Dennis Hotels Pty Ltd v Victoria [1960] HCA 10 | Case summary

Dennis Hotels Pty Ltd v Victoria [1960] HCA 10 | Case summary | Zoe

[7]

That proposition means to me that the provisions impose an excise duty within the meaning of s. 90. It is a tax. It is a tax "upon" the goods. It is the kind of tax which tends to be recovered by the person paying it in the price he charges for the goods which bear the imposition. Only in two respects does the case appear to me to involve any question as to the connotation of the word "excise" in s. 90 - a connotation that has been discussed in past cases very fully in this Court. The first of the two matters to which I refer is the fact that the proposition as I have framed it embraces liquors independently of their place of origin. The tax is an inland tax and not an import tax, but as I have described it, it falls without distinction upon liquors whether they originated in Victoria, in Australia but outside Victoria or outside Australia altogether. The tax is undoubtedly an inland tax but it does not distinguish between the goods upon which it falls in respect of their origin: it is indifferent to the possibility of their being domestically produced or imported. Certain licences such as an Australian wine licence and to some extent perhaps a brewer's licence, are restricted to Australian production but we need not enter upon that distinction between licences; it is a side issue. For so far as I am concerned I think an inland tax upon goods of a class manufactured in Australia and abroad, imposed without regard to their place of origin, is an excise. It may be that it is an excise because it includes goods of home manufacture and as to imported goods is not. That seems to be the way it was regarded in The Commonwealth and Commonwealth Oil Refineries v. South Australia [1] . But it would be ridiculous to say that a State inland tax upon goods of a description manufactured here as well as imported here was not met by s. 90, excluding as that section does both duties of customs and duties of excise, because the duty was not confined to goods imported and so was not a duty of customs and was not confined to goods manufactured at home and so was not a duty of excise. The brief statement in Matthews v. Chicory Marketing Board (Vict.) [2] that "The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities" [3] may need elaborating but it expresses my view of the substance of the provision. The second matter which perhaps arises as to the connotation of "excise" is closely connected with the first. It is whether the tax in order to be an excise must be imposed on the production of the goods or may be imposed upon the goods in the hands of any of the various persons through whom they pass in the course of distribution. Upon this I have expressed my view in Matthews' Case [4] and in Parton's Case [1] , where there is a qualification with respect to consumption.

[9]

I have begun by framing the foregoing proposition because it appears to me to represent the effect of the provisions of the Licensing Act 1958. I must of course establish or justify the proposition by a detailed discussion of the provisions. But for two reasons it has seemed better to formulate it at once before proceeding to justify it. The first is because it is the operation of the provisions of the Act considered together which appears to me inevitably to show that an excise is imposed. They operate together to burden liquor as a commodity with six per cent upon the wholesale price. As was said by Lord Thankerton speaking for the Privy Council in Attorney-General for British Columbia v. Kingcome Navigation Co. [2] : "Customs and excise duties are, in their essence, trading taxes and may be said to be more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted." [3] . If you proceed by looking at each particular licensing provision of the Act connecting it only with the man licensed you are very likely to fail to perceive that, whatever the purpose of licensing the man, that is to say the description of trader in or producer of liquor, the purpose of levying six per cent upon the wholesale price of the liquor permeates the whole and is put into effective operation. The second reason for stating first the combined effect of the provisions as the imposition upon the commodity of a tax of six per cent of the wholesale price and treating that as decisive is that it enables one better to see the bearing of certain objections that are made to placing the exaction of six per cent of the purchase price within the category of a duty of excise. Some of those objections, as it would appear to me, give a characterization to the licence and to the payment to the Treasury by a licensee of the tax, a characterization which may be just enough but which does not detract from the truth that nevertheless the result of the whole is an excise upon the commodity. Other objections seem rather to treat as important the fact that in return for the tax a licence is given to the licensee possessing a quasi monopoly value. This again I would not regard as material, once it is seen that the result is to tax liquor on its way to the consumer by whatever human channel it may flow.

[11]

There is one possible contingency in which the amount may not be paid and may not become payable. That contingency is that neither the licensee nor any occupier nor the owner nor the mortgagee nor any person with any right title or interest seeks a renewal of the licence and the licence lapses or is surrendered. It is not necessary to pursue what is involved in this contingency. It is enough to concede its possibility and to add a reference to s. 37 and Pt. XIII for cases where perhaps there is a surrender and where compensation is sought. It seems plain enough that the provisions are all framed on the footing that a licence will be renewable and will continue indefinitely whether the licensee be the same, or there be a transfer or some new licensee coming in for the owner or mortgagee or as the case may be, or there be a removal of the licence to another site (cf. s. 120). In a general scheme of the kind which the provisions disclose, it appears to me that no significance on the question whether the tax is an excise can be found in the fact that no attempt is made to cover the contingency that a business carried on under a licence may be abandoned at the end of a year and that no renewal may be obtained which would form the occasion for payment of the tax. It is not now perhaps considered remarkable that a licensed site in a growing city should be turned to a more profitable use than the liquor trade provides; but one may be sure that it would be a mistake to attach any particular significance to the omission from the provisions with which we are concerned, taking their root as they do in 1916 and earlier, of any measure to catch the "licence fee" or tax on the liquor purchased in the prior year ending 30th June in a case where there was no renewal of the licence. Plainly it was the general conception that when the renewal of the licence was obtained six per cent on the liquor bought during a convenient year of account for sale on premises should be paid to the Treasury and that this should go on de anno in annum. It is for this reason that in framing the proposition with which I opened this judgment I ventured to place this qualification under the description of exceptions that are of no importance either because they are theoretical and not real or too trivial to matter. There may be found one or two other points, for example in the case of a vigneron's licence, at which it may seem possible theoretically that occasionally a little liquor may go untaxed, but if it be so they form very trivial exceptions and they are not worth separate discussion.

[14]

Take next a packet licence, that is a licence to sell liquor aboard a vessel: s. 14. Six per cent of the amount paid for liquor purchased for the vessel during the twelve months ending on the previous 30th June must be paid on the renewal of that licence: s. 19 (1) (a). So with an Australian wine licence: s. 19 (1) (a) and s. 10. A brewer's licence is granted under Pt. VII of the Act. It authorizes the holder to sell and dispose of beer, ale, porter or wine made in Victoria but in quantities of not less than two gallon. The licence is for a calendar year and is of course renewable. The fee includes six per cent on the liquor sold, not purchased, but it is on the liquor sold or disposed of under the licence to persons other than persons licensed to sell liquor: see s. 19 (1) (g), s. 17 and s. 124. This means that there is no percentage payment payable by the brewer in respect of liquor sold to retailers or other wholesalers but only to persons who because they possess no licence must be considered consumers. Sales to them, however, must be in quantities of not less than two gallons. The point for the purpose in hand is that if the beer, ale, porter or wine sold by a licensed brewer is sold to a licensed person who must include it in the purchases upon which he, his transferee or other successor in title or in business will pay six per cent to the Treasury when he comes at the close of the year to obtain a renewal of that licence, then the brewer pays nothing in respect of it; for it will in due course bear the tax. But if he sells it to a person having no such licence, he must pay six per cent on the selling price which being in quantities of not less than two gallons will, it is supposed by the provision, be a wholesale price. In the same way a licensed spirit merchant must pay six per cent of the amount paid or payable by him for all liquor which during the twelve months ended on the 30th of the preceding June was sold or disposed of under the licence to persons other than persons licensed to sell liquor: see s. 11, s. 19 (1) (c). But a licensed spirit merchant may be a licensed grocer. A holder of a grocer's licence who is a licensed spirit merchant may sell and dispose of liquor in bottles. Such a person must pay six per cent of the amount paid or payable by him for all liquor which during the twelve months ending on the previous 30th June was purchased by the licensee and disposed of under such licence to any person other than a person licensed to sell liquor. If he sells as a wholesaler he does not pay the six per cent because the retailer does pay; otherwise the grocer-spirit merchant does pay it: see s. 11, s. 12 and s. 19 (1) (c) and (d). A vigneron's licence stands in a special position. Doubtless it is assumed that the vigneron will export or sell for export or sell to a wholesaler here all the wine he produces from his vineyard. He will thus never be in the position of one who should pay the six per cent on liquor to be consumed in Victoria. He obtains a vigneron's licence which authorizes him to sell at his vineyard, in quantities of not less than one pint and not to be drunk on the premises, wine made from grapes of his own growing or from grapes purchased by him: s. 13, s. 19 (1) (f). He does not pay six per cent on any sales. For whether it is the wholesaler who buys from him or any retailer who buys from him direct, so far as the wine goes into consumption in Victoria, the six per cent is imposed on it by the other provisions. It is perhaps superfluous to trouble over a railway refreshment room licence; but there the six per cent must be paid calculated on the amount paid or payable by the licensee for all liquor which during the twelve months ending on the 30th of the preceding June was purchased for the premises. Before coming to the licensed victualler there are two other forms of licence to mention. They are the temporary victualler's licence and the temporary packet licence. The first of these may be obtained by a licensed victualler or licensee of a railway refreshment room. It enables the licensee to sell liquor at an agricultural show, at races, at a regatta and at any of a number of other specified temporary amusements or games. The second, the temporary packet licence, authorizes the master of a ship conveying passengers from a place in Victoria to another place in Victoria or outside Victoria to sell or dispose of liquor to passengers during the passage. These licences are of course of no intrinsic importance but they provide this point, namely that six per cent of the amount paid or payable for liquor purchased for sale or disposal under the licence must be paid to the Treasury within seven days of demand and, to enable it to be fixed, the licensee must declare the amount paid by him for liquor purchased by him for sale or disposal under the licence.

[16]

There is one matter of importance which might affect the view taken of the six per cent as a tax of a description tending to be passed on to the consumer, commonly regarded as a characteristic of an excise duty. It is the provision which enables or was intended to enable a licensed victualler who is a tenant to place upon his landlord the burden of the three-eighths the amount of the tax: see sub-s. (3) of s. 19 (amended since Meredith v. Fitzgerald [1] ). It might be suggested that this provision showed an intention or at least a hope on the part of the legislature that the tax of six per cent would not be incorporated in the price of the liquor sold to the customer. Perhaps that may be an inference. But in my opinion it does not operate to make a tax which is calculated directly on the price of the goods sold any less an excise. It remains something essentially associated with the quantity and value of the goods. I say this in full consciousness of the fact that the payment exacted is calculated on the price of the goods purchased during a period which ended six months before the exaction is fixed, purchased during that period for sale but of course not necessarily for sale during that period. That to my mind does not matter. For it is a continuing business and when the licensee purchased those goods he knew they must bear an impost of six per cent. Both the points are met by the language of Lord Warrington of Clyffe in disposing on behalf of the Privy Council of a contention that a tax on the gross revenue of a coal mine was not an indirect tax. "What then is the general tendency of the tax now in question? First it is necessary to ascertain the real nature of the tax. It is not disputed that, though the tax is called a tax on "gross revenue", such gross revenue is in reality the aggregate of sums received from sales of coal, and is indistinguishable from a tax upon every sum received from the sale of coal. The respondents are producers of coal, a commodity the subject of commercial transactions. Their Lordships can have no doubt that the general tendency of a tax upon the sums received from the sale of the commodity which they produce and in which they deal is that they would seek to recover it in the price charged to a purchaser. Under particular circumstances the recovery of the tax may, it is true, be economically undesirable or practically impossible, but the general tendency of the tax remains. It is said on behalf of the appellant that at the time a sale is made the tax has not become payable, and therefore cannot be passed on. Their Lordships cannot accept this contention; the tax will have to be paid, and there would be no more difficulty in adding to the selling price the amount of the tax in anticipation than there would be if it had been actually paid." (R. v. Caledonian Collieries [1] ).

