Commissioner of Taxation v Patrix Prestige Pty Ltd

Federal Court of Australia (Full Court)|2024-11-14|Before: Kennett JJ

The appeal be allowed.
The cross-appeal be allowed.
The matter be remitted to the Administrative Review Tribunal to be reheard according to law.
There be no order as to costs in relation to the appeal.
The cross-respondent pay the cross-appellant's costs of the cross-appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 The Commissioner of Taxation appeals from the Administrative Appeals Tribunal's decision in GHTZ and Commissioner of Taxation [2024] AATA 453 (hereafter "T") to allow in full, or in part, Patrix Prestige Pty Ltd's objections to various notices of assessment and penalty assessments. 2 The appeal was brought in the original jurisdiction of the Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), as then in force. Following the repeal of the AAT Act, the Court has the same powers in relation to the appeal as it had under s 44: Administrative Review Tribunal (Consequential and Transitional Provisions No 1) Act 2024 (Cth), Schedule 16 Item 25. 3 The issue before the Tribunal concerned whether Patrix was entitled to claim decreasing luxury car tax (LCT) adjustments pursuant to Division 15 of the A New Tax System (Luxury Car Tax) Act 1999 (Cth) (LCT Act) in respect of 13 "new" luxury cars (Cars 1 to 4, 6 and 10 to 17) and 4 "used" luxury cars (Cars 5 and 7 to 9). Patrix claimed that it had been supplied with each luxury car by car dealers (upstream dealers) and subsequently sold those cars to other car dealers (downstream dealers). The Tribunal found that Patrix at all material times intended to, and did in fact, use each of the luxury cars for a "quotable purpose" (defined in s 27-1 by reference to s 9-5) under the LCT Act. This was because Patrix at all times had the purpose of holding the luxury cars as trading stock, other than holding the cars for hire or lease and for no other purpose - see: s 9-5(1)(a). The Tribunal rejected the Commissioner's various submissions that Patrix acted as agent for an undisclosed principal or that it acted as trustee for other entities in relation to the purchases of the cars and that Patrix' on-sale of the luxury cars involved sham transactions. 4 The upstream dealers declined to accept Patrix' quotes in relation to its purchases, with the result that LCT arose, and was paid by Patrix, in relation to the supplies made to Patrix by the upstream dealers. On the other hand, for its part, Patrix accepted the quotes from the downstream dealers to whom Patrix supplied the luxury cars, such that those dealers did not pay LCT to Patrix. This could only make commercial sense for Patrix if it claimed a decreasing LCT adjustment under the LCT Act which is what it did. If the decreasing adjustments claimed by Patrix were accepted by the Commissioner, Patrix would recoup the LCT it had paid to the upstream dealers. Meanwhile the downstream dealers, having purchased the cars free of LCT, charged LCT on subsequent sales which they did not remit to the Commonwealth. In relation to the cars the subject of the proceedings before the Tribunal, the Commissioner did not accept the decreasing adjustments which had been claimed. 5 The proceedings in the Tribunal arose as a result.

THE TRIBUNAL'S ERRORS 6 Before the hearing began, the Deputy President hearing the reviews informed the parties that the Tribunal wished to be addressed in relation to the correct construction of s 9-5 and s 15-30 of the LCT Act: T[5]. The Deputy President considered that these provisions were "twins" (T[18]) and adopted a construction of the provisions which was not embraced by either party before him (T[29]), which was inconsistent with authority and which both parties on this appeal agreed was wrong. The Tribunal considered that these construction questions that it had "introduced into [the] issues in the case" were "important legal questions about the LCT Act which affect[ed] the issues in the case in a number of ways": T[5]. The Tribunal's erroneous construction of the LCT Act pervades its reasoning. 7 It is not clear what the Tribunal intended in describing the provisions as "twins". 8 Section 9-5 relevantly states: Quoting (1) You are entitled to *quote your *ABN in relation to a supply of a *luxury car or an *importation of a luxury car if, at the time of quoting, you have the intention of using the car for one of the following purposes, and for no other purpose: (a) holding the car as trading stock, other than holding it for hire or lease; or (b) *research and development for the manufacturer of the car; or (c) exporting the car in circumstances where the export is GST‑free under Subdivision 38‑E of theGST Act. 9 Section 15-30 of the LCT Act relevantly provides: Changes of use - supplies of luxury cars (1) You have a decreasing luxury car tax adjustment if: (a) you were supplied with a *luxury car; and (b) luxury car tax was payable on the supply because you did not *quote for the supply; and (c) you were *registered at the time of the supply; and (d) you intend to use the car for a *quotable purpose; and (e) you have only used the car for a quotable purpose. (1A) You have a decreasing luxury car tax adjustment if: (a) you are supplied with a *luxury car; and (b) luxury car tax is payable on the supply; and (c) you are *registered at the time of the supply; and (d) were you to *import the car for the same purpose as your purpose in acquiring it, luxury car tax would, because of paragraph 7‑10(3)(ba), not be payable on the importation; and (e) you do not intend to use the car, or permit it to be used, other than for that purpose. (2) The *decreasing luxury car tax adjustment is equal to the amount of luxury car tax that was payable on the supply. (3) You have an increasing luxury car tax adjustment if: (a) you were supplied with a *luxury car; and (b) either: (i) no luxury car tax was payable on the supply because you *quoted for the supply; or (ii) you had a decreasing luxury car tax adjustment under subsection (1); and (c) you use the car for a purpose other than a *quotable purpose.

