Martino and Australian Taxation Office [2002] AATA 519 (27 June 2002)

Last Updated: 17 December 2002

CATCHWORDS - EXCISE - stay - whether jurisdiction to stay reviewable objection decision - whether jurisdiction ousted where objection decision both reviewable and appealable objection decision - whether stay may be requested in relation to the decision to which objection taken - no jurisdiction.

Excise Act 1901 Parts III, IV; ss. 28, 29, 39B, 39G, 39H, 39L and 39Q

Income Tax Assessment Act 1997 s. 995-1

Income Tax Assessment Act 1936 s. 318

Taxation Laws Amendment (Excise Arrangements) Act 2001 ss. 4 and 6

Administrative Appeals Tribunal Act 1975 ss. 3, 25, 29, 30 and 41

Taxation Administration Act 1953 Part IVC; ss. 14E, 14ZL(2), 14ZQ, 14ZY, 14ZZ, 14ZZA, 14ZZB and 14ZZN

Pay-roll Tax (Territories) Assessment Act 1971 s. 63

Wool Tax (Administration) Act 1964 s. 43A

Re Gee and Director-General of Social Services (1980-81) 3 ALD 132

DECISION AND REASONS FOR DECISION [2002] AATA 519

ADMINISTRATIVE APPEALS TRIBUNAL )

) V2002/595

GENERAL ADMINISTRATIVE DIVISION )

Re FRANCESCO MARTINO

Applicant

And AUSTRALIAN TAXATION OFFICE

Respondent

DECISION

Tribunal: Miss S A Forgie (Deputy President)

Date: 27 June, 2002

Place: Melbourne

Decision: The Tribunal did not have jurisdiction to grant a stay pursuant to s. 41 of the Administrative Appeals Tribunal Act 1975.

S A FORGIE

Deputy President

REASONS FOR DECISION

On 7 June, 2002, the applicant, Francesco Martino, applied for review of an objection decision made by a delegate of the respondent, the Commissioner of Taxation ("Commissioner") dated 15 April, 2001. That objection decision disallowed an objection made on 12 February, 2002 to an earlier decision dated 14 January, 2002 cancelling producers licences numbered 1S5286 and 1S015449 issued to F & F Martino ("the partnership") ("the licences"). Each licence is a producer licence granted under Part IV of the Excise Act 1901 ("the Act") authorising the partnership to produce tobacco seed, tobacco plant or tobacco leaf. Also on 7 June, 2002, Mr Martino requested a stay of the earlier decision.

2. At the hearing of the request for a stay, Mr Martino was represented by Mr Traczyk and the Commissioner by Mr Lorkin. Copies of a decision dated 12 December, 2001 to suspend the partnership's licences, the decisions dated 14 January, 2002 and 15 April, 2002 and the objection dated 12 February, 2002 were made available to the Tribunal. I declined to hear evidence on the substantive request and decided that the Tribunal did not have jurisdiction to grant a stay in any circumstances. These are the reasons for my decision.

THE ISSUE

3. Before considering the substantive merits of the application for a stay, there is an initial question whether the Tribunal has jurisdiction to consider such an application at all. That question arises whether a stay is sought of the objection decision dated 15 April, 2002 or the earlier decision dated 14 January, 2002.

BACKGROUND

4. For the purposes of this proceeding only, I set out the background facts that appear from the limited documents to which I have had access. Mr Martino is a partner in the partnership, which has been a licensed producer under the Act. The partnership has been producing tobacco leaf on 40 acres of land. It currently possesses 139 bales of cured tobacco leaf.

5. Part III of the Act was repealed and substituted with effect from 7 September, 2000. Among other matters, it provides for the licensing of the producers of tobacco seed, tobacco plant and tobacco leaf. No person other than a holder of a producer licence may produce those products (s. 28). Licensed producers must produce those products in accordance with the Act and his or her producer licence (s. 29). Subject to s. 39G(2), the Collector may suspend a licence if he or she has reasonable grounds for believing that, among other grounds, it is necessary for the protection of the revenue to suspend the licence (s. 39G(1)(m)). Another ground is that the licence holder is an associate (within the meaning of the Income Tax Assessment Act 1997 ("ITA Act 1997") of a person who is not a fit and proper person (s. 39G(1)(f)(i)). In determining whether a natural person is a fit and proper person, the Collector may have regard to the matters set out in s. 39H. Among those grounds is that a person has, within ten years of the Collector's consideration, been convicted of an offence against a provision of the Excise Acts or an offence punishable by imprisonment for a period of one year or longer or by a fine of 50 penalty units or more (s. 39H(b) and see also s. 39B(b)). An "associate" has the meaning given by s. 318 of the Income Tax Assessment Act 1936 ("ITA Act 1936") (ITA Act 1997, s. 995-1(1)). For the purposes of this case, a relative of an entity is an associate (ITA Act 1936, s. 318(1)(a)).

