DARRELL LEA CHOCOLATE SHOPS PTY LTD v FC of T
Judges:Olney J
Court:
Federal Court
Olney J
The proceedings
On 3 November 1994 the applicant filed 4 applications in this Court appealing against appealable objection decisions made by the respondent (the Commissioner) pursuant to the Sales Tax Assessment Act (No 1) 1930 (the No 1 Act), the Sales Tax Assessment Act (No 2) 1930 (the No 2 Act), the Sales Tax Assessment Act (No 6) 1930 (the No 6 Act) and the Sales Tax Assessment Act (No 7) 1930 (the No 7 Act). Each appeal raises, inter alia, a question as to the validity of the respective assessments. On 21 April 1995, Hill J ordered that the issue of the validity of the assessments be tried as separate questions. It is those questions which are presently before the Court.
Background
The background to the proceedings was detailed in reasons published by Hill J on 21 April 1995. The following outline of the facts is drawn from Hill J's reasons.
On 31 May 1991 the Commissioner served on the applicant four notices of assessment of sales tax. The letter enclosing the notices indicated that the assessments were based on a review of the sales tax affairs of the applicant. Each assessment covered the period 1 October 1987 to 31 January 1991. The applicant objected to each assessment. The objections were disallowed on 19 October 1994 whereupon the applicant appealed to the Court.
In the relevant period, the applicant purported to appoint various third parties as agents for the purpose of making sales by retail on its behalf. In total, seventy-five persons are said to have been ``full agents'', selling the applicant's products solely or in conjunction with another business, 154 persons are said to be ``compact agents'', selling the applicant's products as a small section within a larger business and seventy-eight persons are said to have been sub-agents. The Commissioner takes the view that the various arrangements entered into by the applicant do not give rise to a relationship of principal and agent or principal and sub-agent and the assessments have been made on a different basis.
The notification of the first assessment reads as follows:
"SALES TAX ASSESSMENT ACT (NO 1) 1930 (AS AMENDED)
You are hereby notified that Darrell Lea Chocolate Shops Pty Limited is liable to pay sales tax as shown hereunder in accordance with an assessment that has been made under the provisions of sub-section 25(1), or alternatively 25(2) or in the further alternative 25(2A) of Sales Tax Assessment Act (No 1) 1930 (as amended).
SALES TAX ASSESSMENT ACT (NO 1) 1930 (AS AMENDED)
In respect of confectionery, toys and gift items manufactured by you and sold or applied to your own use, during the period 1 October 1987 to 31 January 1991 (inclusive):
RATES OF TAX TOTAL SALE VALUE AMOUNTS OF TAX THEREON
10% $100,172,287 $9,106,571
20% $ 2,102,776 $ 350,462
----------
Total $9,457,033
Less Tax Previously Paid $5,823,874
----------
Amount of Tax Now Payable $3,633,159''
The second notification is headed ``Sales Tax Assessment Act (No 2) 1930''. It notifies a liability to sales tax said to arise:
``... in accordance with an assessment that has been made under the provisions of subsection 10(1) or alternatively 10(2) or in the further alternative 10(2A) of Sales Tax Assessment Act (No 2) 1930 (as amended).''
The narration of the notice says that it is:
``In respect of confectionery, toys and gift items sold during the period 1 October 1987 to 31 January 1991 (inclusive).''
The figures for rates of tax, total sale value and amounts of tax thereon are the same as those contained in the first notice.
The third notice purports to be made under Sales Tax Assessment Act (No 6) 1930 (As
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Amended). It notifies what is said to have been an assessment of sales tax:``... in accordance with an assessment that has been made under the provisions of subsection 10(1) or alternatively 10(2) or in the further alternative 10(2A) of Sales Tax Assessment Act (No 6) 1930 (as amended).''
The narration on the notice says that it is:
``In respect of confectionery, toys and gift items imported by the company and sold or applied to own use, during the period 1 October 1987 to 31 January 1991 (inclusive).''
The rates of tax, total sale value and amounts of tax are again the same in the other two assessments.
