Melbourne, 1969, February 25 - 27; October 9. 9:10:1969

BARWICK C.J. The defendant State of Western Australia has demurred to a Pty. Ltd. claiming a declaration that the Stamp Act, 1921-1967, of the State of Western Australia (the Act)

"does not oblige the plaintiff to issue and/or pay stamp duty on

receipt for money paid to or received by the plaintiff in the State

of Western Australia as freight in respect of contracts of carriage

of goods from places in one State to places in another State in the

manner set out in the above statement of claim, or alternatively

that it is invalid in so far as it purports so to oblige the

plaintiff";

"a declaration that the Stamp Act, 1921-1967, of the State of

Western Australia does not oblige the plaintiff to include any money

so received or paid in any statement submitted to the Commissioner

of Stamps appointed under the said Act by the plaintiff pursuant to

s. 99B of the said Act and/or to pay stamp duty on any such

statement on the basis that such moneys are 'amounts which would

have been liable to duty under and in accordance with' the Second

Schedule to the said Act, within the meaning of those words in

sub-s. (1) (b) of s. 99B of the said Act, or alternatively that it

is invalid insofar as it purports so to oblige the plaintiff". (at p98)

2. The manner of the carriage of goods described in the statement of claim is that

"the plaintiff carries on business as inter alia a carrier of

goods for reward from places in one State of Australia to places in

other States of Australia, and in particular to and from places in

the States of Victoria and New South Wales and Queensland from and

to places in the State of Western Australia". (at p98)

3. In the course of carrying on that business consignors of goods promise to pay the plaintiff freight for such carriage of goods, either by a single sum or at a single rate for through carriage, whether the carriage is effected wholly by sea, or partly by sea and partly by other means of transport. Such freight in some instances is paid to the plaintiff in Western Australia. Some of those who pay such freight require a receipt and some do not, but the plaintiff in the ordinary course of its business does not issue a receipt unless required to do so by the person paying the amount of freight. (at p99)

4. The plaintiff is thus engaged in relation to such carriage in inter-State trade and commerce. The money the receipt of which it claims to be outside the scope of the Act when properly construed represents the freight earned by it in the course of its inter-State trade and commerce in the transportation of goods. So far as the plaintiff is concerned, without the charging and the receipt of freight for such carriage, there is no commercial significance in the carriage. (at p99)

5. This action was commenced on 26th August 1968, the statement of claim being delivered on 4th September 1968, and the demurrer delivered on 8th October 1968. The Act was amended by the Stamp Act Amendment Act, 1968 (W.A.), which received assent on 13th November 1968, and commenced upon a proclaimed date. By s. 3 of the amending Act, s. 2A was inserted into the Act:

"2A (1) This Act shall be read and construed subject to the limits

of the legislative powers of the State and so as not to exceed those

powers, to the intent that, where any provision thereof, but for

this section, would be construed as being in excess of those powers,

it shall nevertheless be a valid enactment to the extent to which it

is not in excess of those powers.

(2) This section shall be deemed to have come into operation on

the date this Act came into operation." (at p99)

6. Apart from this provision there is no provision in the statutes of Western Australia requiring the Act to be so read and construed. The plaintiff's submission is that the provisions of the Act, if allowed to operate according to their terms in relation to its receipt of freight for inter-State carriage, infringe the freedom of inter-State trade and commerce guaranteed by s. 92 of the Australian Constitution. Although the amendment of the Act was not operative at the inception of this suit, it is now. It would be appropriate therefore as the plaintiff's action really relates to the future receipt of freight to construe the Act as directed by s. 2A. In the event, therefore, that the Court should accept the plaintiff's submission, and the Act prove susceptible of such a distributive operation, the appropriate declaration would be that the Act upon its proper construction does not apply to such receipts or acknowledgments in writing brought into existence in Western Australia in respect of the receipt of such freight as may be specified in the declaration. (at p100)

7. The presently significant provisions of the Act are as follows:

"16 (1) Subject to subsection (2) of this section, from and after

the commencement of this Act the stamp duties to be charged for the

use of His Majesty upon the several instruments specified in the

Second Schedule to this Act shall be the several duties in the said

schedule specified, which duties shall be in substitution for the

duties chargeable under the enactments repealed by this Act, and

shall be subject to the exemptions contained in this Act and in any

other Act for the time being in force.

16 (2) Without prejudice to the operation of section nineteen of

this Act, no stamp duties shall be charged as provided in subsection

(1) of this section upon any instrument that contains or relates to

a transaction in the official short term money market.

17 (1) All stamp duties for the time being chargeable by law upon

any instruments are to be paid and denoted according to the

provisions in this Act contained, and subject to any express

provision of this Act or any regulation may be denoted by either

impressed or adhesive stamps.

96 For the purposes of this Act "receipt" means any note,

memorandum or writing whatsoever -

(a) by which any money or any bill of exchange or promissory note

for money is acknowledged or expressed to have been received,

deposited or paid; or

(b) by which any debt or demand or any part of a debt or

demand is acknowledged to have been settled, satisfied

or discharged; or

(c) that signifies or imports any such acknowledgment,

whether the note, memorandum or writing is or is not signed with the

name of any person.

97 The stamp upon a receipt shall be cancelled by the person by

whom the receipt is given before he delivers it out of his hands.

