Australian Coastal Shipping Commission v O'Reilly

High Court of Australia|1962-07-01|Before: Owen JJ

High Court of Australia Dixon C.J. McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ. Australian Coastal Shipping Commission v O'Reilly [1962] HCA 8

ORDER Appeal allowed with costs. Conviction or order of the Court of Petty Sessions set aside. In lieu thereof order that the information be dismissed with thirty guineas costs.

Section 17 of the Stamps Act 1946 (No. 5204), which is now replaced by the Stamps Act 1958 (No. 6375) Vict., and cl. II of the Third Schedule of that Act operated to impose a duty of threepence upon a receipt amounting to £2 or upwards. By s. 50 the expression "receipt" was defined to cover every acknowledgment of the receiving of money or a bill of exchange or promissory note or the settlement or satisfaction of a debt of the requisite amount. Section 53 provided that every person who gives any receipt liable to stamp duty and not duly stamped shall be liable to a penalty of not more than £5. By an information dated 23rd June 1961 the respondent O'Reilly, an officer of the Chief Office for Stamp Duties (Victoria) charged the appellant Australian Coastal Shipping Commission that on 24th July 1958 the Commission was liable to a penalty under s. 53 in that the defendant Commission did give to the Shell Company of Australia Ltd. a receipt liable to duty, namely a receipt for the sum of £107 which receipt was not duly stamped. The length of time elapsing between the date laid for the offence and the laying of the information does not exceed the special period allowed by sub-s. (21) of s. 53 in the case of an offence under sub-s. (1), which is three years. The facts upon which the information rested were proved; that is to say it was shown that a receipt had been given by the defendant in respect of a refund for empty drums to the Shell Company of Australia Ltd., that the amount shown on the receipt was £107 and that it was given by the cashier of the Australian National Line and that that was the name under which the defendant carried on its operations.

The defendant was convicted summarily upon the information and fined £2 and ordered to pay certain costs of the proceedings. The defendant appeals to this Court as of right on the basis of the proceedings being an exercise of federal jurisdiction. It was an exercise of federal jurisdiction because the defence raised was that by reason of s. 36 of the Australian Coastal Shipping Act 1956 and the effect, under s. 109 of the Constitution, of s. 36 upon the material provisions of State law, the receipt was not subject to stamp duty and the defendant Commission was not liable to conviction. The question on which the appeal turns is whether this is a good defence.

Section 36 of the Australian Coastal Shipping Commission Act 1956 consists of four sub-sections of which it is only the first that is really material. Sub-section (1) provides that, subject to s. 36 itself (scil. sub-ss. (2), (3) and (4)), the Commission is subject to taxation under the laws of the Commonwealth but is not subject to taxation under a law of a State or Territory of the Commonwealth to which the Commonwealth is not subject. Sub-section (2) removes the possibility of its being considered that the Commission was covered by an exemption of public authorities from liability to Commonwealth income tax. Sub-section (4) touches the value, for purposes of income tax assessment, of ships of the Commission and sub-s. (2) removes the Commission from the operation of a certain exemption from sales tax enjoyed by public transport authorities.

The purpose of sub-s. (1) is plain enough: it is to ensure that the Shipping Commission's operations shall be exposed to Federal but not to State taxation. In relation to Federal taxation it places the Commission within a category of liability outside which the Commission might otherwise be held to fall. It does not "impose" the federal tax within the meaning of s. 55 of the Constitution. In relation to State taxation it expresses an intention that the Commission shall not be liable. As a matter of interpretation it may be that this intention should be understood as not covering municipal rates and water rates and similar charges annexed to the occupation of land. With that we are not concerned. But apart from any question as to the intended scope of the application of s. 36 (1) it seems clear enough that, under s. 109 of the Constitution, its operation must be to exclude the Commission from liability to a State tax unless s. 36 (1) be invalid in so far as it attempts such exclusion. This was recognized on the part of the informant. His case was simply that in so far as s. 36 (1) purports to remove the Commission from a liability to State tax which it would otherwise incur, the provision was invalid. On the side of the defendant Commission it was not claimed that an immunity from State stamp duty on receipts would belong to the Commission were it not for s. 36 (1).

