A J Holdings (NSW) Pty Limited v Chief Commissioner of State Revenue - [2014] NSWCATAP 40 - NSWCATAP 2014 case summary — Zoe

NSWNSWCATAP

A J Holdings (NSW) Pty Limited v Chief Commissioner of State Revenue

[2014] NSWCATAP 40

NCAT Appeal Panel|2014-03-04

View original source

At a glance

Source facts

Court

NCAT Appeal Panel

Decision date

2014-03-04

Source

Original judgment source is linked above.

Judgment (19 paragraphs)

[1]

reasons for decision 1A J Holdings (NSW) Pty Limited and Cumedo Pty Limited (the Appellants) were, by letters dated 4 and 1 May 2012 respectively, notified that they were jointly and severally liable to an amount for unpaid gaming machine tax (the Decisions) for the quarterly instalment period 1 October 2011 to 31 December 2011. The Appellants objected under cover of letter dated 28 June 2012 (the Objection). The Objection was disallowed and notice of the objection decision was given on 3 September 2012 (the Objection Decision). At first instance, the Tribunal upheld the Decisions: A J Holdings (NSW) Pty Limited & Cumedo Pty Limited v Chief Commissioner of State Revenue [2013] NSWADT 156 (the First Instance Decision). The Appellants' appeal was filed on 30 September 2013.

[2]

The Appeal 2In short, liability for the tax is imposed on the person who is the hotelier, or interested in the hotel business, on the day a quarterly instalment is due. The primary question for the Appeal Panel is whether the due date is the last day of the quarter, or the 21st day after the end of the quarter (the 21st day). If the Appellants were the hoteliers at the relevant time, there is a subsidiary issue as to whether they were entitled to apportionment of the tax; and if they were not hoteliers at the relevant time, the subsidiary issue is whether they were nevertheless liable to pay the tax as persons interested in the hotel business, on that date. 3There is also a jurisdictional issue: whether the Decisions are decisions to which the Appellants had objection rights.

[3]

The Legislation 4Sections 6, 7, 8, 9, 10 and 11 of the Gaming Machine Tax Act 2001 (NSW) (the GMT Act) are relevant and provide as follows: Part 2 Gaming machine tax 6 Tax on gaming machines (1) A tax is payable on profits from gaming machines kept in a hotel or on the premises of a registered club. (2) The tax is payable by the hotelier or registered club concerned. (3) In the event of a tax default (within the meaning of the Taxation Administration Act 1996) in respect of an amount of tax for which a hotelier is liable: (a) the hotelier, and (b) any person who, at the time the amount became due, was directly interested in the business, or the profits of the business, carried on under the hotel licence, are jointly and severally liable to pay the amount concerned, and section 45 of that Act applies accordingly. Note. Section 45 of the Taxation Administration Act 1996 provides for recovery of tax where two or more persons are jointly liable to pay it. 7 Payment by instalments (1) For the purposes of this Act: (a) each tax year of a hotelier is divided into 4 periods of 3 months commencing on 1 July, 1 October, 1 January and 1 April, and (b) each tax year of a registered club is divided into 4 periods of 3 months commencing on 1 September, 1 December, 1 March and 1 June. (2) Quarterly instalments of tax are payable by a hotelier or registered club to the Chief Commissioner within 21 days after the end of each instalment period. (3) A hotelier or registered club must: (a) before the end of each such 21-day period, deposit the amount payable in a bank or financial institution, and (b) make such arrangements with the Chief Commissioner as enable the Chief Commissioner to access or appropriate that amount (such as by way of direct debit from the account of the hotelier or registered club concerned). Maximum penalty: 20 penalty units. (4) In the case of hoteliers, the liability to pay such an instalment lies with the hotelier who holds the relevant hotel licence at the time the instalment is due. 8 Returns (1) The Authority may from time to time, by notice published in the Gazette, require: (a) all hoteliers and registered clubs that keep gaming machines, or (b) specified hoteliers or registered clubs that keep gaming machines, or (c) specified classes of hoteliers or registered clubs that keep gaming machines, to lodge with the CMS licensee a return, in a form approved by the Authority, in relation to the performance of those gaming machines and the tax payable under this Act in relation to those gaming machines. (2) A hotelier or registered club must comply with the requirements of such a notice within the time specified by the notice. (3) A hotelier or registered club must not, in purported compliance with this section, lodge with the CMS licensee a return that is false or misleading in a material particular. (4) Proceedings for an offence under subsection (3) may be commenced at any time within the period of 3 years that next succeeds commission of the offence. (5) The hotelier or registered club is to retain a copy of each return lodged under this section for a period of not less than 3 years after the date on which it was lodged. Maximum penalty: 20 penalty units. 9 Calculation and assessment of tax (1) As soon as practicable after receipt of a return from a hotelier or registered club in relation to a quarterly instalment period, a CMS licensee must: (a) calculate the amount of each quarterly instalment of tax payable by the hotelier or club, and (b) advise the Chief Commissioner (and the hotelier or registered club concerned) of the calculated amount. (2) The Authority may from time to time: (a) where it is of the opinion that the information provided in a return might be incorrect, or (b) for such other reason as seems sufficient to the Authority, and after making such inquiries as it thinks fit and taking into account such information as may be available to it, recalculate the amount of any quarterly instalment of tax payable by a hotelier or registered club, and advise the Chief Commissioner accordingly. (2A) The Chief Commissioner must notify the hotelier or registered club concerned of any recalculation advised to the Chief Commissioner under subsection (2). (3) The Chief Commissioner is to assess or reassess, under Part 3 of the Taxation Administration Act 1996, tax liabilities according to calculations, and any recalculations, made under this section and any rebate available under Part 4. 10 Adjustments (1) Following the end of a tax year and after payment by a hotelier or registered club of the instalment payable in respect of the last of the instalment periods for the tax year, the Authority must, on application by the hotelier (or any relevant previous hotelier) or by the club concerned, make a comparison of the tax payable in respect of that tax year and the total of the relevant 4 quarterly instalments made, and advise the Chief Commissioner of the result of that comparison. (2) If the amount of tax assessed to be payable is less than the amount paid by the hotelier or registered club for the tax year concerned, the Chief Commissioner may: (a) hold the difference in credit for the hotelier or club, or (b) refund the difference in accordance with Part 4 of the Taxation Administration Act 1996. Note. Part 4 of the Taxation Administration Act 1996 provides for refunds of tax overpayments. (3) In a case where the tax for the tax year concerned was paid by more than one hotelier, any credit or refund of tax may be apportioned among those hoteliers in such proportions as the Chief Commissioner considers appropriate. 11 Apportionment of liability for tax in certain circumstances (1) The Chief Commissioner may, in such manner as the Chief Commissioner considers appropriate: (a) apportion the liability for tax as between hoteliers: (i) in any case where there has been a change in the ownership of a hotel licence, or (ii) in such other circumstances as the Chief Commissioner considers appropriate, and (b) apportion the liability for tax as between registered clubs: (i) in the event of an amalgamation of a registered club as referred to in the Registered Clubs Act 1976, or (ii) in such other circumstances as the Chief Commissioner considers appropriate. (2) Subsection (1) (a) does not affect the operation of section 7 (4). 5Certain provisions of the Taxation Administration Act 1996 (NSW) (the TAA) are also relevant. 6The expression "tax default" is defined in s 3 of the TAA to be: a failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of tax that the taxpayer is liable to pay. 7The GMT Act is a taxation law (s 4 TAA). 8Whilst the GMT Act is a taxation law, it does not provide the mechanism for making assessments. Assessments are the province of the TAA. The TAA relevantly provides: 7 Purpose of Act and relationship with other taxation laws (1) The purpose of this Act is to make general provision with respect to the administration and enforcement of the other taxation laws. (2) The other taxation laws include provisions with respect to: (a) the imposition of tax and its payment, and (b) exceptions to and exemptions from liability to the tax, and (c) entitlements to refunds. ... 8 General power to make assessment (1) The Chief Commissioner may make an assessment of the tax liability of a taxpayer. (2) An assessment of a tax liability may consist of a determination that there is not a particular tax liability. ... 11 Information on which assessment is made (1) The Chief Commissioner may make an assessment on the information that the Chief Commissioner has from any source at the time the assessment is made. (2) If the Chief Commissioner has insufficient information to make an exact assessment of a tax liability, the Chief Commissioner may make an assessment by way of estimate. ... 14 Notice of assessment, reassessment or withdrawal of assessment (1) The Chief Commissioner may issue a notice of assessment (showing the amount of the assessment). (2) If the Chief Commissioner has not issued a notice of assessment of the tax liability of a taxpayer, the Chief Commissioner must issue the notice if a request to do so is made by the taxpayer within 5 years after the liability arose. ... 9No notice of assessment was issued in this case.

