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[1983] HCA 23
High Court of Australia
1983-07-01
Deane JJ
Original judgment source is linked above.
High Court of Australia Gibbs C.J. Mason, Murphy, Wilson, Brennan and Deane JJ. Hematite Petroleum Pty Ltd v Victoria [1983] HCA 23
ORDER Demurrer overruled with costs. Declare that s. 2 of the Pipelines (Fees) Act 1981 is invalid. Remit the action to a single justice of this Court for further consideration.
This demurrer raises for consideration the question of the validity of s. 2 of the Pipelines (Fees) Act 1981 Vict.. That section substituted for s. 35(2) of the Pipelines Act 1967 Vict. as amended, ("the Pipelines Act ") seven new sub-sections (sub-ss. (2) to (8)) which, inter alia, fix the amount payable as pipeline operation fees under that Act.
The facts which must be accepted as correct for the purposes of the demurrer may be summarized as follows. The plaintiffs, as joint venturers, carry on the business of the exploration for, recovery, production and processing of petroleum, and have since 1968 produced petroleum from wells located in Bass Strait more than three miles from the coast of Victoria. Their operations are now, and have at all material times been, carried on as follows. Hydrocarbons in the form of oil or gas derived from the wells in Bass Strait are carried from offshore production platforms to a gas processing and crude oil stabilization plant at Longford in Gippsland in Victoria. There the hydrocarbons are processed and separated into stabilized crude oil, liquefied petroleum gas and natural gas. The stabilized crude oil is conveyed by a pipeline ("the crude oil pipeline"), which is the subject of pipeline licences nos. 35 and 126, to a fractionation plant and crude oil tank farm at Long Island Point on Westernport Bay in Victoria. The liquefied petroleum gas is conveyed by another pipeline ("the gas liquids pipeline") the subject of pipeline licences nos. 27 and 34, to the plant at Long Island Point. The natural gas is conveyed by a third pipeline ("the Gas and Fuel Corporation pipeline"), the subject of pipeline licences nos. 75, 117, 120 and 135, to Melbourne. The plaintiffs are the co-owners of the crude oil pipeline and the gas liquids pipeline and the co-holders of licences nos. 27, 34, 35 and 126, which are issued under the Pipelines Act; they also hold the permits which under that Act must be held by a person to whom a licence is issued. They are the co-owners of the substances that pass through those two pipelines. All the petroleum recovered from the wells in Bass Strait is conveyed to the Longford plant and all of the products of the Longford plant (except the natural gas) are conveyed by the crude oil pipeline and the gas liquids pipeline to the Long Island Point plant. There is a continuous flow of crude oil and gas liquids respectively through those two pipelines, and no other substances have been conveyed by them. At the Long Island Point plant further processing occurs; the products are propane and butane (which are marketed as liquefied petroleum gas), ethane (which is marketed separately) and crude oil. Approximately 90 per cent of the propane and butane is exported by ship from Long Island Point and a substantial part of the crude oil, which is sold by the plaintiffs, is transported to its destination by sea. It does not appear from the statement of claim how the ethane is disposed of. There is no other practicable way of conveying the crude oil and the liquefied petroleum gas from Longford to Long Island Point other than by the pipelines. There is no port at Longford; Long Island Point is the nearest deep water port. The recovery of the petroleum from Bass Strait, its processing and production at Longford and Long Island Point and the delivery of the products transported by sea is virtually a continuous process and the transportation of the crude oil and liquefied petroleum gas through the crude oil pipeline and the gas products pipeline is an integral step in the production of the products sold by the plaintiffs. The natural gas produced at Longford is sold and delivered by the plaintiffs to the Gas and Fuel Corporation of Victoria at Longford, and is conveyed to Melbourne by the Gas and Fuel Corporation pipeline, which is owned by the Gas and Fuel Corporation of Victoria, which holds licences nos. 75, 117, 120 and 135.
The plaintiffs seek a declaration that s. 2 of the Pipelines (Fees) Act 1981 is invalid and an order that the defendant repay to the plaintiffs $19,992,920 licence fees paid by them, as they alleged, involuntarily and under protest.
Under the Pipelines Act, no person shall "own or use" a pipeline (which is defined in s. 3) unless, inter alia, he holds a permit entitling him to do so: s. 8. By s. 25(1) no person shall "construct or operate" a pipeline unless he holds a licence issued by the Minister entitling him to do so. The meaning of "own or use" and "construct or operate" appear from the following definitions contained in s. 3:
"Construction" includes, in relation to a pipeline, the placing of the pipeline, and "Construct" and "Constructed" shall have corresponding interpretations.
"Operation" includes, in relation to a pipeline, the maintenance removal and alteration of the pipeline.
"Own and use" means, in relation to a pipeline, the owning and being entitled to convey an authorized thing through the pipeline.
No person other than a permittee shall be entitled to the issue of a licence: s. 25(2). The grant of a permit lies within the discretion of the Minister: ss. 9, 12. A person who has been granted a permit is entitled to the issue of a licence, subject to compliance with certain conditions specified in the Act: s. 26. A licence is to be issued for the same period as the permit held by the licensee: s. 27. Where an application is made for the operation of a pipeline which has been constructed, the Minister may issue a licence for the operation of the pipeline, subject to modifications, alterations and replacements to the pipeline and to such restrictions and conditions of operation as he thinks fit: s. 28. By s. 30 a pipeline is to be constructed in accordance with, inter alia, conditions stated in the licence; further requirements as to the construction of pipelines are contained in ss. 31-34. Section 35, before its amendment by the Pipelines (Fees) Act 1981, provided as follows:
(1) A licensee shall not operate a pipeline unless -
(a) the Minister has informed him in writing that the pipeline is fit to be so operated; and
(b) the current pipeline operation fee has been paid in respect of that pipeline.
(2) The pipeline operation fee shall be payable annually from the date of the issuing of the licence.
The fees prescribed immediately before the amendment in respect of the four licences which relate to the crude oil pipeline and the gas liquids pipeline were $35 (or in one case $40) per kilometre, and the largest annual amount paid by way of pipeline operation fee in respect of any of those licences before the amendment was $7,080. Since the amendment, s. 35(2) has provided as follows: The pipeline operation fee shall be in the financial year 1981-1982 -
(a) in the case of a trunk pipeline, the amount of $10,000,000;
(b) in the case of any other pipeline, an amount equal to $40 for every complete kilometre of pipeline operated under the licence.
Provision is made for the adjustment of the fees in subsequent years by reference to the consumer price index: s. 35(3). The licence fees are payable annually: s. 35(4). By s. 35(8) "trunk pipeline" is defined as follows: "Trunk pipeline" means -
(a) the pipeline to which pipeline licences Nos. 75, 117, 120 and 135 relate;
(b) the pipeline to which pipeline licences Nos. 27 and 34 relate; and
(c) the pipeline to which pipeline licences Nos. 35 and 126 relate.
In other words the only trunk pipelines to which s. 35(2) refers are the Gas and Fuel Corporation pipeline, the gas liquids pipeline and the crude oil pipeline. By s. 36 the Minister may impose on the licensee requirements with regard to the examination, repair, maintenance, adjustment, testing and inspection of the pipeline. By s. 37 the Minister may, by notice served on the licensee, in the interests of safety restrict the use of the pipeline until alterations, repairs or replacements have been made. By s. 38 the licensee is obliged to ensure that immediate notice is given to certain specified authorities in the event of the escape or ignition of anything in the pipeline. The provisions of s. 38 originally referred to the permittee, but were amended in 1971 to refer to the licensee.
The Pipelines Act gives rise to some difficulties of construction. It is not altogether clear what is the statutory purpose of requiring a person who wishes to carry something through a pipeline to obtain a licence as well as a permit, unless it is to dissociate the fee, which is payable for the licence, from the permit. It is made clear enough by ss. 25 and 26 that before any person may construct a pipeline he must hold a licence as well as a permit. The provisions of ss. 8-12 of the Pipelines Act, considered alone, suggest that once a pipeline has been constructed the holder of a permit such as those issued in the present case, viz. a permit to own and use a pipeline for the purpose of carrying hydrocarbons, can lawfully use the pipeline for that purpose. However, to operate the pipeline a licence as well as a permit is needed. The definition of operation in s. 3 includes maintenance, removal and alteration, but is not limited to those things, and the ordinary meanings of the word "operate" include "to cause or actuate the working of; to work (a machine, etc.)" (Shorter Oxford English Dictionary). It seems to follow that a licence is needed to work the pipeline and ss. 36-38 of the Pipelines Act support the view that it is the licensee who is concerned with the working of the pipeline. A licence is also necessary to maintain the pipeline and maintenance is of course necessary to enable the pipeline to be used. The licences actually issued in the present case contain specifications and conditions, inter alia, as to the thing to be carried (which is described as liquid hydrocarbons, usually with further details) and as to the maintenance of the pipelines. Notwithstanding the definition of operation in the Pipelines Act, it is doubtful whether those licences would permit the plaintiffs to remove or alter a pipeline, but there is in any case no suggestion that they intend to do so. The licences authorize the plaintiffs to work and to maintain, and therefore to use, the two pipelines. At the time of the enactment of the Pipelines (Fees) Act 1981 the crude oil pipeline and the gas liquids pipeline had been fully constructed and were in continuous use for the conveyance of the plaintiffs' liquid hydrocarbons from Longford to Long Island Point. It is common ground that the pipeline operation fee which the Pipelines (Fees) Act 1981 made payable in respect of those two pipelines was not a fee for services rendered, but was a tax. In the circumstances to which I have referred, the tax was in my opinion payable for the right to use those pipelines for the conveyance of the liquid hydrocarbons from Longford to Long Island Point.
The first submission on behalf of the plaintiffs is that the pipeline operation fee is a duty of excise, or alternatively a duty of customs, and by virtue of s. 90 of the Constitution beyond the power of the legislature of Victoria to impose.
Clearly the fees were not duties of customs. "Duties of customs under the Constitution are duties levied upon the importation or exportation of commodities into and out of the Commonwealth": The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [1] . The hydrocarbons in the present case are imported, and some of the products into which they are converted are exported, but the tax is not levied either on the importation or the exportation; it is levied for the right to use the pipeline for the conveyance of the hydrocarbons between two places in Victoria. A much more difficult question is whether the fees are duties of excise.
The meaning of the expression duties of excise in s. 90, the purpose of giving the Parliament exclusive power to impose duties of that kind and the way in which the section should be applied to particular statutory imposts are matters which have led to frequent divisions of opinion on this Court. I have already expressed my own views as to the meaning and effect of s. 90 in Dickenson's Arcade Pty. Ltd. v. Tasmania [2] , H. C. Sleigh Ltd. v. South Australia [3] and Logan Downs Pty. Ltd. v. Queensland [4] . It would serve no useful purpose were I to recapitulate my discussion of the authorities which has led me to accept two propositions as correct. First, a duty of excise is a tax directly related to goods imposed at some step in their production or distribution before they reach the hands of the consumer. This means that the person upon whom the tax is imposed is charged by reason of and by reference to the fact that he has taken such a step in relation to the goods: e.g. as manufacturer, producer, processor or seller. Secondly, the question whether a duty is one of excise must be determined by having regard to the legal effect of the taxing statute and its proper construction and it is not enough that the imposition produces the same economic and practical effect as that which a duty of excise would have produced. It seems to me that the first of these propositions is not in doubt, although difficulties sometimes arise in its application. The second proposition has been the subject of controversy; I shall return to it.
Reference to duties of excise appears in ss. 55, 86, 87, 90 and 93 of the Constitution. In each of those sections the expression is used in conjunction with "duties of customs". If one thing is clear, it is that the framers of the Constitution regarded duties of customs and duties of excise as in some way closely connected. However, although the meaning of the words "duties of customs" is plain enough, the word "excise" "has never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application": per Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [5] . We no longer need be concerned with the extended meaning that the word has been given in the English statutes which applied it to a miscellany of heterogeneous imposts (see Matthews v. Chicory Marketing Board (Vict.) [6] ) since it has long been established that the word is not used in the Constitution in that extended sense. However, the meaning of the word in the sense in which it is used in the Constitution was left uncertain by the Constitution itself, and the intentions of the framers of the Constitution in including in s. 90 a reference to duties of excise remains to some extent obscure.
The association in the Constitution of duties of excise with duties of customs suggests that the two forms of taxation were intended to perform related purposes. The reason for giving the Commonwealth exclusive power to impose duties of customs was clear enough. It was intended by the framers of the Constitution that there should be no interstate tariffs and that the taxation of imports into the Commonwealth should be exclusively within the province of the Commonwealth. Although the Commonwealth was given exclusive power to impose tariffs, it might still have been possible for the States, by imposing duties of excise, to prevent the accomplishment of a policy which the Parliament wished to effect by means of its tariff. For example, if the Commonwealth wished to protect local manufacturers, and accordingly imposed duty on certain imported goods, a State which believed in free trade might have imposed a corresponding excise duty on local manufacturers of the same kind. Whether such action would have been likely is another question. Similarly, if the Commonwealth had adopted a policy of free trade, a State might have obstructed that policy by giving bounties to local manufacturers. Section 90 of the Constitution, however, made exclusive the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production and export of goods. This conjunction of customs, excise and bounties suggests that it was intended by s. 90 to give the Commonwealth a real control of its tariff policy, but it is by no means evident from anything that appears in the Constitution that it was intended to go further, and "to give the Parliament a real control of the taxation of commodities", to use the words of Dixon J. inParton v. Milk Board (Vict.) [7] , and still less clear that it was intended to give the Parliament "the control of the national economy as a unity which knows no State boundaries": Western Australia v. Chamberlain Industries Pty. Ltd. [8] .
On any possible view of its effect, s. 90 itself confers on the Parliament only a very limited power to control the economy. There are many taxes which have a tendency to enter into the price of commodities but which are not excises, and which are accordingly within the power of the States to impose. Payroll tax is an obvious example. There are many other legislative measures which a State can take either to discourage or to encourage production and manufacture. On the one hand it can fix quotas on production or manufacture, or indeed forbid production or manufacture altogether; on the other hand it can, for example, favour producers and manufacturers by reducing their taxes and the charges made to them for power and freight, and by building ports and railways for their use and providing them with other assistance. Thus s. 90 does not go very far towards giving the Commonwealth exclusive control of or influence over the production or manufacture of goods. Moreover, s. 109 of the Constitution, which invalidates State laws to the extent to which they are inconsistent with laws of the Commonwealth, plays a major part in preventing any State law from frustrating Commonwealth legislative policy. The presence of s. 109 may well have rendered it unnecessary to include in s. 90 a reference to duties of excise for the purpose of invalidating a State excise duty which counteracted the effect of a Commonwealth tariff.
The power conferred on the Commonwealth by s. 51(ii) to make laws with respect to taxation is unaffected by s. 90. The Parliament may impose a tax whether it is an excise or not. On the other hand, s. 90 seriously restricts the taxing power of the States; it narrows, artificially, the field of taxation open to them. The inability of the States to impose duties of excise has created greater difficulties for the States since the uniform tax arrangements have virtually prevented them from imposing income taxes. One view of experts in the field of public finance is that the wide extension made by this Court to the definition of "excise" is "one of the greatest impediments preventing the achievement of a rational and lasting division of financial powers in the Australian federal system": Mathews and Jay, Federal Finance (1972), p. 318. One result must surely tend to be that the States will impose some forms of taxation which, although constitutionally permissible, are less economically desirable than taxes now categorized as duties of excise.
