Gosford Meats Pty Ltd v New South Wales [1985] HCA 5; (1985) 155 CLR 368 (13 February 1985)

HIGH COURT OF AUSTRALIA

GOSFORD MEATS PTY. LTD. v. THE STATE OF NEW SOUTH WALES & ANOR. [1985] HCA 5; (1985) 155 CLR 368

Constitutional Law (Cth)

High Court of Australia
Gibbs C.J.(1), Mason(2), Murphy(3), Wilson(4), Brennan(5), Deane(2) and Dawson(6) JJ.

CATCHWORDS

Constitutional Law (Cth) - Duties of excise - Exclusive power of Commonwealth Parliament - Licence fee imposed upon abattoir operators by State law - Fee calculated on number of livestock slaughtered in abattoir during preceding financial year - Validity - The Constitution (63 & 64 Vict. c. 12), s. 90 - Meat Industry Act 1978 (N.S.W.), s. 11c.

HEARING

1984, October 16; 1985, February 13. 13:2:1985
DEMURRER.

DECISION

GIBBS C.J. The plaintiff, a company which operates an abattoir in Gosford in New South Wales, seeks, by its statement of claim, a declaration that s.11C of the Meat Industry Act 1978 (N.S.W.), as amended, ("the Act") and reg.41 of the Meat Industry (Licensing) Regulation 1980 ("the Regulations") made under the Act are invalid. The defendants have demurred to the statement of claim. The question for decision raised by the demurrer is whether s.11C and reg.41 together impose a duty of excise within s.90 of the Constitution and in that way go beyond the power of the State.

2. The Act is intended, amongst other things, to provide for the regulation and control of the meat industry in New South Wales: see the long title to the Act. It sets up a system for the licensing and inspection of places used for the slaughtering of animals either for human consumption or for use as animal food, and of places or things used for the processing, storage or conveyance of meat or the sale of animals, and the Regulations prescribe minimum standards with which such places and things must comply. It is sufficient to refer to the effect of the provisions of the Act and Regulations with respect to abattoirs, with which the case is alone concerned. It is an offence for any person to operate a slaughtering place at or in any premises unless he is the holder of an abattoir licence or a slaughter-house licence in respect of those premises: s.10(1)(a). By s.4(1), "slaughtering place" means "premises used or intended to be used for or in connection with the slaughtering of abattoir animals for human consumption ...", "abattoir" means "a slaughtering place licensed as an abattoir", and "abattoir animal" means "bull, ox, steer, cow, heifer, calf, ram, ewe, wether, lamb, goat, kid and swine, and includes any other animal that the Minister, by order published in the Gazette, declares to be an abattoir animal for the purposes of this Act." The Meat Industry Authority ("the Authority") constituted under the Act is given power to issue licences, including abattoir licences: ss.11(1), 9(a). A licence issued by the Authority expires on 1 September next following the day of its issue but may be renewed for successive periods of one year expiring on 1 September: ss.11A(2)(b), 11A(3). Section 11C, so far as it is material, provides as follows:

"(1) In this section, 'relevant period' in relation to the issue
or renewal of a licence, means the period of 1 year that ended on
30th June that last preceded the date on and from which the licence
or renewed licence is to be in force.
...
(3) An abattoir licence or a slaughter-house licence shall not be
issued or renewed by the Authority unless the Authority has been
paid -
(a) the appropriate licence fee determined in accordance with
this section for the issue or renewal, as the case may be, of the
licence; or
(b) where the applicant for the issue or renewal of the
licence has made an election under section 11D, the first
instalment of that fee.
(4) The licence fee to be paid for the issue or renewal of an
abattoir licence or a slaughter-house licence is -
(a) an amount calculated at the prescribed rate for each
abattoir animal slaughtered during the relevant period at the
premises in respect of which the licence or renewed licence is
sought; or
(b) where no abattoir animals were so slaughtered or no such
rate is prescribed, such amount as may be prescribed for the
issue or renewal, as the case may be, of the licence.
(5) Without affecting the generality of section 77 (4) -
(a) different rates may be prescribed for the purposes of
subsection (4) (a) for different classes of abattoir animals;
and
(b) different amounts may be prescribed for the purposes of
subsection (4) (b) for different abattoirs or slaughter-houses
or for different classes of abattoirs or slaughter-houses."
instalments. A licence may be transferred by the licensee to another person only with the approval of the Authority: s.14(1). The Authority may suspend or cancel a licence in certain circumstances: s.16. There is no provision for repayment of any part of the licence fee if a licence is suspended or cancelled, although if an application for an issue or renewal of a licence is refused any licence fee paid is refunded: s.11C(8).

3. Regulation 41 of the Regulations provides as follows:

"(1) In this clause, 'calf' means a bovine animal having a
dressed weight of less than 70 kg.
(2) For the purposes of section 11C (4) (a) of the Act, the
prescribed rate is -
(a) in the case of cattle, other than buffalo and calves
- 10 cents;
(b) in the case of buffalo - 10 cents;
(c) in the case of calves - 2.5 cents;
(d) in the case of sheep - 1.25 cents;
(e) in the case of pigs - 2.5 cents;
(f) in the case of goats - 1.25 cents; and
(g) in the case of any abattoir animals not referred to
in paragraphs (a)-(f) - 1.25 cents.
(3) For the purposes of section 11C (4) (b) of the Act, the
prescribed amount is $100."

4. An application for a licence shall be refused if the premises in respect of which it is sought do not comply with the prescribed minimum standards: s.11(4)(a). The standards for abattoirs are prescribed by reg.4 and Sch.1 of the Regulations and are very much concerned with hygiene and sanitation. Meat inspectors are given powers, inter alia, to inspect abattoirs, to give directions for the hygienic and humane maintenance of an abattoir, to condemn animals or meat as unfit for human consumption and to seize meat dealt with contrary to the Act: ss.20, 21, 26, 29. It appears that these meat inspectors now perform their functions on behalf of the Commonwealth, pursuant to an arrangement made with the State under ss.43A and 43B of the Act, but that is not important for present purposes. No animal other than an abattoir animal may be slaughtered at an abattoir, and an abattoir animal may be slaughtered at an abattoir only with the approval of a meat inspector. If the inspector approves of the slaughter, he must inspect the carcase and, if he is satisfied that the carcase or any part of it is fit for human consumption, must pass the carcase or part as fit for human consumption: s.22. By s.41(1) of the Act it is provided as follows:

"A person shall not sell meat for human consumption or as an
ingredient of processed meat unless -
(a) the animal from which it came was slaughtered at an abattoir
or slaughter-house; or
(b) it or the carcase from which it came was brought into the
State in accordance with section 43 (1),

and the meat or the carcase from which it came has been inspected
by a meat inspector and passed by him as fit for human
consumption."

Section 43(1) deals with the importation of meat and its provisions are not material for present purposes. Provision is made for branding meat to show that the carcase or part has been inspected by a meat inspector and that it is of a particular class or grade: s.42.

5. Licence fees are dealt with in accordance with s.66(2) which provides as follows:

"All fees or sums of money received by the Authority or its
officers or employees under the provisions of this Act and all
money appropriated by Parliament for the purposes of the Authority
shall go to form a fund, out of which shall be defrayed -
(a) the cost of conducting elections of elected members;
(b) the salaries, wages and allowances of members, officers and
employees of the Authority; and
(c) all other expenses of the Authority in the carrying out of
the purposes of this Act."

6. The argument for the plaintiff is that the licence fee payable under s.11C(4)(a) and reg.41(2) is in substance a tax on the production of the products of the abattoir. It is submitted that it is a tax on past production, payable in arrears - that is to say, it is a tax on production that occurred during the period of one year that ended on 30 June that last preceded the date on and from which the licence came into force. Therefore, it is submitted, it is an excise, notwithstanding that it is collected by means of a licensing system, and notwithstanding that there is no disclosed mathematical relationship between the tax and the quantity or value of the goods produced in any specific period.

7. The licence fee is no doubt a tax; it is "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered": Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 C.L.R. 263, at p.276, and see Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 C.L.R. 229, at pp.258-259. The fact that the licensing system is no mere device to collect the tax, but has been introduced in order to maintain proper standards in the meat industry, does not necessarily mean that the fee for the licence is not an excise, just as it would not necessarily follow that the tax would be an excise even if the primary aim of the licensing system had been to enable the tax to be exacted. I expressed my views on this matter in Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 C.L.R. 177, at pp.224-226 and there cited a passage from the judgment of Kitto J. in Dennis Hotels Pty. Ltd. v. Victoria (1960) 104 C.L.R. 529, at p.563:

"The fact which makes a licence fee not a duty of excise is not
that the exaction is for the licence; it is that the exaction is
only in respect of the business generally, and not in respect of
any particular act done in the course of the business."

Further, it has been settled, since Matthews v. Chicory Marketing Board (Vict.), that a tax may be an excise although it does not bear any arithmetical relation to the quantity or value of the goods taxed. In that case the basis of the tax ( 1 for every acre of land planted with chicory) was said, at p.303, to have "a natural, although not a necessary, relation to the quantity of the commodity produced". Dixon J. said, at p.304:

"To be an excise the tax must be levied 'upon goods', but those
apparently simple words permit of much flexibility in application.
The tax must bear a close relation to the production or
manufacture, the sale or the consumption of goods and must be of
such a nature as to affect them as the subjects of manufacture or
production or as articles of commerce."

Since the decision in Dickenson's Arcade Pty. Ltd. v. Tasmania, this statement must be regarded as erroneous in so far as it refers to consumption, but it otherwise correctly states the present position.

8. The critical question in deciding whether the tax here is an excise is whether it is directly related to the goods produced by the abattoir. In Dennis Hotels Pty. Ltd. v. Victoria, Kitto J., at p.559, said that "a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer". This statement was adopted by the whole Court in Bolton v. Madsen [1963] HCA 16; (1963) 110 C.L.R. 264, at p.273. Notwithstanding the differences of opinion in Hematite Petroleum Pty. Ltd. v. State of Victoria [1983] HCA 23; (1983) 57 A.L.J.R. 591; 47 A.L.R. 641 on the question whether it is the criterion of liability laid down by the taxing statute on its proper construction, or the practical effect of the impost, that has to be regarded, the judgments of all the members of the Court in that case (even that of Murphy J., who gave s.90 a narrower operation than the other members of the majority) support the conclusion that an impost cannot be an excise unless it is a tax upon, or in respect of, a step in the production, manufacture, sale or distribution of goods.

9. The question in the present case therefore is whether the licence fee is a tax on the production of the meat and meat products produced by the abattoir or whether, to use the words of Kitto J. in Dennis Hotels Pty. Ltd. v. Victoria, at p.560, it "has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all". The defendants contend that the fee is not a tax on production and rely on a line of cases in which it has been held that a fee paid for a licence to carry on the business of selling particular goods, calculated by reference to the value of goods sold, purchased or handled in a period prior to that in respect of which the licence was granted, is not a duty of excise: Dennis Hotels Pty. Ltd. v. Victoria, Dickenson's Arcade Pty. Ltd. v. Tasmania, H.C. Sleigh Ltd. v. South Australia [1977] HCA 2; (1977) 136 C.L.R. 475 and Evda Nominees Pty. Ltd. v. State of Victoria [1984] HCA 18; (1984) 58 A.L.J.R. 307; 52 A.L.R. 401. The reasons for reaching this conclusion, put shortly, are that no particular act done in the course of the business gives rise to any liability to pay the tax; liability arises only on the grant of a licence, so that if no licence is granted or renewed no tax is payable; in other words the tax is not imposed on the sale or purchase of the goods, but is exacted for the licence to engage in the business. Obviously the contrary view is not unarguable, as the dissenting judgments show, and the result can be criticized, as it was criticized by Mason J. in Hematite Petroleum Pty. Ltd. v. State of Victoria, at p.601 of 57 A.L.J.R.; p.659 of 47 A.L.R., as giving too much importance to a mere matter of form. Nevertheless quite recently the whole Court in Evda Nominees Pty. Ltd. v. State of Victoria declined to reconsider the correctness of these decisions, and it should now be taken as settled that a licensing fee calculated by reference to past sales or purchases is not an excise.