99 (1) If any person -

(a) gives any receipt liable to duty and not duly stamped;

or

(b) in any case where a receipt would be liable to duty refuses to

give a receipt duly stamped; or

(c) upon a payment to the amount of ten dollars or upwards

gives a receipt for a sum not amounting to ten dollars,

or separates or divides the amount paid with intent

to evade the duty,

he shall be liable to a penalty not exceeding forty dollars.

(2) If upon payment of an amount in any case where a receipt would

be liable to duty, the person who receives the payment does not give

or tender to the person who makes the payment a receipt in writing

duly stamped, the person who receives such payment shall be guilty

of an offence, and on conviction shall be liable to a penalty not

exceeding twenty dollars.

99 (4) This section does not require a receipt to be given or

tendered by a person who has given notice to the Commissioner

pursuant to subsection (1) of section ninety-nine A of this Act

until the notice is cancelled pursuant to that section.

(5) Where a receipt has not been requested, a receipt shall be

deemed to have been given for the purposes of this section, if a

receipt is made out and duly stamped notwithstanding that the

receipt is not delivered or sent to any person.

(6) Where a receipt is made out and duly stamped but not delivered

or sent to the person entitled thereto or authorised to receive it,

the person making out the receipt shall retain possession of it for

at least two years after it is so made out.

99A (1) Any person referred to in, and to whom paragraph (a), (b)

or (c) under the heading "Receipt" in the Second Schedule to this

Act, applies and any other person who on application to the

Commissioner has been granted permission in writing by him so to do,

may give notice in writing in the prescribed form to the

Commissioner that he elects to pay duty under this section instead

of being obliged to comply with the requirements of this Act with

respect to the payment of duty on receipts.

99B (1) Where a person has given a notice to the Commissioner

pursuant to subsection (1) of section ninety-nine A of this Act

until the notice is duly cancelled pursuant to subsection (2) of

that section the person -

(a) shall forward to the Commissioner at such intervals

as the Commissioner in writing directs a statement in

the prescribed form verified in the manner prescribed,

setting out the total of all amounts received or deemed

to have been received by, or paid or deemed to have

been paid to, or deposited with or deemed to have been

deposited with that person during the prescribed

period; and

(b) shall forthwith pay to the Commissioner as duty on

that statement an amount calculated at the rate of -

one cent for each ten dollars and also for any fractional

part of ten dollars, if the person so forwarding the

statement is a person referred to in, and to whom

paragraph (a), (b) or (c) under the heading "RECEIPT"

in the Second Schedule to this Act, would otherwise

apply

on so much of the total amount so set out in the statement

as represents the aggregate of the amounts in

respect of which a receipt given for each of those

amounts would have been liable to duty under and in

accordance with that Schedule, if the person had not

included that amount in the statement forwarded to

the Commissioner." (at p102)

8. The Second Schedule of the Act contains a list of instruments and sets out the appropriate rate of duty in relation to each and as well a description of exempt instruments. From that Schedule, it appears that the duty payable on a receipt given by a company as defined by the Companies Act, 1961 (W.A.), or by a foreign company is ad valorem of the amount of money received; in substance, one cent in respect of each ten dollars of which the receipt is acknowledged. (at p102)

9. A law imposing taxation upon or in respect of an activity necessarily creates a burden directly upon that activity which is necessarily inconsistent with the freedom of that activity in the sense of s. 92 of the Constitution. In the case of taxation the question cannot be whether the amount of the tax is itself such a burden. The tax itself may be small and in itself of little commercial significance. But the law imposing it will of its nature, in my opinion, be burdensome in the relevant sense. In its nature therefore a law imposing a tax upon or in respect of an inter-State activity is incompatible with the absolute freedom of that activity and of the freedom to do so of the person engaging or to engage in it. But, though it may not be taxed, charges may be made for services rendered in connexion with the inter-State activity. Though there is room for considerable difference of opinion as to what relevantly amounts to a tax and as to what is no more than a charge for services rendered, this area is not involved in this case. The receipt duty imposed by the Act, however regarded, is unquestionably a tax. (at p102)

10. The critical question in the case is whether on the one hand it is a tax upon a part of the commercial activity of transporting goods from one State to another, or if it is not in substance a tax on that activity itself is it a tax upon an activity so closely and necessarily associated with the inter-State commerce that a tax upon it burdens that commerce, or whether on the other hand it is no more than a duty on an instrument. (at p102)

11. I say the question is whether the duty is in substance a tax upon or in respect of the inter-State activity because in relation to the constitutional guarantee we are dealing with matters of substance. Both the concept of trade and commerce and the concept of freedom in relation thereto are matters of substance, not to be confined to or by form or formula. (at p102)

12. The question, the answer to which determines, in my opinion, the fate of this demurrer, may be expressed as whether the Act taxes the creation of the document or the receipt of the money in respect of which the acknowledgment of receipt is written out. The submission of the plaintiff is that it is a tax upon the inter-State activity; the submission of the defendant is that it is no more than a stamp duty upon a document or instrument. (at p103)

13. A stamp duty upon an instrument is, in my opinion, essentially a tax upon the creation of the instrument. If it is not brought into existence there is no instrument to bring to duty. Whether or not there is an instrument is a matter for the party or parties to it. Thus, as it seems to me, viewed as a tax upon an activity, the stamp duty on such an instrument is a tax upon the creation of the document. It is not a tax upon the property the subject matter of the instrument or upon the activity out of which the decision to create the document arose. (at p103)

