Commissioner of Taxation v Secretary to the Department of Transport

REASONING OF THE PRIMARY JUDGE 18 Before the primary judge, the Commissioner's case was that the DOT was not entitled to input tax credits in respect of MPTP Payments made by the DOT to taxi-cab operators, essentially because, on the Commissioner's approach, there were no taxable supplies to the DOT. The Commissioner's case was that, when the DOT made a MPTP Payment, there was only one taxable supply - that made by the taxi-cab operator to the MPTP Member. The DOT disputed this analysis, arguing that there were two taxable supplies, including a taxable supply by the taxi-cab operator to it. 19 In dealing with the Commissioner's case, the primary judge described the essential framework in which the question before her was to be decided as follows (at [35]-[38]): The express words, structure and purpose of the GST Act direct the questions to be asked in ascertaining whether the DOT is entitled to an input tax credit for the GST it paid as part of the payment of the MPTP subsidy to taxi-cab operators. First, the focus is the "entity" "carrying on [the] enterprise" - here, the DOT: ss 184-1 and 7-10 of the GST Act. Secondly, the entity must pay the GST on any taxable supply that the entity makes: s 9-40. However, the entity is also entitled to input tax credit in respect of certain acquisitions. Having identified the "entity" "carrying on [the] enterprise", the next question to be asked is - did that entity acquire anything in carrying on its enterprise: s 11-15(1)? There is no dispute that the DOT is an enterprise within the meaning of the GST Act (see s 9-20 of the GST Act) and that the MPTP is an activity or series of activities done by the State through one of its executive arms, the DOT (s 9-20(1)(g) of the GST Act). As has been said on numerous occasions, acquisition by an entity in carrying on its enterprise will normally consist of the supply of goods or services to that entity. However, "it may equally well consist of the right to have goods delivered or services rendered to a third party" where "[t]he grant of such a right is itself a supply of services": Customs and Excise Commissioners v Redrow Group plc [ ] [1999] 1 WLR 408 at 418 (Redrow). 20 After noting that, generally speaking, the GST Act did not deal with whether one set of acts may constitute two or more different supplies of services and give rise to two or more different acquisitions, the primary judge remarked (at [40]-[41]) that: In the United Kingdom, it is accepted that one set of acts can constitute two or more different supplies of services under the Value Added Tax Act 1994 (UK) and the Value Added Tax Act 1983 (UK): see Redrow and Customs and Excise Commissioners v Plantiflor Ltd [2002] 1 WLR 2287 [ ] at [32], [50] and [55] (Plantiflor). However, the Courts in the United Kingdom recognise that such arrangements involving more than a supplier and an ultimate consumer (a tripartite arrangement) "call for close analysis in order to determine their [GST] consequences": Plantiflor at [49]. . . . Ultimately, we are driven back to the words of the GST Act and the fact that even in the case of multiple supplies, we are concerned with a limited set of relevant concepts: a taxable supply to the taxpayer for consideration (see for example the discussion of the proper characterisation of what was alleged to be two taxable supplies in Federal Cmr of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342 [ ] at [42]) and an acquisition for a creditable purpose. 21 The primary judge found (at [52]-[53]) that s 11-10(2) of the GST Act was satisfied with respect to the MPTP Payments because the DOT "acquires from the taxi-cab operator who carried a MPTP member a service - the carriage of that person". Her Honour continued: That carriage is acquired by the DOT in implementation of the MPTP which is a particular form of State Government policy for the assistance of the disabled. The DOT, as an arm of the executive of the State Government, acquires that service for consideration because it agrees to pay and does pay the taxi-cab operator to carry the disabled person: see s 9-15 of the GST Act. The amount the DOT pays is not the whole of the amount the taxi-cab operator charges for the carriage but that does not deny the accuracy of the observation that the DOT pays the taxi-cab operator to carry the MPTP member (a disabled person who participates in the MPTP).

22 The primary judge also found (at [52]) that there was a supply to the DOT from the taxi-cab operator, being "the transport of the disabled person - that is what it acquired". Her Honour thus found that there was a taxable supply within the meaning of s 11-5(b) of the GST Act. As the passage set out above shows, her Honour held (at [52]) that the acquisition by the DOT of the service of the carriage of the MPTP Member was for consideration because the DOT "agrees to pay and does pay the taxi-cab operator to carry the disabled person" and that the corresponding taxable supply to the DOT - the carriage of the disabled person - was for "part of the taxi-cab fare and other fees". Her Honour's reference to "other fees" was apparently a reference to certain fees associated with the MPTP trip, such as fees in respect of the carriage of wheelchairs. 23 Thus, the primary judge rejected (at [57]-[58]) the Commissioner's argument that there was only one taxable supply - that from the taxi-cab operator to the MPTP Member. Her Honour considered that the Commissioner approached the matter from the wrong perspective, and that the correct analysis was to examine the questions of acquisition and supply from the point of view of the DOT.

