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High Court of Australia |
H.C. SLEIGH LTD. v. SOUTH AUSTRALIA (1977) 136 CLR 475
Constitutional Law (Cth)
High Court of Australia
Barwick C.J.(1), Gibbs(2), Stephen(3), Mason(4), Jacobs(5) and Murphy(6) JJ.
CATCHWORDS
Constitutional Law (Cth) - Duties of excise - Exclusive power of Commonwealth Parliament - Petroleum vendor's licence fee imposed under State law - Fee calculated on sales in period preceding licence period - Validity - The Constitution (63 & 64 Vict. c. 12), s. 90 - Business Franchise (Petroleum) Act, 1974-1975 (S.A.).Constitutional Law (Cth) - Freedom of interstate trade and commerce - Prohibition of sale of petroleum products without licence - Licence fee - Interstate trade and commerce - Sales made in interstate trade - Interstate trade - Standing of person engaged only in intrastate trade to impugn validity of legislation on ground of infringement of s. 92 of Constitution - Partial invalidity - Severance - Construction of statute so as not to infringe Constitution - The Constitution (63 & 64 Vict. c. 12), s. 92 - Business Franchise (Petroleum) Act, 1974-1975 (S.A.), ss. 11, 13, 14 - Acts Interpretation Act, 1915 (S.A.), as amended, s. 22a.
HEARING
Sydney, 1976, March 16, 18; 1977, February 1. 1:2:1977DECISION
1977, Feb. 1.
2. I have had the advantage of reading the reasons for judgment prepared by
my brother Mason. I am in substantial agreement with
the reasons he expresses
for his conclusions; first, that the licence fee under challenge in the case
is not an excise; second,
that the refinery exchange arrangements set out in
the statement of claim, the sales referred to in pars 24 and 25 of the
statement
of claim, and the transactions described in pars 28, 29 and 30 of
the statement of claim do not form part of interstate trade; third,
that the
prohibition in the Act of carrying on the business of selling without a
licence infringes s. 92 of the Constitution; fourth, that the penalty imposed
upon carrying on such a business without a licence infringes s. 92; fifth,
that, by reason of the Acts Interpretation Act, 1915 (S.A.) as amended, the
relevant parts of the Act may be given a distributive operation so that they
remain valid in so far as they
relate to carrying on the business of selling
petroleum products otherwise than in the course of interstate trade. (at
p489)
3. I should add that I have found the last of these conclusions a matter of
difficulty, as indeed are so many applications of
sections importing into
legislation an intention for partial operation. However, I have come to the
conclusion that, notwithstanding
the limited nature of the provisions of the
Acts Interpretation Act, the prohibition, the provisions for a licence fee and
for
the penalty can be read distinctively and saved from total invalidity.
(at
p489)
4. I would allow the demurrer and dismiss the suit. (at p489)
GIBBS J. The plaintiff company challenges the validity of the Business
Franchise (Petroleum) Act, 1974-1975 (S.A.). That Act had
a short life. It
came into operation in December 1974 and was repealed on 24th December 1975.
In the meantime it had been amended.
It is unnecessary for present purposes to
distinguish between the unamended and the amended form of the Act; reference
need only
be made to the latter. The Act made it unlawful for any person to
carry on the business of selling petroleum products on and from
24th March
1975 unless he was the holder of a licence: s. 11 (1). If a person was
convicted of an offence against that provision,
the court was required to
impose upon him a penalty which included such amount (if any) as had been
certified by the Commissioner
as the amount by which the convicted person had
benefited financially through non-payment of licence fees: s. 11 (1a). There
were
nine classes of licences: s. 12; the class of licence required depended
mainly on whether the products to be sold were, or included,
products
manufactured by the licensee and whether the intended buyers were, or
included, other licensees: see the definitions in
s. 4 (1). An ordinary
retailer of petrol from a service station required a class 9 licence, which
authorized the licensee to carry
on at the premises specified in the licence
the business of there selling petroleum products not manufactured by him and
not manufactured
at those premises, and to sell them only to persons who were
not licensees. It was unlawful for a licensee to sell petroleum products
except as authorized by the licence held by him (s. 13 (1) ). During the
currency of the Act there were two "licence periods" -
(a) the period
commencing on 24th March 1975 and ending on 23rd September 1975, and (b) the
period commencing on 24th September
1975 and ending on 23rd December 1975: s.
4 (1). The fee payable for any licence comprised a fixed sum of money and a
further amount
which (except in the case of a class 9 licence) was "the
prescribed percentage of the value of the quantity of petroleum products
sold
by the applicant during the relevant period reduced by the quantity of any
petroleum products non-accountable in respect of
that period": s. 14 (2). The
"relevant period" meant, in relation to a licence to be in force during the
first licence period,
the financial year ending on 30th June 1974, and in
relation to a licence to be in force during the second licence period, the
financial year ending on 30th June 1975: s. 4 (1). The question what quantity
of any petroleum product was "non-accountable" in
respect of any period was
dealt with (rather obscurely) in s. 14 (1). Any petroleum product which had
been sold by one licensee
to another, whether or not during the relevant
period (other than any of such product held for resale by the latter licensee
at
the end of the next preceding relevant period), and which was either resold
by the latter licensee during the relevant period, or
wasted or lost by the
latter licensee during that period, or held for resale by the latter licensee
at the end of that period,
was non-accountable so far as the former licensee
was concerned. This reduction for "non-accountable" petroleum product was
inapplicable
to the ultimate reseller who held a class 9 licence and whose fee
therefore included simply "the prescribed percentage of the value
of the
quantity of petroleum products sold by the applicant during the relevant
period". The Commissioner was given power to reassess
the fee in any case
where in his opinion it was assessed incorrectly: s. 22. The fee for a licence
was payable when the application
was made for the licence unless the applicant
elected to pay the fee by instalments; in the latter case the first instalment
was
payable on the application: s. 19 (1) (c). However, the Commissioner might
refuse to grant a licence notwithstanding that the fee
was paid: s. 19 (1).
The Act did not lay down any criteria to guide the Commissioner in deciding
whether to grant or refuse a licence,
when the application had been made in
due form and the fee had been paid. Provision was made for an appeal to a
tribunal against
a refusal by the Commissioner to grant a licence and against
the assessment or reassessment of a licence fee: s. 25. (at p491)
2. The plaintiff contended that the Act attempted to impose a duty of excise
contrary to s. 90 of the Constitution and further that it impaired the freedom
of trade and commerce among the States contrary to s. 92. (at p491)
3. The question whether the Act attempts to impose a duty of excise is in my
opinion concluded by the recent decision in Dickenson's
Arcade Pty. Ltd. v.
Tasmania [1974] HCA 9; (1974) 130 CLR 177 . It may be accepted that the licensing system
under the Act was
brought into existence
primarily as a means
of collecting
the licence fees but it does not follow that the fees are duties of excise.
One thing that is
clear about the operation
of s. 90 is that an exaction is
not a duty of excise within the meaning of that section
unless it is a
tax
upon goods. Not every
tax on goods is an excise but no exaction that is not a
tax on goods can be an excise.
As Fullagar J.
pointed out in Dennis Hotels
Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529, at p 554 , the expressions
"a tax
upon goods", " a tax in
respect of goods" and "a tax in relation to goods"
are
ambiguous. Fullagar J. explained the meaning
of those expressions as follows:
"Goods as such cannot pay taxes: there must be a personI am in complete agreement with that statement and do not need to consider, for present purposes, what imposts, although taxes upon goods, are nevertheless not duties of excise. The Act in the present case does not impose a tax on goods, because the fee for a licence to carry on the business of selling petroleum products is quantified by reference to the value of the quantity of petroleum products sold during a period preceding that in respect of which the licence is granted. The decisions in Dennis Hotels Pty. Ltd. v. Victoria and Dickenson's Arcade Pty. Ltd. v. Tasmania establish that such a fee is not a tax on goods and is therefore not a duty of excise. (at p492)
to pay them. And what is meant by saying that a tax is a
tax upon goods is that the person by whom the tax is payable
is charged by reason of, and by reference to, som specific
relation subsisting between him and particular goods. A tax
will be rightly regarded as a tax upon goods if the person
upon whom it is imposed is charged by reason of and by
reference to the fact that he is the owner, importer, exporter,
manufacturer, producer, processor, seller, purchaser, hirer or
consumer of particular goods. This list may not be
exhaustive."
4. I can see no ground of distinction between those two decisions and the
present case. The circumstances that the legislation
there considered may have
provided a means of regulating the trade in liquor and tobacco, and that the
licence itself may have
constituted a valuable privilege (at least in the case
of a liquor licence) do not distinguish those cases from the present, where
the purpose of the licence is to enable the fees to be collected. The fees
there in question were held not to be duties of excise,
not for those reasons,
but because they did not amount to taxes upon goods. I need not add to what I
have said in relation to this
matter in Dickenson's Arcade Pty. Ltd. v.
Tasmania (1974) 130 CLR, at pp 224-226 . Nor in my opinion does the presence
in the Act
of ss. 14 (1) and 22 distinguish the legislation now in question
from that considered in those cases. Section 14 (1) may be thought
to reveal
an intention that any particular gallon of a petroleum product shall be
brought only once into the assessment of a fee
for any licence or licences,
and thus to support the view that it is intended that the tax shall be placed
once on each gallon
of petroleum product as it progresses from the first to
the last seller. However, this does not alter the fact that the fee is based
on the value of goods sold during an earlier period, and it remains true to
say that under the Act no sale of petrol, either during
the "relevant period"
or during the "licence period", creates a liability to pay the tax. The
discretionary power given to the
Commissioner by s. 22 to reassess the fee
does not in my opinion alter the nature of the tax. It was also argued that it
was relevant
to the question whether the fee was a duty of excise that the
amount of the fee forms a component of the prices that may lawfully
be charged
to consumers of petroleum products in South Australia, pursuant to the Prices
Act, 1948-1974 (S.A.) and to a Prices
Order made thereunder, and to exemptions
granted under the Prices Justification Act, 1973-1974 (Cth), and that have in
fact been
charged to such consumers. The fact that the fee is in fact passed
on by the licensee to the consumer means no doubt that it may
be described as
an indirect tax, but that alone does not make it an excise. None of these
matters leads to the conclusion that
any sale of petroleum products is taxed,
or that the fee bears any other than "a coincidental relationship" (to use the
words of
Stephen J. in Dickenson's Arcade Pty. Ltd. v. Tasmania (1974) 130
CLR, at p 236 ) to the products sold during the period of the
licence. (at
p492)
5. Counsel for the plaintiff in their argument relied heavily on M. G. Kailis
(1962) Pty. Ltd. v. Western Australia [1974] HCA
10; (1974) 130
CLR 245 , which it was
suggested weakened the authority of Dickenson's Arcade Pty. Ltd. v. Tasmania
[1974] HCA
9; (1974) 130 CLR 177 . In that
case the majority of the Court (McTiernan,
Menzies and Mason JJ., Gibbs and Stephen JJ. dissenting)
held that s. 35G of
the Fisheries
Act, 1905-1971 (W.A.) purported to impose a duty of excise and
was invalid. Under that Act it
was unlawful to carry on the processing
of fish
for the purposes of sale except under the authority of a licence for which a
fee
was payable. One member of the majority,
Menzies J., considered that the
effect of the legislation, on its proper construction,
was that the fee was to
be assessed by reference
to the fish acquired for processing during the period
of the licence. On that
view, of course, both Dennis Hotels Pty. Ltd. V.
