Matthews v. Chicory Marketing Board (Victoria)

60 CLR 263

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(Judgment by: DIXON J)

Between: MATTHEWS
And: CHICORY MARKETING BOARD (VICTORIA)

Court:

Judges: Latham CJ
Rich J
Starke J

Dixon JMcTiernan J

Subject References:
Constitutional Law
Duties of excise
Freedom of inter-State trade
State marketing legislation

Legislative References:
Constitution (Cth) - s 90; s 92
Marketing of Primary Products Act 1935 (Vic) No 4337 - s 4; s 6; s 7; s 16; s 19; s 26; s 32

Hearing date: MELBOURNE 10 May 1938; 11 May 1938
Judgment date: 9 August 1938

SYDNEY

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Judgment by:
DIXON J

The question of liability raised by this appeal is whether a sum of PD11 is recoverable from the appellant, a grower of chicory, by the respondent, a marketing board constituted in respect of chicory under the Marketing of Primary Products Act 1935 of Victoria. The Chicory Marketing Board, acting under s. 32 of that Act, assumed to make a levy upon every producer of chicory in Victoria of PD1 for every half acre of the area planted by the producer with chicory during the year ending 30th June 1937. The matter for decision is whether the attempt to impose such a levy is valid.

I am of opinion that it is invalid upon the ground that it would amount to the imposition of a duty of excise.

The Marketing of Primary Products Act 1935 provides means for establishing a system of collective marketing for any of the products of certain of the primary industries, including agriculture. A poll may be taken of the producers of a commodity, and, if the required number vote and a sufficient majority favour the constituting of a marketing board in respect of the commodity, it may be established by proclamation by the Governor in Council. The commodity may be a primary product or an article of commerce prepared otherwise than by a process of manufacture from the produce of the primary industries concerned. Of the members of a marketing board one is appointed by the Governor in Council and the others are elected by the producers of the commodity. The duties of the marketing board are to acquire the commodity, to sell it and, after making deductions on account of expenses and for other purposes, to distribute among those who supplied the commodity during the period concerned the balance of the proceeds in such a manner as to give each an appropriate proportion (ss. 16, 18, 19 and 23). Subject to the exigencies of inter-State trade, there may be a compulsory acquisition of the commodity by proclamation. In that case, as and when it comes into existence, the commodity becomes the property of the marketing board. Such a proclamation was made in respect of chicory.

Section 32 authorizes the making of levies. It provides that a marketing board with the approval of the Governor in Council may from time to time make a levy on and to be paid by the producers of any commodity in relation to which the board is constituted in such amount or at such rate on and to be paid by such persons and on such basis and for such period or otherwise as the board with the approval of the Governor in Council specifies. Where the board thinks fit the amount of the levy may be retained out of the funds in the board's hands. The purposes to which the moneys raised by a levy may be applied are limited to the payment of administrative expenses, the repayment of advances made to the board, the establishment and maintenance of a fund for insurance against pests, hail, flood or other casualty and the purpose of instruction and experiment for the improvement of the commodity or some other special object considered to be in the common interest of the producers of the commodity.

In exercising the power thus given by s. 32 a board must necessarily make the levy upon producers in that character. It is true that, in specifying the persons upon whom a levy may be made, the language of the section is not free from confusion. It says that a board "may make a levy on and to be paid by the producers" but it goes on, "in such amount or at such rate on and to be paid by such persons ... as the board ... specifies." The explanation of the words "on and to be paid by such persons," which appear incongruous with the words "on and to be paid by the producers," must lie in the consideration that for purposes of collection or retention of the levy it may be necessary to specify persons, as, for instance, crop lienees, who shall actually discharge the amount levied on the producer. But it is plain that the producer is to be the person primarily liable.

Apart from special cases, such as share-farming or partnership, the word "producer" is defined to mean a person by whom or on whose behalf a product is actually grown, produced or prepared (otherwise than by any process of manufacture) for sale. The resolution or determination of the Chicory Marketing Board imposing the levy is expressed as making the levy on and to be paid by producers of chicory. Under the words "in manner following" it then proceeds to prescribe that every producer of chicory shall pay the board a levy at the specified rate for every half acre "of the area planted by such producer with chicory." It thus appears that every person who during the relevant period actually grows or produces chicory is to be liable to pay to the board a sum calculated in respect of the area he has planted. The attempted imposition of the liability is quite independent of the manner in which the grower disposes of his chicory. It does not matter whether it is delivered to the board, or, as in this case, it is sold by the grower in the course of inter-State trade, or it is used by the grower for his own manufacturing or trade purposes. It is thus quite unlike the charge for administration expenses, advances, sinking fund and interest to be provided out of the proceeds of the milk which in Crothers v Sheil ^[F52] we held to involve no excise. Rich J. said:

