Whitehouse v Queensland [1960] HCA 11; (1960) 104 CLR 609 (26 February 1960)

HIGH COURT OF AUSTRALIA

WHITEHOUSE v. QUEENSLAND [1960] HCA 11; (1960) 104 CLR 609

Constitutional Law (Cth)

High Court of Australia
Dixon C.J.(1), McTiernan(2), Fullagar(3), Kitto(4), Taylor(5), Menzies(6) and
Windeyer(7) JJ.

CATCHWORDS

Constitutional Law (Cth) - Duties of excise - Exclusive power of Commonwealth Parliament - Liquor licensing fees imposed under State law - Fee calculated on gross amount paid or payable in respect of all liquor purchased or obtained for licensed premises during the preceding twelve months - Validity - The Constitution (63 & 64 Vict. c. 12), s. 90 - The Liquor Acts 1912 to 1958 (Q.), ss. 16, 18.

HEARING

Melbourne, 1959, May 21, 22; 1960, February 26. 26:2:1960
DEMURRER.

DECISION

1960, February 26.
The following written judgments were delivered:
DIXON C.J. This is a demurrer to a statement of claim seeking among other to 1958 (Q.) are invalid. The plaintiff is a licensed victualler and relies on that status for his locus standi. The ground he takes for impugning the validity of s. 18 (1) is that it imposes, or forms part of the imposition of, a duty of excise and accordingly is placed outside the legislative power of the State by s. 90 of the Constitution. Section 18 (1) and (2) imposes under the heading or description of "fees" what no doubt is a tax and the plaintiff maintains that it amounts to an excise duty or duties. The case is in pari materia with that of Dennis Hotels v. Victoria (1960) 104 CLR 529 upon the Victorian Licensing Act. The Queensland legislation differs in not unimportant respects from that of Victoria but after a full consideration of the case I have reached the conclusion that the so called "fees" constitute a tax which is a duty of excise. (at p614)

2. Section 18 (1) begins with the words "The fees which shall be charged, levied, collected, and paid annually for the following licenses under this Act shall be" ; then follows an enumeration. Sub-section (2) deals with brewers ; it provides that there shall be charged, levied, and collected from and paid by a registered brewer a fee, which the provision proceeds to describe. Of the fees listed in sub-s. (1) there are certain, scil. those for a bottler's licence, a billiard licence and a bagatelle licence, that may be disregarded; they have nothing to do with the matter. As to sub-s. (2), that deals separately with the imposition on a brewer because brewers are neither licensed nor registered under The Liquor Acts. The reference to registered brewer may be to those registered under the federal law. "Brewer" is defined as any maker, for purposes of sale, of beer, ale, porter or stout or any other fermented liquor brewed wholly or in part from malt ; and a "registered brewer" is defined as meaning a brewer whose brewery is registered under any law in force in Queensland relating to the registration of brewers or breweries or a person licensed to make beer pursuant to the Beer Excise Act (Cth) or any Act in substitution therefor: s. 4. (at p614)

3. Unlike the Victorian law the Queensland Liquor Acts do not require the annual renewal of licences. Licences continue indefinitely: see s. 16 (3). The law is administered by the Licensing Commission: see ss. 6 to 8. That body may forfeit or cancel a licence for certain offences (s. 22A) or defaults (s. 47A) and so on, including failure to pay fees when assessed (s. 18 (7) ). (at p615)

4. Now the reason why, in my opinion, the effect of the material provisions amounts to an attempt to impose an excise is simply that when you put those provisions together their operation would be, if valid, to impose on liquor at a point in the course of distribution to the consumer a tax of four per cent of its wholesale price. The percentage is charged annually and is based on a period of twelve months ending on 30th June immediately preceding the commencement of the year or period in which it is payable. In the case of a registered brewer it is calculated on the gross amount paid or payable to the brewer of all liquor which during that twelve months was sold or disposed of by him to persons not licensed under the Acts: see s. 18 (2). In the case of persons licensed under the Acts, including clubs, it is calculated on the gross amount (including duties thereon) paid or payable for or in respect of all liquor which was purchased or otherwise obtained during that twelve months for the licensed premises. The licences referred to are a victualler's licence, a wine-seller's licence, a spirit merchant's licence (unless the liquor is sold or disposed of to persons licensed) and a club licence. Section 18 (1) in imposing the tax (for it appears incontestable that tax it is) says "The fees which shall be charged, levied, collected and paid annually for the following licences shall be respectively: - ", and then are set out the licences. It does not seem to me to matter what is the meaning or application of the word "for" in this description. It can be at most descriptive, and even if it describes a legislative conception of a quid pro quo, a tax it remains and a tax calculated by reference to the purchases or sales of liquor by wholesale, as the case may be. (at p615)

