Deputy Commissioner of Taxation v Richard Walter Pty Ltd

1. See Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643

Legislative attempts to regulate the way in which a court is to exercise its jurisdiction may amount to an attempt to oust or exclude the jurisdiction of the court or to a usurpation of, or interference with, the exercise of judicial power. Section 54R of the Migration Act 1958 Cth, which was held invalid in Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs [25] , was such a case. A conclusive evidence provision would not ordinarily be regarded as ousting jurisdiction or interfering with the exercise of judicial power. That is because a provision of that kind usually does no more than attach definitive legal consequences to an act, transaction or instrument. However, it would be very different if an attempt were made to give conclusivity to a document or certificate which was in its terms determinative of the very issue for determination in a pending case.

1. (1992) 176 CLR 1 at 36-37, per Brennan, Deane and Dawson JJ; at 53, per Gaudron J.

The question whether the legislature can prescribe a conclusive rule of evidence to be applied by federal courts has not been considered in this Court. The vesting of the judicial power of the Commonwealth in Ch III courts requires those courts to determine facts in controversy. Consequently, a statutory provision which attempts to preclude the determination by a federal court of facts in controversy constitutes an impermissible intrusion into the exercise of judicial power. As Wigmore states it [26] :

The judicial function under the constitution is to apply the law in controverted cases; to apply the law necessarily involves the determination of the facts; to determine the facts necessarily involves the investigation of evidence as a basis for that determination. To forbid investigation is to forbid the exercise of an indestructible judicial function. On the other hand, a rule of substantive law, which will not intrude into the exercise of judicial power, may be expressed in the form of a conclusive evidence provision. 1. Wigmore on Evidence (1972), vol 4, s1353.

It follows that the characterisation of s 177(1) is the critical consideration. Does it prescribe a substantive rule that all procedural steps, other than those going to substantive liability and so going to the excessiveness of the assessment, are directory only and do not touch the validity of the assessment? Or is it a jurisdictional provision which simply attempts to preclude the court from inquiring into matters which do go to the validity of the assessment?

In David Jones Finance & Investments Pty Ltd v Federal Commissioner of Taxation [27] , the Full Court of the Federal Court (Morling and French JJ, Pincus J dissenting) answered this question by holding that s 177(1) was a jurisdictional provision. In reaching this conclusion, the majority was influenced by the fact that s 177(1) has a contingent or conditional operation; its preclusive effect in relation to the "due making" of the assessment is hinged upon the production of the notice of assessment or a copy of it. In the view of the majority, the conditional operation of the provision is incompatible with the suggestion that the sub-section is an empowering provision which protects an assessment against invalidation for non-compliance with procedural requirements or for some excess of authority. The majority reasoned to that conclusion in this way [28] :

Both first and second limbs [of s 177(1)] come into effect only upon the production of a notice of assessment and operate in the context of proceedings in which the "due making" of the assessment or the amount and particulars thereof might otherwise be debated. If a notice is not produced, they can be debated. The statutory powers under which the Commissioner or his delegates operate in making assessments are therefore logically anterior to the operation of the section in proceedings in which the "due making" and substantive liability might be in issue. There is nothing to indicate that the legislature would have intended that these powers should be contingently and retroactively affected by the production of a notice in later litigation. To so construe the section would be to allow the absurd possibility that the powers exercised in making an assessment are to be treated as greater in one proceeding where a notice is produced (say recovery proceedings) than in another where it is not produced (say judicial review proceedings). All this, in their Honours' view, led to the conclusion that the effect of s 177(1) was "purely jurisdictional". 1. (1991) 28 FCR 484 at 502, per Morling and French JJ. 2. David Jones Finance (1991) 28 FCR 484 at 502.

With respect to their Honours, it is scarcely accurate to describe the effect of the sub-section as purely jurisdictional. The sub-section leaves the jurisdiction of the relevant court intact but requires the court in the exercise of its jurisdiction to treat the notice of assessment as having been duly made. The effect of s 177(1) therefore is to condition the exercise of jurisdiction upon production of the notice of assessment or a copy of it so that it is treated as valid, otherwise than in Pt IVC proceedings [29] .

In theory, in proceedings other than Pt IVC proceedings, the validity of the notice is contingent upon its production or production of a copy. Nonetheless, it was plainly contemplated that, in such proceedings, production would take place as a matter of course. Indeed, it is difficult to suppose that the Commissioner would fail to produce the notice once an assessment was made complete and finalised by the service of the notice. And it is equally difficult to suppose that a person could seek to challenge the validity of an assessment or proposed assessment before service of the notice of assessment because, as already mentioned, it is only after service of the notice that the taxable income and the tax payable are ascertained. Unless and until service takes place, the Commissioner has not discharged his statutory responsibility to make an assessment.

It follows that the majority in David Jones Finance was mistaken in perceiving a marked difference in the powers exercised in making an assessment depending upon whether the proceedings were recovery proceedings or judicial review proceedings. Furthermore, their Honours do not appear to have taken into account the significance of s 175. That provision is of critical importance because it indicates that compliance with any of the provisions of the Act is not essential to validity. Viewed in the light of s 175, s 177(1) is a provision which gives effect to the substantive expression of intention in the earlier section. The reference to "due making" of the assessment in s 177(1) reflects the content of s 175.

The view that the relevant provisions of the Act do no more than require the making of an assessment, due compliance with the statutory provisions not being essential to the validity of an assessment, is in conformity with statements made by members of this Court. Apart from the observation of Isaacs ACJ in Federal Commissioner of Taxation v Clarke [30] that "[t]he Act so far trusts the Commissioner and does not contemplate a curial diving into the many official and confidential channels of information to which the Commissioner may have recourse to protect the Treasury", there was the statement made by Kitto J in Batagol [31] , to which I have referred. In addition, in F J Bloemen [32] , Mason and Wilson JJ (with whom Stephen and Aickin JJ agreed) said:

The general tenor of the statutory provisions suggests that a taxpayer wishing to challenge a notice of assessment served upon him will be effectively confined to the Pt V procedures. Later, their Honours, when referring to the production of the notice of assessment in that case, said [33] : Its production will put beyond contention the due making of the assessment so that the Court cannot find that no assessment was made or that, if made, it was made for an inadmissible purpose. 1. (1927) 40 CLR 246 at 276. 2. (1963) 109 CLR 243 at 252. 3. (1981) 147 CLR 360 at 376. 4. F J Bloemen (1981) 147 CLR 360 at 378.

This last statement, which perhaps goes further than anything said before, proceeds upon the footing that the paramount purpose of the Act is to ascertain the liability of taxpayers to tax and that the Act, with that object in view, sets up a legislative regime whereby the Commissioner assesses a taxpayer to tax, the taxpayer being liable to pay the amount stated in the notice of assessment, subject to a reference to the Administrative Appeals Tribunal or an appeal under Pt IVC to the Federal Court. In such an appeal, it is for the taxpayer to show that the assessment is excessive. In that context, the existence of an inadmissible purpose on the part of the Commissioner plays no part. The central element of the legislative regime is the making of an assessment by the Commissioner which ascertains the taxpayer's liability to tax and the reference to the Tribunal or the appeal to the Federal Court, in which the taxpayer is entitled to dispute his or her substantive liability to tax. In such an appeal, the taxpayer is at liberty to challenge the exercise of any relevant discretion by the Commissioner. Thus, on appeal, the court will set aside the assessment if any relevant exercise of discretion by the Commissioner is affected by error of law, if he has taken an extraneous factor into account or if he has failed to consider a material factor [34] .

1. Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360

In the light of the relevant provisions of the Act, as I have explained them, s 177 is not inconsistent with s 75 of the Constitution; nor does s 177 trench upon the provisions of s 75. Section 177 gives effect to the substantive provisions of the Act, in particular s 175, the effect of which is to ensure that the validity of an assessment does not depend upon compliance with any of the particular provisions of the Act or considerations of purpose. On this view, s 177(1) is consistent with the Hickman principle.

It follows that the first limb of s 177(1) is effective to preclude a challenge by the taxpayer in proceedings in the Federal Court under s 39B of the Judiciary Act to the validity of the assessment on the ground that the Commissioner has included the same amounts in the taxable income of more than one taxpayer. In any event, there is long-standing authority supporting the proposition that the Commissioner has power to assess more than one taxpayer in respect of the same income [35] .

1. Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192

I did not understand the taxpayer to contend that the assessments were tentative or were vitiated by bad faith or improper purpose otherwise than by reference to the fact that two taxpayers were assessed to tax in respect of the same income deriving from the one source.

In the result, I would answer the question reserved in the case stated as follows:

No, but the challenge must fail or the review be refused by reason of the combined operation of ss 175 and 177 of the Income Tax Assessment Act 1936 Cth. Brennan J.

The provisions of Pt IVA of the Income Tax Assessment Act 1936 Cth (the Act) authorise the Commissioner to make a determination which effectively eliminates a tax benefit that has been or would otherwise be obtained under certain schemes to reduce income tax. Where the tax benefit is referable to an amount that is not included in the assessable income of the taxpayer, the Commissioner's determination may include that amount in the taxpayer's assessable income (s 177F(1)(a)) whereupon the amount is "deemed to be included in that assessable income by virtue of such provision of [the] Act as the Commissioner determines" (s 177F(2)). Similar provisions apply, mutatis mutandis, where the tax benefit is referable to "a deduction or a part of a deduction [that is] allowable to the taxpayer in relation to a year of income" (s 177F(1)(b), and see s 177F(3)(b) and (4)). Thus the Commissioner eliminates the tax benefit by including assessable income or disallowing deductions that would, apart from Pt IVA, not be included or be allowable under other provisions of the Act.

On 10 December 1991, in purported pursuance of s 177F(1)(a) and (2) of the Act, a Deputy Commissioner made determinations in respect of the respondent, Richard Walter Pty Ltd (Richard Walter), for the years of income ended 30 June 1981, 1982, 1983 and 1984 (the 1981-1984 years). For the year ended 30 June 1981, for example, the Deputy Commissioner determined that the amount of $2,143,148 should be deemed to be included in the assessable income of Richard Walter by virtue of s 25(1), s 92(1), s 97(1) or s 99B of the Act. On 11 December 1991 the Deputy Commissioner, having made those determinations in respect of the 1981-1984 years, issued notices of assessment (or, for the 1981 and 1982 years, notices of amended assessment) to Richard Walter in respect of the 1981-1984 years giving effect to the determinations he had made. The determinations are reflected in the adjustment sheets which accompanied the notices of assessment. The amended adjustment sheet in respect of the year ended 30 June 1981, for example, added to the taxable income otherwise assessed the sum of $2,143,148 which was identified as follows:

An amount of $2,143,148 being the net income purportedly derived by Morlea Professional Services Pty Ltd as agent for the Morlea Partnership has now been included in assessable income. The notices of assessment for the 1981-1984 years were served on Richard Walter.

On 10 November 1992 the Deputy Commissioner commenced proceedings in the Supreme Court of New South Wales against Richard Walter for the recovery of the taxes assessed for the 1981-1984 years and the taxes assessed for the years ended 30 June 1986 and 1989. Those proceedings so far as they related to the 1981-1984 years were subsequently transferred to the Federal Court of Australia. The Deputy Commissioner moved for judgment for the amount of tax specified in the notices of assessment for the 1981-1984 years.

For its part, Richard Walter objected to the assessments pursuant to s 175A of the Act and Pt IVC of the Taxation Administration Act 1953 Cth (the Administration Act) and, upon the Deputy Commissioner making an objection decision disallowing the objections, appealed to the Federal Court. Then, on 5 February 1993 Richard Walter, invoking the jurisdiction conferred on the Federal Court by s 39B of the Judiciary Act 1903 Cth, commenced a proceeding in that Court (the s 39B proceeding) to restrain proceedings for the recovery of the taxes assessed in respect of the 1981-1984 years. In the s 39B proceeding, Richard Walter sought declarations which, after some reforming in the submissions made in this Court, read as follows: (a) the determinations under s 177F(2) in respect of the 1981-1984 years are not determinations for the purposes of s 177F of the Act; (b) further or alternatively those determinations are void and of no effect; (c) the assessments in respect of those years are not assessments under or for the purposes of the Act and the notices of assessment do not notify assessments of income tax within the meaning of that Act; and (d) further or alternatively those assessments are void and of no effect.

The Deputy Commissioner filed an affidavit producing copies of the notices certified as true copies under his hand. He moved to dismiss the s 39B proceeding on the ground that the Federal Court lacked jurisdiction to grant relief by reason of the production of notices of assessment certified under the hand of a Deputy Commissioner. This motion was founded on what is contended to be the conclusive effect of s 177(1) of the Act which reads:

The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.

The Deputy Commissioner's motion to strike out the s 39B proceeding was removed into this Court where the Chief Justice stated a case and reserved the following question of law for consideration of the Full Court:

Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth, by reason of the operation of s 177 of the Income Tax Assessment Act 1936 Cth?

Richard Walter's challenge to the assessments is on the ground that the income which was described in the amended adjustment sheets as net income purportedly derived by Morlea Professional Services Pty Ltd had already been determined under the provisions of s 177F to be included in the assessable income of that company and notices of assessment had issued to give effect to those determinations. Richard Walter submits that the purported assessments in respect of the 1981-1984 years were made in abuse of power and that the purported notices of assessment directed to Richard Walter are not notices of assessment for the purposes of s 177(1) of the Act.

In respect of the 1981-1984 years, income tax was imposed and levied on companies by an annual Income Tax Act and was calculated at the rates prescribed by those Acts [36] upon a taxpayer's taxable income as ascertained in accordance with the provisions of the Act [37] . The taxable income and tax liability of a taxpayer are ascertained by assessment by the Commissioner (ss 166, 167, 169) who must serve on the taxpayer a notice of the assessment made (s 174). An assessment is defined by s 6 of the Act [38] to mean -

The amount of taxable income is ascertained by reference to the general provisions of the Act although the quantum of taxable income may be increased by determinations under Pt IVA of the Act. The tax payable in this case was ascertained by reference to Richard Walter's taxable income and the provisions of the relevant Taxing Act. Although the Act and the relevant Taxing Act imposed income tax on taxpayers who had a taxable income in a relevant period, those Acts did not themselves create a debt for tax recoverable by action. They were applied to the particular case by assessment made by the Commissioner. Kitto J described the nature and incidents of an assessment in Batagol v Federal Commissioner of Taxation [39] : The word "assessment" is defined in s 6 to mean, unless the contrary intention appears, the ascertainment of the amount of taxable income and of the tax payable thereon It is here used in an Act under which the service of a notice of assessment is the levying of the tax. Assessment in the sense of mere calculation produces no legal effect. No step that the Commissioner may take, even to the point of satisfying himself of the amount of the taxable income and of the tax thereon, has under the Act any legal significance. But if the Commissioner, having gone through the process of calculation, serves on the taxpayer a notice that he has assessed the taxable income and the tax at specified amounts, the tax becomes by force of the Act due and payable on the date specified in the notice or (if no date is specified) on the thirtieth day after the service of the notice: s 204. Thus, and thus only, there is brought about an "ascertainment" of the taxable income and of the tax, in the sense that thereafter it is possible to say what could not have been said before: that amounts have been fixed so that they are to be taken for all purposes (except those of appeal: see s 177) to be the result flowing from the application of the Act in the particular case. The respective amounts of the taxable income and the tax have been rendered certain. The word "ascertainment" being understood in this sense, the definition of "assessment" means, in my opinion, the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case. (Emphasis added.) Citing this passage in Federal Commissioner of Taxation v Prestige Motors Pty Ltd [40] , the Court said: Service of the notice on the taxpayer brings the process of assessment to an end in the sense that, in conformity with s 174(1), the notice, which necessarily reflects the requisite elements of the calculation that has been made, is served after the making of that assessment. 1. See Acts No 126 of 1980; No 156 of 1981; No 102 of 1982 and No 106 of 1983. However, income tax on companies has been levied and imposed by the Income Tax Rates Act 1986 Cth in respect of tax years commencing on or after 1 July 1986 and calculated at the rates prescribed by the Income Tax Rates Act 1986 Cth as amended from time to time. 2. Re Dymond (1959) 101 CLR 11 at 18and see Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 563, 585. 3. Prior to 14 December 1984 this definition read: " "assessment" means the ascertainment of the amount of taxable income and of the tax payable thereon." 4. (1963) 109 CLR 243 at 251-252. 5. (1994) 181 CLR 1 at 13.