"The provisions of the Milk Act do not exact any pecuniary payment from the dairy farmer. They do not impose any liability in respect of the ownership, transfer, sale or production of goods. They merely contain a scheme for the compulsory acquisition of milk and the payment of the price or compensation to be borne by the proceeds arising from the resale by the board. The fact that these proceeds are subject to deductions would not convert the scheme into one for taxation". ^[F53]

The Chicory Marketing Board is a public authority constituted under the statute by the Executive Government of the State. It is true that s. 8 (4) provides that a board shall not be deemed to represent the Crown for any purpose whatsoever. But this simply means that it is not a corporate servant or agent of the Crown, so that nothing it does can impose any liability upon the Crown nor, on the other hand, can it claim any of the immunities of the Crown.

The levy is clearly taxation. In Lawson v Interior Tree Fruit and Vegetable Committee of Direction ^[F54] Duff J. dealt with a levy indistinguishable from the present, except possibly in the basis of calculation and in the fact that the body, though directing and controlling marketing, did not itself acquire and resell the commodity, and he held that it was a tax and an indirect tax. He said:

"I think ... that such levies so imposed have a tendency to enter into and to affect the price of the product. I think, moreover, that levies of that character, assuming for the moment that they come under the head of taxation, are of the nature of those taxes on commodities, or trade in commodities, which have always been regarded as indirect taxes. If they are taxes, they cannot be justified as direct taxation within the Province. That they are taxes, I have no doubt."

His decision was mentioned with approval by the Privy Council in Lower Mainland Dairy Products Sales Adjustment Committee v Crystal Dairy Ltd ^[F55] in the course of a judgment delivered by Lord Thankerton deciding that two levies made under a statute of British Columbia relating to the dairy industry amounted to indirect taxes. The statute set up a committee for the purpose of insuring that producers of milk received the same return whether the milk was sold for retailing as a fluid or used for the purpose of manufacturing. A levy was made upon those selling milk for fluid consumption, for which the higher prices were paid, in order to equalize the return to those whose milk was used for manufacturing purposes. A second levy was made upon all producers in order to meet the expenses of administration. As indirect taxes outside the provincial power both taxes were held bad by the courts of British Columbia ^[F56] and by the Privy Council. ^[F57] They were held to be taxes because they were imposed by a statutory body, a public authority, and for a public purpose or purposes, and the levies were enforceable by law. The application of the levies, the one in payment of a bonus to those supplying milk for the manufacture of products, and the other in providing the expenses of a scheme, did not affect their character as taxation. "While not saying that these elements are exhaustive of the elements which might be found in other cases to point to the same conclusion, their Lordships are of opinion that they are sufficient to characterize the adjustment levies in the present case as taxes. ... It seems to follow that the expenses levies in the present case, which are ancillary to the adjustment levies, must also be characterized as taxes". ^[F58] As taxes they were held to be indirect because they were imposed in proportion to milk or milk and manufactured products sold. "In effect, both levies are imposed on the sale of commodities by the persons taxed, and, in their Lordships' opinion, there can be little doubt that such taxes have a tendency to enter into and affect the price which the taxpayer will seek to obtain for his commodities, as is the case with excise and customs". ^[F59]

The reasons given by the Privy Council in the Crystal Dairy Co's Case ^[F60] and by Duff J. in Lawson's Case ^[F61] appear to me to apply to the Victorian levy upon chicory growers and to establish that it constitutes a tax or duty. They do not show that the chicory levy is a duty of excise, nor even that it is necessarily an indirect tax, but they go some way towards doing at least the latter. The only distinctions upon which the character of indirect taxation could be denied to it consist in the adoption of an acreage basis for calculating the amount and possibly in the intention that the marketing board should, except for chicory sold in inter-State trade, acquire and sell all the chicory grown in Victoria. These considerations, together with the purpose to which the levy is applied and the nature and functions of the board making it, form the foundation for the contention that it does not answer the description "duty of excise" within s. 90 of the Commonwealth Constitution.

