F.J. Bloemen Pty. Limited v. Federal Commissioner of Taxation.

Judges:
Rath J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 14 December 1978.

Rath J.: There are two summonses before the court raising identical issues. The first is a summons for directions in an appeal to the Supreme Court pursuant to sec. 187(b) of the Income Tax Assessment Act 1936 (as amended) and the second is a summons originating proceedings in the court. This second summons (which I shall call the originating summons) was filed during the hearing of the first summons (which I shall call the summons for directions) and the two summonses were thereafter by consent heard together.

The relief claimed in the summonses is as follows: -

At the request of the parties the court heard argument on the preliminary question of jurisdiction to grant all or any of the relief sought in the summonses. The argument was in substance limited to the jurisdiction of the court to make the declaration sought in paragraph 1.

It is necessary to consider the facts of the case only for the purpose of understanding the way in which the issues in the summonses have arisen. In the appellant's income tax return for the year ending 30th June, 1968 it showed a net loss of $484,354. The return disclosed that an amount of $478,478 had been received from Gold Coast City Council under an arbitration award, and in an adjustment sheet the respondent Commissioner added the net amount under the award ($439,922), thus reducing the loss for the year to $44,432. Another item in the loss claimed by the appellant was $137,500 for hire of a dredge. In an adjustment sheet accompanying the assessment issued on 28th May, 1971 this claim was disallowed. After allowing accumulated losses to 30th June, 1967, the result was a taxable income of $70,345. In an adjustment sheet accompanying the amended assessment issued on 4th September, 1974 another item of $26,355 was disallowed, and two items from the 1967 return were also disallowed. The result was a taxable income of $282,700. The appellant objected to both the assessment and the amended assessment, and these objections were disallowed. The appellant, being dissatisfied with the decisions on its objections, caused the decision in relation to the assessment to be referred to a Board of Review, and the objection in relation to the amended assessment to be treated as an appeal and to be forwarded to this court. That is the appeal in respect of which the summons for directions has been issued.

Sections 166 and 167 of the Income Tax Assessment Act 1936 (as amended) (``the Act'') are as follows: -

``166. From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon.

167. If -

  • (a) any person makes default in furnishing a return; or
  • (b) the Commissioner is not satisfied with the return furnished by any person; or
  • (c) the Commissioner has reason to believe that any person who has not furnished a return has derived taxable income,

the Commissioner may make an assessment of the amount upon which in his judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of the last preceding section.''

Section 170 makes provision for the amendment of an assessment, and in particular subsection (2) empowers the Commissioner to amend an assessment where the taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax. The absence of full and true disclosure, and the avoidance of tax, are conditions precedent to the exercise of the powers in this subsection, but the taxpayer has the onus of showing that the conditions do not exist (
McAndrew v. F.C. of T. (1956) 98 C.L.R. 263). Except as otherwise provided every amended assessment shall be an assessment for all the purposes of the Act (sec. 173). As soon as conveniently may be after any assessment is made, the Commissioner shall serve notice thereof in writing by post or otherwise upon the person liable to pay the tax (sec. 174). The validity of any assessment shall not be affected by reason that any of the provisions of the Act have not been complied with (sec. 175). Section 177(1) reads as follows: -

``177. (1) The production of a notice of assessment, or of a document under the hand of the Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and (except in proceedings on appeal against the assessment) that the amount and all the particulars of the assessment are correct.''

By sec. 6, unless the contrary intention appears, ``assessment'' means the

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ascertainment of the amount of taxable income and of the tax payable thereon. By sec. 204, subject to the provisions of Part VI, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable. Income tax when it becomes due and payable shall be a debt due to the Queen on behalf of the Commonwealth (sec. 208), and any tax unpaid may be sued for and recovered in any court of competent jurisdiction (sec. 209). If any tax remains unpaid after the time when it becomes due and payable, additional tax shall be due and payable at the rate of ten per centum per annum on the amount unpaid (sec. 207).