5. The Licensing Commission assesses the fee: see s. 18 (5) (i). For that purpose, the brewers and the holders of the various licences must send in returns not later than 31st August: s. 18 (4). If no information is produced to the Licensing Commission or if it is incomplete or insufficient or if there is no previous period of twelve months or if information cannot be produced covering that period or if the licence has been cancelled, surrendered or removed, the Licensing Commission is empowered to assess such sum as it thinks reasonable. Notice of assessment is given "to every person liable" (s. 18 (6)) and payment must be made to the Commission or a clerk of petty sessions (s. 18 (7)). The "fees" must be paid to the Treasurer and placed to the credit of the Consolidated Revenue Fund: see s. 157. It may not be easy to say exhaustively who are comprehended under the expression "every person liable". But at all events it includes the brewer, the licensee and the holder of a licence that has been cancelled, surrendered or removed. (at p616)

6. Now it appears to me that the tax of four per cent of the wholesale price is laid upon the liquor on its way to the consumer and a plan or system plainly appears whereby the liquor as it is purchased must bear that imposition. It is substantially for that reason that I think the imposition is a duty of excise. It seems to me nothing to the point that a period is taken which does or may end six months earlier than the actual incurring of the immediate liability to make payment. But the system does involve certain exceptions or exemptions, or perhaps one may call them an allowed escape of tax, and these do call for consideration. The first to mention can be of little importance, but it is a curious fact that, so far as I can see, liquor sold on a ship under a packet licence does not bear the four per cent charge or tax: see s. 16 (1) (c), s. 18 (1) (ii) and s. 24. It seems to me also that liquor sold in a military canteen or in a parliamentary refreshment room does not necessarily bear the tax: see s. 5 (c) and (d). (at p616)

7. Bankruptcy and death are specially dealt with: see s. 33 and s. 5 (h). But it is not necessary to discuss these somewhat difficult provisions, which in any event probably do not allow of any escape of tax that matters. (at p616)

8. Sub-section (8) of s. 18 says that the levy of fees shall be for the period of twelve months commencing on 1st July (scil. of every successive year) and the annual period for which returns are to be furnished on which assessments are to be based shall be the period of twelve months ending on 30th June (scil. the immediately preceding twelve months). Sub-section (4) requires the return to be made before 31st August. It is said that if the licence is cancelled or surrendered before 30th June, the obligation to make a return and pay the "fee" or tax will not arise. There is power in the Licensing Commission to cancel or accept the surrender of a licence: see ss. 36 to 40. But under s. 39 the Licensing Commission fixes the date as from which it is deemed cancelled or surrendered. I doubt very much whether there is a practicable method of escaping the tax by surrender or through cancellation. (at p616)

9. The foregoing account of the system suffices, as it appears to me, to show that liquor cannot go forward in the course of distribution to the consumer through lawful channels without bearing a tax of four per cent of the purchase price by wholesale of the liquor. I advisedly use the absolute expression "cannot go forward" notwithstanding the qualification required in respect of packet licences, canteens and the exceptions or possibilities I have noted. They are so trifling that in my opinion they may be ignored in making a generalization as to the fiscal operation of the provisions. Indeed to state the qualifications almost serves the purpose of confirming the existence of the rule that four per cent is levied on liquor and will be collected annually. (at p617)

10. In the very clear argument in which Mr. Gibbs defended the validity of the imposition, he took three positions. In the first place he put forward the thesis that an imposition cannot be an excise unless it is a tax upon goods and that that means a tax upon persons in respect of the manufacture or production by them of goods or the dealing by them in goods or, it was added dubiously, their ownership or their use of goods. Not every tax fulfilling this condition would be an excise but, so it was argued, nothing which did not fulfil it could amount to a duty of excise. The reason why, according to the argument, the condition is not fulfilled in the present case is that the person liable to pay the tax might not himself have any connexion with the goods: for example, he might be no more than the person holding for the time being the victualler's licence, the spirit merchant's licence or the wine-seller's licence in respect of the premises for which they were ordered. The tax is imposed without regard to what he sells, or what becomes of the liquor. It is needless to multiply the examples of the fact that the man who buys the liquor in any twelve months may not be the man who pays the tax and of the fact that the man who pays the tax may have no handling of the identifiable liquor upon which it is calculated. I certainly would not deny that the essence of an excise is that it taxes goods. Explanation and elaboration of the statement is of course needed. But the more you examine the system of the legislation the more it is apparent that it is the goods that are taxed and that the tax is not aimed at the man who is taxed. The licensing system is seized on to ensure that the liquor as it passes into and through it bears a tax of four per cent on the wholesale price. It is precisely because the liquor obtained for the licensed premises or for sale under the licence is made the subject of the tax that the liability to pay goes with the licence. If an imposition is so made in respect of goods that it naturally forms part of their cost, that the acquisition of the goods means that it must be paid, it appears to me to be unimportant how the machinery for ensuring that it is paid is constructed. The machinery under The Liquor Acts is based upon the reality of the connexion of the business of the spirit merchant, the wine-seller and the licensed victualler with the distribution of liquor. The brewer and the club take their due place too. If there is a transfer or devolution of the business the new licensees take with it the burden which belongs to it. (at p618)