14. In form the tax imposed by s. 16 of the Act is a duty payable upon a writing. The writing may be one of three different types. First, it may be a receipt given by the recipient of money to the payer of that money in exchange for it, voluntarily and for his own or their mutual purposes. Second, it may be a written acknowledgment brought into existence under compulsion of the Act simply in order that the appropriate stamp to represent the amount of the duty may be placed upon it and not in order that it should be given to any person or operate as a commercial instrument (see s. 99 (5) and (6)). It should be observed that it is not an offence not to hand over the acknowledgment. It is only an offence not to create and stamp it. Third, it may be a return of all money received or deemed to have been received by the person making the return in a stated period of time made in conformity with the Act and as an alternative to the creation of separate writings in respect of each separate receipt of money (see ss. 99A and 99B). The actual amount of duty payable may differ according to whether individual acknowledgments are written out or a return of receipt made to the Commission. I have described each of the above as a writing. Only the first can, in my opinion, properly be called an instrument or for that matter a document in any relevant sense. (at p103)

15. Is the duty imposed by the Act upon or in respect of the second and third classes of writing which I have described truly and in substance merely a tax upon the creation of an instrument? I might mention in passing that it may be questionable whether the duty is imposed at all on the writing in the third of these classes; for in that case there is a direct obligation to pay the tax on the total amount of money received during the span of time covered by the return although the duty is expressed as duty "on the statement" (see s. 99B). The return itself is not, in my opinion, a dutiable instrument (see Second Schedule). In my opinion, it is no more than part of the administrative mechanism of quantifying and collecting the amount of tax payable upon the receipt of money. Whilst the making of the return is at the option of the person making it and subject to the consent and approval of the Commissioner for Stamp Duties, the very fact that it is an acceptable alternative to the stamping of the writings in the second class is of some significance, though may be not of critical significance in deciding the actual question which we are here dealing with, namely, is the tax a mere instrument duty or a tax on the receipt of money? This same question was, in my opinion, critical to the resolution of the problem in the case of Western Australia v. Hamersley Iron Pty. Ltd. (No. 1) [1969] HCA 42; (1969) 120 CLR 42 in which the Court recently delivered judgment. In that case, I came to the clear conclusion, as did the late Sir Alan Taylor, that the duty in relation to the receipt of the price on the sale of goods was a tax on the receipt of the purchase price for goods sold; it was not a mere instrument duty. It was thus in the same case as a tax on the price charged for the goods; it was in substance a sales tax and therefore, according to the decisions of this Court, an excise. It mattered not that the section there under attack was limited to the receipt of money out of State: it was none the less, as applied to the receipt of the purchase price for goods sold, a tax on the receipt of that price. I remain of that opinion. In that case the writing which was required to be brought into existence was in substance of a like kind with the writings in the second class of the three classes which I have already set out. It was not required to be used commercially at all. In my opinion, for that reason and by reason of the compulsion of the statute to make writings of the second class, there is a radical difference between the first and second class of those writings: and as I have said, the third class is scarcely an instrument at all. (at p104)

16. In the case of a duty upon a receipt brought into existence by the person receiving money, not under any compulsion of law, the duty may be regarded, in my opinion, as a tax upon the creation of the instrument. This, in my opinion, would be so, even if the giving of the receipt was customary, though not obligatory, in connexion with business transactions of the kind of that out of which the payment of the money in respect of which the receipt was given arose. The same is true of a receipt given by the recipient to the payer merely at his request and for the payer's convenience. (at p105)

17. As a matter of contract between parties for the carriage of goods, there is an obligation to pay the freight but none, ex contractu, to give a written receipt for the freight when paid nor is there any such obligation under the common law. Indeed, where payment is made by crossed cheque, little if any need arises for any acknowledgment of the receipt of the sum represented by the cheque. In relation therefore to stamp duty on receipts not brought into existence by compulsion of the law of the legislature imposing the duty, I am of opinion that that duty is properly regarded as a tax upon the creation of the instrument for the purposes of the party or parties and not as a tax upon the receipt of the money itself. It is, in my opinion, otherwise in relation to the writings produced under compulsion of that law. In that case as in Western Australia v. Hamersley Iron Pty. Ltd. (No. 1) [1969] HCA 42; (1969) 120 CLR 42 , in my opinion, the duty is a tax on the receipt of the money itself. In that case it was, amongst other things, a tax upon the receipt of the purchase price of goods : in this case it is, amongst other things, a tax upon the receipt of freight for the carriage of goods. In my opinion, the matter could not be clearer than in the case of the return made pursuant to s. 99B. In neither of the second nor the third classes of writing to which I have referred can the tax, in my opinion, be regarded as merely a duty upon an instrument. (at p105)