Victoria [1960] HCA 10; (1960) 104 CLR 529 and Dickenson's Arcade Pty. Ltd. v.
Tasmania
[1974] HCA 9; (1974) 130 CLR 177 were clearly distinguishable. The other
members of the
Court considered that the fee
was to be assessed by reference
to the value or
cost of fish acquired during an earlier
period. Mason J. nevertheless
distinguished
Dennis Hotels Pty. Ltd. v.
Victoria [1960] HCA 10; (1960) 104 CLR 529 for a
reason that he had expressed
in Dickenson's Arcade
Pty. Ltd. v. Tasmania
(1974) 130 CLR, at p 240 ,
namely that it "should not be regarded as
authoritative
in relation to the prescription
of fees for licences to
manufacture or
produce goods" (1974) 130 CLR, at p 265 . Neither Menzies
J.
nor Mason J. questioned the
authority of those decisions so far as
they
related to fees for a licence to carry on a business
of selling goods. The two
members
of the Court who were in the minority,
in conformity with the opinions
which they had expressed
in Dickenson's Arcade Pty. Ltd.
v. Tasmania followed
and applied Dennis
Hotels Pty. Ltd. v. Victoria. Only the judgment of
McTiernan
J. is opposed to the authority
of those decisions; he gave effect to
the opinion he had expressed in Dickenson's Arcade Pty. Ltd.
v. Tasmania
(1974) 130 CLR,
at p 206 , where he had said that Dennis
Hotels Pty. Ltd. v.
Victoria was not a precedent governing
that case: that, however, was
a
dissenting opinion. The judgments of
the majority of the Court in M. G. Kailis
(1962) Pty. Ltd.
v. Western Australia [1974] HCA
10; (1974) 130 CLR 245 have no common basis
and for that reason the authority of that case would appear to be
limited to
the
very
question it decided, i.e. that s. 35G is invalid, but it is apparent
that four of the five members of the Court
accepted the
authority
of
Dickenson's Arcade Pty. Ltd. v. Tasmania so far as it relates to fees for
licences to sell goods. (at
p493)
6. In Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 CLR 177 this
Court, although asked to reconsider Dennis
Hotels Pty.
Ltd. v. Victoria (1960)
[1960] HCA 10; 104 CLR 529 , reaffirmed the authority of that decision. No valid reason has
been advanced for reopening
a question decided recently
and by a substantial
majority. Those decisions govern the present case.
The argument that the Act
attempts
to impose a duty of
excise must fail. (at p494)
7. I turn now to the alternative argument based on s. 92. I commence with the
assumption that the Act could not validly apply
to interstate trade. The
initial question, however, is whether the plaintiff engages in any interstate
trade which would be affected
by the Act. The plaintiff does no doubt engage
in interstate trade. It sells and delivers petroleum products in all States of
Australia.
However, although the words of ss. 11 and 13 of the Act are wide
and general, they must be understood, in accordance with general
principles of
construction, to be limited to business carried on, and sales made, in South
Australia. The question is whether the
business which the plaintiff carries
on, and the sales which it makes, in South Australia (or some of them) form
part of interstate
trade. (at p494)
8. The plaintiff obtains the petroleum products which it sells in South
Australia from a refinery operated at Port Stanvac in
that State by two other
companies, Esso and Mobil. The products are obtained pursuant to a system
known as "refinery exchange".
In short, Esso and Mobil sell and deliver
petroleum products to the plaintiff in South Australia, in consideration of
the plaintiff
selling and delivering petroleum products to Esso and Mobil from
a refinery in New South Wales. The refinery exchange system obviates
the need
for petroleum products to be moved interstate, but a transaction entered into
to avoid the necessity of engaging in interstate
trade cannot for that reason
itself be regarded as part of interstate trade. The operation of the refinery
exchange system involves
communications between oil companies in different
States, and the movement of debits and credits between and among those
companies.
It thus in my opinion involves interstate commerce or intercourse.
However, the Act has no legal effect on that commerce or intercourse.
The fact
that the sales by Mobil and Esso to the plaintiff of petroleum products
refined at Port Stanvac are made pursuant to the
refinery exchange system does
not convert them into transactions of interstate trade. They are sales made
within South Australia
of petroleum products produced within South Australia,
and are part of the domestic trade of South Australia. Some of the products
so
sold are delivered by Mobil or Esso or transported by the plaintiff from Port
Stanvac to distribution points situated in other
States, namely Victoria,
Tasmania and New South Wales. That, however, is not enough to convert the sale
to the plaintiff into an
interstate transaction. For that result to ensue it
would be necessary that the agreement for sale to the plaintiff should contain
a stipulation that the petroleum products should be despatched from the
refinery in South Australia and delivered by the seller
to the plaintiff in a
State other than South Australia: see W. & A. McArthur Ltd. v. Queensland
[1920] HCA 77; (1920) 28 CLR
530, at pp 540, 559-560
which on this point has often been
cited with approval. (at p495)
9. The plaintiff further alleges that the circumstances of certain of the
sales which it makes give them the qualities of interstate
trade. Those sales
are as follows: (a) sales made in South Australia, the product sold being
delivered by the plaintiff from a
distribution point in South Australia to
buyers in Victoria; (b) sales made by the plaintiff pursuant to orders
received by an
agent in South Australia from purchasers resident in South
Australia, delivery being made by the plaintiff by transporting the petroleum
products from Victoria to South Australia; (c) sales made by the plaintiff in
South Australia or New South Wales pursuant to orders
received from purchasers
resident in South Australia, delivery being made by the plaintiff from Broken
Hill in New South Wales
to South Australia. In none of these cases was it
alleged that it was a term of the contract that petroleum products should be
despatched from one State and delivered in another. W. & A. McArthur Ltd. v.
Queensland [1920] HCA 77; (1920) 28 CLR 530 is
authority for the proposition
that these sales
did not form part of interstate trade. (at p495)
10. Finally it is said that the provisions of the Act are intended to apply
equally to interstate and to intrastate trade, that
they are incapable of
severance and that the Act is therefore invalid in its attempted application
to intrastate trade as well
as in its attempted application to interstate
trade. I do not need to decide whether the plaintiff, which has not shown that
the
Act has interfered with its freedom of interstate trade, has a sufficient
standing to raise this contention, since it is a contention
that cannot in any
case succeed. In my opinion s. 22 (a) of the Acts Interpretation Act, 1915
(S.A.), as amended, has the effect
that the Act is to be construed so that it
does not infringe the freedom of interstate trade
guaranteed by s. 92 (and
thereby exceed
the legislative power of the State) and that the Act is a valid
enactment to the extent
to which it does not exceed the power of
the State by
contravening s. 92. Accordingly, s. 11 of the Act is to be construed as
referring
to the business of selling petroleum
products otherwise than in the
course of interstate trade, s. 13 refers only to a licensee
who sells
petroleum products otherwise
than in the course of intrastate trade, and s.
14, when it refers to the quantity of petroleum
products sold, must be
construed
as referring only to such products sold otherwise than in the course
of interstate trade. (at
p496)
11. The Act has not been shown to be invalid and the demurrer should be
allowed. (at p496)
STEPHEN J. In other judgments in this case appear analyses of the relevant
legislation, which I gratefully adopt. Two questions
arise for decision,
whether or not the licence fees here in issue are duties of excise and as such
infringe s. 90 of the Constitution, and whether the legislation involves any,
and if so what, infringement of s. 92 of the Constitution. (at p496)
2. The analyses of the legislation make it abundantly clear that the
legislation is, in all relevant respects, indistinguishable
from that
considered in Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 CLR 177 . I
find no valid ground for
distinction in
the fact that in Dickenson's Case and
in its predecessor, Dennis
Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960)
104 CLR 529 ,
the licence
in question related to the licensing of premises for the sale of
consumables, liquor and tobacco,
which
some may see as falling
within a
particular class broadly described as drugs. To introduce into this already
difficult area
of
the law a ground of distinction
dependent upon the character
of the goods in question and which involves the notion of a class
of
goods of
uncertain scope is neither
called for by prior authority nor is it, in my
view, likely to contribute either to greater
certainty of result or to what
might
be thought to be desirable policy ends. (at p496)
3. Since the decision in Dickenson's Case [1974] HCA 9; (1974) 130 CLR 177 , delivered only
a little over two years ago, nothing
has occurred
to affect its authority. In
M. G. Kailis
(1962) Pty. Ltd. v. Western Australia (1974) 130 CLR 245
a
State-imposed licence fee
in respect of fish processors was held by the
majority to be a duty of excise.