6. Even if the Collector concludes that he or she has reasonable grounds for believing that the licence holder is not a fit and proper person, he or she must not suspend the licence unless satisfied that it is necessary to do so to protect the revenue (s. 39G(2)). If the Collector is entitled to suspend a licence under s. 39L, the Collector may cancel the licence.

7. Although reference is made in the Act to the Collector, the effect of the amendments effected by the Taxation Laws Amendment (Excise Arrangements) Act 2001 ("Amendment Act") is that the Act is now administered by the Commissioner and a reference to a Collector is, in the context of this case, the Commissioner (Amendment Act, ss. 4 and 6).

8. In her decision dated 14 January, 2002, a delegate of the Commissioner decided that Mr Martino is a partner in the partnership which is a licensed producer. Mr Martino is the brother of Mr Guiseppe Antonio Martino and she decided that she believed on reasonable grounds that Mr Guiseppe Antonio Martino is not a fit and proper person. She went on to decide that, in terms of s. 39G(1)(f) of the Act, she believed on reasonable grounds that Mr Martino is an associate of Mr Guiseppe Antonio Martino, who is not a fit and proper person. Furthermore, she noted that the Tobacco Co-Operative of Victoria has advised the Commissioner that it can no longer sell tobacco leaf on behalf of the partnership and concluded that the partnership has the capacity to produce tobacco leaf for which there is no apparent legitimate market. That possession and capability, she further concluded, constitutes a risk to the revenue within the meaning of s. 39G(1)(m). It was necessary for the protection of the revenue to suspend the producer licences. The delegate of the Commissioner duly suspended the partnership's producer licences.

CONSIDERATION

The Tribunal's jurisdiction to review the Commissioner's decision under the Excise Act

9. Section 25 of the Administrative Appeals Tribunal Act 1975 ("AAT Act") is fundamental to any consideration of the Tribunal's jurisdiction to review a decision. It necessarily precedes any consideration of the powers of the Tribunal for it sets the framework in which either the AAT Act or another enactment provides that an application may be made to the Tribunal for the review of a decision. Section 25(1) provides:

"An enactment may provide that applications may be made to the Tribunal:

(a) for review of decisions made in the exercise of powers conferred by that enactment."

Section 25(4) provides the necessary corollary to this sub-section when it provides that the "... Tribunal has power to review any decision in respect of which application is made to it under any enactment." The general powers of the Tribunal are found in other provisions of the AAT Act.

10. The remaining ten sub-sections of s. 25 go on to refine the general proposition made in s. 25(1) and to provide that an enactment may modify the operation of any particular provision of the AAT Act. Of particular interest in this case is s. 25(6)(b) which provides:

"Where an enactment provides for applications to the Tribunal:

(b) that enactment may also include provisions adding to, excluding or modifying the operation of any of the provisions of sections 21, 21A, 22, 27, 29, 32, 33 and 35 or of subsection 41(1) or 43(1) or (2) in relation to such applications, and those sections and subsections have effect subject to any provisions so included."

11. It is clear from s. 25 generally and from ss. 25(1) and 25(2), which I have set out, that Parliament intended that the Tribunal's power of review be defined and circumscribed by the enactment providing for that review. This interpretation is consistent with the statements made by the Attorney-General in his Second Reading speech in the House of Representatives when he said:

"The intention of the present Bill is to establish a single independent tribunal with the purpose of dealing with appeals against administrative decisions on as wide a basis as possible. The Bill would establish the Tribunal and provide for its membership, powers and procedures. The Tribunal thus established would be a standing body that can be given jurisdiction as new legislation creating administrative discretions is introduced. At the same time, the Government proposes to review discretionary powers under existing legislation to determine whether there should be appeals to the Tribunal against decisions in the exercise of those discretions, and whether existing provisions for appeal would be brought within the framework of the new Tribunal." (Hansard, House of Representatives, page 1187)

12. The effect of s. 25 is that regard must be had to the terms of the enactment to decide whether or not the Tribunal has been given jurisdiction. In this case, regard must be had to the Act and, in particular, to s. 39Q, which provides that:

"A person or partnership who is dissatisfied with a decision of the Collector under this Part may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953."