By bringing the process of assessment to an end, service of the notice of assessment has two effects: first, it crystallises the taxpayer's liability under the Act and makes the tax assessed due and payable at a certain date (s 204) and, secondly, it enlivens the objection, review and appeal procedures prescribed by s 175A of the Act and Pt IVC of the Administration Act. As the process of assessment in exercise of the Commissioner's statutory power is apt to affect the rights and liabilities of a taxpayer in these ways, an exercise of those powers is amenable to judicial review by this Court under s 75 of the Constitution [41] . The jurisdiction of this Court under s 75 of the Constitution judicially to review the exercise of statutory power by an officer of the Commonwealth cannot be excluded by any law enacted by the Parliament [42] .

1. It is unnecessary for present purposes to consider whether the jurisdiction to review the exercise of power by the Commissioner is conferred by s 75(iii) or s 75(v) of the Constitution or by both those sub-sections. 2. Ince Bros and Cambridge Manufacturing Co Pty Ltd v Federated Clothing and Allied Trades Union (1924) 34 CLR 457 at 464 Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 357 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 251

Section 39B(1) of the Judiciary Act confers on the Federal Court jurisdiction which is expressed, subject to sub-s (2), in terms that are no narrower than those in which s 75(v) of the Constitution confers jurisdiction on this Court. But, as the Federal Court's jurisdiction is defined by a law made by the Parliament [43] , the Parliament may, by other laws, restrict the jurisdiction conferred by s 39B. The Commissioner contends that that is the effect of s 177(1) of the Act. I do not find it necessary to decide that question for reasons that will presently appear but, as at present advised, I would not construe a law to confine the jurisdiction conferred by s 39B more narrowly than the jurisdiction conferred by s 75(v) of the Constitution unless the restriction appears expressly or by necessary intendment [44] . For the purposes of answering the question reserved for the opinion of the Full Court, I shall assume that the jurisdiction invoked by Richard Walter in the s 39B proceeding is no more restricted than the jurisdiction of this Court conferred by s 75(v) of the Constitution [45] .

1. Constitution, s 77(i). 2. See O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 270 3. This assumption accords with the view of its jurisdiction taken by the Federal Court in David Jones Finance & Investments Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 484 at 497, 503-504.

When a purported exercise of a statutory power by a repository of the power is impugned as invalid, the first step is to identify the particular act which is impugned and then to determine whether there was power available to support it. The particular acts which complete the process of assessment under the Act are the calculation of the amounts of taxable income and of tax payable by a taxpayer, the preparation and execution under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner of a notice of assessment and the service of the notice on the taxpayer. Richard Walter's challenge in this case attacks the power or authority of the Deputy Commissioner to include in the taxable income of Richard Walter the amounts that appear in the notices of assessment for the 1981-1984 years and to assess Richard Walter to tax accordingly. If the Deputy Commissioner had that power or authority, Richard Walter does not attack the preparation, execution and service of the notices.

The challenge to the assessments cannot succeed unless s 175 of the Act is read down. That section reads:

The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. On its face, s 175 appears to preserve the validity of an assessment although it has been made in disregard of the general provisions of the Act which prescribe the rules governing the assessment of taxable income and tax liability and which are prima facie binding on the Commissioner in the making of an assessment. The apparent conflict between the rules prescribed by the general provisions of the Act and s 175 raises a question similar to that addressed by Dixon J in R v Hickman; Ex parte Fox and Clinton [46] . The " Hickman principle", as it has been called, reconciles "the prima facie inconsistency between one statutory provision which seems to limit the powers of the [repository of the power] and another provision, the privative clause, which seems to contemplate that the [repository's] order shall operate free from any restriction" [47] . The reconciliation is effected by "reading the two provisions together and giving effect to each" [48] . The privative clause is given effect despite non-compliance with the provisions governing the exercise of the power, but only if the purported exercise is a bona fide attempt to exercise the power, it relates to the subject matter of the legislation and it is reasonably capable of reference to the power given to the body purporting to exercise it [49] . The validating provision cannot be so construed if the impugned act by the repository of the power is not referable to the power given to the repository [50] or exceeds the power which can constitutionally be given to the repository [51] . The Hickman principle has been invoked where a privative clause in a statute is expressed to exclude the jurisdiction of a court judicially to review a purported exercise of a power which, by virtue of other provisions of the statute, can be validly exercised only if the repository complies with prescribed conditions [52] . The privative clause treats an impugned act as if it were valid. In so far as the privative clause withdraws jurisdiction to challenge a purported exercise of power by the repository, the validity of acts done by the repository is expanded [53] . 1. (1945) 70 CLR 598. 2. R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418and see O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 304 3. R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418 4. Hickman (1945) 70 CLR 598 at 615 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union (Australian Section) (1967) 118 CLR 219 at 252-253 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418and see O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 249-250, 275. 5. McDonald v Commissioner of Business Franchises (1992) 175 CLR 472 at 477-478 6. O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 250 Re Australian Railways Union; Ex parte Public Transport Corporation (1993) 67 ALJR 904 at 910117 ALR 17 at 25. 7. See the cases cited in R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 422and see O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 248-249, 251, 274, 286, 304. 8. O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 275

When the general provisions of a statute prima facie condition the valid exercise of a power and are found together with another provision which confers validity on a purported exercise of the power despite a failure to comply with the general provisions, the problem of reconciling the general provisions and the validating provision is indistinguishable from that which arises when a privative clause withdraws jurisdiction to review. In both cases the legislature manifests an intention that the purported exercise of the power should have the effect of a valid exercise of power notwithstanding non-compliance with the conditions governing that exercise. Thus, when s 175 declares the validity of an assessment to be unaffected by non-compliance with the general provisions of the Act governing the ascertainment of a taxpayer's taxable income and tax liability, that provision is to be given an operation according to its tenor provided the elements of the Hickman principle are satisfied.

However, the Hickman principle is a rule of construction and, as Dixon J pointed out [54] , it is "a question of interpretation of the whole legislative instrument whether transgression of the limits, so long as done bona fide and bearing on its face every appearance of an attempt to pursue the power, necessarily spells invalidity." There are two features of the legislative scheme which, in my opinion, indicate that the Hickman principle should be applied in the construction of s 175. These features are consistent with two objectives which the principle is designed to achieve: according legal effect to an act or instrument which is not done or made in compliance with conditions expressed to govern the power to do or make it, and attributing effect to the governing conditions except to the extent necessary to accord legal effect to the impugned act or instrument [55] . The first feature is the legislative intention to protect the validity of the notice of assessment as a central and critical link in the chain of imposing liability for income tax on and the recovery of tax from the taxpayer. The second feature is the full opportunity afforded to the taxpayer to object to the assessment and, in the event that the objection is dismissed, to challenge the assessment. The challenge may be made before either an administrative or a judicial tribunal (at the taxpayer's election) on any ground which affects the taxpayer's liability to tax or the quantum thereof including the Commissioner's power to make the assessment to which the taxpayer has objected.

1. Hickman (1945) 70 CLR 598 at 616and see O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 251 2. O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 273-274

Subject to the provisions of this Part, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable, not being less than 30 days after the service of the notice, or, if no date is so specified, on the thirtieth day after the service of the notice. The notice of assessment, reflecting the antecedent calculation of the taxpayer's taxable income [56] , fixes the amount of the taxpayer's tax liability, and it either fixes the date or its service determines the date on which the tax is due and payable. Absent the service of a valid notice of assessment, a taxpayer's liability to pay the tax imposed by the relevant Taxing Act is not fixed nor is there a due date for payment. But, on service of a valid notice of assessment on a taxpayer, s 204 imposes on the taxpayer a liability to pay tax in the amount and on the date specified in the notice or, if no date is specified, on the thirtieth day after service. In Prestige Motors [57] , this Court pointed out that - The principal purpose of the notice of assessment is to bring to the attention of the person on whom it is served that such person is liable to pay on the due date the amount of tax assessed in the notice on the income stated in the notice. 1. Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 at 13 2. (1994) 181 CLR 1 at 14.

The service of a notice of assessment would fail in its purpose if the assessment were open to challenge for non-compliance with the general and often complex provisions of the Act governing the calculation of taxable income and the liability to pay tax. The application of the general provisions to the particular facts of a taxpayer's case is and must be expected to be a matter of frequent controversy between the taxpayer and the Commissioner. Although the Commissioner's exercise of power to assess a taxpayer to tax is governed by provisions of the Act which prescribe the components of a taxpayer's taxable income and the manner in which those components and the taxable income are to be ascertained, it is inevitable that on occasions the process of assessment will fail to comply with those provisions. However, if s 175 confers validity on assessments made in a bona fide attempt to exercise the power to make them, it authorises the Commissioner to determine in good faith, rightly or wrongly, the application of the general provisions of the Act to the facts of the particular case subject to correction by the objection, review and appeal procedures. That accords with the policy of the Act which most clearly appears from the text of s 177(1). That policy was expounded by Dixon CJ, McTiernan and Webb JJ in McAndrew v Federal Commissioner of Taxation [58] :

The ground over which s 177(1) gives conclusiveness to the assessment is described as the due-making of the assessment and the correctness of the amount and all the particulars of the assessment. But that appears to us to comprise the whole ground. It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose. 1. (1956) 98 CLR 263 at 270.

The scope and operation of each of s 175 and s 177(1) must be congruent, for the Parliament is not to be taken to have intended by s 175 to validate a purported assessment that does not comply with the general provisions of the Act to an extent that falls short of the evidentiary protection afforded by s 177(1). Equally there is no reason to suppose that Parliament intended the evidentiary protection afforded by s 177(1) to fall short of the validity of an assessment determined by reference to the provisions of s 175. In my respectful opinion, the operation of s 177(1) corresponds with the operation of s 175 and the disconformity in operation between ss 175 and 177(1), which was accepted in F J Bloemen Pty Ltd v Federal Commissioner of Taxation [59] in reliance on the judgment of Taylor J in McAndrew [60] , is erroneous. Unless the operation of s 177(1) corresponds with the operation of s 175, the conclusive evidence provision in s 177(1) would attempt to shut out judicial review of a purported exercise of the power of assessment that does not satisfy the Hickman principle. And that would be inconsistent with s 75 of the Constitution.

1. (1981) 147 CLR 360 at 371, 375. 2. (1956) 98 CLR 263 at 281-282.

It is conceivable that a purported assessment could be made in bad faith so as to forfeit the protection which s 175 would otherwise confer on the assessment. If such a case were to occur, neither s 175 nor s 177(1) would transform the purported but invalid assessment into a source of liability [61] . The purported assessment would be a nullity. But an assessment which has been made in a bona fide attempt to exercise the power to make it is not invalid merely on account of a disconformity between the amounts assessed and the amounts properly assessable under the general provisions of the Act.

1. See Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 624, 633-634 and Bloemen (1981) 147 CLR 360 at 375-376, 378.

The Act (s 175A) opens the way to a proceeding under Pt IVC of the Administration Act in which a taxpayer is entitled to a review of or appeal against a decision taken on an objection to an assessment. The taxpayer may elect either to apply for a review of the decision to the Administrative Appeals Tribunal or to appeal against the decision to the Federal Court [62] . But the conclusive evidence provision of s 177(1) of the Act arms the Commissioner with a weapon by which other attacks on the assessment based on non-compliance with the general provisions of the Act may be repelled. Section 177(1) is, of course, expressed as an evidentiary provision; it is not expressed to alter a taxpayer's tax liability. It is merely "a facultative provision; if the notice does not fall within [it], the only consequence is that the Commissioner cannot rely upon the provision" [63] . Section 177(1) does not itself confer validity on an instrument that is not otherwise a valid notice of assessment. If it stood alone as an evidentiary provision, it could not preclude an effective exercise by this Court of its constitutional jurisdiction to review an exercise by the Commissioner of his power of assessment. But if s 175 be construed according to the Hickman principle and each of ss 175 and 177(1) be construed as having an operation corresponding with the operation of the other, the evidentiary edifice of s 177(1) is seen to be constructed on the foundation of s 175. So construed, the immunity from review produced by the "conclusive evidence" provision of s 177(1) is coextensive with the validity of assessments produced by operation of s 175 or, when s 175 has no work to do, by the general provisions of the Act. The "notice of assessment" to which s 177(1) attaches a conclusive evidentiary effect is a notice of an assessment which is either valid under the general provisions of the Act or is validated by s 175.

1. Administration Act, s 14ZZ. 2. Prestige Motors (1994) 181 CLR 1 at 14.

The procedures in Pt IVC of the Administration Act expose an assessment to correction if the application of the general provisions of the Act to the facts as found establishes that the assessment was excessive [64] . The mechanism by which tax liability is altered under the Pt IVC procedures is amendment of the assessment [65] so as to make the taxpayer's taxable income and tax liability conform to the decision of the Administrative Appeals Tribunal or to the order of the Federal Court (as the case may be). But, in reviewing or determining an appeal against an objection decision, the Administrative Appeals Tribunal or the Federal Court (as the case may be) gives effect to the general provisions of the Act governing the ascertainment of the taxpayer's taxable income and tax liability. Section 177(1) presents no impediment in proceedings under Pt IVC of the Administration Act to giving full effect to those general provisions. In Federal Commissioner of Taxation v Dalco [66] , the Court subscribed to the view that -

It is open to a taxpayer to attack not only the calculation of the amount of an assessment but the authority of the Commissioner to make the assessment. Thus it was held in McAndrew's Case that it was open to a taxpayer on appeal to challenge the fulfilment of the conditions mentioned in s 170(2) governing the power of the Commissioner to impose a tax liability by amendment of an assessment. If a taxpayer is assessed to tax in pursuance of a purported exercise of power by the Commissioner, non-compliance with a condition precedent to the existence of the power establishes that the tax assessed is, pro tanto, not supported by the purported exercise of that power [67] and the assessment may be excessive to that extent. If the taxpayer thereby establishes that the tax assessed exceeds what is, in the circumstances, the true tax liability under the general provisions of the Act [68] , the Court or Tribunal may direct the amendment of the assessment to accord with the true tax liability of the taxpayer. 1. Administration Act, ss 14ZZK(b)(i), 14ZZO(b)(i). 2. Administration Act, ss 14ZZL(1), 14ZZQ(1). 3. (1990) 168 CLR 614 at 621-622. 4. McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 282-283 Bloemen (1981) 147 CLR 360 at 375 5. Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 623, 631.

The jurisdiction of the Federal Court on appeal from, or of the Administrative Appeals Tribunal on review of, a decision on an objection extends to every issue which affects the amounts ultimately included in the taxable income or tax liability of a taxpayer. If any of these issues be resolved in favour of the taxpayer, an amendment of the assessment so as to reduce the taxable income or the tax liability of the taxpayer must follow. The width of that jurisdiction [69] and the evident purpose of the Act to channel all issues as to the true tax liability of the taxpayer into the objection, review and appeal procedures found the clearest implication that exceptions to the broadest literal application of s 175 must be narrowly confined and a corresponding operation must be attributed to s 177(1).

1. McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 270

As the scheme of the Act is to protect the validity of notices of assessment while allowing a taxpayer a full opportunity to have the general provisions of the Act affecting tax liability applied, I would construe the term "due making of the assessment" in s 177(1) as extending to every purported exercise of the power to ascertain the taxable income and tax liability of a taxpayer which satisfies the criteria expressed by the Hickman principle.