[44]

When it has been decided that the particular exaction in question is a tax, the question is then sometimes asked whether it is a "direct" tax or an "indirect" tax. As to this, I would say that, with the greatest respect, I think it a pity that this distinction was ever raised or mentioned in relation to s. 90. I do not think it is capable of throwing any light on s. 90. Attention to it may be thought to have been invited by the concluding words of the "definition" of Griffith C.J. in Peterswald v. Bartley [1] . His Honour's words were "and not in the sense of a direct tax or personal tax" [1] . But I understand his Honour to have intended by those words not to add anything by way of definition to what he had already said, but merely to give an example, by way of contradistinction, of something which would not be a duty of excise. I gather from a recent article Judicial Review under Section 90 of the Constitution - An Economist's View - Pt. 1 by Professor H. W. Arndt [2] that the distinction between "direct" and "indirect" taxes is now discredited among economists. But in any case I do think that the whole subject of s. 90 and duties of excise has been clouded by reference to a number of decisions of the Privy Council, which have interpreted and clarified s. 92 (II) of the Canadian Constitution but have no real bearing on s. 90 of our own. Section 92 (II) of the British North America Act gives to the legislatures of the Provinces exclusive power to make laws in relation to "direct taxation within the Province". This provision was adopted with conscious and deliberate reference to John Stuart Mill's distinction between "direct" and "indirect" taxation, and Mill himself probably had some influence in the matter. In Atlantic Smoke Shops Ltd. v. Conlon [3] , Viscount Simon L.C. said: "It has been long and firmly established that, in interpreting the phrase "direct taxation" in head 2 of s. 92 of the Act of 1867, the guide to be followed is that provided by the distinction between direct and indirect taxes which is to be found in the treatise of John Stuart Mill. The question, of course, as Lord Herschell said in Brewers and Maltsters' Association of Ontario v. Attorney-General for Ontario [4] , is not what is the distinction drawn by writers on political economy, but in what sense the words were employed in the British North America Act. Mill's Political Economy was first published in 1848, and appeared in a popular edition in 1865. Its author became a member of parliament in this latter year and commanded much attention in the British House of Commons. Having regard to his eminence as a political economist in the epoch when the Quebec Resolutions were being discussed and the Act of 1867 was being framed, the use of Mill's analysis and classification of taxes for the purpose of construing the expression now under review is fully justified". [1] . There can be no such justification for "the use of Mill's analysis", or for the use of Canadian precedents, when we come to interpret our own s. 90, which was adopted in a quite different setting and employs much more specific terminology,

[57]

In Parton's Case [1] the levy in question was imposed upon "dairymen". Dairymen were not producers or manufacturers of milk, but it was held by a majority of five Justices that the levy was a duty of excise. Latham C.J. and McTiernan J. dissented. Latham C.J. said: "In my opinion an examination of the cases upon which the plaintiff relies shows that in each of them a tax payable upon the occasion of the sale of a commodity was held to be a duty of excise because the tax was a tax payable by the producer of the commodity and therefore was truly a tax upon the production of goods. If a tax is imposed upon the producer of goods when he sells the goods the tax is a tax upon production. If, however, the tax is imposed at a later stage after the producer has disposed of the goods, it is a tax merely upon sale and not upon production" [8] . The majority consisted of Dixon J. (as he then was), Rich and Williams JJ. The view of Dixon J. was, as I have observed, directly opposed to that which I have expressed: his Honour repeated, with a very slight modification, what he had said in Matthews's Case [9] . But Rich and Williams JJ. who delivered a joint judgment, were of opinion that a duty of excise "must be imposed so as to be a method of taxing the production or manufacture of goods" [10] . This is my view, and I cannot therefore regard their judgment as inconsistent with that view. Their Honours proceeded: " but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer" [1] . With this I am, with respect, unable to agree. The "tax" payable by the dairyman was not imposed on production or manufacture; it did not affect production or manufacture in any way: what was done was a taxing of the dairyman, or of what the dairyman did with milk, not a method of taxing production or manufacture.

[61]

By a line of decisions beginning with Peterswald v. Bartley [2] , it is established that although in the United Kingdom the word "excise" has come to be used as a convenient label for a mass of heterogeneous taxes collected by the excise administration, in the Australian Constitution the expression has a more precise meaning. The Court had occasion to consider this line of decisions in the recent case of Browns Transport Pty. Ltd. v. Kropp [1] , in which, after saying that the essential distinguishing feature of a duty of excise (in the relevant sense) is that it is a tax imposed "upon", or "in respect of" or "in relation to goods", a reference was given to a passage in the judgment of Dixon J. (as he then was) in Matthews v. Chicory Marketing Board (Vict.) [2] . His Honour there stated more fully what such expressions as the foregoing attempt to convey. He said that to be an excise, "The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce" [3] . The reference to consumption must be considered as omitted now, in view of what his Honour said later in Parton v. Milk Board (Vict.) [4] ; but with that qualification the correctness of the proposition seems to me to be demonstrated by his Honour's examination of the subject. The Court went on, in Browns Transport Case [5] , to reject a contention that the licence fee there in question was a duty of excise, holding that the exaction did not possess the distinguishing feature referred to, and remarking, by way of contrast, that it was "in truth a fee payable as a condition of a right to carry on a business". Similarly, in an earlier case, Hughes and Vale Pty. Ltd. v. State of New South Wales [6] , Dixon C.J. held that a tonnage rate levied on a carrier was not a duty of excise, being not "a tax directly affecting commodities", but a tax "on the carrier because he carries goods by motor vehicle" [7] .

[63]

The contrast which these citations bring out is not simply between a tax which is and a tax which is not imposed by reference to commodities, or even by reference to a specified mass of commodities. What is insisted upon may, I think, be expressed by saying that 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. Indeed, the fact which in general justifies the description of an excise duty as an indirect tax, in the sense of John Stuart Mill's dichotomy, is that when, in the ordinary case, excise duty becomes payable, it amounts to a statutory addition to the cost of a particular act or operation in the process of producing or distributing goods, so that in the costing of the goods in relation to which the act or operation is done, for the purpose of arriving at a selling price to be charged to the next recipient in the chain that leads to the ultimate consumer, the duty paid in respect of those goods may enter - and therefore, according to the natural course of business affairs, will enter - as a charge relating to those goods specifically. This, I apprehend, is what is meant by saying that an indirect tax "enters at once " (the italics are mine) "into the price of the taxed commodity" [1] , as the Privy Council said of a customs duty in Bank of Toronto v. Lambe [2] , and by saying that such a tax is "intended" or "desired" or "expected" to be passed on (Mill's own words, adopted by the Privy Council in Bank of Toronto v. Lambe [3] ), or has "a general tendency" to be passed on (per Lord Warrington of Clyffe in R. v. Caledonian Collieries [4] ). As Matthews v. Chicory Marketing Board (Vict.) [5] shows, it is not essential that in every case that may arise the act or process which attracts the tax shall succeed in its purpose: through some mischance it may happen that no goods issue from the activity to be passed down the line to the consumer, and therefore there may be no opportunity to pass the tax on. But the impost is nevertheless a duty of excise if it operates as a tax upon the taking of a step in a process of producing or distributing goods.

[72]

The matter cannot be disposed of in favour of the defendants simply by saying, though it is true, that in s. 19 the fees are described expressly as fees "for" the licences, and that in substance they constitute the payment which the licensee must make to the State in return for the authority which the licence gives him and the degree of freedom from competition which the operation of the Act in respect of other persons creates in his favour. No doubt even an exaction in the nature of a quid pro quo for a statutory licence to carry on a business might take the form of an excise duty: if, for example, s. 19 had imposed, as the payment to be made to the State for a victualler's licence, what in truth was a sales tax, so that a liability for the tax arose every time a sale of liquor was made under the licence, it would be an excise duty clearly enough. The fact which makes a licence fee not a duty of excise is not that the exaction is for the licence; it is that the exaction is only in respect of the business generally, and not in respect of any particular act done in the course of the business. But the relation of the licence fees now in question to the goods to be sold under the licence, consisting, as it does, merely in the fact that without the licence the sales would not be made, does not connect any part of the fee with any particular sale: on the contrary, it is simply the relation between a fee for a licence to carry on a business and the business itself. The fee is payable in full when the licence is taken out; and no right to a refund arises if the privilege which the licence gives is not fully availed of, as, for instance, if sales cease during the year in consequence of a forfeiture of the licence or some catastrophe to the premises. I put aside, therefore, the relation between the licence fee and the sales made under the licence. The more difficult problem is that which arises from the relation between the fee and the purchases or sales on which the amount of the fee is calculated. Let me go over the paragraphs of s. 19 (1) and identify the purchases or sales upon which the amount in each case is made to depend.

[76]

It is urged that when a licensed victualler buys liquor for his premises, he knows that if he is the applicant for the next renewal after the ensuing 30th June he will have to pay whatever fee is then exacted, and that unless the law is amended in the meantime the fee will be six per cent. In the most usual type of case, it is said, he will have, at the time of buying the liquor, the intention of renewing the licence when it expires, and will probably be in a position to do so. Consequently he will want to cover his contingent but probable liability, by including the six per cent in his selling price. (Whether in the practical working of the liquor trade that will be possible is another matter). Of course, if he does this it may turn out that he is simply putting an extra profit in his pocket, for it may be someone else who renews the licence and therefore has to pay the fee, someone who has received no benefit from the addition to the price. Still, the argument proceeds, it is permissible for the purpose of characterizing the fee to generalize from the case which will most often occur, and to say that the fee is of a kind which lends itself to being passed on (and is therefore to be classed at least as an indirect tax), because there is no relevant difference between including in a selling price a sum by way of provision for a contingent tax liability and including the amount of an actual tax liability incurred in the course of dealing with the goods. And to conclude from this that it is a duty of excise is a step which, according to the plaintiff, receives some support from the very fact that while the fee is proportioned to the purchase price of goods, the liability to pay it may not fall upon the person who makes the purchases; for such duties may be said in a sense "to be more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted": Attorney-General for British Columbia v. Kingcome Navigation Company [1] .