The final notice is headed ``Sales Tax Assessment Act (No 7) 1930''. It purports to notify an assessment:
``... made under the provisions of subsection 10(1), or alternatively 10(2) or in the further alternative 10(2A) of Sales Tax Assessment Act (No 7) 1930 (as amended).''
The narration on the document says that it is:
``In respect of confectionery, toys and gift items sold during the period 1 October 1987 to 31 January 1991 (inclusive).''
Again, the figures are the same as in the other notices.
The accompanying letter dated 31 May 1991 states:
``Enclosed are four notices of assessment based on the recent review of the company's sales tax affairs. The assessments are primarily based on the conclusion reached during that review that the company has sold goods to agents who in turn sell by retail to the public or by wholesale to sub-agents. The working papers which support the calculations for the assessments will be made available to the company or its representatives for inspection as soon as possible. Copies of the assessments have been forwarded to the company's solicitors with a covering letter concerning further matters relevant to sales tax. A copy of that letter is enclosed for your information.
While four notices of assessment have been issued, I wish to point out that the total amount of the company's liability based on the matters considered so far is $3,633,159. This single amount should be paid as set out in each notice of assessment.''
In its objections the applicant put in issue the validity of the assessments relying, inter alia, upon the issue of four assessments for the same amount, and upon the fact that the assessments are each said to be made in the alternative pursuant to the provisions of different subsections of the relevant Acts.
It is common cause that some but not all of the goods sold by the applicant in the relevant period come within the scope each of the No 1 Act, the No 2 Act, the No 6 Act and the No 7 Act, and further that no sale is caught by more than one Assessment Act. With respect to goods manufactured by the applicant in Australia (No 1 Act), purchased by the applicant from local manufacturers (No 2 Act), imported by the applicant (No 6 Act) and imported by other persons and purchased by the applicant (No 7 Act) and sold by the applicant during the relevant period, the applicant paid sales tax totalling $5,823,874.
The separate questions
The separate questions which Hill J ordered to be tried are:
Whether, having regard to the documents annexed and marked ``A'', ``B'', ``C'', ``D'' and ``E'':
- 1. the document annexed and marked ``A'' was a valid and definitive notice in writing of an assessment pursuant to s 25(3) of the Sales Tax Assessment Act (No 1) 1930?
- 2. the document annexed and marked ``B'' was a valid and definitive notice in writing of an assessment pursuant to s 10(3) of the Sales Tax Assessment Act (No 2) 1930?
- 3. the document annexed and marked ``C'' was a valid and definitive notice in writing of an assessment pursuant to s 10(3) of the Sales Tax Assessment Act (No 6) 1930?
- 4. the document annexed and marked ``D'' was a valid and definitive notice in writing of an assessment pursuant to s 10(3) of the Sales Tax Assessment Act (No 7) 1930?
The annexed documents marked ``A'', ``B'', ``C'', ``D'' and ``E'' are respectively copies of the assessments issued pursuant to the No 1 Act, the No 2 Act, the No 6 Act and the No 7 Act and of the respondent's letter of 31 May 1991. (In the way they are framed the questions do not readily admit of a simple affirmative or
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negative answer and accordingly, consistent with the obvious intention of Hill J, I will treat the questions as asking ``Is (the relevant document) a valid and definitive notice in writing of an assessment pursuant to (the relevant statutory provision)?''.)On the hearing of the separate questions counsel for the Commissioner tendered as evidence (without objection) certified copies of the 4 notices of assessment and copies of letters from the applicant's solicitors to the Commissioner dated 12 July 1991 and from the Commissioner's solicitor to the applicant's solicitors dated 29 March 1995. No other evidence was adduced.
The legislative scheme
Prior to legislation which came into operation on 1 January 1993 there were 11 Sales Tax Assessment Acts each of which dealt with imposition of sales tax in respect of a discrete category of goods. The need for a multiplicity of legislation was explained by Dixon J in
DFC of T v Ellis & Clark Ltd (1934) 3 ATD 98 at 100; (1934) 52 CLR 85 at 89:
``Because of some apprehension as to the possible effect of sec 55 of the Constitution on its validity, if the sales tax legislation were enacted in one Assessment Act and one Taxing Act, it was passed in the form of nine separate machinery statutes and nine separate taxing Acts. They constitute, however, a single legislative scheme to the complete operation of which all are necessary, and they should be construed together....''