Section 15-30 10 The Tribunal found that, for s 15-30 to apply, there must be a "change of use" of the luxury car. In doing so, the Tribunal gave primacy, and a substantive operative effect, to the words "changes of use" in the heading to s 15-30. 11 The Tribunal relied upon the uncontroversial proposition that a heading may be taken into account in construing the meaning of a statute, citing: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; 157 CLR 309 and CIC Insurance Ltd v Bankstown Football Club Limited [1997] HCA 2; 187 CLR 384. 12 The Tribunal did not engage in any analysis of the text of s 15-30 apart from the heading. Rather, the Tribunal declined to follow the Federal Court's decision in Stallion (NSW) Pty Ltd v Commissioner of Taxation [2019] FCA 1306 at [242] (Thawley J), and an implication which might be seen to arise from the Full Court of the Federal Court's decision in Automotive Invest Pty Ltd v Commissioner of Taxation [2023] FCAFC 129; 299 FCR 288 at [92] (Wheelahan and Hespe JJ), on the basis that Stallion and Automotive Invest were "inconsistent" with Gordon & Gotch and CIC Insurance. 13 The Court in Stallion stated at [242]: Headings to sections form part of the LCT Act: s 23-1(1). The Commissioner submitted that this had the consequence that there must be a "change of use" in order for the provision to have any application. That submission cannot be accepted. The language of the section beneath the heading is clear as to when a person has a decreasing LCT adjustment. The statutory scheme does not necessarily require that there be a change in use, despite the heading. 14 The majority of the Full Court in Automotive Invest stated at [92]: The operative terms of s 15-30 do not refer to a change in the use made of a car since the time of quotation or supply of the car but refer to use for a purpose other than a "quotable purpose" which in turn is defined to mean "a use … for which you may *quote under section 9-5". The heading to s 15-30 does not inform the construction of s 9-5. 15 Stallion - in which the operation of s 15-30 was directly in issue - is inconsistent with the construction the Tribunal adopted in relation to s 15-30. 16 The statement in Automotive Invest - in which the operation of s 15-30 was not directly in issue - is also inconsistent with the Tribunal's reasoning. Although it now lacks any binding force because the orders of the Full Court were set aside by the High Court on appeal in Automotive Invest Pty Limited v Commissioner of Taxation [2024] HCA 36 on other grounds, the statement remains as persuasive authority: see BIF23 v Minister for Immigration, Citizenship & Multicultural Affairs [2023] FCAFC 201; 301 FCR 229 at [103] -[105] (Markovic, Derrington and Anderson JJ); Nationwide News Pty Ltd v Rush [2020] FCAFC 115; 380 ALR 432 at [507] (White, Gleeson and Wheelahan JJ). 17 In Stallion at [242], the Court specifically rejected an argument, put by reference to the words in the heading of s 15-30, that a "change of use" was required in order for a decreasing LCT adjustment to arise. The Court decided, having regard to the language of the provision, including the heading, read in the context of the statute as a whole, that - "despite the heading" - s 15-30(1) does not "necessarily require that there be a change in use". The Deputy President may have disagreed with the construction of s 15-30(1) adopted in Stallion (and evidently did), but as an arm of executive government the Tribunal should not have adopted a construction of its choosing in the face of authority directly on point: see generally Commissioner of Taxation v Indooroopilly Children Services (Qld) Pty Ltd [2007] FCAFC 16; 158 FCR 325 at [3] to [7] (Allsop J, Stone J agreeing at [1], Edmonds J agreeing at [48]). 18 As an alternative, the Tribunal could have considered whether some other procedure could be adopted in order to test its concern before finally determining the reviews such as referring a question of law for decision. But the Tribunal did not take that course. 