Dennis Hotels Pty Ltd v Victoria
[1960] HCA 10104 CLR 529
(Decision by: Dixon CJ)
Dennis Hotels Pty Ltd
vVictoria
Judges:
Dixon CJMcTiernan J
Fullagar J
Kitto J
Taylor J
Menzies J
Windeyer J
Subject References:
Constitutional Law (Cth)
Duties of excise
Exclusive power of Commonwealth Parliament
Victualler's licence fee imposed under State law
Fee equal to six per cent of gross amount paid or payable for all liquor purchased for the licensed premises during the twelve months preceding application for renewal of licence
Temporary victualler's licence fee imposed under State law
Fee to include sum equal to six per cent of gross amount paid or payable for all liquor purchased for sale or disposal under such licence
Validity
The Constitution (63 & 64 Vict. c. 12), s. 90
Licensing Act 1958 (Vict.) (No. 6293), ss. 7, 19 (1) (a), (b).
Case References:
Parton v Milk Board (Vict) - [1949] HCA 67; (1949) 80 CLR 229
The Commonwealth and Commonwealth Oil Refineries v South Australia - [1926] HCA 47; (1926) 38 CLR 408
Matthews v Chicory Marketing Board (Vict) - (1938) 60 CLR 263
Meredith v Fitzgerald - [1948] HCA 11; (1948) 77 CLR 161
R v Caledonian Collieries - (1928) AC 358
Griffith v Constantine - [1954] HCA 80; (1954) 91 CLR 136
Browns Transport Pty Ltd v Kropp - [1958] HCA 49; (1958) 100 CLR 117
Peterswald v Bartley - [1904] HCA 21; (1904) 1 CLR 497
Crothers v Sheil - (1933) 49 CLR 399
Hartley v Walsh - [1937] HCA 34; (1937) 57 CLR 372
Hopper v Egg and Egg Pulp Marketing Board (Vict) - [1939] HCA 24; (1939) 61 CLR 665
Atlantic Smoke Shops Ltd v Conlon - (1943) AC 550
Brewers and Maltsters' Association of Ontario v Attorney-General for Ontario - (1897) AC 231
John Fairfax
&
Sons Ltd and Smith's Newspapers Ltd v New South Wales - (1927) 39 CLR 139
Browns Transport Pty Ltd v Kropp (1958) - [1958] HCA 49; 100 CLR 117
Hughes and Vale Pty Ltd v State of New South Wales - [1953] HCA 14; (1953) 87 CLR 49
Bank of Toronto v Lambe - (1887) 12 App Cas 575
Jones v Whittaker - (1870) LR 5
Attorney-General for British Columbia v Kingcome Navigation Company - (1934) AC 45
Bergin v Stack - [1953] HCA 53; (1953) 88 CLR 248
Meredith v Fitzgerald (1948) - [1948] HCA 11; 77 CLR 161
Attorney-General (NSW) v Homebush Flour Mills Ltd - [1937] HCA 3; (1937) 56 CLR 390
John Fairfax
&
Sons Ltd v New South Wales - [1927] HCA 3; (1927) 39 CLR 139
Henriksen v Grafton Hotel Ltd - [1942] 2 KB 184
Attorney-General for Manitoba v Attorney-General for Canada - (1925) AC 561
Brewers and Maltsters' Association of Ontario v Attorney-General for Ontario - (1897) AC 231
Sharpe v Wakefield - (1891) AC 173
Reg v Flintshire County Council County Licensing (Stage Plays) Committee Ex parte Barrett - (1957) 1 QB 350
Lancashire v Staffordshire Justices - (1857) 26 LJMC 171
Judgment date: 26 February 1960
Melbourne
Decision by:
Dixon CJ
In Parton v. Milk Board (Vict.) [1949] HCA 67; (1949) 80 CLR 229 I had occasion Walsh [1937] HCA 34; (1937) 57 CLR 372 showed that it could not be a duty of excise. I said: "Not only was the imposition upon the proprietor of the packing shed and one measured, at least as to the maximum, by the fruit handled, but the fruit was the fruit of the previous year. This appears to me to place the imposition more in the category of a licence fee in respect of a business calculated on past business done." (1). Had I stopped there, I would have had nothing to repent. But I did not stop there; I went on with an illustration: "something like the licence fee of a licensed victualler calculated on the amount expended by him in the previous year in purchasing liquor, which I should not regard as an excise." (1949) 80 CLR, at p 263 . No doubt I had the system obtaining in Victoria in mind. But an examination of the system has convinced me that the illustration was entirely wrong. (at p539)
2. A careful consideration of the Victorian licensing law, which is now embodied in the Licensing Act 1958 (No. 6293), has made it clear to me that a connected series of provisions ensures that, subject to exceptions that are of no importance either because they are theoretical and not real or because they are too trivial to matter, all liquor sold in Victoria must bear a tax of six per cent of its wholesale price or value before it reaches the consumer. Some forms of licence authorize the selling of liquor by wholesale, such for instance as a brewer's licence or a spirit merchant's licence, although they cover retail sales. Other forms of licence of which the ordinary victualler's licence is the chief are concerned with retail selling. It will be necessary to show the pattern more in detail but in a general way it may be said that for liquor sold under the first class of licence (unless it be sold to persons authorized to resell which in effect means to persons who sell by retail) six per cent of the selling price must be paid to the State Treasury. For liquor passing through the hands of those holding any of the second forms of licence, those concerned with retail selling, the six per cent paid to the Treasury must be calculated on the price paid for the liquor; it could not be on the price for which the liquor is sold, for that is the retail price. In taking the price at which the retailer purchases and the wholesaler sells the provisions adopt the same thing for the calculation of the percentage. (at p539)