The views expressed by Dixon J in Ellis & Clark Ltd were endorsed by the High Court (Gibbs CJ, Mason, Wilson, Deane and Dawson JJ) in
Brayson Motors Pty Ltd v FC of T 85 ATC 4125 at 4127; (1984-1985) 156 CLR 651 at 656-657. Only 4 of the 11 Assessment Acts are relevant in this proceeding. The No 1 Act subjects to sales tax goods manufactured in Australia and sold by the manufacturer or treated by the manufacturer as stock for sale by retail or applied to the manufacturer's own use. The No 2 Act applies to goods manufactured in Australia and sold by a purchaser from the manufacturer. The No 6 Act applies to goods imported into Australia and sold or applied to own use by the importer. The No 7 Act applies to goods imported into Australia and sold by a person other than the importer. It is obvious that goods coming within the scope of the No 1 Act are not also caught by the No 2 Act. Nor are goods to which the No 6 Act applies within the scope of the No 7 Act. The same goods cannot be both manufactured in Australia and imported into Australia.
The general scheme of the several Assessment Acts is essentially the same although the section numbers in the No 2, No 6 and No 7 Acts do not coincide with those of the No 1 Act. It will be convenient to first outline the provisions of the No 1 Act so far as they are relevant to the facts of this case and then to refer to the corresponding provisions of the No 2, No 6 and No 7 Acts.
Section 17(1) provides that the sales tax imposed by the Sales Tax Act (No 1) 1930 shall be levied and paid upon the sale value of the relevant goods. Where goods are sold by a manufacturer by retail the sale value is the amount for which the goods could reasonably be expected to have been sold by the manufacturer by wholesale (s 18(1)(b)).
Every manufacturer who is a monthly remitter (it is common cause that the applicant is a monthly remitter) is required within 21 days after the close of each month to furnish to the Commissioner a return in an approved form (No 1 Act s 21) and within the same period, if liable to pay sales tax under the Act, to pay the same on the sale value of any goods sold during the relevant month (s 24(1)). Sales tax is due and payable by a monthly remitter at the end of the 21 day period (s 24(2)). When it becomes due and payable, sales tax is deemed to be a debt due to the Commonwealth and payable to the Commissioner in the manner and at the place prescribed (s 30(1)).
Where the amount shown in a return is less than the amount which in the Commissioner's opinion is a fair and reasonable wholesale value of the goods, the Commissioner may determine the amount which in the Commissioner's opinion is the fair and reasonable wholesale value in which case the Commissioner is deemed to have altered the sale value of the goods to the amount so determined and such value becomes the sale value of the goods for the purposes of the Act (s 18(3A)).
Section 25 provides as follows:
``25(1) Where the Commissioner finds in any case that tax or further tax is payable by a person, the Commissioner may make an assessment in relation to the person.
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25(2) Where, under sub-section 18(3A) or (4) or 18A(5) or (6), the sale value of any goods has been altered, the Commissioner shall make an assessment in relation to those goods.
25(2A) Where-
- (a) a person makes default in furnishing a return;
- (b) the Commissioner is not satisfied with a return furnished by a person; or
- (c) the Commissioner has reason to believe or suspect that a person (although not having furnished a return) is liable to pay sales tax,
the Commissioner may determine an amount to be the amount upon which, in the opinion of the Commissioner, sales tax should be paid and may make an assessment in relation to the person.
...
25(3) As soon as conveniently may be after an assessment has been made, the Commissioner shall cause notice in writing of the assessment to be served on the person liable to pay the tax or further tax.
...
25(5) The omission to give any such notice shall not invalidate the assessment made by the Commissioner.''
The term ``assessment'' is defined in s 3(1) to mean the ascertainment of the sale value of goods and of the sales tax payable on that sale value.
The mere production of a document signed by the respondent, a Second Commissioner or a Deputy Commissioner and purporting to be a copy of a notice of an assessment is conclusive evidence, inter alia, of the due making of the assessment and except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or an appeal relating to the assessment, that the amounts and all of the particulars of the assessment are correct (s 67(1)).