19 Critically for present purposes, the Tribunal was incorrect in the construction of s 15-30(1) that it adopted. There is no error in the reasoning in Automotive Invest or Stallion on this point. There is no question that a heading can inform the construction of a provision - see, for example: R v Rolfe [2021] HCA 38; 273 CLR 413 at [18]. Here, as was stated in Stallion at [242], the LCT Act expressly provided that the heading was a part of the Act. Headings are often misleading - see, for example: R v Lavender [2005] HCA 37; 222 CLR 67 at [21]; Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; 239 CLR 420 at [13]; Em v The Queen [2007] HCA 46; 232 CLR 67 at [95]; Bell Group NV (in liq) v Western Australia [2016] HCA 21; 260 CLR 500 at [37]. In the present case, the heading does not reflect the full operation of all aspects of s 15-30 (which deals also with increasing LCT adjustments) even if the provision is capable of applying where there has been a change of use. The heading is an incomplete summary of the operation of the provision. It necessarily follows from the observations of the majority of the High Court in Automotive Invest Pty Limited v Commissioner of Taxation [2024] HCA 36 at [132] that the heading is apt to summarise the operation of s 15-30(3), which addresses increasing LCT adjustments. Whilst the Tribunal held that a "change of use" was required by s 15-30(1), nowhere did it describe precisely what that meant or which part of s 15-30(1) (apart from the heading to the whole of s 15-30) required such a change of use. In doing so, it gave an operative effect to the heading applicable to the whole of s 15-30 in preference to construing the text of s 15-30(1) in context. 20 The unfortunate consequence of the Tribunal acting in the manner it did is that the parties have been put to the significant additional expense and delay associated with this appeal and, for reasons given below, to the significant and additional expense of a remittal to the Administrative Review Tribunal (ART) for the proceedings to be reheard according to law.

Section 9-5 21 In relation to s 9-5, the Tribunal concluded that, where a luxury car purchaser is "entitled to quote" under s 9-5 of the LCT Act, an upstream dealer is obliged to accept a quote. In the context of its reasons as a whole, the Tribunal considered that an upstream dealer would act unlawfully in refusing to accept a quote. 22 At T[13], the Tribunal stated that a "refusal to accept a quote was inconsistent with the statutory entitlement given by s 9(5) of the Act to quote". At T[265], the Tribunal stated: [T]he entitlement of a person such as [Patrix] to quote for a taxable supply means, amongst other things, that the vendor in the taxable supply cannot refuse to accept such a quote, or otherwise compel the purchaser, otherwise entitled to quote, not to do so. 23 The Tribunal's construction of s 9-5 failed to have regard to the whole of Div 9 of the LCT Act, read in the context of the Act as a whole. The fact that a person has an entitlement to quote does not lead inexorably to the conclusion that a dealer is obliged to accept a quote or that a dealer acts wrongfully or unlawfully in refusing, directly or indirectly, to accept a quote. 24 If the recipient of the luxury car supply quotes for the supply, then the supplying seller does not make a taxable supply of the luxury car and no obligation to pay LCT arises - see: s 5-5 and s 5-10(2)(a). If a person quotes in circumstances where the person is not entitled to quote, or the quote is not in the approved form, the quote is nevertheless effective for the purposes of s 5-10(2) unless s 9-25 applies: s 9-20. Section 9-25 contemplates that quotes are not necessarily effective. Section 9-25 provides: Quote not effective for certain purposes if there are grounds for believing it was improperly made A *quote is not effective, so far as it would have resulted in you not paying luxury car tax, if at the time of the quote the person to whom the quote is made has reasonable grounds for believing that: (a) you are not entitled to quote in the particular circumstances; or (b) the quote is not made in the * approved form; or (c) the quote is false or misleading in a material particular (either because of something stated in the quote or something left out). 25 By reason of s 9-25, if a quote has been given to a supplier, it will not be "effective" so far as it would have resulted in the purchaser not paying LCT, if the supplier had reasonable grounds for believing any of the matters set out in (a) to (c) above. In the situations contemplated in (a) to (c), a supplier would be unlikely to make a supply without insisting on payment of the LCT. The supplier would, presumably, only enter into the transaction on the basis that the purchaser pay LCT. Practically, this is equivalent to refusing the quote. This tells against a conclusion that the entitlement to quote provided in s 9-5 carries with it an implication that the supplier is always bound to accept, or not entitled to refuse, a quote. A supplier is entitled not to enter into the transaction and is entitled to enter into the transaction only on terms that the purchaser pays LCT.