3. It is, I believe, an undeniable proposition that, subject to the unimportant exceptions I have mentioned, because of the provisions of the Licensing Act no liquor can be bought by retail in Victoria unless in respect of it someone has paid, has become liable to pay or will be placed in a situation which will from the necessity of the case involve him in paying to the Victorian Treasury an amount equal to six per cent of the wholesale selling price of the liquor. (at p539)
4. That proposition means to me that the provisions impose an excise duty within the meaning of s. 90. It is a tax. It is a tax "upon" the goods. It is the kind of tax which tends to be recovered by the person paying it in the price he charges for the goods which bear the imposition. Only in two respects does the case appear to me to involve any question as to the connotation of the word "excise" in s. 90 - a connotation that has been discussed in past cases very fully in this Court. The first of the two matters to which I refer is the fact that the proposition as I have framed it embraces liquors independently of their place of origin. The tax is an inland tax and not an import tax, but as I have described it, it falls without distinction upon liquors whether they originated in Victoria, in Australia but outside Victoria or outside Australia altogether. The tax is undoubtedly an inland tax but it does not distinguish between the goods upon which it falls in respect of their origin: it is indifferent to the possibility of their being domestically produced or imported. Certain licences such as an Australian wine licence and to some extent perhaps a brewer's licence, are restricted to Australian production but we need not enter upon that distinction between licences; it is a side issue. For so far as I am concerned I think an inland tax upon goods of a class manufactured in Australia and abroad, imposed without regard to their place of origin, is an excise. It may be that it is an excise because it includes goods of home manufacture and as to imported goods is not. That seems to be the way it was regarded in The Commonwealth and Commonwealth Oil Refineries v. South Australia [1926] HCA 47; (1926) 38 CLR 408 . But it would be ridiculous to say that a State inland tax upon goods of a description manufactured here as well as imported here was not met by s. 90, excluding as that section does both duties of customs and duties of excise, because the duty was not confined to goods imported and so was not a duty of customs and was not confined to goods manufactured at home and so was not a duty of excise. The brief statement in Matthews v. Chicory Marketing Board (Vict.) (1938) 60 CLR 263 that "The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities" (1938) 60 CLR, at p 303 may need elaborating but it expresses my view of the substance of the provision. The second matter which perhaps arises as to the connotation of "excise" is closely connected with the first. It is whether the tax in order to be an excise must be imposed on the production of the goods or may be imposed upon the goods in the hands of any of the various persons through whom they pass in the course of distribution. Upon this I have expressed my view in Matthews' Case (1938) 60 CLR, at pp 291-303 and in Parton's Case (1949) 80 CLR, at pp 260, 261 , where there is a qualification with respect to consumption. (at p541)
5. I have begun by framing the foregoing proposition because it appears to me to represent the effect of the provisions of the Licensing Act 1958. I must of course establish or justify the proposition by a detailed discussion of the provisions. But for two reasons it has seemed better to formulate it at once before proceeding to justify it. The first is because it is the operation of the provisions of the Act considered together which appears to me inevitably to show that an excise is imposed. They operate together to burden liquor as a commodity with six per cent upon the wholesale price. As was said by Lord Thankerton speaking for the Privy Council in Attorney-General for British Columbia v. Kingcome Navigation Co. (1934) AC 45 : "Customs and excise duties are, in their essence, trading taxes and may be said to be more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted." (1934) AC, at p 59 . If you proceed by looking at each particular