Gosford Meats Pty Ltd v New South Wales

From time to time the plaintiff receives small numbers of livestock for slaughtering and dressing of the carcass on a fee for service basis. The carcasses and offal produced in this way are delivered to, or on the instructions of, the owner. Other material derived from the carcasses is dealt with or processed on the premises in accordance with the terms of the particular contract.

The long title of the Act describes it as an Act, inter alia, to provide for the regulation and control of the meat industry in New South Wales and to constitute and define the functions of the New South Wales Meat Industry Authority ("the Authority"). Section 9 creates a number of kinds of licences, including "abattoir licences". Section 10 creates the offence of a person operating a slaughtering place at or in any premises unless he is the holder of an abattoir licence in respect of those premises and a licensee is required to comply with any conditions or restrictions specified by his licence. The penalties for offending against the section are heavy: in the case of a first offence, $10,000 and, in the case of a second or subsequent offence, $50,000 or imprisonment for two years, or both. There is also provision for a daily penalty of $1,000.

So far as material, s. 4(1) defines the relevant terms, subject to context or subject-matter, as follows:

"abattoir" means a slaughtering place licensed as an abattoir;

"abattoir animal" means bull, ox, steer, cow, heifer, calf, ram, ewe, wether, lamb, ;

"slaughtering place" means premises used or intended to be used for or in connection with the slaughtering of abattoir animals for human consumption, ;

The premises of the plaintiff are a "slaughtering place" within the meaning of that term in the Act.

Licences may be issued by the Authority provided that the prescribed requirements relating to the application for the licence have been complied with: s. 11(1) and (2). An application shall be refused if the premises do not comply with the prescribed minimum standards or if the Authority is of the opinion that it should be refused because of the unsuitability of the site of the proposed premises or having regard to the existence, in the area to be served by the premises sought to be licensed, of other premises that are adequate to serve the area, or because of the unsuitability of the applicant or the lack of merit in the application (s. 11(4)). A licence may be renewed, from time to time, for successive periods of one year expiring on 1 September in accordance with the provisions of s. 11A. A licence may be issued or renewed subject to such conditions and restrictions as may be specified: s. 11B. Section 4(2) provides:

(a) the renewal of a licence is a reference to the issue of a further licence which is of the same class as that licence and is to take effect on the expiry of that licence; or

(b) a renewed licence is a reference to a licence issued as referred to in paragraph (a).

An abattoir licence shall not be issued or renewed unless the appropriate fee or the first instalment of that fee, as the case may be, has been paid to the Authority: s. 11C(3). The amount of the fee is determined by reference to s. 11C(1) and s. 11C(4), which read as follows:

(1) In this section, "relevant period" in relation to the issue or renewal of a licence, means the period of 1 year that ended on 30th June that last preceded the date on and from which the licence or renewed licence is to be in force.

(4) The licence fee to be paid for the issue or renewal of an abattoir licence or a slaughter-house licence is -

(a) an amount calculated at the prescribed rate for each abattoir animal slaughtered during the relevant period at the premises in respect of which the licence or renewed licence is sought; or

(b) where no abattoir animals were so slaughtered or no such rate is prescribed, such amount as may be prescribed for the issue or renewal, as the case may be, of the licence.

For the purposes of s. 11C(4)(a) and (b), different rates may be prescribed for different classes of abattoir animals and different amounts may be prescribed for different abattoirs or different classes of abattoirs: s. 11C(5). If the licence fee payable in respect of the issue or renewal of the licence is in excess of $500, an applicant may elect to pay the fee by four equal instalments, the first instalment being due and payable before the issue or renewal of the licence and the remaining instalments being payable during the currency of the licence at the times specified: s. 11D(1). If an instalment is not paid on or before the day on which it is due and payable, the balance of the fee thereupon becomes due and payable, as it does also upon the cancellation or suspension of the licence: s. 11D(3) and (4). The whole or any part of an amount which is due and payable under s. 11D and which is unpaid may be recovered by the Authority, as a debt, in any court of competent jurisdiction.

The rate for each abattoir animal slaughtered and the amount where no animals are so slaughtered is prescribed in cl. 41 of the Meat Industry (Licensing) Regulation as follows:

(1) In this clause, "calf" means a bovine animal having a dressed weight of less than 70 kg.

(2) For the purposes of Section 11C(4)(a) of the Act, the prescribed rate is -

(a) in the case of cattle, other than buffalo and calves - 10 cents;

(3) For the purposes of Section 11C(4)(b) of the Act, the prescribed amount is $100.

Subject to compliance with the prescribed requirements, a licence may be transferred by the licensee to another person with the approval of the Authority: s. 14.

Where the Authority makes a decision which is adverse to an applicant or licensee, as for example a decision to refuse a licence or the transfer of a licence or to suspend or cancel a licence, it must notify the applicant or licensee of its grounds for the decision and an appeal may then be made to the Minister: s. 17. All fees received by the Authority together with other sums of money received by it and all money appropriated by Parliament for its purposes go to form a fund, out of which shall be defrayed, (a) the cost of conducting elections of elected members of the Authority; (b) the salaries, wages and allowance of members, officers and employees of the Authority; and (c) all other expenses of the Authority in the carrying out of the purposes of this Act: s. 66(2).

Part III of the Act (ss. 18-43B) contains detailed provisions with respect to inspections and regulation of the meat industry. Meat inspectors are given extensive powers, including the power to enter premises, to inspect, to take samples, to give directions, to condemn any abattoir animal or meat as unfit for human consumption and to seize any meat that has been or is being dealt with contrary to the Act.

An indication of the concern of Parliament with the industry of which abattoirs form part appears from s. 46 of the Act which outlines the functions and powers of the Authority in the following terms:

(a) keep under review the construction and hygiene of, and the plant and equipment in -

(i) slaughtering places, with particular reference to the slaughtering capacity and location of those places in relation to the overall requirements of the State; and

(ii) meat processing plants, meat markets, meat vans, saleyards, animal food processing plants, knackeries, pet food vans and shops for the sale by retail of meat intended for use as animal food;

(b) issue and renew licences in accordance with this Act;

(c) provide, in co-operation with the Department of Agriculture, a market intelligence service with respect to abattoir meat and abattoir animals;

(d) whenever it considers it necessary to do so or it is requested by the Minister to do so, make recommendations to the Minister with respect to the setting of meat inspection standards and the functions of meat inspectors; and

(e) within such period as may be fixed by the Minister make a report to the Minister with respect to the continued operation of the Corporation.

(a) promote and undertake procedures for research into improving standards of hygiene in slaughtering places, meat processing plants, meat markets, meat vans, saleyards, knackeries, animal food processing plants and pet food vans;

(b) promote and undertake research into the design and equipment of and procedures at slaughtering places, meat processing plants, meat markets, meat vans, saleyards, knackeries, animal food processing plants and pet food vans;

(c) investigate and promote procedures with respect to the production of meat, processed meat and processed animal food for the purpose of protecting public health;

(d) promote and encourage the provision and operation of meat markets;

(e) make recommendations to the Minister relating to the establishment of central killing areas and the alteration of those areas;

(f) make recommendations to the Minister with respect to the conditions under which abattoir meat intended for sale for human consumption may be introduced into central killing areas;

(g) either on its own behalf or on behalf of any other person -

(i) purchase or take delivery of abattoir animals and cause them to be slaughtered;

(ii) purchase or sell, within or outside the State, or export abattoir animals, abattoir meat, offal or other products of abattoir animals; or

(iii) enter into contracts for the treatment of or the application of a manufacturing process to any abattoir meat, offal or other products of abattoir animals and sell any resulting product;

(h) make recommendations to the Minister for Local Government with respect to -

(i) the establishment of abattoirs by councils and the management thereof;

(ii) the alteration or extension of slaughtering places provided, controlled and managed by councils;

(iii) the method of financing the establishment, alteration or extension of slaughtering places provided, controlled and managed by councils; and

(iv) applications by councils for approval to borrow money for the establishment of abattoirs or to be used in connection with slaughtering places provided, controlled and managed by councils;

(i) make recommendations to the Minister with respect to the implementation of a system for the classification, grading, branding, stamping or marking of meat;

(j) make recommendations to the Minister with respect to the implementation of a system providing for the identification of any meat offered or exposed for sale by retail;

(k) administer any meat stabilisation scheme for the implementation of which regulations have been made, and appoint such committees as it thinks necessary for the purposes of the scheme;

(l) make payments, in accordance with the regulations, into any meat stabilisation fund established under a meat stabilisation scheme; and

(m) act as a delegate or agent of, or act jointly with, any Commonwealth body for the purpose of performing any function relating to the production or marketing of abattoir animals, knackery animals, meat, processed meat or processed animal food.