GROUNDS OF APPEAL 24 Thus, on this appeal, the question is, broadly speaking, whether the primary judge erred in holding that the DOT is entitled to input tax credits under s 11-20 of the GST Act for the GST component of the payments made to taxi-cab operators under the MPTP from October 2006 to April 2007. 25 By his Notice of Appeal, the Commissioner claimed that the primary judge fell into error in finding that: 1. the DOT acquired from the taxi-cab operator who carried a MPTP Member the service of carriage of the MPTP Member; 2. the DOT acquired that service for consideration because it agreed to and did pay the taxi-cab operator to carry the MPTP Member; 3. the taxable supply to the DOT was the carriage of the MPTP Member and that was what it acquired; and 4. the express words of the GST Act required that the question of acquisition be looked at from the taxpayer's (the DOT's) point of view. 5. Further, the Commissioner said that the primary judge ought to have found that s 11-5(b) of the GST Act requires the "taxable supply" to be considered from the perspective of the supplier, namely, the taxi-cab operator or driver. 26 The DOT filed a Notice of Contention, which had two grounds. The Commissioner stated that he took no issue with ground 1. In taking this approach, the Commissioner accepted that, if the Court dismissed the appeal, then he was to attribute the input tax credits to the tax period in which the DOT made each of the relevant MPTP Payments. 27 By ground 2 of the Notice of Contention, the DOT sought to argue that, if it were found that the DOT did not make creditable acquisitions at the time each taxi-cab trip was taken in accordance with the MTPT, then: (a) the [DOT] made creditable acquisitions at the time each licence requiring compliance with the MPTP was issued to a licence holder or transferred with the approval of the [DOT] to a licence holder; and (b) the payments made by the [DOT] under the MPTP from time to time were the consideration the [DOT] provided for those rights; and (c) the creditable acquisitions were attributable to the tax periods in which the payments by the [DOT] were processed and paid.

PARTIES' SUBMISSIONS 28 Before us, the Commissioner argued, as he did before the primary judge, that the only taxable supply was the supply of transport by the taxi-cab operator to a MPTP Member. The Commissioner argued that the DOT's MPTP Payments did not satisfy the requirements for creditable acquisitions because they did not satisfy s 11-5(b) and (c) of the GST Act, with the result that the DOT was not entitled to input tax credits. 29 The Commissioner did not contest that s 11-5(a) was satisfied because, on the Commissioner's case, when a taxi-cab licence was granted, the DOT acquired something - the right to performance of the obligations under the licence. The consideration for this acquisition was the grant of the licence. Further, the Commissioner did not contest the existence of a creditable purpose, as required by s 11-5(a). 30 The Commissioner's case depended on his characterisation and interpretation of the circumstances in which the DOT made a MPTP Payment. The Commissioner contended that: · An MPTP Member was carried pursuant to the Member's instructions, rather than those of the DOT. The MPTP Member decided upon the trip, and whether or not to use a Member MPTP Card. In this connection, the Commissioner specifically drew attention to condition 8 of the MPTP Membership Application Form, which stated that "MPTP membership does not guarantee that appropriate taxi transport will be available on request", and to the printed information accompanying the Membership Application Form, which, amongst other things, said: If your card doesn't work, you may still complete the trip. The EFTPO[S] terminal will advise the driver under which circumstances an emergency paper voucher is permitted to be used. Otherwise, you will be required to pay full fare, obtain a receipt and contact the [VTD]. · The carriage of the MPTP Member was carried out pursuant to a contract between the MPTP Member and the taxi-cab operator. The MPTP Member assumed responsibility for the payment of the whole of the fare. In making a MPTP Payment, the DOT merely discharged a part of the MPTP Member's liability to the taxi-cab operator. The DOT was liable for part of the fare only when the Member MPTP Card was authorised at the end of the trip. Until that point, the MPTP Member remained liable to pay the whole of the fare. · In some circumstances, the MPTP Member was able to pay the whole fare and seek reimbursement from the DOT. · The carriage of a MPTP Member by a taxi-cab operator did not satisfy any obligation owed by the DOT to the MPTP Member, and the DOT did not receive the benefit of that carriage. Under the MPTP, the DOT had merely a fundingobligation. That is, the DOT was obliged to fund a taxable supply - transport to the MPTP Member. Moreover, the DOT's statutory obligation was to ensure the provision of a public transport system; and it was not obliged to provide transport itself. In these circumstances, a MPTP Payment was for a supply by the taxi-cab operator to the MPTP Member and not for a supply by the taxi-cab operator to the DOT. Particularly in written submissions, the Commissioner submitted that, in making the contrary finding, the primary judge relied overly much on the judgment of Lord Millett in Customs and Excise Commissioners v Redrow Group plc [1999] 1 WLR 408 ('Redrow'). · The question of "taxable supply" was to be determined from the perspective of the supplier - the taxi-cab operator. From this perspective, the taxi-cab operator was providing transport, the consideration for which was the payment of the fare by the MPTP Member, the Member's liability being partially discharged by the DOT's MPTP Payment. · A MPTP Payment was not a payment for the performance of the taxi-cab operator's obligations to the DOT. Consideration for