ADMINISTRATIVE APPEALS TRIBUNAL - GENERAL ADMINISTRATIVE DIVISION

[2002] AATA 657

Re Riviera Nautic Pty Ltd v Federal Commissioner of Taxation

J Dwyer, Senior Member

5 August 2002 - Melbourne


J Dwyer, Senior Member.

Background facts

   This is an application for review of a reviewable decision made 12 October 2001 disallowing an objection by Riveria Nautic Pty Ltd (Riviera Nautic) to a decision made on 19 June 2001 under s 164AD(4) of the Customs Act 1901 (Cth) that Riviera Nautic was not entitled to diesel fuel rebate of $9585.98 paid to it under the diesel fuel rebate scheme. That decision also determined that the amount of $9585.98 was accordingly repayable (T docs pp 48-49).

  2  Mr Herbert, a director, appeared and gave evidence for Riviera Nautic. He was assisted by Mr O'Brien, an accountant. Mr Sest of Counsel appeared for the Commissioner of Taxation (the Commissioner). The tribunal had before it the documents (the T documents) lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) and the exhibit tendered during the hearing.

  3  There is no dispute about the facts. They were set out in the respondent's Statement of Facts, Issues and Contentions as follows:

   

 1.  The Applicant operates a fleet of yachts and motor cruisers which it charters to customers to drive themselves around the Gippsland Lakes.
 2.  Generally, the Applicant's staff are not present on the vessels during the course of the charter period.
 3.  Clause 5 of the Terms and Conditions of the Charter agreement between the Applicant and its customers states: "The Vessel can be reserved for the exclusive use of the Charterer during the Charter period provided the signed Agreement is received by the Owner by the date specified".
 4.  Clause 10 of the Terms and conditions of the Charter Agreement provides; "The Owner will deliver the Vessel to the Charterer ready for service ... at the start date".
 5.  The Applicant purchases bulk diesel fuel with which it fills the tanks of each vessel prior to delivering the vessels to its customers.
 6.  The Applicant charges its customers a fee inclusive of all fuel used irrespective of the quantity. No separate charge is made for the fuel.
 7.  On 14 August 2000 the Applicant made an application for a rebate under the diesel fuel rebate scheme on the basis that the fuel was for use in marine transport under s 164(1)(ac) of the Customs Act 1901 (Cth).
 8.  On 12 April 2001 [should be 4 September 2000 (T4)] the Respondent advised the Applicant that the activities specified in its application were eligible for rebate. A rebate of $9,585.98 was paid to the Applicant.
 9.  The Applicant was audited by the ATO on 3 May 2001 and its operations were found to be ineligible for rebate.
 10.  On 19 June 2001 the Applicant was advised of its ineligibility for rebate.
 11.  Repayment of $9,585.98 was sought by issue of Debit Note DFW 97110461 dated 20 June 2001.

  4  It is appropriate to add that the decision, that Riviera Nautic was not eligible for a rebate, was not made because the audit found that the application lodged by Riviera Nautic contained any inaccurate or misleading information. It was simply a result of a different interpretation of the legislation. The decision stated (T docs p 48):

   

Section 164(1) of the Customs Act 1901 (Cth) provides that the Diesel Fuel Rebate is "payable to a person who purchases diesel fuel for use by him" for marine transport in the course of carrying on an enterprise. Accordingly, the use of fuel in a vessel which is "hired out" and not crewed by yourself or your employees, would not be eligible for rebate. This is because, the use of the fuel would be by the hirer of the vessel and not by you. The hirer would also not be eligible for rebate as they would be using the fuel for recreational activities. Excise Bulletin EB 2000/3 issued 30/6/2000 provides the eligibility requirements for Marine Transport (copy attached)

Relevant legislative provisions

  5  The relevant legislative provisions are found in s 164(1), (2) and (7) of the Customs Act 1901 (Cth) which, so far as relevant, read as follows:

   

164 Rebate of duty in respect of diesel fuel used for certain purposes

 (1)  A rebate is, subject to subsections (2) and (4A) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by the person:
 ...  
 (ac)  in marine transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise;

 

...

 (2)  A person is not entitled to be paid diesel fuel rebate, or to retain diesel fuel rebate paid to the person, in respect of diesel fuel purchased by the person for use by the person in a manner referred to in subsection (1) that is specified in the application for that rebate if, in fact, the person:
 (a)  uses the fuel otherwise than in that manner; or
 (b)  sells or otherwise disposes of the fuel; or
 (c)  loses the fuel (whether because of accident, theft or any other reason).
 Note:  If rebate has been paid on diesel fuel that is subsequently used in a manner other than the manner indicated, or sold or otherwise disposed of, or lost, the rebate on the fuel is repayable. (See sections 164AA and 164AD).

 

...

 (7)  In this section:
    ...
     carrying on an enterprise has the same meaning as in the Diesel and Alternative Fuels Grants Scheme Act 1999 (Cth).
    ...
     marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.
    ...
     use, in relation to diesel fuel in relation to a person, does not include the sale or other disposal of the diesel fuel by the person to another person or the loss of the diesel fuel by the person.

 The definition of "carrying on an enterprise" in s 5 of the Diesel and Alternative Fuels Grants Scheme Act 1999 (Cth) is as follows:
   

     "carrying" on an enterprise includes doing anything in the course of the commencement or termination of the enterprise.

 The term "enterprise" is also defined in that Act by reference to the A New Tax System (Australian Business Number) Act 1999 (Cth). There is no issue about the fact that Riviera Nautic carries on an enterprise.