[4]

Summary of legislation 10Putting the foregoing provisions together for the purposes of this appeal, the following emerges (references are to the GMT Act unless otherwise specified). Tax is "payable", by the hotelier, on profits from gaming machines (ss 6(1), (2)) within 21 days after the end of each quarter (s 7(1), (2)). In the case of hoteliers, the person liable for the quarterly tax instalment is the person who is the hotelier at the time the instalment is "due" (s 7(4)). In the event of a tax default, the hotelier and any person directly interested in the hotel business or profits at the time it became due, are jointly and severally liable to pay the amount concerned (s 6(3)). 11Pursuant to s 8, hoteliers are required (if notice is published in the Gazette) to lodge a return with the CMS licensee (CMS means centralised monitoring system and a CMS licence is granted pursuant to the Gaming Machines Act 2001 (NSW) (GM Act) Part 9 (the CMS licensee)). On receipt of the return, the CMS licensee must calculate the amount of each quarterly tax instalment payable and advise the Respondent (s 9(1)) and the hotelier. In certain cases, the CMS licensee may recalculate the amount payable. The Respondent is to assess or reassess according to the calculations made under s 9 (s 9(3)). 12Curiously, there is no requirement for hoteliers to file returns and gaming machines are now required to be connected to the CMS licensee (s 133 of the GM Act). This was the subject of evidence, which we discuss below. Suffice to say that the CMS licensee calculates the amount payable from direct feeds from the machines and notifies the hotelier and the Respondent of the amount payable. The Respondent uses this information and not the returns to assess or reassess. The GMT Act does not require the Respondent to issue a notice of assessment. The TAA does not require the issuing of a notice of assessment, unless this is requested by the taxpayer (s 14 TAA). 13At the end of a tax year adjustments may be necessary to take account of differences in tax liability for the whole tax year as compared to the amounts paid in respect of tax quarters (s 10). Differences may arise as a result of the application of progressive rates in ss 12 and 13. 14Inequities may arise from the fact that liability for the entire quarter rests on the hotelier or person interested in the profits on the due date: for instance the hotelier may change throughout the period. To counter this, s 11 provides that the Respondent may apportion liability as appropriate. However, this is subject to s 7(4) (see s 11(2)). This provision was the subject of scrutiny in Papacostas v Chief Commissioner of State Revenue [2006] NSWADT 57 where it was held at [18] and [25] that the quarterly liability could not be apportioned; only the annual liability was subject to apportionment (we return to this below). 15The provisions focus attention on two important questions: when is the due date and who was the hotelier at that time? The due date is to be gleaned from the provisions of the GMT Act extracted above. Hotelier is defined in the GMT Act (s 3) to have the same meaning as in the Liquor Act 2007 (NSW) (the Liquor Act). The Liquor Act (at s 4) defines hotelier to be the holder of a hotel licence. Licence is defined to mean a licence under the Liquor Act and licensee means the holder of a licence. 16The First Instance Decision was premised on the basis that on the 21st day after the end of the quarter (but not at the end of the quarter) the Appellants were the deemed holders of the hotel licence (at [5] of the First Instance Decision). Notwithstanding that the Objection accepted that the Appellants were the licensees from 2 January to 29 January 2012 ([21] and [23] of the Objection) that proposition was disputed before the Appeal Panel. Accordingly, it is relevant to look further into the Liquor Act. Section 61 of the Liquor Act deems, in certain circumstances, the owner of the licensed premises to be the holder of a hotel licence. 17Section 61 of the Liquor Act relevantly provides as follows: Part 4 Licensing procedures and related matters 61 Application for transfer of licence on dispossession of licensee (1) This section applies in relation to a licence (other than a club licence) if: (a) the licensee is evicted from the licensed premises, or (b) the owner of the licensed premises comes into, or becomes entitled to, possession of the licensed premises to the exclusion of the licensee, or (c) the licensee is no longer employed by the owner of the business carried on under the licence (the business owner) or in attendance at the premises in the capacity as licensee. (2) An application for a transfer of the licence may be made by the owner of the licensed premises or by the business owner. (3) The owner of the licensed premises who comes into, or is entitled to, possession of the premises, or the business owner (as the case requires), is taken to be the licensee of the premises until: (a) the day that is 28 days after this section becomes applicable, or (b) the day on which application is made under subsection (2), whichever first occurs. (4) If an application is made under subsection (2) not later than 28 days after this section becomes applicable, the applicant is, until the application is determined by the Authority, taken to be the licensee under the licence to which the application relates.