By sec. 185 a taxpayer dissatisfied with any assessment under the Act may, within 60 days after service of the notice of assessment, post to or lodge with the Commissioner an objection in writing against the assessment stating fully and in detail the grounds on which he relies. The Commissioner shall consider the objection, and may either disallow it, or allow it either wholly or in part (sec. 186). A taxpayer dissatisfied with the decision may, within 60 days after service of written notice of the decision, in writing request the Commissioner either to refer the decision to a Board of Review for review, or to treat his objection as an appeal and to forward it to the Supreme Court of a specified State (sec. 187). If the request is accompanied by the prescribed fee, the Commissioner shall refer the decision or forward the objection to the Court in accordance with the request (sec. 188). Upon every such reference or appeal the taxpayer shall be limited to the grounds stated in his objection and the burden of proving that the assessment is excessive shall lie upon the taxpayer (sec. 190). By sec. 193(1), for the purpose of reviewing such decisions, the Board shall, subject to the section, have all the powers and functions of the Commissioner in making assessments, determinations and decisions under the Act.

By sec. 218 the Commissioner may by notice in writing require (inter alia) any person by whom any money is due to the taxpayer to pay to the Commissioner so much of the money as is sufficient to pay the amount due by the taxpayer in respect of any tax. The matter proceeded before me on the assumption that the Commissioner had given notices under this section in respect of tax payable by the appellant under the assessment and the amended assessment.

For the appellant it was submitted that, notwithstanding the finality in the form of the notices of assessment and amended assessment, the court had jurisdiction to receive evidence as to whether the assessments were only tentative or provisional, and to hold that they were void if it found that they were tentative or provisional. Evidence would be called, it was said, to show that the Commissioner had not made his assessments from the return, or from any other information in his possession in accordance with sec. 166, and that his real purpose was not to make an assessment of the amount of taxable income, and of tax payable thereon, but to cause a debt for tax to come into existence so that he could exercise his powers under sec. 218. Thus, it was said, the Commissioner, on the evidence that would be tendered, in making the assessments, was not exercising or intending to exercise his statutory function, but only issuing colourable assessments for a collateral purpose. His purpose according to the submission was not to protect the revenue of the Crown, but to harass the taxpayer upon a mere suspicion of avoidance of tax. The Commissioner through his counsel accepted the challenge, and entered the lists with the submission that even if the assessment was made for purposes foreign to sec. 166 it was none the less a valid assessment under the Act. The starkness of this conflict is self evident, and the implications of its resolution one way or the other for the revenue and taxpayer hard to discern. The issue thus deliberately raised is unique, and I was referred to no decided case providing clear guidance. I have found the matter one of great difficulty, and my thinking has fluctuated from one answer to another. I still have considerable doubt whether the opinion I have formed is the correct one.

As I understand the submission for the appellant, the Commissioner is alleged not to have addressed his mind to the task of assessment under sec. 166. The return did not provide a basis for the assessments, and it is said that the evidence will show that the Commissioner had no other information

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upon which an assessment could be made. If this is correct, then it was submitted that the assessment was made for the purpose of securing a source of payment (by the notices under sec. 218) to provide for the possibility of information coming to hand which would form the basis of an assessment. As I understand his counsel, the Commissioner is prepared, for the purpose of a decision upon his powers, that requisite assumptions of fact be made. It is the contention of the Commissioner that there are no circumstances in which a notice of assessment, final in form, can be held to be invalid or void. Whatever the circumstances giving rise to the notices of assessment, that notice precludes any inquiry into those circumstances, and is conclusive evidence that the taxpayer is liable for the tax stated in it, with the exception that, upon an appeal under the Act, the taxpayer may show that the amount is excessive.