The power to make an assessment is exercised by ascertaining the taxpayer's taxable income and defining the resulting tax liability of the taxpayer. If it appears, either on the face of a notice of assessment [70] or from elsewhere [71] that the Commissioner has not attempted in good faith to determine the taxable income [72] or has not made an assessment definitive of the tax liability of the taxpayer [73] , the assessment does not attract the protection of s 175 [74] . Nor, in my opinion, does s 177(1) make the production of such a purported notice of assessment conclusive evidence of the due making of the assessment [75] .

1. Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 Bloemen (1981) 147 CLR 360 at 374 2. R v Commissioner of Taxation (WA); Ex parte Briggs (1986) 12 FCR 301 3. Trautwein v Federal Commissioner of Taxation (1936) 56 CLR 63 at 88 Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 633-634and cf R v Deputy Commissioner of Taxation (WA); Ex parte Briggs (1987) 14 FCR 249 at 269 4. Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 at 55-56 5. Bloemen (1981) 147 CLR 360 at 371 6. R v Deputy Commissioner of Taxation (WA); Ex parte Briggs (1986) 12 FCR 301 at 308

Richard Walter seeks to show that the assessments in respect of the 1981-1984 years were not attempts in good faith to exercise the power to assess, because the assessments were merely "protective", that is, assessments to tax of different taxpayers whom the Commissioner treats as alternatively liable to pay tax upon the same income. The alternative tax liability sought to be imposed is said to appear from the notices of assessment directed to the taxpayer and to Morlea Professional Services Pty Ltd (Morlea) together with the respective accompanying adjustment sheets [76] as well as from the Morlea determinations made by the Deputy Commissioner. These documents reveal that assessments have been made which include in the assessable incomes of each of Richard Walter and Morlea the same amount, being an amount which has been the subject of determinations under s 177F(1)(a) and (2) against Richard Walter and Morlea respectively.

1. As to reference to adjustment sheets, see Bloemen (1981) 147 CLR 360 at 374, 381-382.

Richard Walter submits that two persons cannot be severally liable each in its own right to have included in its individual assessment the same income for the same year. This is the submission which the unsuccessful taxpayer made in Richardson v Federal Commissioner of Taxation [77] . It cannot be accepted now. The function of the Commissioner in making an assessment is to take a view of the facts, so far as a view can reasonably be taken from the information in his possession, and to apply the general provisions of the Act so as to arrive at the taxpayer's taxable income and to define the tax liability accordingly. In Bailey v Federal Commissioner of Taxation [78] Barwick CJ said: "the process of assessment requires the application of the Act to the facts as known to and accepted by the Commissioner. He must of necessity, as part of that process, adopt a view of the relevant facts." Subject to what follows, I would respectfully agree.

1. (1932) 48 CLR 192 at 205. 2. (1977) 136 CLR 214 at 217.

It must be remembered that the Commissioner's function is administrative, not judicial. The power to assess is, as s 167 shows, not limited to cases where the Commissioner has enough information on which to make a positive finding of fact. The Commissioner is not required to determine on the balance of probabilities that one person rather than another is the person subject to the tax liability in respect of the particular income. Where the facts known to the Commissioner are such that he is unable to determine which of two or more persons is liable to tax on the same item of income in the same year, he may adopt the view in the case of any or all of those persons that there is a substantial possibility that the item of income is assessable income of that person. If that view is adopted in respect of two or more of those persons, he may validly assess each of them to tax. The making of an assessment on that view of the facts, provided it is not for the purpose of double recovery of the tax imposed by the relevant Taxing Act, is in my opinion a bona fide attempt to exercise the power to assess so that the assessment either is valid or is validated by s 175. And the notice of assessment attracts the protection of s 177(1).

It is immaterial to the validity of an exercise of the power to assess one taxpayer to tax that the Commissioner believes it possible that another taxpayer is liable to tax in respect of the particular income. If uncertainty as to the taxpayer liable were to sterilise the Commissioner's power to make an assessment or if the power could be exercised only when the Commissioner is satisfied on the balance of probabilities that one taxpayer rather than another is liable, the uncertainties which are the inevitable companions of complex commercial transactions would substantially erode the Commissioner's ability to recover tax and would, contrary to the intent of s 177(1), open the way to litigating liability to tax outside the objection, review and appeal procedures.

The fact that a tax liability remains outstanding against two taxpayers pending the ascertainment of the taxpayer truly liable is no bar to the exercise of the power to assess both to tax in respect of the same income. As Dixon J observed in Richardson v Federal Commissioner of Taxation [79] when upholding the validity of an assessment to tax against a second person while the first person's assessment remained on foot and unamended, "it was not unnatural that [the Commissioner] should delay relieving one of two persons whom he considered culpable until the liability of the other was established." The co-existence of tax liabilities in two or more taxpayers in respect of the same income is, as Dixon J observed [80] , attended with difficulty. Sometimes the difficulty will be removed by the objection, review and appeal procedures where the taxpayer will establish the facts in order to establish that the assessment is excessive.

1. (1932) 48 CLR 192 at 207. 2. Richardson (1932) 48 CLR 192 at 207

The raising of concurrent assessments of two or more taxpayers to tax in respect of the same item of income has not hitherto been regarded as beyond the powers of the Commissioner [81] . The appropriateness of alternative assessments to tax of two taxpayers in respect of the same item of income was recognised in a dictum of this Court in Deputy Commissioner of Taxation v Moorebank Pty Ltd [82] . And the courts, if not the Commissioner, can diminish the difficulty of concurrent assessments by ensuring that there is no double recovery of tax [83] .

1. Richardson (1932) 48 CLR 192 at 205-207 Booth v Federal Commissioner of Taxation (1986) 81 FLR 346 at 359 Winter v Deputy Federal Commissioner of Taxation (1987) 19 ATR 244 at 24887 ATC 4,655 at 4,659-4,660; Hoare v Deputy Commissioner of Taxation (Vict) (1987) 19 ATR 661 at 668-66988 ATC 4,042 at 4,049; cf Deputy Commissioner of Taxation (Q) v Truhold Benefit Pty Ltd (1984) 73 FLR 28315 ATR 1227. 2. (1988) 165 CLR 55 at 67. 3. Deputy Commissioner of Taxation v Faint [1988] 2 Qd R 494 at 497-498

The co-existence of tax liabilities arising from concurrent assessments is entirely consistent with the operation of s 177(1). If the Commissioner employs s 177(1) in a proceeding to recover tax from taxpayer A, the liability of that taxpayer cannot be avoided by pointing to an outstanding assessment against taxpayer B. Section 177(1) operates as between the Commissioner and the taxpayer served with the notice of assessment in a proceeding between them and the notice of assessment issued to another taxpayer does not qualify or affect the operation of s 177(1) [84] .

1. Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192 at 212 Tupicoff v Federal Commissioner of Taxation (1984) 4 FCR 505 at 523 Deputy Commissioner of Taxation v Crowl (1986) 85 FLR 323 at 32618 ATR 497 at 500-501; 87 ATC 4,001 at 4,004-4,005; Deputy Commissioner of Taxation v Jonrich Pty Ltd (1986) 70 ALR 357 at 361-36217 ATR 880 at 886; 86 ATC 4,560 at 4,575.

Richard Walter's attack on the assessments in respect of the 1981-1984 years is based entirely on the determinations made under Pt IVA against Morlea specifying the same amounts as the amounts specified in the determinations made against Richard Walter and on the adjustment sheets attached to Richard Walter's notices of assessment which show the latter amount to be "net income purportedly derived by Morlea Professional Services Pty Ltd as agent for the Morlea Partnership". That attack is not directed to the final, mechanical stage of assessing Richard Walter to tax but to the antecedent determinations under s 177F. That raises the question: do the making of those determinations form part of the process of assessment so as to be protected by s 177(1) or are they separate acts which stamp the character of assessable income on the amounts they specify? Is the mechanical addition of the amounts specified in the antecedent determinations to the other assessable income of Richard Walter the only relevant exercise of the power to assess?

Part IVA does not itself stamp the character of assessable income on income derived by a taxpayer. It is not self-executing; it must be applied by the Commissioner. The starting point for Pt IVA is the existence of a tax benefit acquired by operation of the general provisions of the Act and the power conferred by Pt IVA is a power to alter the amount of assessable income or allowable deductions otherwise ascertained. The exercise of the Pt IVA power is therefore properly to be regarded as part of the process of assessment. It is not open to the Commissioner to defend an assessment merely by asserting its conformity with an antecedent determination. The antecedent determination, being itself part of the process of assessment, must itself be supported as a valid exercise of power or be validated by s 175 as a bona fide attempt to exercise the power.

However, to support its attack on the s 177F determinations, Richard Walter relies solely on the copies of the s 177F determinations against Richard Walter and Morlea and the notices of assessment and adjustment sheets annexed to the stated case. That material is incapable of supporting an inference that the Deputy Commissioner did not attempt in good faith to exercise his powers to make determinations under Pt IVA. To the contrary, if any inference is to be drawn from those meagre facts, it is that the Deputy Commissioner was uncertain whether Morlea or Richard Walter is the taxpayer properly liable to tax in respect of the income purportedly derived by Morlea. That is not surprising. In complex schemes for minimising tax, the identification of the person deriving the relevant tax benefit will often be uncertain [85] .

1. See, eg, Commissioner of Taxation v Peabody (1994) 181 CLR 359and Winter v Deputy Federal Commissioner of Taxation (1987) 19 ATR 24487 ATC 4,655.

It follows that, on the facts pleaded in Richard Walter's statement of claim and particulars (which are annexed to the stated case), the assessments including the antecedent determinations are valid or are validated by s 175. And, as s 177(1) protects the making of an assessment only if the assessment is valid or is validated by s 175, s 177(1) does not purport to preclude or limit the jurisdiction of the Federal Court to review the making of a purported assessment that is invalid. Therefore, it is immaterial whether the jurisdiction that is invoked to determine the validity of the exercise of the power to assess Richard Walter to tax is the jurisdiction conferred on this Court by s 75 of the Constitution or the jurisdiction conferred on the Federal Court by s 39B of the Judiciary Act. Both jurisdictions extend to the review of purported exercises of the power of assessment which are not validated as bona fide attempts to exercise the power. But the facts alleged in Richard Walter's statement of claim and particulars in the s 39B proceeding do not amount to an allegation that the making of the assessments was not a bona fide attempt to exercise the power - albeit the making of the assessments was allegedly unauthorised by the Act. And so s 177(1) protects the Richard Walter assessments from challenge or review on the grounds pleaded.

Although the Federal Court has jurisdiction to review a purported exercise of power that does not satisfy the Hickman principle, once the Richard Walter notices of assessment in respect of the 1981-1984 years have been produced in the s 39B proceeding, the Court is bound to conclude that the assessments (including the antecedent determinations) were duly made and that the amounts and all particulars thereof are correct.

I would therefore answer the question reserved as follows:

No, but the challenge must fail or the review be refused by reason of the combined operation of ss 175 and 177 of the Income Tax Assessment Act 1936 Cth. Deane and Gaudron JJ.

The background facts and circumstances and the relevant legislative provisions are set out in other judgments. We shall avoid unnecessary repetition of them. The question before the Court relates to the effect of the production of certified notices of assessment in proceedings in the Federal Court of Australia in which an injunction is sought against the Commonwealth Deputy Commissioner of Taxation. The answer to that question turns on the relationship between s 177(1) of the Income Tax Assessment Act 1936 Cth and s 39B(1) of the Judiciary Act 1903 Cth. As a matter of language, s 39B(1) effectively repeats the provision of s 75(v) of the Constitution and it is convenient to turn at once to a consideration of the scope and effect of that constitutional provision.

Section 75(v) effects a direct and unqualified grant of "original jurisdiction" upon this Court in "all matters [i]n which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth". At least to a large extent, the jurisdiction conferred by the sub-section is also comprehended by s 75(iii)'s grant of "original jurisdiction" in "all matters [i]n which the Commonwealth, or a person being sued on behalf of the Commonwealth, is a party" [86] . Implicit in each of s 75(v) and s 75(iii) is a conferral of a right to invoke the jurisdiction of the Court upon any person with an interest which is sufficient to provide standing to seek judicial relief in a matter of a kind specified in the relevant sub-section. Together, the two sub-sections constitute an important component of the Constitution's guarantee of judicial process in that their effect is to ensure that there is available, to a relevantly affected citizen, a Ch III court with jurisdiction to grant relief against an invalid purported exercise of Commonwealth legislative power or an unlawful exercise of, or refusal to exercise, Commonwealth executive authority. Necessarily, there lies at the heart of that jurisdiction the authority to determine whether an impugned law is or is not in fact ultra vires and whether an impugned administrative decision or impugned administrative conduct is or is not in fact invalid or unlawful [87] .

1. Section 75(v) was apparently included as a safeguard against the possibility that s 75(iii) would be read down by reference to United States decisions such as Marbury v Madison (1803) 1 Cranch 137: see, eg, Quick and Garran, Annotated Constitution of the Commonwealth of Australia (1901), pp 778-779; Ah Yick v Lehmert (1905) 2 CLR 593 at 608-609 2. R v Commonwealth Rent Controller; Ex parte National Mutual Life Association of Australasia Ltd (1947) 75 CLR 361 at 369 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 606, 610, 614.

The various legislative powers which are conferred upon the Parliament by s 51 of the Constitution are all "subject to" the provisions of s 75. That being so, the jurisdiction which s 75(v) confers and the right of a relevantly affected person to invoke it cannot be withdrawn, negated or diminished by the Parliament [88] . Nonetheless, the right to invoke the jurisdiction is essentially an auxiliary or facultative one in the sense that the jurisdiction which the sub-section confers upon the Court is to hear and determine the designated matters in accordance with the independently existing substantive law. In other words, the right to invoke the jurisdiction will be unavailing unless the decision or conduct of the officer of the Commonwealth in respect of which the designated relief is sought is invalid or unlawful under that substantive law. The result of that is that, while the Parliament cannot withdraw or diminish the jurisdiction of the Court to hear and determine the matters which the sub-section designates including the jurisdiction to determine the critical issue of the validity or lawfulness of an impugned decision or conduct, it can, consistently with the sub-section and within the limits of the legislative powers conferred upon it by the Constitution, alter the substantive law to ensure that the impugned decision or conduct is in fact valid or lawful. The Parliament can also, pursuant to those legislative powers [89] , make laws which, while not diminishing the content of the jurisdiction conferred by the sub-section, prescribe procedural rules to be observed by the Court in its exercise [90] . That distinction between what laws are and what laws are not consistent with s 75(v) is admittedly an elusive one. Hopefully, a clearer perception of it can be conveyed by reference to two obvious categories of "matters" in which "an injunction is sought against an officer of the Commonwealth".

1. See The Commonwealth v New South Wales (1923) 32 CLR 200 at 216The jurisdiction of the High Court to grant remedies pursuant to s 75(v) notwithstanding "privative" clauses has been established in a number of cases, eg, the Tramways Case [No 1] (1914) 18 CLR 54; Waterside Workers' Federation of Australia v Gilchrist, Watt & Sanderson Ltd (1924) 34 CLR 482 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 2. See, in particular, s 51(xxxix). 3. Such procedural rules must be consistent with the proper exercise of judicial power.