Section 47 requires the Authority to make an annual report, as soon as practicable after 30 June in each year, which must then be laid before both Houses of Parliament.

It is in the context provided by these provisions of the Act and Regulation that the question whether the licence fee demanded of the plaintiff constitutes a duty of excise is to be determined.

Plainly, the licence fee is a tax. It is a compulsory levy by a public authority for public purposes: Parton v. Milk Board (Vict.) [58] , per Dixon J. It is not a payment for services rendered. It may be noted that the learned Solicitor-General for the Commonwealth submitted that the flat fee of $100 prescribed in cl. 41(3) of the Regulation ought not be regarded as a duty of excise, on the basis either that it is a fee for service or that it should simply be dismissed as a nominal amount. In any event the parties and the interveners have joined issue over the fee prescribed in cl. 41(2) and the flat fee need not be further considered.

It is convenient to consider first the question whether the authority of the decision of this Court in Dennis Hotels Pty. Ltd. v. Victoria [59] determines the demurrers in favour of the defendants. It was there decided by majority that the licensing provisions of the Licensing Act 1958 Vict., other than that provision which fixed the fee for a temporary victualler's licence or a temporary packet licence, did not impose duties of excise and were within the competence of the Victorian legislature. The provisions in question quantified the amount of the licence fee by reference to the amount paid or payable for liquor purchased during a period preceding that in respect of which the licence was granted. However, there was no reasoning leading to the decision which was common to the majority. The authority of the decision was considered by the Court in Dickenson's Arcade Pty. Ltd. v. Tasmania [60] . Barwick C.J. said [61] :

There being no reason for decision common to the majority of the justices, the Court's decision is authority only in relation to the statutory and factual situation it resolved and in relation to a case which has, if not precisely, at least substantially and indistinguishably the same statutory and factual situation. His Honour concluded that he ought to regard the decision as decisive of the validity of the licensing provisions under challenge in Dickenson's Arcade. They were provisions whereby the licence fee permitting the retail sale of tobacco was calculated by reference to the average monthly value of tobacco handled by a retailer over the period of six months prior to the commencement of the licence period. Menzies, Gibbs, Stephen and Mason JJ. also each found the decision in Dennis Hotels decisive of the validity of the tax. Menzies J. [62] , having rejected a challenge to the correctness of the earlier decision, added in a passage adopted by Stephen J.: In any event I would not reopen either part of the decision in Dennis Hotels Pty. Ltd. v. Victoria. It is an important decision upon the faith of which States have ordered their affairs for some thirteen years. The decision has been recognized both in Bolton v. Madsen [63] and in Anderson's Pty. Ltd. v. Victoria [64] . Cf., also, Gibbs J. [65] ; Stephen J. [66] . Mason J., while accepting that the decision in Dennis Hotels was decisive of the validity of the tobacco retail licence fee, made an important statement upon which the present plaintiff relies. His Honour said [67] : Dennis Hotels is not authority for the universal proposition that, in order to constitute an excise, a licence fee must be calculated by reference to the quantity of goods sold under the licence, thereby enabling the duty to be passed on to a purchaser and that it is not enough that the licence fee is calculated by reference to the quantity of goods sold by the licensee or on the premises before the licence commenced to operate. The decision related to fees prescribed for a licence to sell liquor by retail; it has no necessary application to fees prescribed for a licence to manufacture or process goods to which in my opinion different considerations apply. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1974) 130 C.L.R., at p. 188. 4. (1974) 130 C.L.R., at p. 212. 5. (1963) 110 C.L.R. 264. 6. (1964) 111 C.L.R. 353. 7. (1974) 130 C.L.R., at pp. 224-227. 8. (1974) 130 C.L.R., at p. 236. 9. (1974) 130 C.L.R., at p. 240.

In M. G. Kailis (1962) Pty. Ltd. v. Western Australia [68] the Court encountered the kind of situation to which Mason J. referred in the passage I have cited. The validity of a fish processor's licence fee, assessed as a percentage of the value of fish caught or purchased for processing during a period preceding that of the licence, was under attack. It was held by McTiernan, Menzies and Mason JJ., Gibbs and Stephen JJ. dissenting, that the fee was a duty of excise. However, once again there was no reason common to the judgments of the majority; only Mason J. relied on the fact that the licence fee was imposed in respect of the process of manufacture or production to distinguish the case from Dennis Hotels and Dickenson's Arcade. It is plain that Menzies J. would have applied Dennis Hotels had he not construed the relevant statutory provisions in such a way as to require the conclusion that the fee was imposed by reference to current production. Gibbs J. and Stephen J., both in dissent, took the decision in Dennis Hotels to be conclusive authority for the validity of the impost.

Dennis Hotels [69] and Dickenson's Arcade [70] were applied by four members of the Court (Barwick C.J., Gibbs, Stephen and Mason JJ.) in H. C. Sleigh Ltd. v. South Australia [71] to uphold the validity of a South Australian statute which required petroleum vendors to hold a licence, the licence fee being calculated on the value of sales in a period preceding the licence period. Gibbs J. [72] and Stephen J. [73] each found Dennis Hotels and Dickenson's Arcade to govern the case. Mason J. [1] found Dickenson's Arcade to be decisive of the case, while recalling the views he had expressed in that case and Kailis concerning manufacture and production. Barwick C.J. [2] agreed that the case was governed by the decision in Dickenson's Arcade, the Court having now decided "to maintain the decision of Dennis Hotels Pty. Ltd. v. Victoria, for what, upon its facts and relevant legislation, it decides". His Honour expressed his substantial agreement with the reasons expressed for his conclusions by Mason J. but made no reference to the distinction between selling and manufacturing drawn by his Honour. Murphy J. [3] also found the fee to be valid but without reliance upon Dennis Hotels or Dickenson's Arcade. Jacobs J. was the sole dissentient. His Honour said [4] that he was prepared to distinguish Dennis Hotels and Dickenson's Arcade -

upon the ground that in both of them there was present in the impugned legislation a concatenation of factors - the nature of the product and the licensing of premises for the sale of the product - sufficient to enable it to be held that the calculation of the licence fee by reference to the value or quantity of the product dealt with in a preceding period was no more than a method of quantification of that licence fee and not a tax upon the product dealt with in the preceding period. His Honour then added [5] : I find it quite impossible to say that of legislation where the licence is no more than a mechanism for collection of a tax or levy on dealings in a product during a prior period. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1977) 136 C.L.R. 475. 4. (1977) 136 C.L.R., at p. 494. 5. (1977) 136 C.L.R., at p. 496. 6. (1977) 136 C.L.R., at pp. 499-503. 7. (1977) 136 C.L.R., at pp. 488-489. 8. (1977) 136 C.L.R., at p. 527. 9. (1977) 136 C.L.R., at p. 526. 10. (1984) 154 C.L.R. 311.

Finally, in this regard, in Evda Nominees Pty. Ltd. v. Victoria [5] all the members of the Court joined in refusing to reconsider the correctness of the actual decisions in Dennis Hotels, Dickenson's Arcade and Sleigh .