Counsel for the appellant relied upon
F.C. of T. v. S. Hoffnung & Company Limited (1928) 42 C.L.R. 39. This was a case under the War-Time Profits Tax Assessment Act 1917-1918, but there would appear to be no material difference in the Acts for present purposes. The statute provided that in the computation of war-time profits a deduction should be allowed for any sum paid in respect of the profits on account of any war-time profits tax or similar tax imposed in any country outside the Commonwealth. A notice of assessment was given on 26th April, 1919, and the assessment was thereafter altered from time to time. The assessment originally and as altered up to 13th January, 1922 did not include any such deduction, but the Commissioner intimated when making the assessment that this matter remained to be adjusted and that pending such adjustment payment of tax was to remain in abeyance. Later a deduction was allowed, and still later the amount of this deduction was decreased. The taxpayer then for the first time objected. It was contended for the Commissioner that the taxpayer was precluded from objecting on any ground other than the increase in liability arising from the last alteration. It was held that there was no assessment until the final adjustment, and that the objection could not be so limited. The statute provided a limit of 30 days for an objection. The original notice of assessment was accompanied by a paper headed ``Tentative - War-time Profits Tax - Assessment''. Isaacs J. said (pp. 53-56): -

``Now, the Commissioner relies on secs. 18, 23 and 28 of the Act for the position that there is but one assessment contemplated by the Act for each financial year, that there is a limit of a period of 30 days after service of notice of the assessment, not susceptible of enlargement by the Commissioner, for objections by the taxpayer, that, in respect of alterations or additions to the assessment, only such as have the effect of `imposing any fresh liability, or increasing any existing liability', are `subject to objection'. Given, in the first place, an assessment as contemplated by secs. 18 and 23 and a notice of assessment as contemplated by secs. 25, 28 and 33, I should agree with the contention. In that event sec. 25 would make the production of the assessment conclusive evidence of the due making of the assessment, and the legal consequences stated would follow. The cases of
The King v. D.F.C. of T. (S.A.); Ex parte Hooper (1926) 37 C.L.R. 368 and
Williams, Kent & Co. v. F.C. of T. (1926) 38 C.L.R. 256 are decisive. The two Acts are for present purposes identical, and were so treated in the latter case, with which I entirely agree... But all this depends on whether the assessment of 26th April 1919 was an `assessment' contemplated by the Act and whether the notice of that date was a notice intended by the Act. In the first place, the notice itself does not on its face bear out those requirements. It describes the matter as `tentative'. The `assessment' and the notice of assessment required by the Act to fix the taxpayer with liability for a Crown debt carrying interest and penalties must be definite and certain, or, as it has been described throughout the argument, `definitive', as opposed to `provisional'. There is no evidence, or at all events no satisfactory evidence, to displace the self-description in the notice. The facts as admitted and the correspondence taken as a whole confirm the apparently provisional character of the assessment and notice. Since the apparent, that is, the `tentative', character of the departmental operation

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emanates from the Tax Office, the burden rests on the Commissioner to displace it

...

If an assessment definitive in character is made, it assumes that, so far as there can be seen, a fixed and certain sum is definitely due, neither more nor less. In short, it ascertains a precise indebtedness of the taxpayer to the Crown. But if an assessment is made which recognizes that one matter is unsettled and remains for settlement, and until it is settled - and probably to the advantage of the taxpayer - then, if that is the basis of the assessment, it is not the assessment contemplated by the Act. Every assessment, of course, contemplates that it may appear thereafter that an alteration or addition is necessary. But that is a different thing - there is then no existing matter known to be a presently necessary factor and put aside for future adjustment. Reading the combined evidence as reasonably susceptible of two interpretations, and therefore as raising a fair matter of contest, I adopt the one which seems to me to operate in fact more justly. So reading it, the revenue loses nothing it ought strictly to get, and the taxpayer gets no right to which he is not entitled, and loses nothing which in ordinary circumstances he justly should have.''

