for the purposes of Division 255 of the Taxation Administration Act 1953.(b) Subject to subsection (c) below, you must pay the excise duty at the rate in force on the day the excisable goods are delivered into home consumption. The rates for excisable goods are set down in the Schedule to the Excise Tariff Act 1921.
(c) Notwithstanding the provisions of subsection (b), where any Excise Tariff or Excise Tariff alteration is proposed in the parliament or by the Commissioner of Taxation subject to section 160B of the Excise Act (tariff proposal) which, if ratified by legislation, will affect the rate of duty imposed on the excisable goods which you deliver for home consumption, then from the day on which the tariff proposal is proposed, the rate of duty you are required to pay is the rate specified in the tariff proposal.
(d) If the liability for excise duty remains unpaid after it has become due and payable, then under the authority provided by section 255-5 of the Taxation Administration Act 1953, a Deputy Commissioner of Taxation may sue you in a court of competent jurisdiction to recover the amount unpaid after it has become due and payable.
10 It is important to remember that the term, "Excisable goods" includes not only goods that are subject to an excise duty imposed by Parliament but also goods that are "the subject of an Excise Tariff or Excise Tariff alteration proposed in the Parliament" in respect of which excise duty is imposed by the Parliament; see [3] above. The Excise Act is to be read with the Excise Tariff Act 1921 (Cth); s 2.
11 The circumstances contemplated in subclause (c) of Condition 3 arose on 26 April 2008 when, pursuant to s 160B, the Commissioner published a notice of intention to propose an Excise Tariff alteration increasing the duty payable on "other excisable beverages" (the Excise Tariff Proposal (No. 1) 2008) on and from 27 April 2008. Accordingly, the Commissioner collected excise duties at the higher rate specified in the Excise Tariff Proposal (No.1) 2008 from that date and, at the date of the hearing of the appeal, continued to do so.
12 On 13 May 2008 the proposed Excise Tariff alteration was moved by motion in the House of Representatives. On 11 February 2009 the Government introduced the Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 (Cth) containing the Excise Tariff alteration into the House of Representatives. The Bill was passed by the House of Representatives on 25 February and rejected by the Senate on 18 March.
13 A key element of the scheme of the Excise Act pursuant to which the monies have been collected from Suntory is s 114:
114 Time for commencing action(1) No proceeding whether against any officer or otherwise for anything done (whether before or after the commencement of this section) for the protection of the revenue in relation to any Excise Tariff or Excise Tariff alteration proposed in the Parliament shall, except as mentioned in section 115, be commenced before the close of the session in which the Excise Tariff or Excise Tariff alteration is so proposed or before the expiration of 12 months after the Excise Tariff or Excise Tariff alteration is so proposed, whichever first occurs.(2) No proceeding, whether against an officer or otherwise, for anything done for the protection of the revenue in relation to an Excise Tariff or Excise Tariff alteration that is intended to be proposed in accordance with a notice under s 160B shall, except as provided in s 115, be commenced before:
(a) the seventh sitting day of the House of Representatives after the date of publication of the notice, or the day on which the period of 6 months from the date of publication of the notice expires, whichever is the earlier day; or(b) where, on or before the earlier of the days referred to in paragraph (a), an Excise Tariff or Excise Tariff alteration that would validate the thing so done is proposed in the Parliament - the close of the session in which the Excise Tariff or Excise Tariff alteration is so proposed, or the expiration of 12 months after the Excise Tariff or Excise Tariff alteration is so proposed, whichever first happens.
14 The exception in s 115 provides that the Supreme Court of a State or Territory may require an officer against whom any person may decide to commence proceedings referred to in s 114 "to give security to the satisfaction of the court to abide the result of the proceeding". Failure to give such security may result in the Court sanctioning the immediate commencement of the proceedings.
15 The primary judge held that s 114 does not cease to operate when the Senate rejects a Bill that, if passed, would have given retrospective effect to the Excise Tariff alteration that has been proposed. Accordingly, her Honour held that the present proceeding was required to be stayed during the period specified in s 114. The Commissioner contends that her Honour was correct in so holding and submitted that s 114 validly applies to proceedings commenced in the Federal Court under s 39B of the Judiciary Act 1903 (Cth). Accordingly, the Commissioner submitted that the application for leave to appeal should be refused or, if granted, the appeal should be dismissed.
16 Suntory submitted that s 114 does not render the collection of money under a Tariff Proposal lawful nor does it purport to do so. Before discussing Suntory’s submissions it may be helpful to take note of the legislative purpose of s 114 as revealed by its language and operation in the light of its context and the long-standing tradition of collecting increased excise duties pending retrospective validation by Parliament.