Evidence

  6  Mr Herbert explained that Riviera Nautic provides boating holidays on the Gippsland Lakes. The business has been operating for about 16 years and has won many tourism awards. It hires both yachts and cruisers, but they all have diesel engines. He said that one of the differences between Riviera Nautic and other boat hire companies is that Riviera Nautic provides the boats "fully found", so that all costs, including fuel and insurance, are included in the hire or charter fee. He said this has been the practice for about 10 years. It is seen as good marketing to be able to give people all inclusive prices as to the cost of hire. He also said that a diesel engine functions best if it is used a lot. They do not produce full power until they are hot. Riviera Nautic wants to encourage use of fuel, so that guests will use the engine for a minimum of 2 hours a day. He said this is important as the engine also provides the hot water on board and charges the batteries. Mr Herbert said that boats are provided to clients with a full tank of fuel at the commencement of a hire period. If a boat requires refuelling, this is done at no extra charge. There is no refund for fuel not used. He pointed out that a small proportion of the fuel purchased by Riviera Nautic is retailed to private boat owners or to people who hire a boat for day hire only. There is no rebate claimed in respect of that fuel.

  7  Mr Herbert agreed with Mr Sest that although there is no specific charge for fuel when clients hire his vessels, an element of the overall daily hire charge covers the cost of fuel. He said that is the same position as with all the other costs of boat hire. He said the all inclusive hire charge must recover costs for Riviera Nautic, otherwise it could not stay in business. He explained that if 2 clients hired the same sort of vessel for the same number of days, and one brought the boat back at the end of the hire with a considerable amount of fuel, and the other required refuelling during the period of hire, which is a rare occurrence, both would still pay the same previously quoted charter fee. Mr Herbert agreed with Mr Sest that the boats are supplied without crew. I asked Mr Herbert whether the marine industry recognises any difference between the terms "hire" and "charter"? He said at transcript p 34:

   

The technical term used by the - what is now the Marine Safety Victoria, is that we are hire and drive vessels under schedule 1(f). Generally speaking, although we - the words are sometimes synonymously used, such as our contract with our hire guest is called a charter contract, generally speaking it is sort of accepted in the marine industry, I think, that a charter includes crew on board, whereas a hire is what is known by the very non-marketing term of bare boat charter.

  8  The Riviera Nautic promotional material states (T docs p 38):

   

With our boating holidays, the package is complete - all your entertainment; your bedroom, bathroom and kitchen; and your transport. It's in one price that you know about up front; a price that includes:

 ·  Safety net health cancellation insurance
 ·  boat insurance
 ·  the government stamp duty
 ·  fuel and gas (no matter how much you use) ...

  9  Riviera Nautic, in its objection of 12 August 2001, explained its contentions as follows (T docs pp 15 and 16):

   

 1.  We carry on an enterprise as a tourism business . The basis of that enterprise is that we operate hire vessels for fishing or creational [sic] activities.
 2.  In the course of operating those vessels we purchase diesel fuel for use by the business in our hire vessels.
 3.  Unlike most of the companies in our industry we do not sell or otherwise dispose of the diesel fuel to the hirer of the vessel. The hire rate paid by our hirers is inclusive of all fuel used irrespective of the quantity. At no time do we separately identify or account to the hirer for the fuel used and no separate charge is made for the fuel.

  10  The respondent's contentions were as follows:

   

 1.  The Applicant was not engaged in marine transport in the carrying on of an enterprise, but was engaged in the business of hiring vessels to others.
 2.  The marine transport (if any) was undertaken by the Applicant's customers after those customers took exclusive possession of the vessels and fuel under the hiring agreement.
 3.  When the fuel was consumed by the vessels in the course of their operation, the fuel was used by the Applicant's customers who had exclusive use of the vessels and fuel, not by the Applicant.
 4.  If the activities of the Applicant are found to be in marine transport, the Applicant sold or otherwise disposed of the fuel to another person and is deemed not to have used the fuel by the provisions of s 164(7) of the Customs Act 1901 (Cth).

  11  The crux of the submission for the respondent was in contention 3. The respondent did not deny that the diesel fuel was purchased by Riviera Nautic for use and actually used in its marine hire or charter business. But the respondent claimed that the fuel was not to be taken to have been "used" until the hirer of a vessel "used", or perhaps "used up", that fuel to transport a boat around the Gippsland Lakes. Secondly, it was contended by Mr Sest that s 164(2) disqualified Riviera Nautic as it "sold or otherwise disposed of" the fuel to its clients.

  12  The contentions of Riviera Nautic were well summarised in the decision to disallow the objection at T docs p 7 as follows:

   

A. It carries on an enterprise as a tourism business. The basis of the enterprise is that it operates hire vessels for fishing or recreational activities. In the course of operating those vessels it purchases diesel fuel for use by the business in its hire vessels. Unlike most of the companies in the industry it does not sell or otherwise dispose of the diesel fuel to the hirer of the vessel. The hire rate paid by its hirers is inclusive of all fuel used irrespective of the quantity. At no time does it separately identify or account to the hirer for the fuel used and no separate charge is made for the fuel.

 

Therefore the diesel fuel is no different from any other consumable that is used in the course of running the enterprise. That is, it is a direct cost to the company.

 

B. Alternatively, it contends that use of the fuel takes place at the time when the fuel tank of the vessel is filled, whereas the interpretation that the ATO placed on the use of the fuel in its letter of 19 June 2001, is that the consumption of the fuel takes place while the vessel is on hire. As the filling of the tank is done by Riviera Nautic staff while the vessel is under its control then the use of the fuel is within the meaning of the Act.

 

C. Alternatively, that the Commissioner should be bound by the terms of eligibility given in the Australian Taxation Office "Off Road Diesel Fuel Rebate Scheme - Guide For Claimants" booklet NAT3365-7.2000. Under the Marine Transport section this lists eligible activities as including "carrying on a tourism business that involves the hiring or chartering of vessels for fishing or other recreational activities".

 

D. Alternatively, that the Commissioner should be bound by the Australian Taxation Office letter of 4 September 2000 in which it stated that Riviera Nautic's business was eligible. At the time of this determination the Commissioner had been given the full facts relating to the claim, and as nothing has changed since that determination, then that determination should be binding on the Commissioner.

  13  The Diesel Fuel Rebate Scheme was extended to cover diesel fuel used for marine transport from 1 July 2000. The publication "Off Road Diesel Fuel Rebate Scheme - Guide for Claimants" (the Guide) referred to in contention C above (T docs pp 70-121), was issued by the Australian Taxation Office (the ATO) and current at June 2000. It stated (T docs p 83):

   

Marine transport

 

If you are carrying on an enterprise that involves marine transport, you are entitled to register and claim under the scheme after 1 July 2000.