When regard is had to the Taxation Administration Act 1953 ("TA Act"), s. 14ZL(2) of Part IVC provides that, where a person objects, his or her objection is known as a "taxation objection" (see also TA Act, s. 14ZQ). If a taxation objection is lodged with the Commissioner, he must decide either to allow it (wholly or in part) or to disallow it and his decision is known as an "objection decision" (TA Act, ss. 14ZQ and 14ZY(2)). An objection decision that is neither "(a) an ineligible income tax remission decision; or (b) an ineligible sales tax remission decision" is a "reviewable objection decision" (TA Act, s. 14ZQ). Section 14ZZA of Part IVC provides, in so far as it is relevant, that "The AAT Act applies in relation to: (a) the review of reviewable objection decisions ... subject to the modifications in this Division" (TA Act, s. 14ZZA(a)). There is no question in this case that the decision made by the Commissioner is a reviewable objection decision.

13. Having regard to the provisions of the TA Act, it seems clear that Mr Martino may only seek review of the reviewable objection decision and not of the earlier decision to which he made an objection. That is to say, he may only lodge an application seeking review of the decision dated 15 April, 2002 disallowing his objection to the decision dated 14 January, 2002 and may not lodge an application seeking review of the decision dated 14 January, 2002.

May Mr Martino seek a stay of the decision dated 14 January, 2002?

14. Returning to s. 14ZZA of the TA Act, one of the modifications that it makes to the AAT Act is that section "... 41 of the AAT ... [does] not apply in relation to: (a) a reviewable objection decision (other than a reviewable objection decision that relates to a registration-type sales tax decision) ..." (TA Act, s. 14ZZB(1)(a)). There is no question in this case that the reviewable objection decision made by the Commissioner does not relate to a registration-type sales tax decision as defined in s. 14ZQ.

15. Mr Traczyk submitted in the first instance that s. 41 of the AAT Act is not ousted in relation to a decision that is both an appealable objection decision and a reviewable objection decision. The Commissioner's decision of 15 April, 2002 is both for it is an objection decision other than those excluded in the definition of an "appealable objection decision" in s. 14ZQ of the TA Act. As such, an appeal may be lodged to the Federal Court (TA Act, s. 14ZZN). The modification of the AAT Act effected by s. 14ZZB(1)(a) applies, Mr Traczyk submitted, only in relation to those decisions that are reviewable objection decisions only and in relation to which no appeal may be lodged in the Federal Court.

16. Having regard to the definitions of an "appealable objection decision" and of a "reviewable objection decision" in s. 14ZQ of the TA Act, the practical effect of Mr Traczyk's submission is that the only objection decisions that would be solely objection decisions and not appealable decisions would be those made on a taxation objection under s. 63 of the Pay-roll Tax (Territories) Assessment Act 1971, s. 14E of the TA Act (relating to a refusal to issue a tax clearance certificate) and s. 43A of the Wool Tax (Administration) Act 1964. That is a very limited range of decisions in relation to which s. 14ZZB and the remaining provisions of Division 4 of Part IVC of the TA Act has made modifications. If I were to adopt Mr Traczyk's submission, it would also follow that I would have to conclude that an "appealable objection decision" relates only to those decisions that were not also a "reviewable objection decision". That would mean that only ineligible income tax remission and an ineligible sales tax remission decisions would be appealable decisions and subject to the provisions of Division 5 of Part IVC in relation to appeals to the Federal Court.

17. If that is the legal effect of those provisions then the limited nature of the range of objection decisions affected by the modifications effected by the TA Act is irrelevant but I do not consider that it is the legal effect. It seems to me that there are no grounds in the TA Act for reading qualifications into what appears on its face to be clear language in Part IVC. It seems to me that it establishes two avenues by which persons affected by most of the Commissioner's objection decisions may seek to have that decision examined. One is by the Tribunal and the other is by the Federal Court. The choice of avenue is left to the person affected by the objection decision. If he or she chooses to come to the Tribunal, then he or she does so because it is a reviewable objection decision in relation to which the Tribunal has jurisdiction but that jurisdiction is subject to the modifications set out in Division 4 of Part IVC. If he or she chooses to go to the Federal Court, then he or she does so because it is an appealable decision in relation to which the Court has jurisdiction but its jurisdiction is subject to Division 5 of Part IVC. In the absence of clear language creating categories of objection decisions that are only reviewable objection decisions to which the modifications in Division 4 apply and, as a corollary, only those that are appealable objection decisions, I do not consider that those categories can be read into the TA Act. Indeed, to do so would be to run counter to the clear provisions of s. 14ZZ that clearly recognises that there are three categories of objection decisions: those that are both reviewable objection decisions and appealable objection decisions where the choice of avenue lies with the person affected, those that are only reviewable objection decisions and those that are only appealable objection decisions.

