Chhua and Commissioner of Taxation

[2020] AATA 832

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(Decision by: Senior Member R. Pintos-Lopez)

Heang Kok Chhua
and Commissioner of Taxation

Tribunal:

Member:
Senior Member R. Pintos-Lopez

Legislative References:
Administrative Appeals Tribunal Act 1975 - The Act
Evidence Act 1995 - The Act
Income Tax Assessment Act 1936 - The Act
Taxation Administration Act 1953 - The Act

Case References:
Binetter v Federal Commissioner of Taxation - (2016) 249 FCR 534
Casey v Repatriation Commission - (1995) 60 FCR 510
Federal Commissioner of Taxation v Futuris Corporation Ltd - (2008) 237 CLR 146
Jones v Comcare - [2019] AATA 5407

Hearing date: 2 March 2020
Decision date: 16 April 2020

Melbourne

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Decision by:
Senior Member R. Pintos-Lopez

INTERLOCUTORY DECISION

REASONS FOR INTERLOCUTORY DECISION

1. The Respondent applies to set aside a summons requested by the Applicant and issued by the Tribunal on 28 November 2019 (the summons). The summonsed party is a former employee of the Australian Taxation Office (ATO) who, on 13 March 2013, it is stated, formed an opinion that there had been fraud or evasion on the part of the Applicant in the years ended 30 June 2007 to 30 June 2010 (the former employee referred to herein as the former employee). I will refer to the application for review of that decision in this Tribunal as the principal application. The former employee was also represented by counsel for the Respondent on his own behalf and sought to have the summons set aside.

2. The Applicant submits that the evidence that the former employee could give at the hearing of the principal application is relevant to the existence or formation of a "decision" or lack thereof.

3. The Respondent submits that the summonsed party could not, on any view, provide evidence relevant to the matters to be determined or any findings of fact in the principal application.

4. For the reasons that follow, I agree that the summons must be set aside.

RELEVANT FACTS

5. On 13 November 2018, solicitors for the Applicant wrote a letter to the former employee noting that the Applicant sought to call him as a witness. That letter states further:

We have advised our client that your evidence might be that:

-

you have no recollection of the events of six years ago;

-

you did not authorize the affixing of the signature block and or did not form the opinion in question.^[1]

6. On 28 November 2019, as noted, a summons was issued directed to the former employee.

7. On 9 December 2019, the former employee sent an email to the Tribunal stating:

I retired from the ATO in August 2014.

The event referred to appear [sp.] to have taken place in March 2013.

My substantive position was EL1 in Dandenong.

I may have been acting as an EL2 for a short period around that time covering Box hill where this case was conducted from.

Quite frankly I do not have any recollection of these events of almost 7 years ago, especially as it was not conducted out of my team in Dandenong.

Please advise in view of the above if I need to be present as required by the summons.

8. On 20 February 2020, the Applicant's lawyer wrote to the ATO requesting documents relating to the former employee, including:

1

The documents evidencing the delegation by the Commissioner of Taxation, or the authorising by a duly delegated officer, to the holder from time to time of the Relevant Position, (being the position to which substantive Executive Level 1 [the former employee] was appointed in an acting capacity between 20 February 2013 and 17 March 2013) to form an opinion for the purposes of Item 5 of section 170(1) of the ITAA 1936.

2

The documents evidencing the appointment of [the former employee] to the Relevant Position between 20 February 2013 and 17 March 2013.

3

The documents evidencing that the Relevant Position was a position in which the appointee acquired the power form an opinion for the purposes of Item 5 of Section 170(1) of the ITAA 1936.

4

The document requesting [the former employee] to form an opinion in relation to the applicant for the purposes of Item 5 of Section 170(1) of the ITAA 1936.

RELEVANT LAW

9. Section 33(1) of the Administrative Appeals Tribunal Act 1975 (the Act), provides that:

(a)

the procedure of the Tribunal is , subject to this Act and the regulations and to any other enactment, within the discretion of the Tribunal ;

(b)

the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and

(c)

the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate.

(Emphasis added.)

10. Section 33 of the Act, similar to other inherent or statutory powers granted to courts to govern their processes, grants the Tribunal discretion in respect of its procedure, subject to any other laws. In context, that discretion is directed to compliance with its function to consider evidence and to make findings of fact relevant to determinations. Section 40 of the Act provides power to the Tribunal to, among other things, take evidence for the purposes of reviewing a decision.

11. Section 40A of the Act grants power to the Tribunal to summons a person to give evidence:

(1) For the purposes of a proceeding before the Tribunal, the President, an authorised member or an officer of the Tribunal may summon a person to do either or both of the following, on the day, and at the time and place, specified in the summons:

(a)

appear before the Tribunal to give evidence;

(b)

produce any document or other thing specified in the summons.