[77]

This I think, puts the argument about as high as it can be put for the plaintiff, but it does not commend itself to me at any point. In particular, the fact that the person who becomes liable to pay the fee may have had nothing to do with the purchases by reference to which it is calculated, does not mean that the fee is concerned with the liquor purchased rather than with the person who has to pay. It means rather that the fee is concerned with the taking out or renewing of the licence, and therefore with the person who takes it out or renews it rather than with the person who made the purchases. The reason why the amount of the purchases in the last complete year is taken as the determinant of the quantum of the fee is not far to seek, and it is a reason which places the emphasis on the individual who is to pay the fee rather than on him whose purchases are taken as the variable factor in the ascertainment of it. Just as the billiard-table licence fee is based upon a readily ascertainable fact which gives some indication of the size of the particular business, so, for each of the other licences except the vigneron's licence there are readily available figures which give some idea of the comparative volumes of the individual businesses. (In the case of the vigneron's licence it well may be that no attempt to follow a similar course would be satisfactory or worth-while). This is borne out by s. 21 (1) which provides that every applicant for the grant of a new licence shall at the time of the application furnish all particulars available to enable the Licensing Court to estimate the probable extent of the annual purchases of liquor for sale or disposal under licence. The figures for past transactions may, of course, not provide in every case, or perhaps in any case, an accurate indication of future business. But if you are going to lay down a formula for general application the figures of the most recently closed financial year are probably as convenient a guide as you can get. And the important point is that in so far as they are a guide to the probable volume of business in the near future they are a guide to the relative values, as between different businesses in the same class, of the advantages which licences will confer. True to the characterization which this suggests, the fees are not only described as fees "for" the licences; they are made payable by the persons who take out the licences and in respect of their doing so. The purchases have been made at earlier dates and when made were free of tax. They never are taxed. The fact that they were made is made relevant to the quantum of the fee which some person probably (though not certainly) will have to pay; but to have a bearing upon quantum is a very different thing from being taxed. Even if the purchases had not been made - for example if the licences were the first licences granted for the premises - the liability for the fee would still arise on the grant of the licences (see ss. 97 and 98), and the quantum would presumably have to be assessed as contemplated by ss. 20 (1) and 21 (1). To call in aid the passage quoted above from the Privy Council's judgment in Attorney-General for British Columbia v. Kingcome Navigation Company [1] , is, I think, to miss the contrast which that judgment as a whole brings out. Their Lordships, if I follow them correctly, would not have held the fees in question in the present case to be indirect taxation. They would have said, I think, adapting language which they used [1] , that the fees are imposed in respect of the privileges and advantages which the particular licensee enjoys by the operation of the Act, and that it is intended and desired that he should pay them, though it is possible for him, by making his own arrangements to that end, to pass the burden on in the sense of the political economists. In other words, the fees are taxes imposed not "in respect of commercial dealings" [2] , but in respect of the acquisition of a right to engage in commercial dealings. They are imposed, not on goods, but on licences. Accordingly I would hold that the victuallers' licence fees are not duties of excise.

[79]

As supporting this conclusion I may refer to the case of Reg. v. Lancashire [3] , which was followed in Jones v. Whittaker [4] already referred to. It was an appeal against a conviction, under s. 18 of the Act 9 Geo. 4 c. 61, of selling "exciseable liquor" without being licensed so to do. The expression "exciseable liquor" was interpreted by s. 37 of the same Act to mean inter alia wine "charged with duty either by customs or excise". The appellant had sold wine made in the United Kingdom, and the question was whether such wine was, at the date of the sale, "exciseable". Two duties with respect to liquor made in the United Kingdom were in force at the passing of the Act. One, imposed by s. 2 of the Act 6 Geo. 4 c. 37, was called a duty of excise, and on any test it was such a duty, being made payable upon every 100 gallons of liquor made in any part of the United Kingdom, for sale, from certain ingredients. The other duty was imposed by s. 2 of the Act 6 Geo. 4 c. 81 under the description "The several Duties of Excise, or Rates or Sums of Money hereinafter following". It took the form of an annual sum "For and upon every Excise Licence to be taken out by any Maker, Manufacturer, Trader, Dealer, or Person hereinafter mentioned". The section set out a list of classes of persons described by reference to their trades, and specified a fee for each. The appellant came under the description "Every retailer of made wines", and as such was liable to a fixed duty of £1 1s. 0d; but there were some classes of persons who were charged differently. Brewers of beer were charged on a sliding scale according to the number of barrels of beer brewed within the year ending 18th October previous to taking out the licence; maltsters on a sliding scale according to the number of quarters of malt within the year ending 5th July in each year; distillers on a sliding scale according to the rent or annual value at which their premises were rated; and manufacturers of tobacco and snuff on a sliding scale according to the rate of tobacco and snuffwork weighed within the year ending 5th July previous to taking out the licence. (It will be noticed how the fees payable by these four classes of persons were proportioned, not directly to the value of their licences, but to readily verifiable figures indicating the size of the business for which each licence was taken out). The duties under both Acts, c. 37 and c. 81 of 6 Geo. 4, were continued in force concurrently for some years; but, before the date of the offence charged, the first-mentioned duty was repealed by the Act 4 and 5 Wm. 4, c. 37. In this state of the law, the question arose whether made wines were still "exciseable liquors"; and the Queen's Bench (Lord Campbell C.J., Coleridge and Crompton JJ., Erle J. dissenting) held that they were not. The following passage from the judgment of Crompton J. rests the decision on the distinction which seems to me decisive in the present case: "Throughout the Acts there are two different duties imposed, one on certain liquors, and another on the licences to sell them. In the first Act (6 Geo. 4, c. 37) a duty of excise was imposed on the liquors, which thereby became exciseable liquors. In the same year, by stat. 6 Geo. 4, c. 81, another duty was imposed on another thing, though relating to the same liquors, which duty was a duty upon the licences to sell the liquors, which licences were to be granted by the excise. By stat. 9 Geo. 4, c. 61, another licence was to be taken out, namely, a licence to be granted by justices to any person keeping or about to keep inns &c. to sell exciseable liquors by retail to be drunk or consumed on the premises. By stat. 4 & 5 Wm. 4, c. 77, the duty on the liquors in question is repealed, but the necessity of taking out the excise licence mentioned in 6 Geo. 4, c. 81, is preserved, and so is the duty on such licence. The licence to be granted by justices is not mentioned: and I should suppose designedly so; because such licence is no longer necessary or applicable, the liquors in question being no longer exciseable liquors" [1] .

[83]

The Licensing Act contains a great many provisions with respect to the regulation of the liquor trade and it is an offence for any person to sell liquor (as defined) unless he is the holder of an appropriate licence under the Act (s. 154). This section is, as Fullagar J. described it in Bergin v. Stack [1] , "the keystone of the whole licensing system" [2] . Perhaps, it may be said, it is the "keystone" invariably employed in the regulation of a trade which, traditionally, has been thought to require regulation and supervision in the public interest. It is unnecessary to refer in detail to the provisions of the Act but particular mention should be made of ss. 8, 9, 19 (1) (a), 19 (1) (b) and 19 (3). By s. 8 it is provided that a victualler's licence shall authorize the licensee to sell and dispose of liquor in any quantity on the premises therein specified between the hours of nine in the morning and six in the evening. A temporary victualler's licence is, by virtue of s. 9, issued for any specified period not exceeding seven days and it authorizes the licensee (being also the holder of a victualler's licence) to sell and dispose of liquor between the hours of ten in the morning and six in the evening at any fair agricultural or horticultural show military encampment races regatta rowing cricket football golf tennis or polo match or circus or other public sports games or amusements subject to such restrictions and conditions as the licensing court granting the application may impose. The fees to be paid for such licences are prescribed by s. 19 (1). By sub-s. (1) (a) the fees payable for a victualler's licence "shall be equal to the sum of six per centum of the gross amount (including any duties thereon) paid or payable for all liquor which during the twelve months ended on the last day of June preceding the date of the application for the grant or renewal of the licence was purchased for the premises". By the succeeding paragraph of the sub-section the fees payable for a temporary victualler's licence are specified as "One pound for each day during which the licence will be in force in respect of each booth, stall, bar or place from which liquor will be sold", together with "a further fee equal to the sum of six per centum of the gross amount (including any duties thereon) paid or payable for all liquor purchased for sale or disposal under such licence". Provision is made by s. 19 (3) to enable a licensed victualler who holds a victualler's licence for any premises of which he is not the owner and who pays the annual licence fee to recover from the owner of the premises by way of deduction from the rent payable or otherwise a sum equal to three-eighths of the amount of the fee paid by him. Licences, with the exception of temporary licences, remain in force to the end of the year for which they are granted and applications for renewal are made annually (s. 7). Fees payable under the Act on a percentage basis are fixed by the licensing court and the court is empowered to fix such sum as it thinks reasonable in any case where no information is produced to the court, or where the information produced is incomplete or insufficient to enable the court to determine the gross amount paid or payable for liquor purchased, or where information covering a period of twelve months cannot be produced (s. 20). All fees for licences, certificates, permits or authorities under the Act and all fees, fines, penalties, forfeitures and moneys incurred or accruing thereunder are to be paid to the credit of the Licensing Fund, and subject to certain prescribed payments to the municipalities specified in the second schedule to the Act and to the Police Superannuation Fund, that fund is to be applied towards carrying out the provisions of the Act including the payment of all compensation payable to owners and occupiers of licensed premises deprived of licence under the Act (ss. 288-290).

[86]

Much has been said concerning the meaning of the expression "duties of excise" in s. 90 of the Constitution since it was decided in Peterswald v. Bartley [2] that the fees payable by brewers for licences under the Liquor Act 1898 (N.S.W.) were not duties of excise. In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [3] it was held by a majority of the Court that a tax imposed by an Act of the South Australian legislature of threepence per gallon on any first sale of motor spirit in that State, so far as it related to motor spirit produced, refined or manufactured locally, was a duty of excise and that, so far as it related to motor spirit brought into the State from other places, it was a duty of customs. The conclusion that the Act operated to impose a "duty of excise" was consistent with the view expressed concerning that expression in the following passage in Peterswald v. Bartley [2] "Bearing in mind that the Constitution was framed in Australia by Australians, and for the use of the Australian people, and that the word "excise" had a distinct meaning in the popular mind, and that there were in the States many laws in force dealing with the subject, and that when used in the Constitution it is used in connexion with the words "on goods produced or manufactured in the States", the conclusion is almost inevitable that, whenever it is used, it is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax" [1] . Indeed, in the later case Isaacs, Higgins and Starke JJ. expressly accepted the definition of "excise" contained in this passage and the conclusions of Knox C.J. and Powers J. necessarily involved acceptance of the view that "excise" denotes a tax imposed upon goods produced or manufactured locally. This view was again affirmed by Starke J. in Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [2] But in Browns Transport Pty. Ltd. v. Kropp [3] this Court felt constrained to say that the definition in Peterswald v. Bartley [4] "has been found in several later cases to be somewhat too narrow" [5] and, no doubt, this circumstance has given rise to the present litigation in which it is sought to establish, in the face of the decision in Peterswald v. Bartley [4] to the effect that brewers' licence fees payable under the Liquor Act 1898 (N.S.W.) could not be regarded as duties of excise, that victuallers' licence fees ought now to be so regarded. I should mention, for what it is worth, that the fees payable under the legislation in question in the last-mentioned case were of fixed amounts. But the fact that in later years it has become common practice to fix them by reference to a percentage of purchases in an earlier year did not deter Starke J. in Matthews v. Chicory Marketing Board (Vict.) [6] from observing "that personal taxes, such as fees for brewers' licences, etc., are not excise duties" [7] . Nor did that circumstance appear significant to Dixon J. (as he then was) when he said: "Before leaving Hartley v. Walsh [8] it is perhaps desirable to refer again to the character of the levy in that case. Not only was the imposition upon the proprietor of the packing shed and one measured, at least as to the maximum, by the fruit handled, but the fruit was the fruit of the previous year. This appears to me to place the imposition more in the category of a licence fee in respect of a business calculated on past business done; something like the licence fee of a licensed victualler calculated on the amount expended by him in the previous year in purchasing liquor, which I should not regard as an excise": Parton v. Milk Board (Vict.) [9] .

