Decision impact statement

Suntory (Aust) Pty Ltd v Commissioner of Taxation

Venue: Federal Court of Australia
Venue Reference No: NSD319/2009
Judge Name: Finn, Emmett & Stone JJ
Judgment date: 30 June 2009
Appeals on foot:
No.

Impacted Advice

Relevant Rulings/Determinations:

• N/A

Subject References:
Excise Tariff Proposals
Excise licence conditions
Exercise of powers incidental to taxation power
'Alcopops'

Précis

Whether the Commissioner is precluded from collecting, and required to refund moneys collected under an Excise Tariff alteration proposal where legislation giving effect to the proposal was rejected by parliament within the 12 month expiration period.

Decision Outcome:

Favourable

Brief summary of facts

As part of the implementation of what became known as the 'alcopops' measure, on 26 April 2008 the Commissioner published a notice of intention to propose an Excise Tariff alteration increasing the rate of duty payable on "other excisable beverages" (Excise Tariff Proposal (No 1) 2008) from $39.36 to $66.67 per litre of alcohol. The notice said that "the alterations operate on and from 27 April 2008". On and from that date the Commissioner collected monies at the higher rate specified in Excise Tariff Proposal (No 1) 2008.

On 13 May 2008 the proposed Excise Tariff alteration was moved by motion in the House of Representatives. On 11 February 2009 the Federal Government introduced into the House of Representatives the Excise Tariff Amendment (2009 Measures No 1) Bill 2009 containing the Excise Tariff alteration. On 25 February 2009 the House of Representatives passed the Bill. On 18 March 2009 the Senate rejected the Bill.

The Applicant had permission under section 61C of the Excise Act 1901 (Cth) to deliver goods for home consumption without entry, including "other excisable beverages". The permission dated 24 December 2004 was subject to conditions, including condition 3(c) which provided that, when any Excise Tariff alteration is proposed in the Parliament or by the Commissioner, from that day the rate of duty the Applicant is required to pay is the rate specified in the tariff proposal.

On 3 April 2009, following the Senate's rejection of the Bill, the Applicant sought declaratory and injunctive relief from the Federal Court pursuant to section 39B of the Judiciary Act 1903, to the following effect:

•

a declaration that that the applicant is not liable to pay the amounts of excise duty at the increased rate set out in Excise Tariff Proposal (No 1) 2008 to the extent that it exceeds the previous rate set out in item 2 of the Schedule to the Excise Tariff Act 1921; ("the excess amounts")

•

a declaration that the collection of the excess amounts by the Commissioner is unlawful;

•

an order restraining the Commissioner from collecting the excess amounts or imposing any requirement upon the Applicant to comply with any obligation to pay the excess amounts;

•

an order that the Commissioner refund the excess amounts collected since 27 April 2008; and

•

an injunction restraining the Commissioner from collecting or imposing any requirement upon the Applicant to pay the excess amounts.

On 6 April 2009 the Commissioner filed a Notice of Motion seeking that the proceedings be stayed until 13 May 2009 (the expiry of the 12 month period under s 114).

On 15 April 2009 Justice Jagot handed down judgment at first instance ordering that the proceedings be stayed until 13 May 2009. On 17 April 2009 the Applicant filed a notice of motion seeking leave to appeal against that interlocutory decision to the Full Federal Court.

On 4 May 2009 the Full Court granted leave to appeal and dismissed the Applicant's appeal.

On 30 June 2009 the Full Court provided written reasons for its decision.

Issues decided by the court

The Full Court noted that "the primary judge held that s114 does not cease to operate when the Senate rejects a Bill that, if passed, would have given retrospective effect to the Excise Tariff alteration that has been proposed. Accordingly her Honour held that the present proceeding was required to be stayed during the period specified in s114" and agreed with Jagot J's's conclusion for the reasons given by her Honour.

On appeal to the Full Court, the Applicant argued that condition 3(c) of the permission granted to it under s61C purported to impose a tax without authorisation by Parliament.

In rejecting that submission their Honours held that "s61C(3) expressly permits the Commissioner to attach conditions to the permission subject to them being necessary for the purposes set out in the subsection. It is an exercise of statutory power that is enlivened by the decision to rely on entry of goods under s61C."

The Court considered that the validity of the collection of anticipated duty lay not in whether condition 3(c) imposed a tax but in whether it fell within the incidental scope of the taxation power.

The Court agreed with the Commissioner's submission that both s61C and s114 have the evident purpose of being for the "protection of the revenue" and therefore fall within the incidental scope of the taxation power in s51(ii) of the Constitution.

Their Honours stated that "In our view both s61C and s114 are directed to the protection of the revenue. As such they have a 'relevant and sufficient connexion' with the taxation power and are 'appropriate to effectuate the exercise of [that] power' "

The Court agreed with the Commissioner's submission that the relationship between s114 of the Excise Act and s75(v) of the Constitution did not need to be determined in this case as the proceedings were brought in the Federal Court and there is no doubt that Parliament has the power to limit jurisdiction in that Court.

As the Court concluded that the relevant provisions were properly characterised as being with respect to taxation they considered that the Applicant's further argument, that there was an acquisition of property on unjust terms under s51(xxxi) of the Constitution, did not arise.

Tax Office view of Decision

The decision is in accordance with the Commissioner's view of the operation of section 114 of the Excise Act 1901.

Administrative Treatment

Implications on current Public Rulings & Determinations

None

Implications on Law Administration Practice Statements

None

Court citation:
[2009] FCAFC 80
177 FCR 140
75 ATR 620

Legislative References:
Customs Act 1901 (Cth)
262

Commonwealth Constitution
51(ii)
51(xxxi)
75(v)

Excise Act 1901 (Cth)
4
54
58
59
61C
160B
109
114
115

Excise Tariff Act 1921 (Cth)
2


Excise Tariff Amendment (2009 Measures No. 1) Bill 2009 (Cth)

Federal Court of Australia Act 1976 (Cth)
24(1A)

Judiciary Act 1903 (Cth)
39B


War Precautions Act 1914-1916 (Cth)

Case References:
Bowles v Bank of England
[1913] 1 Ch 57

Commonwealth v Colonial Combing, Spinning and Weaving Company Limited (Wool Tops)
[1922] HCA 62
31 CLR 421
29 ALR 138

Ex parte Wallace and Co
(1892) 13 NSWLR 1

Fairfax v The Commissioner of Taxation of the Commonwealth of Australia
[1965] HCA 64
114 CLR 1
[1966] ALR 1073

Grannall v Marrickville Margarine Proprietary Limited
[1955] HCA 6
[1955] ALR 331
93 CLR 55

Matthews v The Chicory Marketing Board (Victoria)
[1938] HCA 38
[1938] ALR 370
60 CLR 263

Nationwide News Pty Limited v Wills
[1992] HCA 46
177 CLR 1

Sargood Brothers v The Commonwealth
[1910] HCA 45
16 ALR 483
11 CLR 258

Suntory (Aust) Pty Ltd v Commissioner of Taxation
[2009] FCA 348

Szajb v Minister for Immigration and Citizenship
[2008] FCAFC 75
168 FCR 410
101 ALD 499

Victoria v The Commonwealth
[1996] HCA 56
187 CLR 416
70 ALJR 680
138 ALR 129
66 IR 392