Higgins J. said (at pp. 58-59): -

``In my opinion, the Commissioner in his so-called assessment as well as in his so-called alterations or amended assessments has adopted a course which is not that permitted by the Act. The Act contemplates an assessment which is definitive, so as to bind the taxpayer subject to the power of the Commissioner to make all such alterations in or additions to any assessment as he thinks necessary (sec. 23). Here, the notice of the original assessment itself (exhibit E), is accompanied by a paper giving details, but headed thus: - `Tentative - War-Time Profits Tax - Assessment.' If the notice is `tentative' merely, how can the taxpayer be expected to lodge an objection within 30 days, or be forever silent (see sec. 28)? The course which the Commissioner has adopted, that of a `tentative' or experimental assessment or alteration of assessment may be convenient in certain circumstances; but it does not put the taxpayer under an obligation to pay within 30 days after notice of the assessment (secs. 32 and 34), or within 30 days after notice of the amended assessment.''

The remaining member of the court, Starke J., said (at p. 65): -

``But the Commissioner fails, in my opinion, because the facts establish that he never made a complete and final assessment - or perhaps I should say any assessment - under the Act, until the so-called amendment of July 1925. Everything else was `tentative' or subject `to further revision' or `remained to be finalized at an early date'. Only in July 1925 was a final, or what was called during argument a `definitive', assessment made according to the true meaning and intent of the taxing Acts, of the war-time profits in respect of which the taxpayer was liable to tax. The objection to this assessment was lodged in due time, and opens generally to the taxpayer the question what deduction for excess profits duty should be allowed on it.''

Sections 21 and 22 of the War-time Profits Tax Assessment Act 1917-18 were in substance the same as subsec. 166 and 167 of the Act. Section 23 provided that the Commissioner might at any time make all such alterations in or additions to any assessment as he thought necessary in order to insure its completeness and accuracy, provided that every alteration or addition which had the effect of imposing fresh liability, or increasing any existing liability, should be subject to objection (unless made with the consent of the taxpayer). Section 24 was identical with sec. 175 of the Act. Section 25(1) was as follows: -

``25. - (1) The production of any notice of assessment or of any document under the hand of the Commissioner, Assistant Commissioner or a Deputy Commissioner purporting to be a copy of a notice of assessment shall -

  • (a) be conclusive evidence that the amount and all the particulars of the

    ATC 4704

    assessment are correct; except in proceedings on appeal against the assessment, when it shall be prima facie evidence only.''

It is arguable that the principle of the Hoffnung case (above) is limited to assessments which are on their face provisional, and that it has no application in the present case, because the assessment and amended assessment are each final in form. However, Isaacs J. refers to ``the combined evidence''. The reference in the judgment of Starke J. to ``finalise at an early date'' relates to some communication by the Commissioner to the taxpayer in June 1925, prior to his last amendment (pp. 64, 65). Though the self-description of the notice of assessment as ``tentative'' was obviously regarded as forceful evidence, it was not the only evidence considered by the court on the question of the provisional character of the assessment. The case is I think authority for the propositions that a so-called assessment is not an assessment within the meaning of the War-time Profits Assessment Act 1917-18 if it is provisional and that the provisional character of the assessment may be shown by evidence extraneous to the notice of assessment. An assessment is provisional in the relevant sense if there is then an ``existing matter known to be a presently necessary factor and put aside for future adjustment'' (Isaacs J. at p. 56). The ``matter'' in that case was a deduction for excess profits duty paid in the United Kingdom. The assessment levied tax without allowing the deduction, but there was an intimation at the time of assessment that the matter remained to be adjusted (p. 41, No. 7 of the admitted facts). I do not think it was essential to the decision that the intimation was made at the time of making the assessment. What I think was essential was that the Commissioner had not completed the process of assessment under sec. 21 (cp.
Batagol v. F.C. of T. (1963) 109 C.L.R. 243 esp. at pp. 251-2, 255;
Bailey v. F.C. of T. 77 ATC 4096 at pp. 4097, 4098). There is sufficient similarity between the War-time Profits Tax Assessment Act 1917-18 and the Act to warrant treating the Hoffnung case as authority for similar propositions applicable to the Act, unless authorities expressly upon the Act prevent such application. If the Hoffnung case does apply, then the appellant (in appropriate proceedings) would be entitled to tender evidence for the purpose of establishing that the Commissioner at the time of the assessment and amended assessment had not completed the process which ``by force of the Act is definitive of the amount of the taxpayer's liability'' (Batagol's case, above, per Kitto J. at p. 252). In putting the matter this way I am not intending to express any view as to burden of proof.