[88]

In the cases which were decided between The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [10] and Parton's Case [11] there has been considerable discussion concerning the question whether the expression "duties of excise", as used in the Constitution, was intended to denote taxes of a particular character levied upon goods of local manufacture or production or whether it embraces taxes levied in respect of goods generally and irrespectively of their place of origin. A further question debated from time to time was whether "excise" is limited to taxes directly levied upon production or manufacture or whether it extends also to taxes imposed upon the sale and distribution of goods or merchandise at any time before reaching the consumer and irrespectively of any other considerations which might colour or give a particular character to the tax imposed. But it must now, I think, be taken to be decided by a majority of the Court in Parton's Case [1] , that a tax upon the sale of goods at any stage before they reach the consumer must, in some circumstances at least, be regarded as a duty of excise. This conclusion is stated in the following passage from the joint reasons of Rich and Williams JJ., in Parton's Case [1] where, after expressing the view that the Court had never decided "that a levy is only a duty of excise within the meaning of s. 90 of the Constitution if it is imposed in respect of the production or manufacture of goods or in respect of the first sale of such goods by the producer or manufacturer" [2] , they said: "In Peterswald v. Bartley [3] Griffith C.J. for the Court said that excise in s. 90 is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured and not in the sense of a direct tax or personal tax. At [4] he said that the term "duties of excise" as used in the Constitution is limited to taxes on goods in process of manufacture. If the latter statement is accepted literally, a levy on the first sale of goods produced or manufactured in Australia is not an excise duty. But it has been decided that such a levy is an excise: Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [5] ; John Fairfax & Sons Ltd. v. New South Wales [6] . It is submitted this is because the first sale of the goods is usually a sale by the producer or manufacturer, so that such a tax is in effect a tax on their production or manufacture. But we can see no reason why a levy should not be a duty of excise within the meaning of s. 90 of the Constitution although it is imposed at some subsequent stage. It must be imposed so as to be a method of taxing the production or manufacture of goods, but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer". [1] . Thereafter their Honours accepted the definition proposed by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [2] - "To be an excise the tax must be levied "upon goods", but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce" [3] . In the last-mentioned case Dixon J. fully discussed the meanings which had from time to time been assigned to the expression "excise" in England and, for himself, expressed the view that its history "does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production" [4] . But Parton's Case [5] was concerned with a local product and I do not read the observations of Rich and Williams JJ. as conclusive of the proposition that "duties of excise" are concerned with all goods whatever their origin. However, it is unnecessary in this case to pursue the point for if the fee payable in respect of a victualler's licence can, in some way, be regarded as the aggregate of direct levies upon individual sales then, as in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [6] , the legislation applies with equal force to both locally produced and imported goods. But the difficulties in the way of so regarding the licence fee are, it seems to me, insuperable.

[92]

When we pass to a consideration of the character of the fees payable for a victualler's licence it is seen that they are quite dissimilar in many respects to imposts which this Court has held to be "duties of excise". In the first place, they are not, as was suggested by the plaintiff, either in form or substance a tax upon the production or manufacture of liquor. Nor do they constitute a tax upon the liquor sold during the currency of the licence. In truth, they constitute fees payable by the licensed victualler for the right which his licence confers upon him. That is, the right to sell and dispose of liquor, in the course of his business, upon the premises specified in the licence. And the amount payable for this privilege will be the same whether he sells more or less liquor than he or his predecessors purchased during the previous year, or indeed, even if he sells none at all. In these circumstances, it will be seen that the charge lacks the characteristic of a tax upon a commodity or upon the sale of a commodity such as may be "passed on" to the consumer or other purchaser. No doubt the fact that a licence fee must be paid by a licensed victualler may have some economic effect on the price at which he disposes of his stock but this is far from saying that the fee represents a tax upon a commodity which it is expected will be "passed on" to the consumer. Indeed, unlike the imposts considered in the earlier cases, it is impossible for a licensed victualler to "pass on" the amount of the licence fee to the purchasers from him during the annual currency of his licence for, although that amount may be known in advance, the extent of his sales cannot be ascertained until the end of the trading period. To attempt, in those circumstances, to estimate the amount by which his sales prices ought to be increased to cover the expenditure on the licence fee for any particular period could not, on any view, be regarded as a method of "passing on" to the purchasers from him taxes which had been imposed upon the relevant sales. The substance of the matter is that the fee payable for his licence represents but one item of expenditure in the conduct of a licensed victualler's business and, although it may, as such a factor, affect the prices at which he sells his stock - and, no doubt, the prices charged for other services provided by him in the course of his business - it is not a tax either upon his sales or upon the subject matter of his sales.

[94]

Examination of the character and incidence of the legislation leads me to conclude that the fee payable for a victualler's licence is not a duty of excise. Though a system of licensing may frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties, this is not the part played by the system of licensing erected by the Licensing Act for the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words the requirement that liquor shall not be sold or disposed of without a licence appears as a substantive provision and not merely as an adjunct to a revenue statute. But this very requirement necessarily means that partial monopolies will be enjoyed by licensees and that licensed premises will, as such, achieve an enhanced value. So much is recognized by the provisions of s. 19 (3) to which reference has already been made. Where the licensee is a lessee of the licensed premises he may recover from his landlord a sum equal to three-eighths of the licence fee for each year. Such a provision is not only inconsistent with the suggestion that the licence fee is an impost intended to be passed on directly to purchasers from licensed victuallers but recognizes the advantage which accrues to the owner of premises by the issue and continued subsistence of the licence. One may, of course, readily assume that any increase in value which so accrues to the owner will be reflected in the rent obtainable for his premises and that this, in turn, may affect the prices generally charged for liquor on licensed premises. But, again, this does not mean that the licence fee is "passed on" or is intended to be "passed on" to customers who purchase liquor on licensed premises. It is, as I have already said, but an item of cost which may, and probably does, constitute a factor in determining retail prices for liquor.

[95]

In substance the fee payable for a victualler's licence bears some resemblance in character to the payments required by English legislation as a condition of the grant of justices' licences. These payments are required in order to secure to the public any monopoly value that is represented by the difference in value which the relevant premises bear when licensed and the value of the premises unlicensed. Some difference may be found in the fact that under the local legislation licences fall due for renewal and the appropriate fees are payable annually but both here and in England "the effect of the licensing laws is to grant to a licensee what for practical purposes and in respect of a particular area is in truth a monopoly" and that what the legislation requires the licensee to do "is, so to speak, to purchase the monopoly rights for a sum equal to their value" [1] or, if I may add, for a sum to be determined according to a formula specified by the legislature (see per Lord Greene M.R. in Henriksen v. Grafton Hotel Ltd. [2] ). A payment partaking of this character in no way resembles the imposts in the cases to which reference has been made and, in my view, it is in no sense, a "duty of excise" within the meaning of the Constitution. It is, I think, fair to say that the argument to the contrary is substantially based on the fact that the fee payable in respect of the renewal of the licence for any particular licensed premises is calculated by applying the prescribed percentage to the amount expended for purchases by the licensee of those premises during the preceding year. Indeed, it was common ground that if, instead of a fee so calculated, a fee of a fixed amount, or a fee varying with the assessed annual value of the premises, were payable as a condition of renewal it could not be characterized as a duty of excise. A review of the history of the legislation shows that, in Victoria, until 1916 licensed victuallers were required to pay fees determined by reference to the assessed annual value of their premises though from 1906 to 1916 they were required, in addition, to pay a "compensation fee" calculated by reference to a percentage of past purchases. Then in 1916 provisions not dissimilar to those now in force came into operation. In these circumstances it is said that there was a change from an impost which was not a duty of excise to one which is, the ground for the assertion being that the fee has changed from a fixed fee to one that is calculated by the application of a percentage to past purchases. With respect to those who entertain the contrary view I am unable to see that this change had the effect of transforming the character of the fee and of making it a duty of excise. Even if one is prepared to accept fully - which, as at present advised, I am not - that a tax payable by a trader and measured by the amount of the commodities which he buys or sells in the course of his business is, prima facie, a duty of excise there is, I think, ample in the considerations to which I have already adverted to displace any prima facie impression which the formula for the calculation of the fees payable by licensed victuallers may tend to produce. There can be little doubt that the annual purchases made by a licensed victualler are, in practice, a reliable and well-established guide to the annual value of his licensed premises and to me there is no significant difference between a fee which is calculated by reference to that value and one which is calculated directly by reference to past purchases. In these circumstances to say that one is a duty of excise and the other is not is, I think, to attach far too much significance to the manner in which the fee is calculated and to pass by what I regard as the decisive considerations.