10. Mr Handley, for the plaintiff, submitted that when a licence fee is calculated according to the value of goods produced or manufactured in a previous period the position is different; he said that since production or manufacture is at the very heart of the concept of an excise duty, the principle which was applied in the case of licences to sell will not be applied to licences to produce or manufacture goods. He relied on the judgments of Mason J. who, in M.G. Kailis (1962) Pty. Ltd. v. Western Australia [1974] HCA 10; (1974) 130 C.L.R. 245, at pp.265-266, and H.C. Sleigh Ltd. v. South Australia, at pp.499-500, drew this distinction. In the former of those cases, the very question that now concerns us arose for consideration. The Fisheries Act 1905-1971 (W.A.) required any person who operated an establishment for the processing of fish to obtain a processor's licence, the fee for which was assessed in accordance with s.35G. All the members of the Court except Menzies J. considered that s.35G required the amount of the fee to be quantified according to the value of fish caught or produced during a previous year. On that construction, McTiernan and Mason JJ. held that the section imposed a duty of excise and Stephen J. and I held that it did not. Menzies J. took a different view of the effect of s.35G, and for that reason distinguished the case from Dennis Hotels Pty. Ltd. v. Victoria. The case is of no value as an authority. In H.C. Sleigh Ltd. v. South Australia, Barwick C.J. and Jacobs J. expressed views similar to those of Mason J.: see at pp.488 and 525-526. However, the remarks of Barwick C.J. and Mason J. on this point were obiter, since all agreed in the decision of the Court that the fee in that case, which was imposed on persons engaged in the business of selling petroleum products, and was calculated upon the licensee's turnover during a period preceding that of the licence, was not a duty of excise. The judgment of Jacobs J. was a dissenting one.

11. In my opinion it cannot be held, consistently with the authority of Dennis Hotels Pty. Ltd. v. Victoria, Dickenson's Arcade Pty. Ltd. v. Tasmania, H.C. Sleigh Ltd. v. South Australia and Evda Nominees Pty. Ltd. v. State of Victoria that the impost in the present case is an excise. There is no logical ground on which it is possible to distinguish a case where the licence fee is calculated according to sales and purchases in a past period from that in which the fee is calculated according to production or manufacture in a past period. Parton v. Milk Board (Vict.), in which it was established that a tax might be an excise although not imposed when the goods taxed were produced or manufactured, held that this was so because "A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production": per Dixon J., at p.260; and see per Rich and Williams JJ., at p.252. In other words, a tax on sale or distribution is an excise because it places a burden on production: see per Mason J. in Hematite Petroleum Pty. Ltd. v. State of Victoria, at p.602 of 57 A.L.J.R. and p.661 of 47 A.L.R.; and per Deane J. at p.616 of 57 A.L.J.R. and pp.687-688 of 47 A.L.R. If a licence fee quantified by reference to past sales or purchases of goods is not a tax upon the sale or purchase, there seems to be no reason for saying that a licence fee quantified by reference to past production is a tax upon production. Exactly the same reasoning applies in both cases, and the central importance of production or manufacture to the concept of an excise does not mean that a tax which, properly characterized, is not a tax upon production should be regarded as an excise because the person paying it is a producer rather than a distributor and because the tax is exacted because he engages in the business of production rather than in the business of selling. The conclusion reached by Mason J. in M.G. Kailis (1962) Pty. Ltd. v. Western Australia cannot, in my respectful opinion, be reconciled with the decision in Dickenson's Arcade Pty. Ltd. v. Tasmania and the other cases mentioned.

12. I have expressed in Hematite Petroleum Pty. Ltd. v. State of Victoria my reasons for thinking there is no good reason to be found in the Constitution itself, or, if it be relevant, in economic theory, for expanding the scope of s.90 beyond its proper limits, with consequent grave detriment to the States and no corresponding benefit to the Commonwealth. For those reasons, which I need not repeat, and apart from the obvious value of certainty, it would, in my opinion, be wrong to decline to follow Dickenson's Arcade Pty. Ltd. v. Tasmania and H.C. Sleigh Ltd. v. South Australia. Further, I consider that there is no distinction in principle between those cases and the present, and that those decisions govern this case.

13. These reasons lead me to the conclusion that the tax in the present case is not an excise. It is an exaction for the privilege of operating the abattoir, and not a tax on anything done in the course of the operations. Even if the reasons I have given were not acceptable, I would reach the same result if I were to examine the practical operation of the tax. I need not consider whether it is right to say that the nature of a tax may vary according to the individual business practices of the persons called upon to pay it, but it is obviously necessary, in considering the practical effect of a tax, to have regard to the way in which business is generally carried on in the occupation in question. The allegations in the statement of claim as to the manner in which the business of the plaintiff's abattoir is conducted, which, of course, must be taken as correct for the purposes of the demurrer, may, I think, in the absence of any suggestion to the contrary, be taken as indicating in a general way how abattoirs in New South Wales are conducted. The plaintiff purchases livestock, slaughters them and from their carcases produces for sale dressed carcases and sides, quarters and other parts thereof, meat cut up and packed for sale, offal, pet food material, casings, skins, hides, meat meal, tallow, blood meal, gall and hair. If it were right to say that the licence fee is a tax on the taking of any step by the person who operates the abattoir, it would be a tax upon slaughtering conducted in a past period, imposed at a fixed rate for each animal of a particular kind slaughtered, and not, as in Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [1962] HCA 41; (1962) 108 C.L.R. 189, according to the weight of the carcases broken up. (Of course in that case the tax was imposed by reference to production, not past production.) There is no natural or practical relation between such a tax and any of the products which come forth from the abattoir. Beasts of a particular kind may vary greatly in size and weight, depending, amongst other things, on the season. From one beast the abattoir may produce a carcase that is dressed and sold as such; another carcase may be cut up and packaged; and a third carcase may be found unfit for human consumption and sold for pet food or rendered down. Offal from a carcase may prove to be edible or inedible and, if edible, may be used either for human consumption or for pet food. We are not informed what proportions to the total value of the production of the abattoir are made up by the various products, such as meat, hides, casings and blood meal, but in the nature of things the proportion of each product would be likely to vary from time to time. In some cases - a small number - livestock will be slaughtered on a fee for service basis and the products will belong to the owner. All these circumstances combine to show that it is impossible to say that there is any relation between the fee imposed and the quantity or value of any particular product, such as meat or hides. It cannot be said that the fee is of such a nature as to enter into the cost of any particular product or to affect any product as the subject of production or as an article of commerce. The fee is, of course, likely to enter into the cost of all the products indirectly and in a general way, just as a tax on the land on which the abattoir is situated, or a payroll tax imposed in respect of the workers at the abattoir, might do. There is, however, no relation between the fee and the quantity or value of any of the various things produced at the abattoir.

14. In the present case, whether one considers the legal effect or the practical consequences of s.11C(4)(a) and reg.41(2), the result is that the licence fee is seen to be a tax exacted for the licence to operate the abattoir, and not a tax on the production of the meat and other products of the abattoir. It is not an excise.

15. I would allow the demurrer of each defendant.

MASON and DEANE JJ. Section 10(1)(a) of the Meat Industry Act 1978 (N.S.W.) ("the Act") provides that a person shall not operate a "slaughtering place" at or in any premises unless he is the holder of an abattoir licence or a slaughter-house licence in respect of those premises. Upon the assumed facts, the plaintiff operates a slaughtering place on premises known as "the Gosford Abattoir" in New South Wales where it carries on the business of slaughtering livestock as a step in the production of a variety of goods ranging from dressed carcasses and offal to skins, hides and tallow. As required by the Act, the plaintiff is, and at material times has been, the holder of an abattoir licence under the Act.

2. Pursuant to the provisions of the Act and the Regulations made under it, the plaintiff is required to pay a licence fee in respect of that licence. The licence is an annual one running from 1 September each year. The licence fee payable under the Act for the issue or renewal of such a licence is, in the ordinary case of a continuing use of premises as a slaughtering place, an amount calculated "at the prescribed rate for each abattoir animal slaughtered" at the premises during the period of one year that ended on 30 June last preceding the date on and from which the licence or renewed licence is to be in force (Act, s.11C(1) and (4)). Under reg.41 of the Meat Industry (Licensing) Regulation 1980 ("the Regulations") made under the Act, the prescribed rate is 10 cents per head in the case of cattle, other than buffalo and calves, 2.5 cents per head in the case of calves and 1.25 cents per head in the case of sheep. Where the annual licence fee is in excess of $500.00, s.11D of the Act provides that the licensee may elect to pay the licence fee by four equal instalments over the period of the licence.

3. There are circumstances in which a licensed operator of an abattoir will avoid the liability to pay a licence fee which reflects the prescribed rate in respect of livestock slaughtered on his licensed premises. If he disposes of the premises or ceases to use them as an abattoir, it will be unnecessary for him subsequently to hold a licence in respect of those premises. A purchaser who continued to operate the abattoir would however be liable to pay a licence fee which reflected the prescribed rate during the relevant period. The exceptional case aside however, the effect of the Act and Regulations is that a person who operates a "slaughtering place" in New South Wales at or in any premises must hold a licence in respect of those premises and is required to pay a licence fee which is calculated by reference to the prescribed rate for each head of livestock which he has slaughtered thereon during the preceding financial year.

4. On 18 June 1984, the plaintiff paid the defendant New South Wales Meat Industry Authority ("the Authority") the amount of $13,911.60 being the third and fourth instalments of its licence fee for the year ending 1 September 1984. On the assumed facts, that payment was made involuntarily and under protest. In these proceedings, the plaintiff seeks to recover that amount on the ground that the licence fee which it is required to pay under the Act and the Regulations is a duty of excise which it is beyond the competence of the Parliament of New South Wales to impose.

5. A duty of excise is a tax upon internally produced or manufactured goods. Although the long course of judicial decisions on s.90 has demonstrated that it may not be easy to determine whether an impost is such a tax, it has been recognized from the beginning that the constitutional conception of an excise is a matter of substance and not of form (Peterswald v. Bartley [1904] HCA 21; (1904) 1 C.L.R. 497, at pp.510-511). In conformity with this approach, Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 C.L.R. 263, at p.304), observed that if "the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise". In enunciating this proposition Dixon J. must be taken to have rejected the notion that the constitutional prohibition in s.90 was merely formal and procedural, having an operation serving no substantial or useful purpose, which could be avoided easily by resort simply to drafting techniques. The same approach was implicit in the remarks of Isaacs J. in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1926] HCA 47; (1926) 38 C.L.R. 408, when he said, at p.423 - "The prohibitions of (sections) 90 and 92 of the Constitution may be transgressed not merely by a direct and avowed contravention. They are transgressed also by a statute ... if it operates in the end by its own force so as to do substantially the same thing as a direct contravention would do ...".

6. The fact that the question whether an impost is a duty of excise is to be answered by reference to matters of substance rather than form underlies the refusal in subsequent cases in this Court to accept what was said in the joint judgment in Bolton v. Madsen [1963] HCA 16; (1963) 110 C.L.R. 264 as an exhaustive and definitive test of whether or not a tax is a duty of excise. Acceptance of the Bolton v. Madsen formula as such a test is inconsistent with the decision in Western Australia v. Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970) 121 C.L.R. 1 (see the dissenting judgment of Walsh J., at pp.35ff. and the judgment of Barwick C.J., at pp.13ff.) and with what was said in the judgments of at least four justices (Barwick C.J., Mason, Jacobs and Murphy JJ.) in Logan Downs Pty. Ltd. v. Queensland [1977] HCA 3; (1977) 137 C.L.R. 59. It is also inconsistent with what was said in the judgments of each of the four members of the Court (Mason, Murphy, Brennan and Deane JJ.) who constituted the majority in Hematite Petroleum Pty. Ltd. v. Victoria [1983] HCA 23; (1983) 57 A.L.J.R. 591. Recognition of the need for regard to be paid to substance rather than form must inevitably involve rejection of the notion that the question whether a tax is a duty of excise can be resolved by reference to whether the legal effect of the law imposing it satisfies the strict requirements of a formularized criterion of liability. If regard is truly to be had to substance rather than form, the question whether an impost is a duty of excise must be determined not by reference to some comprehensive formula of inclusion but as the result of "consideration of many factors ..., factors which may not be present in every case and which may have different weight or emphasis in different cases" (see per Barwick C.J., Anderson's Pty. Ltd. v. Victoria [1964] HCA 77; (1964) 111 C.L.R. 353, at p.365, and Hematite, at pp.602,604-605,613-614,615-617).

