ACN 154 520 199 Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 33 (17 January 2018)

1. Section 14ZZF(1)(a)(v) of the TAA narrows that obligation in the case of the Commissioner to:

...every other document that is in the Commissioner's possession or under the Commissioner's control and is considered by the Commissioner to be necessary to the review of the objection decision concerned". (Emphasis added.)

Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be given to the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the specified number of copies of each of those other documents that is in his or her possession or under his or her control, and a person to whom such a notice is given shall comply with the notice.

1. It "provides a safeguard against a decision-maker who does not lodge under s 37(1) everything that it should".[1]
2. Section 14ZZF(1)(b) of the TAA modifies the Tribunal's power under s 37(2) of the AAT Act but does not change the criterion that the "Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal". (Emphasis added.)
3. There is an assumption that the range of documents which the Tribunal forms the opinion may be relevant to the review pursuant to s 37(2), is potentially broader than the range of documents that the Commissioner considered "to be necessary" to the review pursuant to s 37(1).[2]
4. In Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; (2008) 168 FCR 566 (Kennedy), the Full Court stated (at [28]):

The submission by Mr Kennedy that his Honour failed to consider whether the documents may be relevant lacks cogency because, to substantiate such an assertion of error, Mr Kennedy must show how a particular document or category of documents may be relevant to specific issues of fact relating to the excessiveness of the assessments issued to him. That has not been shown. The intent of s 14ZZF of the TAA was clearly to narrow the class of documents which the Commissioner must produce to the Tribunal, and in the absence of a demonstration by Mr Kennedy of the relevance of any additional documents, it is not appropriate to widen the class of documents which the Commissioner has already provided in this case.

1. In order to determine the present application, it is necessary to understand what the decision is that the Tribunal is reviewing.
2. On 8 April 2016, the Commissioner issued notices of assessment of Goods and Services Tax (GST) net amounts to the Applicant for the monthly tax periods ended 29 February 2012 to 30 June 2012 and notices of amended assessment of GST net amounts for the monthly tax periods ended 31 July 2012 to 30 June 2014.
3. On the same date, the Commissioner issued a notice of assessment of administrative penalty totalling $58,059,829.75 for the monthly tax periods ended 31 July 2012 to 30 June 2014.
4. The administrative penalties were imposed pursuant to s 284-75(1) of Schedule 1 to the TAA on the basis that the Applicant made false or misleading statements to the Commissioner on its Business Activity Statements (BASs) for the relevant period.
5. The basis on which the base penalty amounts for the relevant tax periods were calculated pursuant to the relevant provisions of Schedule 1 to the TAA.
6. To the extent that the Assessments gave effect to the Commissioner's declarations to cancel input tax credits pursuant to s 165-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), the Commissioner imposed penalties on the alternative basis that the Applicant got a scheme benefit from a scheme for the purposes of s 284-145 of Schedule 1 to the TAA.
7. The Respondent decided not to remit any of the administrative penalties under s 298-20(1) of Schedule 1 to the TAA.
8. On 28 April 2016, the Applicant objected to the assessments, the notice of assessment of administrative penalty, and the Commissioner's decision not to remit any of the administrative penalties (the objection).
9. On 21 September 2016, the Respondent notified the Applicant of his decision to disallow the objections in full (the Objection Decision).
10. At paragraphs 45 and 46, the Objection Decision summarised the law that is at the centre of the dispute between the Applicant and Respondent:
    1. If you make a GST-free supply of precious metal, you are entitled to input tax credits for any creditable acquisitions that you make in respect of that GST-free supply of precious metal.[3]
    2. If you make an input taxed supply of precious metal, you are not entitled to input tax credits for acquisitions relating to that supply.[4]
11. On 18 November 2016, the Applicant sought review of the Objection Decision in this Tribunal pursuant to s 14ZZ(1)(a)(i) of the TAA.
12. The Respondent lodged with the Tribunal approximately 51,300 documents pursuant to s 37(1) of the AAT Act (as modified by s 14ZZF of the TAA).
13. On 9 August 2017, the Applicant wrote to the Respondent, stating, inter alia, that it was aware of at least two legal advices in relation to parts of the decision under review which had not been included in the s 37 documents and requested the Respondent to "file" with the Tribunal:
    • (a) any legal advice given on or between 29 November 2011 and 31 July 2017 that:
      • (i) relate to the interpretation and application of the law relating to the decision under review; and
      • (ii) it had in its possession and control when it lodged documents under section 37(1) of the Act ....
    • (b) Any instructions given in relation to that legal advice.
14. On 11 August 2017, the Respondent notified the Applicant that it would not produce the requested documents.
15. On 25 August 2017, the Tribunal, differently constituted, made directions for the filing of submissions by the Applicant and Respondent in respect of the Applicant's application for "(1) further supplementary T-documents and (2) a summons to produce the legal advice obtained by the Respondent referred to in the Respondent's objection decision (the Application) together with a draft summons and any proposed orders".
16. Both parties filed written submissions. In its written submissions, the Applicant requested the Tribunal to direct pursuant to s 37(2) of the AAT Act:

the Commissioner to lodge with the Tribunal legal opinions prepared by internal or external legal advisors on the No refining issue as the Tribunal should be satisfied they are documents that may be relevant to the decision under review (i.e. the decision to disallow the objection against the imposition of administrative penalties).

1. In accordance with the direction, on 1 September 2017 the Applicant filed and provided to the Respondent a draft summons that sought:

Any internal or external legal advice received by the Commissioner in Relation to the contention by the Commissioner that s.38-385 does not apply to the supplies of gold bullion by the Applicant because it did not undertake any 'refining' to produce the bullion as the refining material from which the gold was produced had a purity of at least 99.5%.

1. The summons was finalised and issued by the Tribunal by mistake and then revoked.
2. The Applicant handed a draft direction to the Tribunal during the hearing of the present application. It stated:

1. The Respondent produce any internal legal advice produced by officers of the Australian Taxation Office in relation to the contention by the Respondent that s 38-385 of the A New Tax System (Goods and Services Tax) Act 1999 does not apply to the supplies of gold bullion by the Applicant because the supply of that bullion was not the first supply after its refining because the Applicant did not undertake any 'refining' to produce the bullion as the refining material from which the gold was produced has a purity of at least 99.5%.
2. The Respondent produce any internal legal advice prepared by officers of the Australian Taxation Office in relation to the application of Division 165 of the GST Act to the Applicant.
3. The draft direction shows that the Applicant had altered its position from that set out in its written submission dated 31 August 2017, in two respects.
4. First, it no longer sought legal opinions prepared by external legal advisors on the "No refining issue". The "No refining issue" is the issue addressed in the first paragraph of the draft direction set out above.
5. Secondly, the Applicant's written submission had not referred to the issue of the application of Division 165 of the GST Act to the Applicant. The Respondent's legal representative objected to that matter being raised and dealt with at the hearing and opposed any application to amend. He argued that there was a completely different set of considerations.
6. During oral submissions, the Applicant's legal representative raised another argument for the legal advice being relevant based on general power to remit a penalty. The Respondent's legal representative said that that issue had not been raised in the Applicant's statement of facts, issues and contentions or in the written submissions in relation to this application. He conceded that it had been raised in the Applicant's objection. He also conceded that Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50 (24 May 2013) (Sanctuary Lakes) held that, whether a position was reasonably arguable could be relevant in relation to a remission argument, but the Respondent's position is that it is an objective test which would be resolved based on legal authority rather than subjective historical views of an adviser to the Commissioner.