The conclusion that the grant to the Commonwealth of the exclusive power to impose duties of excise gravely hampers the States in the conduct of their financial affairs without conferring any corresponding benefit on the Commonwealth does not mean that the prohibition which s. 90 contains must be disregarded. It does however suggest that there is no good reason for giving a wide and loose construction to its provisions. It supports the view that there is no justification for deciding the question whether a tax is a duty of excise by considering whether the real or practical effect of the legislation is the same as that which would be produced by a duty of excise. As Walsh J. pointed out in Western Australia v. Chamberlain Industries Pty. Ltd. [9] , it does not assist the Court in deciding whether a tax is an excise to consider the economic consequences of the tax. And when it has been said that in deciding upon the validity of laws we must look to the substance rather than the form, that only means "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": Western Australia v. Chamberlain Industries Pty. Ltd. [10] . With all respect to any who may take a different view, I can see no analogy with questions that arise under s. 92 of the Constitution. That section is expressed to be designed to achieve a result - that trade, commerce and intercourse among the States shall be absolutely free. It is understandable that an enactment which has the practical effect of detracting from the attainment of that result may be regarded as infringing the prohibition contained in the section. However, s. 90 makes exclusive to the Commonwealth a particular sort of tax. 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. The decision in Vacuum Oil Co. Pty. Ltd. v. Queensland [11] strongly supports this approach. In that case it was accepted that the scheme of the Act there challenged did bring about the same result as levying an excise on petrol, but that did not result in its invalidation [12] .
If one were to have regard to practicalities, the decisions of this Court would not inspire one with any firm conviction that the invalidation of State taxes on the ground that they are duties of excise has always either contributed to the effectuation of the policies of the Commonwealth Parliament or has had any other beneficial result of a practical kind. It is difficult to see what practical benefit (except to the taxpayer) ensured from the invalidation of a charge made by a marketing board to meet the expenses of its administration (Parton v. Milk Board (Vict.) [13] ), or a stamp duty on receipts of payments on sales (Western Australia v. Chamberlain Industries Pty. Ltd. [14] ) or a levy on stock imposed to provide a fund to be used in providing husbandry services (Logan Downs Pty. Ltd. v. Queensland [15] ).
The fact that an impost is correctly described as a fee for the right to carry on a particular business or occupation will not prevent it from being a duty of excise. The question, as I have said, is whether the impost is a tax directly related to goods, imposed at some step in their production or distribution before they reach the hands of consumers. In Peterswald v. Bartley [16] , where a fixed fee for a brewer's licence was held not to be an excise, the amount of tax in no way depended on the quantity of beer manufactured [17] . In three cases the Court has upheld the validity of licence fees required to be paid by public carriers. The fee considered in Hughes & Vale Pty. Ltd. v. State of New South Wales [18] , was calculated on the combined weight of the vehicle and the weight of the load it was capable of carrying and was payable in respect of the employment of the vehicle upon a journey independently of the weight or quantity of the commodities carried; it was held not to be an excise because the tonnage rate was not a tax directly affecting commodities [19] . In Browns Transport Pty. Ltd. v. Kropp [20] , the fee was a percentage of the gross revenue derived from carrying on the service authorized by the licence and the Court said [21] : "Here the exaction is imposed without mention of, and without regard to, any commodity or class of commodities. The person taxed is not taxed by reference to, or by reason of, any relation between himself and any commodity as producer, manufacturer, processor, seller or purchaser. The taxes which s. 35(2) authorises, calculated on one or more of a variety of bases, are payable whether the person taxed carried goods or passengers, and, if he carries goods, whatever may be the nature of the goods carried." This was said although in fact the carrier in that case derived revenue only from freight [22] , it was the provisions of the enactment, rather than the facts of the case, that mattered. In Bolton v. Madsen [23] the fee was charged by reference to the carrying capacity of the vehicle and the distance in miles over which the goods were carried on the vehicle. The tax was held not to be an excise because it did not affect the goods carried. The Court said [24] :
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. The tax is a duty of excise only when it is imposed directly upon goods or, to put the same thing in another way, when it directly affects goods, and to establish no more than that its imposition has increased the cost of putting goods upon the market by a calculable amount falls short of establishing the directness of relation between the tax and the goods that is the essential characteristic of a duty of excise. A fixed fee to use a vehicle for a particular journey could by a simple arithmetical calculation be distributed over the goods carried, but counsel for the appellants showed natural reluctance to go as far as to contend that such a fee imposed by virtue of s. 44(2)(b)(i) of the Act would be a duty of excise. It was held to be immaterial that the carrier was also the producer of the wool carried. The Court pointed out [25] that the carrier fell within the provisions of the legislation "not because he wanted to carry wool which he had produced upon a vehicle of which he was the owner but because he wanted to carry wool belonging to him on that vehicle; not because he wanted to carry the wool to market but because he wanted to carry the wool on a Queensland road". They added [25] : If there were a law imposing liability to pay fees for permits to carry a person's own goods upon his own vehicle without more, it could not be said that 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" 1. (1904) 1 C.L.R. 497. 2. (1904) 1 C.L.R., at p. 511. 3. (1953) 87 C.L.R. 49. 4. (1953) 87 C.L.R., at p. 75. 5. (1958) 100 C.L.R. 117. 6. (1958) 100 C.L.R., at pp. 129-130. 7. (1958) 100 C.L.R., at p. 128. 8. (1963) 110 C.L.R. 264. 9. (1963) 110 C.L.R., at pp. 271-272. 10. (1963) 110 C.L.R., at p. 273. 11. (1963) 110 C.L.R., at p. 273.
Browns Transport Pty. Ltd. v. Kropp and Bolton v. Madsen are entitled to be regarded as authoritative. In each case the decision, which was given by all available members of the Court, was unanimous, and the correctness of the actual results reached has, so far as I am aware, never been doubted. Those cases give strong support to the view that the question whether a tax is directly related to goods depends on the provisions of the legislation which imposes the tax, rather than on the practical effect of the tax. They also decide that a tax on the carriage of goods which is fixed by reference to the gross revenue of the carrier, or by reference to the carrying capacity of the vehicle and the distance travelled, is not sufficiently related to the goods carried. In Bolton v. Madsen the decision in Matthews v. Chicory Marketing Board (Vict.) was held to be "plainly distinguishable" [27] ; in other words, it must have been held that the basis adopted for the tax in Bolton v. Madsen had neither a natural, nor a necessary, relation to the quantity of goods carried, within the test suggested in Matthews v. Chicory Marketing Board (Vict.) [28] . Bolton v. Madsen also decided that the fact that the person taxed was a producer was not relevant when the tax was not imposed by reference to the fact that he was a producer.
In three other cases, in which licence fees were quantified by reference to products bought or sold during a period preceding that in respect of which the licence was granted, it was held that the fees were not a tax on goods and therefore not an excise: Dennis Hotels Pty. Ltd. v. Victoria [29] ; Dickenson's Arcade Pty. Ltd. v. Tasmania [30] and H. C. Sleigh Ltd. v. South Australia [31] . Those three cases are consistent with the views that I have expressed. A fourth case of a similar kind, M. G. Kailis (1962) Pty. Ltd. v. Western Australia [32] , in which a different view was taken by the majority of the Court, is of limited authority, for the reasons which I gave in H. C. Sleigh Ltd. v. South Australia [33] . However, the particular question that caused difficulties in those cases does not arise in the present case, and need not now be considered.
On the other hand, in Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [34] , a fee payable by the occupier of an abattoir, slaughterhouse or butcher shop for the purpose of defraying the expenses of inspection of meat for sale and of carrying the Act into effect, and charged, in the case of a carcass which had been broken up, at the rate of 1s. per 1001b. of beef, or portion thereof, was held to be an excise. Dixon C.J. said [35] , that the fee "is a tax upon a step in the preparation of the commodity for the consumer and its manifest tendency is to affect the price". Menzies J. said [36] , that the exaction was "conditional upon the taking of a step in the process of putting meat in the form in which it will be sold for consumption (i.e. the breaking up of carcasses) and calculated upon the weight of the broken up meat". In that case the tax was imposed by reference to a step taken in production and was quantified by reference to the quantity produced, and, once it was held to be a tax rather than a fee for services, was clearly an excise.
In the present case, as I have already said, the pipeline operation fee imposed by s. 35(2) in respect of the crude oil pipeline and the gas liquids pipeline is a tax paid for the right to use those pipelines for the conveyance of the liquid hydrocarbons from Longford to Long Island Point. The pipeline operation fee in respect of the Gas and Fuel Corporation pipeline is a tax paid for the right to use that pipeline for the conveyance of natural gas from Longford to Melbourne. The conveyance of the liquid hydrocarbons to Long Island Point is an integral step in the production of the products sold by the plaintiffs. It does not appear that the same is true of the conveyance of the natural gas to Melbourne. It was argued for the plaintiffs that the fees are in substance a tax upon a step in the production by the plaintiffs of the products derived from the hydrocarbons, but the same cannot be said of the fee payable by the Gas and Fuel Corporation. There is nothing in the Pipelines Act to suggest that any distinction is intended to be drawn between the fees payable in respect of the three trunk pipelines or that liability to the tax in any way depends on whether the things conveyed by the pipeline are to be subject to further processing. If for some reason production ceased at Long Island Point, and the plaintiffs sold the hydrocarbons on their arrival there, that would not affect the plaintiffs' liability for the fee. However, in the case of all three trunk pipelines, if the tax directly affects the goods conveyed it is imposed at a point in their production or distribution before they reach the hands of consumers. The question then is whether the tax directly affects the goods, or in other words whether the plaintiffs are taxed by reason of the fact that they transport the hydrocarbons and by reference to the transportation.
"A pipeline operation fee is payable on the issue of a licence and on each anniversary of the day upon which the licence was issued but in the case of a trunk pipeline to which more than one licence relates the fee shall be payable only in respect of the licence the anniversary of which occurs latest in the financial year": s. 35(4). Unless the plaintiff holds the licence and has paid the fee it is forbidden to operate the pipeline: ss. 25(1), 35(1). Clearly the payment of the fee is a condition of the right to use the pipeline. The amount of the fee does not depend on the extent to which the pipeline is used. In fact the use has been continuous, although it does not appear whether or not that means that the pipelines have been operated under constant pressure and have carried a constant flow of hydrocarbons. However, for the purposes of the Pipelines Act, it is immaterial whether the pipelines carry any particular quantity of, or indeed any, hydrocarbons. If the Minister, acting under s. 37, limited the pressure at which the pipeline might be operated, or prohibited the use of the pipeline or part of it for a time, no rebate would be allowed in respect of any fee already paid. If it were known that in a forthcoming year the use of the pipeline would be prohibited for a time, the fee payable would not be affected. If, perhaps as the result of some disaster, no oil could be produced from Bass Strait, and the use of the pipeline stopped entirely, no part of the fee would be repayable. No doubt in those circumstances, as a matter of practicality, the plaintiffs might not wish to seek a renewal of the licence, but they could not recover the fee if already paid. If it appeared that in a particular year the plaintiffs would carry a greater (or lesser) amount of liquid hydrocarbons than in the previous licence period, that would be quite irrelevant to the amount of fee payable.
The conclusion appears to me inescapable that the fee is not imposed because the hydrocarbons are carried; it is imposed as a condition of the right to carry them.
Moreover, there is neither a natural nor a necessary relationship between the fee fixed and the quantity or value of the hydrocarbons conveyed. Bolton v. Madsen seems to me decisive on this point. It would be mere speculation to suggest that there is any particular relationship between the amount of $10,000,000 and the quantity or value of the hydrocarbons carried in the pipelines. The fact that the fee increases in accordance with the consumer price index throws no light on the question whether any such relationship exists. It is common nowadays for all sorts of payments to be adjusted by reference to the consumer price index - salaries, pensions and rent provide examples - the fact that such an adjustment is made shows no more than that the index is regarded as a convenient if rough guide to the extent of inflation.
The very size of the impost, the fact that it is exacted in respect of pipelines carrying the products of the Bass Strait oil wells and the comparison with the pipeline operation fee charged in respect of other pipelines naturally give rise to the suspicion that the fees charged for the licences for the trunk pipelines are designed to avoid the limitation which s. 90 imposes on the taxing power of the States. However, a tax is not an excise simply because it is large and discriminatory and aimed at companies which carry on a business thought to be lucrative enough to enable them to pay it. None of these circumstances show that there is any relationship between the fee and any step taken by the plaintiffs in respect of the goods. And for the reasons I have given a tax is not an excise because its practical effect appears to be similar to that of an excise. The pipeline operation fee is in my opinion not a tax upon or directly affecting goods; it is what it purports to be, a fee for a licence to use the pipeline. It is not a duty of excise.
It was further argued on behalf of the plaintiffs that the provisions of s. 35(2)-(8) of the Pipelines Act are inconsistent with the Petroleum (Submerged Lands) Act 1967 Cth ("the Commonwealth Act"). It was submitted that there was a direct inconsistency between certain sections of the Commonwealth Act and s. 35 of the Pipelines Act, or alternatively that the Commonwealth legislation reveals a national legislative scheme for taxing the recovery of petroleum from Bass Strait and the product recovered, and thus reveals an intention to cover the field on to which s. 35 of the Pipelines Act intrudes. I have formed the clear opinion that these arguments cannot succeed. I have had the advantage of reading in draft what my brother Wilson has written in relation to this aspect of the matter. I agree with what he has said and could not usefully add anything to his judgment in this respect.
The plaintiffs in this case assert that the "pipeline operation fee" imposed by the Pipelines Act 1967 Vict., as amended, ("the Act") is a duty of excise and, consequently, beyond the legislative competence of the defendant, the State of Victoria, by virtue of s. 90 of the Constitution. By way of demurrer the defendant says that the pipeline operation fee, whilst it may be a tax, is not a duty of excise and does not contravene s. 90. The plaintiffs have paid to the defendant $19,992,920 pursuant to the Act and now claim a declaration that the provisions in the Act imposing the pipeline operation fee are invalid and an order that the amount of $19,992,920 be returned to them.
According to their statement of claim, the plaintiffs carry on a joint venture for the exploration for, and recovery, production and processing of, hydrocarbons in their solid, liquid or gaseous state, which are sold as various petroleum products. The plaintiffs as joint venturers have been engaged in the exploration for and exploitation of the petroleum resources of submerged lands adjacent to the Australian coast near Gippsland. They produce and have produced since 1968 petroleum from wells located more than three seaward miles from the coastline near Gippsland, in the Bass Strait.