18. So to conclude, in my opinion, resolves the question in this case. Where the money is received as freight for the inter-State carriage of goods the combined effect of ss. 16, 99, 99A and 99B and the Second Schedule is to impose a tax upon the receipt of that freight. Can commercial inter-State transportation or carriage be absolutely free if the receipt of the freight thereon is directly taxed ? The charging and receiving of freight for such transport or carriage is essentially, in my opinion, part of the commercial activity of inter-State transport or carriage. As I remarked earlier, without it there is in reality no commerce. Carriage for reward is part of that inter-State trade, commerce and intercourse of which the freedom is guaranteed by the Constitution : see Australian National Airways Pty. Ltd. v. The Commonwealth [1945] HCA 41; (1945) 71 CLR 29 If the Act imposes a tax on that activity or upon a part of it, in my opinion, it infringes the guarantee and is unable lawfully so to operate. It is quite distinguishable from the case of a general income tax as may be seen in reasons given in the A/asian Scale Co. Ltd. v. Commissioner of Taxes (Q.) [1935] HCA 23; (1935) 53 CLR 534 It does not matter that the statute also taxes the receipt of money which is not freight, the absence of discrimination, as it is called, not saving the law from invalidity. Counsel for the defendant felt bound to concede that a law which subjected all freight to tax would offend the constitutional guarantee in so far as it fell on freight for inter-State carriage. In my opinion, this concession was rightly made. (at p106)

19. The reasons put forward by the defendant in support of the validity of the duty in relation to freight received for inter-State transport or carriage included an emphasis upon the generality of the law imposing the tax, its "characterization", the absence of any reference to freight, the smallness of the impost and the general community purposes for which the tax is raised. (at p106)

20. But none of these considerations are relevant to the question of validity in relation to s. 92 of the Constitution. The validity of a law in relation to s. 92 cannot be affected by what it is called, or by its so-called characterization. It is the operation of the law including, in my opinion, the effect which that operation not remotely produces which is the matter to be set against the guaranteed freedom of trade and commerce. (at p106)

21. I conclude therefore that a duty upon the written acknowledgment brought into existence under the compulsion of the Act in respect of the receipt of freight for inter-State carriage is a tax upon the receipt by the trader of that freight. To tax that receipt is, in my opinion, to impair the freedom of the inter-State trade and the trader in respect of his commerce and to do so directly, the receipt of the reward for the carriage being an essential part of the protected inter-State transaction. I have no difficulty in this case in giving the Act a distributive operation so that by virtue of s. 2A upon its true construction it does not apply to the receipt of such freight. (at p106)

22. In my opinion, it should be declared that the Stamp Act, 1921-1967, does not oblige the plaintiff to create or issue a receipt for money paid to or received by the plaintiff in the State of Western Australia as freight for the carriage of goods from a place in a State other than the State of Western Australia to a place in that State, or to include in any return made by the plaintiff to the Commissioner of Stamps pursuant to s. 99B of the said Act any money so paid or received as such freight. (at p106)

McTIERNAN J. In my opinion the matters alleged in the statement of claim would not support a declaration of the nature of any of the declarations sought by the plaintiff, because, in my view, it does not disclose that the Stamp Act, 1921-1967, impairs the freedom of the plaintiff's inter-State commerce to which the statement of claim refers. (at p107)

2. The Court was not referred to any decision on the precise question whether a receipt given by a carrier in relation to money paid to him as reward for inter-State carriage by him of goods or passengers is exempt from stamp duty charged upon the receipt by a legislative Act ; nor to a dictum of the Court on the question. (at p107)

3. The statement in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55, at p 78 was relied upon to support a right in the plaintiff to the declarations it claims. I do not think that this statement is decisive in the plaintiff's favour of the contention that the freedom of its inter-State commerce is impaired by the provisions of the Stamp Act relating to receipts. It seems to me that it is not easy to hold that the giving of a receipt upon which the Act charges stamp duty is a

"fact or event or thing which itself forms part of trade, commerce

or intercourse or forms an essential attribute of that conception

(essential in the sense that without it you cannot bring into being

that particular example of trade, commerce and intercourse among the

States)". (at p107)

4. In my view the provisions of the Stamp Act relating to a receipt or a s. 99B "statement" are not restrictive of trade, commerce or intercourse among the States. It is not necessary in order to say that trade is "free" that the trader should be free from an obligation imposed by a statute to give receipts to his customers or that the receipts he issues should not be dutiable. I reach the conclusion that the plaintiff's constitutional freedom accorded to him by s. 92 to carry goods in the course of his trade, commerce and intercourse among the States suffers no impairment by the operation of the Stamp Act ; and that the Act does not impose a burden on this activity, incompatible with s. 92. (at p107)

5. The reasoning in Hughes & Vale Pty. Ltd. v. New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 127, at pp 162, 172 in my view, supports the contention for the State of Western Australia that the Stamp Act does not contravene s. 92 as alleged by the plaintiff. I take the view that the stamp duty imposed by this Act on a "receipt" within the meaning of that Act, or on a s. 99B statement is an example of a fiscal liability similar to those mentioned at the bottom of p. 172 of the report of the last-mentioned case ; and that the provisions of the Act imposing stamp duty on receipts belong to that concept of "law" of which s. 92 assumes the existence, and with which the section does not intend to interfere : see observation of Griffith C.J. in Duncan v. Queensland [1916] HCA 67; (1916) 22 CLR 556, at p 573 approved in The Commonwealth v. Bank of New South Wales [1949] HCA 47; (1949) 79 CLR 497, at p 639 (at p108)