The first category consists of cases in which a plaintiff claims that his or her property is being irreparably damaged by the unlawful conduct of an officer of the Commonwealth acting in the ostensible discharge of the duties of office. Clearly enough, and regardless of whether jurisdiction to entertain such proceedings is also possessed by some other court, the Parliament could not validly deprive such a citizen of the constitutional right to invoke the jurisdiction of this Court under s 75(v) to entertain an action for an injunction against the particular officer. Nor could the Parliament denude that jurisdiction of effective content by precluding the Court from determining whether the impugned conduct is or is not in fact unlawful. Thus, the Parliament could not, consistently with s 75(v), enact that, in a case where the citizen exercises the constitutional right to institute proceedings for injunctive relief to restrain unlawful conduct by an officer of the Commonwealth, there shall be an irrebuttable presumption that the impugned conduct is lawful. Unlike a law prescribing a merely prima facie presumption, such a law could not properly be seen as a rule of procedure or evidence to be observed in the exercise of jurisdiction. It would constitute a pro tanto denial or withdrawal of the constitutional jurisdiction to hear and determine a matter in which an injunction is sought against an officer of the Commonwealth. The Parliament could, however, consistently with s 75(v), alter the substantive law so that threatened conduct which would otherwise be unlawful was actually rendered lawful with the consequence that, while the jurisdiction of the Court to entertain an application for injunctive relief to restrain unlawful conduct by an officer of the Commonwealth remained undiminished, subsequent proceedings for an injunction to restrain the particular conduct would fail.

The second category is in point here. It consists of cases in which a plaintiff claims that his or her rights, interests, status or legitimate expectations are directly and adversely affected in an individual capacity by, or by action pursuant to, an invalid administrative decision made by an officer of the Commonwealth in the purported exercise of the powers of office. Again, the Parliament could not validly diminish the jurisdiction conferred by s 75(v) by precluding the Court from determining that the impugned administrative decision was in fact invalid. Thus, the Parliament could not, consistently with s 75(v)'s conferral of jurisdiction or with the proper exercise of judicial power under Ch III of the Constitution, enact that, in a case in which an injunction is sought to restrain an officer of the Commonwealth from enforcing an allegedly invalid decision, a certificate of the defendant officer to the effect that the impugned decision was valid and enforceable would conclusively determine that issue in his or her favour regardless of whether the decision was in fact invalid. On the other hand, the Parliament could, consistently with s 75(v), provide that administrative decisions of the relevant kind were valid and enforceable notwithstanding the existence of some procedural defect which would otherwise result in invalidity [91] . Such a legislative provision would be consistent with s 75(v)'s conferral of jurisdiction to hear and determine matters in which an injunction is sought against an officer of the Commonwealth since it would neither diminish the jurisdiction nor override the right of the affected citizen to invoke it. It would merely alter the substantive law in a way which produced the consequence that, while the jurisdiction and the right to invoke it were unaffected, the particular ground for the grant of injunctive or other relief was removed.

1. R v Commonwealth Rent Controller (1947) 75 CLR 361 at 369 R v Murray; Ex parte Proctor (1949) 77 CLR 387 at 394, 399-400; R v Drake-Brockman; Ex parte Northern Colliery Proprietors' Association [1946] ALR 106 at 110

At the cost of some repetition, the effect of the foregoing for the purposes of the present case can be stated in summary form as follows. The jurisdiction conferred upon the Court by s 75(v) includes jurisdiction to hear and determine "all matters" in which an injunction is sought, by a relevantly affected plaintiff, to restrain an officer of the Commonwealth from engaging in unlawful or unauthorised conduct or from acting on the basis that an invalid decision is valid and enforceable. An enactment of the Parliament will be inconsistent with s 75(v) and invalid to the extent that it purports to withdraw or diminish that jurisdiction of the Court. An enactment will purport to diminish that jurisdiction and be ultra vires by reason of inconsistency with s 75(v) if, and to the extent that, it purports to preclude the Court in such a matter from determining whether the relevant conduct or decision is in fact unlawful, unauthorised or invalid. On the other hand, such an enactment will not purport to diminish that jurisdiction and will not be inconsistent with s 75(v) by reason only of the fact that it alters the substantive or procedural law to be applied by the Court in the exercise of the jurisdiction.

The proceedings in the Federal Court in the present case were instituted by Richard Walter Pty Ltd (the taxpayer) as applicant against the Deputy Commissioner of Taxation as respondent. In them, the taxpayer alleges that certain assessments and amended assessments of income tax (the assessments) purportedly made by the Deputy Commissioner are void and seeks (among other relief) an injunction restraining the Deputy Commissioner from seeking to enforce the assessments.

The making of an assessment under the Income Tax Assessment Act (the Act) of the amount of tax which a taxpayer is liable to pay has, upon service of the notice of assessment [92] , serious adverse consequences from the point of view of the particular taxpayer. In particular, and notwithstanding the institution of an appeal pursuant to the review and appeal procedures which the Act expressly recognises [93] , the amount of tax assessed becomes payable at the expiry of the time for payment [94] . If an appeal is brought against the assessment pursuant to those procedures, the particular taxpayer bears the onus of showing that he or she is not liable to pay the tax assessed [95] . Prima facie, and subject to the effect of any valid legislative provisions, a person who is served by the Commissioner or a Deputy Commissioner with notice of an assessment which is in fact invalid possesses standing to institute proceedings in a court of competent jurisdiction for a declaration that the assessment is void and an injunction restraining the Commissioner from seeking to enforce it or otherwise acting on the basis that it is a void assessment. Such proceedings against the Commissioner (or, where appropriate, a Deputy Commissioner) clearly constitute, for the purposes of s 75(v) of the Constitution, a matter "[i]n which an injunction is sought against an officer of the Commonwealth".

1. cf Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 251-252 2. See, eg, s 177(1): "proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment." 3. See the Act, s 204(1). 4. Taxation Administration Act 1953 Cth, s 14ZZO for assessment notified after 1 March 1992; otherwise s 190 of the Act.

It follows that the proceedings in the present case could have been instituted by the taxpayer in the original jurisdiction conferred upon this Court by s 75(v) of the Constitution. In fact, as has been mentioned, they were instituted in the Federal Court. There, the respondent Deputy Commissioner of Taxation sought to foreclose the question of the validity of the allegedly void assessments by the production of copies of notices of assessment and amended assessment certified in accordance with s 177(1) of the Act. While this Court's jurisdiction under s 75(v) has not been invoked by the taxpayer, it is, for reasons which will become apparent, convenient to approach the question of the applicability and effect of s 177(1) in the proceedings in the Federal Court through a consideration of what the effect of s 177(1) would have been if the proceedings instituted by the taxpayer in the Federal Court had in fact been brought in the original jurisdiction of this Court.

Section 177(1) is plainly intended to extend to proceedings in all courts, including proceedings in the original jurisdiction of this Court. It reads:

The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct. As its words make plain, s 177(1) operates only if and when an original notice or a certified copy of a notice of assessment is actually produced. Even when it operates, the sub-section does not impart validity to an assessment which is otherwise invalid. It simply forecloses the issues of validity and (where applicable) correctness of amount and particulars by making production of the relevant document "conclusive evidence" in relation to those matters. Thus, the fact that a notice of assessment had been produced as conclusive evidence of due making and correctness in one set of proceedings would not of itself establish validity or correctness for the purposes of a different set of proceedings in which no notice of assessment or other document under the hand of the Commissioner or a Deputy Commissioner was produced. Indeed, the second limb of s 177(1) makes that quite clear by excluding the operation of the production of an original or copy notice of assessment as "conclusive evidence" of correctness from appeal or review proceedings under Pt IVC of the Taxation Administration Act. If an impugned notice of assessment were in fact invalid, s 177(1) would, if applicable in proceedings under s 75(v), preclude the Court from properly exercising its constitutional jurisdiction to hear and determine the issue of validity.

It follows from what has been said above that s 177(1) is, in its purported application to proceedings in this Court for an injunction restraining the Commissioner or a Second or Deputy Commissioner from acting on the basis that an invalid assessment is valid and enforceable, inconsistent with s 75(v) to the extent that it purports to preclude the Court from determining whether an allegedly invalid assessment is in fact invalid. To that extent, the section cannot be seen as merely prescribing procedural rules to be observed by the Court in the exercise of its jurisdiction under s 75(v). To the contrary, it impermissibly purports to diminish that jurisdiction by precluding the Court from properly determining the very issue whose determination lies at the heart of its exercise.

Section 177(1) must, of course, be read in context. In particular, it must be read with s 175 which provides that the "validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with". No question of inconsistency between s 175 and s 75(v) of the Constitution arises since s 175's operation, in so far as the jurisdiction conferred by s 75(v) is concerned, is as part of the substantive law to be applied by the Court in the actual exercise of that jurisdiction. Section 175 does not preclude the proper judicial determination by the Court of the question whether an assessment is or is not in fact invalid. It simply ensures, in the case of an "assessment" to which it is applicable [96] , that the correct answer to that question is in the affirmative. If the effect of s 175 were to provide that a valid and enforceable assessment is in fact made whenever the Commissioner, a Second Commissioner or a Deputy Commissioner issues a notice or certificate that it has been made, there would be something to be said for the view that s 177(1) does no more than reflect the substantive provision of s 175. Section 175 does not, however, have such a wide operation.

1. ie an assessment in respect of which "any of the provisions of [the] Act have not been complied with".

Section 175's operation is to preserve the validity of "any assessment" notwithstanding a failure to comply with "any of the provisions of [the] Act". The section preserves validity only if there be an "assessment" in respect of which it can operate. Section 6 of the Act relevantly defines "assessment" as meaning "the ascertainment of the amount of taxable income and of the tax payable on that taxable income". In the context of the Act as a whole, the process to which the word "assessment" in s 175 must be understood as referring is the ascertainment by the Commissioner or an authorised officer [97] of "the amount of the taxable income of [a particular] taxpayer, and of the tax payable thereon" [98] .

1. See Taxation Administration Act, s 8. 2. See the Act, s 166 and note that, in some cases, the Act itself will produce a deemed assessment.

What then are the minimum requirements which must be satisfied before there will be an "assessment" whose validity is protected by s 175 notwithstanding a failure to comply with "any of the provisions of [the] Act"? Assistance and guidance in relation to the answer to that question can be obtained from the decisions of this Court dealing with the construction of provisions in Conciliation and Arbitration legislation immunising an "award" from collateral attack on grounds other than excess of legislative power. The "classical" [99] statement of the prima facie approach to the construction of such a clause is that contained in the judgment of Dixon J in R v Hickman; Ex parte Fox and Clinton [100] which has been quoted with approval and applied in many subsequent cases [101] :

Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body. That approach should, in our view, be applied to the construction of s 175 of the Act. The result of its application is that s 175's protection from invalidity is applicable only if the purported "assessment" (i) is "a bona fide attempt" by the Commissioner or other authorised officer to exercise powers conferred by the Act [102] , (ii) "relates to the subject matter" of the Act and (iii) "is reasonably capable of reference to" those powers. If a purported "assessment" does not satisfy those three requirements, the protection of s 175 will be unavailable and the purported "assessment" will be invalid. That being so, s 177(1) of the Act is inconsistent with s 75(v) of the Constitution to the extent that it purports to make a certificate of the Commissioner or a Second or Deputy Commissioner conclusive evidence of the due making of an assessment in proceedings in the original jurisdiction of this Court under s 75(v) in which it is alleged that the assessment does not satisfy one or more of those requirements. In what follows, references to an assessment (or a determination) not being "bona fide" should be understood as encompassing not only failure to satisfy the first requirement but also a failure to satisfy either the second or third. 1. See Coal Miners' Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia Ltd (1960) 104 CLR 437 at 455, per Menzies J. 2. (1945) 70 CLR 598 at 615. 3. See, eg, R v Central Sugar Cane Prices Board; Ex parte Maryborough Sugar Factory Ltd (1959) 101 CLR 246 at 255 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union (Australian Section) (1967) 118 CLR 219 at 252-253 R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 286 4. As the Chief Justice points out in his judgment in this case, a majority of the Court in O'Toole v Charles David Pty Ltd did not accept the view that the requirement of "bona fide attempt" related only to what was apparent on the face of the record and did not extend to an examination of subjective motivation.

On the other hand, where the minimum requirements for there to be an "assessment" for the purposes of s 175 are satisfied, that section operates to ensure validity notwithstanding any failure to comply with any of the provisions of the Act. When that is so, other provisions of the Act operate upon the valid assessment (after service) to create liability in the taxpayer [103] . To the extent that s 177(1) makes the production of the original or a certified copy of a notice of assessment conclusive evidence of due making and (except in review or appeal proceedings) correctness in a case where it is not alleged that the assessment is not bona fide, the sub-section does no more than reflect the substantive provisions of the Act.

Section 39B(1) of the Judiciary Act was introduced in 1983 [104] . It is qualified by the provisions of s 39B(2) in respects which are irrelevant for present purposes. Subject to that qualification, the only variation between the words describing the jurisdiction which s 39B(1) vests in the Federal Court and the words of s 75(v) of the Constitution describing the jurisdiction which that sub-section vests in this Court would seem to be immaterial: the substitution in s 39B(1) of the words "with respect to any matter" for the words "[i]n all matters" in s 75(v) and the addition in s 39B(1) of the words "or officers" after the word "officer" in s 75(v). Prima facie, the Parliament must, in otherwise adopting the exact words of s 75(v), be taken to have intended that the jurisdiction described in s 39B(1) would correspond with the jurisdiction conferred on this Court by s 75(v). That means that, as a matter of prima facie construction, the words of s 39B(1) should be construed as conferring upon the Federal Court, in a case such as the present where an injunction is sought to restrain an officer of the Commonwealth from acting on the basis that an allegedly invalid decision is valid, jurisdiction to determine whether the impugned decision is or is not in fact invalid. Accordingly, on that prima facie construction of the words of s 39B(1), there exists between that sub-section and s 177(1) of the Act a similar inconsistency to that which exists between s 177(1) and s 75(v) of the Constitution, that is to say, inconsistency to the extent that s 177(1) would preclude the proper judicial determination of a challenge to the validity of an assessment on the ground that it is not bona fide. Section 39B(1) does not, however, enjoy s 75(v)'s status as a provision of the Constitution. The prima facie inconsistency between it and s 177(1) is an inconsistency between two different enactments of the same legislature.

1. See Statute Law (Miscellaneous Provisions) Act (No 2) 1983 Cth, s 3 and Sch 1..

It is possible to argue that, in enacting s 39B of the Judiciary Act, the Parliament would not have intended to modify the Act's carefully constructed legislative scheme under which a challenge to an assessment is confined to specifically designed review and appeal procedures and, even in those procedures, to questions of substantive liability as distinct from the intrinsic validity of the assessment as an assessment [105] . That argument is, however, without real persuasive force once it is appreciated that the prima facie inconsistency between s 39B(1) and s 177(1) merely reflects that which already existed between s 177(1) and s 75(v) of the Constitution and that s 39B(1), if given its full prima facie effect, does no more than confine s 177(1)'s operation in certain kinds of matters in the Federal Court in the same way as it is confined in the same kinds of matters in this Court. In that context, there is no real basis for attributing to the Parliament an intention that the words of s 39B(1) of the Judiciary Act should be given a narrower construction than the corresponding words of s 75(v) of the Constitution. To the contrary, it seems to us to be most unlikely that the Parliament would have intended that s 177(1) of the Act should have a wider application in proceedings in the Federal Court than it has in proceedings in this Court with the consequence that a taxpayer who wishes to challenge the validity of an assessment on the ground that it was not a bona fide exercise of relevant powers would be effectively compelled to invoke the jurisdiction of this Court rather than the more appropriate jurisdiction of the Federal Court.

1. cf Perpetual Executors & Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1 at 29

It follows that the prima facie inconsistency between s 39B(1) of the Judiciary Act and s 177(1) of the Act must be resolved, in accordance with the ordinary rules of construction of statutes [106] , in favour of the subsequent provision, that is to say, in favour of s 39B(1). The effect of that is that s 39B(1) overrides or pro tanto amends s 177(1) to the extent that s 177(1) would make a certificate of the Commissioner or a Second or Deputy Commissioner conclusive evidence of the due making of an assessment in proceedings in the Federal Court under s 39B(1) in which the applicant's case is that the assessment is invalid on the ground that it is not bona fide.

