Finemores Transport Pty. Limited v. The State of New South Wales & Ors.

Judges: Barwick CJ
Stephen J
Mason J
Jacobs J

Murphy J
Aickin J

Court:
Full High Court of Australia

Judgment date: Judgment handed down 16 May 1978.

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Murphy J.: If the tax imposed by the Stamp Duties Act , 1920, as amended (N.S.W.), were confined to motor vehicles to be used in interstate trade and commerce, sec. 92 of the Constitution would be contravened as the stamp duty would be a fiscal impost on interstate trade and commerce. The statutory complexities of the registration and issuing of certificates would not detract from this conclusion. However, this tax is imposed in respect of the registration of all such vehicles without discrimination, whether intended for interstate or intrastate trade and commerce or both, except that, in favour of interstate trade and commerce, the legislation exempts from tax a vehicle registered by the same person in another State. Other States have similar provisions.

A person who engages solely in interstate trade and commerce is not freed of all taxes in

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relation to that trade and commerce, even those which are imposed without any reference to (but which extend to and include) interstate trade and commerce.

The early case of
Fox v. Robbins (1909) 8 C.L.R. 115 establishes the correct approach to sec. 92. A Western Australian Act imposed a retail licence fee of £ 2 per year for the sale of wine produced in that State and £ 50 per year for the sale of wine produced elsewhere. The Court consisted of Chief Justice Griffith and Justices Barton, O'Connor, Isaacs and Higgins . Chief Justice Griffith said:

``This provision [sec. 92] would be quite illusory if a State could impose disabilities upon the sale of the products of other States which are not imposed upon the sale of home products....

... the Act of Western Australia now in question, in so far as it makes a discrimination against wine the product of fruit grown in other States of the Commonwealth in favour of wine the product of fruit grown in Western Australia, is contrary to the Constitution

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The consequence is that no greater burden or restriction can now be laid upon the sale of other Australian wines in Western Australia than that laid upon the sale of Western Australian wine.''

(pp. 119-120).

Mr. Justice Barton , in agreeing, said:

``To impose one charge on the sale of the wines of other States, while allowing the sale of Western Australian wines at another and a lower fee, is discrimination of a kind which if lawful in this case is lawful in a thousand others - for this is a question of power. By burdens of this kind and that, whether under the name of licence fees or under any other name, the operation of inter-state free trade could be so hampered and restricted as to reduce the Constitution in that regard to mere futility.... There is no difference in substance or effect in its bearing on interstate commerce between a burden such as this and a duty collected at the borders of the ports of one State on the products of another. In either case that commerce is restricted which the Constitution says shall be free; and in either case the disability may be made so great as to render the product unsaleable, and therefore virtually to prohibit its introduction. In a word, however the enactment may be phrased, it is inter-state protection, not inter-state free trade....

I must not for a moment be taken to cast any doubt on the capacity of a State to tax, together with its own products, goods produced in other States, when brought into it for sale or consumption. When the interstate transit is over and they have become part of the mass of property within the State, any goods may be taxed, no matter whence they have come. But they must be taxed alike with all other such goods in the State. The tax must be general, and laid equally on all goods of the kind to be taxed, whether their State of origin be the taxing State or another. And what I say of taxes applies to other imposts and burdens.''

(pp. 123-4).

Mr. Justice O'Connor also founded his judgment on the discriminatory effect of the tax against interstate trade and commerce:

``It is clear that the Constitution does not permit a State by such discriminating charges to place at a disadvantage the goods of other States passing into it for sale.''

(p. 126).

Mr. Justice Isaacs said of sec. 92:

``... if any of the provisions discriminate adversely to other States, it does impair that freedom, because it deters the residents of the State from selling or consuming, and therefore from purchasing and importing, the products of the other States....

Section 92 of the Constitution... prevents adverse discrimination from being lawful...''

(pp. 129-30).

Mr. Justice Higgins said of the Act:

``This involves a discrimination in favour of Western Australian products, and an infringement of the provisions of sec. 92 of the Constitution in favour of absolute freedom of trade among the States.''

(p. 131).

It is quite clear that the Court considered that a retail licence fee of £ 2 imposed in respect of wine coming from interstate was not a contravention of sec. 92 provided that there was no adverse discrimination. In
H.C. Sleigh Ltd. v. State of South Australia (1977) 12 A.L.R. 449 , I took the view that because of the absence of adverse discrimination against

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trade and commerce among the States, the Business Franchise (Petroleum) Act , 1974-75 (S.A.) did not contravene sec. 92.

There is no point in traversing the great number of cases on sec. 92, many of which depart from the concept of adverse discrimination and were made at a time when the decisions of this Court were subject to appeal to the Privy Council. As this Court is not now bound by any decision of the Privy Council or by its own decisions, there is no reason why sec. 92 should not be reconsidered. However, counsel for the State did not ask for any reconsideration of the previous decisions.

The acquisition of a motor vehicle and registration provides one of the facilities for trade and commerce among the States. Equally, the acquisition or employment of other resources may be necessary or desirable. If the test of adverse discrimination is not applied, then, with all respect to what was said by Chief Justice Dixon , Justices McTiernan and Williams in
Hughes and Vale Pty. Ltd. v. State of New South Wales (No. 2) (1955) 93 C.L.R. 127 at p. 182 , there seems no reason why the acquisition or employment of all such resources, including the employment of persons, should not be free of all types of taxes and fiscal imposts. Those engaged in interstate trade and commerce would then be able to claim freedom from payroll taxes in respect of employees engaged in such trade and freedom from sales taxes in respect of goods used (for example, stationery, petrol, tyres, packing materials, as well as vehicles) and logically, freedom from any tax on the receipts or profits of the trade of commerce. Section 92 was not intended to put those engaged in interstate trade and commerce in such a privileged position.

The plaintiff cannot complain that although in one State the laws do not discriminate against it, the combined effect of laws of two or more States is that they do adversely discriminate against its interstate trade and commerce - because the laws of the several States (New South Wales and Victoria being relevant here) are drawn with exemptions to ensure that interstate trade and commerce is not subjected to any duplication in tax which will adversely discriminate against it.

No attention was paid to the question whether in the absence of adverse discrimination the tax must not (together with other taxes) exceed what is a fair compensation to the State for the use of its roads. The plaintiff did not assert that the tax (together with road maintenance taxes which are applied on a weight and distance formula) was in excess of fair compensation to the State for the use of its roads; and the State did not seek to justify the taxes as being no more than a fair compensation for the use. As no attention was paid to this aspect, I will not consider it. In the United States, a similar tax to this, imposed by the State of Maryland, was held not to violate the Commerce Clause (see
Capitol Greyhound Lines et al. v. Brice, Commr. of Motor Vehicles 339 U.S. 542 ).

The State Act is valid and the declarations sought should not be made.