The expression "duties of excise," as used in the Commonwealth Constitution, has caused some difficulty because of the very wide denotation of which it was capable. The tendency of the decisions of this court has been to restrict the meaning of the word, but I do not think that any connotation has been fixed upon it which the levy in the present case would not satisfy. The expression "duties of excise" occurs in ss. 55, 86, 90 and 93 of the Constitution. In s. 55 laws imposing duties of customs or of excise are excepted from the requirement that laws imposing taxation shall deal with one subject of taxation only, and it is provided that laws imposing duties of customs or of excise may not deal with anything but duties of customs or of excise respectively. Section 86 transferred the collection and control of duties of customs and of excise and the control of bounties to the Executive Government of the Commonwealth. Section 90 provided that on the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise and to grant bounties on the production and export of goods should become exclusive. It also provided that at the same time all laws of the several States imposing duties of customs or of excise or offering bounties on the production or export of goods should cease to have effect. Section 93, by reference to the provisions of s. 89, prescribed how, for the first five years after the imposition of uniform duties of customs, the balance of the revenue collected by the Commonwealth within a State over the expenditure debited to that State was to be computed and paid over to the State. For the purpose of the calculation, the first paragraph of s. 93 directed, among other things, that "the duties of excise paid on goods produced or manufactured in a State and afterwards passing into another State for consumption, shall be taken to have been collected not in the former but in the latter State."

Upon the face of these provisions, it is evident that customs, excise and bounties on production and export are treated as complementary one to another, or, at least, closely associated, and that the payment of excise on the production and manufacture of goods is contemplated. But these considerations scarcely supply a foundation for a logical inference that no duty is an excise unless it is levied immediately on the manufacture or production within Australia of a commodity.

In Peterswald v Bartley ^[F62] the court directed a conviction under s. 75 of the New South Wales Liquor Act 1898 for carrying on the trade or business of a brewer without holding a licence, notwithstanding that under s. 71 of that Act a licence fee of PD30 a year was imposed. The court regarded it as passed for the purpose of regulating or controlling the manufacture of beer. It required the manufacturer to give his name and the place of manufacture as well as to pay the fee and to submit to the entry of inspectors in order to prevent adulteration. The amount of the licence fee did not depend on the quantity of beer manufactured. The Supreme Court had interpreted the expression "duties of excise" as including all kinds of inland revenue imposts and, accordingly, had held that under s. 90 of the Constitution the brewer could no longer be compelled to pay such a licence fee. The decision of this court was summarized in a sentence by Griffith C.J.:

"Rejecting, then, the larger view as to the meaning of the term `duties of excise,' which found favour with the majority of the Supreme Court, and regarding the term as it is used in the Constitution, where it is limited to taxes imposed upon goods in process of manufacture, we find nothing in the State Act to show that this licence fee was other than a direct tax upon the manufacturer". ^[F63]

But in an earlier part of the judgment ^[F64] Griffith C.J. had formulated a definition of the expression as "a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax." This definition, particularly the words "in relation to quantity or value when produced or manufactured" may well be found to be too narrow.

Unfortunately the word "excise" has never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application. The word came into English apparently as a description of a tax, strange to England, but in operation in the Low Countries and elsewhere upon the Continent, a tax upon articles of consumption. Even its derivation was misunderstood, and the misunderstanding seems to have coloured its meaning. For it was supposed that the duties were called "excises" because they meant the excision of a part of the goods taxed (See Skeat's Etymological Dictionary and the Oxford English Dictionary, s.v "Excise," and compare Dowell, History of Taxation, 2nd ed. (1888), vol. II., at pp. 8, 9). When, in Elizabeth's reign, a proposal was mooted of appointing a surveyor of brewers in London, the Queen was advised against it because, among other reasons, "it was certain that, should she grant never so small a fee, the people would say their drink was `excised' as it was in Flanders, and would repine at it" (Dowell, op. cit., ibid.). Under James I. an attempt to introduce duties on commodities was relinquished in face of a fear that the "impositions might be extended to commodities which growing in the kingdom, are not transported, but uttered (that is, put out, retailed) to the subjects of the same" (Dowell, op. cit., vol. I., p. 188). But in the Long Parliament in 1643 a resolution was passed and an ordinance made imposing an excise and new impost on a list of articles of consumption. During the period of the Commonwealth this form of taxation was much relied upon, and, in 1656, by an ordinance a long list of commodities was made subject to duty. It is worth notice that the list was divided into two parts, one relating to foreign and imported goods, and the other to native or inland goods (Dowell, op. cit., vol. II., p. 12). The expression "excise" was thus used to cover inland taxes on commodities, whether imported or produced or manufactured in England. This was so, too, when the Restoration Parliament granted the "hereditary excise" and the "temporary excise" (12 Car. II. c. 23 and c. 24) (ibid., p. 25).