From the wells in the Bass Strait the hydrocarbons are conveyed along pipelines, which either carry predominantly gas or predominantly oil, to the gas processing and crude oil stabilization plant at Longford. At Longford processing and purification of the hydrocarbons takes place and the hydrocarbons are thereby separated into liquefied petroleum gas (a mixture of ethane, propane and butane), stabilized crude oil and natural gas (primarily methane). In the course of the processing the heavy hydrocarbons are removed from the gas and passed into the oil processing system. The remaining "dry" natural gas is sold at Longford to the Gas and Fuel Corporation of Victoria and conveyed to Melbourne for industrial and commercial use along a pipeline which is referred to in the statement of claim as the Gas and Fuel Corporation pipeline, a pipeline owned by the Corporation. Light hydrocarbons are removed from the incoming crude oil and passed to the gas processing plants. The liquefied petroleum gas and ethane from the gas plants and the crude oil plant and the stabilized crude oil are conveyed from Longford to the fractionation plant and crude oil tank farm at Long Island Point along two pipelines owned by the plaintiffs. The pipelines are referred to in the statement of claim as the gas liquids pipeline and the crude oil pipeline.
At Long Island Point fractionating, processing and purification takes place. The resulting liquefied petroleum gas, ethane and stabilized crude oil are marketed from Long Island Point, 90 per cent of the liquefied petroleum gas being exported by ship and a substantial part of the stabilized crude oil being transported to its ultimate destination by sea.
The statement of claim alleges the crude oil pipeline and the gas liquids pipeline are the only practicable means of conveying hydrocarbons from Longford to Long Island Point, there being no deep water port adjacent to the plant at Longford. The consequence, according to the plaintiffs, is that the conveyance of hydrocarbons through those two pipelines is an integral step in the production of the products sold by the plaintiffs.
It is common ground that the plaintiffs are the only operators in in the Bass Strait fields, that the entirety of the hydrocarbons recovered by the plaintiffs are conveyed to Longford, that these hydrocarbons are the only hydrocarbons received at Longford and that, other than the natural gas conveyed along the Gas and Fuel Corporation pipeline, all the products emerging from the Longford plant are conveyed by either the gas liquids pipeline or the crude oil pipeline to Long Island Point and that no other substances are conveyed by any of the three pipelines. It follows that the three pipelines convey between them the entirety of the hydrocarbons extracted from the Bass Strait fields and carry no other substances.
The plaintiffs hold various pipeline licences and permits which have been issued pursuant to the provisions of the Act. The authority and effect of the licences and the permits require some examination of the statutory provisions. For the moment it is convenient to list the licences and to state that the plaintiffs hold corresponding permits to own and use a pipeline. In 1968 pipeline licence nos. 27 and 34 were issued in respect of the gas liquids pipeline, the former relating to 107.5 miles (or approximately 172 kilometres) of the 115 miles (or approximately 184 kilometres) of pipeline between Longford and Long Island Point and the latter relating to the remainder. Pipeline licence no. 35 was issued in 1969 and pipeline licence no. 126 was issued in 1980 and together they relate to the crude oil pipeline. Pipeline licence no. 35 originally related to the whole crude oil pipeline, but 87.5 kilometres of the pipeline became corroded and was replaced by pipeline in respect of which pipeline licence no. 126 was issued. The Gas and Fuel Corporation of Victoria hold permits and licences in respect of the Gas and Fuel Corporation pipeline.
The statutory provisions relating to permits and licences are complex with the consequence that the relationship between the two forms of authority is somewhat obscure. Section 8 provides that "No person shall own or use a pipeline unless (b) he holds a permit granted under this Part entitling him to own and use the pipeline." Section 3 defines "Own and use" to mean "in relation to a pipeline, the owning and being entitled to convey an authorized thing through the pipeline". Section 12 states that, on payment of the prescribed fee, the Minister may grant a permit for such period as the Minister determines and on such terms and conditions as are prescribed or as are stated in the permit. The permits held by the plaintiffs authorize them to own and use the gas liquids pipeline and the crude oil pipeline for the conveyance of the products which they carry.
(1) No person shall construct or operate a pipeline unless he holds a licence issued by the Minister under this Part entitling the person to construct and operate the pipeline.
(2) No person other than a permittee shall be entitled to the issue of such a licence.
Section 3 says that " "Operation" includes, in relation to a pipeline the maintenance removal and alteration of the pipeline." "Construct" is also defined in s. 3 and is said to include the placing of the pipeline.
Section 35(1) of the Act prohibits a licensee from operating a pipeline unless "the current pipeline operation fee" has been paid in respect of the pipeline. Prior to 1981 the pipeline operation fee was prescribed by reg. 22 of the Pipelines (Construction and Operation) Regulations 1971 (Vict.), which were made by the Governor in Council pursuant to s. 47(f) of the Act. Regulation 22 provided that:
The pipeline operation fee to be paid annually by the licensee in accordance with Section 35 of the Act shall be calculated at the rate of $35 for each kilometre or portion of a kilometre of length of the pipeline. However, in 1981 the Pipelines (Fees) Act 1981 Vict. amended the Act by repealing s. 35(2), which had provided that "The pipeline operation fee shall be payable annually from the date of the issuing of the licence", and substituted new sub-ss. (2)-(8). The new sub-s. (2) provides: The pipeline operation fee shall be in the financial year 1981-1982 -
(a) in the case of a trunk pipeline, the amount of $10,000,000;
(b) in the case of any other pipeline, an amount equal to $40 for every complete kilometre of pipeline operated under the licence.
(a) the pipeline to which pipeline licences Nos. 75, 117, 120 and 135 relate;
(b) the pipeline to which pipeline licences Nos. 27 and 34 relate; and
(c) the pipeline to which pipeline licences Nos. 35 and 126 relate.
Paragraph (a) refers to the Gas and Fuel Corporation pipeline and, as we have seen, pars. (b) and (c) refer to the gas liquids pipeline and the crude oil pipeline respectively. Therefore, the impost levied by s. 35(2)(a) of the Act attaches solely to the three pipelines conveying hydrocarbons from Longford. Section 35(2)(b), which in practical terms levies a much lower impost, applies to all other pipelines in Victoria.
Section 35(3) provides a formula whereby the amounts levied by sub-s. (2) are indexed in accordance with the consumer price index.
A pipeline operation fee is payable on the issue of a licence and on each anniversary of the day upon which the licence was issued but in the case of a trunk pipeline to which more than one licence relates the fee shall be payable only in respect of the licence the anniversary of which occurs latest in the financial year.
The licensing procedure, for which ss. 25 and 35 provide, seems to be a revenue raising measure. Otherwise it is difficult to account for the introduction of a requirement that a licence in addition to a permit for a licence can be issued only to a person who already holds a permit under s. 12. Indeed, the object of prohibiting the operation of a pipeline without a licence and until the pipeline operation fee is paid is to ensure payment of the fee.
At the outset of any discussion of "duties of excise" in s. 90 three points need to be made. The first is that at its inception in England an excise duty was a tax imposing a burden on home production or manufacture. It was a tax on the production or manufacture of articles which could not be taxed through the customs house. However, it came subsequently to denote a tax on the licences of those who dealt in "excisable commodities". (See Quick & Garran, Annotated Constitution of the Australian Commonwealth (1901), p. 837.) The second point is that the close juxtaposition of the references to "duties of customs" and "duties of excise" in s. 90 together with the reference in s. 93 to duties of excise "paid on goods produced or manufactured in a State" impressed the Court in Peterswald v. Bartley [37] . This consideration more than any other led their Honours to the conclusion that the constitutional conception of an excise was narrower than the English notion, being limited to " 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" [38] . The third point is that the broad effect of the later stream of authority has been to expand the concept of duties of excise and to extend it to taxes imposed upon the sale and distribution of commodities in some circumstances at least, after the process of production and manufacture has been completed.
Accordingly, the Court has rejected the narrow view of excise - that it is confined to taxes upon production and manufacture. Instead it has adopted the broader view that it extends to taxes upon commodities to the point of receipt by the consumer. However, the apparent breadth of this approach is somewhat illusory because the Court has from time to time insisted that there must be a strict relationship between the tax and the goods in order to constitute a tax upon goods. The continuing problem has been to define or describe that relationship accurately and instructively, especially with a view to distinguishing those taxes imposed at the point of sale or distribution which are an excise from those which are not.
In Bolton v. Madsen [39] the Court enunciated a formula which was designed to overcome this problem. The Court said that the tax must be directly related to the goods and the criterion of liability must be a step in the production, manufacture, sale or distribution of the goods. There is a direct relationship between the tax and the goods if the tax is calculated by reference to the quantity or value of goods produced or dealt with in the relevant period. Conversely, it was said that to establish no more than that the imposition of the tax increased the cost of putting goods on the market by a calculable amount, e.g., because the tax was imposed in a fixed amount as the fee for a licence, falls short of establishing the requisite relationship between the tax and the goods.
Though expressed in general terms the formula was primarily designed to identify those taxes affecting sale or distribution which constitute an excise from those which do not. The formula sought to achieve this object by emphasizing the need for a direct relationship between the tax and the goods, so that the amount of the tax inevitably formed a component of the price paid by the next person in line in the course of distribution from producer to consumer. Such a tax was a burden on home production and manufacture. By this means the Court sought to relate the expanded concept of excise back to the original notion expressed in Peterswald v. Bartley that an excise was a duty on production or manufacture. So, in Anderson's Pty. Ltd. v. Victoria [40] , Kitto J. (with whom Taylor J. agreed), when applying the Bolton v. Madsen formula, was able to say "a duty of excise is, at bottom, a burden upon home production or manufacture".
The Bolton v. Madsen formula has not emerged unscathed from the more recent decisions on s. 90. It no longer commands the acceptance of the Court as a whole, or even of a majority, as a conclusive guide as to what is an excise. In Anderson's [41] Barwick C.J. expressed the broad view of an excise, that a tax is a duty of excise if it is upon or in respect of goods at any point including the point of manufacture or production, as they pass to consumption, saying:
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 Dickenson's Arcade Pty. Ltd. v. Tasmania [42] , I agreed with his Honour's comments. 1. (1964) 111 C.L.R., at p. 365. 2. (1974) 130 C.L.R. 177, at p. 241.
It is apparent, as I said in Logan Downs Pty. Ltd. v. Queensland [43] , that the contemplated relationship between the tax and the goods "is more easily perceived" in cases where the tax is levied at a time when the goods are in the course of production than in cases where the tax is levied at a time when the goods are in the course of sale or distribution, after the process of production or manufacture has been completed. This is because the tax on its face appears to be an immediate burden on production or manufacture - it necessarily enters into the pricing of the goods, increasing the price which will be paid by purchasers down the line to the point of receipt by the consumer. A tax upon the sale or distribution of goods will apply to imported goods as well as to goods manufactured in Australia. If, in its application to imported goods, it constitutes a burden on home manufacture, it is because it lowers the demand for the goods generally by increasing the price of them.
The Bolton v. Madsen formula has one advantage. Its application will lead to certainty and predictability in the determination of what is an excise. Unfortunately the formula has a number of countervailing disadvantages. The criterion of liability which it expresses is very much a matter of form, not of substance. This would not matter if the constitutional conception of an excise was itself a matter of form. But there are powerful reasons for thinking that the grant of exclusive power to the Commonwealth to impose excise duties was not intended to be a mere matter of form.
Applied literally, as the decision in Dennis Hotels Pty. Ltd. v. Victoria [44] convincingly demonstrates, the criterion of liability leads to the result that a licence fee charged on a step in production or distribution, calculated by reference to the quantity or value of goods produced or sold in the period for which the licence is held, is an excise, but not if the fee is calculated by reference to the quantity or value of the goods produced or sold in the previous licencing period. The distinction between the two licence fees just mentioned is a mere matter of form. It leaves the State free to levy licence fees and other duties in respect of the production, manufacture sale or distribution of goods in any form except that which is caught by the Bolton v. Madsen strict criterion of liability.
What, one might ask, was the high constitutional purpose intended to be served by prohibiting the States from imposing a tax in this very limited form? To prohibit the States from imposing a tax having an arithmetical relationship with goods produced or sold during a licence period, while leaving the States free to impose any other form of tax in respect of goods produced or sold, achieves nothing. If this be the effect of s. 90 is certainly adds nothing to the Commonwealth's economic and financial powers.
Yet it has been generally accepted that the grant of exclusive power to impose duties of excise in conjunction with a like power to impose customs duties, in a Constitution which frequently refers to the two duties - ss. 86, 87, 90 and 93 "was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action" (Parton v. Milk Board (Vict.) [45] , per Dixon J.; see also, per McTiernan J. [46] ; The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [47] , per Rich J.; Whitehouse v. Queensland [48] , per Dixon C.J.; Western Australia v. Chamberlain Industries Pty. Ltd. [49] , per Barwick C.J.; Dickenson's Arcade [50] , per Mason J.). Excise duties, like customs duties, are significant instruments for raising revenue. What is more important is that Parliament, possessing exclusive power to impose both forms of duties, can protect and stimulate home production by fixing appropriate levels of customs and excise duties. And it can lower the level of domestic prices by lowering customs and excise duties. By lowering customs duties alone it can put pressure on Australian producers and manufacturers to become more competitive.
If the States had power to impose excise duties then the Commonwealth Parliament's power to protect and stimulate home production and influence domestic price levels might be compromised. It is possible that by an exercise of the taxation power the Commonwealth could effectively prevent the States from imposing excise duties. A law enacted under s. 51(ii) providing that no excise duties should be payable on designated goods would, by virtue of s. 109, prevail over any inconsistent State law. This is not a reason for denying that the object of granting exclusive power to the Commonwealth was as I have expressed it to be. The Commonwealth's control is stronger if it possesses exclusive power; then there is no potential for conflict between Commonwealth and State legislation. The possibility of the imposition of taxes on goods by the States in the period prior to the enactment of inconsistent legislation by the Commonwealth undermines the Commonwealth's real control of the taxation of commodities and provides a further reason for rejecting the existence of s. 109 as a basis for narrowing the ambit of the Commonwealth's exclusive power under s. 90. In any case, to make the power exclusive is to free its exercise from some of the political controversies and constraints which would inevitably surround any attempt by the Commonwealth Parliament to pass inconsistent legislation designed solely to override a State law.
That s. 90 confers on the Commonwealth Parliament an exclusive power to grant bounties on the production or export of goods reinforces the proposition that the grant of an exclusive power to impose duties of customs and excise was intended to give the Parliament a real control over the taxation of commodities. It could not have been intended that the States should have the power to burden home production by imposing taxes upon goods, when the Commonwealth was given exclusive power to stimulate production by granting bounties.
That the object of the power was to secure a real control over the taxation of commodities provides strong support for a broad view of what is an excise, one which embraces all taxes upon or in respect of a step in the production, manufacture, sale or distribution of goods, for any such tax places a burden on production. A tax on goods sold, like a tax on goods produced, is a burden on production, though less immediate and direct in its impact. It is a burden on production because it enters into the price of the goods - the person who is liable to pay it naturally seeks to recoup it from the next purchaser. As the tax increases the price of the goods to the ultimate consumer, and thereby diminishes or tends to diminish demand for the goods, it is a burden on production.