But each of the majority
judgments proceeded
upon
quite distinct grounds; that of Menzies J. in particular turned upon the
particular
meaning which he assigned
to the curious terms
in which the
legislation there in question was cast. His Honour expressly affirmed
(1974)
130 CLR, at p 254
the correctness of
Dennis Hotels [1960] HCA 10; (1960) 104 CLR 529 . Mason
J. in his reasons for judgment in the present case,
after an exposition of the
true basis
of his own
majority decision in the Kailis Case, has described the
submission that the Kailis
Case overruled Dennis Hotels and Dickenson's
Arcade
as "plainly misconceived". With this I am in full agreement. (at p497)
4. Accordingly, for the reasons which emerge from the majority judgments in
Dickenson's Arcade [1974] HCA 9; (1974) 130 CLR 177
, I reject the
attack upon the present
legislation based upon s. 90 of the Constitution. There is but one further
observation to be made concerning duties of excise. It was submitted that to
distinguish between a licence
fee calculated on sales or turnover of a past
period and one calculated on current sales or turnover is merely artificial,
that
it lacks some worthwhile quality of reality and is destructive of clear
constitutional intent. So to submit is to assume that the
exclusive nature of
the federal Parliament's power to impose duties of excise can readily and with
accuracy be explained by reference
to constitutional purpose or historical
reasons, that purpose or those reasons providing a reliable guide to the
identification
of the precise field of revenue-raising from which the States
are to be excluded. Yet experience in the past suggests that neither
source
offers certain guidance and that it is, instead, to the meaning of "duties of
excise" that attention must be directed if
the extent of the area immune from
State exaction is to be discovered. If, then, it be a feature of "duties of
excise" that they
are directly related to goods and are imposed at some step
in their production or distribution (Bolton v. Madsen
[1963] HCA 16; (1963) 110 CLR
264, at p
271 ) it is entirely realistic that importance should be attached to the
distinction to which I have
referred,
constitutional
limits of revenue-raising
power being fixed by reference to the particular character which an impost
bears,
it necessarily
follows
that a feature of that impost relevant to that
character will be an important determinant of validity. Moreover,
since s. 90
denies to the States only those imposts of a particular character, it is to be
expected that imposts especially designed so as
to lack that character will be
resorted to; this is no more than the consequence of delimiting legislative
capacity by reference
to a particular class of impost identifiable by
particular characteristics. (at p497)
5. In relying upon s. 92 the plaintiff seeks to establish two distinct
grounds upon which it may be said itself to be engaged in interstate trade,
the one
involving the system of refinery exchange, which is a feature of the
Australian oil marketing scene, the other concerned with particular
instances
said to involve trading across State borders. Both have been considered in
detail in the reasons for judgment of Mason
J. and I agree with his conclusion
that in neither instance is there made out any relevant example of interstate
trade. (at p498)
6. The plaintiff has accordingly failed to establish the existence of
interstate trade engaged in by it and which is burdened
by the present
legislation; nor, for that matter, has another's interstate trade been shown
to be so burdened as relevantly to
burden the plaintiff's own interstate
trade. (at p498)
7. It is not open to the plaintiff to ask of the Court that it should assume
some hypothetical set of circumstances involving
an example of interstate
trade, should determine that the legislation burdens that imagined trade in a
manner offensive to s. 92, should then find that all the provisions of the
legislation form an inseverable whole, and should by this means conclude that
the plaintiff, engaged exclusively in intrastate trade, may nevertheless with
impunity disregard that legislation. (at p498)
8. The principal, although not the sole, objection to such a course is that
this Court would be being asked to declare legislation
invalid as depriving
interstate trade of the freedom guaranteed by s. 92 without any evidence that
the legislation in fact does so. In truth there may exist no instances
whatever of any burdening of interstate
trade in consequence of this
legislation, and thus no infringement of s. 92. It would be wrong that in
those circumstances the legislation should be thus struck down. The objection
rests not so much upon
any lack of standing or interest on the part of the
plaintiff as upon the absence of any evidence that the legislation in any way
offends s. 92. The importance of a sound evidentiary basis in cases to which
s. 92 is sought to be applied has been emphasized in the past. Instances are
provided by Chapman v. Suttie, per Dixon C.J., (1963) 110
CLR, at p 325 and
Tamar Trading Co. Pty. Ltd. v. Pilkington, per Barwick C.J. (1968) 117 CLR
3538 at p 358 . No mere unsupported
hypothesis should be substituted for
proved or agreed fact and thus become the ground for decision. (at p498)
9. I would allow the demurrer and dismiss the action. (at p498)
MASON J. In Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 the
Court decided, by majority, that the liquor
licensing
fee imposed by s. 19 (1)
(a) of the Licensing Acts (Vict.) was not a duty of excise. The amount payable
for the licence was calculated not by reference
to sales of liquor in the
period for which the license was granted, but by reference to sales during a
period ending before the
date of the application for the grant or renewal of
the licence. On the other hand, the fee imposed for a temporary victualler's
licence by s. 19 (1) (b) was held to be an excise. The amount of the fee
payable for this licence was calculated by reference to liquor sold under
the
licence. As the reasons given by Fullagar J. differed from those given by
other members of the Court for concluding that s. 19 (1) (a) imposed a duty of
excise, it is difficult to extract a uniform principle from the majority
judgments. (at p499)
2. Later, in Bolton v. Madsen [1963] HCA 16; (1963) 110 CLR 264, at p 271 the whole Court
said: "...for constitutional purposes
duties of excise
are taxes directly
related
to goods imposed at some step in their production or distribution
before they reach
the hands of consumers",
and went on to say:
"It is not enough that Turner, the owner-carrier, could by a
simple calculation determine the cost to him per bale of
carrying his wool from his station to the wool store for
sale. It is not enough because it is the criterion of
liability that determines whether or not a tax is a duty of
excise. The tax is a duty of excise only when it is imposed
directly upon goods or, to put the same thing in another way,
when it directly affects goods, and to establish no more than
that its imposition has increased the cost of putting goods
upon the market by a calculable amount falls short of
establishing the directness of relation between the tax and
the goods that is the essential characteristic of a duty of
excise." (at p499)
3. However, subsequent cases indicated that the criterion of liability
enunciated in Bolton v. Madsen no longer commanded unqualified
acceptance (see
Anderson's Pty. Ltd. v. Victoria [1964] HCA 77; (1964) 111 CLR 353 ; Western Australia v.
Hamersley Iron Pty.
Ltd. (No. 1) [1969] HCA 42; (1969)
120 CLR 42 ; Western Australia v.
Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970) 121
CLR 1 ). Then, in Dickenson's
Arcade Pty. Ltd. v.
Tasmania [1974] HCA 9; (1974) 130 CLR 177 the Court held that Pt III of
the Tobacco Act 1972 (Tas.) did not impose an excise. Part III prohibited the
retail sale of tobacco without a licence and imposed
as a fee payable for the
licence an amount calculated by reference to the value of tobacco handled by a
retailer during the period
of six months prior to the commencement of the
licence. With the exception of McTiernan J., all the members of the Court
regarded
the licence fee as indistinguishable in any relevant respect from
that imposed by s. 19 (1) (a) of the Licensing Acts in Dennis
Hotels (1960)
[1960] HCA 10; 104 CLR 529 . I indicated then that, although I accepted Dennis Hotels as an
authoritative decision
in relation to
a licence fee
having similar
characteristics, I did not regard the majority judgments as expressing a
principle
that would necessarily
govern
all cases, in particular cases where a
licence similarly calculated was imposed on the manufacture
or production of
goods.
So in
M. G. Kailis (1962) Pty. Ltd. v. Western Australia (1974) 130 CLR
245 , in which judgment was delivered
on the same day as
in Dickenson's
Arcade
[1974] HCA 9; (1974) 130 CLR 177 , I concluded that the licence fee payable for the
processing
of fish under the Fisheries
Act (W.A.) was an
excise. There the
mode of calculation of the licence fee was, as I though, though
Menzies J.
thought otherwise,
indistinguishable
form the s. 19 (1) (a) fee in Dennis
Hotels and the fee in Dickenson's Arcade.
But it was a fee payable in respect
of the processing
of fish, that is, in respect of manufacture and production,
whereas in Dennis
Hotels the fee payable was in respect
of the sale
of liquor
and in Dickenson's Arcade in respect of the sale of tobacco. (at p500)
4. The plaintiff's submission in the instant case, that Kailis' Case (1974)
130 CLR 245 overruled Dennis Hotels
[1960] HCA 10; (1960) 104 CLR
529 and Dickenson's
Arcade [1974] HCA 9; (1974) 130 CLR 177 , is plainly misconceived. What I have
already said
as to the circumstances in which
Kailis' Case was decided
and as to the nature
of the tax there imposed is enough
to dispose of that suggestion. But the
answer
to the submission does not
stop at this point. The fact is that the
three members
of the majority in Kailis' Case each had different
reasons for
subscribing
to the conclusion that the licence fee was an excise.
McTiernan J.
who dissented in Dickenson's Arcade
in conformity with the view
which he
expressed in that case, held the fee to be
an excise, whilst Menzies J.,
placing a different
construction on the Fisheries
Act (W.A.), considered that
the licence fee was
calculated by reference to the quantity of materials
processed during the period
for which the licence was held. (at p500)
5. The question, then, as I see it, is whether the licence fee payable under
the Business Franchise (Petroleum) Act, 1974 (S.A.)
is distinguishable from
the licence fees dealt with in Dickenson's Arcade [1974] HCA 9; (1974) 130 CLR 177 . If it
is not distinguishable,
then
this Court has no alternative but to follow its
earlier decisions. Had
it not been for Dickenson's Arcade there may have been
stronger
reasons for taking a different course, but in the latter case the
Court was invited to reconsider Dennis Hotels [1960]
HCA 10; (1960) 104 CLR 529
. The Court
rejected this invitation. (at p501)
6. Generally speaking, the Court should be slow to depart from its previous
decisions, especially in constitutional cases where
the overturning of past
decisions may well disturb the justifiable assumptions on which legislative
powers have been exercised
by the Commonwealth and the States and on which
financial appropriations, budget plans and administrative arrangements have
been
made by governments. This comment applies with more force to excise cases
for, as a result of the contraction of the financial powers
of the States in
consequence of s. 105A of the Financial Agreement and the Uniform Tax Cases
[1942] HCA 14; (1942) 65 CLR 373;
(1957) 99 CLR 575
, any expansion in the constitutional
concept of excise has a marked effect on the capacity
of the States to raise
revenue for
government. (at p501)
7. Since Dennis Hotels [1960] HCA 10; (1960) 104 CLR 529 it has been accepted that liquor
licensing fees calculated by reference
to past sales
are not an excise and
the
States have continued to rely on liquor licensing fees as an important source
of revenue.
Likewise, since
Dickenson's Arcade
[1974] HCA 9; (1974) 130 CLR 177 States have
relied on tobacco licensing fees, similarly calculated,
as an additional
source
of government
revenue. It would, I think, lead to great uncertainty in
government and commerce if the Court
were now to hold that
Dennis Hotels
or
Dickenson's Arcade was wrongly decided. Such a course would disturb
legislative and financial
arrangements made
on the faith
of the existing
decisions of this Court. (at p501)
8. A departure from these decisions can be justified only in the event that
the Court is convinced that they are wrong. Yet the
inherent difficulty of
determining what is an excise in the constitutional sense, a difficulty
reflected in the shifts of opinion
that have taken place in the judicial
exposition of s. 92, makes it extremely hard to say that a particular decision
is wrong,
notwithstanding that the reasoning on which it is based may not
appear to be persuasive. So far as the present problem is concerned,
nothing
has occurred since Dickenson's Arcade [1974] HCA 9; (1974) 130 CLR 177 , which was decided
only two years ago, to suggest
that it was
wrongly decided. Nor, indeed, did
the plaintiff's
counsel so suggest, apart from submitting that it had been
overruled
by Kailis'
Case (1974) 130 CLR 245 , a submission which, as I have
said, was misconceived. There is, therefore,
no basis for our refusing to
follow
Dickenson's Arcade if it transpires that the present case cannot be
distinguished. (at p502)
9. In the present proceedings the plaintiff seeks a declaration that the
South Australian Act of 1974 is invalid. The validity
of the Act arises on a
demurrer taken by the defendant to the further amended statement of claim. The
Act of 1974 was repealed
by the Business Franchises (Miscellaneous Provisions)
Act (No. 61 of 1975) on 24th December 1975, but in its operation up to that
date the Act of 1974 was amended in several respects by the same Act. What is
in question between the parties is the application
of the Act in its amended
form to the plaintiff in the period of time before its repeal, in particular
the validity of those provisions
in the Act which required the plaintiff to
hold a licence in order to carry on the business of selling petroleum products
and to
pay the prescribed fees for such a licence, it being acknowledged that
the plaintiff did not hold a licence at any relevant time.
(at p502)
10. Part III of the Act deals with "Licences". It commences with s. 11 (1) which, on and from 24th March 1975, prohibits a person from carrying on the business of selling petroleum products unless he is the holder of a licence. Upon conviction of an offence against s. 11 (1) a person is subjected to a penalty consisting of (a) such amount as is certified by the Commissioner as the amount by which the person has benefited financially through the non-payment of licence fees, and (b) a further amount not exceeding $1,000 fixed by the Court (s. 11 (1a) ). The fee payable for a licence (except a class 7 licence with which we are not presently concerned) is (a) $500, and "(b) the prescribed percentage of the value of the quantity of petroleum products sold by the applicant during the relevant period reduced by the quantity of any petroleum product non-accountable in respect of that period".
11. "Value" is defined by s. 4 as meaning the value attributed to a quantity of petroleum products pursuant to s. 16. This section enables the Minister by published notice to set out the basis upon which and the means by which a value shall be attributed to any quantity of petroleum products sold during the period specified in the notice.