7. In the present case, the defendants have placed particular reliance on what they submit to be a general proposition to be derived from the majority judgments in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 C.L.R. 529, namely, that a tax is excluded from characterization as a duty of excise if it takes the form of a retailer's licence fee calculated by reference to goods sold during a period prior to the period in respect of which the licence fee is payable. The submission that Dennis Hotels v. Victoria is decisive of the present case fails however at every step. First, the judgment of Fullagar J. in Dennis Hotels (at pp.554-558) makes clear that the decision in Dennis Hotels would almost certainly have gone the other way if the plaintiff had been a manufacturer or producer rather than a retailer. Upon analysis, it is reasonably clear that a majority of the Justices either denied the proposition altogether (Dixon C.J., McTiernan and Windeyer JJ.) or considered that it could not be applied generally to a manufacturer or producer (Fullagar J.). Secondly, it has been made clear enough in subsequent cases that the reasoning underlying the decision in Dennis Hotels cannot be accepted as being of general application (see, e.g., H.C. Sleigh Ltd. v. South Australia [1977] HCA 2; (1977) 136 C.L.R. 475, at p.488 (Barwick C.J.), pp.499-500 (Mason J.), pp.524-526 (Jacobs J.) and p.527 (Murphy J.)). Thirdly, in the recent case of Hematite Petroleum Pty. Ltd. v. Victoria, three of the majority justices (Mason J., at pp.600ff., Murphy J., at p.605 and Deane J., at pp.616ff.) adopted, as the basis of their respective judgments, reasoning which is quite inconsistent with the extension of the Dennis Hotels' formula into the heartland of duties of excise, namely the manufacture and production of goods. Finally, a general proposition that a tax cannot be a duty of excise if it takes the form of a licence fee that is quantified by reference to goods produced, manufactured or sold during some period prior to the actual period of the licence is simply inconsistent with the well established and fundamental principle to which reference has already been made, namely, that the question whether a tax is a duty of excise must be determined by reference to substance rather than form. Although Dennis Hotels has been allowed to stand as an authoritative decision on its own facts, it would fly in the face of both principle and authority to accept it as establishing a general proposition that can be applied to a tax made payable, in the form of a licence fee, by a manufacturer or producer of goods.

8. Viewed as a matter of substance, the question whether the licence fee payable by the plaintiff in the present case is a duty of excise is susceptible of but one answer. It cannot be suggested that the licence fee is insubstantial in amount or that it represents a payment for services rendered to the person required to pay it. That being so, it is clear that the licence fee which the plaintiff is required to pay as a condition of being lawfully able to continue to operate the Gosford Abattoir is a tax (see, e.g., Matthews, at p.276; Logan Downs, at p.63). Indeed, it was not seriously submitted to the contrary. Putting to one side the exceptional case where the operator of an abattoir sells the premises or ceases to use them as a slaughtering place, the tax is payable by a producer by reason of an essential step (slaughtering of livestock on the premises) in his production process and in an amount ascertained by reference to the quantity of livestock which he processes. Such a tax is, when viewed as a matter of substance, an excise duty notwithstanding that it is payable in the form of a licence fee which the producer is bound to pay in respect of the next following licence period or that the producer may escape the liability to pay it by ceasing to carry on his business on the relevant premises.

9. The demurrer should be overruled.

MURPHY J. The Meat Industry Act 1978 (N.S.W.) ("the Act") and the Meat Industry (Licensing) Regulation 1980 (N.S.W.) ("the Regulation") require a licence fee to be paid by an abattoir operator, based on the number and type of animals slaughtered at the abattoir. The plaintiff seeks a declaration that s.11C of the Act and clause 41 of the Regulation are invalid, as imposing a duty of excise that is contrary to s.90 of the Constitution. It also seeks recovery of instalments of the licence fee paid under protest. The defendants have demurred.

2. The Constitutional concept of excise has been confused by a number of cases which are so unsatisfactory that they should not be followed (see Queensland v. The Commonwealth [1977] HCA 60; (1977) 139 C.L.R. 585 ("Second Territories Representation Case")). In Logan Downs Pty Ltd v. Queensland [1977] HCA 3; (1977) 137 C.L.R. 59, 84-85 ("Logan Downs") and Hematite Petroleum Pty Ltd v. Victoria [1983] HCA 23; (1983) 47 ALR 641, 665-666 ("Hematite"), I set out my view of s.90 but it is necessary to re-state it.

3. The Constitution, in Chapter 4, "Finance and Trade", contemplates free trade within Australia and has a number of provisions designed to achieve this. Section 90, in making exclusive the power of the Parliament to impose "duties of customs and of excise", prohibits the States from imposing such duties. Since Peterswald v. Bartley [1904] HCA 21; (1904) 1 C.L.R. 497 ("Peterswald") it has been clear that "excise" in s.90 is more restricted than the broad English interpretation. It is also apparent from the context, as Chief Justice Griffith recognised in Peterswald (at p.509), that s.90 is concerned with imposts on the "production ... of goods".

4. Section 91 also refers to the "production ... of goods", and s.93(i) to "goods produced or manufactured in a State"; s.95 gave Western Australia certain special rights for 5 years to impose customs duties on "goods passing into that State".

5. Section 92 states clearly, although this could be doubted from a reading of the cases, that "trade, commerce, and intercourse among the States ... shall be absolutely free". In Fox v. Robbins [1908] HCA 98; (1909) 8 C.L.R. 115, 124, Mr Justice Barton said:

"When the inter-state transit is over and they have become part
of the mass of property within the State, any goods may be taxed,
no matter whence they have come. But they must be taxed alike
with all other such goods in the State. The tax must be general,
and laid equally on all goods of the kind to be taxed, whether
their State of origin be the taxing State or another ...".

Although said in relation to s.92, those words are also applicable to s.90 which states 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. On the imposition of uniform duties of customs all
laws of the several States imposing duties of customs or of
excise, or offering bounties on the production or export of goods,
shall cease to have effect, ..."

6. What s.90 prohibits are State customs duties and State excise. The prohibition against State customs duties prevents a State impairing free trade by discriminatory taxes on goods produced (or manufactured) elsewhere. The prohibition against State excise duties precludes any discriminatory tax on the production of goods within the State, and thus prevents State exploitation of a monopoly or a shortage of the taxed goods. The Constitution reinforces this framework for free trade by s.51(2) which gives the Parliament power to make laws with respect to taxation "but so as not to discriminate between States or parts of States" and s.51(3) which gives the Parliament power to make laws with respect to bounties "on the production ... of goods, but so that such bounties shall be uniform throughout the Commonwealth".

7. These s.90 prohibitions deal only with taxes on production (or manufacture). They are not concerned with wholesale or retail distribution or consumption, except in so far as a tax on these is indirectly a discriminatory tax on production. Any State tax directly on production would, because of territorial limits on State legislative power, apply only to production within the State, and therefore would be an excise. A State tax on sale or other distribution or consumption of goods, which does not discriminate between goods produced in a State and those produced outside it, is neither a customs duty nor an excise. If it discriminates between goods produced in a State and those produced outside, to the extent that it discriminates against those produced outside it is a customs duty; to the extent that it discriminates against those produced in the State, it is an excise. For simplicity, I ignore importation of goods originally produced in the State.

8. A tax need not be direct to be an excise or a customs duty. A tax imposed on sales or distribution (or even consumption) of goods produced outside a State, which discriminates against those goods, is a customs duty. Likewise, if that tax applies to, and discriminates against, goods produced inside the State, it is an excise.

9. It follows that licence fees or taxes on sellers or consumers of goods which do not discriminate on the basis of whether the goods were produced in or outside the State are not excise duties. Likewise if the tax is imposed on dealing with or handling goods but does not discriminate on the basis of production within or without a State, it is not an excise. Therefore a tax on the carriage of goods, which is blind to the origins or places of production of the goods, is not an excise.

10. Of course there may be instances where superficially a tax is undiscriminatory but is in reality aimed at goods produced outside or inside the State. For example, a sales tax discriminating against a particular type of highly desirable cheese that was only produced inside the State would be an excise. A discriminatory State tax against a particular mineral (say, brown coal) produced in that State only, would be an excise, since it would again be aimed at production within the State.

11. The Court, in Bolton v. Madsen [1963] HCA 16; (1963) 110 C.L.R. 264, 271 defined duties of excise as "... taxes directly related to goods imposed at some step in their production or distribution before they reach the hands of consumers". In my opinion this definition is erroneous in three respects. First, to be an excise the tax need not be directly related to some step in production; it is enough if it is indirectly related. Second, excise does not extend to a tax on distribution (except if this is an indirect tax on production). Third, excise embraces a tax on consumption if this is indirectly a tax on production. The statement in Bolton v. Madsen is defective in another respect. It fails to recognise the critical feature of s.90 - the exclusion or prohibition is of State duties of customs and excise.

12. In Evda Nominees Pty Ltd v. Victoria [1984] HCA 18; (1984) 52 ALR 401, I agreed that the decision in Dennis Hotels Pty Ltd v. Victoria [1960] HCA 10; (1960) 104 C.L.R. 529 ("Dennis") upholding the validity of legislation similar to that in Evda was correct and therefore should not be re-opened. I did so because the legislation itself was valid even if not for the reasons given in Dennis. The notion of a fee based on a previous period being valid, but not a fee based on a current period, is irrational as a Constitutional discrimen. Why not the previous month or the previous week? With the advent of computers, why not the previous day or even the previous hour? There is no magic about the financial or calendar year but the reasoning of Dennis has forced on the States a narrow and inefficient means of collecting revenue.

Conclusion

13. Section 90 prohibits a State tax directly or indirectly discriminating on the basis of production inside or outside the State.

14. The licence fee on the slaughtering of animals in an abattoir within the State necessarily discriminates against production of goods in the State and is therefore an excise, prohibited by s.90. That section leaves open to the States the power to impose non-discriminatory taxes (for example, on all meat sold in the State) and does not require States to frame their tax laws to apply only to some previous period of distribution or consumption.

15. The demurrers should be overruled.

WILSON J. This matter comes before the Court by way of demurrers by the defendants to a claim by the plaintiff for a declaration that s. 11C of the Meat Industry Act 1978 (N.S.W.) as amended ("the Act") and cl. 41 of the Meat Industry (Licensing) Regulation 1980 as amended made under the Act are invalid because, contrary to s. 90 of the Constitution, they purport to impose taxes which are duties of excise.

2. According to the statement of claim, the plaintiff operates the Gosford Abattoir and associated processing and production establishments in New South Wales ("the premises") and there carries on the business of slaughtering livestock. From the carcases, the plaintiff produces for sale dressed carcases and sides, quarters and other parts thereof, meat, offal, pet food material, casings, skins, hides, meat meal, tallow, blood meal, gall and hair. For the purposes of its business, the plaintiff purchases livestock consisting of sheep, lambs, cattle and calves. After slaughter the carcases are dressed unless they are considered to be unfit for human consumption. Carcases considered unfit are either sold for pet food or are rendered down. Dressed carcases are either sold in that form or are processed further by the plaintiff either by being broken down into sides, quarters and the like for sale as such or by being boned, sliced, cut up and packed for sale as packaged fresh meat. Edible offal removed from carcases is further processed by the plaintiff to render it suitable either for human consumption or for pet food. Inedible offal is rendered down. The intestines and glands recovered from carcases are saved, cleaned, treated and used at the premises to produce casings for sale to sausage makers or to manufacturers of smallgoods, tennis string and pharmaceutical products. Sheep and lamb skins removed in the dressing of carcases are dried, treated and processed on the premises and then sold to wool and leather producers. Blood recovered on the premises is dried to produce blood meal which is sold to stock feed manufacturers. Gall is sold to pharmaceutical manufacturers. Tailhair recovered in dressing the carcases of cattle and calves is cleaned and sold to upholsterers, while the hides and skins removed from the carcases of cattle and calves are sold to tanneries or leather works. Meat meal and tallow are sold to stock food, soap and pharmaceutical manufacturers.

3. From time to time the plaintiff receives small numbers of livestock for slaughtering and dressing of the carcase on a fee for service basis. The carcases and offal produced in this way are delivered to, or on the instructions of, the owner. Other material derived from the carcases is dealt with or processed on the premises in accordance with the terms of the particular contract.

4. The long title of the Act describes it as an Act, inter alia, to provide for the regulation and control of the meat industry in New South Wales and to constitute and define the functions of the New South Wales Meat Industry Authority ("the Authority"). Section 9 creates a number of kinds of licences, including "abattoir licences". Section 10 creates the offence of a person operating a slaughtering place at or in any premises unless he is the holder of an abattoir licence in respect of those premises and a licensee is required to comply with any conditions or restrictions specified by his licence. The penalties for offending against the section are heavy: in the case of a first offence, $10,000 and, in the case of a second or subsequent offence, $50,000 or imprisonment for 2 years, or both. There is also provision for a daily penalty of $1,000.

5. So far as material, s. 4(1) defines the relevant terms, subject to context or subject-matter, as follows:

"'abattoir' means a slaughtering place licensed as an abattoir;
'abattoir animal' means bull, ox, steer, cow, heifer, calf, ram, ewe,
wether, lamb, ...;
'slaughtering place' means premises used or intended to be used
for or in connection with the slaughtering of abattoir animals for
human consumption, ...;"

The premises of the plaintiff are a "slaughtering place" within the meaning of that term in the Act.

