FC of T v BANK OF WESTERN AUSTRALIA LIMITED; FC of T v STATE BANK OF NEW SOUTH WALES LIMITED

Members: Wilcox J
Hill J

Drummond J

Tribunal:
Full Federal Court

Decision date: Judgment delivered 15 December 1995

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Drummond J

I have had the benefit of reading, in draft, the reasons of Hill J. I agree with Hill J that none of the banks was ``an authority'' within either of the Sales Tax Acts. I also agree with what his Honour has to say to the effect that the expenditure of each of the banks was ``exclusively borne by the relevant State Government'' in the sense in which that expression is used in each of the legislative provisions in question. I would add a few words of my own.

There is no material difference, for present purposes, between the wording of Item 74 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (Cth) (which governs the exemption entitlement of what the learned primary judge called the former Bank of Western Australia and the former State Bank of New South Wales) and the wording of Item 126 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) (which governs the entitlement of the Bank of Western Australia and the State Bank of New South Wales to exemption). Whether goods purchased by each of the banks were exempt from sales tax thus depends upon three criteria all being satisfied, viz., whether each bank was:

• (a) an authority;
• (b) which is completely controlled by the Government of a State; and
• (c) the expenditure of which is exclusively borne by the Government of a State.

It is common ground that each bank was completely controlled by the relevant State Government. It can readily be inferred from this that the legislative intent of the statute constituting each bank was that it would carry on its activities for the public benefit. This obligation is expressly spelled out in the legislation governing the former Bank of Western Australia and the former State Bank of New South Wales and it is reflected in the statutory provisions requiring each bank to pay certain of its funds into the consolidated revenue fund of the relevant State, (indirectly, in the case of the Bank of Western Australia, through its parent, R & I Holdings). For the reasons given by Hill J, each is also a body the expenditure of which is exclusively borne by the Government of a State. But it is apparent from the criteria in the legislative provisions to which I have referred and which must be satisfied before an entitlement to exemption from sales tax can arise, that it is not enough for a body to possess these characteristics. That the body must also be an ``authority'' makes it necessary that it possess an additional feature if it is to be exempt from liability to sales tax.

As Hill J observes, the expression ``authority'' of a State is often used in legislation. So are the expressions ``instrumentality'' of a State and ``agent of the Crown''. Although the meaning of each of these expressions is ultimately dependent on the statutory context in which it is used, each generally bears its own quite separate meaning and describes a particular attribute of the entity to which the term is applied. The term ``agent of the Crown'' has become common usage for a public corporation which enjoys the privileges and immunities of the Crown: Hogg, Liability of the Crown , 2nd Ed., p. 248. In Re Anti- Cancer Council of Victoria; Ex parte State Public Services Federation (1992) 175 C.L.R. 442, it was said at 448 and 450 that the expression ``public authority'' has much the same meaning in popular usage as it has in legal contexts, as does the expression ``State instrumentality''. In the Cancer Council case, it was said at 448 and 451 that the expression ``State instrumentality'' usually refers to a body which is empowered to and which does in fact serve some State Government purpose, even though it may be neither a servant nor an agent of the State. In Committee of Direction of Fruit Marketing v Australian Postal Commission (1980) 144 C.L.R. 577, Gibbs J said:

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ATC 4031

``... The words `authority of a State' naturally mean a body which is given by the State the power to direct or control the affairs of others on behalf of the State - i.e., for the purposes of and in the interests of the community or some section of it.''

Gibbs J was, I think, speaking of the meaning of the phrase according to popular usage, as reference to dictionary definitions of ``authority'' shows. This passage was referred to by Mason CJ, Brennan and Gaudron JJ in the Cancer Council case at 450 as identifying the nature of the powers that indicate that a body is a ``public authority''.

Hill J's discussion of the history of sales tax legislation shows that there is no ground for thinking that State Governments had any special claim to immunity from the incidence of the legislation, although statutory changes made in the early years of operation of the legislative scheme conferred limited immunity on the State Governments and certain of their various emanations. The historical background to the legislation lends no support for reading the term ``authority'' in the relevant provisions in an extended sense, so as to confer immunity on a wide range of entities associated with the various State Governments. The attribute which a body must have to be exempt from sales tax under the legislation of concern here, in addition to being wholly State-controlled, financially supported by the State and obliged to act for the public benefit, is that it must be a body that answers the meaning according to popular usage of the term ``authority''. It must be a body having the power to direct or control the affairs of others on behalf of the State: it must be able to exercise authority or command, which Hill J refers to [ as] ``the hallmark of Government''.

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The order and declarations made by Lindgren J on 4 November 1994 be set aside and, in lieu thereof:

• (a) it be declared that:
  • (i) goods purchased on or before 31 December 1992 by the Rural and Industries Bank of Western Australia and by the applicant for official use by them are not exempt from sales tax pursuant to s. 5 of, and Item 74 of the First Schedule to, the Sales Tax (Exemptions and Classifications) Act 1935; and
  • (ii) goods purchased on or after 1 January 1993 by the applicant for official use by it are not exempt from sales tax pursuant to s. 24 and s. 25 of the Sales Tax Assessment Act 1992 and Item 126 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992; and
• (b) it be ordered that the Bank of Western Australia Limited pay the costs of the proceeding incurred by the Commissioner of Taxation.

3. The Bank of Western Australia Limited pay the costs of the appeal incurred by the Commissioner of Taxation.