As has been seen, s 177(1) of the Act is inconsistent with s 75(v) of the Constitution only to the extent that it purportedly precludes the Court from determining, in the exercise of the original jurisdiction conferred by that sub-section, a claim that an assessment is invalid on the ground that it is not bona fide. Section 177(1) is also inconsistent with any other provision of the Constitution [107] directly conferring original jurisdiction upon the Court to the extent that it would purportedly preclude the proper judicial determination of such a claim in circumstances where the determination of the claim was a necessary step in the exercise of that jurisdiction. That inconsistency does not, however, give rise to total invalidity. Clearly, s 177(1) can be read down, in accordance with s 15A of the Acts Interpretation Act 1901 Cth, to avoid the excess of legislative power. The appropriate method of reading the sub-section down is, in our view, to read it as simply inapplicable in relation to the issue of the validity of an assessment which is alleged, in such proceedings in this Court, to be not "bona fide" in the sense explained above. Similarly, s 177(1) is overridden and pro tanto repealed by the provision of s 39B(1) of the Judiciary Act only to the extent that it would otherwise be applicable in relation to that issue in proceedings in the Federal Court under that provision.

The assessments and amended assessments which the taxpayer attacks in the proceedings in the Federal Court were based upon determinations purportedly made by the respondent Deputy Commissioner pursuant to s 177F of the Act. The taxpayer claims that those determinations and the assessments or amended assessments based upon them ("the relevant determinations and assessments") are not determinations or assessments for the purposes of the Act and are all void. It follows from what has been written above that s 177(1) of the Act has been overridden and pro tanto repealed by s 39B(1) of the Judiciary Act to the extent that it would preclude a consideration by the Federal Court of the question whether the relevant determinations and assessments are in fact void.

Strictly speaking, it is unnecessary to determine the answer to that question for the purposes of the proceedings before this Court. However, the case stated indicates, and it was common ground in argument, that the only basis of the claim that the relevant determinations and assessments are not determinations or assessments for the purposes of the Act and are void is the alleged fact that "the income the subject of the Morlea determinations and the Morlea assessments is the same income as the income the subject of the Richard Walter determinations and the Richard Walter assessments". Since the matter was examined in argument and is dealt with in other judgments, it is appropriate that we indicate that we consider that the taxpayer's challenge to the relevant determinations and assessments must fail for the reason that that alleged fact would not, if established, of itself suffice to establish that the relevant determinations or assessments are not determinations or assessments for the purposes of the Act or that they are void. In that regard, we are in general agreement with the reasons given by Dawson J for concluding that the provisions of the Act permit the Commissioner to make s 177F determinations and assessments based upon them on an alternative basis. That is not, of course, to suggest that the courts would be powerless to prevent their processes being abused to obtain double recovery by enforcement of an alternative assessment.

The question reserved for the consideration of this Full Court reads:

Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth, by reason of the operation of s 177 of the Income Tax Assessment Act 1936 Cth? We would answer it: No, but the challenge must fail or the review be refused. Dawson J.

The question of law reserved for the consideration of the Court in this case arises out of the service by the Deputy Commissioner of Taxation (the Commissioner) of amended notices of assessment in respect of specified years upon Richard Walter Pty Ltd and Morlea Professional Services Pty Ltd. The Commissioner assessed each of those taxpayers to tax upon the same income, that is to say, the same amounts (save for an immaterial sum) from the same source for the same periods of time. Both taxpayers objected to their assessments. The objection by Richard Walter Pty Ltd was disallowed and an appeal to the Federal Court against the disallowance has not yet been heard. According to the stated case, there has been no decision upon the objection by Morlea Professional Services Pty Ltd.

In the meantime the Commissioner commenced proceedings against Richard Walter Pty Ltd, but not against Morlea Professional Services Pty Ltd, to recover the tax for which it was said to be liable under its assessments. Those proceedings were commenced in the Supreme Court of New South Wales but subsequently removed (save for one aspect) to the Federal Court.

Richard Walter Pty Ltd for its part invoked the jurisdiction conferred on the Federal Court by s 39B of the Judiciary Act 1903 Cth by commencing proceedings in that court against the Commissioner to restrain him from continuing or prosecuting the recovery proceedings. Section 39B confers (with certain immaterial exceptions) original jurisdiction on the Federal Court with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.

The Commissioner sought by notice of motion to have the s 39B proceedings dismissed on the ground that the Federal Court lacked jurisdiction by reason of the effect given by s 177 of the Income Tax Assessment Act 1936 Cth (the Act) to the production of the relevant notices of assessment certified under the hand of the Commissioner. Sub-section (1) of s 177 provides:

The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct. The notice of motion having been removed into this Court, the Chief Justice stated a case and reserved the following question for the consideration of the Full Court: Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth, by reason of the operation of s 177 of the Income Tax Assessment Act 1936 Cth?

The taxpayer, Richard Walter Pty Ltd, contends that the question should be answered in the negative. It does so upon the basis that the assessments which the Commissioner purported to make against it are not valid assessments because Morlea Professional Services Pty Ltd was assessed to tax in respect of the same amount. Thus, the argument runs, the notices upon which the Commissioner seeks to rely are not notices of assessment within the meaning of s 177(1) and the sub-section has no application. Alternatively, the taxpayer says that, if the relevant notices are notices of assessment within the meaning of s 177(1), the sub-section is invalid to the extent that it purports to preclude the Court from determining the validity of the assessments. This alternative argument is based upon the premise that, subject to the specified exceptions, the jurisdiction conferred upon the Federal Court by s 39B of the Judiciary Act is co-extensive with that conferred upon the High Court by s 75(v) of the Constitution, namely, jurisdiction in all matters "[i]n which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth".

Although the jurisdiction of the Federal Court is conferred pursuant to the legislative power contained in s 77(i) of the Constitution - the power to define the jurisdiction of any federal court other than the High Court - it is, unlike the relevant jurisdiction of the High Court, conferred by statute and admits of statutory exceptions or limitations. However, it is convenient for present purposes to put to one side the possibility that s 177(1) of the Act intended to qualify the jurisdiction conferred by s 39B of the Judiciary Act, and to proceed upon the footing that the jurisdiction was intended to be no less than that conferred upon the High Court by s 75(v) of the Constitution.

The whole basis upon which the taxpayer seeks to challenge the assessments against it is that Morlea Professional Services Pty Ltd is assessed to tax at the same time in respect of the same income. That is not contested, and it is upon that basis that the taxpayer says that the assessments neither constitute a bona fide assessment of the amount of its taxable income nor are definitive, being at best tentative assessments. It is also upon that basis that the taxpayer says that the assessments constitute an abuse of the power of the Commissioner under s 166 of the Act to make an assessment of the amount of the taxable income of the taxpayer and of the tax payable thereon.

However, an immediate and insuperable obstacle is encountered by the taxpayer in the form of authority contrary to its basic propositions. In Richardson v Federal Commissioner of Taxation [108] the taxpayer's assessment was amended to include income which had been returned as part of the income of a nominee who had been assessed to tax upon that income. Whilst it was accepted that "two persons cannot be severally liable each in his own right to include in his individual assessment for the same year the same income" [109] , this Court saw no difficulty in the co-existence of assessments to tax of different persons in respect of the same income. Thus Dixon J observed [110] :

No doubt, when and if the Commissioner arrived at the clear conclusion that to ensure the completeness and accuracy of the nominee's assessments the exclusion of the income he returned was requisite, it became his duty to exercise his power under s 37 [the power to alter assessments and refund any tax overpaid]. But it was not unnatural that he should delay relieving one of two persons whom he considered culpable until the liability of the other was established. The questions which may arise out of such situations are no doubt attended with difficulty It is enough to say that there is nothing in the character of the power given in s 37 or in the nature of the power of assessment which requires the formal alteration of the nominee's assessments before the alteration of the assessment of the taxpayer. It is true that in Richardson the circumstances were not the same as in the present case, but there is nothing in those circumstances which would limit the generality of the proposition accepted by the Court that more than one taxpayer may be assessed to tax upon the same income. Indeed, in Deputy Commissioner of Taxation v Moorebank Pty Ltd [111] this Court thought that a "case in which the Commissioner issues a number of assessments on an alternative basis to different taxpayers in respect of the same income provides an obvious example" of a situation in which it would be "oppressive for the Commissioner to seek to enforce payment of the full amount due under a notice of assessment or by way of additional tax before the final resolution of a genuine dispute about the correctness of the assessment" [112] . Clearly the authority of Richardson has been accepted for a considerable time during which frequent amendments have been made to the Act. It would be wrong now to depart from that decision. 1. (1932) 48 CLR 192. 2. Richardson (1932) 48 CLR 192 at 205 3. Richardson (1932) 48 CLR 192 at 207 4. (1988) 165 CLR 55. 5. Moorebank (1988) 165 CLR 55 at 67

The manner in which the taxpayer seeks to establish that the assessments in question are tentative only and constitute an abuse of power on the part of the Commissioner is by placing reliance upon the notices of assessment themselves, and presumably the notices of assessment served upon Morlea Professional Services Pty Ltd, to show that there are assessments against different persons in respect of the same income. But even assuming that the notices of assessment against Morlea Professional Services Pty Ltd are admissible in evidence notwithstanding the tender by the Commissioner of the notices of assessment against Richard Walter Pty Ltd, the most that could be drawn from the evidence would be that two persons were assessed to tax in respect of the same income. Applying the decision in Richardson , that would not establish that the assessments were either tentative or an abuse of power. There being nothing in, or in relation to, the notices of assessment against the taxpayer to suggest that they are not notices of assessment within the meaning of the Act and of s 177(1), that sub-section would apply. Because the proceedings in the Federal Court to restrain the Commissioner from recovering the tax are not proceedings upon a review or appeal relating to the assessments, the production of the notices of assessment by the Commissioner would be conclusive evidence, not only of the due making of the assessments, but also that the amounts and all the particulars of the assessments are correct.

In F J Bloemen Pty Ltd v Federal Commissioner of Taxation [113] the taxpayer sought to impugn assessments against it upon grounds similar to those raised in the present case, namely, that they were tentative only and constituted an abuse of power. Mason and Wilson JJ referred to s 175 of the Act which provides:

The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. Of that provision they said [114] : This section does not relieve the Commissioner from the necessity of performing his duty to make an assessment. The section protects the validity of an assessment, once made, from the consequences which might otherwise flow from the Commissioner's failure to comply with any provisions of the Act. But it does not, and cannot, create a valid assessment where no assessment has been made at all. The section requires an actual assessment as a condition of its operation. And of s 177(1), which is designed to give evidentiary effect to s 175, Mason and Wilson JJ said [115] : There is no ground for saying that assessment in s 177(1) is used otherwise than in its defined sense. The taxpayer's contention in Bloemen was, however, rejected because the notices of assessment which were produced lent no support to it; on their face they constituted notices of assessment within the meaning of s 177(1) so that the sub-section applied to make them conclusive evidence that the assessments were duly made and that the amounts and all the particulars were correct. 1. (1981) 147 CLR 360. 2. F J Bloemen (1981) 147 CLR 360 at 371. 3. F J Bloemen (1981) 147 CLR 360 at 372.

The Court in Bloemen did not resile from the decision in Federal Commissioner of Taxation v S Hoffnung & Co Ltd [116] , which held that a tentative assessment was no assessment at all, but as Mason and Wilson JJ pointed out [117] the document in Hoffnung , which was said to be a notice of an assessment, "bore evidence, if not on its face then in the supporting documentation, which denied it that character. Visual inspection alone was sufficient to compel the conclusion that the document was not a notice of assessment for the purpose of the relevant Act." Mason and Wilson JJ went on to say [118] :

It is one thing to say that a notice of a tentative assessment is not touched by ss 175 and 177. That is clearly correct. But it is difficult to understand how it can be said, consistently with those sections, that a notice which appears to be a final notice of assessment is nevertheless not what it appears to be because there was no assessment at all. 1. (1928) 42 CLR 39. 2. F J Bloemen (1981) 147 CLR 360 at 374. 3. F J Bloemen (1981) 147 CLR 360 at 377.

The position is, therefore, that whilst s 177(1) has no application in relation to an assessment which is tentative or which constitutes an abuse of power, where the production of a notice of assessment does not reveal any such defect, it conclusively establishes the validity of the assessment except on a review or appeal. That is to say, it conclusively establishes, to the contrary of any contention by the taxpayer, that the assessment is neither tentative nor an abuse of power. This forms the basis for the taxpayer's alternative argument that s 177(1) purports to cut down the jurisdiction of the Federal Court - assuming it to be a jurisdiction which is co-extensive with that conferred on the High Court by s 75(v) of the Constitution - with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth.

However, s 177(1), at least in form, operates upon the evidence in the particular case and does not purport to restrict jurisdiction. Nor, I think, does it do so in substance. Section 75(v) of the Constitution defines jurisdiction in terms of remedies rather than subject matter and it has long been recognised that Parliament may deal with a subject matter within its legislative competence in such a way as to render the kind of relief referred to in s 75(v) inappropriate in the circumstances without affecting the jurisdiction of the Court to grant such relief where appropriate. As Isaacs and Rich JJ pointed out in Waterside Workers' Federation of Australia v Gilchrist, Watt & Sanderson Ltd [119] , the jurisdiction under s 75(v) exists, "but it needs a proper case for its exercise" [120] . There is no reason why the legislature should not render prerogative relief inappropriate by making a particular kind of evidence conclusive proof of specified matters, provided that in doing so it does not deny the jurisdiction for which s 75(v) provides. No doubt there are cases in which no line can be drawn between the facilitation of proof of a particular matter and the denial of a remedy. That might occur where the conclusiveness of the evidence effectively determined the issue between the parties for all purposes. But it is, I think, clear enough that s 177(1) only operates to create a situation in which, upon the evidence constituted by a notice of assessment, liability in recovery proceedings is conclusively established, rather than to deny the jurisdiction to grant the remedies referred to in s 75(v).

1. (1924) 34 CLR 482 at 526. 2. See also Ince Bros and Cambridge Manufacturing Co Pty Ltd v Federated Clothing and Allied Trades Union (1924) 34 CLR 457 at 464

As the Court recognised in Bloemen [121] , if the Commissioner of Taxation in endeavouring to recover tax were to elect to prove his case by giving evidence otherwise than by reliance upon s 177(1), there is no reason why the taxpayer would not be free to contest the validity of the assessment and be given such relief as was appropriate. That may be more theoretical than real, because there does not appear to be any reason why the Commissioner would not rely upon s 177(1) when he was able to do so.

But the tentative assessment in Hoffnung was not theoretical. Notice of that assessment did not attract the operation of s 177(1) so as to provide conclusive evidence of the validity of the assessment because the tentative nature of the assessment appeared on the face of the proceedings. It was not a notice of assessment within the meaning of the Act. There was nothing in s 177(1) which would have precluded a claim for prerogative relief in that case, had that relief been otherwise appropriate.

Nor was the situation theoretical in R v Commissioner of Taxation (WA); Ex parte Briggs [122] where prerogative relief was sought against the Commissioner. In that case, the Commissioner conceded for the purpose of the proceedings that in issuing the relevant notices of assessment he had made no attempt to ascertain or evaluate the taxpayer's taxable income. In view of that concession, the Full Court of the Federal Court held that there was no assessment within the meaning of the Act so that s 177(1) did not operate to provide conclusive evidence of validity. The evidence was, therefore, not such as to preclude a claim for prerogative relief, if that relief was otherwise appropriate. Moreover, in proceedings where no notice of assessment has been issued, but a taxpayer seeks to contest its tax liability by way of a claim for prerogative relief or an injunction, s 177(1) can have no direct operation [123] .