 

Marine transport includes the use of vessels in or on fresh or salt-water, though it does not include any marine transport relating to forestry.

 

Eligible activities include:

 

...

 ·  operating charters
 ·  carrying on a tourism business that involves the hiring or chartering of vessels for fishing or other recreational activities, and

 

...

  14  Similarly the Australian Taxation Office Excise Bulletin (EB 2000/3) (the Bulletin) issued on 30 June 2000 (T docs pp 52-56), which was referred to by the decision-maker at T docs p 48, explained the meaning of a number of terms including "marine transport" . It stated:

   

What is meant by marine transport?

 

The expression "marine transport" includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.

 

The following uses of diesel fuel are eligible for rebate:

 (a)  in vessels for the transport of goods or passengers, whether or not on scheduled services;
 (b)  in vessels carrying out activities connected with marine transport (including the forward journey of a vessel with a view to undertaking transport activities or the return journey after the transport activities have been carried out);
 (c)  in vessels providing towing, mooring and piloting services;
 (d)  in vessels carrying out sea or surf rescue operations, firefighting and other emergency services;
 (e)  in vessels engaged in the exploration or mining of oil or natural gas or other minerals;
 (f)  in hire or charter vessels, operated by a tourism business, for fishing or other recreational activities;

  15  Neither the Guide nor the Bulletin makes any distinction between hire or charter vessels. Using the terminology Mr Herbert said is accepted in the industry, vessels are "hired", without crew, or "chartered" with crew.

Submissions and findings

  16  Mr Sest submitted that the tribunal must apply the Customs Act 1901 (Cth), and not the Guide and Bulletin. Secondly, he submitted that the Guide and Bulletin were wrong insofar as they stated that a rebate was payable in respect of fuel used by an enterprise carrying on a tourism business that involves the hiring of vessels for recreational activities. The first submission is clearly correct. The tribunal must construe the words of the Customs Act 1901 (Cth). The tribunal must decide the matter before it, without being influenced by the statements in the ATO publications which the Commissioner now claims are incorrect.

  17  Mr Sest, at para 5 of the respondent's outline of submissions, referred to the 2 relevant issues as the "use" issue under s 164(1)(ac), and the "sale or disposal issue" under s 164(2) of the Customs Act 1901 (Cth). He wrote:

   

5. In summary the statutory requirements for rebate give rise to two issue here:

 5.1   The "use" issue. Did the Applicant purchase diesel fuel for use by it in marine transport in the course of carrying on an enterprise? This concerns the question of the "use" of the fuel in the context of s 164(1)(ca) [sic] of the Act.
 5.2   The "sale or disposal" issue. Did the Applicant sell or otherwise dispose of the fuel? This concerns the question of whether the Applicant sold or otherwise disposed of the fuel in the context of s 164(2) of the Act.

  18  On the "use" issue Mr Sest submitted:

   

8. On this issue the Respondent submits that the Act requires the following:

 8.1  The purchaser of the fuel must be the user - a person other than the purchaser cannot be the user.
 8.2  The relevant use of the fuel is its consumption in marine transport.
 8.3  The user must be engaged in the activity of marine transport as part of carrying on an enterprise.

The "Use" Issue

(i) "Use by the person"

  19  The words of s 164(1) clearly provide that the rebate is payable "to a person who purchases diesel fuel for use by the person ...". There must be a purchase of diesel fuel by Riviera Nautic for use by Riviera Nautic, if it is to qualify for a rebate. The Customs Act 1901 (Cth) in s 164(7) contains a definition of the word "use", but it states only:

   

"use", in relation to diesel fuel in relation to a person, does not include the sale or other disposal of the diesel fuel by the person to another person or the loss of the diesel fuel by the person.

 That definition does not say what is meant by the term "use by the person".

  20  Mr Sest submitted that although Riviera Nautic purchased the fuel and filled the fuel tanks of the hire vessels at the end of each hire, so that they were full when the next hire commenced, and provided fully fuelled boats to its clients, the fuel was not used by Riviera Nautic, but by its clients. That submission requires that the words "for use by the person" be given a narrow or restrictive operation.

  21  Mr Sest conceded that there is a use of fuel by Riviera Nautic in that fuel is required to run the business, but he submitted that that concept of "use" does not satisfy the requirements of the legislation which, "is concerned with the use of fuel as fuel; not just in a general business way". He said at transcript p 45:

   

So, to say that there is a use in the fact that there is fuel that is required to run the business can be accepted. And as I said in my primary submissions, on the face of it one could not deny that the business' purchase of that fuel is a cost it could deduct from its income. But that does not then determine the question of use of the fuel as fuel under Act because the Act is concerned with the use of fuel as fuel; not just as use of fuel in a general business way.

  22  The Customs Act 1901 (Cth) does not expressly make any such distinction between different uses of fuel. What is required by s 164(1)(ac) is simply that the fuel be used by Riviera Nautic "in marine transport ... in the course of carrying on an enterprise".

  23  Mr Sest submitted that the fact that the legislation is designed to encourage activities that consume fuel, suggests that the only relevant use is that which actually consumes the fuel. That submission seems to overlook the fact that the fuel is consumed whether the relevant use is that of Riviera Nautic, which uses the fuel to provide fully fuelled boats for hire, or of the hirers. Further, Mr Sest was purporting to make a distinction which does not exist. Both Riviera Nautic and its clients use the fuel "as fuel", to provide power to transport boats about the Lakes.

  24  Mr Sest's submissions on this issue required that the word "use" not be given its usual or ordinary meaning, but be applied in a narrow or restrictive way, which he contended was required to give effect to the object of the diesel fuel rebate scheme. There was no evidence on that issue during the hearing, but there are statements in decided cases such as Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 289, and there was agreement that the object of the rebate scheme is to encourage the off road use of diesel fuel in eligible activities. (See also Bulletin T docs pp 52-55, Guide T docs pp 72-121 and extracts from Hansard relied on by both parties in further submissions lodged with leave after the conclusion of the hearing). Mr Herbert submitted that the use of diesel fuel by Riviera Nautic satisfied the object of the legislation, and that the word "use" should be given its ordinary meaning.