The Sales Tax Assessment Act (No 1) 1930 imposes sales tax at the rates specified therein upon the sale value of the relevant goods.
Each of the No 2, No 6 and No 7 Acts contains express provisions which correspond with ss 17(1), 18, 24 and 25 of the No 1 Act and other relevant provisions (in particular for present purposes the provisions of s 67) are incorporated by reference. In the No 2, No 6 and No 7 Acts, the provisions corresponding to s 25 are found in s 10. Each of the Sales Tax Assessment Act (No 2) 1930, the Sales Tax Assessment Act (No 6) 1930 and the Sales Tax Assessment Act (No 7) 1930 imposes sales tax at rates specified therein upon the sale value of the goods referred to in the corresponding Assessment Act. The rate of sales tax imposed is the same in respect of goods referred to respectively in the No 1, No 2, No 6 and No 7 Acts.
The liability to pay sales tax arises by reason of the sale etc of relevant goods and not by virtue of any assessment nor indeed by reason of any return furnished to the Commissioner. The tax is payable (in the case of a monthly remitter) at the end of 21 days after the close of the month during which the goods were sold. In this respect the sales tax legislation can be distinguished from the income tax law under which tax is due and payable by the person liable to pay the tax only after the expiration of a prescribed period following the service on the person liable of a notice of assessment (Income Tax Assessment Act s 204(1)). In
FC of T v Murray 90 ATC 4182 at 4196; (1990) 21 FCR 436 Hill J at 453 said:
``Sales tax is a self-assessing tax. The obligation to pay the tax arises without assessment by the Commissioner and it may accordingly be sued for without assessment: sec 24(1) and 30 of the No 1 Act. It was for this reason that the legislature, by Act No 48 of 1986, sec 135, conferred upon a taxpayer a right to obtain a special assessment under sec 25AA so that a taxpayer could have a right of objection and appeal under the statutory procedures introduced at the same time.''
The applicant's case
The applicant says that in determining the sale value of goods and issuing an assessment under each relevant Assessment Act relating not merely to that portion of the goods to which each Act applies but to the totality of the goods sold, the Commissioner did not make a genuine attempt to ascertain the sale value of goods and of the sales tax payable on that sale value as imposed by each Act.
The primary submission on which the applicant relies is that although each assessment could, if it constituted a valid assessment, be
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relied upon by the Commissioner in a proceeding to recover sales tax as entitling the Commissioner to judgment for $3,633,159, i.e. an aggregate of $14,532,636, the Commissioner has made it clear that the intention is to recover only $3,633,159 and thus it is said, the several notices were not valid and definitive but rather were tentative. The notices were not intended to reflect the legal liability to pay the amount of tax stated on their face to be payable under the particular Act pursuant to which they were purported to have been issued.There is an alternative and independent basis upon which the applicant submits that each notice is invalid. The argument can be summarised thus: Each notice was issued on the basis that the Commissioner had made a determination as to the amount which in the Commissioner's opinion would be the fair market value of the goods if sold by wholesale. Such a determination was in each case a precondition to assessment and upon making each determination the Commissioner was under a duty to make an assessment. In forming the relevant opinion for the purpose of each Assessment Act it was necessary for the Commissioner to identify the goods which came within the scope of each Act and accordingly, it is said, the Commissioner could not have genuinely determined, or been of the opinion that the same goods were both manufactured in Australia and not manufactured in Australia by the applicant and were both imported by the applicant and not imported by the applicant. The assessing powers contained in s 25(2) of the No 1 Act and s 10(2) of each of the No 2, No 6 and No 7 Acts are independent heads of power and cannot be exercised in respect of the same goods. This, it is said, leads to the conclusion that it is impossible to identify the relevant statutory power pursuant to which the sale value of particular goods has been altered which leads to the further conclusion that there has been no effective alteration of the sale value of any particular goods and hence no assessment within the definition of that term.
The respondent's case
The respondent asserts that subject to what is referred to as the Hickman principle the production of certified copies of the notices of assessment forecloses any argument as to the due making of the assessment, that is, it places beyond review the question of the validity of the assessment.