17 The legislative purpose of a predecessor to s 114, namely s 226 of the Customs Act 1901 (Cth), is described in Wollaston, Customs Law and Regulations, Sydney, William Brooks & Co Ltd. 1904 at 144:
The object of this section, which is novel in Australian legislation, is to prevent a Court from giving judgment against the Crown in an action for recovery of duties which had been collected under a Tariff proposal of Parliament merely, and not by virtue of any Statute. Usually, so soon as any tariff alteration is proposed in Parliament, the Customs officers proceed immediately to collect duties under the new scale. This is done without legal authority and formerly importers could then sue for their goods and refuse to pay any new duties proposed to be collected under the proposal. In case of an action for delivery of goods under such circumstances the course usually followed by the Court was to defer judgment until the end of the Session, by which time Parliament would probably have passed the new Tariff Act [having retrospective effect], and thus all proceedings up to that date would be null. If no such Act be passed the collection of new duties becomes illegal and consequently duties collected under resolution only must be refunded. ... But the Court in the exercise of its discretion would refuse to grant a mandamus against the Collector. [Exp Wallace and Co., 13 NSWLR 1] This section, by preventing an earlier commencement of an action than the close of the Session, prevents any chance of hostile action succeeding, as it otherwise might, presuming that the Court did not delay its judgment.18 The history of this practice is also described in AC Castles and GS Reid, "Taxation by Parliamentary Resolution - A Case for an Australian Provisional Collection of Taxes Act" (1961) 35 ALJ 74. The following account draws on the work of the learned authors.
19 According to Castles and Reid the practice was well established in the United Kingdom by the first half of the 19th century and was followed in Australia. It was unsuccessfully challenged in Ex parte Wallace and Co (1892) 13 NSWLR 1. In Wallace the Supreme Court of New South Wales, in the excise of its discretion, refused to grant an application for a writ of mandamus to compel the New South Wales Collector of Customs to release goods imported by the company until the new duty had been paid. The application had been made before the retrospective legislation ratifying the increased duty had commenced. Although apparently accepting that the appellant's strict legal rights had been infringed, the Court emphasised that the method was a well established constitutional practice initially in the United Kingdom and later in New South Wales.
20 Although the propriety of the practice was discussed in the first Federal Parliament, the method was used in Australia as early as 1902. It was challenged in Queensland in Colonial Sugar Refining Co Ltd v Irving (1903) SR Qd 261 where the Full Court of the Supreme Court upheld the process of retrospective validation. In discussing the case, Castles and Reid make the following observations, at 76:
Griffith CJ in the course of his judgment looked to the accepted use of such methods in similar circumstances in the Australian States, the United Kingdom and Canada. Pointing out that the practice had been utilised without challenge by these governments for many years his Honour held that it was a reasonable inference to assume that the framers of the Australian Constitution intended to confer a similar power upon the Commonwealth Government. The decision of the Supreme Court of Queensland was subsequently upheld by the Privy Council in 1906. The legality of raising an excise tariff before a statute had been passed supporting such a levy was traversed by the Queensland Supreme Court. Griffith CJ simply stated in this regard: "The objection that the duties could not be legally collected until the Act was passed is too late. The legality of the collection cannot now be disputed". The Privy Council in its judgment does not seem to have expressly adverted [to] this point.21 Despite the views he expressed in Colonial Sugar Griffith CJ took a different view in the High Court in Cowan and Sons Ltd v Lockyer [1904] HCA 19; (1904) 1 CLR 460 at 466-7. The Chief Justice categorically stated that the legislature "cannot authorize the collection of money as and for customs duties, not being customs duties, but in lieu of them". Similarly, in Sargood Brothers v The Commonwealth [1910] HCA 45; (1910) 11 CLR 258 the High Court upheld a statutory provision which barred the recovery of amounts paid in anticipation of increased duty even where the increased duty was not subsequently ratified by legislation.