There is no decision of the Court which applies Dennis Hotels [6] to a case where the licence fee exacted in respect of the processing of goods is quantified by reference to the quantity of goods processed in a preceding period. The only case which provided an opportunity for that question to be considered was Kailis [7] where, as we have seen, only three members of the Court expressly addressed the question: Gibbs J. and Stephen J. regarded the distinction between sales on the one hand and manufacture and production on the other as immaterial and Mason J. considered it a sufficient basis for distinguishing the case. As I have said, Menzies J. distinguished the case for a different reason. Mr. Handley, counsel for the plaintiff, describes manufacture and production as "the heartland" of the constitutional concept of excise, while distribution is on the periphery. He argues that Dennis Hotels and the cases that have followed it should be confined in their application to that periphery. Perhaps the argument is presented most persuasively in the judgment of Mason J. in Logan Downs Pty. Ltd. v. Queensland [8] where, after declining to accord to the criterion of liability expressed in Bolton v. Madsen [9] a universal application, his Honour continued [10] :

it needs to be emphasized that Dennis Hotels, Bolton v. Madsen and for that matter Dickenson's Arcade were cases involving impositions levied at a time when goods were in course of sale or distribution, after the process of manufacture or production had been completed. It has always been recognized that before these impositions can be characterized as an excise a direct relationship between the tax and the goods must be shown. Such a relationship between the tax and the goods must also exist, so it is said, when the tax is levied at a time when the goods or the commodity is in course of production, but it may be said that in such a case the relationship between the tax and the goods and therefore the relationship between the tax and "home production or manufacture" is more easily perceived. His Honour then cited a passage from the judgment of Kitto J. (with which Taylor J. agreed) in Anderson's Pty. Ltd. v. Victoria [11] , in which the learned judge, after asserting that a duty of excise is, at bottom, a burden upon home production or manufacture, continued: Obviously it is such a burden if it is payable upon a step in production or manufacture in its character of such a step. Not so obviously but just as certainly, it is such a burden if it is payable upon a step in distribution in its character of such a step; for in that case from the time the goods come into existence the law makes it inherent in their nature, as goods requiring distribution in order to become available to fulfil their purpose, that the tax shall be paid. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 245. 3. (1977) 137 C.L.R. 59. 4. (1963) 110 C.L.R. 264. 5. (1977) 137 C.L.R., at p. 77. 6. (1964) 111 C.L.R. 353, at p. 374.

I acknowledge the force of the view expressed by Mason J. but with all respect to his Honour I am unable to share it. It is true, despite the seemingly distinct recognition accorded by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [12] , to goods as "articles of commerce" and to their sale, that the majority judgments in Parton v. Milk Board (Vict.) furnish support for the relationship between distribution and manufacture which Kitto J. recognized in Anderson's Pty. Ltd. [13] . I am not concerned now to dispute it. With all respect, I think the observations of Kitto J. refute the validity of the distinction which Mason J. seeks to draw. His Honour is saying that a tax imposed upon a step in the distribution of goods is not so obviously but just as certainly a burden upon home production or manufacture. It should be no more difficult to recognize a tax as one imposed on a step in distribution as it is to recognize a tax as one imposed on a step in production, especially when, in either case, the imposition of the tax takes precisely the same form. It is the consequential burden on manufacture or production which may be less obvious in the case of a tax imposed on a step in distribution. But such a tax is rightly characterized as an excise if it is imposed on such a step in its character as such a step without any necessity to discern its impact on manufacture or production. It has never been suggested that an essential element in the diagnosis of an excise is the perception that an impost imposed upon the sale of a commodity thereby burdens the manufacture of that commodity. As Barwick C.J. noted in Anderson's Pty. Ltd. [14] :

To conclude that the tax is an excise because it is in substance a tax upon the relevant step in connexion with the goods is to find that it is a burden on manufacture or production and thus to satisfy economic theory, whether or not the supposed economic consequences of an excise can be seen to be involved in the case in question. It seems to me, therefore, that the actual decision in Dennis Hotels requires the conclusion in the present case that the licence fee imposed upon the plaintiff by s. 11C of the Act and cl. 41(2) of the regulation is not a duty of excise. It is not suggested that there is any ground of distinction between the legislation here and that which was considered in Dennis Hotels, in Dickenson's Arcade and in Sleigh save that which I have discussed. I am fortified in the conclusion to which I have come by the reasoning of Gibbs J. and Stephen J. in Kailis [15] respectively. 1. (1938) 60 C.L.R. 263, at p. 304. 2. (1949) 80 C.L.R., at pp. 252, 260. 3. (1964) 111 C.L.R., at p. 365. 4. (1974) 130 C.L.R., at pp. 259, 263.

Although the conclusion which I have expressed leads me to allow the demurrers, I propose to examine the issue between the parties as one of substance, not one to be determined by operation of the principle of stare decisis.

The natural starting-point for such an examination is the unanimous judgment of the Court in Bolton v. Madsen. The Court said [16] :

It is now established that for constitutional purposes duties of excise are taxes directly related to goods imposed at some step in their production or distribution before they reach the hands of consumers.

It is not enough that Turner, the owner-carrier, could by a simple calculation determine the cost to him per bale of carrying his wool from his station to the wool store for sale. It is not enough because it is the criterion of liability that determines whether or not a tax is a duty of excise.

Later in the judgment [17] , the "criterion of liability" was described as "the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer", these being the words in which Kitto J. formulated the test in Dennis Hotels [18] . It is regrettable that such a rare expression of unanimity on the subject of excise has not found complete acceptance by some members of the Court in later cases. Mr. Handley and the Solicitor-General for the Commonwealth argue that the authority of Bolton v. Madsen has been weakened by subsequent cases and that in particular the identification of a tax as a duty of excise imposed directly upon goods is to be approached not in terms of the formal expression of the criterion of liability found in the statute but in the operation of the legislation viewed as a matter of substance. I am prepared, for the purposes of the argument, to approach the matter on this basis. In Anderson's Pty. Ltd. [19] , Barwick C.J. said: it ought now to be taken as settled that the essence of a duty of excise is that it is a tax upon the taking of a step in a process of bringing goods into existence or to a consumable state, or of passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer The question is a legal question

But, of course, in arriving at the conclusion that the tax is a tax upon the relevant step, consideration of many factors is necessary, factors which may not be present in every case and which may have different weight or emphasis in different cases. The "indirectness" of the tax, its immediate entry into the cost of the goods, the proximity of the transaction it taxes to the manufacture or production or movement of the goods into consumption, the form and content of the legislation imposing the tax - all these are included in the relevant considerations.

In Western Australia v. Chamberlain Industries Pty. Ltd. [20] , Barwick C.J. referred back to the passage in his judgment in Anderson's Pty. Ltd. which I have cited and added: It is not enough that the effect an Act in its operation produces has the like effect which a duty of excise would in the circumstances produce. The Act must impose or authorize the imposition of a tax which in its nature is a duty of excise. The Court has endorsed the view that "a tax is not a duty of excise unless the criterion of liability is the taking" of such a step as I have described. Of course, as his Honour indicated in Anderson's Pty. Ltd. [21] and repeated in Chamberlain [22] , the criterion of liability will not be found exclusively in the verbal formulae of the statute. I understand the obligation to have regard to substance rather than form to mean that one must ask whether the real operation and effect of the Act by which the duty is imposed is to tax the goods directly, whatever be the means it employs. The question is a legal one. Economic consequences are irrelevant. In Chamberlain [23] , Walsh J. elucidated the question of substance rather than form in words which I would respectfully adopt: When it has been said that the character of a duty depends upon the operation and effect rather than upon the form of the Act by which it is imposed I think that what has been meant is that an examination must be made of the provisions of the Act to determine its legal effect, according to the proper construction of its operative provisions, whatever their form may be and whatever label may be attached by the Act to the duty which is imposed by it. Cf. also, Dickenson's Arcade [24] , per Barwick C.J. 1. (1963) 110 C.L.R., at p. 271. 2. (1963) 110 C.L.R., at p. 273. 3. (1960) 104 C.L.R., at p. 559. 4. (1964) 111 C.L.R., at pp. 364-365. 5. (1970) 121 C.L.R. 1, at p. 13. 6. (1964) 111 C.L.R. 353. 7. (1970) 121 C.L.R., at p. 15. 8. (1970) 121 C.L.R., at p. 37. 9. (1974) 130 C.L.R., at p. 186.

Before I apply these principles to the statutory provisions in the present case, three further observations should be made. The first is that I do not find any assistance in approaching the task of statutory construction to determine the nature of the tax by considering the kind of questions the Court asks of a statute when it has to consider whether in its practical operation it imposes a burden on interstate trade contrary to s. 92 of the Constitution. The questions are quite different. In this regard, I adopt the observations of Kitto J. in Chamberlain [25] , and of Gibbs C.J. in Hematite Petroleum Pty. Ltd. v. Victoria [26] . Secondly, I refer to what I said in my judgment in Hematite Petroleum [1] , where I warned against approaching the construction of a statute in a case of this kind with questions of assumed constitutional purposes in mind. The Constitution did not confer on the Commonwealth a legislative power with respect to the economy as such. In my respectful opinion one is not justified, when seeking guidance as to the character of a duty of excise, in looking beyond the Constitution in order to mould the concept to fit subjective understandings of desirable contemporary economic or political goals: cf. Dickenson's Arcade, per Menzies J. [2] ; Sleigh , per Stephen J. [3] . Thirdly, the plaintiff relied heavily on the recent decision of this Court in Hematite Petroleum. That was a very different case from the present one and I have not found the decision to be of any assistance in the resolution of this case.