[5]

The First Instance Decision 18The facts were summarised by the Tribunal and apprehended to be "not in dispute" at [2] to [6] as follows: 2 The facts are not in dispute. For many years, the applicants have owned a hotel at Lismore called "Tommy's Tavern". In 2007 they leased it to Buckoe Pty Limited, which operated the hotel with its licensee, a Mr Parrott. In November 2011, a dispute arose between landlords and tenant as to the payment of rent. On 30 December 2011 the locks were changed by the landlords, and formal demand was made for arrears in rent. 3 On 4 January 2012, the applicants began to trade from the premises. On 16 January 2012, an invoice for the Quarterly Instalment was issued by the CMS licensee, addressed to Mr Parrott at the hotel. On 18 January 2012, the Chief Commissioner of State Revenue approved payment of the invoice by three monthly instalments in January, February and March 2012. 4 On 23 January 2012, the Chief Commissioner attempted to appropriate the Quarterly Instalment, or so much of it as was then payable in accordance with the instalment arrangement, from a nominated bank account. The attempted appropriation was unsuccessful, presumably because the account was not in funds. 5 On 24 January 2012, the applicants requested the Casino, Liquor and Gaming Control Authority to transfer ownership of the hotel business to A J Holdings Pty Limited, and the licence to its director, Mr Sidgreaves, pursuant to section 61 of the Liquor Act 2007. That application was granted, and the licence transferred, on 30 January 2012. It is common ground that, from 4 January 2012 (or perhaps from 2 January 2012, though nothing turns on the difference) to 29 January 2012, the applicants were deemed to be the licensees of the hotel by operation of section 61(3) of the Liquor Act 2007. 6 On or about 20 January 2012, the Office of State Revenue informed Mr Sidgreaves that he was liable to pay the tax, as he had been the licensee when the tax became payable on 23 January 2012. He objected, and his objection was allowed on 20 April 2012. 19As mentioned, the First Instance Decision was premised on the basis that it was agreed that the Appellants were hoteliers on the 21st day, but not at the end of the quarter. Contrary to what is set out at [3] of the First Instance Decision, the Appellants contend that they did not begin to trade from the premises, at any time. The Appellants own the freehold, but contend that the business operator is AJS Hotel Management Pty Ltd and not, as set out at [5], AJ Holdings Pty Limited. The Respondent contends that this is of no moment; because of the operation of s 61 of the Liquor Act, the Appellants are the deemed licence holders. We will return to this below. 20At first instance, the primary issue was whether the tax liability arose at the end of the quarter or on the 21st day. The Tribunal concluded (at [53]) that the due date for liability was the 21st day; and on the basis that it was thought undisputed that the then Applicants were, on that date, the deemed licensees (at [5]), the Tribunal affirmed their liability to tax at [55]. 21The primary reason for the Tribunal's conclusion was that the expression "due" was a reference to a single date rather than a range of dates or a period (at [44] to [49]). This accorded with the purpose of the section, which was to identify with certainty the person liable to pay the tax. Having determined that the expression "due" related to a single date and not a range, the Tribunal considered it was therefore unlikely that the expression "due" had its ordinary meaning of simply "owing" and must mean "payable" or "due and payable" (at [51]). At [50] the Tribunal acknowledged that Parliament's intention may have been better expressed in s 7(4) by using the word "payable" (rather than "due") but nevertheless determined, having regard to the fact it was a reference to a single date, that "due" in s 7(4) meant "payable". This was held to be consistent with the use of the word "due" in s 6(3) at [51]. As a taxpayer had until the 21st day to make payments the tax could not be due and payable until that day and accordingly, the due date was the 21st day (at [51] and [52]). 22Two subsidiary questions were considered. First, whether the then Applicants were entitled to apportionment of their liability, pursuant to s 11 of the GMT Act; and secondly whether, if they were not primarily liable, whether liability arose because of their interest in the hotel business, under s 6(3)(b) of the GMT Act. 23As to the first subsidiary question, the Tribunal concluded that there was no power to review any decision not to apportion, as it had not been the subject of an objection (at [12]); and recommended the Commissioner consider afresh the apportionment application (at [13]). The second question was not determined because the Tribunal held that the then Applicants were primarily liable as licensees (at [54]) and it was therefore not necessary to consider if they were otherwise interested in the hotel business. 24An anterior question was also touched upon: whether the Decisions fell within the Tribunal's jurisdiction to review. The Tribunal concluded that it was common ground that there was jurisdiction to review the Decisions; and that the parties concurred (at [10]). We return to this, as it became apparent at the hearing of the Appeal, that the Appellants contended that the documents dated 1 and 4 May 2012 were not decisions reviewable in the Tribunal.

