Denver Chemical Manufacturing Co v Commissioner of Taxation (NSW)
79 CLR 2961949 - 0729A - HCA
(Judgment by: Williams J.)
Denver Chemical Manufacturing Co
v Commissioner of Taxation (NSW)
Judges:
Dixon J.
McTiernan J.
Williams J.Webb J
Subject References:
Taxation and revenue
Income tax
Foreign company
Local branch
Tax avoidance
Legislative References:
Income Tax (Management) Act 1941 (No 48) 1941 - The Act
Judgment date: 29 July 1949
Sydney
Judgment by:
Williams J.
I also agree and shall state my reasons shortly for reaching this conclusion. The right of the commissioner to issue the amended assessments depended upon s. 210 of the Act of 1936. There were no limitations as to the time when the commissioner could make the amendments authorized by the section except the limitations imposed by the section. In the present case the commissioner contended that the section imposed no limitation as to time because he was of opinion that there had been an avoidance of tax and that the avoidance was due to evasion. The appellant objected to this opinion of the commissioner and appealed to the Board of Appeal. Under s. 248 of the Act of 1941 the opinion of the Board of Appeal then became the opinion of the commissioner for all the purposes of the Act except for the purpose of objections thereto and appeals therefrom. Objections and appeals therefrom were no doubt expressly excepted to make it clear that a taxpayer could not lodge an objection to the opinion of the Board similar to the objection which he could lodge to the original opinion of the commissioner.
The Board was of the same opinion as the commissioner. I agree with Dixon J. that the combined effect of ss. 238, 248 and 255 of the Act of 1941, as the Supreme Court held, is to confine the appeal to the Supreme Court under s. 255 from this opinion to an appeal on a question of law under sub-s. 1 (a) and that an appeal from such an opinion is not an appeal on a question of fact within sub-s. 1 (b). This construction of the sections is in line with Moreau v Federal Commissioner of Taxation [F5] and the other cases in this Court referred to in the judgment of Jordan C.J. in the Supreme Court. It is also in line with the reasoning of the Privy Council in Minister of National Revenue v Wrights' Canadian Ropes Ltd [F6] and D. R. Fraser & Co Ltd v Minister of National Revenue [F7] . The jurisdiction of this Court, like that of the Supreme Court, is therefore limited to examining the materials on which that opinion was formed and unless the appellant can satisfy the Court that the Board acted capriciously or arbitrarily or upon irrelevant considerations the appeal on this ground must fail. In D. R. Fraser & Co Ltd v Minister of National Revenue [F8] , Lord Macmillan said "The criteria by which the exercise of a statutory discretion must be judged have been defined in many authoritative cases, and it is well settled that if the discretion has been exercised bona fide, uninfluenced by irrelevant considerations and not arbitrarily or illegally, no court is entitled to interfere even if the court, had the discretion been theirs, might have exercised it otherwise." There was in the present case evidence on which the Board could reasonably find that from 1923 Woodward intended to withhold from the commissioner the fact that he was no longer returning as the total sales of the company the total sales to persons in Australia but was only returning the total sales to persons in New South Wales. To my mind that was evidence sufficient in law to justify the Board forming a valid opinion that the avoidance of tax was due to evasion. The commissioner was therefore entitled to amend the assessments and to make such alterations therein or additions thereto as he thought necessary. The expression "as he thinks necessary" in s. 210 means, in my opinion, as he thinks necessary to assess the taxpayer for the full amount of tax legally payable by him under the provisions of the relevant Act. For this purpose he can make such alterations in and additions to the existing assessments as he thinks necessary. The expression confers a wide authority to amend the existing assessments and I think that the words are wide enough to authorize the commissioner to alter the whole basis on which the assessments had previously been made if the commissioner bona fide considers that such an alteration is necessary to make a proper assessment of the income tax payable by the taxpayer. It is therefore unnecessary to determine whether the original assessments could legally be and were made, in the case of the years 1923 to 1927 under s. 18 of the Act of 1912, and in the case of the subsequent assessments under ss. 25 or 27 of the Act of 1928, because assuming that they could be and were so made, s. 210 (1) would still authorize the commissioner to change from such a basis to the ordinary basis of the actual assessable income less all deductions authorized by the Act derived in each relevant year in order to determine the true taxable income. I agree that the appeal should be dismissed.