11. The argument for the State of Queensland denied that the tax is indirect, and it is said, that none but indirect taxes have been held to be excise duties. Now it is true that a licensed victualler and the holder of a wine licence, if he be a tenant, may, by deduction from the rent or directly, recover one-fourth of the "fee" from his landlord; see s. 18A. It is true also that since the Act of 1958 the Licensing Commission is empowered to fix maximum prices for liquor: see s. 134A. It is a power not so far exercised. But notwithstanding these provisions the percentage naturally forms part of the cost of the liquor and carries all the characteristics of an excise, including the susceptibility of passing on or the natural tendency to be regarded as cost to be recovered "from" the goods. There is an "indirectness" of the economic burden. (at p618)

12. The claim that really it represented the State's recompense for conferring a monopoly appears to me to be neither relevant nor correct. From the standpoint adopted by s. 90 of the Constitution what matters is the burdening of commodities. If a commodity is burdened with tax, it is none the less an excise if it is collected through a limited class of traders to whom the entire distribution of the commodity is entrusted and who therefore escape the disadvantages of unrestricted competition. (at p618)

13. The tax is not levied (except perhaps in the case of brewers) upon production as such. If s. 90 means that nothing is excluded from State authority under the description of excise but the power to levy a tax upon the manufacturer or producer at the point of production, then of course the tax now in question does not do that. It burdens the commodity as it passes to the consumer. But it seems impossible that s. 90 should exclude only duties placed on goods as and when produced within the State or in virtue of their production within the State. That would mean a frustration of its manifest object in confiding to the hands of the Federal Parliament the power to deal with the taxation of commodities entering or produced within Australia as a matter of essential economic policy. (at p618)

14. I shall not repeat what I have said upon this subject in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 CLR 263, at pp 292, 299-303 and Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229, at pp 258-261 . The latter case appears to me to be a decision of the Court upon the question. (at p619)

15. This judgment should be read with that I have prepared in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 . For the reasons which appear from the two judgments I am of opinion that the demurrer to the statement of claim should be overruled. (at p619)

McTIERNAN J. I think that the reasoning upon which I have proceeded in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 applies in this case and it should therefore be decided in the plaintiff's favour. The demurrer should be overruled. (at p619)

FULLAGAR J. For the reasons which I have given in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 I am of opinion that the demurrer in this case should be allowed. (at p619)

KITTO J. For reasons similar to those which I have stated in the case of Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 I am of opinion that the Queensland tax which the present case challenges is not a duty of excise. (at p619)

2. I would allow the demurrer. (at p619)

TAYLOR J. In this case it was pointed out to us that licensed victualler's licences issued under The Liquor Acts, 1912 to 1958 (Q.) are issued for indefinite periods and are not, therefore, required to be renewed annually. Accordingly, it was said that licence fees payable pursuant to the Act are not paid for the licence. But when it is seen that the Acts provide that the Commission may at any time forfeit any licence in respect of which any fee imposed under and in accordance with the Act has not been duly paid the difference in the form of the legislation has no significance. Nor does any other feature of the case differentiate it from the case which we have just decided. Accordingly, for the reasons given in that case, the demurrer should be allowed. (at p619)

MENZIES J. By this action, the plaintiff challenges the validity of so much of s. 18 (1) of The Liquor Acts 1912 to 1958 (Q.) as requires the payment of annual fees for every licensed victualler's licence of a sum equal to four per cent of the gross amount paid or payable for or in respect of all liquor which during the twelve months ended on the first day of June in the preceding year was purchased or otherwise obtained for the licensed premises. What is claimed is that such licence fees are duties of excise and their imposition is therefore beyond the power of the State. To this the defendants have demurred. (at p619)

2. The scheme of the Queensland Liquor Acts is much the same as that of the Victorian Licensing Act under consideration in Dennis Hotels Pty. Ltd. v. Victoria (1), and s. 18 (1) of the former corresponds with s. 19 (1) of the latter. The circumstance that instead of being annual the licences provided for by the Queensland Act are indefinite but subject to forfeiture in the event of non-payment of annual licence fees is not to my mind a significant difference for present purposes; the fees are still fees for the licences to carry on business in the future assessed upon past turnover and are not taxes upon sales or purchases. The reasons I have given in that case for holding that s. 19 (1) (a) of the Victorian Act does not impose or authorize the collection of a duty of excise and is valid, require the conclusion that s. 18 (1) of the Queensland Act is valid. (at p620)

3. The defendants' demurrer should therefore be allowed. (at p620)

WINDEYER J. I have had the advantage of reading the judgment of the Chief Justice. I respectfully agree in it. I need not repeat the views that I set out in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 CLR 529 . In principle they are applicable in this case also. (at p620)

ORDER

Demurrer allowed. The plaintiff to pay the costs of the demurrer.