KITTO J. The plaintiff has given, and has not cancelled, a notice to the Commissioner of Stamps under s. 99A of the Stamp Act, 1921-1967 (W.A.), that it elects to pay duty under that section instead of being obliged to comply with the requirements of the Act with respect to the payment of duty on receipts. This being so, s. 99B requires the plaintiff to forward to the Commissioner at intervals a statement setting out the total of all amounts received by or paid to it, and to pay as duty on that statement an amount calculated at receipt duty rates on the aggregate of the amounts in respect of which a receipt given therefor would otherwise have been liable to receipt duty. The duty is according to a sliding scale depending on the amounts of the payments received. While the notice remains uncancelled the plaintiff is not liable to pay duty by impressed or adhesive stamps as required by the Act in respect of receipts : s. 99A (4) ; but if it were to cancel the notice it would be required by s. 99 to give a stamped receipt for every payment it receives. (at p108)

2. The plaintiff receives in Western Australia payments as freight payable under contracts for the carriage of goods for reward from places in one State to places in another ; and it contends that s. 92 of the Constitution prevents the above-mentioned provisions of the Stamp Act from applying to it in respect of such payments. It sues the State of Western Australia for declarations to that effect, and the State demurs. (at p108)

3. The statement of claim alleges that the payments in respect of which declarations are sought are received in the course of the carrying on by the plaintiff of a business as, inter alia, a carrier of goods between States for reward. It is important, because it goes to the root of the case, to observe that this allegation is immaterial to the plaintiff's claim to the protection of s. 92. In fact it is worse than immaterial : it tends to confuse the issue by implying that the freedom which s. 92 assures is freedom not only from restraints and burdens upon individual acts of inter-State trade, commerce or intercourse, but also from consequential detriments to businesses in which such acts occur. The Banking Case (The Commonwealth v. Bank of N.S.W.) [1949] HCA 47; (1949) 79 CLR 497 established that s. 92 forbids only such restraints and burdens as, but for the section, laws would impose upon inter-State trade by their direct operation ; and that necessarily involves, as the decisions of this Court have repeatedly shown over the last twenty years, that upon a claim to the protection of s. 92 the crucial question is whether the law in question operates directly to restrict or burden something that is actually within, and not merely connected with, the concept of inter-State trade, commerce and intercourse. The economic or social consequences that flow from its legal operation are irrelevant, as the Privy Council said in so many words in the Banking Case (1949) 79 CLR, at p 637 and the operation of the impugned law upon anything outside the very subject matter for which freedom is decreed is likewise, and for the same reason, irrelevant. Accordingly, a law which imposes a burden upon a person in respect of some act that he does in his business is not forbidden by s. 92 unless the act itself, as distinguished from all other acts in or aspects of the business, is or forms part of inter-State trade, commerce or intercourse ; if it is not, the person gains no protection from s. 92 by showing that in his business some other act is an act of inter-State trade, commerce or intercourse and that the two acts are interconnected as parts of a single sequence of business events. Thus, to take a familiar example, it is one thing, and correct, to treat an intraState movement as within the protection of s. 92 if it is an integral part of a larger movement which as a whole is an inter-State movement ; but it is another thing, and erroneous, to treat an intraState movement as within the protection on the plea that, though not an integral part of an inter-State movement, it is an essential step in preparations for a future inter-State movement, and that the preparations and the inter-State movement are both parts of the one business. Such a plea confuses the very things that the Banking Case showed must be kept distinct. The freedom with which s. 92 is concerned is only legal freedom - freedom from restraints and burdens imposed by or under laws - not immunity from the more remote, de facto, disadvantages which may ensue when laws have operated according to their terms. (at p109)

4. All this has been amply illustrated by the Tasmanian road transport cases, where the basic principle that has been applied is none other than that which the Margarine Cases exemplified in their own field. The differences of opinion which have arisen among members of the Court in cases of this kind are largely to be explained as differences upon the question of fact, namely whether a movement which itself crosses no State lines is in truth a part of, as distinguished from a mere preparation for, a larger and inter-State movement : see Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353 and cases there cited. I took an opportunity to review some of the principal authorities in Samuels v. Readers' Digest Association Pty. Ltd. [1969] HCA 6; (1969) 120 CLR 1, at pp 27-30 ; sub nom Re Readers' Digest Association Pty Ltd. [1969] HCA 6; 43 A.L.J.R. 116, at pp. 125, 126. and shall not now repeat what I said in that case. The present case seems to me to present less difficulty than some and indeed to afford a classic example of a law to which s. 92 has nothing to say since the only direct operation of the law is to impose a burden upon an intra-State act, with consequences, but no more than consequences, for inter-State trade. What, in the plaintiff's business, constitutes trade, commerce or intercourse among the States ? Only the inter-State transportation of goods. To say that it is the inter-State transportation of goods for reward adds nothing, except that the plaintiff receives money for performing its acts of inter-State transportation ; but the statement has nevertheless been made repeatedly in the course of the argument for the purpose of suggesting that a law which taxes receipt of the freight taxes the transportation for reward. It is precisely at this point that it becomes imperative to observe the general principle I have been discussing. To say, as the plaintiff does, that the Stamp Act taxes the transportation for reward is to use a loose expression. The Act taxes the receipt of the reward and it taxes nothing else. That, and only that, is its direct operation. To say that that operation renders the transportation for reward, or the plaintiff's inter-State transportation business generally, less profitable than it would otherwise be is to wander at once away from the notion of legal freedom into the area of economic consequences. In a business sense it is undeniable that an effect of imposing a tax upon intra-State receipts is, in relation to an intra-State receipt of freight for an inter-State carriage of goods, to burden the business of inter-State carrying, and to burden every individual act of inter-State carrying for which payment is made within the State. But that is a proposition of economics, for the truth of it depends upon the word "effect" being used as referring to ultimate business consequences. The law that imposes the tax does not operate upon or by reference to any conduct by which payments happen to be earned. Its concern is only with the bare fact that money is received, regardless of whether it has been earned in this way or in that or not earned at all. The consequences that flow from the taxing of a receipt may be of many kinds, and their remoteness from the receipt itself may be of varying degrees ; but however disadvantageous they may be they are no impairment of any freedom, except the freedom to receive a payment. (at p111)