The respondent Commissioner relied primarily on two authorities,
George v. F.C. of T. (1952) 86 C.L.R. 183 and McAndrew v. F.C. of T. (1956) 98 C.L.R. 263. In George's case the taxpayer was notified that the Commissioner considered his return unsatisfactory, and that his assessment had been raised in terms of sec. 167 of the Act ``upon the amount upon which in the opinion of the Commissioner of Taxation, tax should be levied''. In an appeal the taxpayer sought particulars of the allegations to be made by the Commissioner in relation to the increased amount. It was argued on his behalf that the dissatisfaction and exercise of judgment required under sec. 167 were not mere formalities but rather conditions precedent to the power. The Court held that sec. 167 is not an independent power, but epexegetical to sec. 166. ``Clearly enough under sec. 166'', it was said, ``the commissioner can make an assessment which does not adhere to the income returned and yet to do so must involve some want of satisfaction with the return'' (p. 203-4). At p. 204 the court said: -

``The fact is that unless the taxpayer discharges the burden laid upon him by sec. 190(b) of proving that this ascertainment or judgment is excessive, he cannot succeed and it can be no part of the duty of the commissioner to establish affirmatively what judgment be formed, much less the grounds of it, and even less still the truth of the facts affording the grounds. Yet that is what is involved when the demand for particulars of the sources alleged of the appellant's income is justified by reference to sec. 167. It is an error to treat the formation by the commissioner of a judgment as to the amount of the taxable income as if it were not the ascertainment of the taxable income which constitutes assessment or a

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necessary part of that process and as if it were but the fulfilment of a condition precedent to the power or authority to assess. If, however, it were a condition precedent the question would at once arise whether the fulfilment of the condition was not part of `the due making of the assessment' of which sec. 177(1) makes the production of a notice of assessment conclusive evidence. But of this it is unnecessary to speak specifically. It is unnecessary to do so not only because the reasons already given are enough to dispose of the request for particulars of the sources of the appellant's additional taxable income, but also because a similar question must now be dealt with in relation to the additional particulars... that is to say, particulars as to the person or officer who formed or made a judgment under sec. 167.''

In the course of discussion of this ``similar question'' the court said (pp. 206-7): -

``But in any case the question whether the right officer has applied his mind to the question whether the taxpayer's returns are satisfactory within sec. 167(b) is not a question left open by sec. 177. As already has been said, subsec. 166 and 167 are together concerned with the process of ascertaining the taxpayer's taxable income and the consequent tax. The clear policy of sec. 177 is to distinguish between the procedure or mechanism by which the taxable income and tax is ascertained or assessed on the one hand and on the other hand the substantive liability of the taxpayer. The former involves the due making of the assessment. The production of the notice of assessment is conclusive evidence of the due making of the assessment... Obviously the `due making of the assessment' was intended to cover all procedural steps, other than those if any going to substantive liability and so contributing to the excessiveness of the assessment, the thing which is put in contest by an appeal.''

There was no issue in George's case as to whether the process of assessment was complete. It obviously was complete, and particulars were being sought in effect of ``the procedure or mechanism by which the taxable income and tax'' was ascertained. Barwick C.J. has said in relation to George's case that the element of the process of assessment in that case was an exercise of the Commissioner's power to determine the principal fact to which the Act should be applied (Bailey's case, above, p. 4098). That is not this case. What is said here is that the notices of assessment and amended assessment have been served prior to the completion of ``the procedure or mechanism by which the taxable income and tax is ascertained or assessed''. On that basis the very existence of an assessment within the meaning of sec. 177 is denied.