1. (1986) 12 FCR 301. 2. See Oil Basins Ltd v The Commonwealth (1993) 178 CLR 643

Section 75(iii) provides that the High Court shall have jurisdiction in all matters in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party. Section 75(v) was a measure designed to ensure that appropriate relief was available against Commonwealth officers and was thought to be necessary to overcome an inadequacy which was perceived to exist in the United States Constitution [124] . Whether s 75(v) was really necessary, having regard to s 75(iii), is now, perhaps, an academic question [125] . But another question which may not have been finally settled is whether s 75 is a source of substantive liability or whether it affords procedural rights only. The more recent tendency is to regard s 75, and in particular s 75(iii), as being procedural in character [126] . Be that as it may, it is to my mind perfectly clear that neither s 75(iii) nor s 75(v) can have an operation which affects the capacity of the Commonwealth to define its obligations and those of others with respect to the matters over which it has legislative power. In particular, it has power under s 51(ii) of the Constitution to specify those circumstances which give rise to liability for tax.

1. See the Tramways Case [No 1] (1914) 18 CLR 54 at 82. 2. See Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 363-367 3. See, eg, Werrin v The Commonwealth (1938) 59 CLR 150 at 165-168 Maguire v Simpson (1977) 139 CLR 362 at 404-405cf The Commonwealth v New South Wales (1923) 32 CLR 200

The protection against an unconstitutional impost lies in the nature of a tax rather than in the availability of a particular remedy to contest it. An impost will not satisfy the description of a tax if it is impossible to differentiate it from an arbitrary exaction. Such a differentiation can only be made by reference to the criteria by which liability to pay the tax is imposed. Moreover, a tax may not be made incontestable, for to do so would place beyond examination the constitutional limits upon power [127] . However, to make a notice of assessment conclusive evidence of liability in recovery proceedings is not, having regard to the existence of review and appeal procedures, to render the tax either arbitrary or incontestable. The position would plainly be different if a notice of assessment were conclusive for all purposes. To the extent that s 177(1) may be regarded as having a substantive operation extending beyond that of a mere evidentiary provision, it must be to change the nature of the tax imposed from that of an impost giving rise to a liability which is contestable generally to that of an impost the liability for which is contestable only upon a review or by way of appeal. The unavailability of any remedy under s 75(v) to impede the recovery process arises from the nature of the tax rather than the restriction of jurisdiction to grant those remedies. And it is clear that it is within legislative power to define the nature of the liability imposed by a tax, provided that the liability is not arbitrary or incontestable.

1. See MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639, 640.

In Deputy Federal Commissioner of Taxation v Brown [128] , Dixon CJ described the process in these terms:

The general machinery for assessment is only too familiar. It is unnecessary to refer to it except for the purpose of noting the following points, viz: - (1) that tax is not due and payable until assessed; (2) that it then becomes a debt to the Crown payable on the date specified in the notice of assessment or, if there be none, on the thirtieth day after service of the notice; (3) that the assessment of liability is conclusive except upon the processes of review and appeal.

Although there is no judicial decision to that effect, it has, I think, been generally assumed that under the Constitution liability for tax cannot be imposed upon the subject without leaving open to him some judicial process by which he may show that in truth he was not taxable or not taxable in the sum assessed, that is to say that an administrative assessment could not be made absolutely conclusive upon him if no recourse to the judicial power were allowed.

The general assumption referred to by Dixon CJ has, of course, now received judicial recognition [129] . 1. (1958) 100 CLR 32 at 40. 2. See MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 639 Deputy Federal Commissioner of Taxation v Truhold Benefit Pty Ltd (1985) 158 CLR 678 at 684 Air Caledonie International v The Commonwealth (1988) 165 CLR 462 at 467

Reliance was placed upon the decision of this Court in R v Hickman; Ex parte Fox and Clinton [130] . In that case a formula was devised to reconcile the prima facie inconsistency between a statutory provision which limits the powers of a decision maker and another provision - a privative clause - which contemplates that any decision will operate free from any restriction. The formula, which is a compromise, prevents a decision from being called in question provided that it is the result of a bona fide attempt to exercise the power to make it, it relates to the subject matter of the legislation and it does not on its face go beyond the power [131] .

1. (1945) 70 CLR 598. 2. See also R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 O'Toole v Charles David Pty Ltd (1991) 171 CLR 232

However, I am unable to discover in the present case anything which would warrant the application of the Hickman formula, either directly or by way of analogy. The requirements of the Act which govern the making of an assessment do not produce any inconsistency with the provision that a notice of assessment constitutes conclusive evidence in recovery proceedings. That is because s 175 provides that the validity of any assessment shall not be affected by reason of the fact that any of the provisions of the Act have not been complied with. The effect of s 175 is that the requirements of the Act relating to the making of an assessment are directory only and, whilst imposing obligations upon the Commissioner, their non-observance has no consequences for the validity of the assessment. Of course, upon a review or in an appeal the non-observance of those requirements may indicate that the assessment ought not to stand, but that is a different matter [132] . Having regard to s 175, there is no inconsistency, apparent or otherwise, between the requirements of the Act relating to the making of an assessment and s 177(1), and no reconciliation is called for. Indeed, as I have said, s 177(1) does no more than give evidentiary effect to s 175.

1. See Taxation Administration Act 1953 Cth, ss 14zzk, 14zzo.

Even if the taxpayer in this case were not precluded by s 177(1) from attacking the assessments in the recovery proceedings, it could not succeed, as it seeks to do, upon the basis that two persons were assessed to tax in respect of the same income. In any event, s 177(1) provides that the relevant notices of assessment are conclusive evidence of the validity of the assessments and, in so doing, does not invalidly restrict the jurisdiction conferred by s 75(v) of the Constitution. For these reasons, I would answer the question reserved as follows:

The production of the Notices of Assessment wholly precludes challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act. Toohey J.

This matter comes before the Court by way of a case stated and a question reserved for the consideration of the Court, following the removal of a proceeding on notice of motion from the Federal Court of Australia.

Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth, by reason of the operation of s 177 of the Income Tax Assessment Act 1936 Cth?

The "Richard Walter assessments" referred to in the question reserved are assessments raised by the applicant (the Commissioner) against the respondent (the taxpayer) in respect of the years ended 30 June 1981, 1982, 1983 and 1984. The assessments for the first two years are amended assessments but nothing was said to turn on that. In each case the taxable income of the taxpayer was increased by a very considerable amount from that returned. This came about because of the inclusion by the Commissioner, in the assessable income of the taxpayer for each year, of the net income of Morlea Professional Services Pty Ltd (Morlea). In each case that net income had been returned by Morlea as agent for the Morlea Partnership. But, relying upon "sham, section 260 and/or Part IVA" of the Income Tax Assessment Act 1936 Cth (the Act), the Commissioner included the income in the assessable income of the taxpayer for the years in question. The taxpayer objected to each of the assessments; the objections were disallowed.

In the case of each assessment the Commissioner made determinations under s 177F(1) and (2) of the Act. Section 177F empowers the Commissioner, where a tax benefit has been obtained by a taxpayer in connection with a scheme to reduce income tax to which Pt IVA applies, to include in the assessable income of the taxpayer the amount of the benefit. The Commissioner made like determinations in the case of Morlea and included the income of the Morlea Partnership in the assessable income of that company for the four years in question. Morlea objected to each of the assessments; the objections were disallowed.

There is a question as to whether an adjustment sheet may be treated as part of a notice of assessment. This will be dealt with later. For the moment it is enough to record that in the case of each tax year the Commissioner issued an adjustment sheet or amended adjustment sheet which explained the amount added to the taxable income of the taxpayer as returned in the following way:

An amount of $ being the net income purportedly derived by Morlea Professional Services Pty Ltd as agent for the Morlea Partnership has now been included in assessable income. The adjustment sheets for Morlea use the same formula.

The Commissioner brought proceedings in the Supreme Court of New South Wales for the recovery of unpaid tax in respect of the assessments raised against the taxpayer. The Commissioner has taken no action against Morlea in respect of the assessments raised against it.

The taxpayer appealed to the Federal Court of Australia against the disallowance of its objections; those appeals have not yet been heard. The taxpayer then brought action in the Federal Court of Australia seeking various declarations, with a view to demonstrating that the assessments raised against it and the determinations made under s 177F are void and of no effect. The Commissioner countered with a notice of motion for orders that the proceedings in the Federal Court be dismissed on the ground that the Federal Court "lacked jurisdiction to grant the relief which Richard Walter sought by reason of the production of notices of assessment certified under the hand of the Deputy Commissioner in accordance with s 177 of the Act" [133] . The notice of motion led to the application for removal of that proceeding into this Court.

1. Strictly speaking, this is the language of the case stated not the motion itself but the paraphrase identifies the issues more clearly.

As the matter was argued, two primary issues emerged. The first concerns the operation of s 177(1) of the Act, which reads:

The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.

The Commissioner contended that s 177(1) precludes any challenge to the steps leading to the making of an assessment and that a taxpayer who wishes to challenge an assessment must do so through the system now to be found in Pt IVC of the Taxation Administration Act 1953 Cth. The taxpayer accepted the generality but not the universality of that proposition and, in particular, argued that the sub-section has no operation where assessments have been raised which include, at the instance of the Commissioner, the same amounts in the assessable income of more than one taxpayer.

The second issue arises from s 39B(1) of the Judiciary Act 1903 Cth which includes in the original jurisdiction of the Federal Court "jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth". The taxpayer argued that even if s 177(1) of the Act had the operation contended for by the Commissioner so far as the Supreme Courts are concerned, the sub-section could not limit the jurisdiction of the Federal Court to inquire into and determine an application for prerogative relief against a Commonwealth officer, the Commissioner being such an officer.

It is convenient to deal first with the operation of s 177(1) of the Act. If the taxpayer's argument in this regard be accepted, the effect of s 39B of the Judiciary Act does not necessarily arise for decision though equally it must be acknowledged that, if s 39B has the effect contended for by the taxpayer, s 177(1) cannot constrain the exercise of jurisdiction by the Federal Court in dealing with the challenge to the assessments.

Section 177(1) has been treated by the Court as an integral part of the tax collection system. The Commissioner relied upon the distinction which the sub-section draws between a taxpayer's substantive liability and the process by which the Commissioner arrives at that liability. The sub-section leaves open to challenge under Pt IVC of the Taxation Administration Act "the amount and all the particulars of the assessment" but "the due making of the assessment" is conclusively determined by production of a notice of assessment in accordance with the terms of the sub-section. Service of a notice of assessment on a taxpayer brings about an ascertainment of the amount of the taxable income and of the amount of the tax payable by the taxpayer [134] . In George v Federal Commissioner of Taxation [135] the Court said:

Obviously the "due making of the assessment" was intended to cover all procedural steps, other than those if any going to substantive liability and so contributing to the excessiveness of the assessment, the thing which is put in contest by an appeal. 1. Batagol v Federal Commissioner of Taxation (1963) 109 CLR 243 at 251-252 Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 at 13 2. (1952) 86 CLR 183 at 207.

As Dixon CJ, McTiernan and Webb JJ observed in McAndrew v Federal Commissioner of Taxation [136] :

It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose. This distinction is well recognised in the decisions of the Court [137] . In F J Bloemen Pty Ltd v Federal Commissioner of Taxation [138] , Mason and Wilson JJ said of a notice of assessment: Its production will put beyond contention the due making of the assessment so that the Court cannot find that no assessment was made or that, if made, it was made for an inadmissible purpose. 1. (1956) 98 CLR 263 at 270. 2. F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 McAndrew ; George ; Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614See also McDonald v Commissioner of Business Franchises (Vict) (1992) 175 CLR 472 3. (1981) 147 CLR 360 at 378.

The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with. But as Mason and Wilson JJ said in Bloemen [139] , s 175 does not create a valid assessment where no assessment has been made at all. It "protects the validity of an assessment, once made, from the consequences which might otherwise flow from the Commissioner's failure to comply with any provisions of the Act". Thus the section plays no significant part in the disposition of the matter before the Court. It is s 177 which attributes to the production of a notice of assessment "conclusive evidence of the due making of the assessment" and governs the exercise of jurisdiction accordingly. 1. (1981) 147 CLR 360 at 371.

It is apparent that the taxpayer is faced with a formidable weight of authority in seeking to go behind the assessments in proceedings other than those provided in Pt IVC of the Taxation Administration Act. The taxpayer did not seek to challenge the correctness of any of the decisions which have been mentioned. It said that, nevertheless, an error in the process of making an assessment - what its counsel described as "an error which goes to jurisdiction" - will deprive the assessment of validity. It said further that the existence of assessments, which include in the taxpayer's assessable income amounts which the Commissioner included as well in the assessable income of Morlea, demonstrates that there has been such an error and a breach of the statutory duty imposed on the Commissioner by s 166 of the Act to make an assessment of the taxable income of the taxpayer. It follows, so the argument ran, that the Federal Court may go behind the assessments raised against it.

As presented, there seem to be two arguments involved here and it is hard to say whether they are discrete or whether they overlap to some extent. One is that in raising assessments against two taxpayers, which include the same amounts of assessable income, there has been an abuse of power on the part of the Commissioner which s 177(1) does not protect because it constitutes an error going to jurisdiction. The other is that failure by the Commissioner to observe a condition precedent to the making of an assessment means that there has been no "due making of the assessment" and that an assessment which includes income the subject of an assessment against another taxpayer evidences a failure on the part of the Commissioner to make the definitive assessment which the Act requires for s 177(1) to operate.

However, the weight of authority is clearly against any general proposition that a court may inquire into the making of an assessment with a view to determining whether there has been an abuse of power. In Dalco [140] I mentioned possible circumstances in which a court might go behind the making of an assessment. But clearly the circumstances, if they exist at all, are most exceptional. Indeed, the admissions made by the Commissioner in R v Commissioner of Taxation (WA); Ex parte Briggs [141] seem designed to postulate the most extreme situation for the purpose of testing the scope and operation of s 177(1). But the circumstances here are not of that exceptional kind.

1. (1990) 168 CLR 614 at 633-634. 2. (1986) 12 FCR 301.

The Court has accepted that the Commissioner may issue assessments on an alternative basis to different taxpayers in respect of the same income though it would be oppressive to proceed to recover against more than one before the final resolution of a genuine dispute about the correctness of the assessment [142] . In refusing special leave to appeal from the decision of the Full Court of the Supreme Court of Queensland in Deputy Commissioner of Taxation v Jonrich Pty Ltd [143] , Gibbs CJ speaking for himself and Wilson and Dawson JJ said [144] :

The Court sees no reason to doubt the correctness of the conclusion that it is not outside the jurisdiction of the Commissioner to issue inconsistent assessments. In Jonrich the Commissioner had assessed Jonrich Pty Ltd as trustee on the net income of a trust estate though the Commissioner had already included the whole income of the trust estate in the assessable income of the beneficiaries. What does not appear from the transcript of the special leave hearing or from the report of the decision of the Full Court is whether the Commissioner initiated the inclusion of the income in the assessable income of the beneficiaries or whether the beneficiaries had themselves included it. 1. Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55 at 67 2. (1986) 70 ALR 357; 17 ATR 880; 86 ATC 4,560. 3. Transcript, 7 November 1986, p 7.

In Richardson v Federal Commissioner of Taxation [145] profits derived from the carrying on of a hotel business were returned as part of the assessable income of a nominee of the appellant. The Commissioner later amended the appellant's assessments to include the profits in the appellant's assessable income without, it appears, amending the assessments already raised against the nominee. On the hearing of the appellant's appeal no question arose as to the validity of his assessments by reason of those raised against the nominee.

It is true that the present case is not one in which a taxpayer included an amount of income in his or her return and the Commissioner assessed another taxpayer as well in respect of that income. Here, following determinations made under s 177F, the Commissioner initiated, in the case of both the taxpayer and Morlea, the inclusion of amounts which neither taxpayer had included in its returns. For that reason, the taxpayer argued, the assessments against it must be regarded as an abuse of power. And, it was said, they cannot be treated as definitive; they are merely tentative.