6. Licences may be issued by the Authority provided that the prescribed requirements relating to the application for the licence have been complied with: sub-ss 11(1) and (2). An application shall be refused if the premises do not comply with the prescribed minimum standards or if the Authority is of the opinion that it should be refused because of the unsuitability of the site of the proposed premises or having regard to the existence, in the area to be served by the premises sought to be licensed, of other premises that are adequate to serve the area, or because of the unsuitability of the applicant or the lack of merit in the application (s. 11(4)). A licence may be renewed, from time to time, for successive periods of one year expiring on 1 September in accordance with the provisions of s. 11A. A licence may be issued or renewed subject to such conditions and restrictions as may be specified: s. 11B. Section 4(2) provides:

"(2) A reference in this Act to -
(a) the renewal of a licence is a reference to the issue of a
further licence which is of the same class as that licence and is
to take effect on the expiry of that licence; or
(b) a renewed licence is a reference to a licence issued as
referred to in paragraph (a)."
An abattoir licence shall not be issued or renewed unless the appropriate

fee or the first instalment of that fee, as the case may be, has been paid to the Authority: s. 11C(3). The amount of the fee is determined by reference to s. 11C(1) and s. 11C(4), which read as follows:

"(1) In this section, 'relevant period' in relation to the issue
or renewal of a licence, means the period of 1 year that ended on
30th June that last preceded the date on and from which the
licence or renewed licence is to be in force."
"(4) The licence fee to be paid for the issue or renewal of an
abattoir licence or a slaughter-house licence is -
(a) an amount calculated at the prescribed rate for each
abattoir animal slaughtered during the relevant period at the
premises in respect of which the licence or renewed licence is
sought; or
(b) where no abattoir animals were so slaughtered or no such
rate is prescribed, such amount as may be prescribed for the issue
or renewal, as the case may be, of the licence."

For the purposes of s. 11C(4)(a) and (b), different rates may be prescribed for different classes of abattoir animals and different amounts may be prescribed for different abattoirs or different classes of abattoirs: s. 11C(5). If the licence fee payable in respect of the issue or renewal of the licence is in excess of $500, an applicant may elect to pay the fee by four equal instalments, the first instalment being due and payable before the issue or renewal of the licence and the remaining instalments being payable during the currency of the licence at the times specified: s. 11D(1). If an instalment is not paid on or before the day on which it is due and payable, the balance of the fee thereupon becomes due and payable, as it does also upon the cancellation or suspension of the licence: s. 11D(3) and (4). The whole or any part of an amount which is due and payable under s. 11D and which is unpaid may be recovered by the Authority, as a debt, in any court of competent jurisdiction.

7. The rate for each abattoir animal slaughtered and the amount where no animals are so slaughtered is prescribed in cl. 41 of the Meat Industry (Licensing) Regulation as follows:

"(1) In this clause, 'calf' means a bovine animal having a
dressed weight of less than 70 kg.
(2) For the purposes of Section 11C(4)(a) of the Act, the
prescribed rate is -
(a) in the case of cattle, other than buffalo and calves -

10 cents;

(b) ...
(c) in the case of calves - 2.5 cents;
(d) in the case of sheep - 1.25 cents;
(e) ...
(f) ...
(g) ...
(3) For the purposes of Section 11C(4)(b) of the Act, the
prescribed amount is $100."

8. Subject to compliance with the prescribed requirements, a licence may be transferred by the licensee to another person with the approval of the Authority: s. 14.

9. Where the Authority makes a decision which is adverse to an applicant or licensee, as for example a decision to refuse a licence or the transfer of a licence or to suspend or cancel a licence, it must notify the applicant or licensee of its grounds for the decision and an appeal may then be made to the Minister: s. 17. All fees received by the Authority together with other sums of money received by it and all money appropriated by Parliament for its purposes go to form a fund, out of which shall be defrayed -

(a) the cost of conducting elections of elected members of the
Authority;
(b) the salaries, wages and allowance of members, officers and
employees of the Authority; and
(c) all other expenses of the Authority in the carrying out of
the purposes of this Act: s. 66(2).

10. Part III of the Act (ss. 18-43B) contains detailed provisions with respect to inspections and regulation of the meat industry. Meat inspectors are given extensive powers, including the power to enter premises, to inspect, to take samples, to give directions, to condemn any abattoir animal or meat as unfit for human consumption and to seize any meat that has been or is being dealt with contrary to the Act.

11. An indication of the concern of Parliament with the industry of which abattoirs form part appears from s. 46 of the Act which outlines the functions and powers of the Authority in the following terms:

"46. (1) The Authority shall -
(a) keep under review the construction and hygiene of, and the

plant and equipment in -

(i) slaughtering places, with particular reference to the
slaughtering capacity and location of those places in relation to
the overall requirements of the State; and
(ii) meat processing plants, meat markets, meat vans, saleyards,
animal food processing plants, knackeries, pet food vans and shops for

the sale by retail of meat intended for use as animal food;

(b) issue and renew licences in accordance with this Act;
(c) provide, in co-operation with the Department of Agriculture,
a market intelligence service with respect to abattoir meat and
abattoir animals;
(d) whenever it considers it necessary to do so or it is
requested by the Minister to do so, make recommendations to the
Minister with respect to the setting of meat inspection standards
and the functions of meat inspectors; and
(e) within such period as may be fixed by the Minister make a
report to the Minister with respect to the continued operation of
the Corporation.
(2) The Authority may -
(a) promote and undertake procedures for research into improving
standards of hygiene in slaughtering places, meat processing
plants, meat markets, meat vans, saleyards, knackeries, animal
food processing plants and pet food vans;
(b) promote and undertake research into the design and equipment
of and procedures at slaughtering places, meat processing plants,
meat markets, meat vans, saleyards, knackeries, animal food processing

plants and pet food vans;

(c) investigate and promote procedures with respect to the
production of meat, processed meat and processed animal food for
the purpose of protecting public health;
(d) promote and encourage the provision and operation of meat

markets;

(e) make recommendations to the Minister relating to the
establishment of central killing areas and the alteration of those
areas;
(f) make recommendations to the Minister with respect to the
conditions under which abattoir meat intended for sale for human
consumption may be introduced into central killing areas;
(g) either on its own behalf or on behalf of any other person -
(i) purchase or take delivery of abattoir animals and cause
them to be slaughtered;
(ii) purchase or sell, within or outside
th State, or export abattoir animals, abattoir meat, offal or
other products of abattoir animals; or
(iii) enter into contracts for the treatment of or the
application of a manufacturing process to any abattoir meat, offal
or other products of abattoir animals and sell any resulting
product;
(h) make recommendations to the Minister for Local Government with

respect to -

(i) the establishment of abattoirs by councils and the
management thereof;
(ii) the alteration or extension of slaughtering places
provided, controlled and managed by councils;
(iii) the method of financing the establishment, alteration or
extension of slaughtering places provided, controlled and managed
by councils; and
(iv) applications by councils for approval to borrow money for
the establishment of abattoirs or to be used in connection with
slaughtering places provided, controlled and managed by councils;
(i) make recommendations to the Minister with respect to the
implementation of a system for the classification, grading,
branding, stamping or marking of meat;
(j) make recommendations to the Minister with respect to the
implementation of a system providing for the identification of any
meat offered or exposed for sale by retail;
(k) administer any meat stabilisation scheme for the
implementation of which regulations have been made, and appoint
such committees as it thinks necessary for the purposes of the
scheme;
(l) make payments, in accordance with the regulations, into any
meat stabilisation fund established under a meat stablisation
scheme; and
(m) act as a delegate or agent of, or act jointly with, any
Commonwealth body for the purpose of performing any function
relating to the production or marketing of abattoir animals,
knackery animals, meat, processed meat or processed animal food."

Section 47 requires the Authority to make an annual report, as soon as practicable after 30 June in each year, which must then be laid before both Houses of Parliament.

12. It is in the context provided by these provisions of the Act and regulation that the question whether the licence fee demanded of the plaintiff constitutes a duty of excise is to be determined.

13. Plainly, the licence fee is a tax. It is a compulsory levy by a public authority for public purposes: Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 C.L.R. 229, per Dixon J., at pp. 258-259. It is not a payment for services rendered. It may be noted that the learned Solicitor-General for the Commonwealth submitted that the flat fee of $100 prescribed in cl. 41(3) of the regulation ought not be regarded as a duty of excise, on the basis either that it is a fee for service or that it should simply be dismissed as a nominal amount. In any event the parties and the interveners have joined issue over the fee prescribed in cl. 41(2) and the flat fee need not be further considered.

14. It is convenient to consider first the question whether the authority of the decision of this Court in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 C.L.R. 529 determines the demurrers in favour of the defendants. It was there decided by majority that the licensing provisions of the Licensing Act 1958 (Vic.), other than that provision which fixed the fee for a temporary victualler's licence or a temporary packet licence, did not impose duties of excise and were within the competence of the Victorian Legislature. The provisions in question quantified the amount of the licence fee by reference to the amount paid or payable for liquor purchased during a period preceding that in respect of which the licence was granted. However, there was no reasoning leading to the decision which was common to the majority. The authority of the decision was considered by the Court in Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 C.L.R. 177. At p. 188, Barwick C.J. said:

"There being no reason for decision common to the majority of
the Justices, the Court's decision ... is authority only in
relation to the statutory and factual situation it resolved and in
relation to a case which has, if not precisely, at least
substantially and indistinguishably the same statutory and factual
situation."

His Honour concluded that he ought to regard the decision as decisive of the validity of the licensing provisions under challenge in Dickenson's Arcade. They were provisions whereby the licence fee permitting the retail sale of tobacco was calculated by reference to the average monthly value of tobacco handled by a retailer over the period of six months prior to the commencement of the licence period. Menzies, Gibbs, Stephen and Mason JJ. also each found the decision in Dennis Hotels decisive of the validity of the tax. At p. 212 Menzies J., having rejected a challenge to the correctness of the earlier decision, added in a passage adopted by Stephen J.:

"In any event I would not reopen either part of the decision in
Dennis Hotels Pty. Ltd. v. Victoria. It is an important decision
upon the faith of which States have ordered their affairs for some
thirteen years. The decision has been recognized both in Bolton
v. Madsen and in Anderson, Pty. Ltd. v. Victoria."

Cf., also, Gibbs J. at pp. 224-227; Stephen J. at p. 236. Mason J., while accepting that the decision in Dennis Hotels was decisive of the validity of the tobacco retail licence fee, made an important statement upon which the present plaintiff relies. At p. 240, his Honour said:

"Dennis Hotels is not authority for the universal proposition
that, in order to constitute an excise, a licence fee must be
calculated by reference to the quantity of goods sold under the
licence, thereby enabling the duty to be passed on to a purchaser
and that it is not enough that the licence fee is calculated by
reference to the quantity of goods sold by the licensee or on the
premises before the licence commenced to operate. The decision
related to fees prescribed for a licence to sell liquor by retail;
it has no necessary application to fees prescribed for a licence
to manufacture or process goods to which in my opinion different
considerations apply."

15. In M.G. Kailis (1962) Pty. Ltd. v. Western Australia [1974] HCA 10; (1974) 130 C.L.R. 245 the Court encountered the kind of situation to which Mason J. referred in the passage I have cited. The validity of a fish processor's licence fee, assessed as a percentage of the value of fish caught or purchased for processing during a period preceding that of the licence, was under attack. It was held by McTiernan, Menzies and Mason JJ., Gibbs and Stephen JJ. dissenting, that the fee was a duty of excise. However, once again there was no reason common to the judgments of the majority; only Mason J. relied on the fact that the licence fee was imposed in respect of the process of manufacture or production to distinguish the case from Dennis Hotels and Dickenson's Arcade. It is plain that Menzies J. would have applied Dennis Hotels had he not construed the relevant statutory provisions in such a way as to require the conclusion that the fee was imposed by reference to current production. Gibbs J. and Stephen J., both in dissent, took the decision in Dennis Hotels to be conclusive authority for the validity of the impost.