the performance of these obligations was provided by the grant of the licence. · Alternatively, an MPTP Payment was to be regarded as "merely discharging an obligation owed by the [DOT] to pay the taxi[-cab] operator a sum of money (akin to a payment made by a bank to a merchant under a charge card arrangement)" and, on this analysis too, was not consideration for a taxable supply to the DOT. 31 In supporting the judgment under appeal, the DOT relied substantially on the reasoning outlined by the primary judge. The DOT submitted that, under the MPTP, a taxi-cab operator supplied a service to the DOT - the carriage of a MPTP Member - to enable the DOT to fulfil its statutory objects and discharge its statutory functions. The DOT argued that this service was acquired by it when, at the outset of a MPTP trip, the taxi-cab driver inserted the Member MPTP Card provided by the MPTP Member into the EPTPOS terminal in the taxi-cab and the trip was electronically authorised as an MPTP trip. At this point, so the DOT said, the DOT became liable to make a MPTP Payment. The DOT argued that, in substance, once authorised as a MPTP trip, the taxi-cab operator was transporting the MPTP Member as the DOT requested. That is, as Senior Counsel for the DOT put it, the DOT's obligation to pay the MPTP Payment was enlivened when the Member MPTP Card was inserted into the EPTPOS terminal and the card was validated. Once a trip was an authorised MPTP trip, the MPTP Member was liable to meet only the non-MPTP component of the cost of the taxi-trip. The DOT submitted that a MPTP Payment was a payment in connection with the provision of a service by the taxi-cab operator in relation to the carriage of the MPTP Member. Thus, so the DOT argued, there was relevantly consideration (within the meaning of ss 195-1 and 9-15 of the GST Act) for the supply of a service to it by the taxi-cab operator. 32 The DOT accepted that, as the primary judge suggested (at [60]), "[b]y taking the MPTP Member, the taxi-cab operator may be understood as accepting a standing offer made by the DOT to pay part of the fare incurred by such a passenger", in the sense explained in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. Senior Counsel for the DOT noted, however, that the application of the relevant provisions of the GST Act did not require that there be a contract in this sense. 33 The DOT's case assumed that one series of acts can result in two relevant services being supplied and that, in the circumstances with which the MPTP was implemented, there were both a taxable supply of a transport service to the MPTP Member and a taxable supply of a transport service of the MPTP Member to the DOT. 34 The DOT argued that the Commissioner's construction of the relevant provisions of the GST Act would defeat the stated purposes of that Act, "as a system of value added taxation both on a juridical analysis and as a 'practical business tax'". 35 In support of Ground 2 of its Notice of Contention, the DOT argued that, if its primary argument failed, then the DOT made a relevant acquisition each time a taxi-cab licence was issued to a licensee, or transferred to a transferee with the DOT's approval. As part of this alternative argument, the DOT submitted that the MPTP Payments were the consideration given by the DOT for the rights acquired by it on the grant or transfer of a taxi-cab licence. Upon this alternative analysis, so the DOT argued, the DOT made a creditable acquisition within s 11-5 of the GST Act by granting or approving the transfer of a taxi-cab licence and, accordingly, the DOT was entitled to input tax credits for each such acquisition. The DOT argued that, by virtue of s 29-10 of the GST Act, the acquisitions were attributable to the time when each MPTP trip was undertaken and an invoice issued. 36 Since we would uphold the judgment of the primary judge substantially for the reasons her Honour gave, it is unnecessary to consider Ground 2 of the DOT's Notice of Contention.

CONSIDERATION 37 Under the GST regime, tax is generally payable at each stage of a commercial "supply" of goods and services. An entity that acquires the goods and services as a result of a taxable supply to it may be allowed a credit, called an input tax credit, for the tax borne by that entity by reference to the output tax payable as a result of the taxable supply: see GST Act, s 7-1, 7-5, 7-10, 9-40, 9-70, 9-75, 11-20, 11-25, 17-5, 7-15, 33-5, 35-5, 35-10. In the present case, the DOT will be entitled to input tax credit under s 11-20 of the GST Act in respect of the MPTP Payments if the MPTP Payments were creditable acquisitions for the purposes of s 11-5 of the GST Act. 38 The concept of input tax credits is integral to the GST regime. In HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 ('HP Mercantile'), at 557, Hill J (with whom Stone and Allsop JJ agreed) described the scheme that the GST Act supports in the following way: The gen[i]us of a system of value added taxation, of which the GST is an example, is that while tax is generally payable at each stage of commercial dealings (supplies) with goods, services or other "things", there is allowed to an entity which acquires those goods, services or other things as a result of taxable supply made to it, a credit for the tax borne by that entity by reference to the output tax payable as a result of the taxable supply. That credit, known as an input tax credit, will be available, generally speaking, so long as the acquirer and the supply to it (assuming it was a "taxable supply") satisfied certain conditions, the most important of which, for present purposes, is that the acquirer make the acquisition in the course of carrying on an enterprise and thus, not as a consumer. The system of input tax credits thus ensures that while GST is a multi-stage tax, there will ordinarily be no cascading of tax. It ensures also that the tax will be payable, by each supplier in a chain, only upon the value added by the supplier. (Emphasis added.) 