[6]

Questions of Law on Appeal 25Pursuant to s 112 of the former Administrative Decisions Tribunal Act 1997 (NSW) (the ADT Act) an appellant may appeal to the Appeal Panel on questions of law. By s 113(2)(b) of the ADT Act the Appeal Panel may grant leave to extend the appeal to the merits. These provisions are still relevant notwithstanding the abolishment of the Administrative Decisions Tribunal (ADT). Schedule 1, clause 7 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) relevantly provides that unheard proceedings from the now abolished ADT are taken to have been duly commenced in the New South Wales Civil and Administrative Tribunal (NCAT). By clause 7(3)(b) of Schedule 1 of the NCAT Act, the provisions of the ADT Act that would have applied in respect of the proceedings had the NCAT Act and relevant amending Acts not been enacted, continue to apply. 26The Notice of Appeal is expressly limited to questions of law. However, it was apparent from the Appellants' submissions at the hearing that the Appellants were also seeking leave to extend the appeal to the merits of the Tribunal's decision. 27Whilst the Notice of Appeal did not specify grounds, the Appellants' Submissions summarised the Appellants' position as follows: 28In conclusion the Appellants' submit that they; 1. Were not the licensee or hotelier when the instalment was due for payment, that being 31 December 2011 not 21 or 23 January 2012. 2. There are no decisions of 1 and 4 May 2012 by the CCSR in respect of this matter. 3. Mr. Parrott was the hotelier when the instalment was due and Judicial Member Blocks definition of the instalment period is eminently sensible and logical and as it predates and precedes Judicial Member Perrignon decision. 4. The Appellants' believe that the Member was required at law to rely and abide by the "authority" established by Judicial Member Blocks' ruling as it reflects the wishes of the Parliament in respect of the intentions of the GMT act and in this case supplies a definition of an "intalment [sic] period" that the GMT act does not. 29The first paragraph of the Appellants' summary can be split into two questions. The first is the substantive question between the parties: whether "the time the instalment is due" within s 7(4) of the GMT Act is the end of the quarter or the 21st day. This raises a statutory construction question. The Respondent accepted that this raised a question of law and we agree: Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42 at [23]. 30A second question within the first paragraph is whether the Appellants were hoteliers as contemplated by s 7 of the GMT Act, at the time the liability for the instalment quarter became due. This may or may not raise a question of law depending upon the basis for the contention. For instance, if the question is whether there was any evidence capable of supporting the proposition, or it relates to the construction of the deeming provision, there will be a question of law. On the other hand, if there is a mere factual dispute, this will not raise a question of law. In any event, if the issue was capable of affecting the outcome, the Appeal Panel would consider granting leave to extend the appeal to the merits: Bilquip Pty Ltd, Illmat Pty Ltd, Holibass Pty Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWADTAP 36 at [39]. 31The question identified in the second paragraph of the Appellants' summary is whether the letters of 1 and 4 May 2012 (the subject of the Objections) were reviewable decisions. This raises a question of law; more particularly it raises a question of jurisdiction. 32The third and fourth paragraphs of the Appellants' summary relate to whether the Tribunal, at first instance, ought to have followed Papacostas. This is tied up with the first question. 33Whilst not set out in the summary, two further questions arose on the appeal. First, whether the Appellant was entitled to the exercise of the Respondent's discretion to apportion the tax. This is a question of construction of s 11(2) of the GMT Act and is a question of law: Lombard Farms at [23]. The Respondent did not suggest that this did not involve a question of law, but submitted that if we found they were so entitled, that it would be appropriate to remit that issue to the Respondent. 34Secondly, the Respondent advanced a contention that in the event we accepted that the liability was due on the 21st day, that the Appellants were nonetheless liable to the tax as interested persons under s 6(3)(b) of the GMT Act. As this was a matter ventilated before the Tribunal at first instance, but not determined at first instance, the Respondent submitted it should be remitted to the Tribunal (as originally or similarly constituted) for determination.

[9]