18. Having reached that conclusion and subject to Mr Traczyk's second submission, it follows that the modifications to the AAT Act applies to the Tribunal's review of the decision of the Commissioner's reviewable object decision i.e. the decision dated 15 April, 2002.

19. In essence, Mr Traczyk went on to submit that s. 14ZZB(1)(a) of the TA Act does not have the effect of removing the application of s. 41 of the AAT Act in so far as the decision of 14 January, 2002 is concerned. In general terms, s. 41(1) of the AAT Act provides that: "Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision." Section 41(2) then goes on to provide that:

"The Tribunal or a presidential member may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal or presidential member is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal or presidential member considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review."

Mr Traczyk submitted that s. 41 distinguishes between the decision of which review is sought and the "decision to which the relevant proceeding relates". He said that the former is the reviewable objection decision and the latter is the decision of 14 January, 2002.

20. I have started my consideration of Mr Traczyk's submission with the definition of a "proceeding" in s. 3(1) of the AAT Act. In so far as it is relevant, it provides that:

"proceeding, in relation to the Tribunal, includes:

(a) an application to the Tribunal for review of a decision; and

...

(f) any other application to the Tribunal under this Act or any other Act; and

...

(h) an incidental application to the Tribunal made in the course of, or in connection with, an application or proposed application, or a matter, referred to in a preceding paragraph."

21. The "proceeding before the Tribunal, and so the "relevant proceeding", in this case would seem to be the application made by Mr Martino for review of the objection decision. He is a party to that application (AAT Act, s. 30(1)(a)). I do not consider his request for a stay made under s. 41 can be regarded as "any other application to the Tribunal" or an "incidental application to the Tribunal" as the word "proceeding" is defined. In another context, the word "request" as used in s. 41(2) might be considered to be a proceeding but in the context of the AAT Act, there would seem to be a clear differentiation between a request and a proceeding. A person may, for example, "make an application in writing" to extend the time within which to lodge an application (AAT Act, s. 29(7)) or he or she may "apply, in writing, to the Tribunal to be made a party to the proceeding" where an application for review of a decision has been made by another person (AAT Act, s. 30(1A)). Section 41(2) refers only to a request's being made.

22. Quite apart from the distinction in meaning between a "request" and an "application", it seems to me that the application and the request under s. 41(2) must be quite different matters. A request may only be made by a person who is a party to a proceeding. That means that the request and the proceeding must be two different things. The only proceeding that is on foot in this case is the application for review made by Mr Martino. That application, then, is the "relevant proceeding" to which reference is made in s. 41(2). Consequently, the Tribunal's power to make an order staying or otherwise affecting the operation or implementation of a decision must be limited to the "decision to which the relevant proceeding relates" i.e. the reviewable objection decision. That is the decision in relation to which s. 14ZZB(1) of the TA Act has expressly stated that s. 41 of the AAT Act has no application.

23. Finally, I have considered the operative decision that is subject to review. Adapting and applying the principles set out by the Tribunal in Re Gee and Director-General of Social Services (1980-81) 3 ALD 132 at 141 (Davies J, President, Mr Cusack and Mr Prowse, Members), the operative decision under review is the decision to cancel the producers licences on 14 January, 2002. In Re Gee, the Tribunal decided that the affirmation of a decision simply leaves the original decision in place. It is that original decision which remains operative and which is under review rather than the affirmation itself. By analogy, the Commissioner's decision to disallow an objection, leaves the original decision of 14 January, 2002 in place and it is the operative decision that is under review rather than the decision to disallow the objection.

24. That conclusion does not, however, avoid the modification to the Tribunal's powers made by s. 14ZZB(1) of the TA Act. Review of the operative decision is only reached by seeking review of the later reviewable objection decision. Once the power under s. 41 of the AAT Act is removed in relation to the reviewable objection decision, it is no more in relation not only to that decision but also to the operative decision. If s. 41 cannot apply to the reviewable objection decision, it cannot apply to the operative decision that lies behind it and can only be reached through review of that reviewable objection decision.

25 Although I do not consider that the Tribunal has power to grant a stay under s. 41 of the AAT Act, this is a case in which consideration may be given to an early hearing of the application.

I certify that the twenty-five preceding paragraphs are a true copy of the reasons for the decision herein of

Miss S A Forgie (Deputy President),

Signed: .........................................

Paul Paczkowski Associate

Dates of Hearing 25 June, 2002

Date of Decision 27 June, 2002

Counsel for the Applicant Mr Traczyk

Counsel for the Respondent Mr Lorkin

Solicitor for the Respondent Australian Government Solicitor