To justify the conclusion that the tax is upon or in respect of the goods it is enough that the tax is such that it enters into the cost of the goods and is therefore reflected in the prices at which the goods are subsequently sold. It is not necessary that there should be an arithmetical relationship between the tax and the quantity or value of the goods produced or sold (Matthews v. Chicory Marketing Board (Vict.) [51] ), still less that such a relationship should exist in a specific period during which the tax is imposed. This is because there are many cases where an examination of the relevant circumstances will disclose that a tax is a duty of excise notwithstanding that it is not expressed to be in relation to the quantity or value of the goods. As Dixon J. said in Matthews [51] :
But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise. The contrary approach, that suggested by the defendant, is to ascertain the character of the tax "solely by considering whether the taxing legislation picks out goods to be the subject of the imposition": Chamberlain [53] . This approach ignores the fact that, in determining whether a tax is a duty of excise, the enquiry is a constitutional question. To strictly confine the inquiry to the terms of the statute levying the impost is to "expose the constitutional provision made by s. 90 to evasion by easy subterfuges and the adoption of unreal distinctions" (see Matthews [54] , per Dixon J.; see also Chamberlain [55] ; Logan Downs [56] ). 1. (1938) 60 C.L.R. 263, at p. 304. 2. (1938) 60 C.L.R. 263, at p. 304. 3. (1970) 121 C.L.R., at p. 20. 4. (1938) 60 C.L.R., at p. 304. 5. (1970) 121 C.L.R., at p. 14. 6. (1977) 137 C.L.R., at p. 76.
The Bolton v. Madsen strict criterion of liability bears more than a haunting resemblance to the direct legal operation test formerly applied in s. 92 cases. The similarity of the criteria is apparently to be explained by the circumstance that the question in each instance is for a burden - in the one case on home production, in the other on interstate trade and commerce. The philosophy which underlies the two criteria is that in applying constitutional prohibitions or guarantees the Court should not look beyond the direct legal operation of the impugned law according to its terms. It is a philosophy with which I profoundly disagree. It is necessary to examine the practical operation of a law as well as its terms in order to ascertain whether it imposes an excise (see Matthews [57] ; Chamberlain [58] ; Dickenson's Arcade [59] ). Otherwise the constitutional prohibition is reduced to a formula which lends itself to evasion. It is not without significance that in the more recent s. 92 cases the Court has looked to the practical operation of the law which is alleged to contravene the section - see North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [60] and later cases. The criteria enunciated by Barwick C.J. in Anderson's [61] are a more reliable guide to what constitutes an excise.
It has been said that a fee charged for the privilege of carrying on an occupation, e.g., a lump licence fee, is not an excise (Dennis Hotels [62] , per Kitto J.). This is so, so long as the licence fee is not a tax upon or in respect of the goods. As his Honour recognized [63] :
The fact which makes a licence fee not a duty of excise is not that the exaction is for the licence; it is that the exaction is only in respect of the business generally, and not in respect of any particular act done in the course of the business. See also per Dixon C.J. [64] ; Dickenson's Arcade [65] , per Gibbs J. 1. (1960) 104 C.L.R., at p. 560. 2. (1960) 104 C.L.R., at p. 563. 3. (1960) 104 C.L.R., at p. 547. 4. (1974) 130 C.L.R., at p. 225.
There are many illustrations, notably in England, of fees charged for licences to carry on an occupation which have been regarded as an excise (W. Harrison Moore, The Constitution of the Commonwealth of Australia, 2nd ed. (1910), p. 515). This is because the fee was not merely a fee for the privilege of carrying on a business or activity; it was also a tax upon goods. Where the fee for a licence to sell a commodity is a lump sum that is small or relatively small in amount it is easier to conclude that it is a fee for a privilege or that, if it be a tax, it is not a tax on the commodity. Where, however, though the fee is expressed to be for a licence to produce or manufacture, the terms and practical operation of the law show that it is exacted in virtue of the quantity or value of units produced or manufactured, it is a tax upon goods.
Here the significant features of the pipeline operation fee are: (1) that it is levied only upon a trunk pipeline, i.e., the gas and fuel Corporation pipeline, the Gas Liquids pipeline and the crude oil pipeline, through which flow the entirety of the hydrocarbons recovered from the Bass Strait fields; (2) that it is a fee payable for permission to operate a pipeline for which the plaintiffs otherwise hold a permit to own and use; (3) that the fee is a special fee which is extraordinarily large in amount, having no relationship at all to the amount of the fees payable for other pipeline operation licences - the fee payable for a trunk pipeline is $10,000,000 whereas the fee payable for any other pipeline is $40 per kilometre; and (4) that the fee is payable before an essential step in the production of refined spirit can take place - the transportation of the hydrocarbons from Longford to Long Island Point where the refinery is situated.
The coexistence of these features indicates that the pipeline operation fee payable by the plaintiffs is not a mere fee for the privilege of carrying on an activity; it is a tax imposed on a step in the production of refined petroleum products which is so large that it will inevitably increase the price of the products in the course of distribution to the consumer. The fee is not an exaction imposed in respect of the plaintiffs' business generally; it is an exaction of such magnitude imposed in respect of a step in production in such circumstances that it is explicable only on the footing that it is imposed in virtue of the quantity and value of the hydrocarbons produced from the Bass Strait fields. To levy a tax on the operation of the pipelines is a convenient means of taxing what they convey for they are the only practicable method of conveying the hydrocarbons to the next processing point.
Finally there is the fact that the Act itself discloses a relationship with the hydrocarbons conveyed by the trunk pipelines. I earlier set out the terms of the definition of Trunk pipeline in s. 35(8). That definition makes specific mention of the pipeline licence numbers issued in relation to each trunk pipeline. It is not possible to ignore those references and to say, as the defendant says, that the Act makes no mention of hydrocarbons. Section 35(8) incorporates by reference the terms of the pipeline licences mentioned therein. Paragraph (b) of the definition refers to pipeline licence nos. 27 and 34, which relate to the gas liquids pipeline. Condition II(A) in the former licence and II(C) in the latter say: "The substance to be conveyed in the pipeline shall be non corrosive liquid hydrocarbons consisting substantially of ethane, propane, butane and crude oil." The other licences contain similar conditions.
There was some suggestion in the course of argument that the flow of the hydrocarbons through the pipelines could cease and that, for that reason, the tax could not be said to be imposed upon the hydrocarbons themselves. There are two answers to this. First, the facts in the statement of claim, which, for the purposes of a demurrer, we must take to be correct, state that there has been a continuous flow through the pipelines. Secondly, and more importantly, it matters not that the flow of hydrocarbons may cease. Barwick C.J. said in Chamberlain [66] , that it is "fallacious" to say that "unless as tax by an Act is in all the circumstances to which the Act is intended to apply a duty of excise, it cannot be a duty of excise in any of those circumstances". If it is a duty of excise in any circumstances then it infringes the proscription contained in s. 90. In Matthews [67] the levy which was imposed per half acre of land planted with chicory was an excise notwithstanding that the chicory plantation may not actually have produced any chicory at all. See also Logan Downs [68] .
There was also a suggestion that, by virtue of s. 15, the right to convey the hydrocarbons through the pipelines is consequent upon the permit and that the fee imposed upon the licence is extraneous to the passage of hydrocarbons. Section 15 states that "A permittee shall not convey anything through a pipeline unless the pipeline is authorized for the conveyance of such thing." Also, as we have seen, s. 8 makes the right to "own or use" a pipeline conditional on the holding of a permit and s. 3 says that "Own and use" means owning the pipeline and "being entitled to convey an authorized thing through the pipeline". It is said that the licence only confers the right to "construct or operate" a pipeline (s. 25(1)) and that the definitions of those terms in s. 3 do not go beyond the placing of the pipeline or the maintenance, removal and alteration of the pipeline. Again, there are two answers to this argument. The definition of "Operation" is only an inclusive definition and the ordinary and natural meaning of "Operation" goes far beyond maintenance, removal and alteration and almost certainly extends to the use of the pipeline and the conveyance of hydrocarbons through it. In any case, it is impossible to accept, once one examines the practical effect of the statute, that the permit alone confers the right to convey the hydrocarbons through the pipelines whilst the licence, which attracts a fee of $10,000,000 per annum, confers the right only to do the things mentioned in the definitions of "Construct" and "Operation". The only reasonable conclusion is that the $10,000,000 fee is imposed on the conveyance of hydrocarbons through the pipelines.
I therefore have no need to consider the plaintiffs' other two arguments, asserting inconsistency under s. 109 of the Constitution and asserting that the impost is a duty of customs infringing s. 90.
The Constitution places the general fiscal and economic arrangements of Australia within the legislative power of the Australian Parliament by giving it certain legislative powers and by denying certain legislative powers to the States. The Parliament is vested, in s. 51, with a battery of legislative powers to make laws for the peace, order and good government of the Commonwealth with respect to subjects of economic significance. Of these, par. (i) the commerce power, is a very wide power for regulation of trade and commerce with other countries and among the States, the terms on which it is carried on, including the terms on which persons participate in it, such as wages and conditions of employment.
Section 51, par. (ii) empowers the Parliament to make laws for the peace, order and good government of the Commonwealth with respect to taxation, but so as not to discriminate between States or parts of States. In addition to the prohibition expressed in it, it is, along with the rest of s. 51, subject to the Constitution, and thus to s. 55 (laws imposing taxation shall deal with only one subject of taxation and not deal with any other matter), s. 99 (Commonwealth not to give preference to any State or part) and s. 114 (Commonwealth not to impose any tax on State property) and to any implication in favour of the continued existence of the States and of their capacity to function. Subject to such restrictions the power is as plenary as any other, and authorizes laws which apply to the States, including laws which exclude the States from particular tax fields. In this respect it is unlike the power in the Constitution of the United States of America, which grants Congress "Power to lay and collect Taxes, Duties, Imposts and Excises; to pay the Debts and provide for the common Defence and general Welfare of the United States" (Art. 1, s. 8, 1). Notwithstanding statements to the contrary such as those in Municipal Council of Sydney v. Commonwealth [69] and Victoria v. The Commonwealth [70] , the power of the Australian Parliament is to make laws for peace, order and good government with respect to taxation, not merely to make laws with respect to imposing and collecting taxes for the purposes of the Commonwealth.
Other important economic legislative powers of the Parliament are those with respect to the following: par. (iii) bounties; par. (iv) borrowing money on the public credit of the Commonwealth; par. (xii) currency, coinage, and legal tender; par. (xiii) banking, other than State banking, also State banking extending beyond the State concerned, incorporation of banks, and the issue of paper money; par. (xiv) insurance, other than State insurance; also State insurance extending beyond the State concerned; par. (xvi) bills of exchange and promissory notes; par. (xvii) bankruptcy and insolvency; par. (xx) foreign corporations and trading or financial corporations; par. (xxiii) invalid and old-age pensions; par. (xxiiiA) various allowances, pensions and benefits and services; par. (xxix) external affairs; par. (xxxi) acquisition of property on just terms from any State or person; par. (xxxv) conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond any one State.
Section 90 provides that, on the imposition of uniform duties of customs, the power of the parliament to impose duties of customs and excise, and to grant bounties on the production or export of goods, shall become exclusive (that is, of the power of the States). Section 91 provides exceptions to the prohibition on State bounties and s. 92 guarantees that trade, commerce and intercourse among the States shall be absolutely free. Section 93 deals with payment of customs duties on goods imported into a State and excise duties on goods produced or manufactured in a State and afterwards passing into another State for consumption during the first five years after imposition of uniform customs and until Parliament otherwise provides.
The group of sections, 90, 91 and 92, should be read narrowly, to avoid adverse consequences to the States which could not have been intended by the framers of the Constitution. In Seamen's Union of Australia v. Utah Development Co. [71] , Stephen J. [1] , Mason J. [2] and Murphy J. [3] referred to the crippling result which a wide reading of s. 91 would have on the States. The history of s. 92 shows how a wide reading of this section has had extremely adverse results on the States, particularly in the regulation of transport and has inhibited the Commonwealth from regulating the national economy. Section 90 should be read narrowly for similar reasons. This was the earliest view (see Peterswald v. Bartley [4] ) and has been stated since (for example see Latham C.J. and McTiernan J. in both Matthews v. Chicory Marketing Board (Vict.) [5] and Parton v. Milk Board (Vict.) [6] and Fullagar J. in Dennis Hotels v. Victoria [7] ; myself in Logan Downs Pty. Ltd. v. Queensland [8] ), but it has not prevailed.
In the Australian Constitution an excise is a tax on production (including manufacture). State excise is a tax on production within the State. State customs duty is a tax on goods produced outside and them imported into the State. Section 90 prohibits State taxation which discriminates between goods produced in the State and those produced outside the State, and prohibits State bounties on production (or export). The constitutional concept of excise forbidden to the States is limited to taxes on production within the State; it does not extend to taxes on distribution or consumption unless these are in substance taxes on production within the State. In general, a tax on wholesale or retail sale which does not discriminate between goods on the basis of their production within or without the State, is neither customs nor excise. In general a sales tax applied indiscriminately on all goods or on a class or classes of goods, wherever produced, would not contravene s. 90 as an excise or a customs duty. I say in general, because a tax may in reality be a tax on production, even if expressed to be a sales tax. For example, a sales tax restricted to a particular commodity produced only or substantially only in the State, might be in substance, though not in form, a tax on the production of that commodity in the State.
If the concept of excise is narrow, so that the States have more freedom in the choice of taxing, this does not impair, but enhances, the capacity of the Australian Parliament to manage the economy. This is because the Parliament may allow the State tax to operate, or may legislate to exclude it by operation of s. 109 of the Constitution. Such a federal law must however conform with the Constitution; it must not, for example, offend s. 51(ii) by discriminating between States or parts of States, or offend s. 99 by giving preference to one State or part over another State or part.
As I observed in Logan Downs [9] , the constitutional concept of excise was expanded too widely in the earlier cases such as Dennis Hotels v. Victoria and Dickenson's Arcade Pty. Ltd. v. Tasmania [10] . The artificial taxation arrangements which these decisions have driven the States to adopt are inefficient and have no logical basis. Where transactions continue over a number of years an impost has no different character whether it is imposed in respect of transactions of the current year or those of a past year. Yet the cases treat a State tax imposed in respect of a past year as valid, and one in respect of the current year as an invalid excise. These cases are a blot on our constitutional jurisprudence and are overdue for reconsideration. In my opinion Logan Downs was incorrectly decided, apart from the question of principle involved. The Court was evenly divided, the decision of a justice of the High Court or of a Supreme Court was not called in question by appeal or otherwise, so the decision was given in accordance with the Judiciary Act 1903 Cth, which provides that in such a case, the opinion of the Chief Justice or if he is absent the senior justice present, shall prevail (s. 23(2)). For the reasons I gave in Federal Commissioner of Taxation v. St. Helens Farm [11] the Parliament cannot require a case to be so decided, and apart from form, the substantial result should have been that the challenge to the validity of the Stock Acts 1915-1965 Q. failed.
The Gas and Fuel Corporation pipeline is used to supply methane or natural gas, sold and delivered by the plaintiffs at Longford, to Melbourne for industrial and commercial purposes. This seems more a step in the distribution than the production process. Unless the tax on this trunk pipeline is shown to be in substance a tax on production, it is not an excise. However that tax is not the subject of these proceedings. The challenged imposts are those on the crude oil and liquefied petroleum gas pipelines which run from one part of the plaintiffs' plant (the gas processing and crude oil stabilization plant at Longford) to another (the fractionation plant and crude oil tank farm at Long Island). There is no practical possibility these pipelines can be used other than for the transportation of hydrocarbons. Transportation by pipeline is thus an integral step in the production process. The tax on the pipeline operation, imposed by the insertion into the Pipelines Act 1967 Vict. of s. 35(2)-(8) by the Pipelines (Fees) Act 1981 Vict., is a tax on production in the State. It is very substantial, amounting to $10,000,000 for a trunk pipeline in 1981-1982 (s. 35(2)(a)). It is not a fee for service.
