Capital Duplicators Pty Ltd v Australian Capital Territory

Capital Duplicators Pty Ltd v Australian Capital Territory - [1993] HCA 67 - HCA 1993 case summary — Zoe

[36]

a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. That test has not been found acceptable, the criticism of it being that, in concentrating on the statutory criterion of liability, it ignores substance in favour of form [76] . On the other hand, those in favour of substance have been unable to identify what they are looking for with any precision [77] . Although everyone is agreed that an excise duty is a tax upon goods, that is merely to state that there must be a relationship between the tax and goods. The formulation of what is a sufficient relationship to constitute a tax an excise duty has proved elusive. I have previously pointed out [78] that upon the authorities, not only is an excise duty no longer confined to a tax upon production or manufacture, but it need not be calculated by reference to the quantity or value of the goods involved. It must, it seems, be an indirect tax, although the only limitation which that imposes is to prevent it from being a tax upon consumption. That in turn introduces an illogicality since the effect of a tax upon consumption is as much upon manufacture or production as is the effect of a tax upon distribution. Furthermore, the distinction between direct and indirect taxes has been long since discredited as an economically justifiable basis for distinguishing between types of taxes [79] . The only discernible test to emerge from the more recent cases is that an excise duty must have some ultimate effect upon production or manufacture. This led Murphy J. to ask in Logan Downs Pty. Ltd. v Queensland [80] : If taxes are to be treated as duties of excise because they indirectly add to costs of production or manufacture of goods, are taxes on industrial land and payroll taxes to be treated as duties of excise? Similarly, I myself remarked in Gosford Meats Pty. Ltd. v New South Wales [81] : To depart from the test adopted in Bolton v Madsen would be to become lost in the wilderness once again or to accept an ever-widening conception of an excise duty which, extended to its logical limits, would subsume all taxes, the ultimate result of which, however indirect, could be shown to affect the production or manufacture of goods. Of course, in making that remark I considered myself to be bound by the view that excise duties might be imposed at any point in the distribution of goods before they reach the hands of the consumer. 1. (1963) 110 C.L.R. 264, at p. 273. 2. (1960) 104 C.L.R., at p. 559. 3. See Anderson's Pty. Ltd. v Victoria (1964), 111 C.L.R., at pp. 364-366; Western Australia v Chamberlain Industries Pty. Ltd. (1970), 121 C.L.R., at p. 15; Dickenson's Arcade Pty. Ltd. v Tasmania (1974), 130 C.L.R., at p. 241; H. C. Sleigh Ltd. v South Australia (1977), 136 C.L.R., at p. 499; Logan Downs Pty. Ltd. v Queensland (1977), 137 C.L.R. 59, at p. 76; Hematite Petroleum Pty. Ltd. v Victoria (1983), 151 C.L.R. 599, at pp. 629, 664-665; Philip Morris Ltd. v Commissioner of Business Franchises Vic (1989), 167 C.L.R., at pp. 432, 492. 4. See, e.g., Anderson's Pty. Ltd. v Victoria (1964), 111 C.L.R., at p. 365, per Barwick C.J.: "in arriving at the conclusion that the tax is a tax upon the relevant step, consideration of many factors is necessary, factors which may not be present in every case and which may have different weight or emphasis in different cases. The "indirectness" of the tax, its immediate entry into the cost of the goods, the proximity of the transaction it taxes to the manufacture or production or movement of the goods into consumption, the form and content of the legislation imposing the tax - all these are included in the relevant considerations." 5. Philip Morris Ltd. v Commissioner of Business Franchises Vic (1989), 167 C.L.R., at p. 473. 6. ibid., at pp. 470-472. 7. (1977) 137 C.L.R., at p. 84. 8. (1985) 155 C.L.R. 368, at p. 416.

[68]

In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action. It may be observed, with the greatest of respect, that his Honour's assumption is not warranted by anything which appears in Ch. IV of the Constitution nor, for that matter, in any contemporary discussion of the subject. The relevant constitutional provisions are clearly designed to achieve a customs union coupled with an internal free trade area and those objectives reflect the desire of those framing the Constitution to overcome two besetting problems of the time, namely, lack of uniformity in external tariffs and internal barriers to trade and commerce. If those framing the Constitution had wished to place in the hands of the Commonwealth the exclusive power to control the taxation of commodities they could have done so, but they did not and it was unnecessary to do so for the achievement of the objectives which they had in mind. Nevertheless, the view expressed by Dixon J. attracted support both before and after the decision in Parton v Milk Board Vic [17] . 1. (1974) 130 C.L.R., at pp. 218-220. 2. (1949) 80 C.L.R., at p. 260. 3. See The Commonwealth and Commonwealth Oil Refineries Ltd. v South Australia (1926), 38 C.L.R., at p. 437; Attorney-General NSW v Homebush Flour Mills Ltd. (1937), 56 C.L.R., at p. 403; Dennis Hotels Pty. Ltd. v Victoria (1960), 104 C.L.R., at p. 547; Whitehouse v Queensland (1960), 104 C.L.R. 609, at p. 618; Western Australia v Chamberlain Industries Pty. Ltd. (1970), 121 C.L.R., at p. 17; Dickenson's Arcade Pty. Ltd. v Tasmania (1974), 130 C.L.R., at pp. 185, 238; M. G. Kailis (1962) Pty. Ltd. v Western Australia (1974), 130 C.L.R. 245, at pp. 251-252, 265; Hematite Petroleum Pty. Ltd. v Victoria (1983), 151 C.L.R., at p. 631; Philip Morris Ltd. v Commissioner of Business Franchises Vic (1989), 167 C.L.R., at p. 426.

[83]

In the Australian Constitution an excise is a tax on production (including manufacture). State excise is a tax on production within the State. State customs duty is a tax on goods produced outside and [then] imported into the State. Section 90 prohibits State taxation which discriminates between goods produced in the State and those produced outside the State, and prohibits State bounties on production (or export). The constitutional concept of excise forbidden to the States is limited to taxes on production within the State; it does not extend to taxes on distribution or consumption unless these are in substance taxes on production within the State. In general, a tax on wholesale or retail sale which does not discriminate between goods on the basis of their production within or without the State, is neither customs nor excise. In general a sales tax applied indiscriminately on all goods or on a class or classes of goods, wherever produced, would not contravene s. 90 as an excise or a customs duty. I say in general, because a tax may in reality be a tax on production, even if expressed to be a sales tax. For example, a sales tax restricted to a particular commodity produced only or substantially only in the State, might be in substance, though not in form, a tax on the production of that commodity in the State. That view conforms, I think, with the decision in Peterswald v Bartley , acknowledging that, in the light of subsequent cases, particularly Matthews v Chicory Marketing Board Vic and Hematite Petroleum Pty. Ltd. v Victoria , it can no longer be said that an excise duty must be imposed in relation to the quantity or value of goods. Of course, the fact that a tax is so imposed may serve to indicate that it is a tax upon goods. Nor is it any longer necessary to rely upon any distinction between direct and indirect taxes. In any event, it may well be that Griffith C.J. himself did not suggest that the distinction was a necessary one when defining an excise duty. As Fullagar J. pointed out in Dennis Hotels Pty. Ltd. v Victoria [42] , Griffith C.J.'s concluding words "and not in the sense of a direct or personal tax" were not intended "to add anything by way of definition to what he had already said, but merely to give an example, by way of contra-distinction, of something which would not be a duty of excise". 1. (1983) 151 C.L.R., at p. 638. 2. (1960) 104 C.L.R., at p. 553.

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