The existence of other assessments relating to the same amounts of income does not evidence bad faith or improper purpose on the part of the Commissioner. The "assessment" to which s 177(1) refers is the "assessment" defined in s 6, namely, the ascertainment of the amount of taxable income and of the tax payable on that taxable income. It is apparent that the Commissioner intended to embark upon and did embark upon that process. Whether the assessments will in the end survive the appellate process intact is not to the point.

Equally, the existence of the assessments against Morlea does not mean that the assessments against the taxpayer are not definitive. Federal Commissioner of Taxation v S Hoffnung & Co Ltd [146] is clearly distinguishable because in that case the Commissioner, in admissions of fact, acknowledged that the assessment was "tentative" and that a matter relevant to the assessment "remained to be adjusted". In those circumstances it is hardly surprising that the Court held that the assessment did not preclude objections when a complete and final assessment had been made. Isaacs J observed [147] :

If an assessment definitive in character is made, it assumes that, so far as can there be seen, a fixed and certain sum is definitely due, neither more nor less. Whatever implications the Morlea assessments may ultimately prove to have, the assessments raised against the taxpayer answer Isaacs J's description. 1. (1928) 42 CLR 39. 2. S Hoffnung & Co (1928) 42 CLR 39 at 55.

There is nothing in the existence of assessments against the taxpayer and Morlea that deprives s 177(1) of its accepted operation, so far as the taxpayer is concerned. Subject to what follows regarding s 39B of the Judiciary Act, s 177(1) operates according to its terms against the taxpayer.

Before turning to the issue raised by s 39B, something should be said of a matter which arose during the course of argument, namely, whether an adjustment sheet forms part of a notice of assessment. It is the adjustment sheets accompanying the assessments or amended assessments against the taxpayer which disclose the inclusion of the income of the Morlea Partnership in the assessable income of the taxpayer.

There appears to be only one decision of this Court in which the matter has been discussed, and then only briefly. In Bloemen , Murphy J said [148] : "The adjustment sheet was not part of the assessment." The comment was made in relation to an argument that a statement in the adjustment sheet rendered the assessment tentative only, an argument which Murphy J in any event rejected. On the other hand Aickin J said [149] :

In the present case the notice of assessment had attached to it a paper headed "Adjustment Sheet" which has been correctly treated as part of the notice of assessment. 1. Bloemen (1981) 147 CLR 360 at 380 2. Bloemen (1981) 147 CLR 360 at 381

In my respectful view, the approach taken by Murphy J is to be preferred. His Honour cited in support of his statement the judgment of Neasey J in Federal Commissioner of Taxation v Reynolds [150] . In concluding that the statement in the adjustment sheet of reliance upon a particular section of the Act was not part of the assessment [151] , Neasey J had earlier observed [152] :

There is no provision in the Act which requires the Commissioner to send any document in the nature of an adjustment sheet, although it is commonly done, and is done for an important purpose. 1. (1981) 54 FLR 403; 34 ALR 463. 2. Reynolds (1981) 54 FLR 403 at 416-41734 ALR 463 at 476. 3. Reynolds (1981) 54 FLR 403 at 413-41434 ALR 463 at 473.

In Prestige Motors Pty Ltd v Federal Commissioner of Taxation [153] , Hill J inferred from a passage in the joint judgment of Mason and Wilson JJ in Bloemen [154] , which speaks of a notice of assessment bearing evidence "if not on its face then in the supporting documentation", that their Honours also would treat an adjustment sheet which accompanied an assessment as part of the notice of assessment, at least for the purpose of determining whether, on its face, a document was a notice for the purpose of the Act. But that, I suggest, is to read too much into the passage. Their Honours were simply referring to earlier decisions in which supporting documentation was taken into account, apparently without question.

1. (1993) 47 FCR 138 at 145-146. 2. (1981) 147 CLR 360 at 374.

The Commissioner may be ordered to give particulars of the basis of his assessment in proceedings where the assessment is challenged [155] . The Court has left open the question whether particulars might be ordered before the institution of proceedings by a taxpayer and that question does not arise here. An adjustment sheet is an explanatory document. But it is not a notice of assessment; that document in its usual form is self-sufficient in the sense that it identifies the amount of taxable income and of the tax payable thereon.

1. Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214

The conclusion that in the present case the notices of assessment have the evidentiary effect ascribed to such notices by s 177(1) and were not made in bad faith or for an improper purpose and are not tentative is unaffected by consideration of the adjustment sheets. Nevertheless, if an adjustment sheet is not part of the "notice of assessment" to which s 177(1) refers, the operation of s 177(1) is reinforced because the notice itself identifies only the amount of taxable income and the amount of tax payable thereon.

However, the taxpayer's case goes further. It contends that, whatever the implications of s 177(1) for the Supreme Courts, the sub-section cannot affect the jurisdiction invested in the Federal Court by s 39B of the Judiciary Act. In so doing, the taxpayer relies upon the decision of the Full Court of the Federal Court (Morling and French JJ, Pincus J dissenting) in David Jones Finance & Investments Pty Ltd v Federal Commissioner of Taxation [156] . The Commissioner's response is that no distinction can be drawn between the jurisdiction of the Federal Court and that of a Supreme Court in any relevant respect.

Section 75(v) of the Constitution confers on the High Court original jurisdiction in all matters "In which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth". Section 39 of the Judiciary Act invests the several courts of the States with federal jurisdiction in all matters in which the High Court has original jurisdiction or in which original jurisdiction may be conferred upon it, subject to the qualifications mentioned in s 39(2). That investing is done pursuant to s 77(iii) of the Constitution which empowers the Parliament, with respect to any of the matters mentioned in s 75, to make laws "Investing any court of a State with federal jurisdiction". As stated previously, s 39B includes in the original jurisdiction of the Federal Court jurisdiction "with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer or officers of the Commonwealth", with qualifications that are not relevant here. This adopts the language of s 75(v) of the Constitution. Section 39B is enacted pursuant to s 77(i) of the Constitution, which empowers the Parliament to make laws with respect to any of the matters mentioned in s 75, "Defining the jurisdiction of any federal court other than the High Court".

As is apparent from the judgment of Dixon J in Bank of NSW v The Commonwealth [157] , s 75(v) was included by way of caution in order to ensure that officers of the Commonwealth against whom prerogative relief was sought were amenable to the jurisdiction of the High Court. Arguably, that end was achieved by s 75(iii), which confers on the High Court original jurisdiction in all matters "In which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party". That s 75(v) is a source of federal jurisdiction rather than of substantive rights gains support from the judgment of Dixon J in Werrin v The Commonwealth [158] and of Jacobs J in Maguire v Simpson [159] .

1. (1948) 76 CLR 1 at 363. 2. (1938) 59 CLR 150 at 167. 3. (1977) 139 CLR 362 at 404.

Section 39B defines the jurisdiction of the Federal Court in a relevant respect; it does no more. "Characteristically an exercise of jurisdiction is attended by an exercise of power" [160] . However, it is not the distinction between jurisdiction and power with which we are concerned, rather with the exercise of jurisdiction. The jurisdiction of a court is its capacity to inquire into and determine matters of a particular character. Because s 39B confers jurisdiction on the Federal Court to deal with a matter in which mandamus, prohibition or an injunction is sought against an officer of the Commonwealth, it does not follow that the exercise of that jurisdiction may not be affected by other statutory provisions. Indeed the Parliament may repeal or amend s 39B, though the Parliament may not deprive the High Court of its jurisdiction under s 75(v).

1. Re Nolan; Ex parte Young (1991) 172 CLR 460 at 487

The effect of s 177(1) of the Act is not to deprive the Federal Court of the jurisdiction which s 39B of the Judiciary Act confers. Certainly, s 177(1) constrains the jurisdiction of any court to inquire into the making of an assessment but it does so only in the context that a system of objections, determinations, reviews and appeals is provided for. That system is now to be found in Pt IVC of the Taxation Administration Act. In the course of their judgment in Bloemen , Mason and Wilson JJ said [161] :

It does not necessarily follow from what we have said that the Act excludes the general jurisdiction of the Supreme Court. Section 177(1) specifically operates by compelling a court, for example the Supreme Court, in the exercise of its jurisdiction to treat a notice of assessment on its production as conclusive evidence that the assessment has been duly made and thereby foreclosing that issue. In theory s 177 leaves the Supreme Court with jurisdiction to decide whether an assessment has been duly made in a case in which an appropriate document is not produced. Their Honours made that statement in a context in which "the rights of review given to the taxpayer by Pt V are comprehensive" [162] . 1. Bloemen (1981) 147 CLR 360 at 376 2. Bloemen (1981) 147 CLR 360 at 376

These comments have equal application to the relevant jurisdiction of the Federal Court under s 39B, substituting Pt IVC of the Taxation Administration Act for Pt V of the Act as it then stood. And it is not to the point to argue as to the position of the High Court in this regard. Relevantly, the High Court owes its jurisdiction directly to the Constitution; the State courts and the Federal Court owe theirs directly to enactments of the Parliament.

Unless there is a basis for distinguishing the relevant jurisdiction of the State courts and the Federal Court, Bloemen stands directly in the path of the taxpayer because there Mason and Wilson JJ adopted as a "correct statement of the effect of s 177(1)" [163] the conclusion of Taylor J in McAndrew [164] that "s 177(1) was intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any ground". There is no basis for distinguishing the jurisdiction of the courts in this regard.

1. Bloemen (1981) 147 CLR 360 at 375 2. (1956) 98 CLR 263 at 281.

The taxpayer argued that s 177 operated in the same manner as a privative clause, so that the test propounded by Dixon J in R v Hickman; Ex parte Fox and Clinton [165] and adopted in later cases [166] applied. In so doing it relied upon the decision of this Court in O'Toole v Charles David Pty Ltd [167] which held that a privative provision in s 60 of the Conciliation and Arbitration Act 1904 Cth did not protect an award from challenge on the ground that it exceeded the legislative power of the Parliament nor did it preclude the Federal Court from determining any challenge to the validity of an award made by the Conciliation and Arbitration Commission on constitutional grounds.

1. (1945) 70 CLR 598 at 615. 2. See the cases cited in R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418also see O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 3. (1991) 171 CLR 232.

However, the Hickman test operates where it is sought to reconcile an exercise of statutory authority with a provision which protects the determination under challenge, notwithstanding that it may be in excess of power. Section 177(1) does not purport to immunise an assessment from challenge. Its evidentiary effect is expressed in a context which recognises and incorporates the proceedings by way of review and appeal which the Act, and now the Taxation Administration Act, has established. It is only within that context that it gives to a notice of assessment the conclusiveness of which it speaks. Equally, s 175 is only concerned to protect an assessment from challenge by reason of some defect or irregularity in the making of the assessment. It does not operate where the power of the Commissioner to make an assessment is at issue.

Nothing in s 177(1) can be said to deprive the Federal Court of the jurisdiction which s 39B confers on that Court, being a jurisdiction with respect to any matter in which prerogative relief is sought against an officer of the Commonwealth. I cannot agree with the view expressed by the majority in David Jones Finance [168] that the effect of s 177 "is purely jurisdictional". The section requires a court, in the exercise of its jurisdiction, to treat the production of a notice of assessment as conclusive evidence of the due making of the assessment and to deal with the matter before it accordingly. Section 39B defines the jurisdiction of the Court and it is a jurisdiction to be exercised in conformity with other relevant statutory provisions, including s 177(1) of the Act. After all, s 39B was introduced in a statutory context of which s 177(1), as construed in Bloemen less than three years before the enactment of s 39B and at a time when the Federal Court had appellate jurisdiction in income tax cases, formed part. There is much force in the observation of Pincus J in David Jones Finance that it is difficult to accept that s 39B was intended to exclude or limit the application of s 177(1) in the Federal Court. As his Honour said [169] : "the substantial weakening of such a critical part of the tax collection system in this country could hardly have been intended to be effected by a mere implication."

1. (1991) 28 FCR 484 at 502. 2. David Jones Finance (1991) 28 FCR 484 at 509-510.

The decision of the majority in David Jones Finance that the intention of the Parliament was to confer on the Federal Court the full amplitude of the original jurisdiction of the High Court under s 75(v) so that the exercise of jurisdiction by the Federal Court is not affected by s 177(1) should not be followed.

Production of the notices of assessment against Richard Walter Pty Ltd wholly precludes challenge or review of the assessments in question in the proceeding under s 39B of the Judiciary Act 1903 Cth. McHugh J.

The question that arises in this case stated is whether the production of notices of assessment purporting to be made under the provisions of the Income Tax Assessment Act 1936 Cth (the Act) precludes the challenge or review of those assessments in proceedings brought under s 39B of the Judiciary Act 1903 Cth.

Section 39B(1) provides that the original jurisdiction of the Federal Court of Australia includes jurisdiction with respect to any matter in which a writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth. The terms of that sub-section reflect the terms of s 75(v) of the Constitution.

On 10 December 1991, the Deputy Commissioner of Taxation made a determination pursuant to s 177F(1)(a) of the Act that Richard Walter Pty Ltd (the taxpayer) had obtained in the year ended 30 June 1981, or would but for the operation of s 177F have obtained, a tax benefit in connection with a scheme to which Pt IVA of the Act applies. An amended adjustment sheet identified the tax benefit as "[a]n amount of $2,143,148 being the net income purportedly derived by Morlea Professional Services Pty Ltd as agent for the Morlea Partnership". The adjustment sheet also showed that the tax benefit of the taxpayer had been calculated by deducting from the sum of $2,246,103, described as the "[n]et income of the Morlea Partnership", the sum of $102,955 which was described as: "Net income of the Aborda Trust previously returned." In accordance with s 177F(2) of the Act, the Deputy Commissioner determined that the amount of $2,143,148 be deemed to be included in the assessable income of the taxpayer. Determinations based on s 177F were also made in respect of the financial years ended 30 June 1982, 1983 and 1984. On 11 December 1991 the Deputy Commissioner issued assessments to give effect to the determinations.

On 10 December 1991, the Deputy Commissioner also made determinations pursuant to s 177F(1)(a) of the Act in respect of Morlea Professional Services Pty Ltd (Morlea) for the years ended 30 June 1981, 1982, 1983 and 1984. For the year ended 30 June 1981, the tax benefit was identified as $2,246,103 being "the net income purportedly derived by Morlea Professional Services Pty Ltd as agent for the Morlea Partnership". The Deputy Commissioner issued assessments to give effect to those determinations on 11 December 1991. In all cases, the tax benefit determined in respect of Morlea corresponded with the tax benefit determined in the case of the taxpayer less the amount of net income previously returned by the Aborda Trust.

Objections to the assessments were lodged by the taxpayer. The Deputy Commissioner disallowed them. On 24 December 1992, the taxpayer appealed against the assessments. On 5 February 1993, the taxpayer instituted proceedings in the Federal Court of Australia pursuant to the provisions of s 39B of the Judiciary Act to restrain the Deputy Commissioner from prosecuting any proceedings to collect or recover from the taxpayer the amount of tax identified in the notices of assessment. The taxpayer also sought various declarations to the effect that the assessments were void, that their making was an abuse or excess of power, and that the Deputy Commissioner had acted ultra vires. The taxpayer claims that the notices of assessment issued to it were not a bona fide or definitive ascertainment of its taxable income. This was because the tax benefits which the Deputy Commissioner identified as obtained by the defendant were the same tax benefits that the Deputy Commissioner identified as obtained by Morlea and which he had included in the assessable income of Morlea.

On 29 March 1993, the Deputy Commissioner filed a notice of motion in the Federal Court in the s 39B proceedings for orders that the taxpayer's application be dismissed. The ground relied upon was that, upon the production of notices of assessment certified under the hand of the Deputy Commissioner in accordance with s 177 of the Act, the Federal Court lacked jurisdiction to grant the relief sought.

Section 177(1) provides that the production of a notice of assessment certified under the hand of the Commissioner "shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct". Section 175 of the Act also provides that the validity of any assessment is not "affected by reason that any of the provisions of this Act have not been complied with".