1. Following is a summary of the Applicant's submissions, both oral and written.
2. The evident purpose of s 14ZZF of the TAA is to significantly narrow the class of documents the Commissioner has to produce pursuant to s 37(1)(b) of the AAT Act to those documents he subjectively considers relevant. However, s 37(2), as modified by s 14ZZF, is a "safeguard" that empowers the Tribunal to direct the Commissioner to lodge with the Tribunal further documents that in the Tribunal's opinion "may be relevant to the review of the decision".[5]
3. A document "may be relevant" if it "could reasonably be expected to throw light on some of the issues in the principal proceedings".[6]
4. The Commissioner imposed administrative penalties pursuant to Division 284 of Schedule 1 to the TAA on the tax shortfall relating to the No refining issue for the monthly tax periods from 1 February 2012 to 31 October 2013 on the basis that the Applicant's claiming input tax credits was "reckless" as to the operation of taxation law. The Applicant is not liable to any administrative penalties because it was not reckless but adopted a position that was reasonably arguable and it took reasonable care in making the statements in its BASs.
5. The Tribunal should be satisfied that legal opinions prepared by internal legal advisors on the No refining issue may be relevant to the decision under review.
6. The Applicant referred the Tribunal to BRK (Bris) Pty Ltd v FCT [2001] FCA 164; (2001) 46 ATR 347 (BRK) at 364 and Hart v FCT [2003] FCAFC 105; (2003) 131 FCR 203 (Hart) at [45]-[46] in relation to the meaning of "reckless":
7. It referred the Tribunal to Aurora Developments Pty Ltd v FCT (No 2) [2011] FCA 1090 at [43] in relation to matters that are relevant when determining whether a taxpayer and its advisors acted reasonably.
8. The Applicant's submission contended that it followed that if, in making its statements to the Commissioner, a taxpayer adopted a position that is reasonably arguable, it cannot, a priori, have been "reckless".
9. A taxpayer will have a reasonably arguable position if, on balance, the taxpayer's argument can objectively be said to be one that, while wrong, could be argued on rational grounds to be right. That is, the case must be one where reasonable minds could differ as to which view is correct. The Applicant referred the Tribunal to Walstern Pty Ltd v FCT [2003] FCA 1428; (2003) 138 FCR 1 at 27, and Pridecraft Pty Ltd v FCT (2004) 58 ATR 2010 at [108].
10. In the present case, if the Commissioner has received internal written legal advice on the No refining issue to the effect that the position adopted by the Applicant was either correct or that the position adopted by the Commissioner was unlikely to be accepted by a court, then that is probative evidence of the fact that the Applicant's position was not 'grossly careless' as it would assist in an assessment of whether the Applicant's adoption of the position was reasonable.
11. In a suit for professional negligence in relation to legal advice, expert legal opinion on what advice ought to have been given to the client is relevant as it is probative of establishing the requisite standard of care and whether it had been breached. See Maronis Holdings Ltd and Anor v Nippon Credit Australia Pty Ltd and Ors [2001] NSWSC 448 at [380]
12. By parity of reasoning, if the Commissioner received internal legal advice from a senior officer to the effect described above, it is probative of establishing that reasonable minds could differ as to which view was correct and therefore that the Applicant could not have been reckless in adopting the position it did.
13. An alternative basis on which legal advices may be relevant is the general power of remission. It is not in dispute that the Commissioner declined to exercise the power to remit the penalty in full or in part. There is a broad discretion to remit the penalty in the particular circumstances of a taxpayer:[7] Whether or not the taxpayer's position was reasonably arguable is relevant to the consideration of whether a penalty should be remitted.
14. That issue is not in the Applicant's Appeal Statement but is in the Applicant's grounds of objection.[8] It is therefore entitled to argue it.[9] That Statement can be amended.
15. What experienced practitioners in the ATO considered to be the construction is relevant to whether the taxpayer's case is reasonably arguable. Internal legal advice is not subject to legal professional privilege.
16. Therefore, such a class of documents "may be relevant" to the decision under review and the Tribunal ought to direct the Commissioner to lodge such documents with the Tribunal.
17. It is not "a fishing expedition". The Applicant is aware of one advice in respect of the No refining issue. If there are advices in respect of the issue, they may be relevant.
18. At the hearing, the Applicant handed the Tribunal a copy of what it described as an "internal advice" of the Respondent dated 27 November 2013 in relation to the Applicant, that expressed the opinion that "s 38-385(a) extends to subsequent refining of 'precious metal' from scrap and is not confined to any original refining for ore or doré". The writer stated that he agreed with the view cleared by another named person and disagreed with the position "put in the draft discussion paper". The advice had been released by the Australian Taxation Office under the Freedom of Information Act 1982 (Cth). The Applicant's legal representative claimed that it was the first time at the hearing that that the Applicant had been told that there was no such legal advice and that was why it was handed up in reply following the submissions made by the Respondent's legal representative. He claimed that the Respondent had said that there was no advice that was supportive to or sympathetic to the taxpayer, which was not open when terms of the advice are looked at.
19. The Applicant's legal representative argued that for legal professional privilege to attach to an advice, the author must hold a practising certificate. If the author does not hold a practising certificate, the advice is not legal advice to which legal professional privilege attaches.