The statute establishes the Australian Coastal Shipping Commission as a body corporate with perpetual succession and a common seal; no corporators are expressly mentioned as such but there is a provision that the Commission shall consist of five Commissioners who shall be appointed by the Governor-General. Of these one is to be the Chairman and he is to be appointed for five years, another is to be Vice-Chairman and he is to be appointed for four years and there are to be three Commissioners to be appointed for three years, two years and one year respectively. Once these initial terms have severally expired all the appointments are to be for five years each (ss. 7 and 8). The functions of the Commission are to establish, maintain and operate shipping services for the carriage of passengers or mails or to provide for doing so. The services are limited to inter-State and overseas carriage and carriage to Territories. If the Minister is of opinion that a shipping service of the Commission is necessary to meet the needs of a particular area and that in the public interest it is desirable that it should be provided, he may direct the Commission to establish, maintain and operate a service (s. 17). Subject to this, the Commission is to pursue a policy directed to securing revenue to meet expenditure on revenue account and to allow a reasonable return on capital to the Commonwealth (s. 18). Freight rates, however, are to be subject to the approval of the Minister and so too is the place where the Commission establishes its head office (ss. 19 and 20). The Act contains directions as to a General Manager, employment of staff and accounting and auditing by the Auditor-General and as to reports to the Minister. The power to enact the Australian Coastal Shipping Act 1956, including s. 36 (1) itself, depends upon s. 51 (i) and s. 98 of the Constitution. Section 98 has been construed not as an independent grant of power but as a provision explanatory of the power to legislate with respect to trade and commerce with other countries or among the States: cf. Owners of s.s. Kalibia v. Wilson [1] ; Australian Steamships Ltd. v. Malcolm [2] . In other words, it means that in relation to inter-State and overseas trade, the Parliament may legislate as to navigation and shipping. Section 51 (xxxix) authorizes the Parliament to make laws with respect to matters incidental to the execution of any power vested by the Constitution in the Parliament and this has been treated (somewhat unnecessarily or superfluously, as I think, see Le Mesurier v. Connor [3] ) as including not only what attends, or arises in, the exercise of legislative power but also what is incidental to the subject matter of each of the powers conferred by the other paragraphs of s. 51. The description of the subject matter of those powers is of course brief, but independently of par. (xxxix) the description would be interpreted as including all matters that are incidental thereto. The remaining parts of par. (xxxix) relate to powers vested by the Constitution in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth and do not appear to touch this case. There can, however, be no doubt that the combination of s. 51 (i) with s. 98 gives the widest power to deal with the whole subject matter of navigation and shipping in relation to trade and commerce with other countries and among the States: Morgan v. The Commonwealth [4] ; Australian Steamships Ltd. v. Malcolm [2] . That necessarily includes complete power to establish a government shipping line for the purpose of such trade and commerce. By a government shipping line is meant a corporate agency of the Crown in right of the Commonwealth having for its purpose the carrying on of shipping services under the legislative control of the Parliament for the public advantage and not for private profit and subject only to ministerial directions given in pursuance of the statute. That is what has been done. The fact that a corporation is established to carry on the line makes it no less a function carried on in the interests of the Crown in right of the Commonwealth. The provisions which are set out above set up a corporation as the object of rights and duties and as a legal person in whom the property in the assets is vested. They show that the corporation is established for the purposes of the Crown in right of the Commonwealth. No private interests are involved. Why then should the validity of s. 36 (1) excluding the operation of State tax laws upon the transactions of the body be questioned? The legislative power seems ample not only to enable the Parliament to establish a corporate agency of the Commonwealth to carry on an overseas and inter-State shipping line, but also to protect the Commonwealth Government body from what may be considered the embarrassment of taxation by the various States. It is not material to enquire into the motive of the provision. Its validity depends upon its relevance to, or connexion with, the purpose. Speaking for the Supreme Court of the United States, Stone C.J. said: "Congress has not only the power to create a corporation to facilitate the performance of governmental functions but has the power to protect the operations thus validly authorized. "A power to create implies a power to preserve": McCulloch v. Maryland [1] . This power to preserve necessarily comes within the range of the express power conferred on Congress to make all laws which shall be necessary and proper for carrying into execution all powers vested by the Constitution in the Government of the United States (Const. Art 1 s. 8). In the exercise of this power to protect the lawful activities of its agencies Congress has the dominant authority which necessarily inheres in its action within the national field The exercise of this protective power in relation to state taxation has many illustrations.": Pittman v. Home Owners' Loan Corporation [2] . The case related to State tax levied upon a corporation created by Congress and of that Stone C.J. was speaking. See further Federal Land Bank v. Bismark Lumber Co. [3] . An analogy is to be found in the cases where the United States employs contractors for its government purposes. The question has repeatedly arisen whether an immunity claimed from State taxes exists. Of this a majority of the Supreme Court speaking through Black J. has said recently: "Today the United States does business with a vast number of private parties. In this Court the trend has been to reject immunizing these private parties from nondiscriminatory state taxes as a matter of constitutional law. Cf. Penn Dairies v. Milk Control Commission [4] . Of course this is not to say that Congress, acting within the proper scope of its power, cannot confer immunity by statute where it does not exist constitutionally. Wise and flexible adjustment of intergovernmental tax immunity calls for political and economic considerations of the greatest difficulty and delicacy. Such complex problems are ones which Congress is best qualified to resolve. As the Government points out Congress has already extensively legislated in this area by permitting States to tax what would have otherwise been immune." The doctrine propounded in the foregoing passages applies to federalism in Australia. Given the power in reference to a subject matter of legislation to set up a federal governmental corporation, the power of the Parliament extends to excluding the imposition of State taxes on its operations and the exclusion of liability on the part of the corporation to State taxes upon its activities. The fact that a government agency is set up at all brings under consideration the question whether its operations should or should not be exposed to State taxes. How that question should be decided is a matter of policy. But the legislative power under which, ex hypothesi, the agency is validly set up must surely be enough to enable the legislature to decide it. The various taxes of the six States the liability for which might otherwise be incurred in the course of the activities of what is called the National Shipping Line may have been considered something to which it is desirable that the Commonwealth Line should not be exposed. Once that view is taken it appears to be sufficiently clear that the legislative power must extend to excluding the imposition upon the activities of the Commonwealth Line of such taxation. It is clearly relevant to, and falls within, the subject matter of the power conferred by s. 51 (i) and s. 98. The form of the provision is to exclude State taxation by express words. The argument that under a legislative power of the Commonwealth the operation of State laws cannot be directly and expressly excluded has been used without effect in a succession of cases beginning with The Commonwealth v. Queensland [1] . It may be worth remarking that the interpretation, long since adopted by this Court, of s. 109 is hardly consistent in thought with such an argument. The Court has interpreted s. 109 as operating to exclude State law not only when there is a more direct collision between federal and State law but also when there is found in federal law the manifestation of an intention on the part of the federal Parliament to "occupy the field": see Hume v. Palmer [2] ; Ex parte Nelson [No. 2] [3] ; Ex parte McLean [4] . Surely, consistency with that doctrine demands that a legislative power, such as that given by s. 51 (i) together with s. 98, must extend to a direct enactment which expressly excludes the operation of State law provided the enactment is within the subject matter of the federal power. Indeed there can really be no other way of expressing the intention and accomplishing the federal legislative purpose. Section 36 (1) is a law with respect to trade and commerce with other countries and among the States and it seems to me to be within power and therefore valid.