39 There are two aspects of this case that must be borne steadily in mind if they are not to mislead. The first is that, although the DOT is a government entity, it is nonetheless capable of being subject to the general provisions of the GST Act. The second is that, although the MPTP arrangement can be seen as tripartite (involving the taxi-cab operator, the MPTP Member and the DOT), whether there is a taxable supply from the taxi-cab operator to the DOT, for which the DOT gives consideration, calls for a different analysis from the question whether there is a taxable supply by the taxi-cab operator to the MPTP Member, for which the Member gives consideration. The answer to the one enquiry is not necessarily determinative of the answer to the other. 40 Almost self-evidently, the position of the taxpayer and the nature of the enterprise that it conducts must be taken into account in applying the relevant provisions of the GST Act. The fact that the DOT is a State government entity does not prevent it being registered: see GST Act, ss 149-5 and 195-1; also the A New Tax System (Australian Business Number) Act 1999 (Cth), s 41. (We note that some of the relevant constitutional background is discussed in TT-Line Company Pty Ltd v Federal Commissioner of Taxation (2009) 181 FCR 400 ('TT-Line') at 414-415 per Perram J.) Indeed, it was common ground that the DOT was registered under the GST Act. In general, the GST system is intended to operate with respect to registered government entities in the same way as it does with respect to non-governmental organisations: compare TT-Line at 405 per Emmett J, 413 per Edmonds J and 414 per Perram J. For the purposes of the GST Act, a registered government entity is treated as if it were an entity carrying on an enterprise: see s 149-15. In particular, the DOT (being part of the executive arm of the State of Victoria) carries on an enterprise within the meaning of s 9-20(1)(g) of the GST Act, such an enterprise being "an activity, or series of activities, done ... by ... a State ...". The MPTP is either an enterprise or part of an enterprise carried on by the State of Victoria, in the form of the DOT. 41 Further, it was not disputed that from time to time the DOT makes taxable supplies. Nor was it disputed that the DOT is entitled to an input tax credit for any creditable acquisition the DOT makes: see GST Act, s 11-20. Pursuant to s 11-25, the amount of the input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. The amount of the input tax credit is reduced if the acquisition is only partly creditable. 42 A creditable acquisition is made in the circumstances set out in s 11-5 of the GST Act. Section 11-5 provides that: You make a creditable acquisition if: (a) you acquire anything solely or partly for a *creditable purpose; and (b) the supply of the thing to you is a *taxable supply; and (c) you provide, or are liable to provide, *consideration for the supply; and (d) you are *registered, or *required to be registered. (The * indicates defined terms as set out in s 195-1 of the GST Act.) 43 The first requirement is that "you [here, the DOT] acquire anything". In the GST Act, the meaning of "acquire" and "acquisition" is a broad one. Thus, s 11-10(1) provides that "[a]n acquisition is any form of acquisition whatsoever". Section 11-10(2) further emphasizes the breadth of this notion of acquisition, stating that: Without limiting subsection (1), acquisition includes any of these: (a) an acquisition of goods; (b) an acquisition of services; (c) a receipt of advice or information; (d) an acceptance of a grant, assignment or surrender of *real property; (e) an acceptance of a grant, transfer, assignment or surrender of any right; (f) an acquisition of something the supply of which is a *financial supply; (g) an acquisition of a right to require another person: (i) to do anything; or (ii) to refrain from an act; or (iii) to tolerate an act or situation; (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g). 44 As already noted, the Commissioner did not dispute that the DOT acquired something or that s 11-5(a) was satisfied. As noted above, the Commissioner's argument was that the DOT made only one relevant acquisition. This was the acquisition made at the time the taxi-cab licence was granted, when the DOT acquired the right to have the obligations under the licence performed. According to the Commissioner's argument, the consideration for this acquisition was the grant of the licence. Further, as noted, the Commissioner did not contest the existence of a creditable purpose. 45 We reject the Commissioner's submission that this is the relevant acquisition. Let it be assumed that the grant of the taxi-cab licence was the consideration for the acquisition of the right to have the licence performed. This assumption does not account for the MPTP Payments. The occasion for the MPTP Payments was not the grant of a taxi-cab licence. Indeed, a licensee could have operated a taxi-cab under a taxi-cab licence without the DOT ever having made a MPTP Payment, or having incurred any liability to make a MPTP Payment, to that licensee. The DOT made a MPTP Payment to a taxi-cab operator, or assumed the liability to make such a payment, only when the taxi-cab operator made a MPTP trip. As the DOT submitted, in the ordinary case, the trip became an MPTP trip, and the obligations under the MPTP were enlivened, when the driver inserted the Member MPTP Card into the EFTPOS terminal and received the authorisation to undertake the trip as an MPTP trip. 46 The Commissioner relied on the fact that it was the MPTP Member's choice to take the taxi-cab ride and to present a Member MPTP Card. We do not consider that this assists the Commissioner's argument. Once the MPTP Member presented the Member MPTP Card to the taxi-cab driver, the driver took steps to have the proposed trip authorised as an MPTP trip. Once the trip became an MPTP trip, the MPTP Member was carried effectively at the request of the DOT. Moreover, it was incorrect to say, as the Commissioner did, that the MPTP Member remained liable for the whole of the fare and/or that any liability on the DOT's part to make a MPTP Payment arose only at the end of the trip. Once the trip became an MPTP trip, the DOT assumed liability for the MPTP component of the cost of the taxi-cab ride. Further, we are not concerned here with the exceptional circumstance in which the MPTP Member paid the whole fare and was later reimbursed by the DOT. As noted, the DOT did not claim that it was entitled to any input tax credits in respect of the GST components of any such reimbursements. 