Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation

(1963) 113 CLR 475
37 ALJR 182

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(Decision by: Dixon CJ)

Between: Mobil Oil Australia Pty Ltd
And: Federal Commissioner of Taxation

Court:

Judges: Dixon CJ
McTiernan J
Kitto J
Taylor J
Windeyer J

Subject References:
Income Tax (Cth)

Hearing date:
Judgment date: 15 October 1963

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Decision by:
Dixon CJ

This is a case stated by the Board of Review in pursuance of s. 196 (2) of the Income Tax and Social Services Contribution Assessment Act 1936-1958 (Cth). Section 196 (2) provides that the Board shall, upon the request of the Commissioner or taxpayer, refer to the High Court any question of law arising before the Board. As will appear a course was taken which may mean that in strictness there was more than one case stated but that is not material: the case or cases were stated at the request of the Commissioner and of the taxpayer, although one party was responsible for some questions and the other for other questions. (at p487)

The Board of Review stated the case or cases on the hearing of references from the Commissioner pursuant to s. 187 (a) after he had disallowed objections to assessments. The assessments had been made under s. 136. Section 136 authorizes assessments which may depend in no small degree upon the discretion of the Commissioner. But the section provides certain preliminary conditions to its application. The first such condition is that there should be a business carried on in Australia either controlled principally by non-residents or carried on by a company a majority of the shares in which is held by or on behalf of non-residents, or carried on by a company which holds (or on behalf of which other persons hold) a majority of the shares in a non-resident company. The second condition of the application of the section is that it appears to the Commissioner that the business produces either no taxable income or less than the amount of taxable income which might be expected to arise from the business. When these conditions are fulfilled, the section provides that the person carrying on the business in Australia shall, notwithstanding any other provisions of the Act, be liable to pay income tax on a taxable income of such amount of the total receipts (whether cash or credit) of the business as the Commissioner determines. It may be supposed that the words "as the Commissioner determines" involve a discretion on his part. (at p487)

Section 187 provides that a taxpayer dissatisfied with the decision (scil. the decision of the Commissioner on an objection which he may have made under s. 185) may in writing request the Commissioner to refer the decision to a Board of Review for review. Section 192 provides that a Board of Review should have power to review such decisions of the Commissioner, Second Commissioner or a Deputy Commissioner as are referred to it under the Act. Section 193 deals with the powers exercised by the Board for the purpose of reviewing such decisions and in effect reposes the same powers in it as the Act does in the Commissioner in making assessments, determinations and decisions and s. 196 (1) provides that the Commissioner or taxpayer may appeal to the High Court from any decision of the Board which involves a question of law. (at p487)

The Board is an administrative tribunal (British Imperial Oil Co. Ltd. v. Federal Commissioner of Taxation (1926) 38 CLR 153 affd. sub. nom. Shell Co. of Australia Ltd. v. Federal Commissioner of Taxation [1931] AC 275 ; (1930) 44 CLR 530 ) and in effect the purpose of enabling a taxpayer who objects to an assessment to "appeal" to the original jurisdiction of the Court or to require the matter to be referred to a Board of Review as another administrative authority seems to have been to provide a less formal method of investigating facts at a hearing, an opportunity of exercising discretion and the like by a more detached administrative process, although a dispute between the Commissioner and a taxpayer might alternatively become the subject of litigation before this Court or if it involved questions of law might do so in any case in the end. (at p488)