(1910) 11 C.L.R. 689. 2. (1914) 19 C.L.R. 298. 3. (1929) 42 C.L.R. 481. 4. (1947) 74 C.L.R. 421. 5. (1914) 19 C.L.R. 298. 6. (1819) 4 Wheaton at p. 426 [4 Law Ed., at p. 606]. 7. (1939) 308 U.S. 21, at p. 33 [84 Law Ed. 11 at p. 16]. 8. (1941) 314 U.S. 95, at pp. 102, 103 [86 Law Ed. 65, at pp. 71, 72 and annotation pp. 76, 77]. 9. (1943) 318 U.S. 261, at p. 270 [87 Law Ed. 748, at p. 753]; 63 S. Ct. 617. 10. (1920) 29 C.L.R. 1. 11. (1926) 38 C.L.R. 441. 12. (1929) 42 C.L.R. 258. 13. (1930) 43 C.L.R. 472.

In my opinion it should be held that no liability was incurred by the Commission to stamp the receipt in the present case and the appeal should accordingly be allowed.

The question is whether the Australian Coastal Shipping Commission is liable to pay State taxation. The tax with which the case is concerned is duty on receipts imposed by the Stamps Act 1946 Vict. The person who gives a receipt is liable under the Act for the duty. The Commission is constituted by the Australian Coastal Shipping Commission Act 1956 Cth. It consists of a number of Commissioners and is incorporated by the Act. Section 36 (1) relates to the liability of the Commission for taxation. The sub-section says that it is liable for Commonwealth taxation but not for any State taxation to which the Commonwealth is not subject. An immunity from State taxation arises from the Constitution in favour of the Commonwealth and instrumentalities which it creates to operate within the field of government. It is not claimed for the Commonwealth that the Commission is one of such instrumentalities. Its activities have a purely business aspect. They include the carriage of passengers, goods and mails. The passengers whom it may carry are members of the public - not only Commonwealth officials: and the consignors and consignees who may use the Commission's services are the same wide class of persons. The Commission is not independent of the Government of the Commonwealth and the profits of the shipping services it operates go to the Treasury, some in the form of taxation by reason of s. 36 (1). However it is not easy to lay down a rule distinguishing between "governmental" and "trading" functions. Transportation by rail is a traditional function of government in Australia and transportation by road, sea or air when conducted by a government is not regarded as beyond its proper scope.

This case however was argued on the basis that the Commission is not "a mere agent" of the Commonwealth. I take this to mean that its relations with the Commonwealth are not comparable with a purely governmental instrumentality. It is therefore necessary to go to s. 36 (1). These provisions while showing that the Commonwealth wills that the Commission be classed as a taxpayer under its own laws make clear that this does not imply any consent to the Commission being subject to taxation under the laws of any State. The purpose of the sub-section is to clothe the Commission with the same constitutional immunity which it would enjoy if it were part of or an adjunct to the executive administration. Thus the immunity intended is one depending upon the supremacy of Commonwealth law enacted by the Parliament of the Commonwealth over State laws. If s. 36 (1) is a valid law it prevails by virtue of s. 109 of the Constitution over the provisions of the Stamps Act of Victoria requiring every person who gives a receipt within the operation of that Act to pay the prescribed tax. These provisions of course are not discriminatory in relation to the Commission or any instrumentality of the Commonwealth. They are valid laws of the State and if s. 36 (1) is a valid law of the Commonwealth the conflict is resolved by s. 109 in favour of the Commonwealth.

The Solicitor-General of Victoria challenges the validity of the provisions of s. 36 (1) relating to the liability of the Commission for State taxation. The answer to this challenge is decisive of the appeal. The Solicitor-General of the Commonwealth defends the sub-section by reference to s. 51 (i) of the Constitution on the theory that it is incidental to that power. The Act was passed pursuant to that power and its pith and substance are trade and commerce with other countries, and among the States: the Act also extends to the Territories of the Commonwealth, as s. 122 of the Constitution - Government of the Territories - authorizes. Section 36 (1) relates to liability to Commonwealth, State and Territory taxation.

In my view it is within the power conferred by s. 51 (i) to enact that a statutory body established to carry on business activities within the scope of that provision should be a Commonwealth taxpayer. A declaration, as in s. 36 (1), that the Commission is not subject to State taxation is a different exercise of power from that in s. 51 (i) of the Constitution. It seems to me that the argument supporting such a declaration as an exercise of trade and commerce reduces itself to the supposition that State taxation would impair the success of the Commission's business. This argument raises an economic problem which the Court is in no position to solve. But I would sustain the declaration in s. 36 (1) regarding State taxation as a good law under s. 51 (xxxix) of the Constitution. It is incidental to the exercise of the power exerted by establishing the Commission, defining its functions powers and duties, and regulating the affairs of the Commission to invest it with the constitutional immunity which the Commonwealth enjoys from State taxation. The legislative power conferred by s. 51 (xxxix) is not necessarily coincident with the concomitants of the other specified powers respectively. If the prevention of the application of State laws imposing taxation to the Commission is not incidental as far as s. 51 (i) is concerned it does not follow that this is not a proper matter of legislative power under s. 51 (xxxix). Taxation of the Commission results in control of the Commission's activities. In the instant case the State Act makes it a condition of the giving of a receipt by the Commission for payment made to it in the course of the exercise of powers given to it by its Act, that it should put a duty stamp upon the receipt. It is immaterial that the tax is a small amount. The imposition of a tax whether it be small or large necessarily involves control. Looking at taxation in this way it is not a question of weighing its economic burden. The protection of the Commission from State taxation is incidental to the exercise of power made by establishing the Commission and authorizing it to operate shipping services.

