Giris Pty. Ltd. v. Federal Commissioner of Taxation.

Judges: Barwick CJ
McTiernan J
Kitto J

Menzies J
Windeyer J
Owen J

Court:
High Court (Full Court)

Judgment date: Judgment handed down 5 March 1969.

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Menzies, J.: Two separate submissions, which, in the course of the argument for the appellant, seemed to me to overlap, were made to impeach the validity of sec. 99A of the Income Tax and Social Services Contribution Assessment Act, 1936-1966 (Cth), by reference to sec. 51(ii) of the Constitution. One was that the section is not a law with respect to taxation; the other was that, if the section be a law with respect to taxation, it authorises discrimination between States. In either event, so the argument ran, the section is not authorised by the Constitution, sec. 51(ii). Furthermore, it was submitted that sec. 99A imposes what was described as an ``incontestable tax'' and so invalidly attempted to oust the jurisdiction of the Courts to decide whether tax assessed by reference thereto is payable according to law.

It seems to me that there is no substance in the second submission based upon sec. 51(ii) of the Constitution. The Constitution, in effect, puts taxation discrimination between States outside constitutional legislative power. Although sec. 99A does not in terms forbid the Commissioner from exercising his function in such a way as to effect what would be discrimination outside the power of Parliament, there is no reason whatever for construing the section as permitting the kind of discrimination that Parliament has no power to authorise.

The submission that sec. 99A is not a law with respect to taxation has occasioned me greater difficulty.

The section does confer an extraordinary responsibility upon the Commissioner of Taxation. It requires him, in every case where there is income of a trust estate in a particular year of income, to consider whether it is unreasonable ``that this section should apply in relation to that trust estate in relation to that year of income''. Unless he forms such an opinion the section applies. The section directs the Commissioner in forming his opinion to have regard to certain facts and circumstances but gives no guidance upon what significance should be given to the presence or absence of the facts or circumstances as specified. Moreover, there appears to be no common principle underlying the various matters specified so as to give the Commissioner a lead to other matters to which he might have regard. Accordingly, whether or not the section is to apply to a particular trust estate has been made to depend upon an opinion which the Commissioner may form, after the close of the year of income, and with no legislative guidance other than that he is to have regard to a medley of facts and circumstances.

The enactment of such a provision can only be regarded as an acknowledgement by the legislature of its inability to make laws laying down prospectively what will give rise to a particular taxation liability. It leaves, as a problem for the Commissioner to decide, retrospectively and in the light of what has happened, whether the particular provision should not apply to a particular trust estate in respect of a year that has passed. Notwithstanding this I find myself unable to deny to the section the description of the law with respect to taxation. However objectionable it would be, it seems to me that a law fixing two rates of taxation and imposing liability upon taxpayers to pay tax at, one or other rate, in accordance with the decision of the Commissioner, in the particular case, would not fall outside the description of a law with respect to taxation. Section 99A is

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less drastic than such a law would be. At least it applies in the absence of a positive opinion by the Commissioner that its application would be ``unreasonable'', and matters to which the Commissioner must have regard in considering his problem are specified. It is true that at some point in a process of parliamentary abnegation, such as the Act reveals in sec. 99A and other sections, the shifting of responsibility from Parliament to the Commissioner would require consideration of the constitutionality of the delegation but I cannot deny validity to sec. 99A on the ground that it is unconstitutional for Parliament to give to the Commissioner the power to determine that, in a particular case, it would be unreasonable to apply the section. I have therefore reached the conclusion that the submission that sec. 99A is not a law with respect to taxation fails.

Finally, although upon appeal against an assessment made under sec. 99A the taxpayer may find difficulty in challenging the absence of opinion by the Commissioner that the application of the section would be unreasonable; and upon appeal against an assessment under sec. 99 the taxpayer might find difficulty in challenging the opinion of the Commissioner that the application of sec. 99A would be unreasonable; these difficulties do not amount to any unconstitutional denial of resort to judicial process. As to this I agree entirely with what has been written by Owen J. This appeal affirms that the way to the Court remains open to a taxpayer aggrieved by the assessment made by the Commissioner.

Accordingly, I have come to the conclusion that the attack upon the validity of sec. 99A fails on all points. If sec. 99A is valid, as I hold it to be, then no question can arise about the validity of sec. 99.

This Court should, therefore, declare that sec. 99A of the Income Tax and Social Services Contribution Assessment Act is valid.