47 In the ordinary case with which this appeal is concerned, when a MPTP Member was about to commence a taxi-cab trip, the MPTP Member provided a Member MPTP Card to the taxi-cab driver, who started the taxi-meter and then inserted the Member MPTP Card into the EFTPOS terminal to authorise the trip. It was at this point that the system authenticated the Member MPTP Card and authorised the trip as an MPTP trip. Once the trip became an MPTP trip, the DOT assumed liability to make a MPTP Payment. As senior counsel for the DOT put it, every time a Member MPTP Card was inserted into the EFTPOS terminal and the trip authorised, it was as if the DOT was sitting in the taxi-cab too, because the authorisation told the driver and the passenger that the DOT would pay the MPTP component of the fare. Equally, once the trip became an MPTP trip, the MPTP Member assumed liability to pay only the non-MPTP component of the fare. In this circumstance, the DOT acquired from the taxi-cab operator a service, being the transport of the MPTP Member, which the DOT sought when the Member MPTP Card authorised the trip as a MPTP trip. This service was fundamental to the operation of the MPTP. 48 We accept that s 11-5(a) was satisfied although not for the reasons advanced by Commissioner. 49 The second requirement for there to be a creditable acquisition is that set down in s 11-5(b) of the GST Act. This requirement is that the supply of the thing to "you" is a "taxable supply". In this context, "you" is the DOT. 50 Whether or not the supply of the thing to the DOT was a taxable supply involves determining, first, whether or not there was a "supply" to the DOT and, secondly, whether or not that supply was a "taxable" supply. 51 Section 9-10(1) provides that a supply "is any form of supply whatsoever". Section 9-10(2) adds that: Without limiting subsection (1), supply includes … (a) a supply of goods; (b) a supply of services; (c) a provision of advice or information; (d) a grant, assignment or surrender of *real property; (e) a creation, grant, transfer, assignment or surrender of any right; (f) a *financial supply; (g) an entry into, or release from, an obligation: (i) to do anything; or (ii) to refrain from an act; or (iii) to tolerate an act or situation; (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g). 52 The first part of the statutory enquiry under s 11-5(b) - whether there has been a supply to the DOT - should be answered in the affirmative. 53 Partly for the reasons already stated in relation to s 11-5(a) of the GST Act, the Commissioner's contention that the only taxable supply was a supply of transport to the MPTP Member should be rejected. Further, this contention fails to take account of the nature of the enterprise that was being conducted by the DOT. The nature of this enterprise must be considered in the light of the Transport Act. Account should also be taken of the evident purpose of the MPTP. 54 Under the Transport Act at the relevant time, the objects of the DOT included "to improve the efficiency and effectiveness of transport facilities and networks to meet the needs of the community" (s 4(1)(a)) and "to ensure that a public transport system is provided in Victoria that is efficient, effective, safe and reliable and has due recognition for the needs and interests of the users of that system and the taxpayers of Victoria" (s 4(1)(b)). The statutory functions of the DOT included "to develop, improve and co-ordinate the provision of transport services" (s 4(2)(a)). Pursuant to s 6(1), the Secretary of the DOT was empowered, on behalf of the Crown, "to do all things that are necessary or convenient to be done for or in connection with, or as incidental to, the performance of the functions of the Department and the achievement of its objects". 55 The DOT was bound to exercise its powers under the Transport Act, including with regard to taxi-cab licences, in furtherance of its statutory objects and in the performance of its statutory functions: see, for example, Transport Act, ss 140, 143, 143A, 144. As we have seen, these statutory licensing provisions provided much of the legal framework for the MPTP. Exercising the power conferred by s 144(2)(g), the licensing authority (the DOT) attached the conditions to taxi-cab licences that it thought proper to impose in the public interest, including conditions that required each taxi-cab to be fitted out with the equipment that enabled the MPTP to be implemented and that required the taxi-cab operator to operate the taxi-cab in conformity the MPTP. 56 We accept that, as the Commissioner argued, each MPTP Payment was, in effect, a subsidy for taxi-cab travel for a MPTP Member. Under the MPTP the DOT assumed an obligation to fund in part the use of taxi-cabs by persons unable to take ordinary public transport. This did not mean, however, that there was only one supply, being the supply of transport to the MPTP Member. On the contrary, there were two supplies: the supply of transport to the MPTP Member and the supply to the DOT of the transport of the MPTP Member. That is, in transporting the MPTP Member in conformity with the MPTP, the taxi-cab operator provided the service to the DOT of transporting the MPTP Member. This proposition can be made good in a number of ways. First, having regard to what we have said at [47], the taxi-cab operator was doing what the DOT had in effect asked him to do when the Member MPTP Card was validated and the MPTP trip was authorised, upon the basis that the DOT would make a MPTP Payment (i.e., that the DOT would pay the MPTP component of the fare). Secondly, the supply of this service of transporting the MPTP Member to the DOT enabled the DOT to fulfil its objects under the Transport Act and to perform its functions. 