The Parties' Submissions Regarding Jurisdiction 41Despite the Appellants being the moving parties at first instance, the Appellants contended that the Tribunal had no jurisdiction to review the Decisions. The Respondent, on the other hand, did not so contend and provided submissions in support of the Decisions being reviewable. 42In summary, the Appellants submitted as follows: The question of whether there is a reviewable decision was not ventilated at first instance. The absence of reasons for determination as required by s 93 of the TAA leads to the result that the Decisions are not decisions under the ADT Act. The finding by the Respondent of joint and several liability pursuant to s 6 of the GMT Act cannot be applied absent evidence of a tax default. A tax default cannot exist in the absence of a notice of assessment. There was no notice of assessment. The Decisions contain errors on their face: for instance erroneous references to non-existent sections of the GMT Act. The Appellants were not licensees on the due date (which is the end of the quarter) or at all. In the absence of a notice of assessment there is no reviewable decision and accordingly the Tribunal has no jurisdiction to review the decision. The Tribunal has no jurisdiction to review a criminal breach of s 7 of the GMT Act. 43The Tribunal, at first instance, apprehended the parties to be in agreement that the Decisions were reviewable (at [10] of the First Instance Decision). As the Appellants' first submission demonstrates, this, if it was the case, is no longer the case. In any event, as the parties cannot consent to jurisdiction where none exists, it is necessary for the Appeal Panel to resolve this issue: Commissioner of Taxes v Tangentyere Council Inc (1992) 2 NTLR 76. 44Paragraphs 3, 4, 5 and 8 concern the absence of a notice of assessment. As the legislation extracted above demonstrates, there is no requirement (unless there has been a timely request by a taxpayer) for a notice of assessment to be issued: it is not a precursor to liability. Even if this is incorrect, s 6(2) of the ADT Act would preserve the Tribunal's jurisdiction over a "purported" decision (including one made without power). 45Paragraph 6 concerns errors on the face of the Decisions. If decisions were in fact made, then errors in the notice will not undermine an applicant's right to seek review of the underlying decision in the Tribunal. 46Paragraph 7 concerns an issue that arises on the substantive appeal and is dealt with below in that context. 47Regarding paragraph 9, the Respondent did not and could not contend that these proceedings constituted proceedings for a criminal offence. 48That leaves paragraph 2. Section 93 of the TAA refers to notice being given of reasons for the objection decision. It does not refer to reasons being given for the underlying decision. That is covered by s 58 of the ADT Act. In tax cases, s 58 of the ADT Act is modified by s 96(4) of the TAA which, in turn, refers back to s 93 of the TAA. In this case there was an objection decision. It was dated 3 September 2012 and is found at Tab 35 of the s 58 documents. Accordingly, this submission does not assist the Appellants' contention. 49Nothing raised by the Appellants warrants the conclusion that the Decisions were not decisions (or notice of decisions) reviewable by the Tribunal. 50The Respondent contended, in oral argument, that the Decisions constituted demands or determinations as contemplated by s 6 of the ADT Act. In written submissions, the Respondent focussed upon the Decisions being decisions within ordinary parlance and notices that the Respondent had made determinations, on 19 April 2012, that the Appellants were, at the end of the quarter, owners of the hotel licence for the purposes of the GMT Act and therefore liable to tax. The Respondent highlighted that the definition of "decision" in the ADT Act does not require there to be a decision of an administrative or legal character or carry legal consequences; and in any event, the Decisions carried legal consequences in that if the Appellants did not pay the instalment, action to recover it could be taken. 51The Respondent, in written submissions, clarified his position that the documents dated 4 and 1 May 2012 were not the decisions themselves, but rather notices of the decisions.

[10]

Consideration of the Jurisdictional Issue 52Whether a decision is a "decision" as contemplated by s 6 of the ADT Act must be viewed in context of the enactment(s) under which the decision was purported to have been made. Relevantly, only decisions to which objections can be taken are reviewable by the Tribunal (ss 86, 91 and 96 of the TAA). 53In this case the Appellants purported to object to the Decisions and the Respondent treated the objections as having been duly made and determined them. However, as Tangentyere exemplifies, this does not necessitate the conclusion that the Tribunal has jurisdiction. In that case, the Commissioner had purported to revoke a determination that the taxpayers were a public benevolent institution. The taxpayers purported to object and the Commissioner disallowed the objection. The matter proceeded to be determined by the court at first instance, as if an appeal had been properly instituted. However, the Court of Appeal of the Northern Territory noted that the purported determination to revoke public benevolent status, could not affect pay-roll tax liability. The ability to affect liability was a prerequisite to enlivening objection rights. As there was no right to object, the court had no jurisdiction to determine an appeal from the purported objection determination. Here the prerequisites are different, but the cautionary tale is nonetheless relevant. 54As noted by the Court of Appeal in Chief Commissioner of State Revenue v Print National Pty Ltd (2013) 83 NSWLR 555 at [32] "there are three prerequisites to the entitlement to lodge an objection" (s 86 TAA). These are: a taxpayer; a decision; and dissatisfaction with a decision. 55A "taxpayer" (defined in s 3(1) TAA) includes a person who is liable or may be liable to pay tax. The Appellants are taxpayers. 56The definition of "decision" is broad and was described by the Court of Appeal in Print National (at [36]) as having the intent "that wide-ranging decisions were open to review". The opportunity for review was not limited to decisions of substantive rather than administrative effect (at [38]). In Australian Council of Social Services Inc v Commissioner of Pay-Roll Tax (NSW) 82 ATC 4385 Rath J held that a decision to recover pay-roll tax from the plaintiff was not a reviewable decision, even though there was a decision to recover tax from the plaintiff. The decision was not reviewable for the reason that the Act there in question required there to be a decision which affected pay-roll tax liability. The decision to recover pay-roll tax, whilst being a decision in fact, did not affect liability to tax, as the plaintiff's liability arose by operation of statute and not by any discretion or decision-making by the Commissioner. 57Here, the decision in fact made is similar to the one under consideration by Rath J. On 19 April 2012, the Respondent decided that each of the Appellants were liable for the tax. These are decisions in fact. They are decisions within ordinary parlance and decisions as contemplated by s 6 of the ADT Act. 58Nevertheless, the parallels end there. Here, there is no prerequisite, as there was in Tangentyere or Australian Council of Social Services that the decision affect liability. By the letters of 1 and 4 May, the Appellants were notified of liabilities under the GMT Act and advised that if payment was not made by the date shown on the accompanying notice, recovery action would be commenced. It is apparent that the letters do not constitute assessments for tax. They could not, in recovery proceedings, be relied upon as conclusive evidence of the existence and amount of the liability, as would be the case with a notice of assessment due to s 119 of the TAA. However, this does not deprive the decisions, notified in the letters, from the character of decisions as contemplated by s 6 of the ADT Act. The letters constitute notice of decisions in fact made. 59Finally, the taxpayer must be dissatisfied with the decision. "Dissatisfied" does not have a limited meaning (Print National at [38]) and means simply "displeased" (at [34]). In Print National it was held that the taxpayer was dissatisfied with the decision there under consideration (to issue compulsory information requests) because it threatened findings of fact that would render the taxpayer liable to pay-roll tax (at [34]). 60In this case the Decisions give notice of the Respondent's view that the Appellants are liable for the tax. The determinations are not determinations in the sense of the exercise of any discretion by the Respondent, as the liability arises by the operation of the GMT Act in the circumstances outlined in ss 6 and 7 of that Act. Here, the so called determinations consist of findings of fact that render, in the Respondent's view, the Appellants liable to tax. Here, the taxpayers (the Appellants) were displeased because the Commissioner had threatened recovery action if taxes were not paid. The Appellants were dissatisfied. 61Accordingly, objection rights existed. The Appellants duly objected and the Respondent duly determined the Objection. On the Objection Determination being made, the jurisdiction of the Tribunal to review the underlying decision, that the Respondent considered that the Appellants were liable for tax, was enlivened. This is so even though the Decisions are not assessments and irrespective of whether the Decisions have legal effect. 62Despite this conclusion, there must be some practical or legal effect flowing from the decisions in question and there must be some order that the Tribunal could make that could affect the parties, or proceedings in the Tribunal would be futile and might be dismissed as being misconceived or lacking in substance: s 73(5)(g) of the ADT Act. The Tribunal has no power to give declaratory relief and accordingly cannot declare that the Appellants either are or are not liable to the tax. The Tribunal at first instance and the Appeal Panel (if leave to appeal on merits granted) may affirm, vary or substitute any decision or remit the matter to the Respondent to determine in accordance with its findings, directions or recommendations (ss 63, 115 ADT Act and s 101 TAA). Here, the Decisions involved the Respondent forming the conclusion that the Appellants were liable to quarterly tax and gave the Appellants notice of that liability and foreshadowed recovery action if not paid. There is some utility in considering those Decisions afresh and coming to the correct and preferable decision about them. The Tribunal and Appeal Panel had the benefit of material not before the original decision-maker. 63The Appellants could have invoked s 14 of the TAA and required the Respondent to issue a notice of assessment. In such circumstances there would have been no question that the Appellants had rights to object and if disallowed approach the Tribunal. The fact that that path existed and was not travelled does not necessitate the conclusion that the Decisions were not reviewable. 64We are satisfied that the Decisions give notice to the Appellants of decisions as contemplated by s 6 of the ADT Act; and as there has been an Objection and Objection Decision, the Tribunal had jurisdiction to review the decisions.

