Anderson's Pty Ltd v Victoria

Anderson's Pty Ltd v Victoria - [1964] HCA 77 - HCA 1964 case summary — Zoe

[18]

The question which is involved in these demurrers respectively is whether the duty under sub-div. (14) of Div. 3, Pt II of the Stamps Act 1958 of Victoria is a duty of excise within the contemplation of the Constitution, s. 90. The duty is imposed on instruments which are agreements of instalment purchase or contain the material particulars of such agreements as are not in writing. The agreements made dutiable are of three classes namely credit purchase, hire-purchase and rental. There is a definition of each class. A credit purchase agreement or a hire-purchase agreement is not dutiable if the purchaser is engaged in the trade or business of selling goods of the same nature or description as the goods to which the agreement relates. No list of goods is specified in the Act for the purposes of the sub-division. It contains a definition of "goods" which says that this word "includes all chattels personal other than money, livestock books and things in action". The application of the provisions of the sub-division is not limited to goods of home manufacture and second-hand goods are not excluded. The duty under the sub-division is two per cent of the "purchase price". This means in the case of a credit purchase agreement or a hire-purchase agreement - "the total amount payable under the agreement by the purchaser on any account whatsoever in respect of the goods the subject-matter of the agreement less the amount of the deposit or other money or consideration paid or given to the vendor at or before the making of the agreement and less the total amount payable under the agreement for or by way of interest or insurance or other charge". In the case of a rental agreement the "purchase price" means - "the price at which the goods the subject-matter of the agreement might have been purchased for cash at the time of entering into the rental agreement". The tax is payable by the vendor: if he is not bound by the Act the tax is payable by the purchaser. Section 131D prohibits the vendor from transferring the burden of the duty or any part of it to the purchaser.

[30]

It is now established, as the Court said in Bolton v. Madsen [1] , that for constitutional purposes duties of excise are taxes directly related to goods (i.e. goods originating in Australia), imposed at some step in their production or distribution before they reach the hands of consumers. This does not exclude a tax imposed, as is the duty now in question, upon the final step in distribution, by which goods reach the hands of consumers. The crucial question in the case of such a tax is whether it is "directly related to goods", in the sense in which that and similar expressions, such as "upon" goods, are used in the lengthening line of judgments which have been delivered in this Court upon the subject. What is referred to may, I think, be described as a relation consisting in this, that some conduct is selected by the relevant legislation as being a step in the production, manufacture or distribution of goods and in that character is made of the essence of the tax. A tax must necessarily be made payable by a person; but it is not a duty of excise unless the criterion of the person's liability is the fact that some act of his possesses the quality of a contribution either to the physical character of goods as subjects of commerce or to the sequence of events which results in their being available, as in the hands of a consumer, to be put to their ultimate purpose. The reason is that a duty of excise is, at bottom, a burden upon home production or manufacture. Obviously it is such a burden if it is payable upon a step in production or manufacture in its character of such a step. Not so obviously but just as certainly, it is such a burden if it is payable upon a step in distribution in its character of such a step; for in that case from the time the goods come into existence the law makes it inherent in their nature, as goods requiring distribution in order to become available to fulfil their purpose, that the tax shall be paid. This is the point that Rich and Williams JJ. made by saying in Parton v. Milk Board (Vict.) [1] , that to be an excise duty a tax must be imposed "so as to be a method of taxing the production or manufacture of goods". At whatever point before consumption a duty of excise becomes payable it must burden production or manufacture. Their Honours went on immediately to say that the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected or intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer. This statement may need modification or explanation in the light of subsequent judgments, but it directs attention to the point that must be kept in mind in the present case, namely that a tax cannot be an excise unless its fundamental concern is with goods rather than persons. Its probable ultimate incidence is relevant for consideration simply because if the consumer is likely to bear the tax in the end that fact tends to show that the tax is in its nature a tax upon the goods and not upon the particular person who is made liable for payment of it to the Crown. In other words the tax reflects back upon the production or manufacture of the goods, since its effect is that from the beginning the goods are subjected to an inherent inability to reach the point of consumption without the duty becoming payable and so entering into their total cost. As Dixon J. said in Parton v. Milk Board (Vict.) [1] , "A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production" [2] .

[32]

Where a tax is made payable in respect of a transaction which not only affects the ownership or possession of goods but also creates or regulates rights and obligations as between the immediate parties concerning collateral matters such as the payment of moneys, a particular problem in the application of these principles arises. For while the instrument effectuates a single though complex transaction, the tax upon it may be found, when the relevant legislation is examined, to relate in essence not to the nature of the goods or to any effect which the transaction has upon them, but to the nature of the provisions which deal with the collateral matters. The contention of the plaintiffs in the present case, that a stamp duty upon an instalment purchase agreement is an excise duty because the agreement takes a step in the distribution of goods, is fallacious because it fails to recognize, and consequently obscures, the crucial distinction. It overlooks the fact that such an agreement has an operation beyond and apart from that of taking a step in distribution, and that therefore the question whether a tax upon it is a duty of excise depends upon whether the tax is not only upon an agreement which in fact takes such a step but upon an agreement in respect of its taking such a step - that is to say whether it is a tax upon the taking of the step: see the formulation which I suggested in Dennis Hotels Pty. Ltd. v. Victoria [3] , approved in Bolton v. Madsen [4] . The stamp duty here in question is not imposed upon the whole genus of agreements for purchase by or bailment to consumers. It is imposed upon a particular species only of such agreements, namely those which, having provided for the purchase or bailment, go on to create rights and obligations between the parties in relation to payments to be made after the delivery of the goods. In argument the duty was described as relating to the credit element in the transaction. The description may be accepted as making the point, succinctly if not with complete accuracy, that what gives an agreement for a bailment or for a purchase the character that attracts the duty is to be found not in the provisions that take a step in the distribution of the goods, i.e. the provisions for bailment or for purchase - not in anything that it does concerning the goods - but in the special nature of provisions it contains in respect of the future rights and obligations of the particular parties inter se as to the payment of money. The duty therefore cannot be described as producing "the same effect as a tax upon manufacture or production": it is not by its nature a burden upon production or manufacture. In essence it is a tax not "upon" goods, nor "directly related to goods". On the contrary, it is a tax upon the individual who is made liable to pay it, and its direct relation is to his entering into a financial arrangement of a particular kind.