16. Dennis Hotels and Dickenson's Arcade were applied by four members of the Court (Barwick C.J., Gibbs, Stephen and Mason JJ.) in H.C. Sleigh Ltd. v. South Australia [1977] HCA 2; (1977) 136 C.L.R. 475 to uphold the validity of a South Australian statute which required petroleum vendors to hold a licence, the licence fee being calculated on the value of sales in a period preceding the licence period. Gibbs J. (at p. 494) and Stephen J. (at p. 496) each found Dennis Hotels and Dickenson's Arcade to govern the case. Mason J. (at pp. 499-503) found Dickenson's Arcade to be decisive of the case, while recalling the views he had expressed in that case and Kailis concerning manufacture and production. Barwick C.J. (at pp. 488-489) agreed that the case was governed by the decision in Dickenson's Arcade, the Court having now decided "to maintain the decision of Dennis Hotels Pty. Ltd. v. Victoria, for what, upon its facts and relevant legislation, it decides." His Honour expressed his substantial agreement with the reasons expressed for his conclusions by Mason J. but made no reference to the distinction between selling and manufacturing drawn by his Honour. Murphy J. (at p. 527) also found the fee to be valid but without reliance upon Dennis Hotels or Dickenson's Arcade. Jacobs J. was the sole dissentient. At p. 526, his Honour said that he was prepared to distinguish Dennis Hotels and Dickenson's Arcade

"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."

His Honour then added:

"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."

17. Finally, in this regard, in Evda Nominees Pty. Ltd. v. State of Victoria [1984] HCA 18; (1984) 58 A.L.J.R. 307; 52 A.L.R. 401, all the members of the Court joined in refusing to reconsider the correctness of the actual decisions in Dennis Hotels, Dickenson's Arcade and Sleigh.

18. There is no decision of the Court which applies Dennis Hotels to a case where the licence fee exacted in respect of the processing of goods is quantified by reference to the quantity of goods processed in a preceding period. The only case which provided an opportunity for that question to be considered was Kailis where, as we have seen, only three members of the Court expressly addressed the question: Gibbs J. and Stephen J. regarded the distinction between sales on the one hand and manufacture and production on the other as immaterial and Mason J. considered it a sufficient basis for distinguishing the case. As I have said, Menzies J. distinguished the case for a different reason. Mr. Handley, counsel for the plaintiff, describes manufacture and production as "the heartland" of the constitutional concept of excise, while distribution is on the periphery. He argues that Dennis Hotels and the cases that have followed it should be confined in their application to that periphery. Perhaps the argument is presented most persuasively in the judgment of Mason J. in Logan Downs Pty. Ltd. v. Queensland [1977] HCA 3; (1977) 137 C.L.R. 59 where, after declining to accord to the criterion of liability expressed in Bolton v. Madsen (1963) 110 C.L.R. 264 a universal application, his Honour continued, at p. 77:

"... it needs to be emphasized that Dennis Hotels, Bolton v.
Madsen and for that matter Dickenson's Arcade ... were cases
involving impositions levied at a time when goods were in course
of sale or distribution, after the process of manufacture or
production had been completed. It has always been recognized that
before these impositions can be characterized as an excise a
direct relationship between the tax and the goods must be shown.
Such a relationship between the tax and the goods must also exist,
so it is said, when the tax is levied at a time when the goods or
the commodity is in course of production, but it may be said that
in such a case the relationship between the tax and the goods and
therefore the relationship between the tax and 'home production or
manufacture' is more easily perceived."

His Honour then cited a passage from the judgment of Kitto J. (with which Taylor J. agreed) in Anderson's Pty. Ltd. v. Victoria [1964] HCA 77; [1964] HCA 77; (1964) 111 C.L.R. 353, at p. 374, in which the learned judge, after asserting that a duty of excise is, at bottom, a burden upon home production or manufacture, continued:

"Obviously it is such a burden if it is payable upon a step in
production or manufacture in its character of such a step. Not so
obviously but just as certainly, it is such a burden if it is
payable upon a step in distribution in its character of such a
step; for in that case from the time the goods come into existence
the law makes it inherent in their nature, as goods requiring
distribution in order to become available to fulfil their purpose,
that the tax shall be paid."

19. I acknowledge the force of the view expressed by Mason J. but with all respect to his Honour I am unable to share it. It is true, despite the seemingly distinct recognition accorded by Dixon J. in Matthews v. Chicory Marketing Board (Vic.) [1938] HCA 38; (1938) 60 C.L.R. 263, at p. 304, to goods as "articles of commerce" and to their sale, that the majority judgments in Parton v. Milk Board (Vict.) furnish support for the relationship between distribution and manufacture which Kitto J. recognized in Anderson's Pty. Ltd.: see, at pp. 252, 260. I am not concerned now to dispute it. With all respect, I think the observations of Kitto J. refute the validity of the distinction which Mason J. seeks to draw. His Honour is saying that a tax imposed upon a step in the distribution of goods is not so obviously but just as certainly a burden upon home production or manufacture. It should be no more difficult to recognize a tax as one imposed on a step in distribution as it is to recognize a tax as one imposed on a step in production, especially when, in either case, the imposition of the tax takes precisely the same form. It is the consequential burden on manufacture or production which may be less obvious in the case of a tax imposed on a step in distribution. But such a tax is rightly characterized as an excise if it is imposed on such a step in its character as such a step without any necessity to discern its impact on manufacture or production. It has never been suggested that an essential element in the diagnosis of an excise is the perception that an impost imposed upon the sale of a commodity thereby burdens the manufacture of that commodity. As Barwick C.J. noted in Anderson's Pty. Ltd. at p. 365:

"To conclude that the tax is an excise because it is in
substance a tax upon the relevant step in connexion with the goods
is to find that it is a burden on manufacture or production and
thus to satisfy economic theory, whether or not the supposed
economic consequences of an excise can be seen to be involved in
the case in question."

It seems to me, therefore, that the actual decision in Dennis Hotels requires the conclusion in the present case that the licence fee imposed upon the plaintiff by s. 11C of the Act and cl. 41(2) of the regulation is not a duty of excise. It is not suggested that there is any ground of distinction between the legislation here and that which was considered in Dennis Hotels, in Dickenson's Arcade and in Sleigh save that which I have discussed. I am fortified in the conclusion to which I have come by the reasoning of Gibbs J. and Stephen J. in Kailis, at p. 259 and p. 263 respectively.

20. Although the conclusion which I have expressed leads me to allow the demurrers, I propose to examine the issue between the parties as one of substance, not one to be determined by operation of the principle of stare decisis.

21. The natural starting-point for such an examination is the unanimous judgment of the Court in Bolton v. Madsen. At p. 271, the Court said:

"It is now established that 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. ...
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."

Later in the judgment, at p. 273, the "criterion of liability" was described as

"the taking of a step in a process of bringing goods into
existence or to a consumable state, or passing them down the line
which reaches from the earliest stage in production to the point
of receipt by the consumer,"

these being the words in which Kitto J. formulated the test in Dennis Hotels (at p. 559). It is regrettable that such a rare expression of unanimity on the subject of excise has not found complete acceptance by some members of the Court in later cases. Mr. Handley and the Solicitor-General for the Commonwealth argue that the authority of Bolton v. Madsen has been weakened by subsequent cases and that in particular the identification of a tax as a duty of excise imposed directly upon goods is to be approached not in terms of the formal expression of the criterion of liability found in the statute but in the operation of the legislation viewed as a matter of substance. I am prepared, for the purposes of the argument, to approach the matter on this basis. In Anderson's Pty. Ltd., at pp. 364-365, Barwick C.J. said:

"... it ought now to be taken as settled that the essence of a duty of excise is that it is a tax upon the taking of a step in a process of bringing goods into existence or to a consumable state, or of passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer.... The question is a legal question. ...
But, of course, in arriving at the conclusion that the tax is a tax upon the relevant step, consideration of many factors is necessary, factors which may not be present in every case and

which may have different weight or emphasis in different cases.
The 'indirectness' of the tax, its immediate entry into the cost
of the goods, the proximity of the transaction it taxes to the
manufacture or production or movement of the goods into
consumption, the form and content of the legislation imposing the
tax - all these are included in the relevant considerations."

In Western Australia v. Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970) 121 C.L.R. 1, at p. 13, Barwick C.J. referred back to the passage in his judgment in Anderson's Pty. Ltd. which I have cited and added:

"It is not enough that the effect an Act in its operation
produces has the like effect which a duty of excise would in the
circumstances produce. The Act must impose or authorize the
imposition of a tax which in its nature is a duty of excise. The
Court has endorsed the view that 'a tax is not a duty of excise
unless the criterion of liability is the taking' of such a step as
I have described."

Of course, as his Honour indicated in Anderson's Pty. Ltd. and repeated in Chamberlain, at p. 15, the criterion of liability will not be found exclusively in the verbal formulae of the statute. I understand the obligation to have regard to substance rather than form to mean that one must ask whether the real operation and effect of the Act by which the duty is imposed is to tax the goods directly, whatever be the means it employs. The question is a legal one. Economic consequences are irrelevant. In Chamberlain, at p. 37, Walsh J. elucidated the question of substance rather than form in words which I would respectfully adopt:

"When it has been said that the character of a duty depends upon
the operation and effect rather than upon the form of the Act by
which it is imposed I think that what has been meant is that an
examination must be made of the provisions of the Act to determine
its legal effect, according to the proper construction of its
operative provisions, whatever their form may be and whatever
label may be attached by the Act to the duty which is imposed by
it."

Cf. also, Dickenson's Arcade, per Barwick C.J. at p. 186.

22. Before I apply these principles to the statutory provisions in the present case, three further observations should be made. The first is that I do not find any assistance in approaching the task of statutory construction to determine the nature of the tax by considering the kind of questions the Court asks of a statute when it has to consider whether in its practical operation it imposes a burden on interstate trade contrary to s. 92 of the Constitution. The questions are quite different. In this regard, I adopt the observations of Kitto J. in Chamberlain, at pp. 19-20, and of Gibbs C.J. in Hematite Petroleum Pty. Ltd. v. State of Victoria [1983] HCA 23; (1983) 57 A.L.J.R. 591, at pp. 595-596; [1983] HCA 23; 47 A.L.R. 641, at pp. 649-650. Secondly, I refer to what I said in my judgment in Hematite Petroleum, at pp. 609-610 of A.L.J.R.; pp. 674-676 of A.L.R., where I warned against approaching the construction of a statute in a case of this kind with questions of assumed constitutional purposes in mind. The Constitution did not confer on the Commonwealth a legislative power with respect to the economy as such. In my respectful opinion one is not justified, when seeking guidance as to the character of a duty of excise, in looking beyond the Constitution in order to mould the concept to fit subjective understandings of desirable contemporary economic or political goals. Cf. Dickenson's Arcade, per Menzies J. at pp. 212-213; Sleigh, per Stephen J. at p. 497. Thirdly, the plaintiff relied heavily on the recent decision of this Court in Hematite Petroleum. That was a very different case from the present one and I have not found the decision to be of any assistance in the resolution of this case.

23. I turn now to the legal operation of the legislation as it is in substance:

1. Payment of the fee is a condition precedent to the grant of a
licence. In this respect it contrasts with the fee in Kailis:
see per Menzies J. at p. 254. The fee is a tax.
2. The licence authorizes the operation of an abattoir in the
premises referred to in the licence subject to any conditions or
restrictions contained in the licence.
3. There a e heavy penalties for operating an abattoir without a
licence.
4. The maximum duration of a licence is a period of one year. A
licence may be renewed, the renewed licence operating as a fresh
licence from the date of expiry of the old one.
5. Stringent conditions govern the issue of a licence. The
premises must satisfy the prescribed standards of construction.
The application must be refused if the Authority is of the opinion
that the site of the proposed premises is unsuitable or that the
area is already adequately served by other premises or that the
applicant is unsuitable or that the application lacks merit.
6. The amount of the fee is calculated by reference to the number
of animals slaughtered in the premises during the twelve months
ending on 30 June prior to the date of the application. Different
rates, ranging from 1.25 cents per animal to 10 cents per animal,
are prescribed for different kinds of animals. The weight of each
animal is immaterial. There is no provision for any refund of any
part of the licence fee if, in the course of the licence period,
the licensee closes down the business or the licence is cancelled
or suspended.
7. The payment of the fee and the issue of the licence are wholly
prospective in their effect. That effect is the authority to
operate the abattoir, including in that operation the slaughtering
of animals and the preparation of meat and other products for
sale, throughout the period of the licence. No tax is imposed by
the Act on any specified aspect of the operation. In particular,
no tax is imposed on the slaughtering of any animal or on any of
the products that result from the operation of the abattoir. Any
number of animals may be slaughtered and their carcases processed
under the authority of the licence. It is to be expected that the
number of animals coming forward for slaughter will vary markedly
from year to year because of changing weather conditions and the
state of the market generally.
8. If a licence is renewed for a further year, the size of the
fee which must be paid for that licence will be determined by
reference to the number and kind of animals that were slaughtered
under the authority of the preceding licence. But it is not those
acts of slaughter that attracts the tax for the ensuing year.
What attracts the tax is the application for authority to continue
to operate the abattoir in the year that is to come.
9. If it matters, the fee is not an indirect tax. It cannot have
been imposed with the expectation that its incidence on the
finished products emanating from the abattoir will be passed on in
any precise way down the line until they reach the consumer. A
moment's reflection shows how impossible it is for any particular
part of the fee to attach to any particular product. Let it be
assumed that a tax of ten cents is imposed upon the act of
slaughtering each cow. When the cow has been processed through
the abattoir it will be represented by a variety of products
ranging from dressed carcases, sides and quarters, meat, offal,
pet food material, sausage casings, skins, hides, meat meal,
tallow, blood meal, gall and hair. Furthermore, the weight of
each animal may vary considerably. Accordingly, it would be quite
impossible to isolate a discrete component of such tax as being
referable to any particular product.
10. Again, if it matters, the consideration which moved Jacobs J.
to distinguish the facts in Sleigh from those in Dennis Hotels and
Dickenson's Arcade is not present here. The licensing scheme
cannot be described as a mere vehicle for collecting the tax. The
legislation is a detailed and comprehensive scheme for ensuring
the efficient and hygienic operation of the meat industry in New
South Wales. An abattoir licence is a valuable right attaching to
particular premises which allows the licensee to participate in
that industry. It is transferable with the approval of the
Authority.