The Solicitor-General of Victoria argues that the provisions of s. 36 (1) relating to State taxation are an interference with the State's power of taxation and therefore repugnant to the federal system. It is true that these provisions expressly deny the power of the State to tax the Commission. If the provisions are authorized by s. 51 (xxxix) of the Constitution there can be no room for any implication from the Constitution which would invalidate them. The relief from State taxation which the provisions afford the Commission is no more or less than it would enjoy if the Parliament of the Commonwealth intended it to be a branch of the Executive. A corporation is a fit body to be invested with governmental functions: cf. Public Works Commissioners v. Pontypridd Masonic Hall Company [1] .

The Parliament has power to waive the constitutional immunity of the Commonwealth as regards State taxation. This waiver may be effected by a law passed in relation to the persons intended to be made subject to the provisions of the State law of taxation. But they become liable to State taxation within the scope of the legislative consent given by the Parliament. Chaplin's Case [2] ; West's Case [3] . However here there is a declaration - not an abstract one - made by s. 36 (1) in relation to State taxation that the Commission should not be subject to it. The Commission's activities have an aspect of business carried on for profit. If this Act constituting the Commission were silent as to liability to State taxation it might be implied in the Act that the Commonwealth gave consent to its being taxed by the States, especially as the Act says expressly that it is subject to Commonwealth tax. As it would be valid for the Parliament expressly to give consent to the taxation of the Commission by States it seems to me to be equally within the power of Parliament to declare expressly that the Commission should enjoy the constitutional immunity of the Commonwealth from State taxation. In my opinion Parliament has validly done so by using its power under s. 51 (xxxix). Although the Commission's activities have a business aspect such an immunity is appropriate to it. Even though it is not an agency of the Executive it is an agency of the Commonwealth and it carries on its activities by exercising powers which are governmental because they are conferred by laws passed pursuant to s. 51 (i) of the Constitution. Griffith C.J. said in The Federated Amalgamated Government Railway and Tramway Service Association v. The New South Wales Railway Traffic Employes Association [1] : "We apprehend, however, that the execution or administration of the laws of the State is in the strictest sense a governmental function, and that no rule can be formulated, because there is no authority competent to formulate it, which shall prescribe what functions the State shall undertake in the supposed exercise of its duty to promote the well being of its people. There is high authority, both ancient and modern, for holding that the construction and maintenance of roads and means of communication is one of the most important, as it is necessarily one of the first, of the functions of government. It cannot be denied in this twentieth century that railways are a most important means of communication, or that they are in substance highways, however their use may be restricted or controlled by the conditions of the particular franchises granted in respect of them. Apart, however, from this general consideration, we are of opinion that in the year 1900, when the Constitution was adopted, the construction and maintenance of railways was in fact generally regarded as a governmental function in all the Australian Colonies, and that they are expressly recognized as such in the sections of the Constitution above quoted" [2] . The transportation of passengers, goods and mails are at the heart of the power conferred by s. 51 (i) of the Constitution. It seems to me that the relief of the Commission from State control through taxation laws is amply warranted by s. 51 (xxxix) of the Constitution. It follows that by force of s. 109 the provisions of s. 36 (1) prevail against the provisions of the Stamps Act purporting to impose tax on the receipt in respect of which the Commission was prosecuted. For these reasons I think that the conviction of the appellant is not correct. The appeal should be allowed.

(1911) 12 C.L.R. 375. 2. (1937) 56 C.L.R. 657. 3. (1906) 4 C.L.R. 488. 4. (1906) 4 C.L.R., at pp. 538, 539. Kitto J.

In my opinion the appeal should be allowed for the reasons which have been stated by the Chief Justice.

I have had the opportunity of considering the reasons prepared by the Chief Justice in this matter. I fully agree with his Honour's observations and conclusion and do not wish to add anything.

The determination of this appeal from the decision of a magistrate imposing a penalty under s. 53 of the Stamps Act 1946 Vict. upon the appellant Commission for failing to stamp a receipt given by it to the Shell Company of Australia Limited in the course of its trading turns upon the answer to be given to the question whether s. 36 (1) of the Australian Coastal Shipping Commission Act 1956 Cth is, in its operation to stamp duty on such receipts, a valid law of the Commonwealth. Unless it is, the Commission is, as the magistrate decided, liable to pay stamp duty in accordance with the provisions of the Victorian Act upon receipts given by it; if it is, the sub-section, which inter alia exempts the Commission from a liability to taxation under a law of the State, prevails, by virtue of s. 109 of the Constitution, over the provisions of the Stamps Act so that the Commission's appeal must succeed.