12. "The relevant period" is defined by s. 4 as meaning (a) in relation to a
licence that is to be enforced during the first licence
period - the financial
year ending on 30th June 1974, and (b) in relation to a licence that is to be
enforced during a subsequent
licence period - the financial year ending on
30th June last preceding the commencement of the licence period. (at p503)
13. Section 14 makes provision for the quantity of any petroleum product that
is to be non-accountable for the purpose of determining
licence fees. Broadly
speaking, it is that quantity of petroleum products which have been sold by
the licensee to another licensee,
less wastage, and is held for resale by him.
(at p503)
14. There is in all this nothing to distinguish the licence fee from that
which was dealt with in Dickenson's Arcade [1974] HCA
9; (1974) 130
CLR 177 . Although some
attempt was made to suggest that the plaintiff was engaged in manufacturing
operations in
that
it included
one or more additives in the petroleum products
which it obtained from refiners, the prohibition is against carrying
on the
business
of selling petroleum products without a licence, that is against
selling, not against manufacturing. The case is,
therefore, governed
by
Dickenson's Arcade. (at p503)
15. The Act was also attacked by the plaintiff on the ground that it
contravened s. 92. This attack was put upon two grounds.
In order to
understand them it is necessary to say something of the allegations in the
further amended statement of claim as they
relate to the plaintiff's business
and to the commercial arrangements which have been made governing the refining
and distribution
of petroleum products in Australia. (at p503)
16. The plaintiff carries on the business of selling and delivering "Golden
Fleece" petroleum products throughout Australia. It
obtains these products
from refiners in Australia and by importation. They are transported by the
plaintiff to various terminals,
depots and outports and from there delivered
to retail outlets and premises of consumers. The plaintiff supplies a chain of
Golden
Fleece service stations some of which are owned or operated by it. (at
p503)
17. The refining, distribution and marketing of petroleum products (except
oils and greases) in Australia is carried out predominantly
by nine companies
(which include Esso Australia Pty. Ltd. ("Esso") and Mobil Oil Australia Ltd.
("Mobil")) all of which either
themselves or through related companies operate
refineries or have access by way of processing agreements to refinery
production
in this country. The refineries are situate in various States. The
bulk of petroleum products sold in Australia are produced in
these refineries.
Each marketing company draws its supplies from the refinery most suitably
located to the relevant marketing area,
notwithstanding that the refinery is
owned and operated by another marketing company and that supplies are
delivered across State
boundaries. (at p504)
18. The statement of claim then makes the following allegations:
"14. The supply of petroleum products to the marketing
companies from refineries over the production of which they
have no control is obtained pursuant to a system known as
'refinery exchange'.
15. Refinery exchange is the selling and delivering by one
marketer (the first marketer) in a State (the first State) of
quantities and types of petroleum products being the output
of a refinery controlled by the first marketer in the first State
to a second marketer in consideration of that second
marketer selling and delivering to the first marketer in
another State like quantities and types of petroleum products
being the output of a refinery controlled by the second
marketer in that other State.
16. The essential purpose of the system of refinery
exchange is to avoid transportation and other costs which
would otherwise be incurred by a marketing company
transporting petroleum products from a refinery controlled by
that marketing company in one State to a marketing area in
another State." (at p504)
19. The plaintiff asserts that it has a processing agreement with Australian
Oil Refining Pty. Ltd. ("A.O.R.") whereby A.O.R.
processes crude oil at its
refinery at Kurnell in New South Wales supplied by the plaintiff into
petroleum products. Sixty-three
per cent of the petroleum products so
processed by A.O.R. or the plaintiff are sold by the plaintiff to other
marketing companies.
These sales are referred to as "the exchange sales". (at
p504)
20. In consideration for and dependent upon the plaintiff making the exchange
sales, other marketing companies sell and deliver
to the plaintiff in States
other than New South Wales like quantities and types of petroleum products.
These sales are referred
to as "the exchange purchases". (at p504)
21. The plaintiff then alleges that the exchange sales and the exchange
purchases involve "the preparation of projections of the
quantity type and
place of product demands, communications in various forms, the taking of
accounts and the movements of credits
and debits between and among the
marketing companies" throughout Australia (par. 22). (at p504)
22. The plaintiff further alleges that sales made to the plaintiff by Mobil
and Esso from their Port Stanvac refinery in South
Australia as part of the
exchange purchases are delivered by Mobil or Esso or are transported by the
plaintiff from Port Stanvac
to various distribution points situate within
South Australia, Victoria, Tasmania and New South Wales (pars 24 and 25). (at
p505)
23. On the basis of these allegations the plaintiff's first submission was
that the overall arrangement between the marketing
companies ("the system of
refinery exchange") set up a refinery pool or oil bank whose establishment and
exploitation involved
the making of communications and of debits and credits
across State boundaries with the consequence that the plaintiff and the
marketing companies were engaged in interstate trade and commerce in the same
fashion as the trading banks were held to be so engaged
in the Bank
Nationalization Case [1948] HCA 7; (1948) 76 CLR 1 . The submission misconceives both the
character of the overall
arrangement as
it is pleaded (par. 15) and the
basis
on which it was decided that the trading banks were engaged in interstate
trade. (at p505)
24. In the Bank Nationalization Case it was held that the conduct of banking
business involved the movement of money and of debits
and credits across State
boundaries. The majority in the High Court rejected the notion that debits and
credits were extinguished
and merely replaced by debits and credits in another
State. Thus Rich and Williams JJ. said (1948) 76 CLR, at p 289 :
"The banks are engaged in moving money or its equivalentDixon J. (1948) 76 CLR, at p 380 , in reviewing the constituent elements of the business of the private banks stated that they necessarily included, inter alia,
bank credit about intra-State and inter-State for reward
whether the movement is effected by the transfer of actual
money in the shape of notes or coin from one place to another
or by means of cheques or other documents or telegraphic
transfers and subsequent debits and credits in customers'
accounts."
"(a) the constant inter-State transmission of funds andHis Honour went on to say (1948) 76 CLR, at p 383 :
transfer of credit; (b) constant business communication and
intercourse among the States;
(c) the regular use for the purposes of inter-State
transactions of instruments of credit and of title to goods and their
inter-State transmission; (d) the integration of inter-State
banking transactions with the entire business of the bank to
form a system spreading over the Commonwealth without
regard to State lines."
"The contention made that what is commonly called a
transmission of money or credit by a bank involves no
movement, no interchange, nothing occurring across State
lines, but merely the reduction of credit in one place and an
increase in another, seems to substitute an analysis - and one
of doubtful adequacy - belonging to monetary theory for the
common understanding of the course business takes and the
complexion which the law places upon it. But for myself I
should think that if these interdependent and significant
phenomena occurred in different States, involving, as they
must, communication between the States, it would be
enough." (at p506)
25. Here, however, neither the system of refinery exchange nor its execution
contemplates the movement from one place to another
or from one State to
another of petroleum products, or for that matter the movement interstate of
debits and credits. The system
involves no more than that one marketing
company, having control of a refinery output in one State, will sell and
deliver from
that output a quantity of petroleum products to another marketing
company in consideration of that other marketing company, having
control of
refinery output in another State, selling and delivering a like quantity of
petroleum products from that output to the
first-mentioned marketing company.
This arrangement does not call for the sale or delivery of any product across
State boundaries.
The sale and delivery in each instance is intrastate. It
does not acquire an interstate flavour merely because the consideration
for it
is a like sale and delivery occurring wholly within the boundaries of another
State. Accounts of the various transactions
between the marketing companies
are kept, but it is altogether too much to say that the debit and credit
entries in these accounts
are to be likened for relevant purposes to the
debits and credits made by a bank in the course of the banker-customer
relationship
or that there is here involved a movement of credits across State
lines in the sense in which it was held that banking involved
such a movement.
(at p506)
26. Indeed, the system of refinery exchange is far removed from the business
of banking. If a parallel is to be sought it is more
likely to be found in the
business of insurance which was held in Hospital Provident Fund Pty. Ltd. v.
Victoria
[1953] HCA 8; (1953) 87 CLR 1
not to involve encouragement in interstate trade and
commerce. In that case Dixon C.J. said (1953) 87 CLR, at
pp
14-15 :
"For a company to contract with a man that, inHis Honour went on to point out that the transmission of funds and the exchange of communications were no more than the incidents of the business (1953) 87 CLR, at p 18 , a view also expressed by Fullagar J. (1953) 87 CLR, at pp 38-39 . (at p507)
consideration of the latter making payments to it at any given place,
the company will in a specified contingency make a payment
to him at some other place is not to engage in inter-State
commerce. Neither the making of the contract nor the
performance of the contract by either side involves any step
or dealing which of itself forms part of inter-State commerce
even if a State line runs between the two places. If it is
found necessary or convenient by either party to
communicate with the other across a boundary between two
States in the course of making the contract, that is an
accidental feature which cannot make it an inter-State
contract, although the sending of the communication itself
will, of course, form an act of inter-State commerce or
intercourse. In the same way, if either party finds it
necessary to transmit money across such a boundary, so that
he may make a payment in pursuance of the obligation of the
contract, the transmission of the money will be an act of
inter-State commerce, but that will not make the performance
of the contract an inter-State transaction."
27. These observations demonstrate that communications made by the marketing
companies in the execution of the system of refinery
exchange across State
boundaries are themselves entitled to the protection of s. 92, but enough has
been said to show that the
existence of these communications is not enough to
endow the system of refinery exchange in the course of which they are made
with
the characteristics of interstate trade and commerce. (at p507)
28. In support of its case the plaintiff seized on an observation made by
Rich and Williams JJ. in the Bank Nationalization Case
where their Honours
said (1948) 74 CLR, at p 289 : "A contract between A in Sydney and B in
Melbourne by which A agrees to deliver
goods to B in Sydney in exchange for
goods to be delivered by B to A in Melbourne is a transaction of trade and
commerce among
the States." With respect to their Honours, the example given
is not an instance of interstate trade. The contract supposed does
not call
for the delivery of goods across a State boundary; it therefore does not
involve interstate trade. Moreover, there is
no importation or movement of
goods from one State to another; consequently the goods do not enter
interstate trade. That this
is so is made clear in W. & A. McArthur Ltd. v.
Queensland [1920] HCA 77; (1920) 28 CLR 530 where it was held that of the
following
transactions
entered into by travellers in Queensland on behalf of the
plaintiff, a Sydney company, "(1) they offer for
sale goods of the
descriptions
sold by the plaintiff, to be delivered in Queensland;
(2) they
obtain offers to purchase goods
of the descriptions sold by the
plaintiff, and
forward the offers to the plaintiff in
Sydney, where they are accepted, and
the
goods are in fact despatched to
the purchasers in Queensland; (3) they
make agreements
to sell goods of that description to be
delivered in
Queensland; and (4)
they make agreements to sell goods of that description,
stipulating that the goods are to be
despatched from the plaintiff's warehouse
in Sydney and delivered by plaintiff to purchasers
in Queensland" (1920) 28
CLR, at p
540 , only the fourth was held to be an example
of interstate trade
(1920) 28 CLR, at pp 559-560
. This view of the constitutional
conception of
interstate trade has been consistently
maintained ever since (see Carter v.
