Deputy Commissioner of Taxation v DTR Securities Pty Ltd

Deputy Commissioner of Taxation v DTR Securities Pty Ltd - [1988] HCA 28 - HCA 1988 case summary — Zoe

[12]

To attribute to s. 64 [that] effect would be to construe the words of that section as disclosing a general legislative intent to finesse or sidestep that prior question of constitutional invalidity by reason of inconsistency and effectively to override, for the purposes of "any suit to which the Commonwealth is a party", a constitutional provision [i.e., s. 109] of great importance. We are unable to discern any such legislative intent in either the general or qualified ("as nearly as possible") words of s. 64. The Court [7] went on to explain the general nature and function of s. 64 in words which bear repetition: That section was intended to fill what would otherwise be lacunae or gaps in the law of the Commonwealth. It is not to be understood as intended to have the practical effect of overriding s. 109 of the Constitution by indirectly applying a provision of a law of a State to circumstances to which its direct application is invalidated by reason of inconsistency with a provision of an existing law of the Commonwealth. A fortiori, s. 64 should not be construed as intended to manufacture a new kind of indirect inconsistency between a provision of a State law and a provision of a law of the Commonwealth by applying a provision of a State law to a situation to which it does not purport to apply in circumstances where, if rendered directly applicable, it would be relevantly inconsistent with the direct operation of the provision of the law of the Commonwealth. Rather, the section should and must be construed as intended to extend a litigant's rights in a suit in particular circumstances only if, and to the extent that, there be no directly applicable and inconsistent (in the relevant sense) Commonwealth law already regulating those circumstances. In particular, where a Commonwealth legislative scheme is complete upon its face, s. 64 will not operate to insert into it some provision of State law for whose operation the Commonwealth provisions can, when properly understood, be seen to have left no room. Accordingly, the question arises whether the relevant provisions of the Assessment Act have effectively covered the field and left no room for the direct or indirect intrusion of provisions of State Limitation Acts to limit the time in which an action can be brought on behalf of the Commissioner of Taxation for unpaid income tax or additional tax. It can be said at once that the provisions of the Assessment Act dealing with liability for and recovery of additional tax are so dependent upon and interwoven with the provisions dealing with liability for and recovery of income tax that it is plain that there will be no room for the application of State limitation provisions to limit recovery of additional tax if there is no room for the application of such provisions in relation to the recovery of income tax. 1. (1987) 162 C.L.R. 317. 2. (1987) 8 N.S.W.L.R. 204. 3. (1987) 162 C.L.R., at p. 331. 4. (1987) 162 C.L.R., at pp. 331-332.

[13]

The Assessment Act was enacted by the Parliament in reliance upon its legislative power with respect to taxation: Constitution, s. 51(ii). That legislative power is confined by the express requirement of s. 51(ii) that it be not exercised "so as to discriminate between States or parts of States". In that context, it is not surprising that the general scheme of the Act is to define the obligations and liabilities of taxpayers in respect of income tax and additional tax in comprehensive terms which apply generally throughout the Commonwealth and which, subject to presently irrelevant exceptions: see, e.g., s. 221C(1AA), apply to all taxpayers regardless of the State in which they live or in which income is derived or proceedings for recovery are brought. It would be surprising if, within that general scheme, there was room left for the application of whatever the laws of a particular State might provide in relation to barring an action to recover unpaid income tax or additional tax or, in the case of some States, in relation to extinguishing the underlying right and title of the prospective plaintiff in an action for recovery of such taxes: cf., e.g., Limitation Act 1969 N.S.W., s. 63(1). In that regard, it is relevant to note that it has long been recognized that to speak of even traditional limitation provisions as merely "procedural" or as "barring the remedy and not the right" is misleading in that such provisions will, at least in some circumstances, entail consequences which are substantive in that, by barring the remedy, they will effectively extinguish both rights and liabilities: see, e.g., In re Hepburn; Ex parte Smith [8] . It is unnecessary to determine whether the express requirement of s. 51(ii) precluding discrimination between States would be infringed if the Assessment Act left room for s. 64 of the Judiciary Act to apply different State limitation of actions laws to bar an action by the Commonwealth for recovery of unpaid income tax and additional tax according to the identity of the particular State in which proceedings happened to be brought, with the consequence that the citizen of one State might be effectively immune from action for unpaid income or additional tax after a short period while a citizen of another State might enjoy no such immunity. The reason why it is unnecessary to determine that question is that examination of the relevant provisions of the Assessment Act in the form which they bore at relevant times discloses that they left no room for such an application of s. 64.

[15]

It can be argued that a provision of a State Limitation Act precluding the bringing of an action for unpaid income tax (or additional tax) after the expiry of six years (or two years) from the date on which the cause of action arose (or accrued) is directly inconsistent with the express provision of the Assessment Act (s. 209) that any unpaid tax may be recovered in any court of competent jurisdiction by the Commissioner. We are not, however, persuaded that there is necessarily any direct inconsistency between a provision, such as s. 209, conferring a right of action and recovery and a Limitation Act provision limiting the period in which such a right of action and recovery might be pursued. On the other hand, when one examines the general scheme of the Assessment Act provisions providing for collection and recovery of tax, it appears to us to be clear that there is no room for the importation into them of such State Limitation Acts provisions. The provisions of the Assessment Act relevantly cover the field. Indeed, the intrusion of State Limitation Acts provisions would significantly undermine the scheme for collection and recovery of tax which is contained in the Assessment Act. Thus, e.g., s. 206 of the Assessment Act authorizes the Commissioner "in any case [to] grant such extension of time for payment as he considers the circumstances warrant" and provides that "in such case the tax shall be due and payable accordingly". That power to grant an extension of time "in any case" plainly extends to the case where tax has already become due and payable with the result that the right of action to recover the tax has already arisen or accrued. The intrusion of a State Limitation Act provision which, according to its terms, barred recovery after the expiry of a specified time from the date on which the cause of action "arose" or "accrued": see, e.g., the Queensland Act, s. 10(1)(d) and (5) or "first accrues": see, e.g., Limitation Act 1969 N.S.W., ss. 14(1) and 18 would be incompatible with the existence of such a broad discretionary power. If, in such a case, the Commissioner granted an extension of time until after the expiry of the relevant limitation period from the date on which the right of action for recovery of the tax "arose" or "accrued" or "first accrues", the application of a State Limitation Act provision to bar recovery in accordance with the extension of time would be inconsistent with the provisions of the Assessment Act to the effect that the tax should be then due and payable (s. 206) and that any tax unpaid may be sued for and recovered in any court of competent jurisdiction: s. 209. If the application of the State limitation provision was not excluded, the result would be that the general discretion conferred upon the Commissioner was effectively confined to preclude the grant of any extension of time beyond the limitation of action period since, if an extension of time beyond that period were granted, the tax would be irrecoverable at the time when it became due and payable in accordance with the extension.

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