(2)The President or an authorised member may refuse a request to summon a person.

(Emphasis added.)

12. A request to issue a summons will generally be accepted by the Tribunal provided it is in an approved form: see generally Jones v Comcare [2019] AATA 5407 at [8] (Jones).

13. Section 40A(2) includes the power to refuse a request to summon a person. A question arises as to the Tribunal's power to set aside a summons already issued pursuant to s 40A of the Act rather than the refusal of a request under s 40A(2). I agree with the Deputy President in Jones that the Tribunal may set aside a summons already issued following an application made by a person having sufficient interest or on the Tribunal's own motion.^[2] In the statutory context, the manner of the gathering of evidence and relevant procedure is a function of the Tribunal. The discretion granted to the Tribunal under s 33 to govern its procedure and to take evidence for the purposes of reviewing a decision must necessarily extend to setting aside a summons issued, whether the Tribunal considers that the evidence of the summonsed person may be taken by some other more efficient means or otherwise.

CONSIDERATION

14. The Respondent and the former employee apply to set aside the summons.^[3]

15. The Respondent submits that there are various grounds for setting aside a summons.^[4] In the present case, the Respondent points to a lack of relevance. The Respondent relies upon the Tribunal's decision in Jones in making an assessment of what is "relevant" for the purposes of the principal application. The Respondent submits that the evidence of a person summonsed will be "relevant" where they could "reasonably be expected to throw light on some of the issues in the principal proceedings" or, put another way, where there is "a real possibility that [his or her evidence] may assist in the resolution of issues in the proceedings."^[5]

16. The Respondent submits that the evidence of the former employee could not be relevant to the decision under review having regard to the Applicant's Further Amended Statement of Facts, Issues and Contentions, which provides:

Whether on 13 March 2013:

(a)

[the former employee] was acting as an EL2?

(b)

the position in which [the former employee] was acting was a position, the holder of which for the time being, was duly authorised for the purposes of forming a decision for the purposes of Item 5?

(c)

whether [the former employee] attended work on 13 March 2013?

Whether the Respondent formed the decision required for the purposes of Item 5?

Whether any opinion of the Respondent recorded on 13 March 2013 was invalidated by the receipt of further information the following day such that the opinion needed to be remade subsequently and prior to the amendment of the assessments?^[6]

17. The Applicant's submissions where broadly consistent with his Further Amended Statement of Facts, Issues and Contentions and the request for documents of 20 February 2020. The submission is made that the former employee will assist at the principal hearing in establishing that the employee did not make a "decision" in conformity with the requirements of Item 5 of s 170(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA).

18. At the hearing, counsel for the Applicant raised a number of circumstances, which, it was submitted, put in doubt the fulfilment of a decision answering Item 5, including that:

(a)

the former employee worked in Dandenong whereas the decision was made at Box Hill;

(b)

the former employee may not have been acting as an EL2, which, it is submitted, was the minimum level necessary to issue an amendment;

(c)

the day after the purported decision was issued the auditor sought to interview the Applicant for a third time; and

(d)

there was allegedly "bad blood" between the auditor and the Applicant.

19. Counsel for the Applicant submitted that the only person capable of giving evidence regarding the opinion was the former employee. It was submitted that there must be some documentation at the ATO evidencing such an opinion.

20. The Respondent submits in support of the present application that:

The only probative evidence that [the former employee] can give, in his capacity as the Authorised office [sp.] who formed the opinion in question, concerns how the Respondent formed the opinion. This - it is submitted - cannot be relevant in the principal proceeding. In particular, even if there was some deficiency in the forming of the opinion (which is denied), the assessment would still be valid under s 175 of the 1936 Act.^[7]

21. In Casey v Repatriation Commission (1995) 60 FCR 510 at 514 (Casey), the Court stated:

s 33 of the AAT Act means what it says. The fact that material may be inadmissible in accordance with the law of evidence does not mean that it can not be admitted into evidence by the Tribunal or taken into account by it. The criterion for admissibility of material in the Tribunal is not to be found within the interstices of the rules of evidence but within the limits of relevance.

22. Fixing upon a specific formulation of words in relation to the question of relevance may not necessarily assist. The Evidence Act 1995 (Cth), for example, provides more broadly, at s 55, that:

evidence that is relevant is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of fact in issue in the proceeding.

23. The Tribunal is not constrained by the rules of evidence. Furthermore, there is no requirement that the Tribunal engage in an assessment of whether evidence is relevant or not relevant.