1. (1970) 121 C.L.R., at pp. 19-20. 2. (1983) 151 C.L.R., at p. 618. 3. (1983) 151 C.L.R., at pp. 647-657. 4. (1974) 130 C.L.R., at pp. 212-213. 5. (1977) 136 C.L.R., at p. 497.

I turn now to the legal operation of the legislation as it is in substance: 1. Payment of the fee is a condition precedent to the grant of a licence. In this respect it contrasts with the fee in Kailis : see per Menzies J. [4] . The fee is a tax. 2. The licence authorizes the operation of an abattoir in the premises referred to in the licence subject to any conditions or restrictions contained in the licence. 3. There are heavy penalties for operating an abattoir without a licence. 4. The maximum duration of a licence is a period of one year. A licence may be renewed, the renewed licence operating as a fresh licence from the date of expiry of the old one. 5. Stringent conditions govern the issue of a licence. The premises must satisfy the prescribed standards of construction. The application must be refused if the Authority is of the opinion that the site of the proposed premises is unsuitable or that the area is already adequately served by other premises or that the applicant is unsuitable or that the application lacks merit. 6. The amount of the fee is calculated by reference to the number of animals slaughtered in the premises during the twelve months ending on 30 June prior to the date of the application. Different rates, ranging from 1.25 cents per animal to 10 cents per animal, are prescribed for different kinds of animals. The weight of each animal is immaterial. There is no provision for any refund of any part of the licence fee if, in the course of the licence period, the licensee closes down the business or the licence is cancelled or suspended. 7. The payment of the fee and the issue of the licence are wholly prospective in their effect. That effect is the authority to operate the abattoir, including in that operation the slaughtering of animals and the preparation of meat and other products for sale, throughout the period of the licence. No tax is imposed by the Act on any specified aspect of the operation. In particular, no tax is imposed on the slaughtering of any animal or on any of the products that result from the operation of the abattoir. Any number of animals may be slaughtered and their carcasses processed under the authority of the licence. It is to be expected that the number of animals coming forward for slaughter will vary markedly from year to year because of changing weather conditions and the state of the market generally. 8. If a licence is renewed for a further year, the size of the fee which must be paid for that licence will be determined by reference to the number and kind of animals that were slaughtered under the authority of the preceding licence. But it is not those acts of slaughter that attract the tax for the ensuing year. What attracts the tax is the application for authority to continue to operate the abattoir in the year that is to come. 9. If it matters, the fee is not an indirect tax. It cannot have been imposed with the expectation that its incidence on the finished products emanating from the abattoir will be passed on in any precise way down the line until they reach the consumer. A moment's reflection shows how impossible it is for any particular part of the fee to attach to any particular product. Let it be assumed that a tax of 10 cents is imposed upon the act of slaughtering each cow. When the cow has been processed through the abattoir it will be represented by a variety of products ranging from dressed carcasses, sides and quarters, meat, offal, pet food material, sausage casings, skins, hides, meat meal, tallow, blood meal, gall and hair. Furthermore, the weight of each animal may vary considerably. Accordingly, it would be quite impossible to isolate a discrete component of such tax as being referable to any particular product. 10. Again, if it matters, the consideration which moved Jacobs J. to distinguish the facts in Sleigh [5] from those in Dennis Hotels [6] and Dickenson's Arcade [7] is not present here. The licensing scheme cannot be described as a mere vehicle for collecting the tax. The legislation is a detailed and comprehensive scheme for ensuring the efficient and hygienic operation of the meat industry in New South Wales. An abattoir licence is a valuable right attaching to particular premises which allows the licensee to participate in that industry. It is transferable with the approval of the Authority.

1. (1974) 130 C.L.R., at p. 254. 2. (1977) 136 C.L.R. 475. 3. (1960) 104 C.L.R. 529. 4. (1974) 130 C.L.R. 177.

In my view, having regard to all these features and viewing the matter as one of substance rather than form, the conclusion is irresistible that the tax is not a duty of excise. It is not imposed "upon the taking of a step in a process of bringing goods into existence or to a consumable state", to use the formulation adopted by Barwick C.J. in Anderson's Pty. Ltd. [8] , and approved by Brennan J. in Hematite Petroleum [9] . Nor does it satisfy the test propounded by Dixon J. in Matthews [10] , namely:

The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. It is a direct tax imposed on an applicant for a licence before any slaughtering takes place as the price of the privilege of operating an abattoir. The exaction is "only in respect of the business generally" to adopt a phrase used in earlier cases and cited with approval by Brennan J. in Hematite Petroleum [11] . It is only sensible and equitable that the amount of the fee should bear some relation to the value of the business of operating the abattoir and that is best secured by having regard to its past history. 1. (1964) 111 C.L.R., at p. 364. 2. (1983) 151 C.L.R., at p. 655. 3. (1938) 60 C.L.R., at p. 304. 4. (1983) 151 C.L.R. 599, at p. 600.

It follows that in my opinion, whether or not Dennis Hotels [11] is regarded as determinative of this case, the licence fee is not a duty of excise.

The slaughtering of animals in an abattoir is a step in the process of converting livestock into a variety of vendible meat products. A tax on the slaughtering of animals in an abattoir is therefore a duty of excise for it is a tax on a step in production of goods: see Hematite Petroleum Pty. Ltd. v. Victoria [12] . On the other hand, to impose on an operator of an abattoir "a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all" is not to impose a duty of excise: Dennis Hotels Pty. Ltd. v. Victoria [13] , per Kitto J. The fee payable for a licence to operate an abattoir pursuant to ss. 10(1)(a) and 11C of the Meat Industry Act 1978 N.S.W. and reg. 41 of the Meat Industry (Licensing) Regulation 1980, not being a fee for services rendered, is a tax: Logan Downs Pty. Ltd. v. Queensland [14] , per Gibbs J. The question is whether it is a duty of excise.

1. (1983) 151 C.L.R. 599. 2. (1960) 104 C.L.R., at p. 560. 3. (1977) 137 C.L.R. 59, at p. 63.

Licences are issued in respect of particular premises (ss. 10(1), 11(4)). They are issued to expire on 1 September next following the date of issue, and they are renewable for successive periods of one year expiring on 1 September (s. 11A(2)(b) and (3)) provided the licence fee is paid before issue or renewal: s. 11C(3). Section 11D provides for payment of the fee by instalments in some circumstances. Licences are transferable with the approval of the New South Wales Meat Industry Authority (s. 14(1)), which has power to suspend or cancel a licence on the ground that an instalment of the licence fee is due and payable but unpaid and on a number of other grounds including breach of any prescribed minimum standards relating to the premises: s. 16(1). A licence fee for the issue of a licence is payable by the applicant and a licence fee for the renewal of a licence is payable by the holder of the licence: s. 11C(7). Clearly a licence fee is exacted for the privilege of operating the abattoir in respect of which it is issued or renewed during the period for which it is issued or renewed. Does it have the closer connexion with production or distribution sufficient to characterize it as a duty of excise?

Section 11C prescribes the method by which the amount of a licence fee is to be determined:

(1) In this section, "relevant period" in relation to the issue or renewal of a licence, means the period of 1 year that ended on 30th June that last preceded the date on and from which the licence or renewed licence is to be in force.

(4) The licence fee to be paid for the issue or renewal of an abattoir licence or a slaughter-house licence is -

(a) an amount calculated at the prescribed rate for each abattoir animal slaughtered during the relevant period at the premises in respect of which the licence or renewed licence is sought; or

(b) where no abattoir animals were so slaughtered or no such rate is prescribed, such amount as may be prescribed for the issue or renewal, as the case may be, of the licence.

Pursuant to s. 11C(4)(a), reg. 41 prescribes rates at so much per animal slaughtered - 1.25 cents, 2.5 cents or 10 cents according to species; pursuant to s. 11C(4)(b), it prescribes an amount of $100.