  25  Mr Sest referred to Re Queensland Electricity Commission and Collector of Customs (1991) 24 ALD 286 at 291 as supporting his contention as to the meaning of the words "use by him". The tribunal said at 291:

   

(21) It has not been suggested by the Queensland Electricity Commission that the boards are themselves engaged in primary production. Counsel submitted that it was sufficient that the diesel fuel was purchased by the boards with the intention of it being used, at least in part, in primary production. He argued that it was immaterial that those actually engaged in primary production were third parties. We do not accept that submission. While we have agreed that the provisions of this legislation should have a beneficial operation, we are not persuaded that the cases cited by the applicant support its position. Both the Federal Court and this tribunal have taken a liberal approach to the interpretation of the purposes set out in s 164(1)(a)-(d). A beneficial interpretation, however, does not mean that the words "for use by him" should have anything other than plain and common-sense meaning. Close examination of the cases cited by counsel reveals that in each case there is a close association between the user of the fuel and the prescribed activity. In none is there an arm's length transaction of the type entered into by the boards. We agree with the Collector that there must be some nexus between the use made of the fuel by the purchaser and the purpose for which rebate is payable. This approach is necessitated by the words "for use by him" in s 164(1). If it were not necessary to find a nexus between the use of the fuel made by the purchaser and the purpose for which rebate is payable then the words "by him" would be superfluous.

  26  I do not consider that Re Queensland Electricity Commission supports Mr Sest's submission on the issue of the meaning of the words "use by him". First, it confirms that the words should have their "plain and commonsense meaning". In their "plain and commonsense meaning" Riviera Nautic does, as Mr Sest conceded, use the fuel it purchases in the course of "carrying on an enterprise". Further, there is a clear nexus or connection between Riviera Nautic and the prescribed activity.

  27  Mr Herbert relied on Re Asplin and Department of Industry, Technology and Commerce (1986) 9 ALN N246, where the tribunal held there was "no need for the person who purchased the fuel ... to also use the fuel personally at residential premises". The tribunal in Re Queensland Electricity Commission, referred to Re Asplin saying at 291:

   

(18) Counsel also referred to the decision of the majority in Re Asplin and Department of Industry, Technology and Commerce (1986) 9 ALN N246 to support the proposition that the consumer of the electricity generated from the diesel fuel need not be the purchaser of that fuel. He said that when dealing with the issue of diesel fuel being used "at residential premises" there was no need for the resident to be the purchaser of the fuel. In that case the Asplins were owners of a caravan park and used diesel fuel to supply electricity to a number of sites. The respondent had argued that, although the applicant had paid duty on the fuel, it was not for use by it "at residential premises", but for use by third parties. The tribunal rejected the argument and stated that there is "no need for the person who purchased the fuel and paid the duty to also use the fuel personally, in relation to residential premises" (at 10 of the decision).

  28  Mr Herbert pointed out that the tribunal had not found in Re Asplin that the fuel was sold to the guests at the caravan park who used the electricity for the specified purposes. Nor did the tribunal find that the electricity was not used by the proprietor of the caravan park, but only by the guests at the caravan park.

  29  The decision in Re Asplin does have relevance to the similar fact situation in this matter. It indicates that there can be more than one type of use of rebateable fuel. It can be used by a proprietor of a business, and without detracting from that use, also by the guests or hirers or customers of the business, for their personal requirements.

  30  Mr Herbert said at transcript p 36:

   

My company still owns the boat and its equipment and I submit that we are still using it, including the fuel, in the carrying on of our enterprise of marine transport and we are using it through a very act by which the hirer also uses the boat and its equipment and the other resources that we provide to help them having their holiday.

 

In fact, you could say that, if the hirer did not hire and use the vessel, we wouldn't have an enterprise. So I suggest that this very narrow interpretation of use, which seems to contradict their own guidelines, is not looking at the whole process, it is only looking at a very small part. And that, because the hirer has temporary control of the boat, to suggest that they and only they are using the fuel and the boat, suggests that Riviera Nautic hasn't got an enterprise but that it is a very artificial use of the nature and purpose of the Act. Basically, we are only looking at one very small part of the transaction and ignoring the reality of the whole process.

  31  Mr Sest submitted that the purpose of the purchase of fuel by Riviera Nautic was to "supply it, indeed sell it to the customers, so that they may consume that fuel to operate the boats" (trans p 18). He added (trans p 19):

   

use of fuel can only logically and sensibly mean consumption of that fuel for its intended purpose, that is to generate energy to, in this case, propel the vessels and to provide other energy requirements of the vessels. That occurs when the customers take possession of the vessels and sail them ...

 He submitted that Riviera Nautic did not purchase the fuel for use by it, but for use by its customers. He submitted that the "fundamental single identity of purchaser and user prescribed by s 164(1) of the Customs Act 1901 (Cth) has not been satisfied" (at para 14 of Outline).

  32  Crucial to Mr Sest's submission on this point was his contention that the "use" referred to in s 164(1) is the consumption of fuel so as to provide energy to power the vessels. He relied on a number of authorities as supporting that submission, although he conceded that the point was not directly addressed in those cases. He referred to a passage in Australian National Railways Commission v Collector Of Customs, South Australia (1985) 8 FCR 264 at 275 where Sheppard and Burchett JJ said of a rebate:

   

The other matter to be noticed is that although, at first sight, it might appear that the rebate is payable only to persons who are themselves directly engaged in, for example, mining operations or primary production, it will also be payable to persons if their use of it is for those purposes even though they themselves are not miners or primary producers. Thus, it is payable where a primary producer, for example, a grazier, engages a contractor to carry out work connected with primary production and the contractor uses diesel fuel in operating the plant necessary for the task. The contractor providing the equipment is in that case entitled to the rebate.