57 In argument, the Commissioner drew a distinction between the DOT's own statutory object of ensuring the provision of public transport services and a different object of providing public transport services directly. We preface our remarks by noting that the expression "public transport system" is not defined in the Transport Act and that, in any event, the DOT has a number of statutory objects and functions. We do not consider that, in the present context, anything turns on the distinction that the Commissioner would make. Through the implementation of the MPTP and the provision of a subsidy, the DOT sought to facilitate the transport of a sector of the public who, on account of their disabilities, were unable to access conventional public transport. This, so it seems to us, was in furtherance of the DOT's statutory objects and in discharge of its statutory functions described in [54] above and, in particular, was in discharge of its function "to ... co-ordinate the provision of transport services", as stated in s 4(2)(a) of the Transport Act. 58 The supply to the DOT was a taxable supply. So too was the supply to the MPTP Member. Section 9-5 provides that: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. 59 The terms of s 9-5 show that whether or not there is a taxable supply for the purposes of the provision is to be determined from the perspective of the entity making the supply - here, the taxi-cab operator. The taxi-operator was clearly making a taxable supply to the DOT (as well as to the MPTP Member) because the supply to the DOT (like the supply to the MPTP Member) was made in the course or furtherance of an enterprise that the taxi-cab operator was carrying on. The supply to the DOT was made for consideration (see [66] below), being the MPTP Payment made by the DOT to the taxi-cab operator. The supply to the MPTP Member was also made for consideration, being the payment by the MPTP Member of the non-MPTP component of the fare. Paragraphs 9-5(c) and (d) were clearly satisfied. 60 As senior counsel for the DOT noted, this analysis is confirmed by the receipt that was electronically generated to the MPTP Member at the end of the MPTP trip. This receipt ordinarily showed that the MPTP Member had paid one-half the fare for the trip and the GST attributable to that amount (in respect of the taxable supply to the MPTP Member). The electronic invoice issued to the DOT showed that the DOT paid the other half of the fare as well as the GST attributable to it (in respect of to the taxable supply to the DOT). We consider that this evidence disposes of the Commissioner's submission that, in some way, the MPTP Member, if registered under the GST Act, would be entitled to the whole of the input tax credits attributable to the payment made by him and the DOT. 61 In written submissions, the Commissioner argued that the primary judge was misled by Redrow, a judgment of the House of Lords. Redrow concerned a builder who entered into incentive arrangements with real estate agents and prospective purchasers that it would pay the agent's fee on a prospective purchaser's existing home plus value added tax if the prospective purchaser completed the purchase of a house from the taxpayer builder. Considering that the estate agent received its instructions from the builder and, providing the prospective purchasers completed the purchase from the builder, the builder paid for the services that were supplied by the agent, their Lordships held that the transaction between the builder and the agent was a supply of services. Lord Millett summed up by saying (at 419) that it was "sufficient that the taxpayer obtained something of value in return for the payment of the agents' fees in those cases where it became liable to pay them, and that it obtained what was obtained for the purposes of the taxpayer's business". The matter was to be considered from the taxpayer's point of view, and the fact that another person also received a service as part of the same transaction did not deprive the taxpayer of its entitlement to deduct the value added tax as input tax. 62 Plainly enough, the issue under consideration in Redrow arose in different circumstances from the present and was decided under different (though not dissimilar) taxation legislation. The primary judge quite properly referred to the approach in Redrow, but made it very clear that she was not treating it as necessarily governing the case before her. As her Honour herself acknowledged (at [41]), "[u]ltimately, we are driven back to the words of the GST Act". Her Honour reasoned to a conclusion by reference to the provisions of the GST Act, as she was required to do. 63 For the reasons explained, there was a taxable supply within the meaning of s 11-5(b) of the GST Act. 64 The third requirement for there to be a creditable acquisition is that set down in s 11-5(c) of the GST Act. This requirement is that "you" provide, or are liable to provide, consideration for the supply. Again, "you" for present purposes means the DOT. 65 We consider that the s 11-5(c) was satisfied because the DOT was liable to provide, and did provide, consideration for the supply made to it by the taxicab operator in each MPTP trip. 66 Pursuant to s 9-15(1) of the GST Act, the term 'consideration' includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.