The amount of a licence fee where animals have been slaughtered in an abattoir during a "relevant period" is thus arithmetically related to the number and species of animals slaughtered during the period. If a tax calculated at the prescribed rates were imposed on the operator of an abattoir at the end of a period in respect of the slaughtering of animals in the abattoir during that period, the tax would clearly be a duty of excise. But it is argued that the licence fee is exacted in respect of the operation of the abattoir in the licence year, not in respect of its operation in the preceding "relevant period", and that there is no relevant connexion between the licence fee and the slaughtering of animals either during the licence year or during the preceding period. An operator may slaughter throughout a year without incurring any liability. If, immediately prior to 1 September in any year, he discontinues his operations, or transfers his licence to another, he will not need a renewal of his licence and there will be no occasion for him to pay a licence fee. If his transferee wishes to renew the licence, the transferee will be liable to pay the licence fee calculated at the prescribed rate though he had no connexion with the slaughtering of the animals by reference to which the fee is calculated.

Is a licence fee calculated pursuant to s. 11C(4)(a), i.e., at the prescribed rate per animal slaughtered, a tax upon the slaughtering of animals in the abattoir? If it is such a tax, it is a duty of excise. The statutory criterion of liability to pay a tax and the statutory description of a tax are both important indications of the character of the tax, but it cannot be said that one or other is always conclusive. Nor can it be said, when the statute prescribes more than one criterion of liability that the characterizing criterion is necessarily the ultimate criterion to be satisfied before an accrued liability for the tax arises. If a statute selects a step in the production or manufacture of goods as an event on the occurrence of which a contingent tax liability arises, and provides that the occurrence of some other act or event shall transform the contingent liability into an accrued liability, the step in production or manufacture is as much a criterion of liability as the act or event which follows it. Unless both occur, no tax liability accrues. The distinction between such criteria may be merely temporal. It is then a question to determine which criterion gives the tax its character.

In the present case, the fees calculated pursuant to s. 11C(4)(a) are described, and correctly described, as fees for an abattoir licence, but it would mistake the operation of the statute and the character of the tax it imposes to dismiss the other criterion which makes the slaughtering of animals the source of a liability, albeit contingent, for those fees. The slaughtering of animals in an abattoir during a relevant period creates a liability in the holder of a licence which he must pay before 1 September next ensuing (or elect to pay by instalments) if he wishes to renew his licence for the ensuing twelve months. That liability can be avoided by him if he does not wish to renew his licence, but it cannot be avoided by his transferee if the transferee wishes to obtain a licence to operate the abattoir during the ensuing licence period. To deny that licence fees which become payable and which are calculated under s. 11C(4)(a) are duties of excise, it is necessary to dismiss one of the two criteria of liability which the Act selects, namely, the slaughtering of animals during a relevant period. If the slaughtering of animals during that period did not occur, the licence fee would be $100, in accordance with s. 11C(4)(b) - a fee which, in my opinion, has no relevant connexion with production or manufacture. But licence fees calculated under s. 11C(4)(a) have that "closer connexion with production or distribution" to which Kitto J. referred in Dennis Hotels [15] that stamps them with the character of duties of excise. The slaughtering of animals in the abattoir during the relevant period determines the measure of the tax liability. The circumstance that the tax is, and is described as, a fee for a licence to operate an abattoir during the licence period does not deny the tax the character of a duty of excise on the goods produced from the animals slaughtered in the preceding relevant period, and I would so hold unless a contrary view is compelled by authority.

Licence fees of the kinds referred to in Dennis Hotels and Dickenson's Arcade Pty. Ltd. v. Tasmania [16] do not bear that character. It is argued that the present case is concluded by the decisions in those cases, and that it is not open to hold that abattoir licence fees are duties of excise. Each of the licence fees whose validity was upheld in Dennis Hotels and Dickenson's Arcade was calculated by reference to the value of goods bought or sold in the business conducted on the licensed premises during a period preceding the period of the licence. The authority of those cases was recently reaffirmed in their application to legislation that is "indistinguishable" from the legislation upheld in Dickenson's Arcade: see Evda Nominees v. Victoria [17] ; see also per Barwick C.J. in H. C. Sleigh Ltd. v. South Australia [18] . If the legislation in this case is indistinguishable, then the opinion I have formed must yield to the authority of those cases.

1. (1974) 130 C.L.R. 177. 2. (1984) 154 C.L.R. 311. 3. (1977) 136 C.L.R. 475, at p. 488.

There are some dissimilarities between the licence fees upheld in Dennis Hotels and Dickenson's Arcade and the licence fees now under consideration. In those cases, the fees were imposed as the price of a licence to sell goods - liquor in one case, tobacco in the other. In the present case, the licence is one to produce goods. In the former cases, the operations by reference to which the licence fees were calculated were the purchasing or selling of goods - the value of liquor purchases in one case, the value of tobacco sales in the other. In the present case, the licence fees are calculated by reference to steps in production or manufacture.

In Dickenson's Arcade itself [19] , Gibbs J. regarded Dennis Hotels as authority for the wide proposition "that a licence fee quantified by reference to the amount paid or payable for goods purchased during a period preceding that in respect of which the licence was granted was not a duty of excise", but Mason J. [20] regarded Dennis Hotels as having "no necessary application to fees prescribed for a licence to manufacture or process goods to which in my opinion different considerations apply".

1. (1974) 130 C.L.R., at p. 226. 2. (1974) 130 C.L.R., at p. 240.

In M. G. Kailis (1962) Pty. Ltd. v. Western Australia [21] , where Dennis Hotels was distinguished, a fee for a licence to process fish calculated by reference to the value of fish caught or bought for processing or sale in a preceding period was held invalid. Mason J. said [22] :

To hold that Dennis Hotels is decisive of the present case would, I think, give the constitutional prohibition contained in s. 90 a formal operation, having little substantial importance. It would enable the States to impose a tax on the manufacture or production of any goods by the simple expedient of a compulsory licensing scheme under which production and manufacture are taxed by prescribing licence fees to be assessed, not by reference to the quantity of goods produced under the licence, but by reference to the raw materials used in the process of production in a period ending before the licence commenced to operate. Gibbs and Stephen JJ., in dissent, regarded Dennis Hotels as requiring the validity of the licence fees to be upheld [23] but it cannot be said that their view as to the scope of the proposition established by Dennis Hotels was a minority view. McTiernan and Menzies JJ., who with Mason J. constituted the majority, distinguished Dennis Hotels on grounds different from those relied on by Mason J. The Kailis Case did nothing to erode the authority of Dennis Hotels and Dickenson's Arcade although the conflict in opinion as to the scope of the proposition supported by those cases remained unresolved. So much was accepted by Barwick C.J., Gibbs, Stephen and Mason JJ. in H. C. Sleigh [24] . That case was concerned with licences to sell petroleum products where the licence fee was calculated on the licensee's turnover during a preceding period. On either view, that case came within the scope of the proposition for which Dennis Hotels is authority. However, Barwick C.J. [25] stated his "substantial agreement" with the view of Mason J. [26] that the majority judgments in Dennis Hotels would not necessarily govern all cases, "in particular cases where a licence similarly calculated was imposed on the manufacture or production of goods" [26] . Jacobs J., dissenting, refused to accept the "so-called "logical" extensions" of the earlier cases [27] : What has happened is that decisions that a licence fee is not necessarily a duty of excise where the amount of the fee is calculated on the basis of dealings in a commodity for a preceding period has been taken by the legislature to be a decision that a licence fee cannot be a duty of excise provided that the fee is so calculated. Murphy J. [28] stated his opinion that "it makes no difference whether the calculation of the licence fee is based upon transactions of a past financial year or on those of the current year" and he regarded the Dennis Hotels and Dickenson's Arcade tests as unsatisfactory. 1. (1974) 130 C.L.R. 245. 2. (1974) 130 C.L.R., at p. 265. 3. (1974) 130 C.L.R., at pp. 259, 263. 4. (1977) 136 C.L.R., at pp. 488, 493, 497, 500. 5. (1977) 136 C.L.R., at p. 488. 6. (1977) 136 C.L.R., at p. 500. 7. (1977) 136 C.L.R., at p. 500. 8. (1977) 136 C.L.R., at p. 525. 9. (1977) 136 C.L.R., at p. 527.