  33  Mr Sest also referred to Collector of Customs v Rottnest Island Authority (1994) 48 FCR 177 at 182, where the full court said:

   

Before considering the parties' submission in the appeal it is convenient to consider certain decided cases in relation to the meaning and operation of s 78A. Before doing so, it is reasonable to observe that a reading of the section without resort to those decisions, conveys a fairly clear impression that the legislature is seeking to provide a rebate to a purchaser of diesel fuel who uses that fuel at a dwelling for the provision of power for the domestic use of the residents of the dwelling. The use of the fuel to power a private domestic generator providing electricity to the dwelling would no doubt be a use clearly covered by the section. Decisions on the section have, however, given it a wider operation.

  34  Mr Sest claimed to find some support in Rottnest for the proposition that the purchaser and ultimate user of the fuel must be one and the same, where the use is power generation. That was not the basis on which the Collector succeeded in that matter. The Collector succeeded only because the full court found that the use of fuel by the purchaser did not occur "at" the relevant residential premises. The full court said at 193-94:

   

The section, clearly, does not require that the purchaser be one of the residents of the premises but it does require that he or it use the fuel to provide the prescribed amenities in a position which can properly be so described. We do not seek to differ from what was said about this matter in the Flinders Island case. We consider that the section requires that, because the existence of some appropriate heating or generating plant is clearly contemplated, the location of such a plant be in sufficient proximity to the premises as to enable it reasonably to be identified with the premises. It must be appurtenant to the premises and coherent with them. It must be able to be said of the plant using the fuel that it belongs to the premises even though it be not a part of them. As already indicated it is not necessarily destructive of this relationship that the plant should also use fuel in providing power for other purposes, although questions of degree of use might well come into consideration if such other purposes tended to predominate.

 

With respect to the learned members of the Tribunal, we can see nothing in the facts of the present case to indicate that the Authority's generating plant, even when using diesel fuel for the purpose of generating electricity to be supplied to the employees' residences, could properly be described as operating "at" those residences. It had no such connection with them as to render it appurtenant to them. The generator's use of an ascertainable amount of the diesel fuel purchased by the Authority to provide power to those residences was merely incidental to its overall purpose of providing power for all the requirements of the island. This was insufficient, in our view, to enable it to be found that the use of the relevant amount of fuel took place at those premises. (Emphasis added.)

  35  The full court, in Rottnest, at 188-89, referred to Pozzolanic where, at 289, the full court said "The rebate provisions are intended to encourage the activities to which they apply. They should not be construed narrowly". The court went on to say at 191:

   

We agree, with respect, with Hill J that the authority as purchaser must also engage in "the purposive use". However, the use of the fuel in providing electricity to the relevant residences so that it is then available as a source of power to the residents for the provision of the amenities contemplated by the section constitutes, in our view, a sufficient "purposive use" of the diesel fuel purchased for the generation of that electricity. (Emphasis added.)

  36  That passage can be applied to the facts of this matter. It indicates that the use of fuel in providing fuelled boats, so that fuel is then available as a source of power to the hirers of boats for marine transport, constitutes a sufficient "purposive use" of the diesel fuel to satisfy s 164(1)(ac).

  37  I was puzzled during the hearing by what seemed to be the very narrow meaning of the word "use" advanced by Mr Sest. I suggested that the appropriate analysis appeared to be that both Riviera Nautic and its clients use the fuel purchased by Riviera Nautic in marine transport, but only Riviera Nautic does so "in the course of carrying on an enterprise".

  38  I consider that there is an analogy between a restaurant purchasing and using food, to prepare meals, and Riviera Nautic purchasing and using fuel to hire out fully fuelled boats. They are both carrying on an enterprise. The fact that the restaurant's customers consume the food or that the clients of Riviera Nautic cause the fuel to be consumed by using the boat's engine to transport themselves on the Gippsland Lakes, does not mean that the food and fuel are not used by the restaurant and Riviera Nautic in the course of carrying on an enterprise. The business of the restaurant is to use food to offer customers food. The business of Riviera Nautic is to provide marine transport including fuel to hirers. Another example would be a hotel which purchases and uses soaps and shampoos to provide those products in guests' bathrooms. The products are used by the hotel, and are also used by the guests.

  39  I referred Mr Sest to para 11 of the Re Queensland Electricity Commission decision at 289, where the tribunal said:

   

11. Counsel for the applicant submitted that the relevant provisions of the Customs Act 1901 (Cth) and Excise Act 1901 (Cth) ought to be given a wide, beneficial and commonsense meaning and not be given a narrow or restricted application. This Tribunal and the Federal Court on a number of occasions have stated that these provisions are intended to have a beneficial operation. We agree that these provisions should be construed beneficially rather than restrictively. (See Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271; Re Brymay Forests Pty Limited and Collector of Customs (1985) 9 ALN N177; Re Tas Island Shipping Pty Limited and Collector of Customs (1989) 11 AAR 121.)

  40  I asked Mr Sest if he could take me to the authorities referred to in Re Queensland Electricity Commission as establishing that "these provisions should be construed beneficially rather than restrictively".

  41  Further, I referred Mr Sest to Stroud's Judicial Dictionary of Words and Phrases, Sweet & Maxwell, 5th Ed, London 1986 which states under the word "Use" at note 46:

   

The first meaning assigned to "use" in Johnson's Dictionary is "to employ to any purpose"; it is, therefore, a word of wide signification. It seems to me that the terms "use" and "make use of" are intended to have a wider application than "exercise" and "put in practice"; and, without saying that no limit is to be placed on the two former expressions in the patent, I think, on the best consideration that I can give, that they are not confined to the use of a patented article for the purpose for which it is patented (per Stirling J, British Motor Syndicate v Taylor [1900] 1 Ch 583) ...

  42  It is because the general and ordinary meaning of the word "use" is "of wide signification", that I suggested to Mr Sest that it could cover fuel used by Riviera Nautic to supply fully fuelled boats to transport clients around the Gippsland Lakes, as well as use by the clients of Riviera Nautic during the period of hire.

  43  Mr Sest sought and was granted leave to lodge a supplementary submission after the conclusion of the hearing, as to whether or not there should be a beneficial interpretation given to the relevant legislative provisions. Mr Herbert was given the opportunity to respond to those submissions. Further submissions were lodged by the solicitor for the respondent and by Mr Herbert.