licensing provision of the Act connecting it only with the man licensed you are very likely to fail to perceive that, whatever the purpose of licensing the man, that is to say the description of trader in or producer of liquor, the purpose of levying six per cent upon the wholesale price of the liquor permeates the whole and is put into effective operation. The second reason for stating first the combined effect of the provisions as the imposition upon the commodity of a tax of six per cent of the wholesale price and treating that as decisive is that it enables one better to see the bearing of certain objections that are made to placing the exaction of six per cent of the purchase price within the category of a duty of excise. Some of those objections, as it would appear to me, give a characterization to the licence and to the payment to the Treasury by a licensee of the tax, a characterization which may be just enough but which does not detract from the truth that nevertheless the result of the whole is an excise upon the commodity. Other objections seem rather to treat as important the fact that in return for the tax a licence is given to the licensee possessing a quasi monopoly value. This again I would not regard as material, once it is seen that the result is to tax liquor on its way to the consumer by whatever human channel it may flow. (at p541)
6. Now the occasion when the percentage upon sales or purchases as the case may be is to be paid is on the renewal of the particular description of licence. It is convenient to neglect for the moment the grant of a new licence. The Licensing Court has annual sittings usually appointed for the close of the year (see Pt. VI). Renewals are granted for the ensuing year. The Licensing Court fixes the amount of the "fee" and inserts it in the certificate of renewal: see s. 20. The "fee" comprises the percentage, that is six per cent of the sales or purchases as the case may be, but, speaking generally, it is the sales or purchases over the period of twelve months ending on 30th June last. Now it does not matter who applies for the renewal of the licence. It may be the holder, a transferee, or some successor in title or someone applying as owner or mortgagee of the premises or nominee of the owner or mortgagee when for example a tenant or a mortgagor who is licensee has failed to seek a renewal of the licence of the premises: see s. 89 (2). In whatever character he applies he must pay the licence fee fixed by the court, that is to say the tax calculated on the liquor purchased during the twelve months ending on the previous 30th June. (at p542)
7. There is one possible contingency in which the amount may not be paid and may not become payable. That contingency is that neither the licensee nor any occupier nor the owner nor the mortgagee nor any person with any right title or interest seeks a renewal of the licence and the licence lapses or is surrendered. It is not necessary to pursue what is involved in this contingency. It is enough to concede its possibility and to add a reference to s. 37 and Pt. XIII for cases where perhaps there is a surrender and where compensation is sought. It seems plain enough that the provisions are all framed on the footing that a licence will be renewable and will continue indefinitely whether the licensee be the same, or there be a transfer or some new licensee coming in for the owner or mortgagee or as the case may be, or there be a removal of the licence to another site (cf. s. 120). In a general scheme of the kind which the provisions disclose, it appears to me that no significance on the question whether the tax is an excise can be found in the fact that no attempt is made to cover the contingency that a business carried on under a licence may be abandoned at the end of a year and that no renewal may be obtained which would form the occasion for payment of the tax. It is not now perhaps considered remarkable that a licensed site in a growing city should be turned to a more profitable use than the liquor trade provides; but one may be sure that it would be a mistake to attach any particular significance to the omission from the provisions with which we are concerned, taking their root as they do in 1916 and earlier, of any measure to catch the "licence fee" or tax on the liquor purchased in the prior year ending 30th June in a case where there was no renewal of the licence. Plainly it was the general conception that when the renewal of the licence was obtained six per cent on the liquor bought during a convenient year of account for sale on premises should be paid to the Treasury and that this should go on de anno in annum. It is for this reason that in framing the proposition with which I opened this judgment I ventured to place this qualification under the description of exceptions that are of no importance either because they are theoretical and not real or too trivial to matter. There may be found one or two other points, for example in the case of a vigneron's licence, at which it may seem possible theoretically that occasionally a little liquor may go untaxed, but if it be so they form very trivial exceptions and they are not worth separate discussion. (at p543)