A tax such as this fixed annual fee may still be an excise even if it is not assessed according to the quantity or value of the production (see Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [12] ; Western Australia v. Hamersley Iron Pty. Ltd. [No. 1] [13] ; M. G. Kailis (1962) Pty. Ltd. v. Western Australia [14] ).
The tax in its application to the plaintiffs' pipelines is an excise imposed by the State contrary to s. 90 and therefore invalid.
Since 1968 the plaintiffs, as joint venturers, have engaged in the exploration for and exploitation of petroleum resources in Bass Strait, off the Victorian coast near Gippsland. The petroleum produced from the plaintiffs' offshore production platforms is transported by separate sea pipelines, which carry either predominantly oil or predominantly gas, to the gas processing and crude oil stabilization plant at Longford in Victoria. At the Longford plant the oil and gas are subject to processing and purification and then separated into stabilized crude oil, liquefied petroleum gas and natural gas.
The natural gas is sold at Longford to the Gas and Fuel Corporation of Victoria and conveyed by its pipeline ("the Gas and Fuel Corporation pipeline") direct to Melbourne. The stabilized crude oil and liquefied petroleum gas are transported from the Longford plant by individual pipelines ("the crude oil pipeline" and "the gas liquids pipeline" respectively) to a fractionation plant and crude oil tank farm located at Long Island Point in Westernport Bay, Victoria. At the Long Island Point plant further processing and purification of the products take place with a substantial part of the resulting crude oil and approximately 90 per cent of the liquefied petroleum gas (propane and butane) being exported from Long Island Point by ship.
By s. 8 of the Pipelines Act 1967 Vict., as amended, ("the Act") no person shall own or use a pipeline unless: "(b) he holds a permit granted under this Part entitling him to own and use the pipeline."
(1) No person shall construct or operate a pipeline unless he holds a licence issued by the Minister under this Part entitling the person to construct and operate the pipeline.
(2) No person other than a permittee shall be entitled to the issue of such a licence.
"Operation" includes, in relation to a pipeline the maintenance removal and alteration of the pipeline.
"Own and use" means, in relation to a pipeline, the owning and being entitled to convey an authorized thing through the pipeline.
In 1968 the plaintiffs were issued licences nos. 27 and 34 with corresponding permits for the gas liquids pipeline. That pipeline is, in total, 190 kilometres in length and was licensed to convey non-corrosive liquid hydrocarbons consisting substantially of ethane, propane, butane and crude oil. At all material times there has been a continuous flow of gas liquids through the pipeline. The plaintiffs own both the gas liquids pipeline and the substances which pass through it as tenants in common in equal shares.
The crude oil pipeline is 186 kilometres in length and the plaintiffs were issued with licence no. 35 and a corresponding permit for it in 1968. In 1980, licence no. 126 and a corresponding permit were issued for a new pipeline 87.5 kilometres in length which was constructed as a replacement for part of the original pipeline which had become corroded. Again there has been a continuous flow of crude oil through the pipeline and the plaintiffs own both the pipeline and the substances passing through it as tenants in common in equal shares. The licences specify that only liquid hydrocarbons may be conveyed in the crude oil pipeline.
The Gas and Fuel Corporation is the holder of licences nos. 75, 117, 120, and 135 in respect of the Gas and Fuel Corporation pipeline. That pipeline has been used for the transportation of natural gas which is sold and delivered by the plaintiffs to the Gas and Fuel Corporation at Longford.
Prior to 1981, pursuant to s. 35(2) and the regulations made under the Act, annual pipeline operation licence fees per kilometre or portion of kilometre of pipeline were levied in respect of the Gas and Fuel Corporation pipeline, the gas liquids pipeline and the crude oil pipeline. In 1980 the plaintiffs paid $5,765 in fees with respect to the gas liquids pipeline licences and $8,190 for the crude oil pipeline licences.
However, by s. 2 of the Pipelines (Fees) Act 1981 Vict. s. 35 of the Act was substantially amended to provide for a new type of pipeline operation fee. Section 35 now reads:
(1) A licensee shall not operate a pipeline unless -
(a) the Minister has informed him in writing that the pipeline is fit to be so operated; and
(b) the current pipeline operation fee has been paid in respect of that pipeline.
(2) The pipeline operation fee shall be in the financial year 1981-82 -
(a) in the case of a trunk pipeline, the amount of $10,000,000;
(b) in the case of any other pipeline, an amount equal to $40 for every complete kilometre of pipeline operated under the licence.
(a) the pipeline to which pipeline licences Nos. 75, 117, 120 and 135 relate;
(b) the pipeline to which pipeline licences Nos. 27 and 34 relate; and
(c) the pipeline to which pipeline licences Nos. 35 and 126 relate.
The immediate effect of these provisions was to charge a pipeline operation fee in the financial year of 1981-82 of $10,000,000 per annum on the Gas and Fuel Corporation pipeline (licences nos. 75, 117, 120 and 135), the gas liquids pipeline (licences nos. 27 and 34) and the crude oil pipeline (licences nos. 35 and 126). All other pipelines in Victoria are still subject to the lower fee of $40 per kilometre. In subsequent financial years s. 35(3) provides for the payment of a pipeline operation fee using the sub-s. (2) fee as a base, which is then subject to an indexation formula provided in the subsection. It will be noted that the s. 35(2)(a) fee is imposed as a lump sum without reference to the length of the pipeline or to the type or quantity of material which passes through the respective pipelines.
In this case the State of Victoria has demurred to a claim by the plaintiffs that the pipeline operation fees imposed on the gas liquids pipeline and the crude oil pipeline by the Act are invalid. The plaintiffs' claim is based on two main submissions. First, that the fees are duties of excise or alternatively of customs and are therefore beyond the legislative competence of the defendant by virtue of s. 90 of the Constitution. Secondly, s. 35(2)-(8) of the Act is inconsistent with provisions of the Petroleum (Submerged Lands) Act 1967 Cth as amended and related Commonwealth legislation and, consequently, is invalid by reason of s. 109 of the Constitution. The plaintiffs seek declarations in those two respects and an order requiring the defendant to pay to the plaintiffs the sum of $19,992,920 together with interest, representing the fees paid pursuant to the Act. Apart from the demurrer, the State has filed a defence to the action.
The resolution of the problem which is put forward for decision requires the Court to wrestle again with the meaning of the term "duties of excise" in s. 90 of the Constitution.
The tax here is imposed upon trunk pipelines identified by reference to the numbers of the licences which authorize, subject to s. 35(1), their operation. On the proper construction of the legislation, I conclude that what is taxed is the activity of operating the pipeline in question. Furthermore, it is clear on the facts asserted in the statement of claim that the activity includes the use of the pipelines by the plaintiffs for the transportation of hydrocarbons in the course of the refining process and by the Gas and Fuel Corporation for the transportation of natural gas in the course of its business. This is not to say that the impost is a tax imposed on a step taken in the course of production or distribution of the hydrocarbons. It is payable before any petroleum product is conveyed through the pipeline. It might accurately be described as a direct or personal tax, a fee payable by the owner of a pipeline for the privilege of operating it. At the same time, it bears a close relation to the transportation of the product through the pipeline and I am prepared, for the sake of argument, to proceed on the basis of an acceptance of the plaintiffs' argument that it is properly described as a tax on a step taken in the course of production or distribution. Even so, on the basis of received doctrine, such a conclusion is not of itself sufficient to constitute the tax a duty of excise. It must be directly related to the product which passes through the pipelines. The question is whether there is such a relationship. The tax imposed on each pipeline is a fixed annual fee which is in no way dependent upon the volume of hydrocarbons which pass along the pipeline. It remains constant regardless of the capacity or length of the pipeline and the rate at which the petroleum is pumped through it. It will be payable during periods when because of maintenance or other work referred to in the interpretation in s. 3 of the word "operation" no material is being passed along it.
I find a close analogy to the impost in question in this case in the tax under consideration in Bolton v. Madsen [15] . In that case the fee for the permit required for the owner of a truck to carry wool on a Queensland road was calculated at threepence per ton per mile on the registered carrying capacity of the vehicle over the total distance carried. In submitting that the fee was a duty of excise, counsel argued that a calculation based on the carrying capacity of the vehicle bore a sufficient relationship to the quantity or value of the wool to constitute such a duty. However, the argument was rejected. In the course of its judgment, the Court, in a unanimous decision of six Justices, 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. Let it be assumed that the carriage of wool from the station upon which it has been produced to a wool store for sale is a step at which the imposition of a tax directly affecting the wool would be a duty of excise and, on the footing already stated, let it be further assumed that the exaction of the fee demanded from Turner was directly authorized by the Act: nevertheless, the fee would not be a duty of excise for the simple reason that it would not directly affect the wool. It would be a fee to use a particular truck to carry any quantity of any wool belonging to Turner from Goondibilla Station to Brisbane calculated by multiplying three pence by the load capacity of the vehicle in tons and the distance in miles. The contention that such a fee is a duty of excise is, we think, completely answered by adopting mutatis mutandis what was said by Dixon C.J. in Hughes and Vale Pty. Ltd. v. New South Wales [17] about a tonnage rate levied upon licensees of vehicles used in the course of any trade or business calculated not merely upon the carrying capacity of the vehicle, as here, but upon the combined weight of the vehicle and the load it could carry. His Honour said: - "Finally the point was taken that the levy of the tonnage rates amounted to an excise duty placed beyond the power of the State by s. 90 of the Constitution. In answer to this contention it is, I think, enough to say that the tonnage rate is not a tax directly affecting commodities. It is calculated on the combined weight of the vehicle and weight of the load it is capable of carrying and is payable in respect of the employment of the vehicle upon a journey independently of the weight or quantity of the commodities carried. It is a tax on the carrier because he carries goods by motor vehicle" [18] .
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. The tax is a duty of excise only when it is imposed directly upon goods or, to put the same thing in another way, when it directly affects goods, and to establish no more than that its imposition has increased the cost of putting goods upon the market by a calculable amount falls short of establishing the directness of relation between the tax and the goods that is the essential characteristic of a duty of excise. A fixed fee to use a vehicle for a particular journey could by a simple arithmetical calculation be distributed over the goods carried, but counsel for the appellants showed natural reluctance to go as far as to contend that such a fee imposed by virtue of s. 44(2)(b)(i) of the Act would be a duty of excise.
The sheet anchor of the appellants' argument was the case of Matthews v. Chicory Marketing Board (Vict.) [19] where the tax held to be a duty of excise was a levy upon the producers of chicory of £1 for every half acre of land planted. The fee here is, however, plainly distinguishable from that levy, for the ratio decidendi of that case was that "the basis adopted for the levy has a natural, although not a necessary, relation to the quantity of the commodity produced", to quote the language of Dixon J. (as he then was) [20] . His Honour went on to say: - "By adopting area planted as the criterion of the amount of the levy upon each producer the board has taxed the production of the commodity as effectually as if it had selected, for instance, the weight of the chicory gathered in its raw state, the quantity treated or the gross returns. For it has placed upon an essential step in production, namely, planting, an impost computed quantitatively" [20] . The permit fee in question in the present case could not be similarly described for, to quote again what has already been cited from Hughes and Vale Pty. Ltd. v. New South Wales [22] , the tax is independent "of the weight or quantity of the commodities carried" [23] .
Support for the conclusion that if the permit fee under consideration had been imposed by the Act it would not be a duty of excise is to be found in the decision in Browns Transport Pty. Ltd. v. Kropp [24] for, in deciding that a fee fixed under s. 35(2)(ii) of The State Transport Facilities Acts Q. was not a tax "upon" or "in respect of" or "in relation to" goods, the Court said: - "The person taxed is not taxed by reference to, or by reason of, any relation between himself and any commodity as producer, manufacturer, processor, seller or purchaser The exaction is in truth, as it purports to be, simply a fee payable as a condition of a right to carry on a business" [25] . It was sought to distinguish that decision by pointing out that here Turner was not merely the carrier of the wool but that he was the producer of the wool which the vehicle was carrying. But, if attention is concentrated on the facts of the particular case, it is still clear that the fee in question was payable as a condition of a right to carry on that part of his business which consisted of carrying his goods upon the road. The distinction which was attempted therefore fails.
However, Mr. Gleeson, for the plaintiffs, advances two submissions to meet the difficulties posed by the principles so clearly expounded in Bolton v. Madsen. In the first place, he argues that there is a natural relationship to quantity or value established by the direct imposition of a tax on the operation of a particular pipeline and draws an analogy with the tax measured by the area planted with chicory which was determined to be a duty of excise in Matthews v. Chicory Marketing Board (Vict.) [26] . But on examination the supposed analogy breaks down. In that case the tax varied with the extent of the area that was planted. In the course of argument in the present case much reliance was placed on the words of Dixon J. in Matthews [27] that "the basis adopted for the levy has a natural, although not a necessary, relation to the quantity of the commodity produced". That statement must not be taken out of its context and relied upon to characterize any tax which may be seen to have some effect, however indirect, on the cost of producing goods as a tax directly affecting commodities. In Bolton v. Madsen the Court was confronted with precisely the same argument based on Matthews . It was rejected. The Court, as appears from the passage which I have already cited, answered the contention by observing that in Matthews Dixon J., after referring to the area planted as providing a natural though not a necessary relation to the quantity of the commodity produced, made it plain that he considered such a tax as a tax on "the production of the commodity as effectually as if it had selected, for instance, the weight of the chicory gathered in its raw state, the quantity treated or the gross returns". Dixon J. then proceeded, in a sentence of critical importance, to assign a reason for that conclusion [27] : "For it has placed upon an essential step in production, namely, planting, an impost computed quantitatively."
In the second place, Mr. Gleeson argues in the alternative that even though there may be no relation in this case in terms of quantity or value between the tax and the goods, the very size of the impost, its discriminatory character and the directness of its application to a step in production are sufficient to establish it as a duty of excise.
The argument is a formidable one. There is nothing of general application about this tax. It is an enormous impost laid directly by the legislature on three specified pipelines, each of which is associated with the transportation of Bass Strait oil and gas. It may be fairly described, so it seems to me, as a tax on the business of refining or of distributing that oil and gas. But is such a tax properly described as a duty of excise? Underlying the submission is the premise that the requirement of a relationship to the quantity or value of goods has been no more than an aid in identifying a duty of excise. I find it impossible to accept such a premise. The element of a relation to quantity or value, accepting the broader application of that term in the sense discussed by Dixon J. in Matthews , is essential to distinguish a tax imposed directly upon goods or directly affecting commodities from a tax which does not satisfy that description even though, like any other general cost of running a business, it may be expected to enter into the price at which the goods are sold. A relationship to quantity or value has always been insisted upon as an essential feature of a duty of excise. In Peterswald v. Bartley [28] Griffith C.J., expressing the view of the Court, said that the term "is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured". In Matthews , Dixon J. while rejecting the necessity of a calculation based strictly on the quantity or value of the goods described the basal conception of an excise as a tax " directly affecting commodities" [1] and spoke of it being " levied " upon goods [2] (my emphasis). As I have noted, his Honour found a quantitative relation to exist between the area planted with chicory and the product harvested.