[100]

The fees in question, and other like fees covered by s. 19, are imposed as part of the State's detailed control of the liquor trade which is effected by the Act. The key provision is s. 154, which penalizes the selling of any liquor otherwise than by, or on behalf of, a licensed person in accordance with the provisions of a licence. The scheme of the Act is to provide for the granting of various types of licences to sell liquor from the point of production (e.g., brewers) through wholesale dealings (e.g., spirit merchants) down to the point of retail sale (e.g., licensed victuallers). It is part of the statutory scheme that there should be a licensing fund to be applied (subject to particular deductions) towards the carrying out of the provisions of the Act, including the payment of compensation to owners and occupiers of licensed premises deprived of licences under the Act: ss. 290-292. It is into this fund that all licence fees must be paid: s. 289. It was argued, with a good deal of persuasive force, that in a general way, the Act is concerned to raise as revenue for the fund six per cent of the value of all liquor sold by licensed persons to non-licensed persons; it is, however, necessary to examine the matter in some detail. Starting at the production end, a vigneron seeking a licence is required to pay an annual fee of £7 10s. 0d. and no more; under such a licence, the licensee may, in accordance with s. 13, sell from his vineyard wine of his own making. For a brewer's licence a person is required to pay £10 0s. 0d. per annum and a further fee of six per cent of sales to unlicensed persons during the preceding year. For a spirit merchant's licence a person is required to pay £40 0s. 0d. per annum and a further fee equal to six per cent of sales to unlicensed persons during the preceding year; for a grocer's licence, a fee equal to six per cent of liquor purchased and not disposed of to a licensed person during the preceding year; for an Australian wine licence, a fee equal to six per cent of purchases during the preceding year; and for a victualler's licence or a packet licence, a fee equal to six per cent of purchases for the licensed premises or ship. When a club licence is granted, a fee is payable equal to six per cent of purchases during the preceding year. A person seeking a temporary licence is required to pay a fee of £1 0s. 0d. for each day the licence is in force and a further fee equal to six per cent of purchases for sale under the licence. In the foregoing enumeration the phrase "the preceding year" is used in the sense of the twelve months ended on the last day of June preceding the date of the application for the grant or renewal of licences or for the club registration. It is the duty of the Licensing Court to fix finally and conclusively in every case the amount of any fee payable on a percentage basis under the Act. Where an application is made for a new licence or a new club registration, the percentage fee is seemingly charged upon the Licensing Court's estimate of the amount of liquor which is likely to be purchased for sale under the licence during the period of the licence.

[104]

Having now stated the problems and the setting in which they arose, I turn to the Constitution and in particular to s. 90, which makes the power of the Commonwealth to impose duties of customs and excise exclusive. Leaving the cases aside for the moment, I propose to consider what can be derived from the words of the Constitution itself about the character of "duties of excise". The Constitution makes it quite clear that duties of customs and duties of excise are distinct and separate one from the other, because s. 55 provides that "laws imposing duties of customs shall deal with duties of customs only and laws imposing duties of excise shall deal with duties of excise only". The essential distinction between duties of customs and duties of excise is indicated by ss. 92 and 93. The customs duty is chargeable on the importation of goods into the Commonwealth; the excise duty is payable on goods produced or manufactured within the Commonwealth. It is true that the words in s. 93 "duties of excise paid on goods produced or manufactured in a State" do not necessarily restrict the conception of an excise duty to one paid on the production or manufacture of goods, but these words do give the only indication that the Constitution itself provides as to what is a duty of excise - except that it is something altogether distinct from a duty of customs - and there seems no reason why the provisions of s. 93 should apply to only one category of duties of excise, viz., those paid on goods produced or manufactured in a State, if there are other categories such as a duty paid on a dealing with goods after their import into a State. Section 95 contains a further indication that a customs duty is a duty upon the passage of goods into a territory in that it authorizes Western Australia, if an original State, to impose duties of customs "on goods passing into that State and not originally imported from beyond the limits of the Commonwealth". It is true that the insistence of the Constitution that a duty of customs is chargeable "on the importation" of goods or on goods "passing into" a territory does not necessarily show that there may not be duties of excise upon imported goods. These provisions do not define either duties of customs or duties of excise, and although I have spoken of duties of customs as being duties upon importation, it could well be that a duty upon exportation is also a customs duty. Moreover, if "duties of customs" is a description reserved for a duty at the point of import or export, it could be that a tax upon a dealing with goods at a point after their importation might fall within the description of a duty of excise. Theoretically, therefore, a tax upon the sale or purchase of goods after their importation could be treated as a customs duty, an excise duty, or neither one nor the other. The guidance of the Constitution itself is, however, that a duty of customs is a duty charged at the point of importation and a duty of excise is one paid on the production or manufacture of goods, and that a tax upon some dealing with goods which is neither upon importation into Australia nor upon the production or manufacture of goods in Australia, is neither a duty of customs nor a duty of excise. I cannot find in the Constitution any indication that duties of customs and of excise were grouped together as a comprehensive description of any taxation in respect of goods so as to exclude the States altogether from that field. The import, export, and production of goods seem to me to constitute such a cohesive subject matter that considerations of policy as well as of revenue might well be thought to warrant a grant of exclusive taxing power to the Commonwealth with regard thereto without going further to extend that grant to cover taxation in respect of all dealings in goods. If this were the correct view, it would not, of course, follow that a State could directly or indirectly tax goods brought into the State from another State. Section 92 would in general prevent this, and at this point it is perhaps pertinent to refer to s. 113, which is a special provision relating to intoxicating liquids, which assumes that in its absence States would have greater power over locally-produced intoxicating liquids than over such liquids "passing into any State for use, consumption, sale or storage", and it requires liquids falling in the second category to be regarded as liquids falling within the first category for the purpose of the application of State laws. The only relevant application of s. 113 to the case under consideration is that notwithstanding s. 92, all the provisions of the Licensing Act apply as validly to intoxicating liquids brought into Victoria from other States as they do to such liquids produced in Victoria for sale and consumption in Victoria.

[108]

The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [3] (the Petrol Case) decided inter alia that the Taxation (Motor Spirit Vendors) Act 1925 (S.A.) did impose a duty of excise. This Act defined "vendor" to mean "every person who sells motor spirit within the State to persons within the State for the first time after the production of such motor spirit within the State." It was on the basis of this definition that a tax upon vendors at the rate of 3d. a gallon on motor spirit sold was held to be an excise duty. Knox C.J. said: "The tax imposed is payable by the person who within the State for the first time sells and delivers to persons within the State motor spirit produced in the State according to the quantity of spirit sold. In the ordinary course of events the first seller within the State of such spirit is the producer. In effect, the tax is payable by every producer in the State of motor spirit on all spirit produced by him within the State, except so much thereof as is not sold or is sold for export from the State. In my opinion, such a tax is a duty of excise within the meaning of the Constitution" [4] . The Chief Justice then examined the Victorian duty of excise on tobacco manufactured in Victoria and found no distinction between the petrol duty in question and that duty which he treated as an obvious duty of excise. With this judgment, Powers J. agreed [5] . Isaacs J. rejected the argument that the expression "excise duties" in the Constitution should be construed as widely as the law regards it in England and agreed with the reasoning in Peterswald v. Bartley [6] . He said: "Licences to sell liquor or other articles may well come within an excise duty law, if they are so connected with the production of the article sold or are otherwise so imposed as in effect to be a method of taxing the production of the article. But if in fact unconnected with production and imposed merely with respect to the sale of the goods as existing articles of trade and commerce, independently of the fact of their local production, a licence or tax on the sale appears to me to fall into a classification of governmental power outside the true content of the words "excise duties" as used in the Constitution" [1] . Later, he said the second limb of the definition of vendor (i.e., that quoted earlier) "is also a contravention of s. 90 of the Constitution, even on the more limited field of excise duties that I adopt. The first sale of motor spirit, after its production either by primary or later processes, is naturally and in the ordinary course of business a sale by the producer, and a sale by him is certainly included. A tax on that sale, so described, is essentially a burden and a tax on the production of the goods" [2] . He also said: "A tax laid expressly on the production alone of goods would affect everyone who produced them, even for personal use or consumption" [3] . Higgins J. said: "For the purpose of s. 90 and our Constitution as a whole, customs duty is a duty on the importation or exportation whether by land or by sea; whereas excise duty means a duty on the manufacture, production, &c., in the country itself; and it matters not whether the duty is imposed at the moment of actual sale or not, or sale and delivery, or consumption" [4] . Rich J. adopted an entirely different stand from that taken by the other members of the Court. He said that the tax was void because "it is simply an inland tax directly imposed upon the sale of a commodity and this always was and still is denominated a duty of excise" [5] . He rejected the notion that a tax is not a duty of excise because "it is not confined to goods of home manufacture" [5] and said: "In my opinion, the Constitution gives exclusive power to the Commonwealth over all indirect taxation imposed immediately upon or in respect of goods, and does so by compressing every variety thereof under the term "customs and excise". If the expression "duties of excise" be restricted to duties upon or in respect of goods locally produced the fiscal policy of the Commonwealth may be hampered" [5] . Starke J. said: "Duties of customs under the Constitution are duties levied upon the importation or exportation of commodities into and out of the Commonwealth. Duties of excise under the Constitution have received a definite interpretation from this Court in Peterswald v. Bartley [6] . They are duties charged upon goods produced or manufactured within Australia itself. Both are what John Stuart Mill calls indirect taxes; but that classification appears to be one of convenience rather than of strict logical division" [7] .

[112]

Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [4] (the Flour Case) decided that the Flour Acquisition Act 1931-1933 (N.S.W.) imposed a duty of excise. The decision is important here only because of the statements as to what makes a tax a duty of excise. Latham C.J. said: "In so far as it is paid in respect of flour produced or manufactured in New South Wales it is plainly an excise duty within the narrowest definition of that term (Peterswald v. Bartley [5] ). The flour in question in this case was gristed in New South Wales from wheat grown in New South Wales. But though the flour is acquired upon production (s. 3 (2)) the difference between the two prices becomes payable by the miller only upon resale of the flour to him by the Government (ss. 6 (3) and 6 (5)). But a tax payable on the occasion of the sale of goods is also an internal revenue duty by way of indirect taxation amounting to an excise duty" [6] . Rich J. said: "In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [7] , I expressed the opinion that s. 90 gives exclusive power to the Commonwealth over all indirect taxation imposed immediately upon or in respect of goods, and does so by compressing every variety thereof under the term "customs and excise". I said that I was not aware of any authority which explicitly denied the application of the word excise to duties upon goods collected in respect of use, consumption or sale because the duty is not confined to goods of home manufacture. These views I repeated in John Fairfax & Sons Ltd. and Smith's Newspapers Ltd. v. New South Wales [1] . But I said that I gathered from the opinions of the majority of the court in the South Australian Case [2] that they held that the expression "duties of excise" was used in the Constitution with the restricted meaning, that is, restricted to duties upon or in respect of local production. I remain of the opinion which I expressed in those cases, but the limitation to goods of local production is of no importance in the present case" [3] . Starke J. said: "Excise duties have often been described as inland imposts levied upon articles of manufacture or sale, and also upon licences to pursue certain trades or deal in certain commodities. But this court, in Peterswald v. Bartley [4] denied that the words were used in this extended sense in the Constitution: the Constitution limited the words to duties charged upon goods produced or manufactured in Australia itself or upon a sale of such commodities" [5] . McTiernan J. said: "The occasion for levying the liability created by the Act on a miller or any person exercising the power to sell any flour is the sale of such flour. In my opinion the liability is therefore an excise tax on flour" [6] .