McAndrew's case (above) involved the construction of sec. 170(2), which reads: -

``170. (2) Where a taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax, the Commissioner may -

  • (a) where he is of the opinion that the avoidance of tax is due to fraud or evasion - at any time; and
  • (b) in any other case - within six years from the date upon which the tax became due and payable under the assessment,

amend the assessment by making such alterations therein or additions thereto as he thinks necessary to correct an error in calculation or a mistake of fact or to prevent avoidance of tax as the case may be.''

It was held in McAndrew's case that the absence of a full and true disclosure and the fact of avoidance of tax were conditions to the exercise of the power of amendment, that these conditions were not conclusively presumed in the Commissioner's favour under sec. 177(1), but that the onus of proving non-fulfilment of the condition lay upon the taxpayer. In the judgment of Dixon C.J., McTiernan and Webb JJ., the following appears (at pp. 269-270): -

``In the first place sec. 173 places the notice of an amended assessment, that is to say of an assessment as amended, in the same position for the purpose of sec. 177 as notice of an original assessment. Then in our opinion the meaning and effect of

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sec. 177(1) is to give evidentiary effect to such an assessment over the whole ground which by law it is the function of an assessment to cover. Over part of that ground its evidentiary effect is absolutely conclusive, over the rest of the ground it is conclusive except in proceedings on appeal against the assessment... The ground over which sec. 177(1) gives conclusiveness to the assessment is described as the due-making of the assessment and the correctness of the amount and all the particulars of the assessment. But that appears to us to comprise the whole ground. It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose.''

It is this statement of ``the manifest policy'' which tends strongly to support the respondent Commissioner's submission in the present proceedings. Dixon C.J., McTiernan and Webb JJ. considered that the question whether the conditions laid down by sec. 170(2) are fulfilled is clearly within the policy (p. 270), and they said that it would not be difficult to regard the existence of the conditions as part of the due making of the assessment (p. 271); but they added that the consequence of that would be to deprive the taxpayer of any remedy to enforce the protection which sec. 170(2) seems designed to give him. They concluded that fulfilment of the conditions is part of the matter governed by the words of exception in sec. 177(1). The ``manifest policy'' could certainly be taken as requiring that a notice of assessment, definitive in form of liability, is conclusive evidence of the existence of an assessment. In one sense a taxpayer would not be prejudiced by a construction of sec. 177(1) to this effect, because his substantive liability would still be a matter for determination by a board of review or the court. But sec. 177(1) does not in terms say that a notice of assessment is conclusive of the existence of an assessment; and an exercise of the Commissioner's powers under sec. 218 might cause the taxpayer harm for which an ultimate proper determination of liability might not be adequate reparation. For these reasons I do not think that the language used in the construction of sec. 177(1) that appears in the joint judgment should be taken as precluding a taxpayer from going behind a purported notice of assessment, even though final in form, with the object of showing that the process of assessment has not been completed.

The other judgments in McAndrew's case are to the same general effect. Kitto J. said (p. 274-5): - ```Due making' in this context is an expression which covers all procedural steps, other than those (if any) which go to substantive liability and so contribute to the excessiveness of the assessment''. Referring to sec. 170(1) Taylor J. said (p. 280): ``It will be seen that the subsection contains two limbs and that the second limb applies only in proceedings which are not appeals of the character specified. In all other proceedings both limbs apply''. By the expression ``all other proceedings'' I do not think Taylor J. was adverting to proceedings in which the existence of an assessment was in issue.