In any event, the specific features upon which Mr. Gleeson relies do not carry the plaintiffs very far. The size of the impost, however disturbing a feature of the case it may be, does not assist in its characterization apart from requiring its rejection as a fee for services and its characterization as a tax. It does no more than reflect the legislature's assessment of the value of the right to carry on the business in respect of which it is imposed. If it does not directly affect the goods then however serious its indirect effect may be it will not satisfy the test. Similarly, the discriminatory character of the tax is not determinative of its character. If in its nature the tax is the price exacted by the legislature for the privilege of carrying on a business then it cannot matter that one particular business is singled out as the enterprise chosen to bear it. Indeed, the very directness of the application of this tax to numbered pipelines and its fixed lump sum character may tend to indicate that it is a direct or personal tax imposed on the owners of the pipelines. Such taxes are not duties of excise. They directly affect people rather than goods. As Dixon J. remarked in Matthews [3] : "A tax imposed upon a person filling a particular description or engaged in a given pursuit does not amount to an excise." The reason is that such a tax does not directly affect commodities. Finally, I have already endeavoured to show, by reference to the principles enunciated in Bolton v. Madsen that even if the impost be taken to tax a step in production that characteristic is not sufficient of itself to constitute it an excise.
I would stress that it is the nature of a tax and not its economic consequences which determines whether it is a duty of excise. It may be, as the Court said in Bolton v. Madsen that the owner-carrier in that case could by a simple calculation determine the cost per bale of wool which the tax represented. So in the present case, it can readily be seen that the tax is a very significant addition to the costs which the producer or distributor incurs in operating the pipeline. In practical terms it adds to the cost of marketing Bass Strait oil and gas. But such a consideration does not establish the direct relationship between the tax and the goods that is the essential characteristic of a duty of excise. As Barwick C.J. said in Western Australia v. Chamberlain Industries Pty. Ltd. [4] :
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. To the like effect is the statement of Walsh J. [5] in the same case. 1. (1970) 121 C.L.R. 1, at p. 13. 2. (1970) 121 C.L.R., at p. 37.
Mr. Gleeson described the purpose of s. 90 as intended to prevent State fiscal activity from undermining what he described as the constitutional objective of securing national control over the exploitation and production of natural resources. References have been made from time to time in the judgments of members of this Court to the question of constitutional purpose lying behind s. 90: cf. Dixon J. in Parton v. Milk Board (Vict.) [6] ; Barwick C.J. in Chamberlain [7] . Speaking for myself, however, and with all respect, I find little assistance, when required to apply s. 90, in resort to questions of assumed constitutional purpose. The difficulty is that there is no certain guide to the purpose of s. 90 save that which is to be gleaned from the words of the section. The power to impose duties of customs and of excise, and to grant bounties on the production or export of goods, is denied to the States. Therein lies a constitutional distinction in terms of legislative power which it is the duty of this Court to preserve. That section alone defines the limits of exclusive legislative power in this respect. In provides no authority to the Court to assume the responsibility of determining larger questions of fiscal responsibility within the federation; nor, of course, is the Court equipped to undertake such a task. Those larger questions must be determined, consistently with the Constitution, in the political arena. It is there that the resources available in the community to cope with economic conditions of increasing complexity may be appropriately discovered and utilized.
The context within which s. 90 is to be construed and applied is discussed by Stephen J. in H. C. Sleigh Ltd. v. South Australia [8] in terms which I find to be relevant and helpful in the resolution of the problem in the present case. His Honour said:
It was submitted that to distinguish between a licence fee calculated on sales or turnover of a past period and one calculated on current sales or turnover is merely artificial, that it lacks some worthwhile quality of reality and is destructive of clear constitutional intent. So to submit is to assume that the exclusive nature of the federal Parliament's power to impose duties of excise can readily and with accuracy be explained by reference to constitutional purpose or historical reasons, that purpose or those reasons providing a reliable guide to the identification of the precise field of revenue-raising from which the States are to be excluded. Yet experience in the past suggests that niether source offers certain guidance and that it is, instead, to the meaning of "duties of excise" that attention must be directed if the extent of the area immune from State exaction is to be discovered. If, then, it be a feature of "duties of excise" that they are directly related to goods and are imposed at some step in their production or distribution (Bolton v. Madsen [9] ) it is entirely realistic that importance should be attached to the distinction to which I have referred, constitutional limits of revenue-raising power being fixed by reference to the particular character which an impost bears, it necessarily follows that a feature of that impost relevant to that character will be an important determinant of validity. Moreover, since s. 90 denies to the States only those imposts of a particular character, it is to be expected that imposts especially designed so as to lack that character will be resorted to; this is no more than the consequence of delimiting legislative capacity by reference to a particular class of impost identifiable by particular characteristics. These words emphasize to my mind that if one in seeking to determine the true character of a tax is unable to rely on the legal operation of the statute which imposes it, then the important constitutional distinction which is drawn by s. 90 must inevitably be eroded. If the term "duties of excise" is to be extended to cover any impost which may be seen in a practical sense to increase the cost of production or distribution of goods then the powers of taxation hitherto conceded to State legislatures will be seriously diminished. It may be noted that such a broad view of an excise duty finds no support by reference to the other matters referred to in s. 90. Both the term "duties of customs" and the term "bounties on the production or export of goods" signify in each case a necessarily direct and immediate connexion with commodities. Cf., also, Chamberlain [10] ; Logan Downs Pty. Ltd. v. Queensland [11] . 1. (1977) 136 C.L.R. 475, at p. 497. 2. (1963) 110 C.L.R., at p. 271. 3. (1970) 121 C.L.R., at pp. 20-21, 37. 4. (1977) 137 C.L.R. 59, at p. 64.
In the course of argument the plaintiffs sought to draw support from the decisions of this Court in Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [12] and M. G. Kailis (1962) Pty. Ltd. v. Western Australia [13] . However, reference to the facts in each of those cases serves only to demonstrate the distinction that exists between those cases and the present case. In both Swift and Kailis the tax was calculated on the volume of the product that was put through the processing establishment: in Swift it was by reference to the weight of meat broken up, and in Kailis by reference to the value of fish caught or purchased for processing. Leaving aside the distinctive feature in Kailis which occasioned a difference of opinion between the members of the Court, it can be seen that in each case the tax was imposed directly upon the product. It is that feature which is conspicuously lacking in the present case. As I have endeavoured to show, it is no answer to say that the tax, imposed by reference not to the hydrocarbons the subject of production but to the operation of a piece of capital equipment used in the transportation of the product has substantially the same effect as if it taxed the product itself. If every tax which could be seen to increase the cost of producing or distributing goods was to be classed as a duty of excise it is difficult to see why that classification would not extend to a host of taxes such as land tax, payroll tax, and licence fees imposed as the price of the privilege of carrying on a business. Yet it has never been suggested that s. 90 has or should have the effect of placing these imposts beyond the power of a State legislature. Nor can I perceive any warrant for so construing s. 90 as to set at nought the long and arduous course of definition which is reflected in the past decisions of this Court.
In my opinion, the tax is not a duty of excise because it lacks any or any sufficient relation to goods. Such a conclusion must also of necessity answer the alternative contention that it is a duty of customs.
It remains to consider the submission that the provisions of s. 35(2) of the Act are invalid for the reason that they are inconsistent, within the meaning of s. 109 of the Constitution, with the Petroleum (Submerged Lands) Act. In my opinion the submission must fail. The challenged provisions tax the operation of a pipeline in Victoria; I can find nothing in the Commonwealth legislation which is directly inconsistent with such a tax, nor an intention to cover a field which would include such a tax.
The claim of direct inconsistency is based on several provisions of the Petroleum (Submerged Lands) Act which exclude the operation of any tax in the adjacent area by reason of the application to that area of State laws (cf. s. 9(3)(d)). The preamble to that Act includes the following paragraphs:
and whereas the exploration for and the exploitation of the petroleum resources of submerged lands adjacent to the Australian coast would be encouraged by the adoption of legislative measures applying uniformly to the continental shelf and to the sea-bed and subsoil beneath territorial waters:
and whereas the Governments of the Commonwealth and of the States have decided, in the national interest, that, without raising questions concerning, and without derogating from, their respective constitutional powers, they should co-operate for the purpose of ensuring the legal effectiveness of authorities to explore for or to exploit the petroleum resources of those submerged lands:
and whereas the Governments of the Commonwealth and of the States have accordingly agreed to submit to their respective parliaments legislation relating both to the continental shelf and to the sea-bed and subsoil beneath territorial waters and have also agreed to co-operate in the administration of that legislation:
It was a feature of the offshore petroleum scheme instituted in 1967 that the Commonwealth and each State legislature should enact mirror legislation relating both to the continental shelf and to the sea-bed and subsoil beneath territorial waters in a co-operative venture. At the time that legislation was enacted there was uncertainty both as to the legislative competence of the Commonwealth with respect to the territorial sea and as to the legislative competence of the States with respect to both the territorial sea and the continental shelf. The purpose of s. 9 is to ensure that the general framework provided by State laws should extend as Commonwealth law to the adjacent area for the protection and well-being of those persons present in the area. Its subject matter does not include State laws in so far as they apply to or in relation to exploration for, or operations for the recovery of petroleum or to pipelines. It was a necessary feature of such a general "application of laws" provision that it exclude the imposition of any tax because of the constitutional limitations attaching to the taxation power of the Commonwealth (cf. s. 51(ii.) and s. 99 of the Constitution; Commonwealth Places (Application of Laws) Act 1970 Cth as amended, s. 4(5)(a)). There can be no question of the tax which is now under challenge operating in the adjacent area. It taxes the operation of a pipeline within Victoria and nothing more. In my opinion, therefore, no question of direct inconsistency can arise.
The only respect in which the alternative aspect of the inconsistency argument can avail the plaintiffs is if the Commonwealth offshore scheme evinces an intention so to cover the field of recovery of offshore petroleum as to exclude any State law, operative wholly within a State, from taxing an activity associated with that petroleum after it arrives in the State. If the State law imposed a duty of excise, it would be invalid in any event, so the argument must proceed on the basis that while not a direct tax on the petroleum it nevertheless enters a field which the Commonwealth has reserved to itself. In my opinion, the Commonwealth legislation does not evince any intention to deal with activities associated with the petroleum which is recovered offshore once it has entered the territory of a State. It must have been recognized that on entry into a State all the laws of that State relevant to activities associated with the product would apply to it. The discriminatory nature of the present tax is a distinctive feature of the circumstances of this case but there is no indication of an intention to exclude any State law, whether discriminatory or not, attracted by the activity of transporting the petroleum intrastate. It is perhaps not without significance that the learned Solicitor-General of the Commonwealth, although making an appearance in order to argue the excise point in support of the plaintiffs, did not offer any submissions on the question of inconsistency.
The plaintiffs who are the co-holders of pipeline licences under the Pipelines Act 1967 Vict. seek a declaration that s. 2 of the Pipelines (Fees) Act 1981 Vict. which inserted sub-ss. (2) to (8) in s. 35 of the Pipelines Act is invalid. The principal ground advanced in their statement of claim is that the inserted sub-sections impose a tax which is a duty of excise and which is, by virtue of s. 90 of the Constitution, beyond the power of the Victorian Parliament to impose. The defendant State of Victoria demurs to that allegation - not on the ground that the inserted sub-sections do not impose a tax, but on the ground that the tax thereby imposed "is not and does not purport to be a duty of excise contrary to s. 90 of the Constitution ".
The tax is called a "pipeline operation fee". For the financial year 1981-1982, the fee was $10,000,000 in the case of each of three trunk pipelines identified as such for the purposes of s. 35. Pipeline operation fees are payable annually. In the years after the financial year 1981-1982 the amount of the pipeline operation fees is subject to adjustment according to variations in the consumer price index for Melbourne. Section 35(8) identifies the three trunk pipelines by reference to the pipeline licences that relate to each of them. The pipeline licences relating to two of them (known as the gas liquids pipeline and the crude oil pipeline) are held by the plaintiffs; the pipeline licences relating to the third of them are held by the Gas and Fuel Corporation of Victoria. In the case of a pipeline which is not a trunk pipeline, the fee for the financial year 1981-1982 was fixed at the rate of $40 per complete kilometre.
The statement of claim describes the trunk pipelines and their operation. The plaintiffs recover petroleum from submerged lands adjacent to the Australian coast near Gippsland in Victoria and bring it ashore from production platforms in Bass Strait to a gas processing and crude oil stabilization plant at Longford in Victoria. At that plant the petroleum is processed and purified and separated into three products which enter and are carried by the respective trunk pipelines. The gas liquids pipeline carries liquid petroleum gas (being a mixture of ethane, propane and butane) from the Longford plant to a fractionation plant and crude oil tank farm located at Long Island Point in Victoria, the deep water port that is closest to Longford. The crude oil pipeline carries stabilized crude oil from the Longford plant to the Long Island Point plant. The plaintiffs own these two trunk pipelines and the products which they carry. The Gas and Fuel Corporation's pipeline carries natural gas, primarily methane, from the Longford plant to Melbourne. The plaintiffs sell and deliver this natural gas to the Gas and Fuel Corporation at Longford.
The recovery of petroleum from the submerged Bass Strait lands, its processing at the Longford plant and the carriage of liquid gas and crude oil to the Long Island Point plant are continuous; there is a continuous and full flow of liquid gas and crude oil through the respective trunk pipelines, which provide the only practicable means of conveying their respective products from the Longford plant to the Long Island Point plant. Nothing else is carried by these pipelines. Consistently with the conditions of the licences held by the plaintiffs nothing else could lawfully be carried in them. At the Long Island Point plant, the liquid petroleum gas is fractionated and processed. Propane and butane can be stored there. Approximately 90 per cent of the propane and butane produced are exported by ship from the Long Island Point plant as liquid petroleum gas. The stabilized crude oil passes into storage tanks at the Long Island Point plant where further water is removed from it. Thereafter it is sold by the plaintiffs. A substantial part of the crude oil is transported by sea to its ultimate destination. Paragraph 33 of the statement of claim alleges:
The transportation of gas liquids and crude oil by the plaintiffs through the Gas Liquids Pipeline and the Crude Oil Pipeline is an integral step in the production of the products sold by the plaintiffs as aforesaid.
The plaintiffs hold permits granted by the Minister to own and use the pipelines (ss. 9 and 12). As permittees, the plaintiffs were entitled to apply to the Minister for Minerals and Energy and to be issued licences to construct and operate the pipelines (ss. 25 and 26). They hold the appropriate licences. But neither the permits nor the licences authorize the plaintiffs at any material time to operate the pipelines if the current pipeline operation fee has not been paid, for s. 35(1)(b) provides:
(b) the current pipeline operation fee has been paid in respect of that pipeline.