I am unable to regard Dennis Hotels [29] as an authority for the proposition that a fee for a licence to carry on a process of producing goods calculated on steps in production during a preceding period is not a duty of excise. That proposition was denied by the justices in the minority in that case, and it was not accepted by Fullagar J. It is immaterial that the approach adopted by Fullagar J. is rejected as unorthodox. What is material is that he did not accept the "so-called "logical" extension" of the decision in Dennis Hotels on which reliance is now placed to uphold the validity of abattoir licence fees. Fullagar J. said that "what characterizes a duty of excise is that the taxpayer is taxed by reason of, and by reference to, his production or manufacture of goods" [30] . His Honour, examining the judgments in Parton v. Milk Board (Vict.) [31] said [32] :

Rich and Williams JJ. who delivered a joint judgment, were of opinion that a duty of excise "must be imposed so as to be a method of taxing the production or manufacture of goods" [33] . This is my view, and I cannot therefore regard their judgment as inconsistent with that view. Their Honours proceeded: " but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer". With this I am, with respect, unable to agree. The "tax" payable by the dairyman was not imposed on production or manufacture; it did not affect production or manufacture in any way: what was done was a taxing of the dairyman, or of what the dairyman did with milk, not a method of taxing production or manufacture.

It remains only to apply the general propositions which I have formulated to the facts of the present case, and this can be very briefly done. The two classes of licence in question are the victualler's licence and the temporary licence. In each case the licence fee is payable by the licensee, and it is quantified by reference to past purchases of liquor by him. It does not fall upon any producer or manufacturer, and it does not in any way affect production or manufacture. The quantification is arrived at by taking into account all purchases of liquor made in the relevant period, whether produced or manufactured in Victoria or imported from abroad or from another State by the vendor or by the licensee himself.

1. (1960) 104 C.L.R. 529. 2. (1960) 104 C.L.R., at p. 555. 3. (1949) 80 C.L.R. 229. 4. (1960) 104 C.L.R., at pp. 557-558. 5. (1949) 80 C.L.R., at p. 252.

Had the tax fallen on a producer, and had it been quantified by reference to a step in production, his Honour's reasoning would have been different. He may have reached the same conclusion, as Menzies J. thought in Dickenson's Arcade [34] , but not for reasons which are here material. Taylor J. [35] regarded the circumstance that the victualler's licence fees were not "either in form or substance a tax upon the production or manufacture of liquor" as a point of distinction between those fees and fees that had earlier been held to be duties of excise, though it must be said that his reasons assumed that "a tax payable by a trader and measured by the amount of the commodities which he buys or sells in the course of his business is, prima facie, a duty of excise " [36] .

1. (1974) 130 C.L.R., at p. 212. 2. (1960) 104 C.L.R., at p. 575. 3. (1960) 104 C.L.R., at p. 578.

Although the authority of Dennis Hotels and Dickenson's Arcade is to be maintained in respect of legislation imposing fees for licences to sell goods calculated by reference to purchases or sales in preceding periods, those cases do not require the conclusion that a tax payable by a producer of goods and calculated by reference to steps in the production of goods taken in a preceding period is not a duty of excise.

Section 11C(4)(a) and reg. 41 impose a duty of excise. To the extent that the demurrers assert the validity of those provisions, they must be overruled.

This case raises the question whether the fee imposed for the issue or renewal of an abattoir licence under the Meat Industry Act 1978 N.S.W. is a duty of excise within the meaning of s. 90 of the Constitution and so exclusively within the province of the Commonwealth and beyond the power of the New South Wales legislature.

Over the years there have been many exhaustive analyses in the cases of the proper meaning to be given to the concept of an excise duty in its constitutional setting and I think that the point has been reached where another etymological or historical dissertation on the subject is unlikely to elucidate further the problems which are contained within that concept. In my view, there is wisdom in the observation of Stephen J. in Dickenson's Arcade Pty. Ltd. v. Tasmania [37] , that there is no ultimate truth which lies at the end of any search for the meaning of the phrase "duty of excise"; that, as Dixon J. pointed out in Matthews v. Chicory Marketing Board (Vict.) [38] , the word excise "has never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application". This makes it all the more important that when there is doctrine which has been accepted in this Court upon the subject it should be observed and not undermined in subsequent decisions. Not only is this required by the ordinary principles of stare decisis, but it is the more necessary when there is no certain guide whether the answers to the questions which arise are right or wrong other than the decisions of this Court itself. Furthermore, it is important to recognize that those questions involve the financial relationship between the Commonwealth and the States and that the methods which the States may employ in raising revenue, particularly since the advent of uniform taxation, have been to a large extent dictated by the course of decision in this Court. Legislation, with vital fiscal and budgetary consequences, has been carefully framed to conform to the principles laid down by authority and serious disruption is caused by any significant departure from those principles.

1. (1974) 130 C.L.R. 177, at p. 230. 2. (1938) 60 C.L.R. 263, at p. 293.

I should like to be able to say that any modern treatment of the subject of excise duties may begin with the decision in Bolton v. Madsen [39] , but reference to some previous decisions is necessary in order to understand the significance of that case, although the reference may be brief because of the numerous comprehensive reviews of the authorities to be found in the reports.

The wide view of a duty of excise, which in England saw the term as covering miscellaneous sources of revenue, has never been adopted in the construction of s. 90 and in Peterswald v. Bartley [40] , the term was said to be intended to mean " a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax". It is no less correct today than it was at the time Peterswald v. Bartley was decided to say that an excise duty falls upon the production or manufacture of goods although, after some fluctuation in judicial opinion, it is now established that the point at which the tax may be imposed extends to any step in the distribution of the goods up to the point at which they pass into consumption. That is not to say that the relationship between an excise duty and the goods upon which it is imposed has become something different or that an excise duty is no longer essentially a tax upon production or manufacture: cf. Hematite Petroleum Pty. Ltd. v. Victoria [41] , per Mason J. It remains a tax upon goods when produced or manufactured but, because of the tendency of the tax to enter the price of the goods, its imposition at any stage before consumption will affect the demand for the goods and so affect, as a matter of commerce, production or manufacture. The point was made succinctly by Kitto J. in Anderson's Pty. Ltd. v. Victoria [42] , when he said that:

a duty of excise is, at bottom, a burden upon home production or manufacture. Obviously it is such a burden if it is payable upon a step in production or manufacture in its character of such a step. Not so obviously but just as certainly, it is such a burden if it is payable upon a step in distribution in its character of such a step; for in that case from the time the goods come into existence the law makes it inherent in their nature, as goods requiring distribution in order to become available to fulfil their purpose, that the tax shall be paid. See also Parton v. Milk Board (Vict.) [43] , per Rich and Williams JJ. and [44] , per Dixon J.; Dickenson's Arcade Pty. Ltd. v. Tasmania [45] , per Gibbs J.; Hematite Petroleum Pty. Ltd. v. Victoria [46] , per Mason J. 1. (1904) 1 C.L.R. 497, at p. 509. 2. (1983) 151 C.L.R. 599, at pp. 628-629. 3. (1964) 111 C.L.R. 353, at p. 374. 4. (1949) 80 C.L.R. 229, at p. 252. 5. (1949) 80 C.L.R., at p. 260. 6. (1974) 130 C.L.R., at p. 218. 7. (1983) 151 C.L.R., at p. 633.

An excise duty is a tax upon goods although, of course, since goods do not pay taxes, that means that it is a tax upon persons in relation to goods. The problem of defining what relationship between the tax and the goods in the hands of the taxpayer will constitute a tax a duty of excise has greatly exercised judicial minds. But in my view it is important to recognize that this is the problem because it cannot be said that every tax which has a tendency to enter into the price of goods and so affect their manufacture or production, however indirectly, is a duty of excise.