Potato
Marketing Board (1951) 84 CLR
480 ; Chapman v. Suttie (1963) 110 CLR
321, at pp 337,
341, 344 ; Mikasa (N.S.W.) Pty. Ltd. v. Festival
Stores (1972)
[1972] HCA
69; 127 CLR 617, at pp 628, 639 ; S.O.S. (Mowbray) Pty. Ltd. v. Mead
(1972) 124
CLR 529 ; and North Eastern Dairy Co. Ltd. v. Dairy
Industry Authority
(N.S.W.) [1975] HCA 45; (1975) 134 CLR 559 ). (at p508)
29. Considered in this light pars 24 and 25 add nothing to the plaintiff's
first submission. It is not suggested that the system
of refinery exchange
creates any contractual obligation to deliver petroleum products from the Port
Stanvac refinery across State
boundaries. Of course any such delivery would be
protected by s. 92 but this is quite another matter and it lends no support to
the plaintiff's general submission based on the system of refinery exchange.
(at p508)
30. The plaintiff's second submission is founded on certain transactions
which are pleaded in pars 28 to 30 of the amended statement
of claim. The
plaintiff submits that each group of transactions constitutes interstate trade
and commerce. Paragraph 28 alleges
that the plaintiff has carried on and
intends to carry on at distribution points in South Australia the business of
selling in
that State petroleum products and delivering such products to
purchasers resident in Victoria. The particulars which follow show
that sales
are made in South Australia to purchasers in Victoria and that deliveries of
the products thus sold are made by the
plaintiff and in one instance by a
carrier from distribution points in South Australia to destinations in
Victoria. There is, however,
no allegation that the contracts of sale call for
delivery across the border. Paragraph 29 alleges that the plaintiff has
carried
on the business of receiving orders for petroleum products from
purchasers resident in South Australia and "pursuant to such orders
delivering
such petroleum products from Victoria into South Australia" where the products
are sold to the purchasers. The particulars
of this allegation indicate that
the plaintiff received orders from its agent in Mount Gambier for petroleum
products from purchasers
in South Australia and that the plaintiff satisfied
these orders by transporting petroleum products from Portland in Victoria
either
directly to the purchasers or to its agent at Mount Gambier who
thereupon delivered or caused to be delivered the products to the
purchasers.
Here again there is no allegation that the contract called for delivery across
a State border. The plaintiff would
have been at liberty to satisfy the order
by making a delivery from stocks in South Australia. Paragraph 30 alleges that
the plaintiff
receives orders for petroleum products from purchasers in South
Australia and "pursuant to such orders delivers products from Broken
Hill in
New South Wales into South Australia" where the products are sold to the
purchasers. The particulars indicate that deliveries
are made by the plaintiff
from Broken Hill to a destination in South Australia, but once again the
paragraph and the particulars
do not contain any allegation that the contract
required the petroleum products to be delivered across a State border. (at
p509)
31. It therefore follows that in my view on the allegations in the statement
of claim the plaintiff has failed to make out that
it is engaged in interstate
trade or that the sales that it makes are sales made in the course of that
trade. (at p509)
32. Although the plaintiff is not engaged in interstate trade it may have a
sufficient interest to invoke s. 92 if it can show
that the Act contravenes
the section and that the application of the statute to interstate trade is
inseverable from its application
to intrastate trade. The first step in this
argument is that s. 11 (1) is a provision which applies to sales made in the
course
of interstate trade - I do not accept the argument that in the context
of s. 92 there is a material distinction between a prohibition
against sale
and a prohibition against carrying on the business of selling. Either
prohibition, it seems to me, is a burden on
interstate trade. The relevant
prohibition is against the carrying on of the business of selling petroleum
products without a licence.
The Commissioner has a discretion to grant or
refuse a licence, the criteria to be applied being left at large (s. 19). The
licensing
scheme cannot be justified as a regulation of the trade, for the
legislation makes no attempt to prescribe or insist upon standards.
Rather,
the licensing system is a means of imposing and collecting a tax in the form
of the licence fees which are prescribed by
s. 14. That section makes no
allowance, in calculating the amount of the licence fee payable, for
quantities of petroleum products
sold in the course of interstate trade.
Consequently, it is my opinion that the Act, to the extent to which it applies
to sales
made in the course of that trade, contravenes s. 92, by prohibiting
the carrying on of business which includes the making of such
sales otherwise
than as authorized by a licence for which fees are payable, the amount of the
fee constituting a tax on the trade.
(at p510)
33. Likewise, the penalty imposed by s. 11 (1a) is a tax on interstate trade
to the extent to which it is capable of being imposed
on a person in respect
of sales made in the course of that trade otherwise than as authorized by a
licence. (at p510)
34. The question, then, is whether the relevant provisions of the Act are
capable of severance. The Act does not contain a reading
down portion,
although a reference to interstate trade is to be found in s. 4 (4). It is
therefore necessary to look to s. 22a
of the Acts Interpretation Act, 1915
(S.A.), as amended. It provides, so far as it is material:
"(1) Every Act and every provision of an Act shall be
construed so as not to exceed the legislative power of the
State.
(2) Any Act or provision of an Act which, but for this
section, would exceed the power of the State, shall
nevertheless be a valid enactment to the extent to which it
does not exceed that power." (at p510)
35. This section is not expressed so as to give the Act a distributive
operation with respect to acts, matters, persons and things
within legislative
power; nevertheless it is sufficient in my opinion to enable s. 11 (1) to be
read down so as to apply only to
the business of selling petroleum products
intrastate (see Cam & Sons Pty. Ltd. v. Chief Secretary (N.S.W.) (1951) 84 CLR
442
;
Wilcox Mofflin Ltd. v. New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 523 ). I
would therefore regard the prohibition
contained in s. 11
(1) as capable of
being severed so
as to apply to the carrying on of the business of selling
petroleum products
otherwise than
in the course of interstate trade. The
prohibition contained in s. 13 should be similarly read down. (at p510)
36. The next question is whether the provisions in s. 14 respecting the
payment of licence fees are also capable of severance.
In my opinion they are.
Once regard is had to s. 22a the Act should be given an operation which
confines its application to intrastate
trade. Conformably with this approach
licence fees should be calculated by reference to the prescribed percentage of
the value
of the quantity of petroleum products sold by the applicant
otherwise than in the course of interstate trade (s. 14 (2) ). Likewise,
in
computing the quantity of petroleum products non-accountable in respect of a
period, petroleum products sold in the course of
interstate trade should be
left out of account. (at p511)
37. In the result I would allow the demurrer and dismiss the suit. (at p511)
JACOBS J. The Business Franchise (Petroleum) Act, 1974-1975 (S.A.) provided
by s. 11 that a person should not carry on the business
of selling petroleum
products unless he was the holder of a licence. The plaintiff carried on at
the relevant time the business
of selling petroleum products. The type of
business carried on by it would under the Act have required a licence under
class 5
or class 8 depending upon whether the addition of petroleum additives
to petroleum products already manufactured constitutes the
manufacture of a
fresh petroleum product. A class 5 licence is defined in s. 4 (1) to mean -
"a licence that authorizes the licensee to carry on theA class 8 licence is defined to mean -
business of selling petroleum products manufactured by him
and petroleum products not manufactured by him and to
sell them to other licensees or to persons who are not
licensees, if, in the case of the sale of any petroleum product
prescribed for the purposes of this class of licence to such a
person, the quantity of that petroleum product is not less
than the quantity of that petroleum product prescribed for
that purpose:"
"a licence that authorizes the licensee to carry on theThe conditions for sale under these licences to persons who are not licensees deal with sales on a small scale and require no particular elaboration for the purposes of this case. (at p511)
business of selling petroleum products not manufactured by
him and to sell them only to other licensees or to persons who
are not licensees, if, in the case of the sale of any petroleum
products prescribed for the purposes of this class of licence to
such a person, the quantity of that petroleum product is not
less than the quantity of that petroleum product prescribed
for that purpose:"
2. It may be that the plaintiff which also conducted some service stations
directly as part of its business would have required
a class 9 licence which
is defined to mean -
"a licence that authorizes the licensee to carry on at theIn fact the plaintiff had no licence at all during the relevant period when it made sales of petroleum products. Thereby it offended against the requirement of s. 11. (at p512)
premises specified in the licence the business of selling, at the
premises specified in the licence, petroleum products not
manufactured by him and not manufactured at those
premises and to sell them only to persons who are not
licensees".
3. The calculation of licence fees is provided for in s. 14. Fees are
prescribed for each class of licence in (a) a lump sum and
(b) "the prescribed
percentage of the value of the quantity of petroleum products sold by the
applicant during the relevant period
reduced by the quantity of any petroleum
product non-accountable in respect of that period". Section 14 (1) provides:
"14. (1) A reference in this section to the quantity of any"Relevant period" is defined in s. 4 (1) to mean -
petroleum product non-accountable in respect of a relevant
period in relation to which any part of a fee for a licence is
assessed is a reference to the quantity, if any, of any
petroleum product, being a petroleum product which was sold
by that licensee to another licensee, whether or not during
that period, and -
(a) which was resold by that other licensee during that
period;
(b) which, in the opinion of the Commissioner, was wasted
or lost by spillage, evaporation, theft or fire by that
other licensee during that period;
or
(c) which at the end of that period was, in the opinion of
the Commissioner, held for resale by that other
licensee,
reduced by the quantity, if any, of that petroleum product
which was sold by the firstmentioned licensee to that other
licensee and which at the end of the next preceding relevant
period was, in the opinion of the Commissioner, held for
resale by that other licensee."
"(a) in relation to a licence that is to be in force during the
first licence period - the financial year ending on the
thirtieth day of June, 1974;
and
(b) in relation to a licence that is to be in force during a
subsequent licence period - the financial year ending
on the thirtieth day of June last preceding the
commencement of that licence period:" (at p512)
4. Broadly speaking, the effect of s. 14 (1) is that no licence fee other
than the small lump sum is payable by a wholesale distributor
of petroleum
products if the sale and distribution of the products have been made at any
time to retailers licensed under class
9 and the products have been resold by
the retailer during the relevant period. The retailer, since he does not sell
to a licensee
but to the public, has no non-accountable quantity under s. 14
(1). The class 9 licensee thus is liable for a large licence fee,
and any
particular lot of petroleum products is only brought in once over all in the
calculation of the licence fees payable for
licences granted in any one
licence year. (at p513)
5. The plaintiff claims that the whole Act is invalid because its purpose and
effect is to set up a scheme for the collection
of the fees and because the
collection of those fees is the collection of duties within the meaning of s.
90 of the Constitution. The plaintiff submits that it is entitled so to claim
even though, not having been licensed, it never became liable to pay licence
fees. I think that this submission is correct but, whether or not that be so,
the plaintiff has a sufficient interest to challenge
the validity of those
parts of the Act which impose fees for licences, particularly as under the
1975 amending Act the penalty
for the breach of s. 11 is, in addition to a
lump sum, such amount as is certified by the Commissioner of Stamps as the
amount
by which the convicted person has benefited financially through the
non-payment of licence fees. The penalty thus becomes a mechanism
for the
collection of the impugned fees. (at p513)
6. The principle of stare decisis has a particularly important application in
a field such as the limits of the taxing powers
of the States. The difficult
and delicate balance between the Commonwealth and the States on fiscal matters
may be currently being
preserved upon the basis of decisions previously given
by this Court. A previous decision of this Court should not be overruled
unless the Court is convinced not only that it was wrongly decided but that
adherence to the decision is leading to social, economic
or political
consequences which cannot be tolerated by the nation, consequences perhaps not
foreseen when the decision was given.