The plaintiffs submit, in the light of this provision, that sub-ss. (2) to (8) of s. 35 impose a tax upon the plaintiffs' operation of the pipelines, that the plaintiffs' operation of the pipelines is a step in the production, manufacture or distribution of the petroleum products that they sell from the Long Island Point plant and that the tax is a duty of excise as that term is understood for the purposes of s. 90 of the Constitution.
Kitto J. recalled in Dennis Hotels Pty. Ltd. v. Victoria [14] that the term "excise" had come to be used in the United Kingdom as a convenient label for a mass of heterogenous taxes collected by the excise administration. In this country the meaning of the term for the purposes of s. 90 of the Constitution has been expounded in the judgments of this Court. The line of authority stretches back to Peterswald v. Bartley [15] and it has not been uniform. However, more recent cases have taken a passage from the judgment of Kitto J. in Dennis Hotels [16] as an important formulation of principle:
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. That view was adopted by the Court in Bolton v. Madsen [17] . Nevertheless, since Bolton v. Madsen, "conflicting opinions have been expressed as to whether the criterion of liability under the statute imposing the tax, or the practical effect of the legislation, is determinative of the question whether the tax is a duty of excise" (per Gibbs J. in Logan Downs Pty. Ltd. v. Queensland [18] ). That conflict leaves untouched the notion that a tax upon the taking of a step in the process described by Kitto J. is of the essence of a duty of excise (per Barwick C.J. in Anderson's Pty. Ltd. v. Victoria [19] ). 1. (1960) 104 C.L.R. 529, at pp. 558-559. 2. (1904) 1 C.L.R. 497. 3. (1960) 104 C.L.R., at p. 559. 4. (1963) 110 C.L.R. 264, at p. 273. 5. (1977) 137 C.L.R. 59, at p. 64. 6. (1964) 111 C.L.R. 353, at p. 364.
The facts of the present case do not call for an exploration of the extremities of the line either backward to the earliest stage of production or forward to the point of receipt by the consumer. The movement of gas liquids and crude oil through their respective pipelines is an integral part of the process of converting the petroleum brought ashore from the Bass Strait field into the products sold from the Long Island Point plant, and lies, so to speak, somewhere in the middle of the process of production.
If the tax imposed by s. 35 is a duty of excise, it is because it taxes the taking of a step in the production of those goods which are sold from the Long Island Point plant. There is no other class of excise duty into which that tax might fall. But a tax upon the taking of a step in a process of producing or distributing goods is a tax which must be distinguished from "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" (per Kitto J. in Dennis Hotels [20] ). The distinction between a tax upon the taking of a step in the process of producing, manufacturing or distributing goods and a tax that is no more than an exaction for the privilege of being allowed to engage in the process is not always easy to perceive.
A fee exacted for a licence to carry on a business has been held to be a duty of excise in cases where the amount of the fee varies according to the quantity or value of goods produced, manufactured or distributed during the period to which the licence relates (the second tax considered in Dennis Hotels [21] ) or during the period preceding the period covered by the licence (M. G. Kailis (1962) Pty. Ltd. v. Western Australia [22] ). However the question upon which the Court was divided in those cases, namely, whether the calculation of the tax upon the value of goods produced or distributed in a preceding period is indicative of a duty of excise or is inconsistent with a tax having that character, does not arise directly in the present case. In the present case, the question is whether the tax which is imposed is merely a fee for a licence to carry on a business generally: see per Gibbs J. in Dickenson's Arcade Pty. Ltd. v. Tasmania [23] where his Honour agreed with Kitto J. (in Dennis Hotels [24] ) that "[t]he fact which makes a licence fee not a duty of excise is not that the exaction is for the licence; it is that the exaction is only in respect of the business generally, and not in respect of any particular act done in the course of the business".
Where the amount of a licence fee is fixed, unaffected by the quantity or value of goods produced, manufactured or distributed, the fee lacks the proportionate relationship with the quantity or value that is an expected concomitant of a tax imposed upon or in respect of goods. It is true that there is no proportionate relationship between the amount of the tax imposed by s. 35 and the quantity or value of the goods which are said to be subject to a duty of excise in the present case, i.e., the gas liquids and crude oil that pass through the respective trunk pipelines. The annual pipeline operation fee is fixed by a formula that takes no account of the quantities of gas liquids and crude oil that will flow through those pipelines in the period to which the fee relates. The statement of claim does not allege that the gas liquids and crude oil flow through or can be predicted to flow through the respective trunk pipelines at a rate which is constant from year to year or which bears any known relationship to the rate of flow during an earlier period. Distributing the cost of meeting the tax over the goods transported in the pipelines from year to year, the unit cost will reflect both the movements in the consumer price index affecting the total tax and changes in the quantities of gas liquids and crude oil transported in the pipelines.
Though the presence or absence of a proprotionate relationship between a tax and a quantity or value of goods is a relevant and important factor for consideration in ascertaining whether the tax is imposed upon or in respect of goods, such a relationship is neither an exhaustive nor an universal criterion for determining whether a particular tax is a duty of excise. Menzies J. found in Anderson's Pty. Ltd. v. Victoria [25] that, in the absence of a proportionate relationship, the challenged tax was not a duty of excise, yet in Western Australia v. Hamersley Iron Pty. Ltd. [No. 1] [26] his Honour held that such a relationship was not an essential element in a duty of excise. He said:
It seems to me, however, that, when in the case of Matthews v. Chicory Marketing Board (Vict.) [27] , it was decided that a levy of £1 for every acre of land planted with chicory was a duty of excise, there was a departure from the requirement that to be an excise a tax had to be in relation to quantity or value of production. As Dixon J. said: "But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise" [28] . 1. (1964) 111 C.L.R. 353. 2. (1969) 120 C.L.R. 42, at p. 64. 3. (1938) 60 C.L.R. 263. 4. (1938) 60 C.L.R., at p. 304.
In principle, it is sufficent to establish that a tax is a duty of excise if it is a tax, however calculated, upon a step in the process of production, manufacture or distribution. In Anderson's Pty. Ltd. v. Victoria [29] Kitto J. said:
A tax must necessarily be made payable by a person; but it is not a duty of excise unless the criterion of the person's liability is the fact that some act of his possesses the quality of a contribution either to the physical character of goods as subjects of commerce or to the sequence of events which results in their being available, as in the hands of a consumer, to be put to their ultimate purpose. The reason is 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. 1. (1964) 111 C.L.R., at p. 374.
Where a tax which takes the form of a licence fee is exacted not in respect of a business generally but in respect of a particular act done in the business, it is a tax upon the doing of that act; where that act is a step in the production, manufacture or distribution of goods, a tax upon that step is a burden upon production, manufacture or distribution. And that is so whether or not the tax is calculated upon the quantity or value of the goods produced, manufactured or distributed. The question which occasions the conflict of opinion to which Gibbs J. referred in Logan Downs can arise when a step in the production, manufacture or distribution is in fact burdened by a statutory impost but the statute does not on its face evince an intention to effect that result or the purpose of effecting that result. Kitto J. in Anderson's Pty. Ltd. v. Victoria followed his earlier formulation of a "criterion of liability" and looked for a statutory imposition of a burden upon a step in production, manufacture or distribution "in its character of such a step". Barwick C.J. in the same case looked at broader indicia of a duty of excise, saying [30] :
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. But in the end what must be decided is that the tax is in substance a tax upon the relevant step. That being the central question in a controversy as to the nature of the tax, it will not, in my opinion, necessarily be resolved by the form of the tax or by identifying what according to that form the legislature has made the criterion of its imposition, however important in any particular case those matters may be. (See also Western Australia v. Chamberlain Industries Pty. Ltd. [31] ; Dickenson's Arcade Pty. Ltd. v. Tasmania [32] .) 1. (1964) 111 C.L.R., at pp. 365-366. 2. (1970) 121 C.L.R. 1, at p. 15. 3. (1974) 130 C.L.R., at p. 241.
In the present case, it is argued that the approach of Kitto J. is to be preferred and that s. 35 on its face does not impose a burden on a step in the production, manufacture or distribution of goods. If that approach is preferred, it is nevertheless necessary to identify precisely what the statute selects as the criterion of liability. The impugned taxes that are imposed by s. 35 are selective and discriminatory. Section 35 selects the gas liquids, crude oil and Gas and Fuel Corporation pipelines as against all other pipelines in Victoria and imposes a tax upon the licensees of each of those pipelines in respect of the operation of each of those pipelines. Apart from s. 35 the respective licensees would be authorized to operate those pipelines without payment of the tax; by virtue of s. 35 the respective licensees may operate their pipelines only if they have first paid the tax or an instalment of the tax to cover the period of proposed operation.
The approach favoured by Kitto J. does not, I think, preclude an examination of the statutory criterion of liability in order to ascertain whether that criterion is in its nature a step in the production, manufacture or distribution of goods. An examination of the operation of the trunk pipelines, being the criterion of the tax liability imposed by s. 35 upon the trunk pipeline licensees, determines the character of the taxes which s. 35 imposes. Neither the operation of the gas liquids pipeline nor the operation of the crude oil pipeline is anything but a step in the production, manufacture and distribution of the products sold by the plaintiffs. The circumstances that the plaintiffs could not demand a refund if they ceased production during a year in respect of which the pipeline operation fee had been paid is not inconsistent with the taxes imposed by s. 35 being an impost upon a step in the production, manufacture or distribution of goods. That circumstance simply means that the statutory criterion is not a criterion that establishes a proportionate relationship between the tax imposed and the goods in respect of which it is imposed. Adopting the approach favoured by Kitto J., the tax is a duty of excise upon such goods as are moved through the pipeline in the period to which the payment relates.
However, for the reasons expressed by Mason J., I prefer the broader approach. It leads to no different conclusion, for it invites consideration of the same determinative fact, namely, that the tax is imposed upon the operation of the pipelines. As the operation of each pipeline is a step in the production of the goods sold by the plaintiffs from the Long Island Point plant, the taxes imposed upon the plaintiffs' operation of those respective pipelines are duties of excise.
I would overrule the demurrer. It is unnecessary to consider the supplementary grounds of demurrer that were argued.
The compact between the people of the Australian colonies which is embodied in the Constitution was for unity in "one indissoluble Federal Commonwealth". To achieve and preserve that Commonwealth, the Constitution contains provisions, in both negative and positive form, designed to ensure that colonial boundaries, while remaining as lines of demarcation between States, did not continue as barriers in the path towards economic and national unity. Thus, the grant of a general taxation power to the Commonwealth Parliament was limited to exclude any power to discriminate between States or parts of States (s. 51(ii)) and the power to grant bounties was limited by a requirement of uniformity throughout the Commonwealth (s. 52(iii)). In addition, the Commonwealth was prohibited from giving preference, by any law or regulation of trade, commerce or revenue, to one State or any part thereof over another State or any part thereof (s. 99). For their part, the States were deprived, by s. 90, both of the power to impose duties of customs or excise and, subject to limited exception (s. 91), of the power to grant bounties on the production or export of goods. Both Commonwealth and States were subjected to the requirement of s. 92 that trade, commerce and intercourse among the States be absolutely free. It was directed that uniform duties of customs be imposed within two years after the establishment of the Commonwealth (s. 88). In combination, these provisions effectively deprived the people of any State of the protection of tariff barriers or preferential bounties against interstate competition. At the same time, they represented constitutional guarantees in the form of limitations of or restraints on the legislative powers which the Constitution conferred or preserved. The people of a State were not to be disadvantaged, in relation to the people of any other State, by the burden of higher customs or excise duties, by less favourable treatment as regards bounties on production or export of goods, or by restriction upon access, for themselves, their goods and their legitimate commercial endeavours, to the territory and markets of other States.
The scheme embodied in these provisions lay at the heart of the Federation. The freedom of interstate trade and intercourse and the exclusivity of a federal parliament's powers to impose customs duties had comprised two of the four federal "principles" formulated by Sir Henry Parkes in resolutions moved at the commencement of the 1891 Convention. Those two "principles" were accepted in the 1891 draft Bill which introduced the provision that the Commonwealth's powers to impose excise duties and to grant bounties upon production and export should also be exclusive (see Ch. IV, ss. 4 and 8). Thereafter, it was generally accepted that, subject to transitional provisions, duties of customs and excise were to lie exclusively within the Commonwealth domain and that, subject to the effect of inconsistency provisions, the States would retain concurrent powers to raise money by all other forms of taxation. The grouping of duties of customs and duties of excise in the 1891 draft Bill (see, e.g., Ch. I, Pt V, s. 52(2); Ch. IV, ss. 4, 7 and 9) reflected the interrelation of those two types of tax. This grouping was carried forward into the Constitution (see ss. 55, 86, 87, 90, 93 and Peterswald v. Bartley [33] ).
In recognizing the interrelation of customs and excise duties, the framers of the Constitution were but acknowledging what had been made clear by European experience. Customs unions or "Zollvereins" had played a significant part in the process of economic rationalization in Europe and it had long been accepted that, where excise taxes were important and union did not carry with it standardization of excise taxes throughout the incorporated territory, the tariff wall between the members of the union could not wholly be removed without the excise tax system being undermined by a flow of the affected commodities from the untaxed, or lower tax, areas to the taxed, or higher tax, areas producing destructive or damaging consequences to manufacturers and producers in the latter areas (see, generally, Jacob Viner, The Customs Union Issue (1950), pp. 60ff). Thus, de Molinari wrote in 1879 ("Union douanière de l' Europe", Journal des économistes, 4th Series, 2nd Year, V, pp. 314-315, quoted by Viner, op. cit., p. 61):
The most serious difficulty, and we can even say the sole genuinely serious difficulty which the formation of an international Zollverein will face, rests in the standardization of excise régimes. This difficulty has not yet been entirely overcome in Germany, where there has not been achieved a uniform tax on beer and spirits, which has made necessary the maintenance of a frontier (ligne) for the protection of the excises between the North and the South. Similar considerations applied and apply to bounties upon production.
In the context of the foregoing, the provision of s. 90 of the Constitution that the power of the Commonwealth Parliament to impose duties of excise shall be exclusive cannot properly be seen as part of a merely arbitrary division of legislative powers between the Commonwealth and the States. To the contrary, that provision - or some other means of ensuring uniformity of excise duties throughout Australia - was a necessary ingredient of any acceptable scheme for achieving the abolition of internal customs barriers which was an essential objective of the Federation and for ensuring that the people of the Commonwealth were guaranteed equality as regards the customs and excise duties which they were required to bear and the bounties which they were entitled to receive.
Nor should that provision of s. 90 be seen as concerned with matters of form rather than substance or as intended to confer no more than an illusory protection which a State can destroy by imposing what is in substance an excise duty under some other guise. This has been recognized in many cases in the Court commencing with Peterswald v. Bartley which was the first case involving the question whether a State law purportedly imposed a duty of excise contrary to s. 90. In that case, Griffith C.J., speaking for the Court [34] , quoted with approval the following comments of Lord Herschell in Brewers and Maltsters' Association of Ontario v. Attorney-General (Ontario) [35] on the question whether a provincial statute purportedly imposed an indirect tax contrary to the provisions of the British North America Act, 1867:
It was argued that the provincial legislature might, if the judgment of the Court below were upheld, impose a tax of such an amount and so graduated that it must necessarily fall upon the consumer or customer, and that they might thus seek to raise a revenue by indirect taxation in spite of the restriction of their powers to the imposition of direct taxation. Such a case is conceivable. But if the Legislature were thus, under the guise of direct taxation, to seek to impose indirect taxation, nothing that their Lordships have decided or said in the present case would fetter any tribunal that might have to deal with such a case if it should ever arise. Griffith C.J. concluded that "[i]n considering the validity of laws of this kind we must look at the substance and not the form" [36] . 1. (1904) 1 C.L.R., at pp. 510-511. 2. [1897] A.C. 231, at p. 237. 3. (1904) 1 C.L.R., at p. 511.