In my view, having regard to all these features and viewing the matter as one of substance rather than form, the conclusion is irresistible that the tax is not a duty of excise. It is not imposed "upon the taking of a step in a process of bringing goods into existence or to a consumable state", to use the formulation adopted by Barwick C.J. in Anderson's Pty. Ltd., at p. 364, and approved by Brennan J. in Hematite Petroleum, at p. 612 of A.L.J.R.; p. 680 of A.L.R. Nor does it satisfy the test propounded by Dixon J. in Matthews, at p. 304, namely:

"The tax must bear a close relation to the production or
manufacture, the sale or the consumption of goods and must be of
such a nature as to affect them as the subjects of manufacture or
production or as articles of commerce."

It is a direct tax imposed on an applicant for a licence before any slaughtering takes place as the price of the privilege of operating an abattoir. The exaction is "only in respect of the business generally" to adopt a phrase used in earlier cases and cited with approval by Brennan J. in Hematite Petroleum, at p. 612 of A.L.J.R.; p. 680 of A.L.R. It is only sensible and equitable that the amount of the fee should bear some relation to the value of the business of operating the abattoir and that is best secured by having regard to its past history.

24. It follows that in my opinion, whether or not Dennis Hotels is regarded as determinative of this case, the licence fee is not a duty of excise.

25. The demurrers should be allowed.

BRENNAN J. The slaughtering of animals in an abattoir is a step in the process of converting livestock into a variety of vendible meat products. A tax on the slaughtering of animals in an abattoir is therefore a duty of excise for it is a tax on a step in production of goods: see Hematite Petroleum Pty.Ltd. v. State of Victoria [1983] HCA 23; (1983) 57 A.L.J.R. 591 (47 A.L.R.641). On the other hand, to impose on an operator of an abattoir "a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all" is not to impose a duty of excise (Dennis Hotels Pty.Ltd. v. Victoria (1960) 104 C.L.R.529, per Kitto J. at p.560). The fee payable for a licence to operate an abattoir pursuant to ss.10(1)(a) and 11C of the Meat Industry Act 1978 (N.S.W.) and reg.41 of the Meat Industry (Licensing) Regulations 1980, not being a fee for services rendered, is a tax (Logan Downs Pty.Ltd. v. Queensland (1977) 137 C.L.R.59, per Gibbs J. at p.63). The question is whether it is a duty of excise.

2. Licences are issued in respect of particular premises (ss.10(1), 11(4)). They are issued to expire on 1 September next following the date of issue, and they are renewable for successive periods of one year expiring on 1 September (s.11A(2)(b) and (3)) provided the licence fee is paid before issue or renewal (s.11C(3)). Section 11D provides for payment of the fee by instalments in some circumstances. Licences are transferable with the approval of the New South Wales Meat Industry Authority (s.14(1)), which has power to suspend or cancel a licence on the ground that an instalment of the licence fee is due and payable but unpaid and on a number of other grounds including breach of any prescribed minimum standards relating to the premises (s.16(1)). A licence fee for the issue of a licence is payable by the applicant and a licence fee for the renewal of a licence is payable by the holder of the licence (s.11C(7)). Clearly a licence fee is exacted for the privilege of operating the abattoir in respect of which it is issued or renewed during the period for which it is issued or renewed. Does it have the closer connexion with production or distribution sufficient to characterize it as a duty of excise?

3. Section 11C prescribes the method by which the amount of a licence fee is to be determined:

"(1) In this section, 'relevant period' in relation to the
issue or renewal of a licence, means the period of 1 year that
ended on 30th June that last preceded the date on and from which
the licence or renewed licence is to be in force.
(2) ...
(3) ...
(4) The licence fee to be paid for the issue or renewal of an

abbatoir licence or a slaughter-house licence is -

(a) an amount calculated at the prescribed rate for each
abattoir animal slaughtered during the relevant period at the
premises in respect of which the licence or renewed licence is
sought; or
(b) where no abattoir animals were so slaughtered or no such
rate is prescribed, such amount as may be prescribed for the issue
or renewal, as the case may be, of the licence.
..."

4. Pursuant to s.11C(4)(a), reg.41 prescribes rates at so much per animal slaughtered - 1.25 cents, 2.5 cents or 10 cents according to species; pursuant to s.11C(4)(b), it prescribes an amount of $100.

5. The amount of a licence fee where animals have been slaughtered in an abattoir during a "relevant period" is thus arithmetically related to the number and species of animals slaughtered during the period. If a tax calculated at the prescribed rates were imposed on the operator of an abattoir at the end of a period in respect of the slaughtering of animals in the abattoir during that period, the tax would clearly be a duty of excise. But it is argued that the licence fee is exacted in respect of the operation of the abattoir in the licence year, not in respect of its operation in the preceding "relevant period", and that there is no relevant connexion between the licence fee and the slaughtering of animals either during the licence year or during the preceding period. An operator may slaughter throughout a year without incurring any liability. If, immediately prior to 1 September in any year, he discontinues his operations, or transfers his licence to another, he will not need a renewal of his licence and there will be no occasion for him to pay a licence fee. If his transferee wishes to renew the licence, the transferee will be liable to pay the licence fee calculated at the prescribed rate though he had no connexion with the slaughtering of the animals by reference to which the fee is calculated.

6. Is a licence fee calculated pursuant to s.11C(4)(a), that is, at the prescribed rate per animal slaughtered, a tax upon the slaughtering of animals in the abattoir? If it is such a tax, it is a duty of excise. The statutory criterion of liability to pay a tax and the statutory description of a tax are both important indications of the character of the tax, but it cannot be said that one or other is always conclusive. Nor can it be said, when the statute prescribes more than one criterion of liability that the characterizing criterion is necessarily the ultimate criterion to be satisfied before an accrued liability for the tax arises. If a statute selects a step in the production or manufacture of goods as an event on the occurrence of which a contingent tax liability arises, and provides that the occurrence of some other act or event shall transform the contingent liability into an accrued liability, the step in production or manufacture is as much a criterion of liability as the act or event which follows it. Unless both occur, no tax liability accrues. The distinction between such criteria may be merely temporal. It is then a question to determine which criterion gives the tax its character.

7. In the present case, the fees calculated pursuant to s.11C(4)(a) are described, and correctly described, as fees for an abattoir licence, but it would mistake the operation of the statute and the character of the tax it imposes to dismiss the other criterion which makes the slaughtering of animals the source of a liability, albeit contingent, for those fees. The slaughtering of animals in an abattoir during a relevant period creates a liability in the holder of a licence which he must pay before 1 September next ensuing (or elect to pay by instalments) if he wishes to renew his licence for the ensuing 12 months. That liability can be avoided by him if he does not wish to renew his licence, but it cannot be avoided by his transferee if the transferee wishes to obtain a licence to operate the abattoir during the ensuing licence period. To deny that licence fees which become payable and which are calculated under s.11C(4)(a) are duties of excise, it is necessary to dismiss one of the two criteria of liability which the Act selects, namely, the slaughtering of animals during a relevant period. If the slaughtering of animals during that period did not occur, the licence fee would be $100, in accordance with s.11C(4)(b) - a fee which, in my opinion, has no relevant connexion with production or manufacture. But licence fees calculated under s.11C(4)(a) have that "closer connexion with production or distribution" to which Kitto J. referred in Dennis Hotels (at p.560) that stamps them with the character of duties of excise. The slaughtering of animals in the abattoir during the relevant period determines the measure of the tax liability. The circumstance that the tax is, and is described as, a fee for a licence to operate an abattoir during the licence period does not deny the tax the character of a duty of excise on the goods produced from the animals slaughtered in the preceding relevant period, and I would so hold unless a contrary view is compelled by authority.

8. Licence fees of the kinds referred to in Dennis Hotels and Dickenson's Arcade Pty.Ltd. v. Tasmania (1974) 130 C.L.R.177 do not bear that character. It is argued that the present case is concluded by the decisions in those cases, and that it is not open to hold that abattoir licence fees are duties of excise. Each of the licence fees whose validity was upheld in Dennis Hotels and Dickenson's Arcade was calculated by reference to the value of goods bought or sold in the business conducted on the licensed premises during a period preceding the period of the licence. The authority of those cases was recently reaffirmed in their application to legislation that is "indistinguishable" from the legislation upheld in Dickenson's Arcade: see Evda Nominees v. State of Victoria (1984) 58 A.L.J.R.307 (52 A.L.R.401); see also per Barwick C.J. in H.C. Sleigh Ltd. v. South Australia (1977) 136 C.L.R.475, at p.488. If the legislation in this case is indistinguishable, then the opinion I have formed must yield to the authority of those cases.

9. There are some dissimilarities between the licence fees upheld in Dennis Hotels and Dickenson's Arcade and the licence fees now under consideration. In those cases, the fees were imposed as the price of a licence to sell goods - liquor in one case, tobacco in the other. In the present case, the licence is one to produce goods. In the former cases, the operations by reference to which the licence fees were calculated were the purchasing or selling of goods - the value of liquor purchases in one case, the value of tobacco sales in the other. In the present case, the licence fees are calculated by reference to steps in production or manufacture.

10. In Dickenson's Arcade itself, Gibbs J. regarded (at p.226) Dennis Hotels as authority for the wide proposition "that a licence fee quantified by reference to the amount paid or payable for goods purchased during a period preceding that in respect of which the licence was granted was not a duty of excise", but Mason J. (at p.240) regarded Dennis Hotels as having "no necessary application to fees prescribed for a licence to manufacture or process goods to which in my opinion different considerations apply".

11. In M.G.Kailis (1962) Pty.Ltd. v. Western Australia (1974) 130 C.L.R.245, where Dennis Hotels was distinguished, a fee for a licence to process fish calculated by reference to the value of fish caught or bought for processing or sale in a preceding period was held invalid. Mason J. said (at p.265):

" To hold that Dennis Hotels is decisive of the present case
would, I think, give the constitutional prohibition contained in
s.90 a formal operation, having little substantial importance. It
would enable the States to impose a tax on the manufacture or
production of any goods by the simple expedient of a compulsory
licensing scheme under which production and manufacture are taxed
by prescribing licence fees to be assessed, not by reference to
the quantity of goods produced under the licence, but by reference
to the raw materials used in the process of production in a period
ending before the licence commenced to operate."

Gibbs and Stephen JJ., in dissent, regarded Dennis Hotels as requiring the validity of the licence fees to be upheld (see pp.259,263) but it cannot be said that their view as to the scope of the proposition established by Dennis Hotels was a minority view. McTiernan and Menzies JJ., who with Mason J. constituted the majority, distinguished Dennis Hotels on grounds different from those relied on by Mason J. The Kailis Case did nothing to erode the authority of Dennis Hotels and Dickenson's Arcade although the conflict in opinion as to the scope of the proposition supported by those cases remained unresolved. So much was accepted by Barwick C.J., Gibbs, Stephen and Mason JJ. in H.C.Sleigh, at pp.488,493,497,500. That case was concerned with licences to sell petroleum products where the licence fee was calculated on the licensee's turnover during a preceding period. On either view, that case came within the scope of the proposition for which Dennis Hotels is authority. However, Barwick C.J. (at p.488) stated his "substantial agreement" with the view of Mason J. (at p.500) that the majority judgments in Dennis Hotels would not necessarily govern all cases, "in particular cases where a licence similarly calculated was imposed on the manufacture or production of goods" (at p.500). Jacobs J., dissenting, refused to accept the "so-called 'logical' extensions" of the earlier cases (at p.525):

" 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."