5. I have no doubt that a law purporting to tax gross receipts from the carriage of goods for reward would, in its application to receipts from the inter-State carriage of goods, collide with s. 92 and be inoperative accordingly. The case would be analogous to the case of a law imposing a tax on gross receipts from sales, which, as was recognized in A/asian Scale Co. Ltd. v. Commissioner of Taxes (Q.) [1935] HCA 23; (1935) 53 CLR 534 would undoubtedly impair the freedom existing by force of s. 92 in respect of inter-State sales. But the reason is that the law would operate directly upon the carriage of goods in the one case and the sale in the other, since it would take as the criterion for the tax the character which some receipts have as the proceeds of carriage or sale ; and of course both carriage and sale are part and parcel of the concept of trade, commerce and intercourse. But the law we have to consider in the present case is one which, "taking no aspect of trade, commerce or intercourse among the States and no attribute of that conception as the criterion of its operation, (produces) an incidental effect upon given transactions of inter-State trade, commerce or intercourse". It "imposes (a tax) upon conduct without reference or regard to acts of inter-State trade, commerce or intercourse, (and therefore) will not be held to be struck by s. 92 merely because it involves the accidental consequence that acts of inter-State trade, commerce or inter-course" are in consequence less remunerative : see Mansell v. Beck [1956] HCA 70; (1956) 95 CLR 550, at pp 564, 565 quoting from the judgment of Fullagar J. in Hospital Provident Fund Pty. Ltd. v. Victoria [1953] HCA 8; (1953) 87 CLR 1, at p 36 (at p111)

6. In my opinion the plaintiff has shown no title to any relief and the State's demurrer should be upheld. (at p111)

MENZIES J. I have reached the same conclusion as Kitto J. and for the same reasons. In my opinion s. 92 of the Constitution does not prevent the provisions of the Stamp Act from applying to the payments received by the plaintiff. (at p111)

2. Accordingly, the demurrer should be upheld. (at p111)

WINDEYER J. I would allow this demurrer. In my opinion it does not appear from the statement of claim that the Stamp Act, 1921-1968 (W.A.), impairs the freedom of trade between the States which is assured by s. 92. The provisions which are attacked amount in their operation to a duty calculated by reference to sums received. In the case of a trader carrying on an inter-State business such a tax may - to the extent to which it cannot be passed on to customers or consumers - reduce his profits. In that respect it operates as does an income tax. But this Court has said more than once that for s. 92 to destroy legislation, it, the legislation, must in its operation create a real and direct impediment to something which is of the essence of trade between the States, such as the movement of things from State to State. Its effect must not be remote and distant. It is not enough that some incident of trade generally has to be performed in a particular way. Nor is it enough that some fiscal levy in respect of a trade generally may make a trade less economically profitable than otherwise it would be - if the fiscal burden falls indifferently upon the same incident in both intra-State and inter-State trade. That to my mind is not of itself an impairment of the freedom which s. 92 assures. I can imagine circumstances in which a stamp duty on receipts could, by reason of amount or a discrimination in relation to inter-State transactions or in some other way, be obnoxious to s. 92. But I do not see the Act now in question as of that character. Authorities which I think support me in this opinion are referred to in judgments of other members of the Court. I am by that relieved of the need to discuss them. Moreover I prefer to look to the words of s. 92, in the light of general principles as stated by this Court, rather than to seek to apply to the case in hand words from judgments given in the past in relation to different facts. (at p112)

2. I venture to refer to what I wrote in Damjanovic & Sons Pty. Ltd. v. The Commonwealth [1968] HCA 42; (1968) 117 CLR 390, at pp 406, 407 , as expressing in general terms my outlook on the problems which s. 92 creates, and to refrain from repeating it here. I do not think that the questions which arise under s. 92 are solved by using the word "burden" either as a verb or a noun. Of course, having to pay a tax is a burden to a trader if he cannot pass it on. But I am not persuaded that the burden of a tax levied upon moneys received in the course of trade necessarily impairs freedom to engage in trade within a State or across State boundaries. Its effect on freedom to trade is the same in either case, although it is only in respect of the latter that freedom is protected by law. What is said for the plaintiff in this case is, in substance, that a tax upon the receipt of moneys paid in respect of inter-State commercial transactions cannot be validly imposed by either a State or the Commonwealth. It seems to me that whether such a tax is an impairment of the freedom which s. 92 assures depends upon the whole of the circumstances, including I think its amount. I agree that, if it be an unlawful "burden" in the sense in which that word has come into favour in this connexion, it matters not whether it be a small burden or a heavy burden. But, in asking whether it has the quality of a burden in that sense, its weight and commercial operation are not, I think, to be ignored. There is, I consider, no sure distinction here between quality and quantity ; for quantity can be an attribute of quality. (at p113)