[114]

In Matthews v. Chicory Marketing Board (Vict.) [7] , the Court by a majority held that a levy on producers of £1 for every half-acre of land planted with chicory was a duty of excise. The real division between the members of the Court was whether a tax that has no relation to the quantity or value of goods can yet be a duty of excise. The minority (Latham C.J. and McTiernan J.) held the view that it could not; the majority decided that it could, and, as was said by Starke J.: "It remains a tax in respect of the commodity produced for sale" [8] and later: "It still remains a tax or levy upon production for sale. Such a tax or levy is usually and normally susceptible of being passed on, which assists the conclusion that it is an excise duty" [8] . The most important judgment for present purposes is, however, that of Dixon J., (as he then was), who, after a comprehensive examination of the use of the expression "duties of excise" in statutes, decisions, dictionaries and writings of economists, said: "The chief purpose of the foregoing discussion of the considerations governing the connotation of the word "excise" is to show that, although, as it is used in the Commonwealth Constitution, it describes a tax on or connected with commodities, there is no ground for restricting the application of the word to duties calculated directly on the quantity or value of the goods. A definition which makes quantity and value the only basis of taxation which would satisfy the notion of "excise" has no foundation either in history, economic or fiscal principle, nor in any accepted specialization. The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities" [1] . His Honour also said: "The history of the word "excise" does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production. The application of the word by economists and others to duties so confined is scarcely logical proof that the word is inapplicable to inland duties levied on commodities independently of the place of manufacture. But, of course, it is a factor to be weighed, and context and other considerations may show that the word is so restricted. Whether the limitation of the word "excise" in the Constitution to duties upon commodities produced or manufactured within Australia is justified is a question which I think should be regarded as open for future decision" [2] . At the end of his judgment, his Honour, described a duty of excise as follows: "To be an excise the tax must be levied "upon goods," but those apparently simple words would permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise" [3] .

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The next case is Parton v. Milk Board (Vict.) [4] , where it was held that s. 30 (1) (a) of the Milk Board Acts 1933-1939, which provided for dairymen paying an amount not exceeding ¼d. per gallon of milk sold or distributed in the metropolis, authorized a duty of excise, and that the amount of ⅛d. per gallon fixed by regulations and determinations as the amount of contribution was a duty of excise. The decision was that of a majority (Rich, Dixon and Williams JJ.; Latham C.J. and McTiernan J. dissenting). The difference of opinion was upon the question whether a tax, not imposed upon a producer of milk but imposed upon a sale made after the producer has disposed of milk to a dairyman, is a duty of excise. Rich and Williams JJ. said that a levy imposed at some stage subsequent to manufacture might be a duty of excise and stated: "It must be imposed so as to be a method of taxing the production or manufacture of goods, but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer" [1] . Dixon J. described the levy as a sales tax and said: "As I understand it that is generally regarded as an excise" [2] . He added: "Finally it falls within the definition of "excise" given by the Encyclopaedia Britannica, 11th ed., vol. 10, and adopted by the Oxford English Dictionary s.v. viz.: "a term now well known in public finance, signifying a duty charged on home goods, either in the process of their manufacture or before their sale to the home consumers." Only if the conception of what is an excise is limited by the condition that the tax must be levied on the manufacturer, that is to say upon the goods while they are still in his hands, can I see any escape from the conclusion that the levy of the contribution is an excise. I cannot adopt the view that this is an essential feature of the conception. What probably is essential is that it should be a tax upon goods before they reach the consumer" [3] . Then in deference to Atlantic Smoke Shops Ltd. v. Conlon [4] , his Honour modified his statement on the meaning of the word "excise" already quoted from Matthews Case [5] by excluding from the conception of excise a tax on commodities levied at the point of consumption [6] .

[120]

This survey of the Australian cases shows that the position has now been reached that although an excise duty is a tax on the production or manufacture of goods, a tax upon the sale or purchase of goods manufactured in Australia at any point before sale for consumption is to be regarded as a tax on production or manufacture; and furthermore, that a tax may be an excise notwithstanding that quantity or value of goods is not the basis of the duty. This position I feel bound to accept notwithstanding the reservations I would otherwise have about the glosses upon the main proposition. Although the point has not yet been finally determined, I regard the repeated statements of Rich J. that a duty imposed upon a dealing with goods which are not of home production is a duty of excise, as inconsistent with the view which still prevails and which is accepted by Rich J. himself in Parton's Case [1] , that an excise is a tax on production or manufacture, as well as being contrary to the explicit pronouncements in Peterswald v. Bartley [2] and The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [3] ; furthermore, the statement of Rich J. that "the Constitution gives exclusive power to the Commonwealth over all indirect taxation imposed immediately upon or in respect of goods, and does so by compressing every variety thereof under the term "customs and excise" " [4] is, as that learned judge himself recognized, contrary to authority; moreover, his own statement indicates that what his Honour says is based upon his conception of fiscal policy rather than upon anything in the Constitution itself. It is also to be observed that in the cases, there are many statements to the effect that an excise duty is an indirect tax, but there is a good deal to be said for the view expressed by Starke J. on more than one occasion that this particular classification is one of convenience rather than logic and the fact that a duty is "indirect" is no more than one factor in favour of the conclusion that it is an excise. This is the view taken by the Court in Browns Transport Pty. Ltd. v. Kropp [5] , but it is said: "It would perhaps be going too far to say that it is an essential element of a duty of excise that it should be an "indirect" tax. But a duty of excise will generally be an indirect tax, and, if a tax appears on its face to possess that character, it will generally be because it is a tax upon goods rather than a tax upon persons" [6] . This discounting of the importance of indirectness as the mark of a duty of excise (and of duties of customs too) is another reason for treating the foregoing statement of Rich J. as something other than a precise statement of constitutional law.

[127]

A tax payable by a trader and measured by the amount of a commodity that in the course of his business he buys or sells is, in my view, prima facie a duty of excise. If it be measured by the quantity of the goods so bought or sold it is a specific duty. If it be measured by the price or value of the trader's purchases or sales of the particular goods it is an ad valorem duty. In either event it is prima facie an excise because it is a tax laid on the commodity. Of course the taxpayer, not the commodity, pays the tax. But we need not be hypercritical about the phrase duties "on commodities", for it goes back a long way. The Act 12 Car. II c. 23 (1660) was "A grant of certain impositions upon beer, ale and other liquors". And in 1786 in a statute reciting the terms of the commercial treaty with France it was said that "other merchandises shall pay the duties payable by the most favoured nation" (26 Geo. III c. 13 s. 21). By Dr. Johnson's time the essential quality of an excise was so well known that his famous definition of excise began "a hateful tax levied upon commodities". And, omitting the opprobrium, this Court has recently expressed the essential feature of an excise in the same words. In Browns Transport Pty. Ltd. v. Kropp [1] , the matter was summed up as follows [2] : "If an exaction is to be classed as a duty of excise, it must, of course, be a tax. Its essential distinguishing feature is that it is a tax imposed "upon" or "in respect of" or "in relation to" goods: Matthews v. Chicory Marketing Board (Vict.) [1] . It would perhaps be going too far to say that it is an essential element of a duty of excise that it should be an "indirect" tax. But a duty of excise will generally be an indirect tax, and, if a tax appears on its face to possess that character, it will generally be because it is a tax upon goods rather than a tax upon persons. " a direct tax is one that is demanded from the very person who it is desired and intended should pay it. An indirect tax is one which is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another": Attorney-General for Manitoba v. Attorney-General for Canada [2] ."

[130]

