KIMBERLY-CLARK AUSTRALIA PTY LTD v FC of T

Judges:
Hill J

Court:
Federal Court

Judgment date: Judgment handed down 13 April 1994

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Hill J

On 23 August 1988 Kimberly-Clark Australia Pty Limited (``the applicant'') applied to the respondent Commissioner of Taxation (``the Commissioner'') for a refund of sales tax paid by it, inter alia, on toilet and facial tissues which the applicant considered were taxable at the rate of 10% rather than at the rate of 20% which it had paid. The application was one of a number of claims for a refund made by the applicant.

The applicant was motivated to make the claim by a decision of Yeldham J of the Supreme Court of New South Wales in
Kentucky Fried Chicken Pty Limited v FC of T & Ors 86 ATC 4701, such decision being upheld on appeal:
FC of T v Kentucky Fried Chicken Pty Limited & Anor 88 ATC 4363.

The Commissioner refused the refund and the applicant objected on 28 October 1988. The objection was allowed in part, so far as it related to goods other than facial and toilet tissues and a product known as ``Jumbo Roll'', by letter dated 23 July 1991. The applicant thereupon became entitled to request that the objection decision be referred either to the Administrative Appeals Tribunal or to the Court within the period of 60 days from the date of the notification being served on it. The applicant, however, did not make a request within the relevant period.

The applicant's delay appears to have been caused by reorganisations of accounting firms through mergers and subsequent splitting, an arguably wrong addressee of a letter and what, in the material before me, is described as ``general confusion as to which party was then taking action on the matter''. In the result it was not until 13 August 1992 that the applicant sought to refer the objection decision to this

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ATC 4205

Court. Being then out of time, the applicant applied to the Commissioner under s. 42(2) of the Sales Tax Assessment Act (No. 1) 1930 (Cth) (``the Assessment Act'') to treat the application as being duly lodged.

Further delay occurred, in part as a result of the issue which now falls for decision. Ultimately the Commissioner decided not to oppose the application for an extension of time. He also did not support it. The application is now before me.

Also before the Court for directions is an appeal against the disallowance of another application for a refund in respect of the same products but relating to a different period. The outcome of the substantive issue raised in both will most likely be determined by the decision of the Full Court on appeal from the decision of Spender J in
Cosco Holdings Pty Ltd v FC of T 93 ATC 5091.

At the outset there arises a preliminary question whether the Court has power to grant the extension of time. Prior to the enactment of the Taxation Laws Amendment Act (No. 3) 1991 (Cth) (``the Amendment Act''), no difficulty arose. Section 42(2) of the Assessment Act provided for an application in writing to be sent to the Commissioner to treat the request for reference of the matter to the Court has having been duly lodged. Section 42B of that Act then required the Commissioner, where the request related to a reference to the Court, to refer the application for extension of time to the Court. This constituted the making of an application to the Court to extend the time within which the request for reference might be lodged. No question of jurisdiction thus arose.

The Amendment Act repealed the provisions of ss. 42 and 42B of the Assessment Act as part of a general revision of the objection and appeal provisions of various taxation laws, including the Assessment Act. Thereafter objection and appeal provisions relating to sales tax were inserted into the Taxation Administration Act 1953 (Cth) (``the Administration Act''). Unaccountably no equivalent provisions to ss. 42 and 42B were inserted in amendments intended to be machinery only and not affecting any change in the pre-existing law. The necessity for provisions enabling the Administrative Appeals Tribunal to grant an extension of time was probably obviated by s. 29 of the Administrative Appeals Tribunal Act 1975 (Cth). No corresponding provision operates in respect of this Court. It is hard to believe that it was intended that strict time limits should apply where an appeal is taken to this Court with no power in the Court to extend them, but a similar constraint should not apply to the Administrative Appeals Tribunal. Consideration should immediately be given by the legislature to return the situation to that which existed before the Amendment Act so that the Court is able to do justice as between the parties and grant an extension of time in an appropriate case.

The repeal of ss. 42 and 42B was effected by s. 113 and Schedule 4 of the Amendment Act. By force of s. 114, item 2, the amendments apply in relation to objections where the assessments, determinations, notices or decisions to which the objections related, were notified after the commencement of s. 113 on 1 March 1992. Section 116 of the Amendment Act, a transitional provision, makes the Administration Act (with its omission of the right, in the case for an appeal to the Court, to seek an extension of time) applicable only to a case where notice of a decision by the Commissioner allowing or disallowing an objection in whole or in part was served after the commencement of operation of that section, being 1 March 1992.

The combined effect of these two sections is, as a matter of interpretation, that steps taken which relate to objections to assessments or refund decisions where the assessment or refund decision was notified before 1 March 1992, continue to be dealt with under the Assessment Act unless falling within s. 116. The present case does not fall within s. 116. On that basis the applicant retains the right previously conferred upon it to seek an extension of time from this Court, the refund decision having been notified before 1 March 1992.

The present is not a case where there is shown to have been an express intention on the part of the legislature to legislate retrospectively to abolish the right of a taxpayer to apply to the Court for an extension of time. Nor does the question in the present case arise whether the Amendment Act should be construed retrospectively: cf
Rodway v R (1990) 169 CLR 515 at 518-519;
Maxwell v Murphy (1956-1957) 96 CLR 261 at 267; and ss. 8(c) or 8(e) of the Acts Interpretation Act 1901 (Cth).

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ATC 4206

Even if the result of the question of interpretation of the combined effect of ss. 113, 114 and 116 is that the matter is not clearly dealt with, I would reach the same conclusion in a different way. First, it is reasonable to suppose that Parliament did not intend to extinguish any right which existed at the date of enactment of the Amendment Act without express words. Second, it is clear law that a right vested in a party to apply to a Court at the date of commencement of an Act will not be held to be removed unless there is express provision, or the removal of the right arises by necessary implication:
Colonial Sugar Refining Co Ltd v Irving [1905] AC 369 at 372-373;
Pettigrew v FC of T 90 ATC 4124 at 4132-3.

It follows, in my view, that the Court has jurisdiction to extend the time in which the request for reference of the objection decision to the Court may be made.

The present is, I would find, an appropriate case in which the discretion conferred upon the Court should be exercised. First, it was conceded by the solicitor for the Commissioner that there was no prejudice to the Commissioner in extending the time. The matter raised was the same as that raised in another application properly before the Court. Second, there was delay, not only on the part of the taxpayer but also on the part of the Commissioner. Indeed there was considerable and unexplained delay on the part of the Commissioner. Third, the reason for the delay appears to have been due to external events outside the control of the taxpayer, including a letter arguably addressed to the wrong party by the Commissioner. As this Court said in
Lighthouse Philatelics Pty Limited v FC of T 91 ATC 4942 at 4949; (1991) 32 FCR 148 at 156, fault on the part of advisors to a taxpayer will not necessarily result in an exercise of discretion being decided adversely to a taxpayer.

In these circumstances I would extend the time within which the applicant might lodge the request to refer the objection decision to this Court until 4.30pm on 20 April 1994.

The costs of the application should be borne by the applicant.

THE COURT ORDERS THAT:

(1) The time within which the applicant might lodge the request to refer the objection decision to this Court be extended until 4.30pm on 20 April 1994.

(2) The costs of the application be borne by the applicant.