Section 9-15(2) states that it does not matter whether the payment, act or forbearance was voluntary, or whether it was by the recipient of the supply. 67 The MPTP Payments were within s 9-15(1) because they were "payment[s] ... in connection with a supply of [some]thing". In other words, as part of the MPTP, the DOT agreed to pay and paid the MPTP Payments to the taxi-cab operator for, or, as s 9-15(1) has it, "in connection with" the supply to the DOT of the transport of the MPTP Member. It follows from this that the MPTP Payments are properly characterised as "consideration" within the meaning s 9‑15(1). Section 11-5(c) was therefore satisfied. It was immaterial that the MPTP Payments represented only part of the fare payable for a MPTP trip. 68 The Commissioner's contention that the primary judge misconstrued s 9-15 is misconceived. Her Honour did not advance the erroneous proposition that, in every case in which there is consideration, there is a supply, as the Commissioner at one stage suggested. Rather, her Honour's language reflected the requirement in s 11-5(c) that "you provide, or are liable to provide, consideration for the supply". It was this requirement that her Honour addressed when she held that the DOT acquired the service of carriage of the MPTP Member for consideration "because it agrees to pay and does pay the taxi-cab operator to carry the disabled person". 69 We consider that construing and applying the relevant provisions of the GST Act as we have done is in conformity with the legislative purpose of the GST Act and gives effect to that purpose: see Acts Interpretation Act 1901 (Cth), s 15AA. 70 We reject that appellant's contention that this appeal should be decided by analogy with credit and charge card arrangements. Credit and charge card arrangements vary from one another, depending on the terms of the contracts between the relevant participants. This said, the terms of such contracts are different from the contractual and other arrangements instituted under the MPTP. Significantly, when a MPTP trip is commenced, the DOT itself becomes liable to the taxi-cab operator to make the MPTP Payment, being the MPTP component of the fare. Under a charge card arrangement the customer must ultimately meet the whole of the purchase price. DISPOSITION 71 For the reasons stated, the requirements in s 11-5(a), (b) and (c) were met. It was, as we have said, common ground that the DOT was registered and thus s 11-15(d) was also satisfied. The DOT made creditable acquisitions in carrying on the MPTP and was entitled to input tax credits under s 11-20 of the GST Act in respect of the GST components of the MPTP Payments. 72 Accordingly, we would dismiss the appeal. The appellant should pay the respondent's costs of the appeal. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kenny and Dodds-Streeton.

AND: SECRETARY TO THE DEPARTMENT OF TRANSPORT (VICTORIA)

Jessup J 73 I have had the benefit of reading in draft the reasons prepared by Kenny and Dodds‑Streeton JJ. What follows is based upon their Honours' identification of the facts, statutory provisions and issues which are relevant in the present appeal. 74 I agree that the right to have obligations arising under the taxi licence performed was not a thing which the Department of Transport ("the Department") relevantly acquired in the assumed typical facts which were before the primary Judge. Indeed, I consider it a distraction to introduce that right - if it is a thing either acquired or capable of acquisition - into the present discussion at all. Like Kenny and Dodds‑Streeton JJ, I take the view that we are presently concerned only with acquisitions which arose in the context of the hiring of a taxi by an MPTP member. 75 I also agree with Kenny and Dodds‑Streeton JJ that the present appeal cannot be resolved by reference to some categorical proposition that, because a taxi hiring was a service acquired by the MPTP member, it could not also, at the same time, be a service acquired by someone else. But the question is whether, on the assumed facts in the present case, it was also a service acquired by the Department. If the correct analogy were to regard the Department as a notional second passenger in the taxi, then the conclusion that the Department, additionally to the MPTP member, acquired the service, would be a natural one. The (or at least a) substantial issue in the appeal, however, is whether that is the correct analogy. 76 The primary Judge held that the thing supplied to, and acquired by, the Department was "the transport of the disabled person". Although the statutory definitions of "acquisition" and "supply" are wide, it was not suggested by her Honour (or by the Department) that what was here acquired and supplied was other than "services" within the meaning of para (b) of each of the relevant definitions. In considering what these services were, in my view, the starting point must be that, on the assumed facts, a taxi was hired by the MPTP member. The service thus acquired by, and supplied to, him or her was the hire of the taxi. The Department came into the picture because of its policy to subsidise the relevant fare. The transaction as between the taxi operator and the Department does not require characterisation other than as the means by which such a subsidy was provided. That was, in my view, the underlying reality of what occurred. 77 Why then should it be concluded, as the primary Judge did, that the taxi operator supplied, and the Department acquired, services by way of the transport of the MPTP member? An examination of the statutory purposes of the Department does not, in my view, provide a satisfactory explanation. It is true that the Department is concerned with public transport generally, including that provided through the taxi cab network. But to say that it was well within the role of the Department to engage taxis for the transportation of disabled persons does not mean that the facts assumed for the purposes of the present case amounted to such a regime. Neither do I consider that the fact that the Department was obliged (whether by contract, by statute, or otherwise) to pay the taxi operator the moiety of the fare not paid by the MPTP member goes any further than to beg the question: where the underlying, and most obvious, rationale for the payment was the provision of a subsidy to the member, and knowing what we do about the mechanism for paying that subsidy, the existence of such an obligation cannot be regarded as consistent only with the supply to, and the acquisition of, the relevant service, or some component thereof, by the Department. 78 Assuming the Department to be under some legally enforceable obligation to make a payment to the taxi operator equal to one half of the fare of the MPTP member on a particular occasion, the jurisprudential basis of that obligation may be relevant to the question whether the Department acquired, as a service, the carriage of that member. On this issue, the primary Judge said: It may be doubted that the taxi-cab operator who picks up a MPTP Member has no contractual right to recover the amount due under the MPTP from the DOT. By taking the MPTP Member, the taxi-cab operator may be understood as accepting a standing offer made by the DOT to pay part of the fare incurred by such a passenger: Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256; Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 at 455-456; Gippsreal Ltd v Registrar of Titles (2007) 20 VR 157 at [42]. The available remedy was adroitly summarised in Mallinson v Scottish Australian Investment Co Ltd (1920) 28 CLR 66 at 70: 'Wherever an Act of Parliament creates a duty or obligation to pay money, an action will lie for its recovery, unless the Act contains some provision to the contrary'; and where the amount is liquidated the action of debt is appropriate. (Citations omitted). This principle has been repeatedly endorsed by the High Court over the last twenty years: see for example Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at [40] (per Gaudron J) and [65] (per McHugh and Gummow JJ); Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at [83] (per Gummow and Callinan JJ, Gleeson CJ agreeing); Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 248 ALR 693 at [51] (per Gummow ACJ, Heydon, Crennan and Kiefel JJ); Pape v Commissioner of Taxation (2009) 257 ALR 1 at [38] (per French CJ), [140] (per Gummow, Crennan and Bell JJ) and [452] (per Heydon J).