Perhaps the occasion when the use of the word "excise" proved of the greatest consequence was in Walpole's plan for avoiding all the evils of smuggling arising out of customs duties by taxing commodities, not at the ports, but as they went from a merchant's warehouse into consumption. His "Excise Bill," introduced in 1733 as the first step in the plan, related to tobacco and in its second part was to have included wine. "Walpole proposed in his Bill to do away" with "the customs duty on tobacco and to substitute for it an excise duty at a slightly lower rate. When tobacco was imported it would be stored in bonded warehouses, and no duty would be demanded until the owner wished to remove it for purposes of sale within the United Kingdom. It would then be weighed on government scales and the duty would be assessed and exacted before its removal. Or if, on the other hand, the owner wished to re-export it, he would be allowed to do so without hindrance. In this case there would be no need to weigh the bales at all, because, as no duty had been paid, no drawback could be claimed. By this means fraudulent practices of nearly every kind would be dried up at their sources" (F. S. Oliver, The Endless Adventure (1931), vol. II., p. 241). The associations of the word "excise" formed a very powerful element in arousing against the proposal one of "the strange and feverish agitations which sometimes suddenly gripped the English people during this century," before which Walpole abandoned the plan (Cambridge Modern History (1909), vol. VI., c. II., p. 47). "The mass of the people did not object to the principle of excise, for they did not understand what the principle was. ... They merely hated a word, as people so often do" (F. S. Oliver, op. cit., p. 251). Where so much depended on the use of an unpopular term, it is not easy to suppose that Walpole gratuitously wrested the word "excise" from what he understood to be its true meaning and applied it to a tax which ought not to have been so called. Yet the "Excise Bill" dealt with imported commodities. Thirty-four years later, when there was again talk of such a tax, Lord Chesterfield wrote:

"As for a general excise, it must change its name by Act of parliament before it will go down with the people who know names better than things" (Miscellaneous Works, vol. IV., p. 214, quoted by Dowell, op. cit., vol. II., p. 105).

Blackstone's account of the excise, which was published about that time and is the source of many dictionary definitions, begins by drawing a contrast with customs duty:

"Directly opposite in its nature to this is the excise duty; which is an inland imposition, paid sometimes upon the consumption of the commodity, or frequently upon the retail sale, which is the last stage before the consumption. This is doubtless, impartially speaking, the most economical way of taxing the subject: the charges of levying, collecting and managing the excise duties being considerably less in proportion, than in other branches of the revenue. It also renders the commodity cheaper to the consumer, than charging it with customs to the same amount would do; for the reason just now given, because generally paid in a much later stage of it."