[11]

When is the instalment due? 65The parties' submissions on when instalment due 66Returning now to the substantive question: when is the instalment due? 67The Appellants contended that the instalment amount became due at the end of the quarter. First, the Appellants relied on the decision of Senior Member Block in Papacostas where it was said at [9] and [16] as follows: 9 The scheme of the Act is to impose the tax in respect of instalment periods (and which are quarterly periods) by reference to the gambling profits derived during those periods. In this matter the relevant instalment period is the tax period. Section 7(4) of the Act provides that the person liable is the hotelier who holds the relevant hotelier's licence at the time when the instalment became due. The tax falls due on the last day of the instalment period, and is payable within 21 days after the end of the instalment period. That tax is due on the last day of an instalment period (or in other words in arrears) is logical given that the tax is calculated by reference to the profits derived during that instalment period. 16 Under section 7 (4) of the Act the person who is liable for the tax is the person who is the hotelier on the last day of the instalment period. 68Further, the Appellants emphasised that it was only after fully understanding the industry that one could interpret the legislation. Seen in context (by that they meant in practice) "due" in s 7(4) must mean at the end of the quarter. This was primarily for the reason that in order to be able to contest the figures calculated by the CMS licensee, a person would need access to the gaming machine at the end of the quarter. Liability must coincide with possession of the machine at the end of the quarter. If liability was predicated on possession at a later date, it would make contesting the figures impossible, where there was a change of hotelier after the close of the quarter. 69The Appellants contended that it was consonant with the reporting requirements and the mechanism for objecting to the CMS licensee's calculations of liability, that the due date should be the end of the quarter. It was only in the event the hotelier had access to the gaming machine at the end of the quarter that the CMS licensee's figures could, in a practical sense, be challenged. The evidence of each of Mr Morrison called by the Appellants and Mr Fabits called by the Respondent, was relevant to this issue. 70Further, the Appellants relied on Gordon Edgell & Sons v Federal Commissioner of Taxation (1949) 9 ATD 43. That decision, insofar as it suggested tax was not due until it was assessed, was not endorsed in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 (at 16 per Mason J; Aickin and Wilson JJ agreeing) and is inconsistent with Bluebottle UK Ltd v Deputy Commissioner of Taxation (2007) 232 CLR 598. Nevertheless, the case demonstrates the point that until liability has been incurred, or is due (in the simple sense of owing) then, any payment of it is an advance on authority that the Respondent will use the money to satisfy the tax that ultimately comes due. It is not a payment of an existing liability. 71On the other hand, the Respondent contended that the structure of the GMT Act supported a construction that the 21st day was the day the liability was due. It was contended that "due" must, in this context, mean "due and payable". Here, s 7 created the liability and made it at once due and payable 21 days after the end of the quarter. The legislation could be distinguished from Commonwealth tax legislation where liability arose under the relevant Act, but the requirement for payment was predicated on the issue of an assessment. Here, liability did not depend upon the issuing of an assessment and neither did the requirement for payment. 72Further, the Respondent contended that the amount must be due and immediately payable on the 21st day, as it is only from that date that interest on unpaid amounts accrued (s 21(1) TAA); and it is only after the end of the 21st day period that the Respondent could sue to recover the amount as a debt (s 44 TAA). 73The Respondent contended that the remarks of Senior Member Block in Papacostas, in relation to the expression "due" were in passing, as the question of construction of the word "due" in s 7 was not a live question in Papacostas: the remarks were obiter dicta only. The facts were also distinguishable, as in that case there was no change of licensee after the close of the quarter. 74The Respondent acknowledged the use of the expression "due" as opposed to "payable" in various subsections of s 7 and contended that the different expressions were used to highlight the following: "payable" in sub-s 7(2) indicated a permission to pay within a period (i.e., capable of being paid); whereas "due" in sub-s 7(4) identified a single point in time (the 21st day) in order to fix with certainty the identity of the person with the liability. A similar use of a fixed point in time is used in sub-s 6(3)(b) to identify the person who may be liable under that section. In other words, "payable" was used in a permissive sense, but "due" was a command used to fix liability.