The so-called Hickman principle is a reference to a passage from the judgment of Dixon J in
R v Hickman; ex parte Fox and Clinton 70 CLR 598 at 615 which has been applied by the High Court to s 177(1) of the Income Tax Assessment Act, a section which is relevantly comparable with s 67(1) of the No 1 Act (
DFC of T v Richard Walter Pty Ltd 95 ATC 4067; (1994-1995) 183 CLR 168 per Mason CJ at ATC 4070; CLR 179-180; Brennan J at ATC p 4082; CLR p 199; Deane and Gaudron JJ at ATC 4088; CLR 210-211; Dawson J at ATC 4094-4095; CLR 222-223; Toohey J at ATC 4100-4101; CLR 233; McHugh J at ATC 4104; CLR 240). The Hickman principle, applied in the context of the sales tax legislation is that the privative effect of s 67(1) will operate provided the assessment is:
- (i) ``a bona fide attempt'' by the Commissioner or other authorised officer to exercise powers conferred by the relevant Acts;
- (ii) ``relates to the subject matter'' of the relevant Act; and
- (iii) ``is reasonably capable of reference to'' those powers.
The Commissioner says that there is nothing on the face of the notices of assessment or elsewhere in the material before the Court which suggests either that the Commissioner made other than a bona fide attempt to exercise the powers conferred by the relevant Acts, that the assessments relate to anything other than the subject matter of the relevant Acts, or that they are not reasonably capable of reference to the powers conferred by the Acts.
The assessments
Each notice of assessment identifies the statute under which the assessment was made and describes the basis of the assessment by reference to the sale of specified goods.
In the case of the No 1 Act notice the goods are said to have been manufactured by the applicant and sold or applied to its own use during the stated period. Similarly, in the No 6 Act notice the goods are said to have been imported by the applicant and sold or applied to its own use. In each of these cases there can be no doubt that the notices refer to assessments which relate to the subject matter of the
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respective Acts under which they were made. The narrations which appear in the No 2 and No 7 Act notices refer merely to goods which have been sold during the relevant period and it may be said that by not identifying the goods as having been purchased from the manufacturer (in the case of the No 2 Act) or from the importer (in the case of the No 7 Act) the assessment does not specifically relate to the subject matter of the relevant Act but I do not think that the point has any substance. The No 2 Act is ``An Act relating to the imposition, assessment and collection of a tax upon the sale value of goods manufactured in Australia and sold by a purchaser from the manufacturer...'' and provides that sales tax should be levied and paid on the sale value of such goods. It is the sale of goods which gives rise to the liability to tax and it is the sale of goods which is identified in the notice of assessment as giving rise to the tax assessed. By asserting in the notice that the assessment has been made pursuant to the No 2 Act the notice indicates the type of goods in respect of which sales tax has been levied. And similar reasoning can be applied in respect of the No 7 Act assessment. In my opinion each assessment relates to the subject matter of the Act under which it was made.In each assessment the source of power is identified. In the case of the No 1 Act assessment it is said to be ss 25(1) or 25(2) or 25(2A). In the other cases it is said to be ss 10(1) or 10(2) or 10(2A) of the relevant Act. Each of the subsections referred to empowers the Commissioner to make an assessment which (by definition) involves the ascertainment of the sale value of goods and of the sales tax payable on that sale value. The same processes are involved in making an assessment irrespective of the particular subsection which is said to be the source of the Commissioner's power. In my opinion each assessment is reasonably capable of reference to the powers which authorise the Commissioner to make the assessment.
The facts of this case are far removed from those in
Briggs v DFC of T and Ors; Ex parte Briggs 86 ATC 4748; 12 FCR 301 in which the Commissioner conceded that in issuing the relevant notices of assessment he had made no attempt to ascertain or evaluate the taxpayer's taxable income. Nor is this case similar to
FC of T v S. Hoffnung & Co Ltd (1928) 1 ATD 310; 42 CLR 39 in which the assessment was on its face expressed to be tentative.