22 The method, used in respect of proposed income tax measures, came under consideration in Bowles v Bank of England (1913) 1 Ch 57. At issue was the deduction from dividends payable to the plaintiff by the Bank of England of amounts in respect of income tax pursuant to a resolution of the Ways and Means Committee of the House of Commons. Parker J unequivocally rejected the argument that the Committee’s resolution was a valid source of authority and held that no tax could be imposed in the absence of clear statutory authority. Parker J’s decision was affirmed by the House of Lords in Attorney-General v Wilts United Dairies (1922) 91 LJ KB 897. As Castles and Reid point out, Parker J expressly distinguished the situation of customs levies because, in England, they involve the Royal prerogative which might therefore involve different considerations. That distinction is not, however, relevant to Australia; Re Refugee Review Tribunal: ex parte Aala [2000] HCA 57; (2000) 204 CLR 82 at 92-93 per Gaudron and Gummow JJ.
23 The principle identified by Parker J in Bowles and affirmed by the House of Lords in Wilts United Dairies, was accepted by the High Court in the Commonwealth v Colonial Combing, Spinning and Weaving Company Limited (Wool Tops) [1922] HCA 62; (1922) 31 CLR 421.
Does condition 3(c) purport to impose a tax without legislative authority?
24 Suntory relies on the principle in Bowles in support of its submission that Condition 3(c) of the permission granted to Suntory pursuant to s 61C of the Excise Act purports to impose a tax without legislative authority and is therefore unlawful.
25 Mr Russell QC who appeared for the appellant, submitted that the case raises "a fundamental constitutional principle", namely that "taxes can only be levied by act of Parliament". The present reality, he submitted, is that money for tax is being collected in Australia today in relation to an excise tariff proposal originally notified by the executive and not by any parliamentary process. Despite a bill to ratify this collection being rejected by the Parliament, the government’s proposal is that this situation will continue.
26 We accept the fundamental principle to which Mr Russell refers however, we do not accept his "present reality". In Matthews v The Chicory Marketing Board (Victoria) [1938] HCA 38; (1938) 60 CLR 263 at 276, Latham CJ defined a tax as "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and ... not a payment for services rendered". While it is now accepted that a law designed to achieve a range of social and economic objectives may still fall within the constitutional power of taxation under s 51(ii) of the Constitution so long as it actually imposes a tax (Fairfax v The Commissioner of Taxation of the Commonwealth of Australia [1965] HCA 64; (1965) 114 CLR 1), it is not suggested that the compulsory nature of the exaction is other than essential.
27 A critical aspect of s 61C is that it contains no compulsory element. The section provides a facility that a person who has goods for home consumption may elect to use as an alternative to entry for home consumption pursuant to s 58. As the written submissions for the Commissioner pointed out,
A person is not bound to seek a permission under s 61C and, even if they hold a permission under s 61C, is not bound to rely on it, but could instead decide to enter goods for home consumption under s 58.28 In contrast the decision in the Wool Tops case did involve an effectively compulsory exaction. The case was concerned with an agreement between the executive government of the Commonwealth and a company that engaged in the manufacture and sale of wool tops. Regulations made under the War Precautions Act 1914-1916 (Cth) provided that the company must obtain the consent of the Commonwealth government to purchase the sheep skins and wool required for the manufacture of wool tops. The executive government consented to certain purchases by the company only on condition, inter alia, that the company pay a licence fee calculated with respect to the company’s profits. The arrangement was presented as an agreement supported by consideration. In holding that the executive government did not have power to make such agreements the High Court relied, inter alia, on the principle articulated by Parker J in Bowles. With respect to these agreements, Isaacs J made the following comment, at 433:
... however their constitutional effect may be disguised, they amount at bedrock to "taxation" of the individual: and, without parliamentary warrant, that is forbidden ground.29 His Honour held that the executive power of the Commonwealth did not extend to making such agreements but added that there was a "special ground of objection" which was their character as imposing taxation. In relation to the nature of the condition that the Company should pay over a proportion of its profits as consideration for consent, Isaacs J (at 444) quoted the following words of Lord Buckmaster in the Wilts Case at 900:
However the character of this payment may be clothed, by asking your Lordships to consider the necessity for its imposition, in the end it must remain a payment which certain classes of people were called upon to make for the purpose of exercising certain privileges, and the result is that the money so raised Can only be described as a tax the levying of which can never be imposed upon subjects of this country by anything except plain and direct statutory means.30 His Honour then referred to the submission that the arrangement was not a levy but an agreement for consideration and continued:
But that is only a recrudescence of the old struggle between the prerogative and the right of parliamentary control which is often thought to have ended long ago, but which finds its re-appearance even to-day, and the ideas by which the supremacy of Parliament was sought to be evaded are curiously found repeated in the Wilts Case, and even in the present case.31 The concern about the extent of executive power that troubled the High Court in the Wool Tops case does not arise here. Section 61C(3) expressly permits the Commissioner to attach conditions to the permission subject to them being necessary for the purposes set out in the subsection. It is an excise of statutory power that is enlivened by the decision to rely on entry of goods under s 61C.