  44  The submission lodged on behalf of the respondent referred to the 3 decisions cited in Re Queensland Electricity Commission as authority for the proposition that the relevant provisions of the Customs Act 1901 (Cth) "ought to be given a wide, beneficial and common-sense meaning and not be given a narrow or restricted application". He submitted that the approach suggested in Re Queensland Electricity Commission has not been followed by subsequent and higher authority.

  45  The first authority cited was the decision of the full court of the Federal Court in Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 where the full court said at 275:

   

The relevant provisions of the Excise Act 1901 (Cth) reflect a legislative policy of encouragement of mining operations and should not be given a narrow application.

 The court held that the meaning of the word "connection", which is relevant to the term "other operations connected with exploration, prospecting or mining for minerals", "is both wide and imprecise". It held that it had a wider meaning than that for which the Collector contended.

  46  The second decision cited in Re Queensland Electricity Commission was Re Brymay Forest Pty Ltd and Collector of Customs Victoria (1985) 9 ALN N177. The respondent's supplementary submission stated at para 10.2:

   

[T]he report of this decision discloses there was in fact no reference at all to the question of a "beneficial" or a "restrictive" approach to statutory construction.

 However that submission overlooked the fact that the ALD note was not the complete text of the decision. Paragraph 26 of the full reasons for decision (AAT 2496, 24 December 1985) reads as follows:
   

26. The provisions of the Customs Act 1901 (Cth) and the Excise Act 1901 (Cth) providing for a rebate on diesel fuel purchased for use in primary production are plainly intended to be beneficial. They are intended to be read in a practical, commonsense manner (Re Central Norseman Gold Corporation Limited and Collector of Customs, Western Australia No W84/118 - decision handed down 23 August 1985). They should, in our view, be construed beneficially rather than restrictively (see Collector of Customs v Cliffs Robe River Iron Associates, decision of the Full Court of the Federal Court dated 28 March 1985; cf Re Butterworths Pty Ltd).

  47  The third decision referred to in Re Queensland Electricity Commission was Re Tas Island Shipping Pty Ltd and Collector of Customs (1989) 11 AAR 121. The respondent's supplementary submission stated at para 10.3:

   

The relevant passage in this decision was that of the majority (Purvis J and Mr Perrignon; Mr Bannon QC dissenting). At issue was the construction of the definition of "fishing operations". In a passage at page 123 the majority held that the definition was wide enough to entitle the rebate in respect of the operation of a mother ship in a fleet which did not itself "take, catch or capture" the fish. The majority went on to state "The legislative provisions in question were intended to benefit commercial fishing operations. Where there is doubt as to the meaning and application of those provisions , they should, in our opinion be given a wide, rather than a narrow, construction" (emphasis added). The Respondent submits that this does not support a blanket or guiding approach by way of "beneficial" construction. Rather consistent with the Respondent's submissions, this passage supports the position that primacy is to be given to the "meaning and application" of relevant provisions. Importantly here the majority considered that recourse to a wide construction was permissible only where there is relevant "doubt".

  48  The respondent's supplementary submission seems to reflect a misunderstanding of my intention in referring to para 11 of Re Queensland Electricity Commission at 289, during this hearing. It also seems to reflect a similar misunderstanding of the comments of the tribunal in Re Queensland Electricity Commission and of the full court of the Federal Court in Cliffs Robe River Iron Associates. It is of course basic to any task of statutory interpretation that primacy is to be given to the "meaning and application" of the relevant statutory provision. However, as stated in Pearce, DC and Geddes, RS, Statutory Interpretation in Australia, Butterworths, 5th edition, Chatswood 2001 at 2, "The inherent uncertainties associated with the use of language make written documents an imperfect means of communication". In this matter the relevant word is "use". Mr Sest conceded that Riviera Nautic uses fuel in carrying on its enterprise, but he submitted that the tribunal should apply a narrow meaning of the word "use" and hold that the relevant meaning of "use" is "consume" rather than "use for business purposes" (transcript p 45). The question is whether that narrow meaning should be preferred to the general and ordinary meaning of the relevant statutory provision.

  49  It is appropriate to note that Cliffs Robe River was approved by the full court in Pozzolanic in 1993 where, as set out above at para 24, the full court said at p 289, that the rebate provisions of the Customs Act 1901 (Cth) should not be construed narrowly. In 1996 the full court in Telstra Corporation Ltd v FCT (1996) 68 FCR 566; 33 ATR 290 again held that classifications of goods attracting exemptions or beneficial rates of sales tax should be liberally construed, unless the text or context requires a narrow construction. Heerey J said at FCR 569; ATR 293:

   

In the area of sales tax legislation, the general rules as to the construction of revenue statutes (see Pearce and Geddes, Statutory Interpretation in Australia, 4th Ed, 1996, pp 235-236) have given rise to the more specific canon that classifications of goods attracting exemptions or beneficial rates should be liberally construed unless the text or context requires a narrow construction: Diethelm Manufacturing Pty Ltd v FCT (1993) 93 ATC 4703 at 4713 per French J, followed by Foster J in GKN Australia Ltd v FCT (1994) 94 ATC 4417 at 4419.

  50  In this matter the legislation is concerned with a diesel fuel rebate which is similar to an exemption or beneficial rate of sales tax. The purpose is accepted as being to encourage the use of diesel fuel for off road activities. There is nothing which requires a narrow construction of the provisions entitling a person to a diesel fuel rebate.

  51  Mr Herbert, in his response to the respondent's supplementary submissions made the point that Riviera Nautic did not seek any interpretation of the words of the Customs Act 1901 (Cth) other than their "ordinary meaning".

  52  I am of the view that as set out in paras 37-42 of these reasons "use" is a word of "wide signification". Mr Sest was seeking to have the tribunal apply the words of the statute in a narrow and restrictive way. I am satisfied there is no requirement in the Customs Act 1901 (Cth) that the words "use by the person" be construed as Mr Sest suggested. The rebate provisions "should not be construed narrowly" (Pozzolanic). They should be given their ordinary meaning. In Airovent Pty Ltd v FCT (1998) 39 ATR 293 at 304; 98 ATC 4800 at 4809, Sackville J concluded:

   

Ultimately the question must be determined by inquiring whether the statutory language is satisfied.