The Australian Coastal Shipping Commission Act constitutes the Commission as a corporation to provide and operate shipping services between places upon the Australian coast - but not intra-State services - and between places in Australia and places overseas (s. 15). It is not in dispute that s. 51 (i) and (xxxix), s. 98 and s. 122 of the Constitution do authorize the establishment of the Commission with authority to carry out its functions. Furthermore, it is common ground that the Commission is not part of the Crown but is a corporation separate from the Commonwealth, so that it is not entitled to any constitutional immunity from State taxation under s. 114 of the Constitution or otherwise. The validity of s. 36 (1) has therefore to be determined on the footing that although the Commission has been created by the Parliament of the Commonwealth to carry on for the Commonwealth trade that is within its legislative power, the Act is valid only to the extent to which it is a law with respect to or incidental to what can compendiously be described as overseas, inter-State or territorial trade.

The argument for the appellant emphasizes that although the Commission is not part of the Commonwealth, it was established to do for the Commonwealth what Parliament could have authorized the Commonwealth to do for itself. This, however, does not seem to me to be a consideration that bears decisively upon the question whether s. 36 (1) is a law with respect to trade within Commonwealth power under s. 51 (i) and (xxxix), s. 98 and s. 122. The extent of the power to legislate with respect to trade conferred by these provisions does not vary with the character of the person whose trade it is sought to authorize, protect or control. It is, of course, true that if the Commonwealth were itself to participate in trade with respect to which the Commonwealth Parliament can legislate, it would have certain immunities from State taxation laws but these would spring from its constitutional position and would not in any way depend upon either the ambit of Commonwealth legislative power or its exercise. I cannot, however, infer from the special position of the Commonwealth as a trader what laws Parliament can make with respect to traders other than the Commonwealth, even when, as here, the trader concerned trades on behalf of the Commonwealth. Were the Commonwealth, for instance, to acquire and store wool in Australia for sale overseas, it would without any special legislative provisions be free from State taxation (e.g. from land tax upon its wool stores and from stamp duty upon its receipts); Parliament could also by legislation give the Commonwealth further freedom from State laws (e.g. by authorizing the use for wool stores of land that happened to be within municipal residential areas or by regulating conditions of work in the wool stores). Where, however, the Commonwealth sets up a trading agency separate from itself, the only immunities from State law that could be granted are those which could be given to any other trader carrying on the same business, namely, those so connected with trade the subject of Commonwealth power as would fall within Parliament's power to make laws with respect to that trade. The first question is, therefore, whether a law protecting the Commission from all taxation laws of the State is, having regard to the Commission's functions, a law with respect to overseas, inter-State and territorial trade. If it is not, the next question is whether s. 36 (1) can be read down to have a valid operation with regard to stamp duties on receipts given in the course of the Commission carrying on its authorized trade.

Dealing with the first question, it must of course be conceded that a Commonwealth law exempting the Commission from State taxation would tend, by reducing its outgoings, to make its business more profitable. The immunity is therefore an advantage. Such an advantage, if given to a private trader, would also undoubtedly constitute an encouragement to trade and I am prepared to assume - although it is probably not the case - that this could also be true of the Commission. But every law which gives a trader an advantage, and even such an advantage as encourages trade, is not a law with respect to trade. This can, I think, be made to appear without going beyond immunities of the kind conferred upon the Commission by s. 36 (1). If, for instance, the State law to be considered were to be one imposing income tax, notwithstanding that immunity from its exaction could properly be said to be an encouragement to trade, a law providing an immunity to traders carrying on business within Commonwealth power would not seem to me to be a law with respect to the various trades producing income. The same would be true of freedom from State land tax or municipal rates. A law imposing income tax is not to be regarded as a law with respect to the variety of activities which produce income and a law imposing tax or rates upon land, whether or not it is land used for the purposes of trade, does not seem to me to be a law with respect to the various trades that are in fact carried on upon some of the land in respect of which tax is imposed.

In principle, therefore, I consider that the universal negative in s. 36 (1) of the Commonwealth Act that the Commission is not subject to any of the taxation laws of a State is not a law with respect to the trade that the Commission is authorized to undertake.

It is to be observed that in reaching this conclusion I have not followed the powerful reasoning that is to be found in the judgment of Evatt J. in West v. Commissioner of Taxation (N.S.W.) [1] . His Honour's conclusion was that a Commonwealth law exempting a recipient of money from the Commonwealth from State tax in respect of the money received would be ultra vires because its true character would be nothing but a law with respect to State power. This proposition, which would stamp s. 36 (1) as being a law with respect to State power, seems to me to be in conflict with what was said by all the other judges in that case. It is also in conflict with The Commonwealth v. Queensland [2] and with Chaplin v. Commissioner of Taxes (S.A.) [1] as explained in the Engineers' Case [2] . The weight of authority appears to me to favour the view that where Commonwealth legislation validly authorizes the payment of money by the Commonwealth, it is within Commonwealth power to ensure that the receipt of the payment is not made the occasion for State taxation or, as Fullagar J. in The State of Victoria v. The Commonwealth [3] said in more general language: "I would regard it as settled law that the Commonwealth, when it legislates within its powers to confer rights upon itself or create rights against itself, may by express enactment make those rights subject to, or immune from, the taxing power of the States" [4] . This, however, does not help me to decide this case, because the question at issue is quite different. It is whether the Commonwealth can excuse a person who is not the Commonwealth from State tax imposed in respect of anything that that person has or does or receives or pays. While it is not difficult to see that the Commonwealth can, under s. 51 (iv) of the Constitution, determine the conditions upon which subscriptions to Commonwealth loans are invited or the characteristics of interest which the Commonwealth undertakes to pay, it seems to me to be going a long way further to say that Commonwealth power over trade authorizes a law protecting a trader from State tax imposed by a law which does not take anything to do with trading as the criterion of tax liability. I have, therefore, come to the conclusion that this case is not governed by the decisions in Chaplin's Case [1] , The Commonwealth v. Queensland [5] or West's Case [6] . In West's Case [6] , Latham C.J. said: "The authorities cited show that the Commonwealth Parliament may, if it thinks proper, by apt legislation exclude the application of State law in relation to a matter entrusted by the Constitution to the control of the Commonwealth" [7] . This general statement, even if its width is fully justified, does not seem to me to authorize s. 36 (1), because I think that the exclusion attempted by s. 36 (1) of the Australian Coastal Shipping Commission Act lacks the necessary relation to matters entrusted by the Constitution to the control of the Commonwealth.