In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [37] Isaacs J. outlined what is involved in looking at the substance of impugned legislation in words which have been cited in subsequent cases but which bear further repetition. His Honour said:
The prohibitions of ss. 90 and 92 of the Constitution may be transgressed not merely by a direct and avowed contravention. They are transgressed also by a statute - whatever its ultimate purpose may be, and however its provisions are disguised by verbiage or characterization, or by numerous and varied operations lengthening the connective chain, or by otherwise paying titular homage to the supreme law of the Constitution - if it operates in the end by its own force so as to do substantially the same thing as a direct contravention would do, either in attaining a forbidden result or in using forbidden means. The relevant constitutional prohibitions include both means and results. It is no justification for using forbidden means that permissible results are sought, nor for securing forbidden results that lawful means are employed. Barwick C.J., in Dickenson's Arcade Pty. Ltd. v. Tasmania [38] , referred to these remarks of Isaacs J. and commented, in my view correctly, that "the substance of the operation of the statute, rather than merely its form, is treated as definitive of the relevant nature of the tax it imposes or exacts" (see, also, Anderson's Pty. Ltd. v. Victoria [39] ; M. G. Kailis (1962) Pty. Ltd. v. Western Australia [40] ). 1. (1926) 38 C.L.R. 408, at p. 423. 2. (1974) 130 C.L.R. 177, at p. 186. 3. (1964) 111 C.L.R. 353, at pp. 365-366. 4. (1974) 130 C.L.R. 245, at pp. 250-251, 265-266.
The Constitution contains no definition of "excise" or "duties of excise". In England, the original excise duties were taxes levied on the manufacture, purchase or sale of specified commodities. They were collected through the Excise Office and, in time, "excise duty" came to be applied to a wide variety of inland taxes collected through that office including such imposts as the fee for a dog licence and an auctioneer's licence fee. In the United States, excise duties, in their original sense, were "something cut off from the price paid on a sale of goods as a contribution to the support of government" (see 71 Am. Jur. 2d, State and Local Taxation, s. 28 and the cases there cited). It may be that references to "cut off" were the result of solecism since, etymologically, the word "excise", when used to denote a tax, would appear to be derived from the Dutch "excijs" from the Latin "accensare" (to tax) and not from the Latin "excisus" (cut out or cut off) to which the verb "excise" can be traced. As in England, "excise" came to be applied in the United States to a very wide variety of taxes: "any tax which does not fall within the classification of a poll tax or a property tax, and which embraces every form of burden not laid directly upon persons or property" (ibid). In the Australian colonies, "excise" and "duty of excise" were, it would seem, generally understood as having a meaning corresponding to their primary meaning in England, namely, "a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco, and cigars, it [had] been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country" (Quick and Garran, Annotated Constitution of the Australian Commonwealth (1901), p. 837). Since Peterswald v. Bartley [41] , it has been settled that the combination of colonial usage and context leads to the conclusion that the term "duties of excise" is used in the Constitution in that narrower sense of a tax upon internally produced or manufactured goods. The subsequent cases in this Court on s. 90 have been largely concerned with the closer identification of the nature of that particular type of tax.
It is not, in my view, possible to formulate an acceptable definition of "duties of excise" which will enable the question whether an actual impost is, for relevant purposes, a duty of excise to be answered by application of the syllogism of formal logic. As a matter of ordinary language, the term is not one with a precise connotation of that kind and it is undesirable to seek to confine it within the strait jacket of such a definition for the purposes of the Constitution. As Dixon C.J. said in Matthews v. Chicory Marketing Board (Vict.) [42] :
If the word "excise" received a meaning which confined its application to taxes the relation of which to the commodity concerned was of some narrow and strictly defined nature, as, for instance, by an arithmetical relation to quantity, it would not only miss the principle contained in the use of the word "excise," but it would expose the constitutional provision made by s. 90 to evasion by easy subterfuges and the adoption of unreal distinctions. 1. (1938) 60 C.L.R. 263, at p. 304.
There are statements in the joint judgment of the six justices who constituted the Court in Bolton v. Madsen [43] which support the view that their Honours intended to make a considered formulation of an exhaustive and definitive test to be applied in determining whether or not a tax is a duty of excise. The formula enunciated in that case has not, however, been generally accepted as such a test in subsequent cases in this Court. In that regard, it appears to me that the dissenting judgment of Walsh J. in Western Australia v. Chamberlain Industries Pty. Ltd. [44] demonstrates that the actual decision in Chamberlain Industries was inconsistent with the formula in Bolton v. Madsen being so accepted (but cf. per Barwick C.J., Chamberlain Industries [45] ). It also appears to me that at least four justices (Barwick C.J., Mason, Jacobs and Murphy JJ.) in Logan Downs Pty. Ltd. v. Queensland [46] declined to accept that formula as constituting such a test. While the judgment in Bolton v. Madsen plainly provides important guidance in formulating the indicia of a duty of excise, it does not, in the light of these subsequent cases, compel acceptance of the proposition that, in the interests of desirable certainty in the law of the Constitution, the question whether a tax is a duty of excise is to be answered conformably with whether the legal effect of the impugned legislative provisions is such as to satisfy the formal requirements of some formularized criterion of liability. For myself, I decline, in the absence of compelling authority, to accept any such proposition.
In substance, a duty of excise, as that expression is used in the Constitution, is a tax upon the manufacture or production of goods. In its most obvious form, it is a tax which is imposed upon either the general process of manufacture or production of goods or upon the taking of a particular step in such manufacture or production and which is calculated by reference to the quantity or value of goods manufactured or produced. It is, however, established by the cases that a tax on goods which is imposed at a point which is either preliminary or subsequent to actual manufacture or production, including a step in the acquisition of raw materials and a step in the distribution of the finished product, may be a duty of excise. It is also established that a tax may be a duty of excise notwithstanding that it is not calculated by reference to the quantity or value of the goods manufactured or produced (see Matthews v. Chicory Marketing Board (Vict.) [47] ; Western Australia v. Hamersley Iron Pty. Ltd. [No. 1] [48] ; M. G. Kailis (1962) Pty. Ltd. v. Western Australia [49] ).
It is not necessary for the purposes of the present case to consider whether it is either a requirement or an indication of a duty of excise that, where the tax applies in respect of both local and imported goods at a stage subsequent to actual production or manufacture, it discriminate against local production or manufacture (cf. per Murphy J., Logan Downs Pty. Ltd. v. Queensland [50] ). Subject to that question, I respectfully agree with the following comments of Barwick C.J. in Chamberlain Industries [51] as to the nature of a duty of excise for the purposes of the Constitution:
The meaning of the expression "duties of excise" as found in the Constitution has received a great deal of consideration during the lifetime of the Court. On the one hand the Court has taken a limited view by confining duties of excise relevantly to duties upon the manufacture or production of goods On the other hand, the Court has not taken the narrow view that to be a duty of excise the tax must be laid directly on the act or process of manufacture or production. In my view, it should be regarded now as acceptable and settled doctrine that the tax will be a duty of excise if it is upon or in respect of goods at any point including the point of manufacture or production, as they pass to consumption. This view, if I may respectfully say so, has been rightly taken, for a tax upon goods at any stage of their distribution will, in general, and sooner or later, according to circumstances, bear on the rate or level at which they are manufactured or produced or if not locally produced, on the extent of their importation. But there is no warrant, in my opinion, to require it to be established in any particular case that the tax in question will in fact so bear on manufacture or production. Its relevant effect will be presumed: it is enough that the impost is upon or in respect of goods before they have actually reached the consumer. But, of course, the demonstration of the effect of the tax upon such manufacture or production may assist an affirmative conclusion to the question whether the tax is a duty of excise. As Barwick C.J. had pointed out in Anderson's Pty. Ltd. v. Victoria [52] , "in arriving at the conclusion that the tax is a tax upon" a relevant step in the process of production, manufacture or distribution, "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". His Honour continued [53] : 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. But in the end what must be decided is that the tax is in substance a tax upon the relevant step. That being the central question in a controversy as to the nature of the tax, it will not, in my opinion, necessarily be resolved by the form of the tax or by identifying what according to that form the legislature has made the criterion of its imposition, however important in any particular case those matters may be. Prominent among factors which can be added to those mentioned by Barwick C.J. is whether the amount of the tax bears a discernable relationship to the quantity or value of the goods manufactured or produced. While each of the above factors is relevant, no one of them is, by either presence or absence, necessarily conclusive of the ultimate question whether the tax is in substance a tax on the manufacture or production of goods. 1. (1977) 137 C.L.R., at p. 84. 2. (1970) 121 C.L.R., at pp. 12-13. 3. (1964) 111 C.L.R. 353, at p. 365. 4. (1964) 111 C.L.R., at pp. 365-366.
The annual "trunk pipeline" licence fees which the plaintiffs challenge in the present case are plainly taxes in that they are compulsorily exacted by the State for public purposes and do not represent charges for services rendered (see Matthews v. Chicory Marketing Board (Vict.) [54] ;Logan Downs Pty. Ltd. v. Queensland [55] ). Each annual fee is payable by the plaintiffs as the holders of licences to operate one or other of the two pipelines which connect their Longford and Long Island Point plants. Unless it is paid, the plaintiffs are prohibited from operating the relevant pipeline. The fee, in the amount of $10,000,000 "in the case of" each pipeline for the 1981-1982 financial year and an adjusted amount to reflect variations in the consumer price index for subsequent years, is imposed by the Act as the result of specific identification of each pipeline by reference to licence numbers. The only other "trunk pipeline" operation fee is imposed "in the case of" a pipeline operated by the Gas and Fuel Corporation of Victoria for the transportation from the Longford plant of natural gas purchased by that corporation from the plaintiffs.
In the result, one has a legislative scheme which selects, from all the pipelines in Victoria, three designated pipelines in respect of each of which an annual tax calculated on a base rate of $10,000,000 per year is imposed. The amount of that annual tax is to be contrasted with a licence fee of $40 for every complete kilometre of pipeline which is imposed in respect of all other relevant pipelines and which, if applied to the plaintiffs' two pipelines, would involve an annual fee of something less than $8,000 in respect of each. By identifying the three "trunk pipelines" by reference to licence numbers, the Act avoids any need to indicate expressly what it is that singles out the plaintiffs' and the Gas and Fuel Corporation's pipelines so that their "operation" should attract a tax of some one thousand times the fee imposed in respect of the "operation" of other pipelines. What that is appears, however, clearly enough from the assumed facts including the terms of the licences to which the Act expressly refers. The three "trunk pipelines" carry - and only carry - the whole of the hydrocarbons extracted from the Bass Strait fields. In the case of the plaintiffs' two pipelines, the transportation of the hydrocarbons is between stages in processing, purification or fractionation and is itself a step in the overall process of manufacture or production. In the case of the Gas and Fuel Corporation's pipeline, the transportation is at a stage prior to distribution into consumption. The question arises whether, in these circumstances, the tax imposed in respect of the operation of the plaintiffs' two pipelines is in substance a tax upon the manufacture or production of the goods which the plaintiffs distribute from Long Island Point. In my view, it is.
The tax imposed in respect of the plaintiffs' two pipelines cannot, at least as a matter of substance, be seen as a general tax imposed upon the operation of pipelines generally. It is a particular tax imposed upon the operation of each of the specifically identified pipelines. There was some discussion in argument as to whether the inclusive definition of operation in s. 3 of the Act had the restrictive effect of confining the meaning of the word to "maintenance removal and alteration of the pipeline" as distinct from the actual operation of the pipeline for the transportation of goods. In my view, the definition should be regarded as expansive and "operation" and "operate", as used in the relevant provision of the Act, include the actual use of a pipeline. Even if that be not so and, for relevant purposes, the words should be given the limited meaning of maintenance, removal and alteration, the "operation" of the plaintiffs' two pipelines would remain an essential concomitant of an essential step (transportation) in the course of production or manufacture. Either way, the "operation" of the plaintiffs' two pipelines is part of the overall process of manufacture or production and the tax upon that operation is a tax which must be paid before that essential step can lawfully be taken. The magnitude of the tax and its recurrent nature as a revenue outgoing make inevitable the conclusion that the tax is an indirect one in the sense that it will be, and is intended to be, regarded as a component of the costs and expenses of manufacture or production which will, subject to the vagaries of market conditions, be passed down the line to the consumer.
The main factor which militates against a conclusion that the tax is, in substance, a tax upon the manufacture or production of the hydrocarbons carried in the relevant pipeline is that the amount of the tax does not bear any disclosed relationship to the quantity or value of the goods manufactured or produced: as a matter of form, the tax is payable regardless of whether production of hydrocarbons ceases or whether no product is transported. The absence of such a relationship is not however, as has been said, necessarily decisive. Its importance will vary according to the circumstances of the actual case; in particular, it is of comparatively less importance in a case where the tax is imposed at the stage of manufacture or production of goods than in a case where what is claimed to be an excise upon the manufacture or production of particular goods is imposed at a stage where production or manufacture has been completed (see per Mason J., Logan Downs Pty. Ltd. v. Queensland [56] ). The importance of the theoretical possibility that the tax could be payable notwithstanding the cessation of the manufacture or production of hydrocarbons or of their transportation through the pipeline needs to be assessed against both the assumed fact that the flow of hydrocarbons through the pipelines is and has been continuous and the improbability that the plaintiffs would continue to operate a pipeline and thereby attract a tax of some $10,000,000 per year in the event that production or transportation were to cease other than temporarily. In the circumstances of the present case, the absence of a disclosed relationship between the tax and the quantity or value of the goods manufactured or produced is outweighed by the combination of a number of other factors, namely, the magnitude of the tax, its nature as an indirect tax, the fact that it is imposed at the stage of manufacture and production of goods and the fact that it must be paid before an essential step in the actual process of manufacture or production of those goods can be lawfully taken. In my view, the annual tax imposed in respect of each of the plaintiffs' two pipelines is a tax upon the manufacture or production of the goods which are distributed from Long Island Point after transportation, in the course of such manufacture or production, through the relevant pipeline. It is a duty of excise for the purposes of s. 90. It is unnecessary to consider whether, if it were critical that there exist a discernible relationship between the tax and the quantity or value of the relevant goods, it could properly be assumed that the amount of $10,000,000 per annuan in respect of each pipeline was not selected as the result of some arbitrary whim but by reason of some relationship to either the anticipated quantity or value of goods which were to be transported through the pipeline or the anticipated quantity or value of hydrocarbons which will be produced from the Bass Strait fields.
Hematite Petroleum Pty Ltd
Victoria