[53]

A "vendor" is forbidden, by s. 131D (1), to add the amount of any duty payable by him to any amount payable by the "purchaser" of any goods "or otherwise demand or recover or seek to recover" any such amount from the "purchaser". And, by s. 131E (1), the "vendor" of any goods under an "instalment purchase agreement" is required, where the "purchase price" is not less than ten pounds, to prepare an "original instrument" in relation to the agreement conforming with the requirements of the section. Section 131A defines a number of the terms used in the subdivision. "Instalment purchase agreement" means "a credit purchase agreement, a hire-purchase agreement or a rental agreement". "Goods" include "all chattels personal other than money, livestock, books and things in action and include any fixture severable from the realty". "Credit purchase agreement" means an agreement whereby the purchase price of goods is payable by not less than six instalments to be paid over a period of not less than six months and under which any of the instalments are to be paid after delivery of the goods to the purchaser, but does not include an agreement under which the purchaser is a person engaged in the trade or business of selling goods of the same nature or description as the goods to which the agreement relates. "Hire-purchase agreement" means "agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods may pass to the bailee or under which any provision for credit of payments is to be made in the event of a subsequent purchase of the goods but does not include any agreement under which the purchaser is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods to which the agreement relates". "Purchase price" means "in the case of a credit purchase agreement or a hire-purchase agreement, the total amount payable under the agreement by the purchaser on any account whatsoever in respect of the goods the subject-matter of the agreement less the amount of the deposit or other money or consideration paid or given to the vendor at or before the making of the agreement and less the total amount payable under the agreement for or by way of interest or insurance or other charge ". "Purchaser" means "the person to whom goods are bailed or sold or agreed to be bailed or sold under an instalment purchase agreement", and "Vendor" means "the person by whom goods are bailed or sold or agreed to be bailed or sold" under such an agreement. "Rental agreement" means "an agreement for the bailment of goods under which the bailee may after a specified number of instalments of rent (not being less than two instalments) have been paid in respect thereof continue the bailment or from time to time renew the bailment at a nominal rent or without any further payment or on the payment of a nominal periodical or other amount". And, in the case of a rental agreement, "purchase price" means "the price at which the goods the subject-matter of the agreement might have been purchased for cash at the time of entering into the rental agreement".

[54]

The submissions made on behalf of the plaintiffs are that the duty thus imposed - which is undoubtedly a tax - is imposed "upon" or "in respect of" or "in relation to" goods and is levied upon a dealing with the goods in the course of their passage to the consumer. The amount of duty payable is calculated by reference to the value of the goods with which the dealing is concerned and the duty is an indirect tax in the sense that it is imposed in the expectation or with the intention that it will be passed on by the person paying it. It is said, and I agree, that if these features exist, they are characteristic of an excise duty. But the first question must be whether, on an examination of the relevant provisions of the Act, they are present. If they or some of them are, the enquiry must then be whether there are other and counter-balancing considerations which point to the opposite conclusion. And, finally, it must be determined upon a consideration of all the elements involved in the legislation whether the tax is properly to be described as a duty of excise. In my opinion the impost is not of that character. I begin with the fact that it is called a stamp duty and is imposed upon instruments. It is true that they are instruments evidencing certain types of transactions relating to goods but it matters not what the goods are; what attracts the tax is the method of disposing of them. The amount of tax payable on any particular transaction is not related, except in the case of "rental agreements", to the value or quantity of the goods. It is assessed upon what is called the "purchase price" but which is in reality the difference between the amount of the deposit paid by the "purchaser" or the amount allowed to him by way of deposit representing the value of goods "traded in" by him and the total of the payments to be made by him less interest and other charges. It is plain that this "purchase price" will vary from case to case even though the goods may be identical. The goods may be imported, wholly or in part. They may be second-hand goods, that is to say they may have earlier reached the hands of a consumer by means of an instrument on which duty has been paid and have found their way back from him into the hands of the "vendor" or some other distributor. The "vendor" is prohibited from adding the amount of the tax paid to the "purchase price" and thus passing it on to the "purchaser". It is true that a means of passing on the tax in an indirect fashion may perhaps be found by increasing interest rates or by adding to the cost of goods an amount which may be capable of approximate calculation but this would be, to use the phrase of the Judicial Committee in Bank of Toronto v. Lambe [1] , "an obscure and circuitous" way of passing on the tax. It is a tax imposed directly upon a "vendor" of goods if and only if he chooses to dispose of them by a form of contract which involves the extension of credit to a "purchaser" who is not himself a trader in goods of that description.

At a glance

Court

Decision date

Before

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Judgment (55 paragraphs)

Parties