[12]

The Evidence 75Mr Morrison is an Accountant and Director of Hotel Accountants of NSW Pty Ltd. He is a specialist in the hotel/pub industry. His evidence was to the effect that as part of normal hotel accounting services he calculates the gaming tax for each quarter based on records from the gaming machines and from the CMS licensee, for commercial purposes. He notes that the quarterly gaming liability can be accurately determined the day after each quarter, generally by logging into the CMS, but can be taken from the machines. As the machines operate on a real time basis, it would be necessary to take readings at the end of the quarter. Occasionally, the CMS licensees' figures are wrong and may be challenged by the hotelier. 76Mr Fabits is the Gaming Systems Team Leader at the Independent Liquor and Gaming Administration formerly known as the Casino, Liquor and Gaming Control Authority. He caused a search of all New South Wales Government Gazettes and confirmed that despite s 8 of the GMT Act, no notice was ever published requiring a hotelier to provide a return to the CMS licensee. He also confirmed that all gaming machines are now required to be linked directly to the CMS licensee and the machine automatically transfers information about its performance. At the end of each quarter the CMS licensee calculates the quarterly instalments of gaming machine tax and generally, on about the 14th day after the end of the quarter, sends to the hotelier a performance statement and invoice. That information is also sent to the Respondent. Mr Fabits agreed that if data was to be taken from the gaming machine itself, it would need to be done on the relevant day, as the machines update with usage. 77The evidence was not ultimately contentious and we accept the evidence. 78In summary, there is no requirement to lodge returns and the CMS licensee calculates the liability from direct feeds from all gaming machines. It is possible to obtain data from the machines themselves, however, in order for that to occur somebody must actually physically look at the machine at the relevant time. The mechanism differed depending upon whether it was an old machine or a new machine. In any event, if the machine is not scrutinised at the end of the last day of the quarter then as soon as the machine is used again, the information will change because the machine will have started to record the new usage. 79Occasionally there will be a glitch and the CMS licensee may get the calculations wrong. In that case in order to challenge the CMS calculations, it would assist the hotelier to have had recourse to the gaming machines at the end of the last day of the quarter, so that figures could be provided to the CMS licensee, from the actual machine. 80The Appellants sought to rely on the evidence primarily to support the contention that the due date, or the date on which liability is fixed, must be a day when the person liable is in possession of the premises. This is necessary so that they can read the figures from the gaming machines themselves, in case it ultimately becomes necessary to challenge the data and calculations from the CMS licensee. Put another way, for the reason that the gaming machines are recording on a real time system, the Appellants' submission was that if you couldn't be there to read the machine, it couldn't be your liability. 81The Respondent on the other hand submitted that the ability to take a read from the machine could not affect the construction issue; and in any event discrepancies with the CMS licensee would be very rare.

[13]

Consideration of when instalment due 82Ultimately, it is imperative that entities in the hotel or club industries know where the liability for gaming machines tax lies. This is particularly important where businesses operated on the licensed premises change hands. It is made more important where apportionment of liability to reflect commercial reality, rests on a discretion of the Respondent which may be constrained by s 11(2) of the GMT Act (i.e., not available in relation to quarterly instalments, a matter to which we return below). 83The two competing submissions can be summarised as follows. The Respondent contends that "due" must mean "due and immediately payable". On the other hand, the Appellants contend that "due" means "owing but not yet payable". The Tribunal, at first instance noted at [31] that this type of question had been "famously" considered in the decision of Clyne. In that case the High Court concluded that "due" can and does have different meanings depending on its context: at 8. In tax legislation, it may mean due in the sense of simply owing or it may mean owing and payable. This analysis was confirmed in Bluebottle at [80]-[81]. 84We must construe the relevant words in their context. The legislation in question in Clyne's case and in Bluebottle is very different to the legislation here under consideration. Importantly, liability for gaming machines tax (and we include here liability to make payment) does not depend upon a notice of an assessment. The GMT Act both levies the tax and identifies the date for payment. Nevertheless, it is highly significant that s 7 uses the words "payable" and "due" in different subsections. We must give the deliberate choice of the use of those two words some meaning. 85The Respondent has submitted that the choice of different words comes from the different senses in which the words are used. "Payable" is used in the permissive sense and "due" is used in the ultimate and final sense. We are not persuaded by that submission for a number of reasons. First, the Act could have with clarity referred in s 7(4) to the last day for "payment" of the instalment, instead of "the time the instalment is due": s 7(4). Secondly, and more definitively, in ss 6(1) and (2) there is a reference to "payable" but it is not used in any permissive sense. It is levying the tax. The tax is payable on profits (s 6(1)) and the tax is payable by the hotelier (s 6(2)). Those sub-sections levy the tax: there is nothing permissive about them. Thirdly, the Act separates out the period of liability (for the quarter) from the time for payment, the 21st day. 86The Act requires certainty. Both arguments provide certainty. Either the instalment is due at the end of the quarter, or it is due on the 21st day. In either case it is a single date and will provide the requisite certainty. 87As the liability is in respect of profits for the quarter, there is symmetry if liability falls on the hotelier at the end of the quarter (subject to apportionment in accordance with s 11). This is reflected in the Appellants' submission that it is only a person in possession of the hotel that would be in a position to effectively challenge the figures provided by the CMS licensee. Nevertheless, whilst acknowledging that this supports the Appellants' argument, we find it to be of very little weight especially since, under s 6(3)(b) a person interested in the hotel business, but not necessarily with access to the machines, may be liable for the tax. 88Also, there is some support for the Appellants' construction that, on the Respondent's view, a payment on day 20 would be an advance and not a payment in discharge of an existing liability. In other words, if the Respondent is correct and the tax is not due until the 21st day, any payment before the 21st day is an advance and is not the satisfaction of a liability that is due. Whilst there is no prohibition on prepayment of a liability, the fact that the liability is made payable "within" 21 days after the end of each instalment quarter (s 7(2) GMT Act) supports a construction that the liability arises, or becomes due before the commencement of the payment period. 89Whilst we acknowledge arguments can be put each way, ultimately, we are persuaded that there must be some different meaning given to the words "due" and "payable" and we are not satisfied that the deliberate choice of words was simply because "payable" is the permissive use of the word "due". 90We are accordingly satisfied that the time the instalment is due is the end of the quarter and it is payable anytime up to and including the 21st day after the close of the quarter. There is accordingly error of law in the Tribunal's First Instance Decision.