(1937) 56 C.L.R. 657. 2. (1920) 29 C.L.R. 1. 3. (1911) 12 C.L.R. 375. 4. (1920) 28 C.L.R. 129. 5. (1957) 99 C.L.R. 575. 6. (1957) 99 C.L.R., at p. 657. 7. (1911) 12 C.L.R. 375. 8. (1920) 29 C.L.R. 1. 9. (1937) 56 C.L.R. 657. 10. (1937) 56 C.L.R. 657. 11. (1937) 56 C.L.R. 657, at p. 672.

In the course of argument we were referred to dicta which, it was claimed, supported one or other party's contention. Thus the appellant relied upon what was said by Dixon J. in the Banking Case [8] where, after referring to the power of the legislature to determine whether a corporate entity which it creates is or is not established "for the use and service of the Crown", his Honour said: "Such questions depend in the end upon the intention ascribed to the legislature establishing the corporate agency. It is within the province of the legislature to say whether the body it forms shall or shall not be suable for the torts of the persons employed in its work: to say whether it is or is not to enjoy this or that immunity or privilege of the Crown" [1] . On the other hand, the Solicitor-General for Victoria relied upon what Rich J. and Williams J. in the same case said of s. 183 of the Commonwealth Bank Act 1945, which provided inter alia that the Commonwealth Bank should not be liable to taxation under any law of the State, viz.: "This section could only be valid with respect to State law if the Bank is an agent of the Commonwealth" [2] . The Solicitor-General for the Commonwealth also relied upon the statement of Dixon C.J. in Lamshed v. Lake [3] , viz.: "But there remains the question whether s. 10" (i.e., of the Northern Territory (Administration) Act) "is not a law seeking rather to limit State power than to lay down a positive rule. The distinction is a difficult one. There is an example in s. 17 of the Commonwealth Railways Act 1917-1956. That section provides that no rates tax or assessment shall be made or charged or levied upon any railway or other property vested in the Commissioner except as sanctioned by the Minister. Probably in aid of this provision, in its varying applications, ss. 51 (xxxiii) and (xxxiv), 114 and 122 would be invoked. But prohibitory as are its terms and directed as they are in part at least against an authority belonging to a State, it is difficult to know how else the end could be accomplished and the end seems entirely within power" [4] . As to this, I would observe that s. 17 of the Commonwealth Railways Act is much more confined than is s. 36 (1) of the Australian Coastal Shipping Commission Act and it would seem from the heads of power to which his Honour referred as possibly supporting s. 17 that what was said was not directed to the particular problem with which we are now concerned. Having accorded the dicta cited the closest consideration, I have not found therein a sure guide to the answer to be given to the question whether s. 36 (1) is valid as enacted. The dictum that seems to me closest in point is that of Rich and Williams JJ. in the Banking Case [5] which does support the State's contention that it is not.

(1948) 76 C.L.R. 1. 2. (1948) 76 C.L.R. 1, at p. 359. 3. (1948) 76 C.L.R., at p. 275. 4. (1958) 99 C.L.R. 132. 5. (1958) 99 C.L.R., at p. 147. 6. (1948) 76 C.L.R. 1.

The Solicitor-General for the Commonwealth also relied upon American authority, particularly the line of cases of which Pittman v. Home Owners' Loan Corporation of Washington, D.C. [1] is a sufficient example. There it was held to be within the constitutional authority of Congress to provide that a corporation created by it to facilitate the performance of its governmental functions should be exempt from State and municipal taxation. The basis of the decision was that the activities of the corporation through which the national government lawfully acts must be regarded "as entitled to whatever immunity attached to those functions when performed by the government itself through its departments". This does not, I think, hold true in Australia. Departments of the Commonwealth are in a different constitutional position from Commonwealth statutory corporations not constituting part of the Commonwealth; s. 114 of the Constitution provides a limited constitutional immunity from State tax (i.e. from State tax on property belonging to the Commonwealth); officers of the Commonwealth are in a different constitutional position from employees of Commonwealth statutory corporations and are dealt with particularly in sections such as 51 (xxxix), 52, 67 and 75. I find, therefore, no warrant in the Australian Constitution for reaching the same conclusion as that which the Supreme Court of the United States reaffirmed in Pittman's Case [2] and consider, as I stated earlier, that there is no general Commonwealth legislative power which enables the Commonwealth Parliament to give Commonwealth statutory corporations and their employees all the rights and immunities of Commonwealth departments and Commonwealth officers respectively and when such rights and immunities are conferred, as they may be from time to time, the authority to do so must be found in some particular power. Furthermore, decisions of the Supreme Court of the United States upholding the validity of Acts of Congress are, I think, to be treated as persuasive authority only with great caution when the question is whether legislation of the Commonwealth Parliament is valid, particularly when the constitutional authority invoked is the trade and commerce power. Although the authority of the Supreme Court of the United States to declare an Act of Congress ultra vires is beyond question, that power has been exercised so rarely in the last two decades that it hardly seems that the doctrines applied by the Supreme Court of the United States are the same as those which are applied by this Court in deciding whether Commonwealth legislation is within constitutional power. Moreover, the extremely wide conception of what falls within the trade and commerce power that the Supreme Court of the United States has adopted has no counterpart in the decisions of this Court.