THE TRIBUNAL'S RESOLUTION OF THE PROCEEDINGS 26 Absent a concession made by the Commissioner, the Tribunal would have found that Patrix was not entitled to a decreasing LCT adjustment with respect to any of the luxury cars. However, because of a concession made by the Commissioner, the Tribunal considered it appropriate to give s 15-30 of the LCT Act an operation with which the Tribunal disagreed in relation to the 13 new cars such that Patrix was entitled to a decreasing LCT adjustment. 27 The Commissioner's concession was - on the correct construction of the statute - an appropriate one to have been made in the qualified terms in which it was made. The Commissioner's concession was recorded at T[12] as follows: [T]he Commissioner concedes that the [respondent] would be entitled to a decreasing LCT adjustment if the Tribunal finds (contrary to the Commissioner's submissions) that the [respondent] in fact purchased the 13 luxury vehicles that it acquired from brand dealers (cars 1, 2, 3, 4, 6, 10-17) on its own account and the [respondent] intended to hold those vehicles as trading stock. Any such entitlement would be subject to the operation of Division 165 [of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act)], which if engaged in respect of these vehicles, would alter the [respondent]'s net amount in accordance with the Division 165 declaration, by negating the decreasing adjustment as a GST benefit the [respondent] obtained from a scheme. 28 The Tribunal rejected the Commissioner's submissions with respect to agency, trust and sham and therefore concluded, consistently with the Commissioner's concession that Patrix was entitled to the decreasing adjustments in relation to the 13 new cars. 29 The Tribunal acted on a concession which it considered was inconsistent with the statute. It should be observed that parties before the Tribunal cannot, by concession or otherwise, give a statute an operation which it does not have. However, it is unnecessary to dwell on this because, as has been stated earlier, the Tribunal's construction of the statute was incorrect. 30 The Commissioner did not make an equivalent concession with respect to the 4 used cars. As such, the Tribunal, following its interpretation of ss 9-5 and 15-30 of the LCT Act, found that Patrix was not entitled to a decreasing LCT adjustment with respect to the used cars. Its case therefore failed in relation to those cars. 31 The Tribunal considered that Div 165 of the GST Act could not apply in relation to the schemes relevant to any of the cars because it considered that there was no GST benefit. The Tribunal concluded: (a) Patrix was not entitled to a decreasing adjustment and the Commissioner's concession in relation to the 13 new cars was ineffective for the purposes of s 165-15(1)(b)(i): T[261], [264]. (b) From the perspective of the other participants in the scheme there was also no decreasing adjustment and each scheme was "therefore wholly futile": T[270], [275].

THE ISSUES ON APPEAL 32 The Commissioner raised many questions of law in the final form of his notice of appeal. They do not each need to be dealt with given the conclusion reached that the matter must be remitted to be reheard according to law. At the core of his case on appeal, the Commissioner asserted that the Tribunal's erroneous understanding of the statutory scheme pervaded its reasoning as a whole, including its findings of fact in relation to agency, trust and sham. 33 The Commissioner also contended that, if the Tribunal's findings in relation to agency, trust and sham should not be disturbed, then - contrary to the Tribunal's conclusions - there was a GST benefit for the purposes of Div 165 of the GST Act and the matter should be remitted to the Tribunal for it to determine the application of Div 165. 34 Patrix submitted that, notwithstanding the Tribunal's admitted errors, the matter should not be remitted to be reheard. It submitted that the Tribunal's decision with respect to agency, trust and sham were not affected by the Tribunal's errors and that, on any view, Div 165 could not have applied. 35 Further, by a cross-appeal, Patrix challenged the Tribunal's conclusions as to a lack of entitlement to a decreasing adjustment in relation to the 4 used cars. It was uncontroversial that Patrix' cross-appeal must be allowed in this respect - that is, it was common ground that Patrix was entitled to a decreasing adjustment in respect of the used cars if the Commissioner's case on agency, trust and sham was properly rejected. There was an issue between the parties about the quantification of the decreasing adjustment which was not resolved by the Tribunal given its conclusion that there was no entitlement to a decreasing adjustment. Given the conclusion reached that the matter must be remitted to be reheard, this does not need to be addressed on appeal. 36 Likewise, the Commissioner's complaints with respect to penalties need not be addressed given that the penalties issues will depend upon the outcome of the rehearing.