The fact that the consequences of
decisions in constitutional cases cannot be readily altered by the legislature
must result in
a willingness, when necessary, to review a previous decision
but on the other hand there must be a reluctance so to do unless circumstances
compel such a review. (at p513)
7. The principle of stare decisis, however, falls only to be applied within
the limits of the principle itself. It is trite law
that any case is only
authority for what it actually decides. A case is not authority for the
process of reasoning or the multitude
of processes of reasoning which may
appear in the reasons for judgment. It is a necessary part of the practice
whereby reasons
for decision are expressed that general principles should be
formulated and expressed and such formulations by a process of reasoning,
particularly, a process of reasoning agreed on by a majority of the Court may
provide a most compellingly persuasive precedent
for the decision of a case
where the facts, or, as frequently happens in constitutional cases, the
impugned laws are different;
but they do not govern the decision of the later
case. If the earlier case is to be distinguished, the point or points of
distinction
must be relevant to the subject matter upon which the Court has
given its decision, and the reasons for choosing to distinguish
rather than to
follow the earlier decision must be explored so that the course which is
emerging in development of a principle,
great or small, can be the better
predicted. That is the path to certainty in the law through the principle of
stare decisis. There
can be no certainty or predictability in the course of
decision if the area of choice is not recognized and explored or if the
process of choice is elided. At the same time it must be borne in mind that
the area of choice is seldom large and the choice itself
seldom radical. Not
to bear this in mind is no less an error than a failure to recognize the
process of choice itself. (at p514)
8. No provision of the Constitution can be absolutely defined in the sense
that there can be an exhaustive epexegesis which as a binding formula can be
applied to
any set of facts or circumstances or to impugned legislation. I am
aware as I write that my intention may be misunderstood and that,
if I do not
reiterate the contrary, it may be said that my approach would lead to
vagueness, uncertainty and a chance that the
Constitution would fall to be
applied in accordance with individual predilections ungoverned by authority. I
intend exactly the opposite. The
judicial process requires that the inevitable
choices which fall to be made by judges be confined within the limits which
training,
tradition, respect for the opinions of other members of the Court,
past and present, and the ordinary intellectual processes of
argument impose.
But the process is inductive; it is not deductive from a generalization made
in an earlier case. I would say that
particularly is this so when the
generalization is an epexegesis upon the words of the Constitution. (at p514)
9. I have been minded to elaborate on the nature of precedent because I
believe that it assists in an approach to the present
case. I do not think
that any of the actual decisions upon s. 90 conflict with each other but there
are considerable divergencies in the reasoning expressed for the decisions. I
propose therefore
to look at the decisions on s. 90 for what they decided. (at
p514)
10. In Peterswald v. Bartley [1904] HCA 21; (1904) 1 CLR 497 it was held that brewers'
licence fees payable under a statute
which provided that
every brewer should
have
a licence to carry on the business of brewing, and that the licence
should be granted
to a particular
person in respect of particular
premises and
that the fee was a flat fee, were not a duty of excise within the meaning
of
s. 90. It was thereby necessarily decided that "duties of excise" within s. 90
did not have the same meaning as the term "excise duty" as that term was used
in England where a brewer's licence fee would be
described as an excise duty.
However, the decision is strictly only an authority in respect of licences (a)
which provide for the
carrying on of the business on particular premises and
(b) where the amount of the licence fee does not depend upon the quantity
or
value of beer manufactured. It did not necessarily decide that a duty of
excise was a tax on goods but the reasoning ex converso
the English use of the
word would powerfully support such a proposition. It certainly did not decide
on what goods either in respect
of kind or stage of creation, distribution or
consumption the duty had to be a tax before it could be described as a duty of
excise.
(at p515)
11. In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South
Australia [1926] HCA 47; (1926) 38 CLR 408 it was held
that a statute
of the State of South
Australia imposing a tax on a vendor of motor spirit calculated
at the rate of
three pence
for every gallon
of motor spirit sold by him within the State was
invalid under s. 90. It was necessarily held that such a tax was a duty of
customs or a duty of excise within the meaning of those words in s. 90. It was
also held that a tax imposed on any person who used any motor spirit in excess
of a certain quantity which he has purchased
or obtained outside the State of
South Australia for the purpose of propelling any motor vehicle on any street
or road within the
State calculated at the rate of three pence per gallon of
motor spirit so purchased or obtained or so used was invalid but no majority
of the members of the Court determined that this tax was invalid by virtue of
s. 90 of the Constitution. That question therefore remained undecided. There
was a difference of opinion whether a tax on goods not produced or
manufactured
in the State was a duty of customs or a duty of excise but it was
unnecessary to determine this question because if all other conditions
were
satisfied the tax would be either a duty of customs or a duty of excise and s.
90 applies indifferently to both. (at p515)
12. The Commonwealth Oil Refineries Case [1926] HCA 47; (1926) 38 CLR 408 also decides that
a tax may be a s. 90 duty even though it be imposed on a vendor personally if
it is imposed at a rate calculated on the quantity of goods sold. It did
not
decide that every tax imposed on a vendor at a rate calculated on the quantity
of goods sold was a s. 90 duty because that question did not arise for
decision. But it was decided that a tax could be a s. 90 duty if it was
calculated on the quantity of goods sold provided at least that the sale was
the first sale after manufacture, production
or importation. (at p516)
13. In John Fairfax & Sons Ltd. v. New South Wales [1927] HCA 3; (1927) 39 CLR 139 it was
held that a statute imposing a
tax of one halfpenny
upon each copy of a
newspaper published in editions
of more than 15,000 copies in New South Wales
and issued
for sale and actually
sold was a s. 90 duty. The tax not being on
imported goods, it therefore decided that the tax was a duty of excise and is
therefore authority for
the proposition that a tax on goods produced or
manufactured in a State is a duty of excise when the tax is calculated by
reference
to the goods produced or manufactured and then sold. (at p516)
14. In Crothers v. Sheil [1933] HCA 42; (1933) 49 CLR 399 it was held that a statute
providing for a compulsory acquisition
by a board of milk,
a sale thereof, a
payment
for the compulsory acquisition on the basis of a notified minimum
price and payment,
out of the difference
between the minimum price
on
acquisition and the price on sale, of expenditure incurred in treatment,
carriage,
distribution and
sale, and the costs, charges
and expenses of
administration by the board and the provision of a sinking fund in
respect of
the
principal and interest on any
loan raised by the board, did not infringe
s. 90 by imposing a duty of excise. (at p516)
15. In Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. (1937) 56 CLR
390 it was held that a statute providing for the compulsory
acquisition of
flour from an owner at a fair and reasonable price as fixed by a committee,
for the resale of the flour, and for
a first right in that prior owner to
purchase the flour in his possession, which had been compulsorily acquired, at
a standard
price fixed by the Governor, imposed a duty of excise in respect of
the difference between the price at which the flour was acquired
and the price
at which it was resold to the prior owner. The case is authority for the
proposition that a duty of excise need not
necessarily be imposed in the form
of a direct compulsory levy or tax. (at p516)
16. In Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 there were dicta by the majority
that a levy upon the owners of any
registered packing
shed in a sum determined
by a board not exceeding an amount equal to 1/32 per penny per pound of the
value of
the dried fruits
sold or forwarded for sale
from the packing shed in
the preceding year by way of contribution towards the expenditure
of the
Victorian
Dried Fruits Board
was not a duty of excise. I refer to these dicta
because of the discussion of this case in
later cases. (at p517)
17. In Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 it was
held that a levy on producers of
1 pound for every
half acre of land planted
with chicory during a prior
annual period where the statute provided that the
proceeds
of the levy should
be applied in payment of expenses, in repayment of
advances to a board, in effecting insurances and in work directed
to the
improvement
of the quality of the commodity was a duty
of excise within the
meaning of s. 90. It was thereby decided that a tax, in order to be a duty of
excise, need not necessarily be imposed on goods already in existence
or in a
relationship to the quantity or value of goods produced which can be precisely
ascertained. It was also decided that the
disposition of the proceeds of the
tax in the way provided in the statute did not give validity. (at p517)
18. In Hopper v. Egg and Egg Pulp Marketing Board (Vict.) [1939] HCA 24; (1939) 61 CLR 665 ,
the legislation was in relevant
respects similar
to the milk legislation in
Crothers v. Sheil [1933] HCA 42; (1933) 49 CLR 399 which was applied and the levy
was held
not to be a duty of excise.
(at p517)
19. In Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229 a statutory provision
imposing upon a dairyman (other than
the owner of
a milk shop), and empowering
a board
to determine the amount of, a levy in a sum not exceeding one farthing
per gallon
of milk
sold by him was held invalid as imposing
a duty of excise
within s. 90. "Dairyman" was defined to mean the owner of a dairy within the
metropolis and "dairy" was defined to mean inter alia any premises
(not being
solely a dairy farm or factory) where milk was kept for sale. The case decided
that a tax upon goods at the point of
sale as well as at the point of
production or manufacture could be and was in that case a duty of excise. (at
p517)
20. In Browns Transport Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 CLR 117 a statute
which required vehicles for the carriage
of passengers
or goods to be licensed
and enabled a licence
fee to be fixed at an amount per centum of the gross
revenue derived
by the licensee
from the carrying on of the service authorized
by the licence was held not to provide for the imposition of a duty
of excise.
The
decision is authority for the proposition that
a tax calculated upon the
revenue earned from such a service as the
carriage of goods
is not a tax upon
the goods carried. It did
not decide that a tax calculated upon the quantity
or value of goods
carried was not
a duty of excise. (at p518)
21. In Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 it was held
that a licence fee payable in respect
of a victualler's
licence for the
conduct of an hotel on
certain premises, where the licence fee was calculated
as a percentage
of the gross amount
paid or payable for all liquor which
during the twelve months ended on the last day of June preceding the date
of
application for
the grant or renewal of the licence
was purchased for the
premises was not a duty of excise. It was also held
that a licence fee
for a
temporary victualler's licence
enabling the holder of an annual victualler's
licence in respect of certain
premises to sell
liquor at an agricultural show,
at
a regatta and at any of a number of other specified temporary amusements or
games where the
licence fee was a small sum per day
in respect of each booth,
stall, bar or place from which liquor would be sold
and a further
fee
calculated as a percentage of the
gross amount paid or payable for all liquor
purchased for sale or disposal
under such licence
was a duty of excise. The
decision
is authority for the proposition that a licence fee in respect of a
licence
for the sale of
alcoholic beverages at particular premises
is not a
duty of excise where the licence fee is calculated as a percentage
of the
purchase
price of liquor purchased for sale
at those premises at least where
the percentage is calculated on the purchase
price of liquor
purchased for
sale at those premises
during a period preceding the period for which the
licence is granted. The
decision is also
authority for the proposition that a
licence fee where (a) the licence does not license sale at premises of the
licensee but licenses
sale at a public place of amusement
on a particular
occasion and (b) the licence fee is calculated on the
value of liquor
purchased
for sale under that licence is
a duty of excise. (at p518)
22. In Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [1962] HCA 41; (1962) 108 CLR 189
it was held that a fee payable by
the occupier of
an abattoir or
slaughter-house expressed to be for the purpose
of defraying the expenses of
inspection of meat
for sale and of
carrying the Act into effect calculated at
one shilling per 100lb
of broken up carcase of beef where the fee was
payable
into Consolidated
Revenue was a duty of excise. (at p518)
23. In Bolton v. Madsen [1963] HCA 16; (1963) 110 CLR 264 it was held that the use of a
vehicle for the carriage of wool by
the owner of the
wool who was also the
charterer
of the vehicle without a permit having been issued to him to carry
the wool on
the vehicle where
a fee was payable for the permit
and where the
fee demanded was 3d. per ton per mile on the registered carrying
capacity of
the
vehicle was validly made an offence.