1. Following is a summary of the respondent's written and oral submissions about why the application should be rejected.
2. Any legal advice obtained by the Respondent has no relevance to any "taxable fact" with which these proceedings are concerned.[10] The essential question that falls for consideration is whether the relevant assessments were excessive.
3. The legal advices sought, at their highest, go to decisions made by the Respondent in the course of this dispute, and the reasoning that may have formed those decisions. Such matters do not bear on the taxable facts with which these proceedings are concerned.
4. It is for the Applicant to establish any fact that demonstrates that the assessment is excessive: Hua-Australia Pty Ltd Commissioner of Taxation (2010) 184 FCR 430; [2010] FCA 341 (at [18]-[23]).
5. In seeking to explain the relevance of the legal advice sought by reference to the administrative penalties imposed by the Respondent for recklessness, the Applicant has engaged in a "process of reasoning" (Kennedy at [28]), which misunderstands the nature of the present review and the Tribunal's function.
6. The Tribunal stands in the shoes of the Commissioner for the purposes of a review under s 14ZZ(1)(a)(i) of the TAA and must determine questions of fact and law for itself. Historical opinions of lawyers retained by the Commissioner are irrelevant. The Tribunal will be apprised of the Commissioner's view of the law at trial.
7. The principal issue for the Tribunal in this respect is whether the penalty imposed by the Respondent was excessive. It is a question of "whether the shortfall amount attributable to the inaccurate BAS was a result of recklessness by the applicant".[11]
8. Relevantly, "recklessness" is gross carelessness or gross indifference.[12] It does not require the taxpayer to be dishonest in their dealings. It means something more than failure to exercise reasonable care, but less than an intentional disregard of the law.[13]
9. The question of "recklessness" is objective but one which nevertheless requires either:
   • (a) knowledge that there is a real as opposed to a fanciful risk that the return may be incorrect; or
   • (b) gross indifference to its correctness in circumstances where a reasonable person would see that there was a real risk that the Act might operate to make the amount assessable income.[14]
10. Whether the taxpayer was, or was not, reckless will involve an objective application of these tests to the actual facts arising in the monthly tax periods in issue. It is for the Applicant to demonstrate that there was not a real or significant risk that the input tax credits in question were not claimable and that, in claiming them, it did not show gross indifference or carelessness to a risk that was foreseeable to a reasonable person.[15]
11. The legal opinions sought do not shed light on whether, for the monthly time periods in issue,:
    • (i) the Applicant was grossly indifferent as to the accuracy of the information provided to the Respondent in the relevant BASs; and
    • (ii) a reasonable person in the position of the Applicant would perceive that there was a real risk that the GST Act would not operate properly because of that information so as to lead to the correct tax being payable.
12. Any legal advice obtained by the Respondent has no relevance to the question of whether the Applicant took reasonable care for the purposes of s 284-75(5) of the TAA. The question whether or not "reasonable care" was taken is a factual enquiry involving a comparison between what a reasonable person would have done in an attempt to comply with a taxation law and what the taxpayer, that is, the Applicant in this case, in fact did.[16]
13. It follows that a legal opinion about the present application of s 38-385 of the GST Act, is not relevant to the objective ascertainment of the Applicant's liability to administrative penalties.
14. The Applicant's reliance on adopting a position that was "reasonably arguable" is misplaced. The Respondent did not assess the penalties under s 284-75(2) of Schedule 1 to the TAA on the basis that the Applicant took a position that was not "reasonably arguable". That position arises in respect of statements made to the Commissioner concerning an "income tax law" and is not relevant in this case.[17]