  53  Both parties referred to extracts from Hansard in their submissions as to whether a beneficial interpretation of the statutory provisions was appropriate. Section 15AB(1) of the Acts Interpretation Act 1901 (Cth) allows consideration to be given to such material in certain circumstances. It provides:

   

15AB(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

 (a)  to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
 (b)  to determine the meaning of the provision when:
 (i)  the provision is ambiguous or obscure; or
 (ii)  the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.

 In this matter s 15AB(1)(b) is not applicable. I do not consider that the meaning of the provision is ambiguous or obscure or leads to a result that is absurd or unreasonable.

  54  The Federal Court pointed out in Secretary, Department of Social Security v Sword (1991) 13 AAR 383 at 386, that there is a difficulty about referring to extrinsic material under s 15AB(1)(a) to confirm the meaning of a provision. I have decided not to refer to the Hansard extracts for assistance in construing the provision.

  55  The word "use" has a wide meaning and must be given its ordinary or general meaning, subject to bearing in mind the exclusion from that meaning in s 164(7). This is not a matter where the applicant was contending for an extended operation of the rebate provision. On the contrary, Mr Sest was contending for a narrow interpretation of the words "use by the person". I am satisfied that is not appropriate. I find that Riviera Nautic purchases diesel fuel for use by Riviera Nautic. The issue of whether there is a "sale or other disposal" of that fuel is discussed later in these reasons.

(ii) "In marine transport"

  56  The next issue, as set out by Mr Sest in para 8.2 of his outline of submissions, is whether the diesel fuel is used by Riviera Nautic "in marine transport". He submitted that the term is only apt to cover a marine charter, where a boat is supplied with crew and not to cover hire of a boat for the purpose of transporting the hirers around a lake.

  57  Mr Sest submitted that the fact that the rebate is payable to a person who purchases diesel fuel for use by the person "in marine transport", focuses attention on the fact that "the activity that is relevant is the method of propulsion, because that [is] what transport is". There is no dispute about that proposition. Mr Sest seemed to be submitting that Riviera Nautic does not hire boats with means of propulsion, but that they simply hire boats and the hirers provide their own means of propulsion. I do not accept that analysis.

  58  The Customs Act 1901 (Cth) in s 164(7) defines the term "marine transport" as follows:

   

marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.

 Mr Sest claimed that as Riviera Nautic hired boats without crew it was a marine rental business not a marine transport business. The Customs Act 1901 (Cth) in s 164(1)(ac)does not require that the use of the fuel be in "a marine transport business". It requires that the use be "in marine transport in the course of carrying on an enterprise".

  59  The definition of "marine transport" in the Customs Act 1901 (Cth) is not a narrow definition. It extends the meaning of the words by stating that transport by vessels in or on fresh water is included, but it also specifically excludes transport relating to forestry. Pearce, DC and Geddes, RS in Statutory Interpretation in Australia at para 6.56 state:

   

Use of expressions "means" and "includes"

 

[6.56] It is usual to find one or other of these expressions where a word or phrase is being defined in legislation. The orthodox and, it is submitted, the correct approach to the understanding of the effect of these expressions is that "means" is used if the definition is intended to be exhaustive while "includes" is used if it is intended to enlarge the ordinary meaning of the word: Sherritt Gordon Mines Ltd v FCT (1976) 10 ALR 441 at 455; Douglas v Minister for Aboriginal and Torres Strait Islander Affairs (1994) 34 ALD 192 at 203.

  60  Mr Sest submitted that the use of the word "in" in the phrase "in marine transport" in s 164(1)(ac), provides support for the respondent's contentions. I do not see any special significance in the use of the word "in".

  61  Mr Sest seemed to be suggesting that carrying on an enterprise such as a ferry or a charter boat business, where passengers are carried for money would be "marine transport", but hiring fuelled boats for boating holidays is not "marine transport", unless the boats are crewed by the owner and not by the client. Mr Sest said, at transcript p 49, that if Riviera Nautic provided crew for the boat it would be retaining control of the boat, operating the boat and, transporting persons. He added, "The introduction of the customer as an independent party in this scenario is quite critical in my submission." I can see no basis in the Customs Act 1901 (Cth) for such a distinction. There is a point as to whether the use is by Riviera Nautic, or by its hirers, or by both Riviera Nautic and its hirers. That issue has already been addressed. As to the issue of the meaning of "marine transport ... in the course of carrying on an enterprise", the fuel is used "in marine transport", whether the boat is crewed by staff of Riviera Nautic in the course of carrying on an enterprise, or by the clients of Riviera Nautic, in the course of Riviera Nautic carrying on an enterprise. Mr Herbert in his response to the respondent's submissions set out the Chambers Concise Dictionary definition of "in the course of" as meaning "during" or "in the process of".

  62  Bearing in mind the authorities cited earlier as to the method of construction to be applied in considering the rebate provisions, I consider that the plain meaning of the words "marine transport" does cover the hire of boats so that clients of Riviera Nautic can transport themselves by boat around the Gippsland Lakes. I see no reason in the Act to apply any narrower definition of that term. Thus I find that the use by Riviera Nautic of diesel fuel to power boats which it hires to customers is a use of the fuel "in marine transport", in the course of carrying on an enterprise.

  63  The respondent did not challenge the fact that Riviera Nautic is purchasing and using the fuel in a "commercial sense" "in the course of carrying on an enterprise". Subject to consideration of the "sale or other disposal" issue, I find that Riviera Nautic purchases diesel fuel for use by Riviera Nautic "in marine transport in the course of carrying on an enterprise".