Section 8 of the Act imposes on the Commissioner the duty to administer the Act. By s 8 of the Taxation Administration Act, the Commissioner may delegate his powers and functions to a Deputy Commissioner. The Commissioner's power to make assessments of tax derives from ss 166, 167 and 169 of the Act. Section 166 of the Act imposes a duty on the Commissioner to make an assessment of the amount of the taxable income of a taxpayer and of the tax payable thereon. The assessment is to be made from the returns and from any other information in the taxpayer's possession or from one or more of those sources. Section 167 relevantly provides that, if a person makes default in furnishing a return or if the Commissioner is not satisfied with the return furnished by that person, the Commissioner may make an assessment of the amount upon which in his judgment income tax ought to be levied. The amount so identified is to be treated as the taxable income of that person for the purpose of s 166. However, as Kitto J pointed out in Batagol v Federal Commissioner of Taxation [170] , no step under the Act has any legal significance until the Commissioner has gone through the process of calculation and served on the taxpayer a notice that states that the Commissioner has assessed the taxable income of the taxpayer and the specified amounts of that tax [171] .

1. (1963) 109 CLR 243 at 251-252. 2. See also Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 at 13

Counsel for the taxpayer contended that the issue of alternative assessments to Morlea and the taxpayer in respect of the same income showed that the documents served on the taxpayer and Morlea were not definitive assessments of their liability to tax but were merely tentative and alternative assertions by the Deputy Commissioner. Furthermore, he contended that the notices proposed to be produced by the Deputy Commissioner in the s 39B proceedings in the Federal Court were not a bona fide ascertainment of the taxpayer's taxable income in each year because they included in the assessable income the same amount that had been included in the assessable income of Morlea and assessed as its taxable income. Accordingly, the Deputy Commissioner was in breach of the statutory duty imposed on him by s 166 of the Act to make an assessment of the taxable income of the taxpayer [172] .

1. Counsel relied on the terms of the adjustment sheets to support these submissions. Since I am of opinion that the taxpayer's claim must fail, it is unnecessary to decide whether the adjustment sheets are part of an assessment for the purposes of the Act or whether the Morlea assessments would be admissible. In F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 380, Murphy J held that the adjustment sheet in that case was not part of the assessment. Aickin J held (Bloemen (1981) 147 CLR 360 at 381) that it was.

Counsel for the taxpayer accepted that s 177(1) of the Act drew a distinction between the procedure by which taxable income is ascertained and the assessment of the taxpayer's substantive liability to tax. He accepted that in all legal proceedings including Pt IVC proceedings the production of a notice of assessment was conclusive evidence of the "due making" of the assessment and that the procedure by which the tax was ascertained could not be challenged in those proceedings [173] . However, he contended that the "due making" of the assessment did not include the existence of the conditions precedent to the exercise of the power to make an assessment that gave effect to a determination purportedly made under s 177F(1). Counsel contended that s 177(1) does not give conclusivity to an assessment where the error in question deprives a purported assessment of validity.

1. See George v Federal Commissioner of Taxation (1952) 86 CLR 183 at 206-207 McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 271 Bloemen (1981) 147 CLR 360 at 373 Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 620

An assessment made tentatively or subject to revision is not an assessment for the purposes of the Act [174] . Unless the notice served on the taxpayer is definitive of the taxpayer's liability, it is not an assessment for the purposes of ss 175 and 177 of the Act. It will be definitive if "it assumes that, so far as can there be seen, a fixed and certain sum is definitely due, neither more nor less" [175] . If the notice does specify that a fixed sum is definitely and not provisionally payable by a particular person, it will be an assessment for the purposes of the Act. In F J Bloemen v Federal Commissioner of Taxation [176] , Mason and Wilson JJ said that "a notice in proper form of an assessment necessarily compels the conclusion that there was an assessment made in fact".

1. Federal Commissioner of Taxation v S Hoffnung & Co Ltd (1928) 42 CLR 39 2. S Hoffnung & Co (1928) 42 CLR 39 at 55, per Isaacs J. 3. (1981) 147 CLR 360 at 378.

On its face, each of the documents issued to the taxpayer is in the form of an assessment within the meaning of s 6 of the Act. It specifies that a fixed sum is definitely due and payable by the taxpayer. There is nothing tentative or provisional about the tax liability that it assumes.

Furthermore, in Richardson v Federal Commissioner of Taxation [177] , this Court rejected the argument that the Commissioner cannot assess a taxpayer in respect of income while assessments upon another person which include the same income "are maintained in force to warrant the retention of the tax already paid". In Richardson , a nominee of the taxpayer had included the relevant income in his return and had been assessed and paid tax in respect of that income. Dixon J said [178] :

[T]he taxpayer alone was exposed to tax in respect of the income in question. The nominee's liability arose only upon a false state of facts. No doubt, when and if the Commissioner arrived at the clear conclusion that to ensure the completeness and accuracy of the nominee's assessments the exclusion of the income he returned was requisite, it became his duty to exercise his power under s 37 [179] . But it was not unnatural that he should delay relieving one of two persons whom he considered culpable until the liability of the other was established. 1. (1932) 48 CLR 192. 2. Richardson (1932) 48 CLR 192 at 207 3. Section 37 authorised the amendment of the assessment.

In my opinion, Richardson decides that the issue of an assessment within the meaning of s 6 of the Act is within the powers invested in the Commissioner notwithstanding that the assessment purports to impose a tax liability in respect of income that is the subject of another assessment. In Deputy Commissioner of Taxation v Moorebank Pty Ltd [180] Mason CJ, Brennan, Deane, Dawson and Gaudron JJ accepted that the Commissioner could issue "a number of assessments on an alternative basis to different taxpayers in respect of the same income". Whether or not s 177 precludes the taxpayer from going behind the assessments issued in this case, Richardson would seem to be a complete answer to the taxpayer's contention that the Commissioner was in breach of the duty imposed on him by s 166.

Consequently, even if s 177 of the Act invalidly cuts down the s 39B jurisdiction of the Federal Court, the taxpayer's claim that the assessments issued to it were either tentative or void seems bound to fail.

However, the question reserved for decision is: "Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth, by reason of the operation of s 177 of the Income Tax Assessment Act 1936 Cth?"

In David Jones Finance & Investments Pty Ltd v Federal Commissioner of Taxation [181] , Morling and French JJ held that s 177 of the Act would cut down the jurisdiction conferred on the Federal Court by s 39B if s 177 applied to that Court because s 177 restricted the remedies available to a taxpayer to those conferred by Pt V of the Act [182] . Central to that conclusion was the proposition that s 177(1) operated conditionally and only applied on production of a notice of assessment. Their Honours said [183] :

The statutory powers under which the Commissioner or his delegates operate in making assessments are therefore logically anterior to the operation of the section in proceedings in which the "due making" and substantive liability might be in issue. There is nothing to indicate that the legislature would have intended that these powers should be contingently and retroactively affected by the production of a notice in later litigation. To so construe the section would be to allow the absurd possibility that the powers exercised in making an assessment are to be treated as greater in one proceeding where a notice is produced (say recovery proceedings) than in another where it is not produced (say judicial review proceedings). Their Honours said [184] that the conditional nature of s 177 distinguished it from the privative clauses found in statutes that had been considered in the context of s 75(v) of the Constitution. They said that s 177 was "intended to operate and does operate to deny to the courts authority to inquire into the due making of the assessments and, except in Pt V proceedings, whether the amount and all the particulars of the assessment are correct". Their Honours went on to say that, on that characterisation, the effect of s 177 was purely jurisdictional and "cannot displace the jurisdiction conferred on [the Federal] Court by s 39B [of the Judiciary Act]". Consequently, that Court had jurisdiction to inquire into the " "due making" of the assessment and the amount and all the particulars thereof" [185] . 1. (1991) 28 FCR 484. 2. Now Pt IVC of the Taxation Administration Act 1953. 3. David Jones Finance (1991) 28 FCR 484 at 502. 4. David Jones Finance (1991) 28 FCR 484 at 502. 5. David Jones Finance (1991) 28 FCR 484 at 503.

Counsel for the taxpayer felt unable to support the reasoning that led to this conclusion. He said that it failed to recognise that the assessment process is not complete until service of the notice of assessment even if the process of ascertainment of taxable income and of the tax payable has been completed. He pointed out that until the service of the notice took place there was no assessment and that, until a notice of assessment is produced, there is no evidence that an assessment had been made. Since the production of the notice of assessment in any proceeding concerned with the assessment was virtually inevitable, it was erroneous to suppose that s 177 had a conditional operation.

Nevertheless, counsel for the taxpayer submitted that the decision in David Jones Finance was correct. He submitted that s 39B and s 177(1) were to be reconciled by the adoption of the " Hickman test". In R v Hickman; Ex parte Fox and Clinton [186] , Dixon J formulated a principle for reconciling this Court's jurisdiction under s 75(v) of the Constitution and statutory privative clauses which contemplate that the order of a Commonwealth officer is to operate free from interference by appellate review or prerogative writ. His Honour said [187] :

Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body. This statement of principle has been regarded as authoritative in this Court [188] . 1. (1945) 70 CLR 598. 2. R v Hickman (1945) 70 CLR 598 at 615 3. R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418, 422, 427; O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 248, 249, 251, 274, 286, 304.

In my opinion the short answer to the submission for the taxpayer is that s 177(1) is not an attempt to oust the jurisdiction of the Federal Court or any court invested with federal jurisdiction. Although s 177 uses the term "conclusive evidence", its purpose is to enact substantive rules of law which give effect to two policies which are manifest in the terms of the Act and associated legislation. The first policy is that the provisions of the Act involved in the "due making" of an assessment are directory provisions which are not legally enforceable. That policy is manifested by the terms of s 175 of the Act. The second policy is that assessments of tax are not challengeable in ordinary legal proceedings. That policy is now manifested in the terms of Pt IVC of the Taxation Administration Act and was formerly manifested in the provisions of Pt V of the Act.

Section 175 provides that the validity of any assessment is not affected by the failure of the Commissioner to comply with any of the provisions of the Act; the first limb of s 177 is designed to further the policy of s 175 by ensuring that the "due making" of the assessment cannot be litigated in any court or tribunal. But, under the second or exception limb of s 177, matters affecting the substantive liability of the taxpayer are open to challenge in Pt IVC proceedings. In George v Federal Commissioner of Taxation [189] , the Court said that "the "due making of the assessment" was intended to cover all procedural steps, other than those if any going to substantive liability and so contributing to the excessiveness of the assessment, the thing which is put in contest by an appeal". The relationship between the two limbs of s 177(1) was summed up by Dixon CJ, McTiernan and Webb JJ in McAndrew v Federal Commissioner of Taxation [190] :

The ground over which s 177(1) gives conclusiveness to the assessment is described as the due-making of the assessment and the correctness of the amount and all the particulars of the assessment. But that appears to us to comprise the whole ground. It is the manifest policy of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose. 1. (1952) 86 CLR 183 at 207. 2. (1956) 98 CLR 263 at 270.

In McAndrew [191] , Taylor J said that " "the due making of the assessment" does not involve the ascertainment of the existence of the state of facts prescribed as a condition precedent to making an amended assessment". But in Bloemen , Mason and Wilson JJ pointed out that the power to make an original assessment was not conditioned in that way. Accordingly, there was "no like reason for reading [s 177(1)] so as to allow the taxpayer to contest the making of an original assessment" [192] . Their Honours went on to conclude [193] that once the assessment was produced "the Court cannot find that no assessment was made or that, if made, it was made for an inadmissible purpose".

1. McAndrew (1956) 98 CLR 263 at 281 2. Bloemen (1981) 147 CLR 360 at 374 3. Bloemen (1981) 147 CLR 360 at 378

In Bloemen , the relevant court was the Supreme Court of New South Wales exercising invested federal jurisdiction. No valid distinction can be drawn between the jurisdiction of that Court and the Federal Court so far as s 177 is concerned. Accordingly, if s 177 applies to the Federal Court in s 39B proceedings, it would preclude the taxpayer from challenging their validity even if the assessments of the taxpayer in this case were not made bona fide or were made for an improper purpose. That does not mean, however, that s 177 would cut down the jurisdiction of the Federal Court.

With great respect to the learned judges who formed the majority in David Jones Finance, I have great difficulty in seeing how s 177 affects the jurisdiction of the Federal Court or, if it does, why a general grant of jurisdiction such as s 39B should not be read subject to a section such as s 177 which deals with a specific subject matter. Parliament cannot oust the jurisdiction conferred by s 75(v) of the Constitution, but it can legislate in such a way as to limit the cases that come within its scope [194] . One way this can be done is to make a course of action by a Commonwealth officer non-justiciable. That is what the Act has done in respect of the "due making" of an income tax assessment. As a result of s 175 and the first limb of s 177, the procedural acts of the Commissioner in making an assessment do not give rise to any legally enforceable duty that can attract the operation of s 75(v) of the Constitution or s 39B of the Judiciary Act. The procedural steps by which the Commissioner makes an assessment are not justiciable in courts invested with federal jurisdiction. As Isaacs ACJ said in Federal Commissioner of Taxation v Clarke [195] the Act "trusts the Commissioner and does not contemplate a curial diving into the many official and confidential channels of information to which the Commissioner may have recourse to protect the Treasury".

1. Ince Bros and Cambridge Manufacturing Co Pty Ltd v Federated Clothing and Allied Trades Union (1924) 34 CLR 457 at 464 Waterside Workers' Federation of Australia v Gilchrist, Watt & Sanderson Ltd (1924) 34 CLR 482 at 526 2. (1927) 40 CLR 246 at 276.

Accordingly, s 177 does not affect the jurisdiction of the Federal Court. Together with s 175, it enacts a substantive rule of law that is applicable in any legal proceedings in any court including this Court that is invested with jurisdiction to hear matters relating to the assessment or enforcement of tax liabilities. It operates "in the exercise of its jurisdiction" [196] and does not withhold jurisdiction. Because ss 175 and 177 enact a substantive rule of law that defines the legal effect of the Commissioner's conduct occurring in the course of making an assessment, no question of interference with the judicial power of the Commonwealth arises.

Furthermore, if contrary to my opinion the effect of s 177 was jurisdictional, I see no reason to conclude that, by implication, s 39B of the Judiciary Act was intended to confer jurisdiction on the Federal Court in respect of the making of assessments when that jurisdiction did not previously exist. As Pincus J pointed out in his dissenting judgment in David Jones Finance [197] , s 39B was enacted at a time when the Federal Court had jurisdiction in tax appeals and less than three years after this Court had said in Bloemen [198] :

Section 177(1) specifically operates by compelling a court, for example the Supreme Court, in the exercise of its jurisdiction to treat a notice of assessment on its production as conclusive evidence that the assessment has been duly made and thereby foreclosing that issue. 1. (1991) 28 FCR 484 at 509. 2. (1981) 147 CLR 360 at 376.

If the effect of s 177 is jurisdictional, s 39B must have conferred on the Federal Court a jurisdiction in tax matters that s 177 had specifically excluded. It hardly seems likely that Parliament intended a general provision such as s 39B to exclude such a key section in the taxation system as s 177 of the Act. Like Pincus J, I find it difficult to accept that s 39B "was intended to exclude or limit the application of s 177(1) of the [Act] in proceedings in [the Federal] Court; the substantial weakening of such a critical part of the tax collection system in this country could hardly have been intended to be effected by a mere implication".

Accordingly, the question reserved should be answered:

The combined effect of ss 175 and 177 of the Income Tax Assessment Act 1936 Cth wholly precludes any challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 Cth.

The Justices have considered the submissions of the plaintiff and the defendant in relation to costs. By majority, Deane and Gaudron JJ dissenting, the order of the Court is the defendant to pay the plaintiff's costs of the removal application and the case stated.