For these reasons I am satisfied that in appropriate proceedings the appellant may raise the question whether the assessment to which the notices of assessment and of amended assessment refer was provisional, in the sense explained in the Hoffnung case (above). The appeal in my view is not an appropriate proceeding. A properly constituted appeal assumes that there is a valid assessment. The only issue is the excessiveness of the assessment (sec. 190(b)). The issue of the validity of the assessment could be raised in an action by the Commissioner to recover unpaid tax under sec. 209; and I think that such an issue may properly be raised in proceedings for a declaration (cp.
The Commonwealth of Australia v. Sterling Nicholas Duty Free Pty. Ltd. (1971) 126 C.L.R. 297 at p. 305).

With regard to the summons for directions, it will, in accordance with these reasons, be dismissed so far as regards paragraphs 1 and 3. Paragraph 2, with some amendment, might be taken as an application for a separate hearing of the issue

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of the existence of the conditions for the exercise of the Commissioner's powers under sec. 170(2).

With regard to the originating summons there is jurisdiction in the court to make the declarations in paragraphs 1 and 3 in so far as the issue raised is the application of the principle in the Hoffnung case (above), namely whether the process of assessment was complete at the date of issue of the notice of assessment and the notice of amended assessment. If that process was not complete at the date of the notice of assessment but was complete at the date of the notice of amended assessment, a question would arise as to whether an amended assessment may be valid even though there was no assessment to be amended under the powers contained in sec. 170. This matter was not argued, and I express no opinion upon it, but Hoffnung's case is authority for the proposition that a ``tentative'' assessment became an assessment under the War-time Profits Tax Assessment Act 1917-18 when the alterations to it were finalized.

But the appellant is not entitled in my opinion to rely on the grounds of alleged invalidity stated in subparagraphs (b) and (c) of para. 1 of the originating summons. These grounds invoke a principle which I consider to be entirely different from the principle of the Hoffnung case. Though there was no mention of estoppel in the Hoffnung case, the approach made by the court involved similar concepts of fairness and justice (cp.
Brickworks Ltd. v. Warringah Shire Council (1963) 108 C.L.R. 568 at p. 577;
Grundt v. The Great Boulder Proprietary Gold Mines Ltd. (1938) 59 C.L.R. 641 at p. 675). Subparagraphs (b) and (c) call in aid the principle of invalidity based upon collateral or non-statutory purpose (see, for example,
Arthur Yates and Company Proprietary Ltd. v. The Vegetable Seeds Committee (1946) 72 C.L.R. 37;
Marquess of Clanricarde v. Congested Districts Board for Ireland (1914) 79 JP 481). I think that this principle is not available, having regard to sec. 177(1), to invalidate an assessment or notice of assessment. Isaacs J. said this of the Commissioner in
Moreau v. F.C. of T. (1926) 39 C.L.R. 65 at p. 67: ``His function is to administer the Act with solicitude for the Public Treasury and with fairness to the taxpayers. He is necessarily armed with great powers.'' In my view it is conclusively presumed by virtue of sec. 177(1) for all purposes, upon the production of a notice of assessment, that the assessment was made for the purposes of the Act. If the Commissioner's assessment of the tax payable is excessive, then the assessment will be corrected on review or appeal, so as to ensure that the taxpayer is liable only for the tax which by the Act he should pay.

When Isaacs J. in the Hoffnung case (above) referred to putting aside a matter for future adjustment, he was speaking of adjustment by the Commissioner, and in so saying he was I think making explicit what is implicit in the other judgments in the case. Accordingly, evidence, to be relevant, must be directed to showing that the assessment was tentative or provisional in this sense.

So far as paragraph 2 of the originating summons is concerned, there is in my view no jurisdiction in the court to entertain the issue of the existence of conditions for the exercise of the Commissioner's powers under sec. 170(2). The matter of such conditions should be dealt with in appeal proceedings under the Act. To my mind it is clear (as counsel for the Commissioner submitted) that the Act is the law on the topic of valid assessments, and the review and appeal procedure in the Act is the exclusive remedy (cp. Miller v. Miller, High Court of Australia, 15th November, 1978, unreported).

The orders presently to be made shall be: -

 

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