8. But it is desirable now to turn to the task of justifying the proposition. It is justified by going through the possible channels or courses under the licensing system by which liquor may be distributed and by showing how they each mean that six per cent of the wholesale purchase price shall be drawn off to the Treasury, so that the whole field of distribution is covered and there is a tax of six per cent on the wholesale purchase price of all liquor reaching the consumer. I shall begin with clubs, a category outside the general system. I do so simply because they supply an initial example of the fact that the provisions of the Act cover the whole lawful distribution of liquor and secure (subject to the unimportant exceptions to which I have referred) a return of six per cent to the Treasury on the wholesale price of all liquor reaching the consumer in Victoria. (at p543)
9. Clubs are not licensed. They are registered under Pt. XII of the Licensing Act 1958. But the grant or renewal of the registration of a club involves the payment of six per cent, paid or payable for all liquor purchased by or for such club during the twelve months ended on the last day of June preceding the date of the application for registration : s. 248 (2). (at p543)
10. Take next a packet licence, that is a licence to sell liquor aboard a vessel : s. 14. Six per cent of the amount paid for liquor purchased for the vessel during the twelve months ending on the previous 30th June must be paid on the renewal of that licence : s. 19 (1) (a). So with an Australian wine licence : s. 19 (1) (a) and s. 10. A brewer's licence is granted under Pt. VII of the Act. It authorizes the holder to sell and dispose of beer, ale, porter or wine made in Victoria but in quantities of not less than two gallons. The licence is for a calendar year and is of course renewable. The fee includes six per cent on the liquor sold, not purchased, but it is on the liquor sold or disposed of under the licence to persons other than persons licensed to sell liquor : see s. 19 (1) (g), s. 17 and s. 124. This means that there is no percentage payment payable by the brewer in respect of liquor sold to retailers or other wholesalers but only to persons who because they possess no licence must be considered consumers. Sales to them, however, must be in quantities of not less than two gallons. The point for the purpose in hand is that if the beer, ale, porter or wine sold by a licensed brewer is sold to a licensed person who must include it in the purchases upon which he, his transferee or other successor in title or in business will pay six per cent to the Treasury when he comes at the close of the year to obtain a renewal of that licence, then the brewer pays nothing in respect of it ; for it will in due course bear the tax. But if he sells it to a person having no such licence, he must pay six per cent on the selling price which being in quantities of not less than two gallons will, it is supposed by the provision, be a wholesale price. In the same way a licensed spirit merchant must pay six per cent of the amount paid or payable by him for all liquor which during the twelve months ended on the 30th of the preceding June was sold or disposed of under the licence to persons other than persons licensed to sell liquor : see s. 11, s. 19 (1) (c). But a licensed spirit merchant may be a licensed grocer. A holder of a grocer's licence who is a licensed spirit merchant may sell and dispose of liquor in bottles. Such a person must pay six per cent of the amount paid or payable by him for all liquor which during the twelve months ending on the previous 30th June was purchased by the licensee and disposed of under such licence to any person other than a person licensed to sell liquor. If he sells as a wholesaler he does not pay the six per cent because the retailer does pay ; otherwise the grocer-spirit merchant does pay it : see s. 11, s. 12 and s. 19 (1) (c) and (d). A vigneron's licence stands in a special position. Doubtless it is assumed that the vigneron will export or sell for export or sell to a wholesaler here all the wine he produces from his vineyard. He will thus never be in the position of one who should pay the six per cent on liquor to be consumed in Victoria. He obtains a vigneron's licence which authorizes him to sell at his vineyard, in quantities of not less than one pint and not to be drunk on the premises, wine made from grapes of his own growing or