32 Suntory submits that the voluntary nature of the decision to proceed under s 61C is merely colourable. The alternative avenue for entry under s 58 may also involve a payment, pursuant to s 59A, equal to the proposed increase in excise duty, albeit that the payment is expressed to be provided as security. While it is not possible to know if security would have been required if Suntory had elected to proceed under s 58, there is much force in Mr Russell’s submission. As the above analysis indicates the authorities stress that the question is one of substance rather than form. On the evidence presented, however, it is not possible to know if security would have been demanded had Suntory elected to proceed under s 58. In any event it is our view that the validity of the collection of anticipated duty lies not in whether the Condition 3 imposes a tax but in whether it falls within the incidental scope of the taxation power. Presumably, the answer to this question would be the same whether the issue was security under s 59A or a condition under s 61C.
Is Section 61C an exercise of the power incidental to the power to impose a tax?
33 The Solicitor-General submitted that both s 61C and s 114 of the Excise Act have the evident purpose of being for "the protection of the revenue" and therefore they fall within the incidental scope of the taxation power in s 51(ii) of the Constitution. The incidental scope of a power is perhaps best summarised in Grannall v Marrickville Margarine Proprietary Limited [1955] HCA 6; (1955) 93 CLR 55 at 77 where the majority of the High Court (Dixon CJ, McTiernan, Webb and Kitto JJ) said:
[E]very legislative power carries with it authority to legislate in relation to acts, matters and things the control of which is found necessary to effectuate its main purpose, and thus carries with it power to make laws governing or affecting many matters that are incidental or ancillary to the subject matter.34 Despite the use of "necessary" in the above comment, it is well settled that as long as the measure under consideration has "a relevant and sufficient connexion with the subject matter of the power" it will be within the incidental scope of the power; Nationwide News Pty Limited v Wills (1992) 177 CLR 1 at 27 per Mason CJ. In Victoria v The Commonwealth (1996) 187 CLR 416 (the Industrial Relations Act Case) at 548-9, the majority of the High Court (Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ) commented that there was no precise test to determine whether statutory provisions are incidental to the exercise of a grant of power and added:
Various questions have been propounded in the decided cases to facilitate examination of the issue whether there is a sufficient connection between the provision in question and the subject matter of the power, the questions asked often varying according to the nature of the provision or the power in question. However, it is clear that the grant of power extends beyond what is merely necessary and, at the very least, includes whatever is appropriate to effectuate the exercise of the power. It is also clear that what is appropriate is to be determined by the Court with due weight being given to the view of Parliament.See also APLA v Legal Services Commissioner of New South Wales [2005] HCA 44; (2005) 224 CLR 322 at 405-6 per Gummow J and Re Wakim; Ex Parte McNally [1999] HCA 27; (1999) 198 CLR 511 at 580 per Gummow and Hayne JJ.
35 In our view both s 61C and s 114 are directed to the protection of the revenue. As such they have a "relevant and sufficient connexion" with the taxation power and are "appropriate to effectuate the exercise of [that] power". Section 61C does not impose a tax nor, for reasons given below, does it acquire property within the meaning of s 51(xxxi) of the Constitution. Section 61C(3) explicitly limits the Commissioner’s authority to impose conditions to requirements that are "necessary for the protection of the revenue or for the purpose of ensuring compliance with the Excise Acts". The Commissioner’s receipt of monies pursuant to Condition 3 of the Permission granted to Suntory is directed to ensuring that the proposed additional excise duty would be secured if retrospective legislation is passed. An indication of the appropriateness of the measure is that should the proposed increase not be "finally adopted" the Commissioner would be obliged under s 160(c) of the Excise Act to refund the amount paid.
36 Section 114 can also be seen to fall within the incidental scope of the taxation power as being for the protection of the revenue. The section is designed to delay the commencement of proceedings in respect of the collection of duty at the increased rate until a reasonable time had elapsed to allow the retrospective legislation to be enacted. The fact that, over time, Parliamentary sessions have tended to extend to the entire term of the Parliament explains the outer limit of 12 months imposed by s 114(1).