The Tribunal's errors affected its findings of fact 37 The Tribunal approached its fact finding process on the basis of its erroneous understanding of the operation of the LCT Act. The Tribunal clearly stated that its (erroneous) understanding of the operation of the LCT Act was important to various aspects of its decision: T[5]. 38 A central theme of the Commissioner's position that Patrix was not entitled to a decreasing adjustment was that Patrix acted as agent for an undisclosed principal or as a trustee when purchasing the cars and that its purported on-sales of the cars involved sham transactions. One matter which pointed to this conclusion was, in the Commissioner's submission, the fact that Patrix: (a) purchased the cars without quoting and therefore paid LCT; but (b) accepted quotes when on-selling the cars and therefore did not receive LCT, instead relying on a claim for a decreasing adjustment. 39 These matters also informed the Commissioner's alternative position that, if Patrix was entitled to a decreasing adjustment, then Patrix obtained a GST benefit to which Div 165 of the GST Act applied. In short, according to the Commissioner, Patrix purchased and on-sold in the way it did for the dominant purpose of obtaining a GST benefit (in simplified terms, the decreasing adjustment) in the context of a series of transactions in which Patrix' participation was integral and in which the Commonwealth was defrauded. The application of Div 165 does not turn solely upon the purpose of a person entering into the scheme, but also on the dominant purpose of entering into parts of the scheme. 40 The Commissioner submitted that Patrix' decision to sell the cars LCT-free had no rational explanation: it placed Patrix in a cash-flow deficit; Patrix financed the transactions from drawings from its account, secured over Mr Muto's (Patrix' director's) matrimonial home (T[58]); it placed Patrix in a situation of needing to obtain a refund of the LCT from the Commissioner, when it could easily have on-sold the vehicles LCT-inclusive. 41 The Tribunal did not properly engage with these issues because it approached its assessment of the facts from the starting point that Patrix was "obliged" to accept the quotes from the downstream dealers. At T[53] (concerning Car 1), the Tribunal stated (emphasis added): Of course, since he sold to a wholesale dealer, as he understood Bundoora was, he was obliged to accept the buyer's quote and did so. The consequence was that he could not pass on the LCT to Bundoora and the only course open to him was to claim a decreasing LCT adjustment. 42 The Tribunal accepted Mr Muto's evidence at least in part because the Tribunal considered that Patrix was "obliged to accept the buyer's quote" as a matter of law. One does not know what the Tribunal would have concluded if it had proceeded on a correct understanding of the statutory scheme. 43 At T[106] (relating to Car 3), the Tribunal stated (emphasis added): … The only reasons that [Patrix] claimed a decreasing adjustment were that, as a result of the stance taken by the Marque dealer, he [Patrix] was unable to quote, as he [Patrix or Mr Muto] wished to do, and, in accordance with the statutory right of his [Patrix'] buyer [Bundoora], he [Patrix] was bound to accept the buyer's quote. That left him [Patrix] only with the possibility of recouping the LCT by claiming a decreasing LCT adjustment … 44 Patrix was not "bound to accept the buyer's quote" in the manner the Tribunal contemplated. 45 Indeed, one of the many "odd" (T[160] and T[229]) features of the transactions was that Bundoora refused to accept a quote from Patrix when Bundoora was the upstream dealer (in relation to Car 5), yet Patrix accepted Bundoora's quotes when Bundoora was the downstream dealer (in relation to Cars 1, 3, 9, 10, 11). The Tribunal did not directly address the Commissioner's submissions about this, recorded at T[227]. 46 At T[168] (in relation to Car 12), the Tribunal proceeded on the basis that, because the downstream dealer quoted, "the only way" for Patrix to recover the LCT was by means of a claim for a decreasing adjustment. 47 Patrix would not have acted unlawfully in treating a downstream purchaser's quote as ineffective (in substance, refusing to accept the quote) and could have refused to sell unless it was paid LCT. Patrix' decision to sell each of the 17 vehicles without recovering LCT was an important factor in the Commissioner's case on agency, trust and sham, including because - according to the Commissioner - that tended to show that Patrix acted against its own interests or in furthering the interests of the downstream dealers. This Court cannot and does not make any findings on the merits in this regard. The point is that the Tribunal approached the fact finding task on an incomplete and erroneous understanding of the statutory scheme in a way which is likely to have affected its findings of fact. 48 There is a further point in relation to the 4 used cars. In relation to these, the