Deputy Federal Commissioner of Taxation v. The Hell's Angels Ltd. (No. 1).

Judges:
Beach J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 6 April 1984.

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Beach J.

This is the return of a summons for final judgment issued on behalf of the Deputy Commissioner of Taxation seeking judgment in the sum of $155,252.82 against the defendant, The Hell's Angels Ltd. The matter has been referred into Court by the Master pursuant to the provisions of O. 54 r. 17A.

The amount claimed represents tax assessed in respect of the financial years ending 30 June 1980, 1981, 1982 respectively and additional tax for late payment.

Mr. Beaumont, who appears for the defendant, has applied to have the summons adjourned for one month. To appreciate the basis upon which he makes his application it is necessary to say something of the history of the matter.

The defendant did not lodge income tax returns in respect of the three years in question. In due course the Deputy Commissioner made assessments for each year and on 1 March 1983 issued notices of assessment to the defendant.

It is to be noted that pursuant to the provisions of sec. 177(1) of the Income Tax Assessment Act 1936 that:

``The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy 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.''

On 29 April 1983 the defendant lodged a notice of objection against the assessment. By letter of 19 August 1983 the Deputy Commissioner disallowed the objections. By notice dated 25 August 1983 the defendant requested the Deputy Commissioner to refer the objections to a Board of Review. On 24 February 1984 the Deputy Commissioner issued a writ against the defendant seeking to recover the tax due. On 15 March last, the summons for final judgment was issued.

At no time prior to the issue of the notices of assessment did the Deputy Commissioner request the defendant to lodge returns of income in respect of the three years in question. At no time prior to the issue of the writ did the Deputy Commissioner give details to the defendant of the way the taxable income was made up or calculated, the reasons why sec. 166 or 167 of the Income Tax Assessment Act applied to the

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company or the basis or the reason for imposing additional tax under sec. 226(1) of the Act.

Mr. Beaumont now seeks an adjournment of the summons for one month to allow his client an opportunity to review the decision of the Deputy Commissioner not to give the defendant details as to the basis upon which he arrived at the three assessments and the decision of the Deputy Commissioner to institute proceedings to recover the amount alleged to be outstanding.

Insofar as the first decision sought to be reviewed is concerned, it is said that unless the defendant knows the basis upon which the Deputy Commissioner arrived at the three assessments, it will be unable to advance any material to the Court on the hearing of the summons for final judgment justifying the granting of a stay of execution if final judgment is entered against it or indeed justifying a stay of the summons for final judgment itself. That argument is based on the proposition that in determining whether it is appropriate to grant a stay of execution or a stay of the proceedings themselves, the Court will have regard to whether or not the defendant has an arguable case in support of its objection.

Section 5 of the Administrative Decisions (Judicial Review) Act 1977 provides (inter alia) that a person who is aggrieved by a decision to which the Act applies may apply to the Federal Court of Australia for an order of review in respect of the decision on any one or more of a number of grounds set out in the section itself.

The words ``decision to which this Act applies'' are defined in sec. 3 of the Act as meaning a decision of an administrative character made, proposed to be made or required to be made, as the case may be (whether in the exercise of a discretion or not) under an enactment, other than a decision by the Governor-General or a decision included in any of the classes of decisions set out in Sch. 1.

Paragraph (e) of Sch. 1 to the Act provides (inter alia) that the following classes of decisions are not decisions to which the Act applies, and I quote:

``Decisions making or forming part of the process of making or leading up to the making of assessments or calculations of tax or duty or decisions disallowing objections to assessments or calculations of tax or duty or decisions amending or refusing to amend, assessments or calculations of tax or duty under any of the following Acts...''

and the Income Tax Assessment Act 1936 is included amongst the Acts there referred to.

In my opinion the decisions the Deputy Commissioner made based upon the material then before him concerning the financial affairs of the defendant and which led to the making of the assessments in question were decisions forming part of the process of making assessments under the Act. In those circumstances they are not reviewable pursuant to the provisions of the Administrative Decisions Act.

At this stage of the proceedings it is unnecessary therefore to determine whether a Court will in fact have regard to the defendant's prospects of success upon the hearing of his application against an assessment when considering whether or not to grant a stay of execution in respect of any judgment entered against him or indeed a stay of the proceedings brought against him as such.

In my view the only basis upon which the Deputy Commissioner's decision to institute legal proceedings to recover the outstanding tax and penalties could be challenged is that either a breach of the rules of natural justice occurred in connection with the making of the decision (see sec. 5(1)(a) of the Act) or that the making of the decision was an improper exercise of the power conferred by the Income Tax Assessment Act (see sec. 5(1)(e) of the Act).

In my opinion such arguments are untenable.

Section 201 of the Income Tax Assessment Act provides that:

``The fact that an appeal or reference is pending shall not in the meantime interfere with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference were pending.''

That provision can only be consistent with an intention by the legislature that the Deputy Commissioner take all appropriate steps to recover tax due (including the institution of legal proceedings) despite the fact that an appeal is pending. It can hardly be said therefore that the making of the decision to do so was an improper exercise of the power conferred by the Act or that there has been a breach by the Deputy Commissioner of the rules of natural justice in relation to the matter.

The application for the adjournment therefore is refused.