15. To the extent that the Applicant asserts that if certain advice exists which supports its case, it would be probative evidence, such an assertion does not admit of any "rational process of evaluation", and is founded on supposition and speculation which cannot enliven s 37(2).[18]
16. The following matters were raised by the Respondent at the hearing.
17. The Applicant cannot say whether the advices it seeks exist, or when they came into existence. They cannot form "taxable facts" as referred to in Bailey. They could only be relevant for the purpose of s 37 if they had been considered by the decision-maker.[19] The Applicant does not suggest that it knew of or relied on any legal advice it seeks. It cannot show that any such advice could reasonably be expected to throw light on the issues in dispute. They do not relate to the Applicant's knowledge or conduct.
18. If the Applicant is claiming that the "No refining" decision is reasonably arguable, such an argument is a separate head of penalty under Item 4 of s 284-90 of the TAA (which relates to an income tax law or the petroleum resource rent tax law).[20] A position may be reasonably arguable but still be reckless.[21]
19. If there were legal advices, the Commissioner would argue that they are mistaken, an anomaly, and not relevant. The Respondent would rely on legal authorities. The Applicant's request is for advices supporting its position. The Commissioner denied input tax credits on that basis only in relation to acquisitions that were 99.9% pure. The Respondent's legal representative's instructions were that there were no such documents containing internal or external advice that agreed that gold that was 99.9 %pure could be refined, and therefore the application was futile.
20. He pointed to paragraph 19 of the Applicant's submissions which addressed the relevance of legal advices "if" they exist. He argued that the application was a fishing expedition because the Applicant cannot say that there is advice and cannot identify facts giving rise to any reasonable suspicion that there is or are such advice(s). The test is whether the decision-maker identified any such advice.
21. The Respondent's legal representative referred to WR Carpenter Holdings Pty Ltd v FCT [2008] HCA 33; (2008) 237 CLR 198, at [17], in relation to "fishing" in the context of a request for particulars and the administration of interrogatories. He also referred to Kennedy at [28] where the Court addressed the intent of s 14ZZF of the TAA Act and which is quoted earlier in this decision.
22. He referred to Cosco Holdings Pty Ltd v FCT [1997] FCA 1504; (1997) 37 ATR 432 where Spender J considered a summons sought to be issued in the Tribunal. He found that the summons was based on speculation and the object was properly to be described as "fishing".
23. The Respondent's legal representative argued that the request for the legal advice was not supported by any sworn statement and was premature. In any event, it is not known whether the Applicant obtained legal advice. No evidence has been filed by the Applicant. "Recklessness" turns on an analysis of the taxpayer's conduct. The Applicant should put on evidence to see how legal advice fits in with its conduct.
24. When the Applicant handed to the Tribunal the legal advice dated 27 November 2013 during submissions in reply, the Respondent's legal representative stated that it should have been provided earlier and asked the Tribunal not to rely on it. He also said that in-house legal advice was covered by legal professional privilege, and referred to Waterford v The Commonwealth.[22] Further, he said that it was a question of evidence.
25. The Respondent's legal representative abided by his instructions that there was no legal advice that was supportive of or sympathetic to the Applicant. He has been given searches that included the 27 November 2013 Advice but it concerned a different point; whether it is possible to refine gold that is 99.5 per cent pure.
26. Finally, even if the above matters did not "weigh decisively against this application" the documents in question, "legal opinions prepared by internal or external legal advisers on the No refining issue" would be subject to legal professional privilege.[23]
27. Section 37(3) of the AAT Act does not abrogate the legal professional privilege on which the Respondent relies.[24] The documents being subject to legal professional privilege, the Tribunal would not require the Respondent to give the legal advice to the Applicant under its powers to give access to documents.[25]