Quite obviously all the expenses of the production, manufacture or distribution of goods, whether they are taxes or not, have an ultimate effect upon the price and the quantity or type of commodities which reach the market place. And some of these expenses will clearly be taxes. Land tax, payroll tax, municipal rates and the like may all be levied upon a producer of goods and find their way into the price of the goods. But it has never been suggested that they constitute duties of excise and the reason, upon any view, must be that there is not a sufficient relationship between the relevant tax and the goods manufactured or produced. It is for this reason that the imprecise distinction between a direct tax and an indirect tax has afforded little help in the definition of an excise duty for the purposes of s. 90 of the Constitution. The distinction was of use to the political economist rather than the lawyer. To be sure there are some, perhaps relatively few, taxes which are clearly direct taxes - a dog tax is the common example - but there are others which do not fall clearly into either category. As Dixon J. said of the distinction between direct and indirect taxation in Matthews v. Chicory Marketing Board (Vict.) [47] :

It is evident that, in the application of this distinction to manufacturing or trading businesses or productive enterprises, it may be difficult to say where a licence fee or duty ceases to be a tax imposed upon the person expected to bear the burden so that it is a direct tax and when it is so closely connected with the manufacture, production, or distribution of commercial goods that it forms an element naturally incorporated in the price of every article and constitutes an indirect tax. 1. (1938) 60 C.L.R., at p. 301.

It may, perhaps, be said, as this Court did in Browns Transport Pty. Ltd. v. Kropp [48] , that an excise duty will generally be an indirect tax because it is a tax upon goods rather than persons, but that is not to say that there are not many taxes which share the characteristic of an indirect tax in that they tend to be passed on but are not taxes upon goods and are not excise duties.

In particular, it has never been questioned that the price imposed for the grant of a franchise to manufacture, produce or distribute goods may not constitute an excise duty even though it may clearly be a tax. Thus in Matthews v. Chicory Marketing Board (Vict.) [49] , Dixon J. said: "A tax imposed upon a person filling a particular description or engaged in a given pursuit does not amount to an excise" or as Kitto J. put it in Dennis Hotels Pty. Ltd. v. Victoria [50] : "To say so much is to exclude a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all."

1. (1938) 60 C.L.R., at p. 300. 2. (1960) 104 C.L.R. 529, at p. 560.

The powers given by the Constitution to the Federal Parliament over customs and excise duties are correlative and just as customs duties are exacted upon a step taken with goods - their import or export - so excise duties are also exacted upon a step taken domestically with goods, other than their actual consumption. It is thus that an excise duty, just as is a customs duty, is a tax upon goods, for what attracts the tax - the criterion of liability - is what is done with the goods.

This distinction between an excise duty and other taxes was propounded by Kitto J. in the Dennis Hotels Case in terms which have since commanded general assent. He said [51] :

What is insisted upon may, I think, be expressed by saying that a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. It is, I think, important to recognize that the setting of the passage which I have just cited was a case in which the significant tax was a victualler's licence fee. It was held not to constitute a duty of excise. The fee was exacted for the privilege of carrying on the business of a licensed victualler and was calculated at the rate of six per cent of the amount paid for liquor purchased within the twelve months ending with the last preceding 30 June. It was a fee which was exacted for the renewal of the licence. The passage which I have cited formed an essential part of the reasoning of Kitto J. which led him to the conclusion that the licence fee in that case was a payment for a franchise and not a tax upon goods and, therefore, not a duty of excise. It is true that this reasoning was not applied by a majority in the Dennis Hotels Case, because Fullagar J. thought that the issue could be determined by the fact that an excise duty could not be a tax upon the distribution of goods and must be confined to a direct imposition upon their production or manufacture. That view is, of course, no longer tenable. But it was the approach of Kitto J. which was subsequently accepted unanimously in Bolton v. Madsen [52] by a court comprising six justices and the passage which I have cited was crucial to that approach. Nor was Kitto J. merely offering a guide which might be helpful in determining whether a particular impost constitutes an excise duty. He was dealing with the essential quality of an excise duty as a legal concept and was pointing out that in legal terms there can be no guide other than the criterion of liability selected by the statute imposing the tax. If this did not appear with ample clarity at the time he first propounded the test, Kitto J. put it beyond doubt in Western Australia v. Chamberlain Industries Pty. Ltd. [53] when he said: And there is no other way of determining from legislation the character of a tax that it imposes than by ascertaining what criterion of liability the legislation selects. To say this is not to substitute a formula for the words of the Constitution; it is simply to recognize the essential nature of the question that arises when a particular tax is said to possess a character to which the Constitution refers. The unequivocal terms in which this Court in Bolton v. Madsen [54] adopted Kitto J.'s approach can leave no doubt about the central importance of the criterion of liability in determining whether a tax is a duty of excise, for there it was said that "it is the criterion of liability that determines whether or not a tax is a duty of excise". 1. (1960) 104 C.L.R., at p. 559. 2. (1963) 110 C.L.R., at p. 264. 3. (1970) 121 C.L.R. 1, at p. 20. 4. (1963) 110 C.L.R., at p. 271.

In Hematite Petroleum Pty. Ltd. v. Victoria [55] Mason J. expressed the opinion that Bolton v. Madsen no longer commands the acceptance of the Court as a whole and pointed to the statement by Barwick C.J. in Anderson's Pty. Ltd. v. Victoria [56] , where he said:

in arriving at the conclusion that the tax is a tax upon the relevant step, consideration of many factors is necessary, factors which may not be present in every case and which may have different weight or emphasis in different cases. The "indirectness" of the tax, its immediate entry into the cost of the goods, the proximity of the transaction it taxes to the manufacture or production or movement of the goods into consumption, the form and content of the legislation imposing the tax - all these are included in the relevant considerations. See also per Deane J. in the Hematite Petroleum Case [57] . 1. (1983) 151 C.L.R., at pp. 629-630. 2. (1964) 111 C.L.R., at p. 365. 3. (1983) 151 C.L.R., at p. 665.

It is, I think, unnecessary to go to the other cases in which there are statements which are said to weaken the authority of Bolton v. Madsen: see Dickenson's Arcade Pty. Ltd. v. Tasmania [58] ; M. G. Kailis (1962) Pty. Ltd. v. Western Australia [59] ;Western Australia v. Chamberlain Industries Pty. Ltd. [60] ; Logan Downs Pty. Ltd. v. Queensland [61] .

1. (1974) 130 C.L.R. 177. 2. (1974) 130 C.L.R. 245. 3. (1970) 121 C.L.R. 1. 4. (1977) 137 C.L.R. 59.

The fact is that Bolton v. Madsen [62] stands as a unanimous decision of this Court. In my view, it is a decision which introduced order into confusion in an area in which, as I have said, there are no absolute truths and in which legislatures must depend upon the guidance of this Court. The decision ought to be followed rather than the preferences which individual members of the Court may have expressed upon various occasions for other conclusions. The doctrine of stare decisis in this Court demands that it should be followed unless it is overruled. It is not a decision which can be explained away upon the basis that the criterion by which a tax liability is determined is merely one of the factors which may indicate whether it is a duty of excise. The criterion of liability which the relevant statute selects is the only way in which it can ultimately be determined whether there is a sufficient relationship between the tax and goods - whether the tax is a tax upon goods - in order to constitute it an excise duty. Bolton v. Madsen makes it clear beyond question that the criterion of liability is the critical factor; unless the tax is imposed upon the taking of some step in the production, manufacture or distribution of goods, it will not be an excise duty.

To reintroduce other factors such as the indirectness of the tax or the proximity of the transaction taxed to actual production or manufacture, would be to resort to the vagaries of political or economic theory in preference to the sure path which was laid down in Bolton v. Madsen. It is not a matter of substance versus form. An excise duty is a form of tax; it is a tax upon goods. If another tax has the same or a similar effect as a tax upon goods in that it has a tendency to increase the price of goods to the ultimate consumer, is it for that reason to be classified as a duty of excise although in form it is not a tax upon goods and, if so, what is the distinction between it and a land tax, a payroll tax or even a franchise fee? To depart from the test adopted in Bolton v. Madsen would be to become lost in the wilderness once again or to accept an ever-widening conception of an excise duty which, extended to its logical limits, would subsume all taxes, the ultimate result of which, however indirect, could be shown to affect the production or manufacture of goods.