37 It was submitted for Suntory that the "evident purpose" of the section is "the protection of officers" (in this case the Commissioner of Taxation; see the definition of "officer" in s 4(1) of the Excise Act). Furthermore it was submitted that the use of the past participle "done" in s 114 means that the section only applies to proceedings in respect of things done in the past and does not apply to presently occurring actions such as the exaction with which we are concerned. We do not accept that submission. A reference to "anything done" may as likely refer to anything that "will be done" (future) or that "is being done" (present continuous) as to that which "has been done" (past perfect). As Mr Gageler submitted the meaning depends on the implicit auxiliary verb. We agree that the most natural meaning, taking into account the purpose of the section and the context of the phrase, is that it means anything that is done during the period to which the section refers.
38 As the Commissioner points out, "the express language and operation of s 114 ... gives protection to officers in respect of anything done in the protection of the revenue for a specified period". It does not grant immunity to the officers. This is consistent with the heading of Division 2 of Part IX in which s 114 is to be found. That heading is "Protection to officers" not of officers. The purpose of the section can be clearly understood if one recognises that it forms part of a network of provisions directed to protecting the revenue; see ss 16, 17, 61C and 160.
39 It was submitted for Suntory that the Excise Tariff alteration ceased to exist on the Senate’s refusal to pass the Bill imposing the increased excise duty. The primary judge dealt with this submission at [21]-[22] of her reasons. We agree with her Honour’s conclusion on this issue for the reasons she gave. It is not necessary to address the issue further.
Acquisition of property on unjust terms
40 The appellant contends that Condition 3(c) is invalid because, contrary to s 51(xxxi) of the Constitution, it involves an acquisition of property otherwise than on just terms. The Commissioner’s first response to this point is that there is no compulsion on the appellant to seek permission to deliver the goods for home consumption under s 61C. As to this see the discussion above at [32]. Moreover, as the respondent submitted and the appellant conceded, if the provisions under consideration are properly characterised as being with respect to taxation s 51(xxxi) does not arise. It is not necessary to discuss this point further.
Does s 114 purport to oust the jurisdiction of s 75(v) of the Constitution
41 It was submitted for Suntory that the primary judge’s construction of s 114 purports to impose an unconstitutional limitation on the High Court’s jurisdiction under s 75(v) of the Constitution and is thus inconsistent with the grant of jurisdiction to this Court under s 39B of the Judiciary Act 1903 (Cth). In Suntory’s submission if s 114 operated to prevent the relief that the appellant seeks it would entirely undermine the role of s 75(v) as it would preclude the taxpayer from placing disputed matters before the Court. Such an outcome was said to be obviously unfair in Commissioner of Stamps (SA) v Telegraph Investment Company Pty Limited [1995] HCA 44; (1995) 184 CLR 453, per Brennan CJ, Dawson and Toohey JJ at 465.
42 As the respondent submitted, the short answer is that the relationship between s 114 of the Excise Act and s 75(v) of the Constitution does not need to be determined in this case. The proceedings have been brought in this Court and it cannot be in doubt that the Parliament has the power to limit the jurisdiction of this Court; SZAJB v Minister for Immigration and Citizenship [2008] FCAFC 75; (2008) 168 FCR 410 at 422 per French J and 437 per Tracey J.
43 We concluded that the application for leave to appeal should be allowed but, for the reasons given above, that the appeal must be dismissed.
Costs
44 The parties made brief submissions as to costs. Suntory submitted that the case raised novel and difficult questions of law, particularly in relation to the interpretation of the Excise Act and that it was in the public interest that these issues be settled. For that reason it was submitted that the usual rule as to costs should not apply. Counsel for Suntory referred the Court to observations made in Saga Holidays Limited v Commissioner of Taxation [2006] FCA 128 at [4] and to the decision of the Full Federal Court in Ruddock v Vadarlis (2001) 115 FCR 229 at 237.
45 Mr Gageler submitted that this was a commercial case brought for commercial motives and on that basis Ruddock v Vadarlis should be distinguished. He submitted that Saga Holidays should also be distinguished because in that case approximately 35% of the claim was abandoned at the outset of the hearing. In this case the Commissioner did not believe that the law was difficult or required clarification at least once the judgment of the primary judge had been handed down. He noted that the Commissioner had not sought costs below but did seek those costs now.
46 In our view Mr Gageler’s submissions should be accepted and there
is no reason why the Commissioner should not have his
costs in the usual way.
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Solicitor for the Appellant:
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KPMG Tax Lawyers Pty Ltd
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Counsel for the Respondent:
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S J Gageler SC, Solicitor General of the Commonwealth with S B Lloyd SC and
A M Mitchelmore
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Solicitor for the Respondent:
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Australian Government Solicitor
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2009/80.html