1. At the conclusion of the hearing, the Tribunal told the parties that it would not deal with the second paragraph of the draft direction handed up during the hearing which was based on Division 165 of the GST Act. In its view, the Respondent was not in a position to address the issues arising in relation to that direction when the Applicant had given it notice of it half an hour before the hearing. As it told the parties, the Applicant can make another application.
2. The Tribunal approaches its consideration of the issues before it on the basis of the terms of the draft direction provided by the Applicant during the hearing in that it will only consider exercising its power under s 37(2) of the AAT Act as modified by s 14ZZF of the TAA in relation to internal legal advice. The Applicant explicitly conceded that legal professional privilege would attach to any external legal advice and consequently, implicitly, that the Tribunal would not order that it be disclosed to the Applicant if the Tribunal required that it be lodged with the Tribunal pursuant to s 37(2) of the AAT Act.
3. The Tribunal will apply the concept of relevance in s 37(2) of the AAT Act as formulated by Senior Member Taylor in Re KLGL QCCYY and APRA in [2008] AATA 452; 104 ALD 433 (KLGL QCCYY). At [18], the learned Senior Member stated:

... the concept of relevance requires positive satisfaction of a sufficient relationship between the documents, or class of documents, whose production is in issue and the matters to be determined in the proceedings. Furthermore, the notion of relevance carries with it a purposive connotation dealing with the capacity of the document to influence the determination of the proceedings. This capacity, and the criterion it involves, is different from the mere existence of some correlation between the document in question and either the subject matter of, or evidence or issues, in the review proceedings.

The expression "may be relevant" is apt because, by necessary hypothesis, the Tribunal will exercise the power when it does not know the contents of the contentious documents, and may only know their general class or character ... But s 37(2) of the AAT Act could not reasonably have been intended to confer on the Tribunal a power to require the production of documents because of a mere intellectual or speculative possibility of relevance. The threshold requirement that the Tribunal form an opinion requires some process of evaluation, based on reason and reasonable inference.

1. The Applicant has to satisfy the Tribunal that the particular document or category of documents may be relevant "to specific issues of fact relating to the excessiveness of the assessments".[26]
2. The Applicant has the burden of proving that the relevant assessments are excessive.[27]
3. The central issue in the substantive proceedings to which the present application is directed is whether the supply of gold by the Applicant was the first supply after it had been refined by the Applicant.
4. The parties identified the issue differently.
5. In its Statement of Facts, Issues and Contentions, the Respondent wrote:

whether (the Applicant's) acquisitions of gold that had a 99.99% or more fineness were "creditable acquisitions" for the purposes of s 11-5 of the GST Act and, in particular whether the subsequent supply of that gold to the Dealers was the first supply after its refining by (the Applicant) for the purposes of s 38-385.

1. The Applicant's Appeal Statement was filed about five months after the Respondent's document. The Applicant defined the issue as:

...whether the sales of precious metal (as defined) by the Applicant were the first supply of that precious metal after its refining by the Applicant for the purpose of s 38-385. [Original emphasis]

1. During the hearing, the Applicant's legal representative articulated the issue as whether or not gold of 99.5% fineness can be refined such that s 38-385 of the GST Act is engaged. He said that "is extremely narrow and the factual basis is whether or not the gold was 99.5 per cent. We accept that it was." He also said that the factual question is "on the purity of the gold and that is not in dispute".
2. The Applicant has defined the issue in terms of the statutory definition of precious metal in s 195-1(a) of the GST Act:

(a) gold (in an investment form) of at least 99.5% fineness.

1. During the Tribunal's discussion with the Respondent's legal representative about his position in relation to the legal advice dated 27 November 2013 referred to by the Applicant's legal representative, the Tribunal sought clarification as to what the question in issue was. He stated the issue in the following different ways:
   • Whether gold that is acquired that is 99.99% pure can be refined when what is produced is also 99.99% pure;
   • Whether it is possible to refine gold that is already 99.99% pure;
   • There could be an argument that the gold that was produced was more than 99.99% pure.
2. The Tribunal accepts his comment that he could not precisely articulate the question because it might depend on how the case is put and what the facts are that the Applicant relied upon. The Tribunal accepts that ultimately, the Tribunal will make findings of fact and law on the material before it at the time. That is not the Tribunal's role in relation to the present application.
3. Draft direction 1 does not specify the issue in terms of the gold being 99.99% fineness. It refers to 99.5% purity. The Respondent's legal representative's instructions that there was no such advice, clearly refers to the direction as drafted. Whether the Respondent has "internal legal advice produced by its officers" in relation to the 99.99% figure is a different matter.
4. The Objection Decision states at paragraph 50:

We do not agree that all incoming feedstock of gold was refined (for the purposes of the GST Act). The Commissioner has identified that approximately 95% of the gold acquired by (the Applicant) was of 99.99% fineness and therefore was not refined by (the Applicant) for the purposes of the GST Act.

1. The same position was stated in the Respondent's Statement of Facts, Issues and Contentions which were received by the Tribunal on 5 May 2017.
2. The Applicant did not modify its formulation of the issue or the direction it sought in response to the submissions made by the Respondent's legal representative. It is for each of the parties to formulate and argue the case as they wish. It is not for the Tribunal in relation to this application to determine whether one or other formulation of the issue is correct.
3. The Tribunal did not understand the Respondent's legal representative to object to the matter of remission of penalty being dealt with although it was first raised at the hearing, and was not referred to in the Applicant's "Appeal Statement" or in the written submissions. It had been referred to in the application to the Tribunal and in the objection. He addressed the matter orally, albeit briefly, and did not seek to be heard again on the issue after the Applicant's legal representative addressed it again in his submissions in reply. The Respondent's legal representative did seek to be heard and was heard, on several other issues during the course of the Applicant's submissions in reply.
4. Because of its conclusion in relation to the remission issue, it is unnecessary to deal with unrelated arguments put by the Respondent.
5. The Respondent's legal representative accepted that whether the Applicant's position on the No refining issue was reasonably arguable could be a relevant consideration for the purposes of remission of penalty pursuant to s 298-20 of the TAA, on the authority of Sanctuary Lakes Pty Ltd. But, he argued, even if that test was relevant, it is an objective test which the Tribunal would need to resolve based "upon not the subjective historical views of an adviser to the Commissioner, or perhaps an internal officer of the Commissioner, but on actual legal authority".
6. It is not for this Tribunal to determine whether the Respondent's latter proposition is correct. That will be for the Tribunal that hears the substantive matter. The Tribunal accepts that the test is an objective test.
7. As Griffiths J said in Sanctuary Lakes Pty Ltd at [250]:

It is a matter for the decision-maker to weigh in the balance all relevant matters which are raised for consideration under the umbrella of the taxpayer's particular circumstances.

1. Internal legal advices produced by officers of the Respondent on the No refining issue that support the Applicant's position or state that it is arguable, or that do not support its position, may be relevant to the review. Such advices would address the Applicant's "particular circumstances".
2. The Tribunal does not accept that the application is premature or a fishing expedition. The issue specified is that formulated by the Applicant on its assessment of the Objection Decision. The category of documents specified is narrow. It goes to the issue of whether the Applicant's position on the No refining issue is reasonably arguable which is relevant to the issue of remission. The Tribunal does not consider that the Respondent's instructions to its legal representative that it has no such documents is a reason for not making the direction. The making of the direction may result in a reappraisal of the documents the Respondent does have.
3. Whether documents produced are subject to legal professional privilege is a matter to be addressed when documents have been lodged and the question arises whether the Tribunal should direct that they be provided to the Applicant.[28]
4. For the above reasons, the Tribunal is of the opinion that the class of documents specified in the draft direction 1 may be relevant to the review of the Objection Decision by the Tribunal.
5. The Respondent did not object to the proposed direction because it did not specify a time within which it had to lodge a copy of the documents with the Tribunal as required by s 37(2) of the AAT Act and s 14ZZF of the TAA(1)(b)(ii)..
6. If there are documents to be lodged pursuant to the direction and the parties cannot agree as to an appropriate time frame within which they should be lodged, the parties have liberty to apply to the Tribunal to resolve the question.
7. The Tribunal directs pursuant to s 37(2) of the AAT Act that:

The Respondent produce any internal legal advice produced by officers of the Australian Taxation Office in relation to the contention by the Respondent that s 38-385 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) does not apply to the supplies of gold bullion by the Applicant because the supply of that bullion was not the first supply after its refining because the Applicant did not undertake any 'refining' to produce the bullion as the refining material from which the gold was produced had a purity of at least 99.5%.