It was also held that the imposition
of a charge of double the fee which would
have been payable
for such a permit
when the wool
was carried without a permit was not the imposition of a duty of
excise. It did
not decide that
a fee calculated on the quantity
of wool
carried was not a duty of excise. (at p519)
24. In Anderson's Pty. Ltd. v. Victoria [1964] HCA 77; (1964) 111 CLR 353 it was held that
a duty, to be collected by stamping
of the instrument
or by payment to the
Controller of
Stamps in the case of approved vendors, in respect of hire
purchase agreements
where the duty
was fixed at the rate of two per cent
of
the "purchase price" (as defined) of the goods, defined as the total amount
payable under
the agreement less the deposit and
interest, insurance and other
charges, and where the preparation of an instrument
by the vendor
was made
compulsory and where the
vendor was forbidden to add the amount of the duty to
any amount payable by the
purchaser of
the goods was not a duty of excise.
(at
p519)
25. In Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361 it was held that a fee payable
to a board expressed to be and in
fact for the grading,
testing, marking and
stamping of eggs by the board or a person, including a producer of the eggs,
authorized
by the board, where
the sale of eggs which
had not been graded,
tested, marked and stamped was forbidden and made an offence, and
where the
fees did
not pass from the board
into Consolidated Revenue but were included
in the funds of the board from whose surplus
final payments
would be made to
egg producers,
was not a duty of excise. (at p519)
26. In Western Australia v. Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970) 121 CLR 1
and in Victoria v. I.A.C. (Wholesale)
Pty. Ltd.
[1970] HCA 5; (1970) 121 CLR 1 it was held
that a stamp duty (so called in the statute) payable on any instrument of
receipt of moneys representing
payment of the wholesale price of new goods
sold and either manufactured (Chamberlain) or not manufactured
(I.A.C.) by the
trader
where the tender of an instrument of receipt was made compulsory and
where a trader could elect in lieu
of issuing receipts to pay
the stamp duty
after submission of a statement of total amounts received by the trader, was a
duty of
excise within the meaning
of s. 90. (at p519)
27. In Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 CLR 177 it was
held that a fee payable for a licence
to sell tobacco
by retail on designated
premises where the statute
required a person selling tobacco by retail to be
licensed so
to do on the premises
in which the selling takes place and where
the fee was to be calculated (with stated minimum) at a rate of
thirty per
cent of the
average value over a period of twelve months
expiring six months
prior to the commencement of the period
of the licence at retail
values of
tobacco handled in the retail business
on the premises during that period, was
not a duty within
the meaning of s. 90.
It was also held that a tax imposed on
a person
for consuming tobacco, the amount thereof being calculated
on the
value of tobacco
consumed according to the usual retail price
was not a duty
within the meaning of s. 90. (at p520)
28. In M. G. Kailis (1962) Pty. Ltd. v. Western Australia (1974) 130 CLR 245
a fee payable in respect of a fish
processor's licence
where the statute
required a licence to be held by any
person operating a processing
establishment in respect
of that processing
establishment and where the fee
was calculated at a percentage
of the gross amount of the value of fish
caught,
and the moneys
paid or payable for fish purchased, for processing in
the processing
establishment during the period (presumably
the period of a
year) ending 30th June next preceding the commencement of the licence
period
and where the fee in the case of an
establishment
not in operation during the
prior period was such amount as the Minister
might fix having regard to his
estimate
of the probable
extent of the annual catches and purchases of fish
for processing in the
establishment, was held to be a duty of
excise within
the meaning of s. 90. (at p520)
29. It appears to me that the following propositions have been established by
the authorities. A duty of excise under s. 90 is
a tax on goods: Peterswald v.
Bartley [1904] HCA 21; (1904) 1 CLR 497 . The goods taxed may be primary production: Matthews
v.
Chicory Marketing
Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 ; Parton v. Milk Board
(Vict.) [1949] HCA 67; (1949) 80 CLR 229
; or manufactured goods: John Fairfax & Sons Ltd.
v.
New South Wales [1927] HCA 3; (1927) 39 CLR 139 . The fact that the tax
is payable
personally by a nominated person - producer, manufacturer,
vendor or purchaser
(other than ultimate consumer), does
not prevent the tax being a tax on goods:
passim. The goods do not have
to be in existence
at the time the tax is
calculated: Matthews
v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263 and
a sum
payable may be a tax on goods if it is so in substance
though not in
form: Commonwealth Oil Refineries
Case [1926] HCA 47; (1926) 38 CLR 408 ;
Homebush Flour
Mills Case [1937] HCA
3; (1937) 56 CLR 390 ; Matthews v. Chicory Marketing Board (Vict.)
[1938] HCA 38; (1938) 60 CLR 263 . However, although
every duty
of excise is a tax on or in
relation to or in respect of goods, not every tax
on or in relation to or in
respect of
goods is a
duty of excise. A tax imposed on a consumer in respect
of the ultimate consumption
of goods is not a duty under s. 90:
Dickenson's
Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 CLR 177 . A tax imposed on goods
simply in relation to their ownership or
use
is not a duty of excise: Browns
Transport
Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 CLR 117 ; Bolton v. Madsen (1963) 110
CLR 264 . A tax on
goods which is a duty of excise may be one imposed in
relation
to their production: Matthews v. Chicory Marketing
Board (Vict.)
[1938] HCA 38; (1938) 60 CLR 263 ; M. G. Kailis (1962) Pty. Ltd. v. Western Australia (1974)
130
CLR 245 ; or to their manufacture or processing:
Homebush Flour Mills Case
[1937] HCA 3; (1937) 56 CLR 390 ; Swift Australian Co.
(Pty.) Ltd. v. Boyd Parkinson (1962)
[1962] HCA 41; 108 CLR 189 ; or to their
first sale after production or manufacture:
Commonwealth
Oil Refineries Case [1926] HCA 47; (1926) 38 CLR 408 ; John Fairfax & Sons Ltd.
v. New
South Wales [1927] HCA 3; (1927) 39
CLR 139 ; or to their subsequent sale: Parton v.
Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229 ; Victoria v. I.A.C.
(Wholesale)
Pty.
Ltd. [1970] HCA 5; (1970) 121 CLR 1 . A sum payable for services provided in respect of the
goods themselves is not a tax:
Harper
v. Victoria [1966] HCA 26; (1966) 114 CLR 361 ; but a
sum levied in respect of goods where services to be given are not
wholly in
respect of the
goods is
a tax on goods and is a duty of excise even where the
proceeds are payable to a body providing
services to the industry
in which
the
goods are produced: Matthews v. Chicory Marketing Board (Vict.) (1938) 60 CLR
263 ; a fortiori
where the proceeds
are payable
into Consolidated Revenue:
Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [1962] HCA 41; (1962)
108 CLR 189 . (at
p521)
30. Where the goods are compulsorily acquired and the difference between the
price paid for the acquisition and the price on resale
is allocated to payment
of costs incurred in respect of the goods and other costs of the acquiring
authority, the difference is
not a tax and is therefore not a duty of excise:
Crothers v. Sheil [1933] HCA 42; (1933) 49 CLR 399 . Contrast the case where the
substance
was
not an acquisition but a mechanism for the recovery of a tax on the
product: Homebush Flour Mills Case [1937] HCA
3; (1937) 56 CLR 390 . (at p521)
31. A duty payable on the stamping of an instrument for the hire purchase of
goods is not necessarily a tax on goods even though
the duty is calculated on
the purchase price of the goods and the making of an instrument of purchase is
compulsory: Anderson's
Pty. Ltd. v. Victoria [1964] HCA 77; (1964) 111 CLR 353 but a duty
payable on receipts is a duty of excise at least in the circumstances
which
existed in Western
Australia v. Chamberlain Industries Pty. Ltd. (1970) 121
CLR 1 . See also Victoria v. I.A.C. (Wholesale)
Pty.
Ltd. [1970] HCA 5; (1970) 121 CLR 1 .
(at p522)
32. A fee for a licence to carry goods by road is not a duty of excise at
least where the fee is calculated on the gross revenue
earned from the service
of carrying the goods: Browns Transport Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 CLR 117
; or where
the fee is calculated
on the registered carrying capacity of the
vehicle: Bolton v. Madsen [1963] HCA 16; (1963) 110 CLR 264 .
(at p522)
33. A fee for a licence to carry on a business of manufacturing goods for
sale is not a duty of excise at least where the fee
is calculated in a manner
unrelated to the value or quantity of the goods manufactured: Peterswald v.
Bartley [1904] HCA 21; (1904)
1 CLR 497
. Where the licence fee is calculated as a percentage
of the price of goods purchased the fee may be a duty of
excise:
M. G. Kailis
(1962) Pty. Ltd. v. Western Australia (1974) 130 CLR 245 ; but is not
necessarily so where the goods
are purchased for resale:
Dennis Hotels Pty.
Ltd. v. Victoria
[1960] HCA 10; (1960) 104 CLR 529 ; Dickenson's Arcade Pty. Ltd.
v. Tasmania
[1974] HCA 9; (1974) 130 CLR 177 . The fact
that the fee is calculated as a percentage of
the value of production
or the price of goods purchased
during a period
preceding
the period for which the licence is granted does not necessarily
prevent
the tax being a duty of excise.
At least it will not do
so where the
producer or purchaser produces or purchases the goods for the
purpose of
processing: M. G.
Kailis (1962) Pty. Ltd.
v. Western Australia (1974) 130 CLR
245 . (at p522)
34. Where the fee is for a licence to conduct on particular premises the
business of selling by retail to the public in unrestricted
quantities a
product containing a drug and where the fee for the licence in respect of a
following period is calculated upon the
turnover of the product at the
licensed premises during a preceding period, the fee is not a duty of customs
or excise within the
meaning of s. 90: Dickenson's Arcade Pty. Ltd. v.
Tasmania [1974] HCA 9; (1974) 130 CLR 177 . (at p522)
35. It appears to me that there is a coherent pattern of decision. It is
complex but it could hardly be expected to be otherwise.
The general nature of
the pattern is one which gives a fairly narrow meaning to the word "excise".