24. The discretion to set aside a summons ought not be overly constrained as it arises, in the context of ss 40-40B of the Act, by reference to the words of s 33 of the Act which are only limited by reference to regulations or enactment and the "conduct" provision contained in s 33(1)(b). The question of whether a summons ought be allowed must take into account the Tribunal's capacity, when reviewing a decision, to take evidence and control its procedure as necessary. An application to set aside a summons must be considered in all the circumstances and in light of the functions and obligations of the Tribunal.

25. The questions raised by the Applicant's and the Respondent's submissions as to relevance may be usefully analysed on the basis of whether the former employee could give evidence relevant to the determination of the questions to be answered in the principal application. I take the Court's comments in this regard in Casey as constituting such a precis. It may be, however, that a Tribunal directed to a statement which seeks to encapsulate the limits of relevance may consider that the evidence could otherwise assist that Tribunal in reviewing a decision.

26. At the hearing, the parties referred me to a number of authorities concerning the limits of review in the context of an application to the Tribunal under Part IVC of the Taxation Administration Act 1953 (Cth) as opposed to relief in the Federal Court pursuant to s 39B of the Judiciary Act 1903 (Cth).^[8] It was submitted by the Respondent that s 175 of the ITAA bears directly upon the Tribunal's review and thus relevance, providing:

The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.

27. In Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146, Gummow, Hayne, Heydon and Crennan JJ stated:

Section 175 must be read with ss 175A and 177(1). If that be done, the result is that the validity of an assessment is not affected by failure to comply with any provision of the Act, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act; in review or appeal proceedings under Pt IVC the amount and all the particulars of the assessment may be challenged by the taxpayer but with the burden of proof provided in ss 14ZZK and 14ZZO of the Administration Act. Where s 175 applies, errors in the process of assessment do not go to jurisdiction and so do not attract the remedy of a constitutional writ under s 75(v) of the Constitution or under s 39B of the Judiciary Act.^[9]

28. In Binetter v Federal Commissioner of Taxation (2016) 249 FCR 534 (Binetter), Perram and Davies JJ stated:

In cases where the amendment power depends on the formation of an opinion by the Commissioner of fraud or evasion, the difference between merits review by the Tribunal and an appeal to the Court is that the Tribunal re-considers whether, on the evidence before it, there was an avoidance of tax due to fraud or evasion, whereas the Court will only interfere with the Commissioner's exercise of the amendment power if the Commissioner did not form the requisite opinion or the Commissioner's opinion that there was fraud or evasion is vitiated by some error of law: s 43 of the AAT Act; Shell Company of Australia Ltd v Federal Commissioner of Taxation (1930) 44 CLR 530 at 544-545; Jolly v Federal Commissioner of Taxation (1935) 53 CLR 206 at 212-214; Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360. Although the Tribunal re-examines whether, on the evidence before it, there was an avoidance of tax due to fraud or evasion, and is able to substitute its opinion for that of the Commissioner, the issue for the Tribunal is whether the taxpayer has discharged the onus of showing that the opinion that there was fraud or evasion should not have been formed, and therefore, that the statutory condition for the power to amend is not satisfied. Unless the taxpayer discharges that onus, the assessments are not shown to be excessive and the effect of s 14ZZK is that the Tribunal must affirm the amended assessments, such assessments having been made by the Commissioner in compliance with the statutory requirements : McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 at 303; Millar v Federal Commissioner of Taxation (2015) 101 ATR 827.^[10]

(Emphasis added.)

29. Binetter makes plain that the issue for the Tribunal is whether the taxpayer has discharged the onus of showing that the opinion that there was fraud or evasion should not have been formed. The questions raised concerning the effect of s 175 of the ITAA must be properly considered at the hearing of the principal application and in the context of the evidence.

Conclusion

30. The question posed in the present application concerns the summons issued to the former employee. That is in context of the provisions of the Act which provide, among other things, that the procedure of the Tribunal is within its discretion, such proceedings to be conducted with as much expedition as a proper consideration of the matter permits, while allowing the Tribunal to inform itself on any matter in such manner as it thinks appropriate.

31. In the circumstances of the present application to set aside the summons directed to the former employee, the former employee's statement made by email dated 9 December 2019 that he does not have "any recollection of these events of almost 7 years ago" is dispositive. There is no other evidence before the Tribunal that the former employee has any other purpose in stating that he has no recollection of the events. Necessarily, his evidence would not assist in the review of the decision and determination of the principal application. Accordingly, the summons must be set aside and the former employee released from the obligation of attending to give evidence at the hearing.

INTERLOCUTORY DECISION

32. The Tribunal sets aside the summons issued on 28 November 2019.