from grapes purchased by him : s. 13, s. 19 (1) (f). He does not pay six per cent on any sales. For whether it is the wholesaler who buys from him or any retailer who buys from him direct, so far as the wine goes into consumption in Victoria, the six per cent is imposed on it by the other provisions. It is perhaps superfluous to trouble over a railway refreshment room licence ; but there the six per cent must be paid calculated on the amount paid or payable by the licensee for all liquor which during the twelve months ending on the 30th of the preceding June was purchased for the premises. Before coming to the licensed victualler there are two other forms of licence to mention. They are the temporary victualler's licence and the temporary packet licence. The first of these may be obtained by a licensed victualler or licensee of a railway refreshment room. It enables the licensee to sell liquor at an agricultural show, at races, at a regatta and at any of a number of other specified temporary amusements or games. The second, the temporary packet licence, authorizes the master of a ship conveying passengers from a place in Victoria to another place in Victoria or outside Victoria to sell or dispose of liquor to passengers during the passage. These licences are of course of no intrinsic importance but they provide this point, namely that six per cent of the amount paid or payable for liquor purchased for sale or disposal under the licence must be paid to the Treasury within seven days of demand and, to enable it to be fixed, the licensee must declare the amount paid by him for liquor purchased by him for sale or disposal under the licence. (at p545)
11. The licensed victualler is of course chiefly important ; but there is nothing about his case which, having regard to the explanation already given, does more than complete the system which ensures payment of six per cent to the Treasury of the wholesale price of liquor. The six per cent is calculated on the liquor purchased within the twelve months ending with the last preceding 30th June. Whoever obtains the renewal of the licence for the ensuing year for those premises must pay it : see ss. 8 and 19 (1) (a). (at p545)
12. There is one matter of importance which might affect the view taken of the six per cent as a tax of a description tending to be passed on to the consumer, commonly regarded as a characteristic of an excise duty. It is the provision which enables or was intended to enable a licensed victualler who is a tenant to place upon his landlord the burden of the three-eighths the amount of the tax : see sub-s. (3) of s. 19 (amended since Meredith v. Fitzgerald [1948] HCA 11; (1948) 77 CLR 161 ). It might be suggested that this provision showed an intention or at least a hope on the part of the legislature that the tax of six per cent would not be incorporated in the price of the liquor sold to the customer. Perhaps that may be an inference. But in my opinion it does not operate to make a tax which is calculated directly on the price of the goods sold any less an excise. It remains something essentially associated with the quantity and value of the goods. I say this in full consciousness of the fact that the payment exacted is calculated on the price of the goods purchased during a period which ended six months before the exaction is fixed, purchased during that period for sale but of course not necessarily for sale during that period. That to my mind does not matter. For it is a continuing business and when the licensee purchased those goods he knew they must bear an impost of six per cent. Both the points are met by the language of Lord Warrington of Clyffe in disposing on behalf of the Privy Council of a contention that a tax on the gross revenue of a coal mine was not an indirect tax. "What then is the general tendency of the tax now in question ? First it is necessary to ascertain the real nature of the tax. It is not disputed that, though the tax is called a tax on 'gross revenue', such gross revenue is in reality the aggregate of sums received from sales of coal, and is indistinguishable from a tax upon every sum received from the sale of coal. The respondents are producers of coal, a commodity the subject of commercial transactions. Their Lordships can have no doubt that the general tendency of a tax upon the sums received from the sale of the commodity which they produce and in which they deal is that they would seek to recover it in the price charged to a purchaser. Under particular circumstances the recovery of the tax may, it is true, be economically undesirable or practically impossible, but the general tendency of the tax remains. It is said on behalf of the appellant that at the time a sale is made the tax has not become payable, and therefore cannot be passed on. Their Lordships cannot accept this contention; the tax will have to be paid, and there would be no more difficulty in adding to the selling price the amount of the tax in anticipation than there would be if it had been actually paid." (R. v. Caledonian Collieries (1928) AC 358, at p 362 )). (at p546)