After tracing the history of the tax, he concludes his account with a description of the taxes then in force under the name of excise which shows that already the tendency had set in of bringing under that head inland taxes of another description, namely, licence fees exacted from those using such things as carriages, a tendency which has led to still wider applications of the word "excise." "From its first original to the present time, its very name has been odious to the people of England. It has nevertheless been imposed on abundance of other commodities in the reigns of King William III., and every succeeding prince, to support the enormous expenses occasioned by our wars on the continent. Thus brandies and other spirits are now excised at the distillery; printed silks and linens, at the printer's; starch and hair powder, at the marker's; gold and silver wire, at the wire-drawer's; all plate whatsoever, first in the hands of the vendor, who pays yearly for a licence to sell it, and afterwards in the hands of the occupier, who also pays an annual duty for having it in his custody; and coaches and other wheel carriages, for which the occupier is excised; though not with the same circumstances of arbitrary strictness with regard to plate and coaches, as in the other instances. To these we may add coffee and tea, chocolate and cocoa paste, for which duty is paid by the retailer; all artificial wines, commonly called sweets; paper and pasteboard, first when made, and again if stained or printed; malt as before mentioned; vinegars; and the manufacture of glass; for all which the duty is paid by the manufacturer; hops, for which the person that gathers them is answerable; candles and soap, which are paid for at the maker's; malt liquors brewed for sale, which are excised at the brewery; cyder and perry, at the vendor's; and leather and skins, at the tanner's. A list, which no friend to his country would wish to see farther increased" (Blackstone, Commentaries, vol. I., pp. 318, 320). During the War of Independence the system of taxing by means of licences was extended. There existed already annual taxes on hawkers, hackney-coachmen, publicans and dealers in gold and silver plate which dated from the Marlborough Wars, or shortly after. Toward the end of the War of Independence. Burke was able to say of Lord North's taxation that "the blessed fruits of the noble lord's administration were an additional load of ten new taxes," including impositions in respect of beer, wine, houses, coaches, post-chaises, post-horses and servants. "He did not wonder that the noble lord was at a loss about new taxes. We were already taxed if we rode or if we walked; if we kept at home or went abroad; if we were masters or if we were servants; if we drank wine or if we drank beer; and, in short, we were taxed in every way possible" (Dowell, op. cit., vol. II., pp. 82, 172, 174; cf. vol. III., pp. 223 and following, 240, 243). The extension of the system of taxation by means of licences was an important part of Pitt's budget of 1784, and the extension continued during his administration. It was natural to seek to place the collection of inland taxes under one authority, and this was done, but only by steps. In deciding a case depending on referential provisions in the confused excise laws, Ashhurst J. expressed as early as 1788 the difficulty of distinguishing between the original excises and taxes placed under the authority of the Commissioners of Excise. In R. v Justices of Surrey, ^[F65] at p. 275 he says that he was led "to apply to a person who has long been concerned in the business of the Excise, to know what was the distinction generally understood between excise laws, and inland duties under the management of the Commissioners of the Excise. He said the difference they understood is this, that the law of excise is understood to relate only to liquors; and that inland duties under the management of the Commissioners of Excise are understood to relate to malt, dry goods, and other articles, which have of late been put under their management." The distinction thus taken did not depend upon the true meaning of the word "excise"; it depended on the use of it in the course of legislation. But, in the case of licences to carry on pursuits of business or pleasure, the course of legislation ignored the meaning of the term and so caused its misapplication. In 1824 one set of commissioners was established, but in the subsequent consolidation of the laws relating to the management and regulation of the excise the expression "revenue of excise" could only be defined as "the whole revenue under the collection and management of the Commissioners of Excise" (7 & 8 Geo. IV. c. 53, s. 3).

In the meantime, in writings concerned with economic theory and fiscal principles the word "excise" was employed as the natural and convenient name for inland taxes directly levied upon goods, as opposed to customs duties upon imported goods. The distinction of importance for such writers is that between burdens upon domestic production and upon importation, and, accordingly, they used the word "excise" as the name for inland taxes upon home manufactures and products. Mill, in his Political Economy (1848), Book. V., c. IV., s. 1, says:

"Taxes on commodities are either on production within the country, or on importation into it, or on conveyance or sale within it; and are classed respectively as excise, customs, or tolls and transit duties."

Sir Robert Giffen in his article upon Taxation in the Encyclopaedea Britannica, 11th ed. (1911), vol. 26, at p. 460, says:

"Excise duties are charges upon commodities produced at home on their way to the consumer, and customs duties in the United Kingdom are charges upon commodities brought into the country from abroad; and they are of essentially the same nature. Not only so, but excise duties and customs duties are in some cases supplementary to each other, like articles being produced at home and imported from abroad, so that for the sake of the revenue they have both to be taxed alike."

Again, McCulloch's Commercial Dictionary defines excise as "the name given to the duties or taxes laid on certain articles produced and consumed at home," although it proceeds to show how the term was extended to include duties upon certain licences. The Concise Oxford Dictionary adopts this view, its leading definition being:

"Duty charged on home goods during manufacture or before sale to home consumers."

In the note to s. 90 in Quick and Garran's Constitution, which supplied the foundation of the decision in Peterswald v Bartley, ^[F66] the concern of the learned authors appears to be to show that the extension of the application of the word to licences upon the exercise of trades, the ownership or possession of articles of luxury, the employment of servants and the pursuit of game was not within the ambit of the word "excise" in the Commonwealth Constitution. But the note goes further because it limits the word to taxes on articles of home production:

"The fundamental conception of the term is that of a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth. It was never intended to take from the States those miscellaneous sources of revenue, improperly designated as `excise licences' in British legislation. It was considered essential that the two correlative powers over customs and excise, properly so called, should run together and be exclusively vested in the Federal Parliament."