(1939) 308 U.S. 21 [84 Law Ed. 11]. 2. (1939) 308 U.S. 21 [84 Law Ed. 11].

There is one other case to which I should refer, namely, The State of Victoria v. The Commonwealth [1] where Commonwealth legislation forbidding the payment of State income tax until after the payment of Commonwealth income tax and the receipt of a certificate of payment was held to be outside the Commonwealth taxation power and anything incidental thereto. Dixon C.J. said: "This appears to me to go beyond any true conception of what is incidental to a legislative power and, under colour of recourse to the incidents of a power expressly granted, to attempt to advance or extend the substantive power actually granted to the Commonwealth until it reaches into the exercise of the constitutional powers of the States." [2] This was relied upon by the Solicitor-General for Victoria, but it seems to me directed to a different problem. I do not think that what the Chief Justice said there is directly in point here because in s. 36 (1) the Commonwealth Parliament has, to a limited extent, directly denied operation to State laws and whatever Commonwealth legislative power there may be to legislate in such a fashion must be derived from an examination of the manner in which State taxation laws would bear upon the trade which the Commission is established to conduct. What has to be determined here is whether the substantive power granted to the Commonwealth by ss. 51 (i) and (xxxix), 98 and 122 does reach into the exercise of the constitutional powers of the States to impose a tax of any sort upon the Commission. Unless the examination reveals that compliance with any taxation law which a State has made or may make would tend to interfere with the performance by the Commission of its statutory functions, s. 36 (1) cannot be said to be wholly valid. What his Honour's observation does typify is, however, something of importance here, that is, the careful scrutiny that must be accorded to Commonwealth laws which do reach into the constitutional powers of the States.

(1957) 99 C.L.R. 575. 2. (1957) 99 C.L.R., at p. 614.

For the foregoing reasons I have reached the conclusion that s. 36 (1), unless restricted, would be invalid and I turn to the narrower question whether, by reason of s. 15A of the Commonwealth Acts Interpretation Act, it can be read down so as to apply validly to deny operation to the Victorian law which requires the Commission to stamp receipts that it chooses to give in the course of carrying on its authorized trade.

Among the duties that the Australian Coastal Shipping Commission Act imposes upon the Commission is that of keeping proper accounts for inspection by the Auditor-General (ss. 34 and 35) but without requiring it to give and preserve receipts. Had the legislation imposed upon the Commission the duty of giving receipts, the authority of D'Emden v. Pedder [1] as explained in the Engineers' Case [2] would probably require the conclusion that a State law making the giving of a receipt the occasion for a State impost would be inconsistent with a valid Commonwealth law requiring receipts to be given.

(1904) 1 C.L.R. 91. 2. (1920) 28 C.L.R., at p. 156.

Here, however, inconsistency between the Commonwealth and the State law is manifest and the question is whether the Commonwealth Parliament, when it establishes the Commission as a corporate entity to trade and with the capacity to give receipts in the course of its trading, can, if it sees fit, go further and exempt it from liability to pay stamp duty upon receipts which it gives in the course of its trading. This narrow question must, I think, be answered affirmatively. The question is solely one of power and is not concerned either with the policy of denying operation to State laws or with the form of doing so, although it may be said that the drafting device of using a universal negative to be read down in accordance with s. 15A of the Acts Interpretation Act is one that seems to be open to many objections of which perhaps the most important politically is that in denying operation to State law the mind of the legislature is not directed to the question what State laws there are which would interfere in any way with the functioning of the body that is being set up to carry out some purpose of the Commonwealth, for that there are such laws would seem to be the reason for sweeping them aside.

My conclusion is that because the receipt in question here was one given by the Commission in the course of the trade which it was constituted by Commonwealth legislation to carry on, s. 36 (1) does validly exempt it from the obligation to stamp the receipt. I cannot deny to the exemption so limited the character of a law with respect to the trade which the Commission is authorized to undertake. Had s. 36 (1) in terms exempted the Commission from stamp duty upon trading receipts, it would have been obvious that Parliament, having in contemplation that the Commission would give receipts for moneys paid to it in the course of its trade, had included the exemption to facilitate its trading operations. Notwithstanding its generality, which unfortunately cloaks any connexion with Commonwealth power, I consider that I must, because of s. 15A of the Acts Interpretation Act, regard s. 36 (1) as comprehending what if it appeared by itself could with less difficulty be recognized as a law with respect to trade within the power of Commonwealth Parliament.

I consider that the appeal should be allowed and the order of the magistrate imposing a penalty upon the Commission should be set aside.