13. The licences which have been dealt with in the foregoing account of the provisions cover what may be called the distribution of liquor for consumption in Victoria. No person may sell liquor except under the authority of one or other of the licences : see s. 154. The registration of a club covers what ground might remain and the result is that all liquor on its way to the consumer, except to the immaterial extent stated, is subject in the manner described to the payment of a tax of six per cent of the wholesale price. (at p546)
14. The provisions deal with the distribution of liquor in Victoria as a continuous operation and impose the tax accordingly. That is one reason why it appears to me to be quite immaterial that the payment of the tax made in, say, January of a given year is calculated on the liquor purchased during the twelve months ending on the last day of the previous June for sale on the premises or as the case may be. It is also a reason why it has seemed unnecessary to go into the question of the obtaining of a new licence and the assessment of tax for the commencing year. The Licensing Court in such a case estimates the probable extent of the annual purchases of liquor for sale or disposal under the licence : see s. 21. It might be possible to regard the ensuing annual payments upon renewals as continuances from this payment working out the correction. But that is not the aspect which the provisions give them. (at p547)
15. It is not a matter to which I attach importance in the view I take, but it should be noticed that in the case of certain licences there is a fixed fee as well as the six per cent on wholesale prices paid or charged. They are the temporary victualler's or packet licence, the spirit merchant's licence and the brewer's licence. This fixed fee represents as a matter of history the fee for the licence payable by the licensee to which the tax of six per cent on purchases has been added. (at p547)
16. It will be seen that under the system which operates as a result of the provisions that have been examined the tax of six per cent on wholesale prices covers the whole supply of liquor to the consumers in Victoria. The disappearance of this or that old licence, or the grant of this or that new licence has no effect on the liability to tax of the total amount of liquor obtained by the consumers. (at p547)
17. Nothing has been said so far as to the relative proportions of the liquor passing under the system which respectively is imported and is produced in Australia or more particularly in Victoria. But it is common knowledge that the proportion imported is very small and the great proportion, particularly of beer, is produced in Victoria. (at p547)
18. The fact that the licensing of a licensed victualler and for that matter the registration of a club forms part of the method of controlling the sale of liquor, the conduct of hotels and so on appears to me quite immaterial, as does the question whether the licence in the hands of the licensee is a valuable privilege for which the payment of the tax may be regarded as part of the consideration. Section 90 is quite unconcerned with the position of the individual. It is concerned wholly with the demarcation of authority between Commonwealth and State to tax commodities. Duties of excise and of customs are denied to the States simply because of their effect on commodities. Whether a tax is a duty of excise must be considered by reference to its relation to the commodity as an article of commerce. The six per cent upon the wholesale selling price of liquor appears to me simply to be a tax upon liquor, a tax imposed on liquor on its way to the consumer by whatever channel it may proceed: it is in other words an addition to the excises the Commonwealth Parliament has chosen to impose on liquor. It is a tax which goes into the Licensing Fund kept in the Treasury under Pt. XV. From that certain annual subventions are payable to municipalities and to the Police Superannuation Fund and the costs are paid for administering the Act : see s. 290. But the balance forming the great bulk of the fund goes to the Consolidated Revenue of Victoria. (at p548)
19. The tax is in my opinion an excise on liquor. (at p548)
20. For those reasons I think the demurrer should be overruled. (at p548)
21. Perhaps it should be added that the Licensing Act 1958 has been referred to in the foregoing for convenience although it was not in force at the material time. All the provisions are gathered together in that Act and no purpose would be served by going behind it. (at p548)