The statement as to the Australian use of the term is founded upon the circumstances that in Australia taxes called excise duties were in fact confined to goods produced in the colony, or at least the subject of some process within the colony. An account is given of the excise duties of the various colonies by Mr. Stephen Mills in his book, Taxation in Australia (1925), pp. 54, 81, 108, 138, 156 and 173). But it appears that in Tasmania the duties imposed in 1829 under the name of "excise" covered spirits distilled in Van Dieman's Land or in New South Wales and imported directly therefrom (op. cit., p. 173).

The history of the word "excise" does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production. The application of the word by economists and others to duties so confined is scarcely logical proof that the word is inapplicable to inland duties levied on commodities independently of the place of manufacture. But, of course, it is a factor to be weighed, and context and other considerations may show that the word is so restricted. Whether the limitation of the word "excise" in the Constitution to duties upon commodities produced or manufactured within Australia is justified is a question which I think should be regarded as open for future decision. In all the cases so far dealt with by the court, except The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia, ^[F67] home production or manufacture alone has been in question. In that case the duty included petrol produced, refined, manufactured or compounded in Australia, and it was considered enough that it fell on goods thus treated at home although the duty did not discriminate between petrol produced, refined or the like before, and petrol so dealt with after, importation. No doubt there are strong dicta in the judgments of Isaacs J. and Higgins J. to the effect that the tax must be connected with production. But I think that it should not be overlooked that so far there is no direct decision inconsistent with the view that a tax on commodities may be an excise although it is levied not upon or in connection with production, manufacture or treatment of goods or the preparation of goods for sale or for consumption, but upon sale, use or consumption and is imposed independently of the place of production (Cf. the judgments of Rich J. in The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia; ^[F68] John Fairfax & Sons Ltd and Smith's Newspapers Ltd v New South Wales ^[F69] ). What is decided is that to be an excise the tax must be imposed in respect of commodities. A tax imposed upon a person filling a particular description or engaged in a given pursuit does not amount to an excise. In this way a distinction arises which resembles that required by s. 92(2) of the British North America Act 1867, which confers upon a provincial legislature exclusive power to make laws in relation to direct taxation within the Province in order to the raising of revenue for provincial purposes. "The principle is that a direct tax is one that is demanded from the very person who it is intended or desired should pay it. An indirect tax is that which is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another. Of such taxes excise and customs are given as examples" (per Lord Haldane, Attorney-General for Manitoba v Attorney-General for Canada, ^[F70] at p. 566). But "it is the nature and general tendency of the tax and not its incidence in particular or special cases which must determine its classification and validity" (per Lord Cave, City of Halifax v Fairbanks' Estate, ^[F71] at p. 126). In that case and in Attorney-General for British Columbia v McDonald Murphy Lumber Co ^[F72] duties of customs and excise are referred to as types of indirect taxes. In Attorney-General for British Columbia v Kingcome Navigation Co, ^[F73] at p. 59 Lord Thankerton, speaking for the Privy Council, says that the customs or excise duties on commodities ordinarily regarded as indirect taxation, referred to in those cases, are duties which are imposed in respect of commercial dealings in commodities. "They do not extend, for instance, to a dog tax, which is clearly direct taxation, though the machinery of the excise law might be applied to its collection, or to a licence duty. ... 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." It is evident that, in the application of this distinction to manufacturing or trading businesses or productive enterprises, it may be difficult to say where a licence fee or duty ceases to be a tax imposed upon the person expected to bear the burden so that it is a direct tax and when it is so closely connected with the manufacture, production, or distribution of commercial goods that it forms an element naturally incorporated in the price of every article and constitutes an indirect tax. In Bank of Toronto v Lambe ^[F74] a Quebec Act to impose certain direct taxes on certain commercial corporations was upheld. It enacted that every bank carrying on the business of banking in that Province, every insurance company accepting risks and transacting insurance business there, every incorporated company carrying on any labour, trade or business in the Province, and some other companies, should pay annual taxes severally imposed upon them. The decision related to the tax upon banking. Lord Hobhouse, for the Privy Council, said:

"It is not a tax on any commodity which the bank deals in and can sell at an enhanced price to its customers. It is not a tax on its profits, nor on its several transactions. It is a direct lump sum, to be assessed by simple reference to its paid-up capital and its places of business. It may possibly happen that in the intricacies of mercantile dealings the bank may find a way to recoup itself out of the pockets of its Quebec customers. But the way must be an obscure and circuitous one, the amount of recoupment cannot bear any direct relation to the amount of tax paid, and if the bank does manage it, the result will not improbably disappoint the intention and desire of the Quebec Government". ^[F75]

In Brewers and Malsters' Association of Ontario v Attorney-General for Ontario ^[F76] the provincial legislation under attack imposed upon brewers an obligation to obtain a licence and pay a small fee without any relation to the quantity of goods sold. It was decided that the fee was demanded from the very person intended to bear the duty. The Privy Council held that it was a direct tax, but Lord Herschell, who delivered the judgment, said:

"It was argued that the provincial legislature might, if the judgment of the court below were upheld, impose a tax of such an amount and so graduated that it must necessarily fall upon the consumer or customer, and that they might thus seek to raise a revenue by indirect taxation in spite of the restriction of their powers to the imposition of direct taxation. Such a case is conceivable. But if the legislature were thus, under the guise of direct taxation, to seek to impose indirect taxation, nothing that their Lordships have decided or said in the present case would fetter any tribunal that might have to deal with such a case if it should ever arise". ^[F77]

In accordance with this view, in R. v Caledonian Collieries Ltd ^[F78] a provincial Mine Owners Tax Act was held invalid as imposing indirect taxation, because, although the tax was on the mine owner, it was calculated on the gross revenue from the mine. "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 the 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" (per Lord Warrington ^[F79] ). In the same way for the purpose of judging whether an imposition is an excise it is necessary to see what is the real nature of the tax.

The chief purpose of the foregoing discussion of the considerations governing the connotation of the word "excise" is to show that, although, as it is used in the Commonwealth Constitution, it describes a tax on or connected with commodities, there is no ground for restricting the application of the word to duties calculated directly on the quantity or value of the goods. A definition which makes quantity and value the only basis of taxation which would satisfy the notion of "excise" has no foundation either in history, economic or fiscal principle, nor in any accepted specialization. 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.

The levy made by the Chicory Marketing Board is not ascertained by direct reference to the quantity or value of the chicory produced. It is imposed upon a producer, and presumably under the definition of that word he must actually obtain some chicory from the crop he has sown before he satisfies that description. But the basis of his assessment is not what he garners but what he plants. By calculating the levy upon the number of half acres which the producer plants with chicory the board makes it at least theoretically possible that owing to a failure of his crop the levy upon him has little or no relation to his actual production of chicory. But the basis adopted for the levy has a natural, although not a necessary, relation to the quantity of the commodity produced. Although many other factors go to the determination of the actual quantity of chicory produced, the area planted is, if not the chief, at all events a controlling element. By adopting area planted as the criterion of the amount of the levy upon each producer the board has taxed the production of the commodity as effectually as if it had selected, for instance, the weight of the chicory gathered in its raw state, the quantity treated or the gross returns. For it has placed upon an essential step in production, namely, planting, an impost computed quantitatively. There is no distinction of substance and scarcely any even of form between levying a tax upon the area planted and levying a tax upon the act of planting the area. The levy is directed to the normal case of a man reaping even as he sows. The fact that the tax would also fall upon a chicory farmer whose expectations are disappointed through some of the mischances of agriculture does not seem to me to make the levy any less a tax upon production. The natural or practical relations between manufacture or production and activities or conditions chosen as the tests or standards of liability to taxation depend, not upon logical definitions, but upon the actual course of industrial organization and technique and of the productive arts.

If the word "excise" received a meaning which confined its application to taxes the relation of which to the commodity concerned was of some narrow and strictly defined nature, as, for instance, by an arithmetical relation to quantity, it would not only miss the principle contained in the use of the word "excise," but it would expose the constitutional provision made by s. 90 to evasion by easy subterfuges and the adoption of unreal distinctions. To be an excise the tax must be levied "upon goods," but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise.

I do not think that the fact that the board does not form part of or represent the central Government of the State, or the fact that the purpose is to defray expenses in connection with the marketing and improvement of a commodity make the levy any less an excise.

In my opinion the appeal should be allowed. The order of the court of petty sessions should be set aside and the complaint dismissed. The appellant succeeds as a result of an amendment, but I think that he should have the costs of the appeal other than the costs thrown away upon the ground first taken.