OWEN J. The plaintiff is a company incorporated in Victoria which amongst its activities carries on business in Western Australia as an inter-State carrier of goods for reward. In the course of carrying on that business it receives in Western Australia from persons in that State whose goods are carried by it from Western Australia to other States and from other States to Western Australia payment of the freight charged by it for the carriage of those goods. The question arises whether in respect of such receipts the plaintiff is liable to pay the duty imposed by the Stamp Act, 1921-1968 (W.A.). (at p113)

". . . the stamp duties . . . upon the several instruments

specified in the Second Schedule to this Act shall be the several

duties in the said Schedule specified. . . ."

And by the Second Schedule it is provided that, subject to certain exemptions which are not material in the present case, the duty payable on receipts is one cent where the amount received is $10 or less and, where the amount received exceeds $10, one cent for each $10 and fractional part of $10. The duty thus imposed is not inaptly described by the Act as an ad valorem duty (see s. 100 (2)). (at p113)

3. The general scheme of the Act, in so far as it deals with receipts, is to make it an offence for a person receiving a payment in any case where a receipt would be liable to duty not to give or tender to the person who makes the payment a receipt in writing stamped by impressed or adhesive stamps (s. 99 (2)), except in cases coming within s. 99A. Section 99A provides an alternative method by which the recipient of money may pay the duty. It enables persons who answer one or other of the descriptions set out in certain paragraphs of the Second Schedule (and the plaintiff is one such person) and any other person who has been granted permission to do so by the Commissioner of Stamps, to give notice to the Commissioner that he elects to pay duty under that section instead of complying with the requirements of s. 99. In such a case the person concerned is required to forward to the Commissioner from time to time a statement in writing setting out all amounts received by him during the period covered by the statement and to pay duty at the rate of one cent for each $10 and fractional part of $10 on so much of the total amount set out in the statement as represents the aggregate of the amounts in respect of which a receipt given for each of those amounts would have been liable to duty if the amount had not been included in the statement. At all relevant times the Act contained a severability clause (s. 2A) requiring the Act to be read and construed subject to the limits of the legislative powers of the State and so as not to exceed those powers to the intent that, where any provision thereof, but for s. 2A, would be construed as being in excess of those powers, it is nevertheless to be a valid enactment to the extent to which it is not in excess of those powers. (at p114)

4. The plaintiff's submission is that it is not liable to pay duty in respect of payments made to it in Western Australia by persons in that State for freight charged by it for the carriage of their goods inter-State. It is said that to impose such an obligation upon it would be contrary to s. 92 of the Constitution and that, having regard to s. 2A, the Act should be construed so as not to apply to the receipt of payments such as those with which this case is concerned. (at p114)

5. I have come to the conclusion that the plaintiff's submission should be upheld. It is true that the Act is called a Stamp Act and that it takes the form of requiring the recipient of money, whether received in the way of trade or not, to bring an instrument into existence and pay duty upon it but it seems to me that the tax which the Act imposes in such cases is in fact, although not in form, a tax upon gross receipts, the amount of the tax being measured by the amount received. The plaintiff's contentions are not, I think, met by saying that the payments and receipts with which this case is concerned are transactions which, looked at in isolation, involve no inter-State element. In my opinion the receipt by the plaintiff of moneys charged by it for freight for carrying goods inter-State is an essential element in the inter-State trade which it carries on. If that is so, then to require it to pay a tax, the amount of which is measured by the amount received, would be, in my opinion, to impose a burden upon that trade which would infringe s. 92 if it were not for the existence in the Act of s. 2A. I think some support for this view is to be found in the judgments of some of the members of this Court, and particularly in the judgment of Starke J., in A/asian Scale Co. Ltd. v. Commissioner of Taxes (Q.) [1935] HCA 23; (1935) 53 CLR 534 That case was concerned with the validity of s. 14 (4) (iv) of The Income Tax Act of 1924 of Queensland. The first paragraph of s. 14 (4) (iv) provided that the taxable income of a foreign company carrying on business in Queensland should be the amount of the profits made by it in Queensland. Where, in the opinion of the Commissioner, the amount of those profits could not otherwise be satisfactorily determined, the second paragraph of s. 14 (4) (iv) enabled him to assess the taxable income at a sum which bore the same proportion to the total profits made by the company as the sales made by it in Queensland bore to its total sales. The third paragraph of s. 14 (4) (iv) provided that in certain events the Commissioner might assess the taxable income of the company at a sum equal to seven and one half per cent of the amount of the total sales made by it in Queensland. The sales made by the company in Queensland included inter-State sales and the second paragraph of s. 14 (4) (iv) was applied by the Commissioner to determine the amount of its taxable income. It was argued that the result of applying that paragraph was to impose a tax, not upon the company's net income, but upon a proportion of its gross receipts from sales and that, to the extent that those receipts included receipts from inter-State sales, the company's inter-State trade was burdened. The argument failed since, as was pointed out by the Court, what the Act imposed was a tax upon a proportion of the company's profits, notwithstanding the fact that the amount upon which the tax was levied might, in certain circumstances, be ascertained by the use of the formula which the second paragraph of s. 14 (4) (iv) provided. But it was the making of profits that gave rise to the liability to tax and that paragraph merely provided machinery whereby in certain circumstances the amount of those taxable profits might be determined. For present purposes, the significance of the case lies in the fact that, on my reading of the judgment of Starke J., it appears to me that his Honour would have taken the view that had the tax been, as had been argued, one imposed upon and measured by the gross proceeds of sales, including inter-State sales, it would have offended against s. 92. If this was not his Honour's opinion I find it diffucult to understand why he should have been at pains, as he as, to distinguish between a tax on net income and a tax on gross receipts and, although it does not appear so plainly from the joint judgment of Rich and Dixon JJ., their Honours seem to me to have had the same distinction in mind when they pointed out, at p. 553, that the second paragraph of s. 14 (4) (iv) did not make the volume of sales made by the company a measure of the tax and that in this respect it differed from the third paragraph of s. 14 (4) (iv). That third paragraph, they said, had not been applied in making the assessment and for that reason, since it was not suggested to be inseverable from the second paragraph, it could for the purposes of the case be put aside. At pp. 556, 557, Starke J. said:

"A State must not, therefore, burden inter-State trade, by

taxation or otherwise ; it is burdened if a tax be laid upon an

operation or act of inter-State commerce. But it has long been

recognized, if not actually decided by this Court, that a general

income tax imposed by the States is not obnoxious to the provisions

of s. 92, even in cases - which are many - where the income includes

receipts from inter-State trade. The reason is that a general

income tax is not imposed upon any operation or act of inter-State

commerce ; it is laid after inter-State trade is completed, 'after

all expenses are paid and losses adjusted, and after the recipient

of the income is free to use it as he chooses'. (Cf. Peck & Co. v.

Lowe [1918] USSC 127; (1918) 247 US 165, at p 175 ; [1918] USSC 127; 62 Law Ed 1049, at p 1052

; United States Glue Co. v. Town of Oak Creek [1918] USSC 146; (1918) 247 US 321 ;

62 Law. Ed. 1135.) The Queensland Act (s. 14 (4) (iv)), it should

be observed, taxes profits made by the company in Queensland, not

sales or the gross proceeds of sales. In the case in which those

profits cannot, in the opinion of the Commissioner, be otherwise

satisfactorily determined, the tax is nevertheless laid upon profits

- the total profits made by the company - but they are measured by

the proportion that the sales made in Queensland bear to the total

sales made by the company. It is simply a means - artificial it may

be - of estimating the profits made in Queensland, but no tax is

imposed upon the sales or the proceeds of the sales, 'either in form

or in fact'. (Cf. Maine v. Grand Trunk Railway Co.(1891) 142 U.S.

217 ; [1891] USSC 289; 35 Law. Ed. 994.) In my opinion a tax so levied in no wise

contravenes the provisions of s. 92 of the Constitution" (1935) 53

C.L.R., at pp. 556, 557. (at p116)

6. It is true that his Honour went on to say that he expressed no opinion on the validity of the third paragraph of s. 14 (4) (iv), which "raises other considerations, as may be gathered from the reasons already given", but when his reasons are examined I feel little doubt that he would have held that paragraph to be invalid had it been applied by the Commissioner in determining the company's taxable income. The decisions of the Supreme Court of the United States to which his Honour referred are, I think, of significance in the present case and are summed up in a passage from the judgment of that Court in United States Glue Co. v. Town of Oak Creek (2). After stating, at p. 326, that the question was whether a State, in levying a general income tax upon profits, might without contravening the commerce clause of the Constitution include in those profits the net income derived from transactions in inter-State commerce, the Court went on to say that:

"It is settled that a State may not directly burden inter-State

commerce, either by taxation or otherwise. But a tax that only

indirectly affects the profits or returns from such commerce is not

within the rule."

And, after referring to a number of earlier decisions, the judgment proceeded:

"The difference in effect between a tax measured by gross receipts

and one measured by net income, recognized by our decisions, is

manifest and substantial, and it affords a convenient and workable

basis of distinction between a direct and immediate burden upon the

business affected and a charge that is only indirect and incidental.

A tax upon gross receipts affects each transaction in proportion to

its magnitude and irrespective of whether it is profitable or

otherwise. Conceivably it may be sufficient to make the difference

between profit and loss, or to so diminish the profit as to impede

or discourage the conduct of the commerce. A tax upon the net

profits had not the same deterrent effect, since it does not arise

at all unless a gain is shown over and above expenses and losses. .

." (1918) 247 US, at pp 328, 329 (at p117)

7. If then it is right to conclude, as I do, that the effect of the relevant provisions of the Stamp Act is to impose a tax upon gross receipts, the amount of the tax being measured by the amount received, I am of opinion that that tax would, but for s. 2A, impose a direct burden upon the plaintiff's inter-State trade. I would therefore construe the relevant provisions of the Act as having no application to receipts of money paid by way of freight to the plaintiff in Western Australia by persons in that State under contracts made by it with those persons for the carriage of their goods inter-State. (at p117)

8. In my opinion the demurrer to the statement of claim should be overruled and a declaration should be made to the effect that the plaintiff is not obliged by the Stamp Act to pay duty on receipts for freight received by it in Western Australia from persons in Western Australia in the course of its business as a carrier of goods inter-State. (at p117)