Taken in isolation each notice of assessment bears no indication other than that it is intended as a notice of an assessment made pursuant to the relevant legislation of the sale value of goods and of the amount of sales tax payable by the applicant. There is nothing in the notices or in any other material before the Court to suggest that the figures contained therein are bogus or arrived at without any attempt to ascertain or evaluate the sale value of the relevant goods. If there is a basis upon which to attack the good faith of the Commissioner, it lies in the concession made in the letter of 31 May 1991 that it is not sought to recover the aggregate amount of the 4 assessments but only the amount of the individual assessments.
The decision of the High Court in Richard Walter (which followed a number of earlier decisions) is authority for the propositions first that the Commissioner may issue assessments of income tax under the Income Tax Assessment Act 1936 on an alternative basis to different taxpayers in respect of the same income and second, that the fact that two persons have received assessments relating to the same income does not evidence bad faith or improper purpose on the part of the Commissioner or mean that the assessments are tentative and not definitive. But that case is not this case. Here there are multiple assessments of sales tax which purport to render the same taxpayer liable to tax in respect of the sale of the same goods pursuant to different statutory powers which are mutually exclusive. However, the fact that each assessment has been made under a separate statute does not detract from the fact that each statute is but part of ``a single legislative scheme to the complete operation of which all are necessary'' (Ellis and Clark Ltd, per Dixon J at ATD 100; CLR 89).
Despite the differing factual and legislative contexts, the reasoning which justifies the Commissioner in the context of the income tax laws in maintaining concurrent assessments of income tax against more than one taxpayer in respect of the same income is equally applicable in the present case. In Richard Walter Brennan J said at ATC pp 4082-4083; CLR pp 200-202:
``It must be remembered that the Commissioner's function is administrative, not judicial. The power to assess is, as s 167 shows, not limited to cases where the Commissioner has enough information on
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which to make a positive finding of fact. The Commissioner is not required to determine on the balance of probabilities that one person rather than another is the person subject to the tax liability in respect of the particular income. Where the facts known to the Commissioner are such that he is unable to determine which of two or more persons is liable to tax on the same item of income in the same year, he may adopt the view in the case of any or all of those persons that there is a substantial possibility that the item of income is assessable income of that person. If that view is adopted in respect of two or more of those persons, he may validly assess each of them to tax. The making of an assessment on that view of the facts, provided it is not for the purpose of double recovery of the tax imposed by the relevant Taxing Act, is in my opinion a bona fide attempt to exercise the power to assess so that the assessment either is valid or is validated by s 175. And the notice of assessment attracts the protection of s 177(1).It is immaterial to the validity of an exercise of the power to assess one taxpayer to tax that the Commissioner believes it possible that another taxpayer is liable to tax in respect of the particular income. If uncertainty as to the taxpayer liable were to sterilize the Commissioner's power to make an assessment or if the power could be exercised only when the Commissioner is satisfied on the balance of probabilities that one taxpayer rather than another is liable, the uncertainties which are the inevitable companions of complex commercial transactions would substantially erode the Commissioner's ability to recover tax and would, contrary to the intent of s 177(1), open the way to litigating liability to tax outside the objection, review and appeal procedures.
The fact that a tax liability remains outstanding against two taxpayers pending the ascertainment of the taxpayer truly liable is no bar to the exercise of the power to assess both to tax in respect of the same income. As Dixon J observed in
Richardson v FC of T (1932) 2 ATD at 24; (1931-1932) 48 CLR 192 at 207 when upholding the validity of an assessment to tax against a second person while the first person's assessment remained on foot and unamended:`it was not unnatural that [the Commissioner] should delay relieving one of two persons whom he considered culpable until the liability of the other was established.'
The co-existence of tax liabilities in two or more taxpayers in respect of the same income is, as Dixon J observed, attended with difficulty. Sometimes the difficulty will be removed by the objection, review and appeal procedures where the taxpayer will establish the facts in order to establish that the assessment is excessive.