The difficulty may be illustrated by the submission made by the learned Solicitor-General for the Commonwealth in this case which, when followed through, was that a licence fee imposed upon a producer of goods is a duty of excise if it exceeds a nominal amount and is not by way of payment for services. Not only is such a proposition contrary to authority, but it is contrary to principle, for it has not been doubted that a licence or franchise fee for the privilege of carrying on a business, whether or not it be the manufacture, production or distribution of goods, may be in the form of a tax and yet not constitute an excise duty. Yet the submission made by the Solicitor-General necessarily implied that beyond payment for services or a payment of a nominal amount, any tax, even if otherwise unrelated to goods, is an excise duty if it is imposed upon a producer of goods notwithstanding that it is imposed upon him for the privilege of carrying on his business. The implication is necessary because once the test laid down in Bolton v. Madsen is abandoned there is no principle which suggests that a line can be drawn between one such licence fee or another, nor was any such principle suggested. The submission entailed the abandonment of the test laid down in Bolton v. Madsen because it is not, as I have explained, a test laid down as one of a number, but the critical test with a necessary application. To accept the Solicitor-General's submission would, in my view, be to reject doctrine which has never been doubted, at all events since the decision in Peterswald v. Bartley [63] , and to disrupt even further the delicate financial balance between the Commonwealth and the States.

To say that an excise duty is a form of tax and that whether a tax is in such a form - that of a tax upon goods - is to be determined by reference to the criterion adopted for the imposition of liability to the tax, is not to invite the adoption of mere devices to avoid the constitutional prohibition contained in s. 90. No doubt a particular form of tax may be adopted by a State for the purpose of avoiding the constitutional prohibition and that tight lines and fine distinctions, which are the unavoidable concomitants of revenue laws pressed to their limits, will in some cases occur. But this is no warrant for resort to economic consequences in the name of substance rather than form in order to redefine a legal concept, nor is any justification to be found for so doing in the Constitution itself. Notwithstanding that his was a dissenting judgment in the Hematite Case, Gibbs C.J. put it clearly [64] when he said:

The question whether a State law infringes s. 90 can be answered only by determining whether it imposes that sort of tax. One must first define "excise", and then ask whether the tax imposed by the State statute comes within that definition. It is irrelevant that the State statute brings about the same practical result as a duty of excise, for s. 90 does not forbid the States to achieve any particular economic result; it forbids them to enact a particular form of taxation. And as Menzies J. pointed out in the Dennis Hotels Case [65] , individual conceptions of fiscal policy provide no assistance in the interpretation of s. 90, which is not cast in terms of consequence or purpose but in terms of a concept which is assumed to be capable of legal definition. It is, therefore, meaningless to draw any analogy with cases under s. 92 of the Constitution because that section speaks in terms of freedom of activity which necessarily entails a consideration of consequences rather than concepts. 1. (1983) 151 C.L.R., at p. 618. 2. (1960) 104 C.L.R., at p. 590.

It is hardly to be doubted that a licence fee which is calculated by reference to purchases or sales in a past period will be chosen by a State as a form of tax in preference to a licence fee which is calculated by reference to actual sales or purchases, because in the latter case the fee may constitute a duty of excise. That is to say no more than that a State will cast its tax in a form in which it is valid rather than invalid. But the reason why the tax will in the former case be valid is because it is not a tax upon goods. There is no relationship between the amount of the tax and any goods which the licence permits the licensee to deal with. It may in some, or even most cases, be predicted that the amount of the tax would be little different if the tax were upon actual sales or purchases, but that is, at the time the fee is paid, a mere prediction and not a conclusion required by the nature of the tax. It is to say no more than that in general the size or worth of a business, measured by the volume of past purchases or sales, may not fluctuate markedly from year to year. It may be added that the worth of a business is, of course, an entirely appropriate basis upon which to determine the amount of the fee to be charged for the privilege of carrying on that business even when the fee amounts to a tax. The criterion of liability, which determines the nature of the tax, is not any step taken by the taxpayer in relation to goods. The past sales or purchases may or may not have been made by the taxpayer and the tax relates to the future conduct of the business. In answer to those who suggest that the distinction is one of form rather than substance or practical consequences, I can do no better than to repeat what Kitto J. said in the Dennis Hotels Case itself [66] , of the victualler's licence in question in that case:

No part of such a fee becomes payable at the time of a purchase of liquor for the victualler's premises, and no purchase of liquor for the premises necessarily results in any liability under the section on the part of the person making the purchase. If a particular licensed victualler buys liquor for his premises he does not, by doing so, make himself liable to pay one penny to the Crown. If he renews his licence after the ensuing 30 June, his doing so will involve him in a liability under the section, and past purchases, (which in the case supposed happen to have been his purchases) will be taken into account in working out the amount of his liability according to the statutory formula. But if he does not renew it, he will pay nothing under the section in respect of the purchases; and neither will anyone else who does not take a grant or renewal of a licence for the premises. If someone else does renew the licence, or gets a new licence for the premises, that person will pay the fee, and the fact that he had nothing to do with the purchases on which it is based will not matter. 1. (1960) 104 C.L.R., at p. 564.

Turning to the abattoir licence fee in this case, I may gratefully adopt the analysis of the relevant legislation and of the effect of that legislation which is contained in the reasons for judgment of the Chief Justice and Wilson J. The licence is a licence to operate an abattoir and the fee which is imposed is by reference to the number of animals slaughtered during a period of twelve months which precedes the issue of the licence. A different rate is prescribed for different types of animals. A licence may be transferred by the licensee to another person, although only with the approval of the Meat Industry Authority. If a licence is suspended or cancelled, as it may be in certain circumstances, or if the licensed business ceases operations during the currency of the licence, there is no provision for the repayment of any part of the licence fee. The animals slaughtered do not represent the product of the abattoir, for the animals are further processed to produce commodities in the form of dressed carcasses, meat, offal, pet food material, casings, skins, hides, meat meal, tallow, blood meal, gall and hair. The significance of this is that there is no discernible relationship between the products of the abattoir and the fee imposed for the privilege of running the abattoir and that would be so even if the fee were calculated by reference to the animals slaughtered during the period of the licence, rather than by reference to those slaughtered in a past period: cf. Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [67] . What may be produced by way of final product from different animals may vary considerably both in quantity and kind and even if the fee were to be regarded as a tax upon the slaughter of animals, it could not be regarded as an excise duty upon whatever products might result from the treatment of the carcass. A duty of excise may not require a strict or mathematical relationship between the tax and the quantity or value of the goods produced but there must be a sufficiently close relationship between the tax and the production of the goods to show that the tax affects the goods as the subject of production: see Matthews v. Chicory Marketing Board (Vict.) [68] , per Dixon J.

1. (1962) 108 C.L.R. 189. 2. (1938) 60 C.L.R., at p. 304.

However, the fee is calculated by reference to animals slaughtered in a period which precedes the period of the licence and, even assuming that the slaughter can be identified as a step in the production of the ultimate products, to my mind the result is necessarily dictated by the principle which lies behind the decision in the Dennis Hotels Case [69] , accepted as it was by this Court in Dickenson's Arcade Pty. Ltd. v. Tasmania [70] , H. C. Sleigh Ltd. v. South Australia [71] and Evda Nominees Pty. Ltd. v. Victoria [72] . I am unable to accept that those decisions involved no principle and that their application is to be confined to those cases in which an exact parallel can be drawn between the factual situation and legislation with which the previous cases dealt. The acceptance by this Court in Bolton v. Madsen of the test propounded by Kitto J. in the Dennis Hotels Case makes it artificial in the extreme, in my view, to suggest that the decision in the Dennis Hotels Case must be confined to the legislation and facts of the precise kind dealt with in that case. In particular, I can see no justification for drawing a distinction between production or manufacture and distribution as was done by Mason J. in M. G. Kailis (1962) Pty. Ltd. v. Western Australia [73] : see also H. C. Sleigh Ltd. v. South Australia [1] . It was that distinction upon which the plaintiff relied in this case. It may be conceded, as I have pointed out earlier in this judgment, that an excise duty is essentially a tax upon production or manufacture notwithstanding that its imposition may be upon a step in the distribution of goods. But that in no way weakens the requirement that it must be a tax upon goods and it will only be a tax upon goods if it is payable upon some step taken in relation to them, whether it be in relation to their production, manufacture or distribution. A tax imposed for the privilege of producing goods is not an excise duty unless some such relationship can be established and it cannot be established by reference to past production which, if it is related at all to the production of the licensee during the period of the licence, is no more than a matter of coincidence. The abattoir licence fee is not a duty of excise and, accordingly, I would allow the demurrer of each defendant.

1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1977) 136 C.L.R. 475. 4. (1984) 154 C.L.R. 311. 5. (1974) 130 C.L.R., at pp. 265-266. 6. (1977) 136 C.L.R., at pp. 488, 499-500, 525-526.