For us the importance of this distinction is that, because it has a place in the constitutional law of Canada, it has had to be defined and applied by the Privy Council. The Privy Council has recognized that the distinction is derived from John Stuart Mill (Bank of Toronto v. Lambe [1] ; Brewers and Maltsters' Association of Ontario v. Attorney-General for Ontario [2] ). As their Lordships pointed out in Atlantic Smoke Shops Limited v. Conlon [3] , Mill's fame as an economist was established at the time the British North America Act was passed; so that for the purpose of construing the expressions direct and indirect taxation in that instrument the use of his exposition is fully justified. But our Constitution does not make this distinction, and in Matthews v. Chicory Marketing Board [4] , Starke J. went so far as to say: "The cases under the Canadian Constitution are descriptive rather than definitive of a customs and an excise duty, and they are no authority for the proposition that a tax cannot be an excise duty unless it has the characteristics of an indirect tax" [5] . Nevertheless from Peterswald v. Bartley [6] to Browns Transport Pty. Ltd. v. Kropp, [7] this Court has considered the economic concept of indirect taxation of assistance in determining whether or not a particular impost is an excise within s. 90. But we ought not to take too much from Lord Hobhouse's reference to a duty which "enters at once into the price of the taxed commodity" [8] ; for whether a duty does enter at once into the price of the taxed commodity and in what sense, to what extent and for how long it does so, must depend upon how far various factors and circumstances remain unchanged and on the relative elasticity of demand and supply. The matter may be put in its simplest form by quoting further from the abovementioned article by Lord Stamp: "The distinction (i.e. between direct and indirect taxation) has little actual economic basis, because the effect of the tax in retarding production or consumption may be such as to throw the burden elsewhere, and the customer may, in consequence of the higher price, drink less beer, and the brewer, through selling less, make lower profits". Searching for the incidence and ultimate effect of a particular commodity tax may not be a fruitful economic inquiry. But that a tax on commodities levied on anyone before the ultimate consumer does ordinarily affect the price the ultimate consumer pays seems indisputable. If one assumes a state of perfect competition, inelastic demand and supply and other factors constant - an economist's dream world - then, as I understand the matter, the tax might be said in a simple sense to enter at once into the price. Those conditions do not, of course, prevail in the present case. But, in so far as the quality of an indirect tax is a characteristic of an excise duty, I can see no reason for thinking that the fee for a victualler's licence does not have it. It was argued that, because the levy is payable when a licence is renewed and is calculated in respect of purchases for a previous period, it does not enter into the price of the actual commodities sold during the period for which the licence was renewed. A hypothetical illustration in the judgment of Dixon J., as he then was, in Parton v. Milk Board (Vict.) [1] , supports this view. But, as his Honour does not now regard it as correct, it may be put aside and the question approached afresh. The real nature of the tax has to be ascertained (see per Starke J. in Matthews v. Chicory Marketing Board (Vict.) [2] ). This depends upon its operation and effect upon the commodity as an article of commerce. The mechanics of calculating and collecting it should, in my view, be considered so far only as they substantially affect its operation and commercial effect. That a tax is computed in respect of a trader's purchases in a particular period and is payable when he renews his annual trading licence for a different period cannot, I think, be decisive in itself. If it is, then, as my brother Menzies has pointed out, the logical consequence is that whereas the fee paid for a victualler's licence is not a duty of excise, that paid for a temporary licence is. But the two imposts are similar in their general economic consequences. To distinguish them in the way that the logical application of the proposed criterion demands appears to me to involve considerations so nice as to be artificial. Moreover, with great respect to those who think otherwise, it seems to me that this ground for denying the character of an excise to the victualler's licence fee overlooks the way in which a publican's business is conducted. A victualler's licence authorizes the holder to sell liquor upon the licensed premises. The term "victualler" in this connexion has for long been restricted to publicans, that is to "persons authorized by law to keep houses of entertainment for the public" (per Tindal C.J. in Tyson v. Smith [3] ). The Licensing Act requires a licensed victualler to provide meals and accommodation on the premises - in effect to keep an inn. But his licence merely authorizes him to sell and dispose of liquor in any quantity on the premises therein specified between the hours of nine in the morning and six in the evening (s. 8). The right (more strictly the immunity or privilege) which the licence thus creates arises because it is an offence to sell liquor without a licence (s. 154). The licence is granted for a year. It is renewable from year to year. Renewals are obtainable under s. 88 of the Act at the annual sitting of the Licensing Court which is held during such periods in every year as are appointed by notice in the Gazette (s. 80 (1)). Applications for renewal have to be made before the first day of the annual sittings; but apparently they may be made at any time before that day (s. 88). Technically, a renewal is not a continuance of the old licence, but a re-granting of a new licence. A licensee is, however, entitled, subject to objection, to obtain a renewal provided the licence was not liable to be forfeited or revoked (s. 88). (See per Jordan C.J. in Ex parte James; Re Furlong [1] ). It is important to note that the Victorian Act here differs materially from the law under consideration in Sharpe v. Wakefield [2] . (See also Reg. v. Flintshire County Council County Licensing (Stage Plays) Committee; Ex parte Barrett [3] ). A publican who carries on his business in a proper fashion can therefore expect to have his licence renewed from year to year. This is what the Act contemplates (see per Lord Bramwell in Sharpe v. Wakefield [4] ). A publican's business is thus normally conducted on the basis that it will continue. Liquor stocks are replenished as the need arises and sold as demanded. The course of trading is not broken into annual periods. How much, if any, of the liquor bought in the period in respect of which the tax is computed is in stock when the tax has to be paid depends upon the course of trading. A victualler's licence relates to particular premises. It can in certain circumstances be removed to new premises (s. 120). The Act itself indicates what common knowledge makes plain, namely that a licence annexed to premises is a valuable thing. There are careful provisions to safeguard the interest of the owner or mortgagee of the premises if the licensee should fail to apply for a renewal of his licence or should cause it to be forfeited (ss. 89, 115). The owner or mortgagee can then obtain a renewal. If he does so he must pay the tax computed on the purchases made by the outgoing licensee. The tax is payable when any person applies for and gets either the grant or renewal of a victualler's licence. It is not computed on the value of the applicant's purchases - it could not be in cases when he had not previously been the licensee of the premises, and was thus applying for a grant as distinct from a renewal. It is computed on the amount paid or payable for liquor which had been purchased for the premises. The result is that, assuming the law is not altered, and assuming the premises remain licensed, a tax of six per cent must be paid upon the amount of all liquor from time to time bought for the premises, no matter when it be bought and no matter when, or by whom, or indeed where, it be sold. From a business point of view that must mean that the surcharge which the law has imposed on the cost of the liquor will, to a greater or less amount, be reflected in the price at which it is sold to the consumer. I say to a greater or less amount, because this qualification must, as I have said, always be made when the circumstances are not those of perfect competition and inelastic demand and supply. In the case of the liquor trade, the need for the qualification is very obvious. The circumstances are complex. The tax is by law apportionable between the holder of the licence and the owner of the licensed premises (s. 19 (3)). That would not prevent it being, in part at all events, passed on. Moreover, this tax has been long in operation, and there is an adage that an old tax is no tax. There is usually some measure of uniformity in the retail prices of some forms of liquor. The trade as a whole is carried on in conditions of partial monopoly. And, as was pointed out, it cannot be supposed that the retail prices of all types, qualities and quantities of liquor will reflect the burden rateably. But a commodity tax certainly does not cease to be an indirect tax, so far as that is an element in the concept of excise, because the precise extent to which the burden is "passed on" is not predictable and is not uniformly discernible in each item of the commodity sold.

[133]

Turning now to another aspect: I was inclined during the argument to think that to be an excise duty within the meaning of s. 90 the tax must be levied upon the producer of a commodity, or at all events that the goods taxed must have been produced in the country imposing the tax. On consideration I have, however, come firmly to the conclusion that the first of these restrictions of the broad idea of an excise as a tax upon commodities cannot be sustained; and that, notwithstanding what was said in Peterswald v. Bartley [1] , the second is questionable. I am not convinced, however, that we necessarily have to decide the question for the purpose of deciding this demurrer; for we can surely assume that some of the liquor the purchase of which attracted the tax in question was brewed, distilled or fermented in Victoria. And, in the calculation of the tax that a licensed victualler must pay, the Act makes no distinction between his purchases of locally produced and of imported goods. An impost which is invalid cannot be made valid by coupling it with an impost which is valid (cf. The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [2] ). But, to look at the question more broadly, and assuming that it has to be decided in this case, the majority opinion in Parton v. Milk Board (Vict.) [3] , was that a duty of excise is not necessarily a tax levied upon the manufacturer. It may be a tax on manufactured goods which have become articles of commerce. But the tax there was on a commodity which was locally produced. And, apart from the implications of the Petrol Case (The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [2] ), there is no case in which the question directly arose whether or not a tax upon the purchase or sale in one State of the Commonwealth of goods produced either outside that State or outside the Commonwealth is a duty of excise. There is an abundance and variety of dicta more or less in point, but no decision. In the Chicory Case [4] , Dixon J., as he then was, surveyed the history of excise duties. He concluded, and I very respectfully agree with his conclusion, that: "The history of the word "excise" does not disclose any very solid ground for saying that, according to any established English meaning, an essential part of its connotation is, or at any time was, that the duty called by that name should be confined to goods of domestic manufacture or production. The application of the word by economists and others to duties so confined is scarcely logical proof that the word is inapplicable to inland duties levied on commodities independently of the place of manufacture. But, of course, it is a factor to be weighed, and context and other considerations may show that the word is so restricted. Whether the limitation of the word "excise" in the Constitution to duties upon commodities produced or manufactured in Australia is justified is a question which I think should be regarded as open for future decision [1] ".

[135]

There is no doubt that until the nineteenth century an excise duty in England meant an inland tax levied upon goods which were either produced in or had come into the Kingdom, whereas a customs duty was levied at the quay, that is upon importation. But the distinction was mainly administrative - was the tax under the management of the Customs officials or of the Commissioners of Excise? Without repeating the history which the Chief Justice gave in the Chicory Case [2] , I would merely add that there are in the English statute book numerous illustrations of duties on imported goods called duties of excise. One, to which he referred, is the provision made by the Restoration Parliament settling a revenue on the Crown in lieu of the revenues from the military tenures which were abolished by the same Act (12 Car. II c. 24). This hereditary revenue included the proceeds of taxes on beer, ale, cider or perry and "strong water perfectly made", which were imported from beyond the seas, as well as duties on certain articles made in the Kingdom. These duties were all regularly described as "the hereditary duties of excise" in later enactments (see e.g. 10 Geo. II c. 10 s. 8; 27 Geo. III c. 13, s. 51; 1 & 2 Vic. c. 2 s. 6; I Edw. VII c. 4 s. 9 (3)). Other examples are that when Pitt was able to accomplish what Walpole, because of public clamour, had had to relinquish, the duties on imported wines were transferred from the Customs to the Excise by being made an inland tax levied upon wholesalers (26 Geo. III c. 59 (1786)). Excise duties were levied on imports by a system of supervised bonded warehousing, the duty being paid when the goods were taken out for home consumption. In the next year Pitt's great consolidation of the customs and excise duties described many duties on imported goods, including brandy and wine, as excises and put them under the Excise Commissioners (27 Geo. III c. 13 s. 36 and Schedule F). Blackstone said that the excise duties on coffee and tea and cocoa - all imported commodities - were paid by the retailer. The complicated history of these particular duties, in Blackstone's time and afterwards, can be traced in the statute book (e.g. 10 Geo. II c. 10; 21 Geo. III c. 55; 25 Geo. III c. 74). The interest of the Excise in goods coming from abroad during the eighteenth century is very apparent from the part which excisemen and excise cutters played in opposition to smuggling.

[136]

In the nineteenth century, after the adoption of a policy of freetrade, customs and excise duties became associated as instruments of policy as well as sources of revenue. And this tended to greater definition of their respective fields - imports and exports for customs, and home manufacture for excise. When duties on foreign trade were considered to be justified only as means of revenue, and not for the protection of home industries, then, if goods dutiable on importation might also be made at home, they must be subjected to an excise equivalent to the customs duty. If not, the local manufacturer would be protected contrary to the free-trade faith. Conversely, if the revenue from excises was to be safeguarded, countervailing customs duties on exciseable commodities were required. Customs and excise duties thus used as counter-weights in fiscal or tariff policy were, as has been often pointed out, known in the Australian Colonies, in Victoria especially, before Federation. The word "excise" had by that time come to mean not so much any inland duty, its original meaning, as a duty on locally made goods, the common form of inland commodity tax once the Customs had taken over the system of bonded imports. Such a duty was commonly called in statutes a duty of excise, in distinction from the duties of customs on imported goods. For examples in Victoria see The Duties of Customs Act 1884 and 1886; The Distillation Act 1862 as amended by The Distillation Amending Act 1884; The Tobacco Act 1880; The Customs Act 1890; The Customs and Excise Duties Act 1890; The Beer Duty Act 1892. Customs duties have always been duties on imported goods. And the expression "on the imposition of uniform duties of customs" in ss. 92, 93, 94 and 95 of the Constitution refers to duties on imports into Australia. And it may well be that the word "excise" in the expression "duties of customs or of excise" in s. 90 refers only to duties upon goods locally produced. But, however this may be, it is the scope of the comprehensive expression "duties of customs or of excise" which is the critical matter. I have found nothing that leads me to the conclusion that in that expression the phrase "duties of customs" means only duties on imported goods levied at the point of importation (or release from bond) and collected from the importer, or that the phrase "duties of excise" is restricted to duties upon goods of local production imposed at the point of production and collected from the producer. And, if dictionaries be resorted to, the Encyclopedia of Social Sciences (Macmillan Company, N.Y., 1930) describes an excise as "a tax on commodities of domestic manufacture, levied either at some stage of production or before the sale to home consumers". More important, for present purposes, than dictionaries is the decision of this Court in Parton v. The Milk Board (Vict.) [1] . We should, I consider, take the judgments of the majority in that case as binding us. Accepting that, it would be a strange result if s. 90 had the effect of prohibiting the State of Victoria from imposing a purchase or sales tax on whisky or beer made in Victoria, yet leaving it free to do so on whisky made in Scotland or beer made in South Australia. But in my view it is not so. The place where a particular commodity is produced may determine whether a tax on it is best called a customs or an excise duty; but that is really unimportant since either is equally beyond the power of the State. See the various judgments in the Petrol Case [2] . Moreover, this view of the operation of s. 90 accords with what has been said to be the purpose of it and its associated provisions, namely to ensure the basic unity of the Australian economy in relation to trade and commerce.