79 With respect to her Honour, I have some difficulty with this framework of analysis, at least in the context of the present case. It may be a relatively minor point of concern, but the "available remedy" for cases in the Smoke Ball line is an action on the contract, while remedy of the kind proposed in Mallinson is available where the obligation to pay arises from statute. A more substantial concern relates to her Honour's view that the operator, by taking an MPTP passenger, may be understood as accepting a standing offer made by the Department to pay part of the fare. The difficulty with this view is that it implies a particular offer/acceptance paradigm which may not be applicable in the circumstances. With certain presently irrelevant exceptions, a driver of a taxi that is generally plying for hire must take any passenger to his or her nominated destination: Transport (Taxi-Cab) Regulations 2005 (Vic), reg 29(1). The passenger must pay the fare: reg 43(5). The driver may refuse to carry the passenger if the latter does not demonstrate to the driver's reasonable satisfaction that he or she has enough money or other means to be able to pay the estimated fare: reg 41(3). The contract of hiring itself is, therefore, a regulated one. Generally speaking, a driver does not have the discretion usually available to a contracting party whether to enter into the contract at all. It is, in my respectful view, artificial to propose that the driver (or operator) accepted a standing offer by the Department when he or she took the MPTP member as a passenger. 80 It was not, in my respectful view, the taking of the MPTP member as such that gave rise to an obligation on the part of the Department to pay half the fare. Whether an MPTP member used his or her smart card was a matter of choice. He or she had every right to pay the full fare. It was the acceptance of the smart card (which the driver was obliged to do pursuant to the conditions attaching to the taxi licence) which gave rise to the operator's entitlement to payment by the Department. If there was anything done by the operator which is arguably an element in a contract-like transaction with the Department, it was the driver's forbearance from insisting on full payment by the MPTP member, a course which the driver had no option but to adopt, once a valid smart card had been tendered. That this, rather than the taxi ride as such, should be viewed as the equivalent of a benefit received by the Department in return for its payment is at least in harmony with the underlying nature of the Department's relevant role, which is that of a subsidiser of the MPTP member's fare. 81 As it happens, I am unable to regard a taxi operator's compliance with the conditions attaching to the taxi licence as part of any exchange of services for value as between himself or herself and the Department. The transaction by which the driver accepted a duly tendered smart card in payment of one-half of the fare of the MPTP member, and the operator was electronically paid this part of the fare by the Department, was no more than the mechanism by which the member was subsidised for part of the fare. That view of the matter is consistent with the facts of the case generally and is, I consider, the most natural conclusion to be drawn from those facts. 82 It seems that the position for which the Department contends starts from the silent proposition that, having undertaken an obligation to make a payment, it most likely paid for something. When you search for what that thing was, you find that the only service that was supplied to anyone was the transportation of an MPTP member. You conclude, therefore, that the Department paid, or at least made a part payment, for that service. However, where the payer is a government giving effect to social welfare policy, there is no reason to commence with the likelihood that it need receive something in return. Transfer payments by governments are a commonplace. I do not consider it at all unnatural that a government department would make such a payment - even bind itself to do so in defined circumstances - without acquiring anything in return. I am of the view that that is what occurred when the Department paid half the taxi fare of an MPTP member. 83 The present case is not, in my view, analogous to a hypothetical situation in which a second passenger shares a taxi with an MPTP member and agrees to pay half the fare. It is not analogous to a situation in which a third person hires a taxi to take an MPTP member to his or her destination. And neither is it analogous to a situation in which a third person agrees with a taxi driver that, in return for taking the MPTP member to that destination, he or she (the third person) will pay half the fare. It is, in my view, most naturally analogous to a situation in which the third person simply contributes to the fare of an MPTP member who has chosen to hire a taxi and who, absent such a contribution, would be liable as a matter of contract to pay the full fare. 84 For the above reasons, I take the view that the appeal should be allowed, and the Commissioner's decision restored. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.