Tribunal addressed the relevant facts briefly, presumably because it had concluded, erroneously, that Patrix was not entitled to a decreasing adjustment such that the Commissioner's position prevailed irrespective of the various arguments which the Commissioner raised in relation to agency, trust, sham and Div 165 of the GST Act. If the Tribunal had considered the Commissioner's submissions on the correct footing, and dealt fully with the case that the Commissioner advanced in respect of the 4 used cars, there is a realistic possibility that the Tribunal would have reached different conclusions than those which it did. 49 Had the Tribunal dealt fully with the 4 used cars, its further factual findings might realistically have resulted in different factual findings in respect of the 13 new cars. The factual findings in relation to one series of transactions is likely to inform the factual findings in relation to other series of transactions in circumstances such as the present, including the commonality in participants in the transactions. 50 The Tribunal's incorrect understanding of the statutory regime affected its approach to the evidence and thus, at least potentially, its findings of fact. As mentioned, even where one of the downstream dealers quoted, Patrix could have taken the position that the quote was not "effective" or declined to enter into the transaction without payment of LCT. This is equivalent to not accepting the quote. This possibility was not explored by the Tribunal in its reasoning concerning any of the cars. There is a likelihood that the Tribunal's findings may have been different in various respects had it proceeded on a correct understanding of the statutory scheme. No confidence can be placed in the Tribunal's findings of fact given its approach and the importance it attached to its erroneous construction of the LCT Act: T[5]. 51 It follows that the matter must be reheard in relation to agency, trust and sham in relation to all of the cars. The manner in which such a rehearing should proceed is a matter for the Tribunal, but it should be observed that the evidence given may have been affected by the Tribunal's construction of the LCT Act and the questions which it asked during the hearing, informed by its erroneous approach.

Division 165 52 As noted earlier, Patrix submitted that, on any view, Div 165 could not apply. 53 As modified in its oral address, Patrix' contention with respect to Div 165 was that there could be no GST benefit because it could not be said of any GST benefit that it was "not attributable to the making … of a choice [or] election" within the meaning of s 165-5(1)(b), and s 165-5(3) did not apply. According to Patrix, any GST benefit was attributable to a choice under s 9-5(1) and s 165-5(3) could not apply on the facts as found by the Tribunal. 54 The relevant parts of s 165-5 are: General rule (1) This Division operates if: … (b) the GST benefit is not attributable to the making, by any entity, of a choice, election, application or agreement that is expressly provided for by the * GST law, the * wine tax law or the * luxury car tax law; and … Creating circumstances or states of affairs (3) A * GST benefit that the avoider gets or got from a * scheme is not taken, for the purposes of paragraph (1)(b), to be attributable to a choice, election, application or agreement of a kind referred to in that paragraph if: (a) the scheme, or part of the scheme, was entered into or carried out for the sole or dominant purpose of creating a circumstance or state of affairs; and (b) the existence of the circumstance or state of affairs is necessary to enable the choice, election, application or agreement to be made. 55 Patrix submitted that, for the purposes of s 165-5(1)(b), the relevant "choice" or "election" which was "expressly provided for" by the LCT Act, and to which any GST benefit was "attributable", was the entitlement to quote in s 9-5 of the LCT Act. It is doubtful that the entitlement to quote is a "choice" or "election" which is "expressly provided for" by the LCT Act within the meaning of s 165-5(1)(b) of the GST Act. The fact that a provision of an Act provides an entitlement to do something does not mean that the provision "expressly provides for" a "choice" within the meaning of s 165-5(1)(b). Section 9-5 of the LCT Act may be contrasted, for example, with the express choices provided in provisions such as ss 29-40, 40-130(1)(b), 63-10, 87-25 and 123-10 of the GST Act. Taxation legislation often expressly provides for the making of a choice. Where it does, it often requires notification of the choice to the Commissioner or imposes various requirements. Section 9-5 is not an example of such a provision. 