The raising of concurrent assessments of two or more taxpayers to tax in respect of the same item of income has not hitherto been regarded as beyond the powers of the Commissioner... The appropriateness of alternative assessments to tax of two taxpayers in respect of the same item of income was recognized in a dictum of this Court in
DFC of T v Moorebank Pty Ltd 88 ATC 4443 at 4448; (1987-1988) 165 CLR 55 at 67). And the courts, if not the Commissioner, can diminish the difficulty of concurrent assessments by ensuring that there is no double recovery of tax (
DFC of T v Faint [1988] 2 Qd R 494 at 497-498).''
Similar conclusions were expressed by Dawson J at ATC 4091-4092; CLR 216-217 (with which Deane and Gaudron JJ agreed at ATC 4089-4090; CLR 214) and by Toohey J at ATC 4098; CLR 228-229.
The facts which would enable the Commissioner to make assessments of sales tax reflecting the actual amount of the applicant's liability under the four separate Assessment Acts are peculiarly within the knowledge of the applicant, but the facts known to the Commissioner are such that he is unable to determine which of the sales attracting liability to tax are caught by each particular Assessment Act and he has adopted the view that there is a substantial possibility that all of the sales are caught by one or other Act. The several assessments have not been made for the purpose of double recovery of tax. To adopt, with respect, the language of Brennan J, it may well be said that if uncertainty as to the particular Act under which sales of goods are assessable to sales tax were to sterilise the
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Commissioner's power to make an assessment or if the power could be exercised only when the Commissioner is satisfied on the balance of probabilities that sales are taxable under one Act rather than another or others, the uncertainties which are the inevitable companions of complex commercial transactions would substantially erode the Commissioner's ability to recover sales tax and would, contrary to the intent of s 67(1) of the No 1 Act as it applies in respect of all four Acts presently in question, open the way to litigating liability to tax outside the objection, review and appeal procedures.Conclusion
By applying the same reasoning process as was applied in Richard Walter I am of the opinion that each of the four assessments presently under consideration was a bona fide exercise of power by the Commissioner and attracts the protection of s 67(1).
The mischief of which the applicant complains is that it has been rendered liable to sales tax in an amount equivalent to four times the amount the Commissioner considers is the appropriate sum. But there is no substance in that argument. First, the respondent expressly does not seek payment of more than the amount assessed in each assessment and second, the safeguards to which Brennan J referred in Richard Walter which ensure that there can be no double recovery of tax by reason of concurrent assessments in respect of the same income are equally available to prevent the double (or in this case, quadruple) taxation of the applicant in respect of the sale of the same goods.
Since preparing these reasons I have had the opportunity to read the reasons for judgment of Davies J in
Stokes v FC of T 96 ATC 4393. In that case the Court had occasion to decide whether three different notices of assessment made on the same day in respect of the same year of income were valid. After reviewing substantially the same authorities as have been relied upon by counsel in the present case his Honour concluded that the assessments were void. At p 4401 his Honour said:
``In the present case, however, there has not been produced to the Court one notice of assessment under the hand of the Deputy Commissioner but three, all dated the same and all specifying different amounts of taxable income and tax payable. In my opinion, the matter falls within the Hickman principle for, on their face, the notices were not a bona fide attempt to exercise the power of assessment and were not reasonably capable of reference to the power of assessment given to the Commissioner and the Deputy Commissioners. In Richard Walter, all judges accepted that a notice of assessment must crystallize the taxpayer's liability under the Act and make the tax assessed due and payable. See Mason CJ at ATC 4072; CLR 182, Brennan J at ATC 4078; CLR 192, Deane and Gaudron JJ at ATC 4088; CLR 211, Dawson J at ATC 4090; CLR 216, Toohey J at ATC 4098; CLR 229 and McHugh J at ATC 4103; CLR 237.''
The facts in Stokes are obviously distinguishable from those in the present case. The decision is entirely consistent with the established principles.
In my opinion the separate questions should each be answered in the affirmative. The applicant should pay the respondent's costs of the separate questions including any reserved costs. As this judgment is to be delivered in Melbourne in the absence of the parties, I will reserve liberty to apply in case any other order is necessary.
THE COURT:
1. answers each of the separate questions referred to in the order of Justice Hill made on 21 April 1995 in the affirmative.
2. orders that the applicant pay the respondent's costs of the trial of the separate questions including any reserved costs.
3. directs that there be general liberty to apply.
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