In the present case the Board of Review, which had a heavy task, encountered difficulties under s. 16. That section is directed to preserving secrecy about a taxpayer's affairs when they are laid before the Commissioner and his officers. In the cases before the Board which are the subject of this reference it was thought desirable that some of the affairs of other taxpayers of which the Commissioner had learned from their returns and from his dealings with the taxpayers should be made known to the Board of Review as a means, so to speak, of sophisticating the judgment of members of the Board concerning some of the matters raised by the taxpayer who had objected and whose objections had been referred to the Board. Section 16 (2) provides that "Subject to this section, an officer shall not either directly or indirectly, except in the performance of any duty as an officer, and either while he is, or after he ceases to be an officer, make a record of, or divulge or communicate to any person any such information so acquired by him". Sub-section (3) provides that "An officer shall not be required to produce in Court any return, assessment or notice of assessment, or to divulge or communicate to any Court any matter or thing coming under his notice in the performance of his duties as an officer, except when it is necessary to do so for the purpose of carrying into effect the provisions of this Act or of any previous law of the Commonwealth relating to Income Tax". Sub-section (1) defines "officer" to mean "a person who is or has been appointed or employed by the Commonwealth . . . and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of this Act or of any previous law of the Commonwealth relating to Income Tax". For reasons which it is not necessary to go into on this case stated, what is revealed by the returns or other income tax documents of other companies concerned in the importation and sale or disposal of oil may provide relevant information in the case of the appellant taxpayer. (at p489)

The corresponding previous form of s. 16 (4) (b) recognized specifically the particular position of Boards of Review and referred to them as Boards of Review in terms. Section 16 (4) in its existing and relevant form provides that nothing in the section "shall be deemed to prohibit the Commissioner, Second Commissioner, or a Deputy Commissioner, or any person thereto authorized by him, from communicating any information to - (a) . . . (b) any board exercising any function under any Act administered by the Commissioner of Taxation . . . or any member of any such Board" and this expression appears to me clearly to include the Board of Review. The result, as it seems to me, is to enable any "officer" as defined, with the authority of the Commissioner, to act with complete freedom from the other provisions of s. 16 in communicating information to a Board of Review. This freedom extends to any information. To me it seems to follow from the nature of the functions of a Board of Review that it must have unfettered power to ascertain the facts which in the opinion of the Board or its Chairman are indispensable to the proper performance of its duties and powers. It appears to me that the exception created by sub-s. 4 (b) to the operation of the other provisions of the section extends to all things which are incidental to the purpose of the exception. Paragraph (b) of sub-s. (4) speaks only of "any board exercising any functions under any Act administered by the Commissioner . . . "but the history shows that it clearly contemplated a Board of Review. What is incidental must be ascertained from considering the functions of the Board of Review but I think a wide view must be taken of the immunity from the operation of s. 16 which witnesses and others speaking with the authority of the Commissioner possess. As in many cases the presence of solicitors and accountants is necessary on the hearing before a Board of Review it appears to me that nothing which is incidentally or accidentally communicated to them in the course of laying information before the Board of Review is within the prohibition of s. 16. Of course persons must not be unnecessarily allowed to gain information but shorthand writers and others engaged in the task of recording the evidence are necessarily within the incidental immunity. At the hearing in this Court of the case stated by the Board of Review much difficulty was experienced because of the embarrassing nature of the questions and the difficulty of saying how many were confined to questions of law within the meaning of s. 196 (2). A direction was given that the questions should be reframed but this merely led to further questions being framed and in the result the Court had before it a large number of inquiries as to what ought to be done. This seemed to me to tend to replace the administrative procedure contemplated by the legislation in relation to reviews, as distinguished from appeals, by a very formal procedure and a strictness of legal rule which was not intended and would be unfortunate. (at p490)

I have had the advantage of reading the judgments of Kitto J. and of McTiernan and Taylor JJ. and, speaking generally, agree with them in their discussion of the case or cases stated. But I am not disposed to agree with the view that a breach of s. 16 is committed when an officer who divulges information to a Board of Review does so in the hearing of other persons as well as the Board, provided, of course, that it is all done under the authority of the Commissioner, Second Commissioner or a Deputy Commissioner or any person thereto authorized by him. (at p490)

The foregoing observations will, I hope, be sufficient to explain why I find myself prepared to concur in the view that the case stated should be referred back to the Board of Review without specific answers to the questions appearing therein. (at p490)