[16]

Question of Apportionment 96Pursuant to s 11 of the GMT Act the Respondent has a discretion to apportion liability. However, that is subject to s 7(4) of the GMT Act which provides that the quarterly tax is to be paid by the hotelier who holds (or is deemed to hold) the hotel licence on the due date. The Respondent contends s 11(1)(a) cannot be invoked to release the hotelier on the due date from liability to pay the quarterly instalment. 97In Papacostas at [18] and [25] it was held that s 11(2) of the GMT Act precludes apportionment, in respect of the quarterly tax of the hotelier primarily liable for the tax. Senior Member Block considered that that was the inescapable conclusion from the clear words of s 11(2). He also considered whether that construction would leave no work for s 11(1)(a) to do and accepted the Respondent's submission that s 11(1)(a) had work to do because it could be used to apportion the tax so as to recover a part from a hotelier who is not responsible under s 7(4) but was nonetheless a hotelier during the relevant period. In other words, whilst the hotelier on the due date remains primarily liable under s 7(4), the Respondent could, by apportionment, make liable another hotelier under s 11(1)(a). We are not entirely satisfied with that explanation, for the reason that it seems to envisage joint and several liability over a part of the liability, whereas the natural meaning of the word "apportionment" is that liability be split between taxpayers, not shared. Also, it envisages the Respondent levying or collecting tax other than in accordance with s 6 of the GMT Act. 98At the hearing of the Appeal, the Respondent submitted that there was work for s 11(1)(a) to do, notwithstanding s 7(4), in respect of the annual liability calculated in accordance with s 10 of the GMT Act. However, the calculation under s 10 appears to relate to adjustments only. 99Nevertheless, s 11(2) is in clear terms which appear to preclude release from the quarterly liability, for the person who is the hotelier on the due date. Ultimately, we do not need to decide whether that is the correct construction, as we have found that the Appellants were not the hoteliers at the due date. Accordingly, the qualification in s 11(2) is not engaged in relation to them. 100The Tribunal in the First Instance Decision at [12] considered itself not seized of the question of whether or not there should be an apportionment, as there was no objection decision to enliven the jurisdiction of the Tribunal (s 96 of the TAA). However, it is apparent that there was an oral request made to the Respondent to apportion the tax. By phone call and email of 7 May 2012, this request was denied (Tab 23, s 58 documents). In the Objection (Tab 26, s 58 documents) a request was again made for the Commissioner to exercise his discretion to apportion the tax. This request was denied in the Objection Decision (Tab 35, s 58 documents). It is plain from the Objection Determination Report (Tab 36, s 58 documents) that the request for apportionment was treated as an objection to the decision not to apportion (expressed on 7 May and implied in letters of 1 and 4 May). The Respondent disallowed that objection. Accordingly, in our view there was a reviewable decision before the Tribunal with respect to whether to apportion the quarterly tax. 101In any event, as is apparent from Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184, the subject matter of the Tribunal's proceeding is the underlying decision. In this case, the underlying decision is the determination (in the loose sense described above) that the Appellants are liable to the full amount of the tax for the quarter. A Tribunal must decide whether that decision is the correct and preferable decision. It is open to argument that it would not be the correct and preferable decision to affirm a determination as to liability for the whole amount if apportionment was available. We are cognisant of the decision of White J in Metricon Qld Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 982 at [27] and [28] that in the case of a reassessment of an assessment already the subject of a review, a taxpayer may waive his objection rights to have the underlying decision determined on grounds relating to both the assessment and the reassessment. See too Commissioner of Taxation v ANZ Savings Bank (1994) 181 CLR 466, that in Commonwealth tax appeals, the Court is seized of the entirety of the decision (at 476). Here, the underlying decision concerns the Respondent's view of liability to tax. Whether the taxpayers are entitled to apportionment affects that issue and could be ventilated before the Tribunal. Ultimately, we are satisfied that it was open to review the decision of the Respondent to not apportion liability, because the Tribunal was seized of jurisdiction to determine if the Respondent was correct in his determination that the Appellants were liable for the full amount of the quarterly tax; and also for the reason that the question of entitlement to apportionment was the subject of the Objection Decision. The Tribunal erred in holding there was no jurisdiction to review the refusal to apportion. 102We did not receive submissions on whether, in the event it is ultimately held that the Appellants are liable to pay tax under s 6(3)(b) of the GMT Act, s 11(1)(a) could be engaged. It refers expressly to apportioning the tax between various hoteliers and not interested persons. It may be open to argument that read in context "hotelier" includes interested persons under s 6(3)(b). This question may never arise. Nevertheless, we leave the question of apportionment to any liability under s 6(3)(b) to the Tribunal on remittal.

A J Holdings (NSW) Pty Limited v Chief Commissioner of State Revenue

At a glance

Court

Decision date

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (7)

Cited By (6)