Nevertheless the fact that the
Constitution expressly forbids the States to
impose duties of excise has been carried into effect. One of the factors of
difficulty which may
be said to lie behind the pattern is that it does not
appear clearly from the Constitution itself or otherwise why the Constitution
did in such absolute terms forbid the States to impose such duties. Another
factor is that the balance of revenue sources to government
has changed
dramatically over the years since federation. I would not deny that these
factors have in varying degrees influenced
decisions but the fact remains that
the States cannot impose excise duties. Any fundamental re-definition of
excise which would
reverse the course of decision would only institute another
generalization from which it would be sought to have later decisions
deductively determined. That is not the judicial process. The pattern which
has emerged is not comprehensive and it could not be
expected, within a
pattern of a limited number of decisions, to be so. From the course of
decision there can be discerned in the
pattern the necessity to examine the
characteristic of an excise duty which makes it not only a tax on commodities
in their course
between manufacture or production and the ultimate consumption
of the commodity or its product but a tax which has as its basis
or nature or
as the criterion of the liability to pay it the fact that it is a commodity.
This basis or nature or this criterion
of liability may be found in various
factors, e.g. the indirectness of the tax, the fact that the amount thereof
can or will be
incorporated in the price of the commodity, the fact that the
liability is imposed on the taking of a step in the course of the
commodity
from manufacture or production to consumption. However, it appears to me that
no single or simple statement of this characteristic
can be definitive.
Therefore there are and probably always will be questions still undecided. One
such question is whether, and
if so, in what circumstances, a tax on ownership
will or may be a duty of excise. Another area of decision which will continue
to be filled out in the future is when a tax is in substance, though not in
form, a duty of excise. The question when a duty on
an instrument may be a
duty of excise will probably require elaboration. In all these areas a more
detailed pattern will emerge.
(at p523)
36. I would, however, point out that although the pattern of decision is
still coherent it is showing signs of strain or distortion.
On the one side
there is the pressure of the decisions which have invalidated levies even
where the legislature's expressed purpose
was the creation of a fund devoted
to the rationalization and improvement of the industry on whose production the
levy has been
sought to be imposed. On the other side there is a "bulge"
whereby taxes in some circumstances at least can lawfully be raised by
licence
fees calculated by reference to the value or quantity of turnover in a
commercial activity even though the purpose of the
tax is unrelated to any
purpose of rationalization or improvement of the industry reflected in that
commercial activity. This,
I think, is a danger signal. (at p524)
37. The part of the pattern with which the present case is concerned is that
in respect of licences to carry on business where
the licence fee is to be
calculated as a percentage of the price of goods. The question which of the
factors stated in the above
propositions on this aspect are factors essential
to a conclusion that a licence fee calculated on quantity or value of goods is
not a duty of excise and the question whether the presence in legislation of
other and, if so, what other factors can or may lead
to a contrary conclusion
are the questions which fall to be considered in the present case. In
particular, the question arises
whether the further factor that the amount of
the fee is adjustable as a consequence of the payment of an equivalent amount
in
respect of the product by another person dealing with the product in its
course from production to ultimate consumption is a relevant
factor. (at
p524)
38. Where on an examination of the legislation as a whole it appears that the
purpose of the licensing is the facilitation of
the collection of the tax and
not the control of commercial operations in respect of the product in its
course from production
to consumption, then at least the tax will be a duty of
excise within the meaning of s. 90. Whether or not any particular piece of
legislation should be so regarded cannot be deduced from a formula. The answer
will depend
on a consideration of the operation of the legislative provisions
in the conditions of our society with which the Court is familiar
and of
which, if it be thought necessary in a particular case, the Court can be more
particularly informed. (at p524)
39. Having examined the subject legislation I am not left in any doubt
whatsoever that the licensing of the businesses is no more
than a convenient
mechanism for collecting the so-called licence fees. I say "so-called" because
it seems to me that the effect
of s. 14 (1) taken in conjunction with the
provisions of s. 22 for adjustment of fees is that, except for the small lump
sum payment, the scheme of the Act is that a sum of money calculated by
reference to the quantity of petroleum products which has commenced its
movement from production, manufacture or importation to
ultimate consumption
shall be paid to the State once, and once only, in the course of that
movement. The licence fee in so far
as it is calculated on the quantity of
petroleum products is the collection at the end of any particular period of
that "once only"
sum calculated on sales made in that period. The liability to
pay does not accrue from sale to sale in that period so that there
is not the
sanction that it may be recovered by action. Instead there is the sanction of
a compulsory cessation of trade if it
is not paid at the end of the period.
Such an operation of the statute is the imposition of a tax on petroleum
products. The legal
effect is no different from what it would have been if the
statute had without requiring any licence provided that no person should
sell
a petroleum product unless a tax had been paid or was due to be paid to the
State (not necessarily by him but by someone)
on all petroleum products sold
by him during a specified preceding period. When the statute at the same time
provides a mechanism
whereby the tax can be collected, surely the tax is on
the products of that preceding period. (at p525)
40. It has been submitted that the effect of this conclusion would be to
overturn the course of past authority: Dennis Hotels
Pty.Ltd. v. Victoria
[1960] HCA 10; (1960) 104 CLR 529 ; Dickenson's Arcade Pty. Ltd. v. Tasmania (1974) 130 CLR
177 a course
upon which the financial
relationship
between the States and the
Commonwealth has come to depend. In my opinion the first of the
above cases
did not establish
that a
licence fee where the fee is calculated on trading in
a prior period is in every case not
a duty of excise. In view of M.
G. Kailis
(1962) Pty. Ltd. v. Western Australia (1974) 130 CLR 245 it cannot be
said
that Dickenson's Arcade Pty. Ltd. v. Tasmania
[1974] HCA 9; (1974) 130 CLR 177 is authority
for such a proposition. What
has happened is that decisions that a licence fee
is not necessarily
a duty of excise where the amount of the fee is calculated
on the basis of dealings in a commodity for a preceding period has been
taken
by the legislature to be a decision that a licence
fee cannot be a duty of
excise provided that the fee is so calculated.
This has been treated as a
so-called "logical" consequence
and the State has chosen to pass legislation
accordingly. So-called
"logical" extensions of a past decision are seldom a
sufficient
ground for forecasting a future decision, because a regard only
to
the so-called logic fails to take account of the further factors
which make
the later case not merely an application but an
extension of the earlier
decision. Moreover, the financial relationship
between the States and the
Commonwealth has not come to
depend on the course of decision of this Court in
this respect. The attempted
effectuation of the idea that by setting up a
licensing
system in respect of dealing in any commodity at all, the States can
overcome
the s. 90 embargo on imposition of excise duties is
of comparatively
recent origin. It must be curbed now before the Court is faced
either with the
virtual supersession of s. 90 or
a need at some later time to cry halt. In my
opinion the time is now. (at p526)
41. I am prepared to distinguish Dennis Hotels Pty. Ltd. v. Victoria (1960)
[1960] HCA 10; 104 CLR 529 and Dickenson's Arcade
Pty. Ltd. v. Tasmania
[1974] HCA 9; (1974) 130 CLR 177
upon the ground that in both of them there was present in the impugned
legislation a concatenation of factors
- the nature of the product and the
licensing of premises for the sale of the product - sufficient
to enable it to
be held that
the calculation of the licence fee by reference to the value or
quantity of the product dealt with
in a preceding period was no
more than a
method of quantification of that licence fee and not a tax upon the product
dealt with
in the preceding period. I find
it quite impossible to say that of
legislation where the licence is no more than a mechanism for
collection of a
tax or levy on
dealings in a product during a prior period. (at p526)
42. I would overrule the demurrer. (at p526)
MURPHY J. The plaintiff claims: 1. that the licence fee requirements of the
Business Franchise (Petroleum) Act 1974-1975 are an
imposition of duties of
excise contrary to s. 90 of the Constitution; 2. that they contravene the
guarantee of freedom in s. 92 of the Constitution; and 3. that the
requirements are invalid, either entirely or to the extent of the
contravention. (at p526)
Section 90 of the Constitution.
2. Section 90 prohibits State duties of excise by declaring that "On the
imposition of uniform duties of customs the power of the Parliament to
impose
duties of customs and of excise, and to grant bounties on the production or
export of goods, shall become exclusive" and
by declaring that all State laws
imposing duties of customs or excise shall then cease to have effect. State
duties of excise for
the purposes of Ch. IV of the Constitution are taxes on
goods produced or manufactured in the State (see s. 93). Of course the tax is
payable by some person, but it is a tax imposed by reference to goods produced
or manufactured (or to the
production or manufacture of goods) within the
State. Even if there were no s. 90 or s. 92, a State could not impose a tax
simply on production or manufacture of goods outside the State. This is
because of well-recognized
limitations on the competence of a State to
legislate about things or conduct outside its territory. (These limitations
are consistent
with the meaning of excise gathered from s. 93.) (at p527)
3. If a State imposes a tax (which except for s. 92, would be within its
competence) on goods in or coming into the State which discriminates against
those goods by reference to their
production or manufacture outside, this
would be a duty of customs prohibited by s. 92 (see Fox v. Robbins (1909) 8
CLR 115 ). (at p527)
4. If it imposes a tax on goods without reference to their place of
production or manufacture, for example, a sales tax or licence
fee for sale or
distribution, or a consumption tax which applies to all goods whether from
inside or outside the State, this is
not a customs duty (or similar charge)
prohibited by s. 92 (see Fox v. Robbins; my judgment in Buck v. Bavone (1976)
[1976] HCA 24; 135 CLR 110, at pp 132-138 ). Nor, despite the observation
by Dixon C.J.
in
Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529, at p 540 is such a
tax a State duty of
excise in respect of goods produced
or manufactured within
the State.
A tax imposed (invalidly because of s. 90) by a State on production
or manufacture of goods, must be one on production or manufacture within the
State (because of the combined
effect of s. 92 and the territorial limitations
on the competence of the State) and must discriminate against such local
production or manufacture.
A non-discriminatory tax on sales or distribution
or consumption is neither a duty of customs nor of excise. (at p527)
5. Thus, goods produced or manufactured in any State may be sold, distributed
or consumed in any other State on an equal basis
of taxation with goods
produced or manufactured in the other and all other States. A State may impose
taxes on the sale or distribution
or consumption of goods; if these do not
discriminate between those produced or manufactured inside and those outside
the State,
neither s. 90 nor s. 92 is infringed. (at p527)
6. The Act involves no discrimination of this kind. The licence fee is not an
excise. In my opinion it makes no difference whether
the calculation of the
licence fee is based upon transactions of a past financial year or on those of
the current year. I do not
regard the test in Dennis Hotels v. Victoria (1960)
[1960] HCA 10; 104 CLR 529 and Dickenson's Arcade Pty. Ltd. v. Tasmania [1974]
HCA 9; (1974) 130 CLR 177
as satisfactory for determining whether s. 90 of the Constitution applies. (at
p527)
Section 92 of the Constitution.
7. I accept that the relevant business activities of the plaintiff were
largely part of trade and commerce among the States because
they concerned
more than one State (see Gibbons v. Ogden [1824] USSC 18; (1824) 9 Wheat 1 (6 Law Ed 23) ;
Bank Nationalization Case [1949] HCA
47; (1949) 79 CLR
497; (1950) AC 235 ). Because of the
absence of adverse discrimination against that trade and commerce (see Fox
v.
Robbins [1909] HCA 81; (1909)
8 CLR 115 and for the reasons which I gave in Buck v. Bavone
(1976) 135 CLR, at pp 132-138 )
the legislation does not contravene
s. 92. (at
p528)
8. The Business Franchise (Petroleum) Act 1974-1975 is valid. (at p528)
9. I would allow the demurrer and dismiss the action. (at p528)
ORDER
Demurrer allowed with costs. Action dismissed with costs.
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