[139]

I have left to the last the argument which the Solicitor-General put in the forefront, because it seemed best to deal with the other matters first. What was said is briefly that the licence fee is paid for permission to carry on the trade of a publican and that the purpose of the licence is the regulation of that trade. Payment, it was said by the Solicitor-General, is "the condition of the right granted by the State to participate in a trade that is otherwise forbidden". This, of course, is true. But it seems to me no ground at all for saying that the payment is not a duty of excise. In Browns Transport Pty. Ltd. v. Kropp [3] , the Court said of the carrier's licence fee there in question: "The exaction is in truth, as it purports to be, simply a fee payable as a condition of a right to carry on a business. "A tax imposed upon a person filling a particular description or engaged in a given pursuit does not amount to an excise" ". [1] . If the context of these statements be disregarded, then they do in terms support the proposition that a licence fee is not an excise. But it is, of course, necessary to read them in relation to the circumstances out of which they arose. All that they really establish is that a fee payable for an authority to make or trade in a commodity is not, as such, an excise duty. But, if a licence fee be calculated in reference to the quantity or value of the goods made or traded in, then it seems to me to be an excise duty, and not the less so because it is a licence fee. Lord Herschell's observations in the Ontario Brewers and Maltsters' Case [2] quoted by Dixon J. in the Chicory Case [3] are significant. And as Starke J. said in that case, the real nature of a tax does not depend upon the name given to it in the taxing Act, but upon its operation and effect, as gathered from the language of the Act [4] . And Knox C.J. said in the Petrol Case [5] : "If it is in truth a duty of excise, the State Parliament has no power to impose it by whatever name it may be called" [6] . Here the tax is called a licence fee and, as payment of it is the price of a licence, that name is apt. But, if its operation is that of an excise - and the Act, I think, shows that it is - then the name "excise" is apt too.

[141]

As Mr. Gowans showed, in tracing the history of the statutory provisions for licence fees, what has happened is that the legislature has substituted for a licence fee which was not a duty of excise a licence fee which is. The course of events, as outlined by Mr. Gowans, may be summarized. Immediately before Federation the Colony of Victoria levied duties on beer brewed and spirits distilled within the colony, and also duties on imported liquor (Customs Act 1890 and Customs and Excise Duties Act 1890; Beer Duty Act 1892; Duties of Customs Act 1892). And it had then, and had always had, licensing laws regulating the sale of liquor (see Licensing Act 1890, s. 17). The fees that were then payable annually for liquor licences were fixed sums, except that in the case of victualler's licences the fee ranged from £15 to £50 depending on the assessed annual value of the premises. Fees paid for licences under the Licensing Act went to the credit of a "trust fund" in the Treasury. From this fund came the moneys necessary to pay compensation when the number of licensed premises was reduced in accordance with the law then prevailing. In so far as the licence fees did not yield enough for this purpose the fund was to be replenished from the duties on liquor (Licensing Act 1890 s. 200). After the Commonwealth came into existence and uniform duties of customs had been imposed on 8th October 1901, the Victorian duties of customs and excise ceased to have effect. The Licensing Act continued, but at the expiration of five years the State of Victoria was not in receipt of any customs or excise duties from which the trust fund could be supplemented. However, in 1906 a new Licensing Act was passed. It transferred the moneys then in the trust fund to a new fund to be called the Licensing Fund, and set up another fund called the Compensation Fund. To create this victuallers had, when renewing their licences each year, to pay a "compensation fee" in addition to the ordinary licence fee under the 1890 Act. This additional fee was three per cent of the gross amount paid or payable for all liquor purchased for the licensed premises for the twelve months ended on the thirtieth September preceding the date of application for renewal of the licence. By a provision like s. 19 (3) of the present Act a licensee who was a tenant could throw two thirds of the burden of this new percentage impost on his landlord (Licensing Act 1906, ss. 108-111).

[142]

The result at this stage, so far as the holder of a licensed victualler's licence was concerned, was that he had each year when he renewed his licence to pay the ordinary fee of £15 to £50, depending on the annual value of his premises, and also the compensation fee calculated on his purchases in a preceding period. It is unnecessary to consider what would have been the fate of this compensation fee if its validity had been challenged on the ground that it was a duty of excise. It had most of the characteristics of the present tax; but it was only payable by the holders of victualler's licences, and it went to replenish the compensation fund and not to the general revenue of the State. In 1916 a considerable change was made. In place of the old fixed fee and further compensation fee, one fee only was to be paid for a victualler's licence. It was a six per cent tax, calculated in exactly the same way as the one now in question. And fees similar to those now in operation were made payable in respect of other forms of licences also, including brewer's licences. At the same time the Compensation Fund was abolished, and the entire proceeds of the licence fees went into a fund, the Licensing Fund, from which certain moneys were paid annually to municipalities and to the Police Superannuation Fund, and the balance applied to carrying out the provisions of the Licensing Act including the payment of compensation (Licensing Act 1916 ss. 19, 44). In fact the proceeds of the new licence fees soon exceeded the sum necessary to meet these charges on the Licensing Fund; and in 1922 provision was made for transferring the surplus from time to time to the consolidated revenue of the State (Licensing Act 1922, s. 39; and see s. 291 of the present Act). In the result the tax with which this case is concerned yields a large annual revenue to the State of Victoria. The statement of claim alleges that in each of the three years before the action was commenced more than two million pounds was transferred to consolidated revenue. But it was contended for the State of Victoria that, as I understood the argument, whatever the manner of computing the fee for a liquor licence, it could never be an excise duty. This view hardly seemed to accord with the State's attitude which appeared to be based on concern lest the State lose a source of revenue rather than on any fear that it would be frustrated in the control of the liquor trade. However, the way in which the argument that the fee for the licence was merely incidental to the system of liquor trade licensing was urged makes it necessary to go even further into the background of the present legislation than Mr. Gowans took us. For it becomes necessary to see whether there is any special quality in a liquor licence that so colours payments for it that, however computed, they cannot be duties of excise in the constitutional sense.

[143]

The Australian system of taxing and licensing the liquor trade is derived from England. In its essentials, as it still operates in England, it is described in Halsbury's Laws of England, 3rd ed., vol. 22, par. 1010, p. 514 as follows: "The sale of intoxicating liquors although perfectly lawful at common law is subject to certain statutory restrictions. These restrictions are primarily of two kinds: those designed for the orderly conduct of the retail trade and those designed to obtain revenue from the trade whether wholesale or retail. The machinery for achieving these ends consists of two systems of licensing, one controlled by licensing justices, the other controlled by the Commissioners of Customs and Excise". Taking first the fiscal provisions: Historically these consisted of two levies. One a true excise duty levied upon brewers and distillers according to their production. The second a fee for brewer's and distiller's licences. Such licences, commonly called "excise licences", have for long been common concomitants of excise duties on commodities. They are required to facilitate the collection of the duties and to prevent evasion of them. They are part of the machinery for the collection of the excise revenue, not part of the social regulation of the liquor trade. They had their beginning in 1784 (24 Geo. III c. 41) when makers of and dealers in various exciseable commodities were required to be licensed. For these licences fees were charged, so that excise licences became themselves a source of revenue as well as an administrative convenience. Such licences to make exciseable goods are still an ordinary part of the machinery for the collection of excise duties. Examples of those required to-day may be found in the Beer Excise Act 1901-1957 (Cth) and the Distillation Act 1901-1956 (Cth). Since the fees payable for these licences do not themselves bear any direct relation to the quantity or value of the exciseable liquor which the brewer or distiller makes they are not themselves duties of excise in the constitutional sense. The brewer's fee in question in Peterswald v. Bartley [1] , is a good illustration. Even further removed from duties of excise in the constitutional sense are the miscellaneous taxes payable in England for licences required for a variety of purposes. Many of these have no relation at all to duties on commodities. They are called excises in England simply because the issue of such licences had, as a matter of convenience, been made the responsibility of the Excise Commissioners.

[144]

Turning now to the other system of licensing mentioned in the above quotation from Halsbury , that concerned with the orderly conduct of the retail trade in intoxicating liquor: It has a quite separate early history going back to 1552, when the Act 5 & 6 Edw. VI c. 25 was passed: "Forasmuch as intolerable hurts and troubles to the Commonwealth of this Realm doth daily grow and increase through such abuses and disorders as are had and used in common alehouses and other houses called tippling houses", Parliament required keepers of such houses to be licensed by the justices and to enter into recognizances for the proper conduct of them. The only other enactment in the long series of licensing Acts which then began to which I need refer is 9 Geo. IV c. 61. It is the Act that my brother Kitto mentions as under consideration in Reg. v. Lancashire [2] ; but I, with respect, apply that decision in this case somewhat differently from his Honour. When 9 Geo. IV c. 61 was passed in 1828 duties of excise on beer and spirits were in force, and the Act related justices' licences to them. It provided for a special session of justices, the General Annual Licensing Meeting, for granting licences to persons keeping or being about to keep inns, alehouses and victualling houses. The fee for a licence was fixed - the petty constable got a shilling; the justices' clerk five shillings, and one shilling and sixpence was payable for the preparation of precepts etc. - seven and sixpence in all. To carry on his business the publican had still to obtain from the Commissioners of Excise a licence to sell exciseable liquor - meaning liquor "charged with duty either by Customs or Excise". For this excise licence the publican had to pay the usual excise licence fee. The Excise Commissioners were, however, prohibited from granting him their licence except on production of his justices' licence. The form of the justices' licence was to authorize and empower the licensee to sell by retail on the specified premises all such exciseable liquors as he should be licensed to sell under his excise licence. It was an offence to sell exciseable liquor without a licence. But it was no offence to sell without a justices' licence liquor which at the relevant time was not exciseable; for a justices' licence was not necessary for the sale of liquor - only for the sale of exciseable liquor (Reg. v. Lancashire [1] ; sub. nom. Lancashire v. Staffordshire Justices [2] ; Jones v. Whittaker [3] ). There have, of course, been many changes in licensing law in England since the Act of 1828; but the system continues generally the same. For the sale of intoxicating liquor by retail, excise licences and justices' licences are still required; and intoxicating liquor as defined by the Licensing Act 1953 is liquor which cannot for the time being be sold without an excise licence (s. 165 (1)). The fee for an excise licence is either a fixed sum or a percentage of the annual value of the licensed premises (Customs & Excise Act 1952, s. 149 (2), schedule 4). Such a fee is, according to English practice, described in the Act as a "duty of excise". But it is not a duty of excise within the meaning of that phrase in the Constitution. Justices' licences are granted or renewed at the annual licensing meeting of the licensing justices. The fee for a justices' licence is eight shillings and six-pence (Licensing Act 1953, s. 51).

Dennis Hotels Pty Ltd v Victoria

At a glance

Court

Decision date

Before

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Judgment (148 paragraphs)

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