2. The "Sale or Disposal" Issue

  64  This issue arises both because of the definition of "use" in s 164(7) and under s 164(2) of the Customs Act 1901 (Cth). The effect of those provisions is that the definition of "use" in s 164(7), "does not include the sale or other disposal of the diesel fuel by the person or the loss of the diesel fuel by the person". Further s 164(2) provides that purchase and use of diesel fuel by a person in "marine transport in the course of carrying on an enterprise", will not be eligible for rebate if the person "sells or otherwise disposes of the fuel".

  65  The respondent's outline of submissions claimed at para 30 that the clients of Riviera Nautic purchased the fuel in the "all-inclusive price" paid for the hire of a boat. It stated at paras 30 and 31:

   

 30.  The fuel was included in the "all-inclusive price" of the hire (see in particular T3 page 38). It was thus sold or disposed of to the customer. The absence of a separate charge is irrelevant to this conclusion. The making of any separate charge is merely a matter of accounting and does not alter the fundamental point that the fuel was in fact sold.
 31.  The applicant admits that its competitors charge separately for the fuel (T1, page 15-16, Notice of Objection). This is no different in kind from the transaction into which the Applicant enters with its customers. Whether a separate charge is made for fuel, or a charge is made as a component part of a global price, the result remains the same - the customer pays a consideration for the fuel. The customer is the purchaser and the Applicant the vendor. The fuel has been sold or otherwise disposed of by the Applicant to the customer. In consequence the disqualifying operation of s 164(2)(b) is activated.

  66  Mr Sest submitted that the clients of Riviera Nautic paid a consideration for their fuel, although he conceded that the consideration could not be identified. He further submitted that the customer had exclusive possession of the fuel. He acknowledged that any fuel remaining at the end of the period of hire remained the property of Riviera Nautic. He said the clients simply abandon what they do not need. Riviera Nautic denied that it sold the diesel fuel, in respect of which it claimed a rebate, to its clients or hirers. It relied on the fact that the fixed hire price is inclusive of all fuel, irrespective of the quantity used. That is clearly stated in the brochure (T docs pp 38, 41). Further, any fuel left in a tank remains there at the end of a hire. That is quite appropriate if one accepts the analysis of Mr Herbert that the fuel at all times remains the property of Riviera Nautic. It is used by Riviera Nautic to provide power for marine transport, so that the hired boats give satisfaction to the clients.

  67  The analysis made by Mr Sest does not address the facts that if a boat requires refuelling that is provided at no extra charge, and that the evidence was that the hirers have no entitlement to any refund for fuel not used. It follows that they could not syphon off and take home any unused fuel. The fuel is provided by Riviera Nautic for one purpose only and that is to transport the boats around the Gippsland Lakes during the period of hire.

  68  There are further difficulties in analysing the hire transaction as including the purchase by the hirer of fuel. It would be a purchase of an unspecified amount of fuel at an unspecified price, and possibly at the time of actual consumption only, which time is not known to Riviera Nautic.

  69  Mr Sest referred to an extract from Halsbury's Laws of Australiai, Butterworths, Sydney relating to the Sale of Goods. There is a problem in determining on the facts of this matter whether, if there were a sale, it would be of specific goods namely the fuel in the tank at the commencement of the hire, or of unascertained goods, namely so much fuel as is required for the period of the hire, being either more or less than the fuel in the tank. There is no evidence of any price for the sale ever being agreed, and in fact the evidence is that Riviera Nautic never intends that property in the fuel will pass to its clients. I see nothing in Halsbury, paras 375-925, to which Mr Sest referred, which supports the contention that there is a sale of fuel by Riviera Nautic to its clients.

  70  Mr Herbert said that fuel is only one component of the total hire charge a client pays, and there is no reason to regard that component as sold when no other component is sold. The cost of fuel is not a specific charge to a hirer, but is one of the overheads of running the business such as marketing, licence fees, staff wages, cost of boats, maintenance and insurance.

  71  I find that there is no sale of the diesel fuel by Riviera Nautic to its clients. Property in the fuel does not pass to the hirers. Rather it is a term of the hire that all the fuel required for marine transport during the period of the hire is provided by Riviera Nautic.

  72  As I have found there has been no sale of the diesel fuel by Riviera Nautic to its clients, the final issue is whether there has been an "other disposal" of that fuel by Riviera Nautic. Mr Sest set out in para 34.1 2 definitions of the expression "to dispose of" as follows:

   

 34.1  "In general terms to pass into the control of another person, to alienate, relinquish, part with or get rid of". See Butterworths Legal Dictionary.
 34.2  "To deal with definitely, to make over or part with, as by gift or sale". Macquarie Dictionary.

  73  The facts of the matter do not meet either of those definitions. As to the Butterworths definition, I find that while the fuel in the tank of a particular boat does pass into the control of a hirer for the period of the hire, Riviera Nautic has not alienated, relinquished, parted with or got rid of that fuel. Any fuel remaining at the end of the hire still belongs to Riviera Nautic, as does all the fuel at all times. A hire car or hire boat passes into the control of the hirer, so the hirer can use it during the period of hire, but the owner of the car or boat does not dispose of it. The owner does not relinquish, part with or get rid of it.

  74  Similarly, referring to the Macquarie definition, Riviera Nautic does not make over or part with the fuel as by gift or sale. What it does is simply provide the boat with fuel in its fuel tank to be used as required for marine transport, during the period of the hire. That is part of the service Riviera Nautic contracts to provide to its clients. It uses the fuel in marine transport in carrying on an enterprise. It does not dispose of that fuel, although it is used up or consumed in the carrying on of the enterprise.

  75  I find that Riviera Nautic hires fully fuelled boats to its clients. It provides its clients with boats and with "power to move the vessel on the water". It provides the fuel to fulfil that function. It does not sell or dispose of the fuel to its clients.

Conclusion

  76  I find that Riviera Nautic purchases diesel fuel for use by Riviera Nautic in marine transport in the course of carrying on an enterprise. Thus the diesel fuel rebate was payable to Riviera Nautic at the relevant time.

  77  The decision under review will be set aside. In substitution the decision of 19 June 2001 will be revoked. That will leave, as the operative decision, the decision of 4 September 2000 that the activities of Riviera Nautic specified in the initial application are eligible for rebate (T4 pp 42-43).


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