Murphy J. (at p.527) stated his opinion that "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" and he regarded the Dennis Hotels and Dickenson's Arcade tests as unsatisfactory.

12. I am unable to regard Dennis Hotels as an authority for the proposition that a fee for a licence to carry on a process of producing goods calculated on steps in production during a preceding period is not a duty of excise. That proposition was denied by the Justices in the minority in that case, and it was not accepted by Fullagar J. It is immaterial that the approach adopted by Fullagar J. is rejected as unorthodox. What is material is that he did not accept the "so-called 'logical' extension" of the decision in Dennis Hotels on which reliance is now placed to uphold the validity of abattoir licence fees. Fullagar J. said (at p.555) that "what characterizes a duty of excise is that the taxpayer is taxed by reason of, and by reference to, his production or manufacture of goods". His Honour, examining the judgments in Parton v. Milk Board (Vict.) (1949) 80 C.L.R.229 said (at pp.557-558):

" ... Rich and Williams JJ. who delivered a joint judgment,
were of opinion that a duty of excise 'must be imposed so as to be
a method of taxing the production or manufacture of goods' (at
p.252). This is my view, and I cannot therefore regard their
judgment as inconsistent with that view. Their Honours proceeded:
'... but the production or manufacture of an article will be taxed
whenever a tax is imposed in respect of some dealing with the
article by way of sale or distribution at any stage of its
existence, provided that it is expected and intended that the
taxpayer will not bear the ultimate incidence of the tax himself
but wil indemnify himself by passing it on to the purchaser or
consumer'. With this I am, with respect, unable to agree. The
'tax' payable by the dair was not imposed on production or
manufacture; it did not affect production or manufacture in any
way: what was done was a taxing of the dairyman, or of what the
dairyman did with milk, not a method of taxing production or
manufacture.
It remains only to apply the general propositions which I have
formulated to the facts of the present case, and this can be very
briefly done. The two classes of licence in question are the
victualler's licence and the temporary licence. In each case the
licence fee is payable by the licensee, and it is quantified by
reference to past purchases of liquor by him. It does not fall
upon any producer or manufacturer, and it does not in any way
affect production or manufacture. The quantification is arrived
at by taking into account all purchases of liquor made in the
relevant period, whether produced or manufactured in Victoria or
imported from abroad or from another State by the vendor or by the
licensee himself."

13. Had the tax fallen on a producer, and had it been quantified by reference to a step in production, his Honour's reasoning would have been different. He may have reached the same conclusion, as Menzies J. thought in Dickenson's Arcade (at p.212), but not for reasons which are here material. Taylor J. (at p.575) regarded the circumstance that the victualler's licence fees were not "either in form or substance a tax upon the production or manufacture of liquor" as a point of distinction between those fees and fees that had earlier been held to be duties of excise, though it must be said that his reasons assumed that "a tax payable by a trader and measured by the amount of the commodities which he buys or sells in the course of his business is, prima facie, a duty of excise ..." (at p.578).

14. Although the authority of Dennis Hotels and Dickenson's Arcade is to be maintained in respect of legislation imposing fees for licences to sell goods calculated by reference to purchases or sales in preceding periods, those cases do not require the conclusion that a tax payable by a producer of goods and calculated by reference to steps in the production of goods taken in a preceding period is not a duty of excise.

15. Section 11C(4)(a) and reg.41 impose a duty of excise. To the extent that the demurrers assert the validity of those provisions, they must be overruled.

DAWSON J. This case raises the question whether the fee imposed for the issue or renewal of an abattoir licence under the Meat Industry Act 1978 (N.S.W.) is a duty of excise within the meaning of s.90 of the Constitution and so exclusively within the province of the Commonwealth and beyond the power of the New South Wales legislature.

2. Over the years there have been many exhaustive analyses in the cases of the proper meaning to be given to the concept of an excise duty in its constitutional setting and I think that the point has been reached where another etymological or historical dissertation on the subject is unlikely to elucidate further the problems which are contained within that concept. In my view, there is wisdom in the observation of Stephen J. in Dickenson's Arcade Pty. Ltd. v. Tasmania [1974] HCA 9; (1974) 130 C.L.R. 177, at p.230, that there is no ultimate truth which lies at the end of any search for the meaning of the phrase "duty of excise"; that, as Dixon J. pointed out in Matthews v. Chicory Marketing Board (Vict.) [1938] HCA 38; (1938) 60 C.L.R. 263, at p.293, the word excise "has never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application". This makes it all the more important that when there is doctrine which has been accepted in this Court upon the subject it should be observed and not undermined in subsequent decisions. Not only is this required by the ordinary principles of stare decisis, but it is the more necessary when there is no certain guide whether the answers to the questions which arise are right or wrong other than the decisions of this Court itself. Furthermore, it is important to recognize that those questions involve the financial relationship between the Commonwealth and the States and that the methods which the States may employ in raising revenue, particularly since the advent of uniform taxation, have been to a large extent dictated by the course of decision in this Court. Legislation, with vital fiscal and budgetary consequences, has been carefully framed to conform to the principles laid down by authority and serious disruption is caused by any significant departure from those principles.

3. I should like to be able to say that any modern treatment of the subject of excise duties may begin with the decision in Bolton v. Madsen [1963] HCA 16; (1963) 110 C.L.R. 264, but reference to some previous decisions is necessary in order to understand the significance of that case, although the reference may be brief because of the numerous comprehensive reviews of the authorities to be found in the reports.

4. The wide view of a duty of excise, which in England saw the term as covering miscellaneous sources of revenue, has never been adopted in the construction of s.90 and in Peterswald v. Bartley [1904] HCA 21; (1904) 1 C.L.R. 497, at p.509, the term was said to be intended to mean " ... a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax." It is no less correct today than it was at the time Peterswald v. Bartley was decided to say that an excise duty falls upon the production or manufacture of goods although, after some fluctuation in judicial opinion, it is now established that the point at which the tax may be imposed extends to any step in the distribution of the goods up to the point at which they pass into consumption. That is not to say that the relationship between an excise duty and the goods upon which it is imposed has become something different or that an excise duty is no longer essentially a tax upon production or manufacture. Cf. Hematite Petroleum Pty. Ltd. v. State of Victoria [1983] HCA 23; (1983) 57 A.L.J.R. 591, at p.600; (1983) [1983] HCA 23; 47 A.L.R. 641, at p.658 per Mason J. It remains a tax upon goods when produced or manufactured but, because of the tendency of the tax to enter the price of the goods, its imposition at any stage before consumption will affect the demand for the goods and so affect, as a matter of commerce, production or manufacture. The point was made succinctly by Kitto J. in Anderson's Pty. Ltd. v. Victoria [1964] HCA 77; (1964) 111 C.L.R. 353, at p.374, when he said that:

" ... a duty of excise is, at bottom, a burden upon home
production or manufacture. Obviously it is such a burden if it is
payable upon a step in production or manufacture in its character
of such a step. Not so obviously but just as certainly, it is
such a burden if it is payable upon a step in distribution in its
character of such a step; for in that case from the time the goods
come into existence the law makes it inherent in their nature, as
goods requiring distribution in order to become available to
fulfil their purpose, that the tax shall be paid."

See also Parton v. Milk Board (Vict.) (1949) 80 C.L.R. 229, at p.252 per Rich and Williams JJ. and at p.260 per Dixon J.; Dickenson's Arcade Pty. Ltd. v. Tasmania, at p.218 per Gibbs J.; Hematite Petroleum Pty. Ltd. v. State of Victoria, at p.602 of A.L.J.R.; p.661 of A.L.R. per Mason J.

5. An excise duty is a tax upon goods although, of course, since goods do not pay taxes, that means that it is a tax upon persons in relation to goods. The problem of defining what relationship between the tax and the goods in the hands of the taxpayer will constitute a tax a duty of excise has greatly exercised judicial minds. But in my view it is important to recognize that this is the problem because it cannot be said that every tax which has a tendency to enter into the price of goods and so affect their manufacture or production, however indirectly, is a duty of excise.

6. Quite obviously all the expenses of the production, manufacture or distribution of goods, whether they are taxes or not, have an ultimate effect upon the price and the quantity or type of commodities which reach the market place. And some of these expenses will clearly be taxes. Land tax, payroll tax, municipal rates and the like may all be levied upon a producer of goods and find their way into the price of the goods. But it has never been suggested that they constitute duties of excise and the reason, upon any view, must be that there is not sufficient relationship between the relevant tax and the goods manufactured or produced. It is for this reason that the imprecise distinction between a direct tax and an indirect tax has afforded little help in the definition of an excise duty for the purposes of s.90 of the Constitution. The distinction was of use to the political economist rather than the lawyer. To be sure there are some, perhaps relatively few, taxes which are clearly direct taxes - a dog tax is the common example - but there are others which do not fall clearly into either category. As Dixon J. said of the distinction between direct and indirect taxation in Matthews v. Chicory Marketing Board (Vict.), at p.301:

"It is evident that, in the application of this distinction to
manufacturing or trading businesses or productive enterprises, it
may be difficult to say where a licence fee or duty ceases to be a
tax imposed upon the person expected to bear the burden so that it
is a direct tax and when it is so closely connected with the
manufacture, production, or distribution of commercial goods that
it forms an element naturally incorporated in the price of every
article and constitutes an indirect tax."

7. It may, perhaps, be said, as this Court did in Browns Transport Pty. Ltd. v. Kropp [1958] HCA 49; (1958) 100 C.L.R. 117, at p.129, that an excise duty will generally be an indirect tax because it is a tax upon goods rather than persons, but that is not to say that there are not many taxes which share the characteristic of an indirect tax in that they tend to be passed on but are not taxes upon goods and are not excise duties.

8. In particular, it has never been questioned that the price imposed for the grant of a franchise to manufacture, produce or distribute goods may not constitute an excise duty even though it may clearly be a tax. Thus in Matthews v. Chicory Marketing Board (Vict.), at p.300, Dixon J. said: "A tax imposed upon a person filling a particular description or engaged in a given pursuit does not amount to an excise" or as Kitto J. put it in Dennis Hotels Pty. Ltd. v. Victoria [1960] HCA 10; (1960) 104 C.L.R. 529, at p.560: "To say so much is to exclude a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all".

9. The powers given by the Constitution to the Federal Parliament over customs and excise duties are correlative and just as customs duties are exacted upon a step taken with goods - their import or export - so excise duties are also exacted upon a step taken domestically with goods, other than their actual consumption. It is thus that an excise duty, just as is a customs duty, is a tax upon goods, for what attracts the tax - the criterion of liability - is what is done with the goods.

10. This distinction between an excise duty and other taxes was propounded by Kitto J. in the Dennis Hotels Case in terms which have since commanded general assent. At p.559 he said:

"What is insisted upon may, I think, be expressed by saying that
a tax is not a duty of excise unless the criterion of liability is
the taking of a step in a process of bringing goods into existence
or to a consumable state, or passing them down the line which
reaches from the earliest stage in production to the point of
receipt by the consumer."

It is, I think, important to recognize that the setting of the passage which I have just cited was a case in which the significant tax was a victualler's licence fee. It was held not to constitute a duty of excise. The fee was exacted for the privilege of carrying on the business of a licensed victualler and was calculated at the rate of six per cent of the amount paid for liquor purchased within the twelve months ending with the last preceding 30 June. It was a fee which was exacted for the renewal of the licence. The passage which I have cited formed an essential part of the reasoning of Kitto J. which led him to the conclusion that the licence fee in that case was a payment for a franchise and not a tax upon goods and, therefore, not a duty of excise. It is true that this reasoning was not applied by a majority in the Dennis Hotels Case, because Fullagar J. thought that the issue could be determined by the fact that an excise duty could not be a tax upon the distribution of goods and must be confined to a direct imposition upon their production or manufacture. That view is, of course, no longer tenable. But it was the approach of Kitto J. which was subsequently accepted unanimously in Bolton v. Madsen by a court comprising six Justices and the passage which I have cited was crucial to that approach. Nor was Kitto J. merely offering a guide which might be helpful in determining whether a particular impost constitutes an excise duty. He was dealing with the essential quality of an excise duty as a legal concept and was pointing out that in legal terms there can be no guide other than the criterion of liability selected by the statute imposing the tax. If this did not appear with ample clarity at the time he first propounded the test, Kitto J. put it beyond doubt in Western Australia v. Chamberlain Industries Pty. Ltd. [1970] HCA 5; (1970) 121 C.L.R. 1, at p.20 when he said:

"And there is no other way of determining from legislation the
character of a tax that it imposes than by ascertaining what
criterion of liability the legislation selects. To say this is
not to substitute a formula for the words of the Constitution; it
is simply to recognize the essential nature of the question that
arises when a particular tax is said to possess a character to
which the Constitution refers.