I certify that the preceding 107 (one hundred and seven) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

........................[sgd]................................................

[1] Re VLKG and Commissioner of Taxation (2011) 56 AAR 331; [2011] AATA 915 (at [6].

[4] GST Act, sections 11-5, 11-15 and 40-100.

[5] Kennedy v AAT (2008) 168FCR 566 at [28]; VLKG v FCT [2011] AATA 915 at [6], [11].

[6] Re KLGL and QCYY and APRA [2008] AATA 452 at [46]; Cash World Buyers Pty Ltd [2017] AATA 736 at [26].

[7] Sanctuary Lakes per Griffiths J at [249].

[8] The document is usually referred to in the Tribunal as a Statement of Facts, Issues and Contentions.

[9] Hawkins v Commissioner of Taxation [2017] FCA 1247.

[10] Bailey v Federal Commissioner of Taxation [1977] HCA 11; (1977) 136 CLR 214 at 217_; Kennedy_ at [21])

[11] Print Applied Technology Pty Ltd and Commissioner of Taxation (2011) 81 ATR 992; [2011] AATA 555 at [24].

[12] BRK (Bris) Pty Ltd v Federal Commissioner of Taxation (2001) 46 ATR 347; [2001] FCA 164.

[13] Hart v Federal Commissioner of Taxation [2003] FCAFC 105; (2003) 131 FCR 203 at 214; [2003] FCAFC 105; (2003) 53 ATR 371 at 381.

[14] Howard v Federal Commissioner of Taxation [(2012) 206 FCR 329; [2012] FCAFC 149, at [56].

[15] BRK (Bris) Pty Ltd v Federal Commissioner of Taxation (2001) 46 ATR 347; [2001] FCA 164; Ryvitch v Federal Commissioner of Taxation (2001) 47 ATR 381; [2001] FCA 806.

[16] Aurora Developments Pty Ltd v Federal Commissioner of Taxation (No 2) [2011] FCA 1090; (2011) 196 FCR 457 at [465]- [466]; [2011] FCA 1090.

[17] Melbourne Car Shop Pty Ltd v Commissioner of Taxation (2010) 76 ATR 42; [2010] FCA 373 at [40]- [41].

[18] Cash World Gold Buyers Pty Ltd v Commissioner of Taxation [2017] AATA 736; Cosco Holdings Pty Ltd v Federal Commissioner of Taxation [1997] FCA 1504; (1997) 37 ATR 432 at [439]; Kennedy at [27].

[19] APRA v VBN [2005] FCA 1868; (2005) 88 ALD 403.

[20] FCT v Traviati [2012] FCA 546; (2012) 205 FCR 136, per Middleton J at [28].

[22] (1987) 163 CLR 54; [1987] HCA 25.

[23] Daniels Corporation v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at [9], [11]; Grant v Downs [1976] HCA 63; (1976) 135 CLR 674 at [677]; Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at [543]; Esso Australia Resources Ltd v Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49 at [64].

[24] APRA v VBN (2005) 88 ALD 403; [2005] FCA 1868 at [40].

[25] Re Spicer Axle Structural Components Australia Pty Ltd v Secretary, Department of Industry, Tourism and Resources (2005) 83 ALD 104; [2005] AATA 77 at [38].

[27] S 14ZZK(b)(i) of the TAA; Hua-Australia Pty Ltd Commissioner of Taxation (2010) 184 FCR 430; [2010] FCA 341.

[28] APRA v VBN [2005] FCA 1868; (2005) 88 ALD 403; Re Spicer Axle Structural Components Australia Pty Ltd v Secretary Department of Industry Tourism and Resources (2005) 83 ALD 104; [2005] AATA 77 at [38].