The challenged enactment, s. 36 (1) of the Australian Coastal Shipping Commission Act 1956 Cth, when read in its context and circumstance is, in my opinion, a law with respect to trade and commerce with other countries and among the States. The Commonwealth Parliament can, I think, confer upon a body, such as the Commission, which is engaged in inter-State or overseas trade and commerce whatever capacities, rights, privileges and immunities it thinks fit, provided they are in a sufficiently relevant sense related to such trade and commerce, and provided that they do not cause any impairment of the constitutional freedom of inter-State trade and commerce. The Commission is the creature of Commonwealth law, brought into existence pursuant to the policy of the Commonwealth Government, and is, in a sense, an agency of the Commonwealth. But that is not, in my view, the decisive factor in determining the character of the law in question here. The genesis, capacities and duties of the Commission are part of the totality of fact and circumstance by which relevancy to the head of power must be judged. But that the Commission can be described as an agency or instrumentality of the Commonwealth Government and that it dwells, if not in the shadow, at least in the penumbra of the Crown is not to my mind the critical matter. The critical matter is the nature of the activities that it can in law undertake and which it is required by law to undertake.

The case is not, I think, free from difficulty, because of one's inclination to look beyond it toward the distant scene. But the Chief Justice has said, in a passage I have quoted elsewhere [1] that "in dealing with the trade and commerce power, it is peculiarly desirable to consider each case which arises without entering more largely upon the interpretation of the Constitution than is necessary for the decision of the particular case": Huddart Parker Ltd. v. The Commonwealth [2] . Some passages from the judgment of Frankfurter J. in Freeman v. Hewit [1] are apposite. I shall quote only the following: "the power of the States to tax and the limitations upon that power imposed by the Commerce Clause have necessitated a long, continuous process of judicial adjustment. The need for such adjustment is inherent in a Federal Government like ours, where the same transaction has aspects that may concern the interests and involve the authority of both the central government and the constituent States especially in this field opinions must be read in the setting of the particular cases and as the product of preoccupation with their special facts".

(1959) 103 C.L.R., at p. 310. 2. (1931) 44 C.L.R. 492, at p. 514. 3. (1946) 329 U.S. 249, at p. 251 [91 Law Ed. 265].

It seems to me that s. 51 (1) of our Constitution is somewhat less extensive than the commerce clause in the Constitution of the United States. Various considerations, including the terms of s. 92, prevent us giving full scope to economic reasoning that commerce cannot be confined in compartments nor commercial activities neatly classified as those occurring within a State and those which overreach State boundaries. However that may be, the Australian Coastal Shipping Commission is unquestionably formed to engage in, and is engaged in, trade and commerce with respect to which the Commonwealth Parliament can legislate; and s. 36 of its Act bears directly upon those commercial and trading transactions, for it affects the profits that it derives from them. It was not suggested that this is not so. The argument of the Solicitor-General for the State of Victoria was that s. 36 (1) is invalid because in its true character it is not a law with respect to trade and commerce but rather a law with respect to State taxation. As an alternative argument, or perhaps as a different way of putting the same basic proposition, he submitted that the section offends against implications of the Constitution in that it attempts directly to dictate to the States concerning matters within their constitutional powers. He conceded that the State has no power to tax the Commonwealth. Whether this "concession," which was said to be made "for the purposes of the argument" was not inevitable, need not be considered. It was the starting point of the argument that the Commission, not being itself a servant of the Crown entitled to the immunities and privileges of the Crown in right of the Commonwealth, could not validly be given an immunity from State taxation. If the section be robbed of all its context, it appears no doubt only as a restraint on State power - that is as a law imposed by the Commonwealth on the States as polities rather than a law for persons who are subjects. But, in the first place, it is not to be robbed of its context as part of the Act which sets up the Commission and regulates its functions. And secondly, an approach to questions of this sort that might perhaps have been taken before the decisions in The Commonwealth v. Queensland [1] and West v. Commissioner of Taxation (N.S.W.) [2] is no longer, I think, open. It was said that any trader operating in the State is subject to the general commercial law of the State, that a body corporate created by the Commonwealth to engage in trade is subject to that law just as is any other individual or corporation. As a general proposition that is so. But it is misleading to speak of the Commission as coming into the State as if it were a foreign person, or to think of the law to which it is subject as State law. It is subject to the total body of law governing traders in their activities, except in so far as it is lawfully exempted. Parts of that body of law, for example that relating to sale of goods, are found in the statute law of the State; other parts, for example marine insurance and bills of exchange, are found in the statute law of the Commonwealth; part again comes from the common law. The question here is whether the Commonwealth Parliament can, by virtue of s. 109 of the Constitution, modify that body of law in relation to this particular trader by freeing it from laws of the State that otherwise must necessarily in some degree affect its commercial operations. It may seem regrettable that questions such as this, concerning subjects of taxation and the incidence of taxes, are not determined by agreement between governments, and where necessary by the co-ordinated action of the State and Commonwealth Parliaments, rather than by litigation between Commonwealth and State. But the question has arisen for our determination. The Court can do nothing except assert the superiority of valid Commonwealth law. I agree that the appeal should be allowed.

(1920) 29 C.L.R. 1. 2. (1937) 56 C.L.R. 657. Owen J.

I have felt greatly troubled by this case but I think that the considerations which caused me to doubt the validity of s. 36 (1) of the Australian Coastal Shipping Commission Act are, in substance, those which led Evatt J. in West v. Commissioner of Taxation (N.S.W.) [2] to the first two conclusions expressed by him at the end of his judgment. But, as Menzies J. has pointed out in the present case, those conclusions and the reasoning upon which they are based cannot be reconciled with the views expressed by the other members of the Court in West's Case [2] . Accordingly, I agree that this appeal should be allowed for the reasons given by the Chief Justice.

(1937) 56 C.L.R. 657. 2. (1937) 56 C.L.R. 657.

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