The unequivocal terms in which this Court in Bolton v. Madsen, at p.271, adopted Kitto J.'s approach can leave no doubt about the central importance of the criterion of liability in determining whether a tax is a duty of excise, for there it was said that " ... it is the criterion of liability that determines whether or not a tax is a duty of excise."

11. In Hematite Petroleum Pty. Ltd. v. State of Victoria, at pp.600-601 of A.L.J.R.; pp.658-659 of A.L.R., Mason J. expressed the opinion that Bolton v. Madsen no longer commands the acceptance of the Court as a whole and pointed to the statement by Barwick C.J. in Anderson's Pty. Ltd v. Victoria, at p.365, where he said:

" ... in arriving at the conclusion that the tax is a tax upon
the relevant step, consideration of many factors is necessary,
factors which may not be present in every case and which may have
different weight or emphasis in different cases. The
'indirectness' of the tax, its immediate entry into the cost of
the goods, the proximity of the transaction it taxes to the
manufacture or production or movement of the goods into
consumption, the form and content of the legislation imposing the
tax - all these are included in the relevant considerations."

See also per Deane J. in the Hematite Petroleum Case, at pp.616-617 of A.L.J.R.; pp.687-688 of A.L.R.

12. It is, I think, unnecessary to go to the other cases in which there are statements which are said to weaken the authority of Bolton v. Madsen. See Dickenson's Arcade Pty. Ltd. v. Tasmania; M.G. Kailis (1962) Pty. Ltd. v. Western Australia [1974] HCA 10; (1974) 130 C.L.R. 245; Western Australia v. Chamberlain Industries Pty. Ltd.; Logan Downs Pty. Ltd. v. Queensland [1977] HCA 3; (1977) 137 C.L.R. 59.

13. The fact is that Bolton v. Madsen stands as a unanimous decision of this Court. In my view, it is a decision which introduced order into confusion in an area in which, as I have said, there are no absolute truths and in which legislatures must depend upon the guidance of this Court. The decision ought to be followed rather than the preferences which individual members of the Court may have expressed upon various occasions for other conclusions. The doctrine of stare decisis in this Court demands that it should be followed unless it is overruled. It is not a decision which can be explained away upon the basis that the criterion by which a tax liability is determined is merely one of the factors which may indicate whether it is a duty of excise. The criterion of liability which the relevant statute selects is the only way in which it can ultimately be determined whether there is a sufficient relationship between the tax and goods - whether the tax is a tax upon goods - in order to constitute it an excise duty. Bolton v. Madsen makes it clear beyond question that the criterion of liability is the critical factor; unless the tax is imposed upon the taking of some step in the production, manufacture or distribution of goods, it will not be an excise duty.

14. To reintroduce other factors such as the indirectness of the tax or the proximity of the transaction taxed to actual production or manufacture, would be to resort to the vagaries of political or economic theory in preference to the sure path which was laid down in Bolton v. Madsen. It is not a matter of substance versus form. An excise duty is a form of tax; it is a tax upon goods. If another tax has the same or a similar effect as a tax upon goods in that it has a tendency to increase the price of goods to the ultimate consumer, is it for that reason to be classified as a duty of excise although in form it is not a tax upon goods and, if so, what is the distinction between it and a land tax, a payroll tax or even a franchise fee? To depart from the test adopted in Bolton v. Madsen would be to become lost in the wilderness once again or to accept an ever-widening conception of an excise duty which, extended to its logical limits, would subsume all taxes, the ultimate result of which, however indirect, could be shown to affect the production or manufacture of goods.

15. The difficulty may be illustrated by the submission made by the learned Solicitor-General for the Commonwealth in this case which, when followed through, was that a licence fee imposed upon a producer of goods is a duty of excise if it exceeds a nominal amount and is not by way of payment for services. Not only is such a proposition contrary to authority, but it is contrary to principle, for it has not been doubted that a licence or franchise fee for the privilege of carrying on a business, whether or not it be the manufacture, production or distribution of goods, may be in the form of a tax and yet not constitute an excise duty. Yet the submission made by the Solicitor-General necessarily implied that beyond payment for services or a payment of a nominal amount, any tax, even if otherwise unrelated to goods, is an excise duty if it is imposed upon a producer of goods notwithstanding that it is imposed upon him for the privilege of carrying on his business. The implication is necessary because once the test laid down in Bolton v. Madsen is abandoned there is no principle which suggests that a line can be drawn between one such licence fee or another, nor was any such principle suggested. The submission entailed the abandonment of the test laid down in Bolton v. Madsen because it is not, as I have explained, a test laid down as one of a number, but the critical test with a necessary application. To accept the Solicitor-General's submission would, in my view, be to reject doctrine which has never been doubted, at all events since the decision in Peterswald v. Bartley, and to disrupt even further the delicate financial balance between the Commonwealth and the States.

16. To say that an excise duty is a form of tax and that whether a tax is in such a form - that of a tax upon goods - is to be determined by reference to the criterion adopted for the imposition of liability to the tax, is not to invite the adoption of mere devices to avoid the constitutional prohibition contained in s.90. No doubt a particular form of tax may be adopted by a State for the purpose of avoiding the constitutional prohibition and that tight lines and fine distinctions, which are the unavoidable concomitants of revenue laws pressed to their limits, will in some cases occur. But this is no warrant for resort to economic consequences in the name of substance rather than form in order to redefine a legal concept, nor is any justification to be found for so doing in the Constitution itself. Notwithstanding that his was a dissenting judgment in the Hematite Case, Gibbs C.J. put it clearly, at pp.595-596 of A.L.J.R.; p.650 of A.L.R., when he said:

"The question whether a State law infringes s.90 can be answered
only by determining whether it imposes that sort of tax. One must
first define 'excise', and then ask whether the tax imposed by the
State statute comes within that definition. It is irrelevant that
the State statute brings about the same practical result as a duty
of excise, for s.90 does not forbid the States to achieve any
particular economic result; it forbids them to enact a particular
form of taxation."

And as Menzies J. pointed out in the Dennis Hotels Case, at p.590, individual conceptions of fiscal policy provide no assistance in the interpretation of s.90, which is not cast in terms of consequence or purpose but in terms of a concept which is assumed to be capable of legal definition. It is, therefore, meaningless to draw any analogy with cases under s.92 of the Constitution because that section speaks in terms of freedom of activity which necessarily entails a consideration of consequences rather than concepts.

17. It is hardly to be doubted that a licence fee which is calculated by reference to purchases or sales in a past period will be chosen by a State as a form of tax in preference to a licence fee which is calculated by reference to actual sales or purchases, because in the latter case the fee may constitute a duty of excise. That is to say no more than that a State will cast its tax in a form in which it is valid rather than invalid. But the reason why the tax will in the former case be valid is because it is not a tax upon goods. There is no relationship between the amount of the tax and any goods which the licence permits the licensee to deal with. It may in some, or even most cases, be predicted that the amount of the tax would be little different if the tax were upon actual sales or purchases, but that is, at the time the fee is paid, a mere prediction and not a conclusion required by the nature of the tax. It is to say no more than that in general the size or worth of a business, measured by the volume of past purchases or sales, may not fluctuate markedly from year to year. It may be added that the worth of a business is, of course, an entirely appropriate basis upon which to determine the amount of the fee to be charged for the privilege of carrying on that business even when the fee amounts to a tax. The criterion of liability, which determines the nature of the tax, is not any step taken by the taxpayer in relation to goods. The past sales or purchases may or may not have been made by the taxpayer and the tax relates to the future conduct of the business. In answer to those who suggest that the distinction is one of form rather than substance or practical consequences, I can do no better than to repeat what Kitto J. said in the Dennis Hotels Case itself, at p.564, of the victualler's licence in question in that case:

"No part of such a fee becomes payable at the time of a purchase
of liquor for the victualler's premises, and no purchase of liquor
for the premises necessarily results in any liability under the
section on the part of the person making the purchase. If a
particular licensed victualler buys liquor for his premises he
does not, by doing so, make himself liable to pay one penny to the
Crown. If he renews his licence after the ensuing 30th June, his
doing so will involve him in a liability under the section, and
past purchases, (which in the case supposed happen to have been
his purchases) will be taken into account in working out the
amount of his liability according to the statutory formula. But
if he does not renew it, he will pay nothing under the section in
respect of the purchases; and neither will anyone else who does
not take a grant or renewal of a licence for the premises. If
someone else does renew the licence, or gets a new licence for the
premises, that person will pay the fee, and the fact that he had
nothing to do with the purchases on which it is based will not
matter."

18. Turning to the abattoir licence fee in this case, I may gratefully adopt the analysis of the relevant legislation and of the effect of that legislation which is contained in the reasons for judgment of the Chief Justice and Wilson J. The licence is a licence to operate an abattoir and the fee which is imposed is by reference to the number of animals slaughtered during a period of twelve months which precedes the issue of the licence. A different rate is prescribed for different types of animals. A licence may be transferred by the licensee to another person, although only with the approval of the Meat Industry Authority. If a licence is suspended or cancelled, as it may be in certain circumstances, or if the licensed business ceases operations during the currency of the licence, there is no provision for the repayment of any part of the licence fee. The animals slaughtered do not represent the product of the abattoir, for the animals are further processed to produce commodities in the form of dressed carcases, meat, offal, pet food material, casings, skins, hides, meat meal, tallow, blood meal, gall and hair. The significance of this is that there is no discernible relationship between the products of the abattoir and the fee imposed for the privilege of running the abattoir and that would be so even if the fee were calculated by reference to the animals slaughtered during the period of the licence, rather than by reference to those slaughtered in a past period. Cf. Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [1962] HCA 41; (1962) 108 C.L.R. 189. What may be produced by way of final product from different animals may vary considerably both in quantity and kind and even if the fee were to be regarded as a tax upon the slaughter of animals, it could not be regarded as an excise duty upon whatever products might result from the treatment of the carcase. A duty of excise may not require a strict or mathematical relationship between the tax and the quantity or value of the goods produced but there must be a sufficiently close relationship between the tax and the production of the goods to show that the tax affects the goods as the subject of production. See Matthews v. Chicory Marketing Board (Vict.), at p.304 per Dixon J.

19. However, the fee is calculated by reference to animals slaughtered in a period which precedes the period of the licence and, even assuming that the slaughter can be identified as a step in the production of the ultimate products, to my mind the result is necessarily dictated by the principle which lies behind the decision in the Dennis Hotels Case, accepted as it was by this Court in Dickenson's Arcade Pty. Ltd. v. Tasmania, H.C. Sleigh Ltd. v. South Australia [1977] HCA 2; (1977) 136 C.L.R. 475 and Evda Nominees Pty. Ltd. v. State of Victoria [1984] HCA 18; (1984) 58 A.L.J.R. 307; (1984) 52 A.L.R. 401. I am unable to accept that those decisions involved no principle and that their application is to be confined to those cases in which an exact parallel can be drawn between the factual situation and legislation with which the previous cases dealt. The acceptance by this Court in Bolton v. Madsen of the test propounded by Kitto J. in the Dennis Hotels Case makes it artificial in the extreme, in my view, to suggest that the decision in the Dennis Hotels Case must be confined to the legislation and facts of the precise kind dealt with in that case. In particular, I can see no justification for drawing a distinction between production or manufacture and distribution as was done by Mason J. in M.G. Kailis (1962) Pty. Ltd. v. Western Australia, at pp. 265-266. See also H.C. Sleigh Ltd. v. South Australia, at pp.488, 499-500 and 525-526. It was that distinction upon which the plaintiff relied in this case. It may be conceded, as I have pointed out earlier in this judgment, that an excise duty is essentially a tax upon production or manufacture notwithstanding that its imposition may be upon a step in the distribution of goods. But that in no way weakens the requirement that it must be a tax upon goods and it will only be a tax upon goods if it is payable upon some step taken in relation to them, whether it be in relation to their production, manufacture or distribution. A tax imposed for the privilege of producing goods is not an excise duty unless some such relationship can be established and it cannot be established by reference to past production which, if it is related at all to the production of the licensee during the period of the licence, is no more than a matter of coincidence. The abattoir licence fee is not a duty of excise and, accordingly, I would allow the demurrer of each defendant.

ORDER

Demurrers overruled.

Judgment for the plaintiff in the action with costs.

Declare that section 11C(4)(a) of the Meat Industry Act 1978 and regulation 41(2) of the Meat Industry (Licensing) Regulation are invalid

Order that the defendants pay to the plaintiff the sum of $13,911.60.