56 In any event, the GST benefit in the present case arises from a combination of: (a) the decision not to quote to the upstream dealer; and (b) the decision to on-sell the car in a transaction in which the downstream dealer quotes. The decision in (a) does not involve a choice by Patrix to exercise the entitlement in s 9-5, while the decision in (b) involves an entitlement that rests in the downstream dealer and on no view could involve a choice under s 9-5 by Patrix. It follows that there was no making of a choice or election by Patrix that was capable of making s 165-5(1)(b) inapplicable. 57 The Tribunal did not address the Commissioner's Div 165 case, on the hypothesis that there was a GST benefit. To the limited extent that the Tribunal did consider the case at a factual level, those findings were based on an erroneous conclusions about the operation of the statutory scheme - see, for example: T[273], [276]. 58 The Div 165 issues should be remitted for rehearing. 59 It should also be observed that, if there were circumstances taking the case outside the terms of s 165-5(1)(b), the Tribunal would have had to, but did not, consider the application of s 165-5(3). 60 It was submitted for Patrix that there were sufficient findings for this Court to determine the application of that provision should it be necessary. This is plainly not correct. The Tribunal did not turn its attention to the application of s 165-5(3) at all. It would be obtuse to use factual findings made in relation to other issues (even if they had been made on the basis of a correct understanding of the statutory scheme) in order to determine the application of a quite different provision requiring a different factual inquiry. 61 Nor should this Court make the findings itself under s 44(7) of the AAT Act, which (as noted above) continues in force for the purpose of this proceeding. It provides: Federal Court may make findings of fact (7) If a party to a proceeding before the Tribunal appeals to the Federal Court of Australia under subsection (1), the Court may make findings of fact if: (a) the findings of fact are not inconsistent with findings of fact made by the Tribunal (other than findings made by the Tribunal as the result of an error of law); and (b) it appears to the Court that it is convenient for the Court to make the findings of fact, having regard to: (i) the extent (if any) to which it is necessary for facts to be found; and (ii) the means by which those facts might be established; and (iii) the expeditious and efficient resolution of the whole of the matter to which the proceeding before the Tribunal relates; and (iv) the relative expense to the parties of the Court, rather than the Tribunal, making the findings of fact; and (v) the relative delay to the parties of the Court, rather than the Tribunal, making the findings of fact; and (vi) whether any of the parties considers that it is appropriate for the Court, rather than the Tribunal, to make the findings of fact; and (vii) such other matters (if any) as the Court considers relevant. 62 There are at least two difficulties with this Court addressing the issues under s 165-5(3) if it had thought that the provision was necessary to consider: (a) first, this Court would need to have regard to the entirety of the evidence before the Tribunal and that evidence was not placed before the Court; (b) secondly, this Court could not make factual findings inconsistent with those of the Tribunal. 63 As noted above, the Tribunal's factual findings are affected by its erroneous construction of the LCT Act. It is therefore unlikely that this Court, if it embarked on the task, would make factual findings for the purposes of Div 165 which would be in all respects consistent with those of the Tribunal.

CONCLUSION 64 There is at least a realistic possibility that the Tribunal's factual findings would have been different if it had not erred in its construction of s 9-5 and s 15-30 of the LCT Act. The Tribunal's erroneous understanding of the law pervades its reasons and the Court cannot reach a conclusion that the Tribunal would have made the same factual findings or arrived at the same conclusions irrespective of its errors. 65 The appeal and cross-appeal should be allowed. The matter must be remitted to the ART to be determined according to law, pursuant to s 44(5) of the AAT Act as continued in force. If the Deputy President is or becomes a part of the ART, the ART should be differently constituted. 66 The parties were agreed that, if the Commissioner's appeal succeeded, there should be no order as to costs. This agreement arose out of test case funding arrangements between the parties. Patrix submitted that costs should follow the event on the cross-appeal and the Commissioner did not contend otherwise. It is difficult to see that there would be significant costs arising from the cross-appeal which would not have been incurred on the appeal in any event, but that is a matter for agreement between the parties or, failing that, for assessment. I certify that the preceding sixty six (66) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Thawley, Wheelahan and Kennett.

Administrative Review Tribunal (Consequential and Transitional Provisions No 1) Act 2024(Cth)

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