Parton v Milk Board

The purpose of the levy is to contribute to the expenditure incurred in the administration of the Act and in carrying out the powers and duties of the Board thereunder. Mr. Sholl submitted in the first instance, and we agree, that the present legislation is indistinguishable in substance from the legislation passed on by this Court in Hartley v. Walsh [1] . In that case it was held by three members of the Court that the legislation did not impose such a duty. But we are unable to reconcile this decision with the later case of Matthews v. Chicory Marketing Board (Vict.) [2] . In that case the majority of the Court held that the legislation did impose such a duty. In this conflict of opinion we prefer to follow Matthews v. Chicory Marketing Board (Vict.) [2] . We do so because the charge in Hartley's Case [1] was considered by the Justices concerned to be of a similar nature to that in Crothers v. Sheil [3] . But the two charges were not, in our opinion, of the same nature because in Crothers v. Sheil [1] the Board acquired the property in the milk and then deducted certain charges from the proceeds of sale which were its property before distributing them amongst the dairy farmers in accordance with the Act. The fact that such proceeds are subject to deductions would not convert the scheme into one for taxation. This is made clear in the passage from the judgment of Rich J. in Crothers v. Sheil [1] cited by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [2] and from the judgment of Starke J. in Hopper v. Egg & Egg Pulp Marketing Board (Vict.) [3] , a similar case to Crothers v. Sheil [1] . The present levy is in the words of Latham C.J. in Matthews v. Chicory Marketing Board (Vict.) [4] "plainly a tax. It is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered." In the same case [5] , Rich J. said: "As to the fact that it (the tax) is to be applied to meet the expenses of a marketing scheme and for purposes connected with chicory growing, the statute treats these as public purposes to be undertaken by a public body in the public interest. If the State authorizes a levy upon a commodity which in other respects is an excise, I think it is difficult to see how the purpose for which the money is obtained can affect the question whether it comes within an excise."

1. (1937) 57 C.L.R. 372. 2. (1938) 60 C.L.R. 263. 3. (1938) 60 C.L.R. 263. 4. (1937) 57 C.L.R. 372. 5. (1933) 49 C.L.R. 399. 6. (1933) 49 C.L.R. 399. 7. (1933) 49 C.L.R. 399. 8. (1938) 60 C.L.R., at p. 289. 9. (1939) 61 C.L.R. 665, at pp. 676, 677. 10. (1933) 49 C.L.R. 399. 11. (1938) 60 C.L.R., at p. 276. 12. (1938) 60 C.L.R., at p. 281.

In our opinion the present levy must, like the levy there discussed, be an excise unless Mr. Sholl's alternative submission is correct that the contributions are not imposed in respect of or in relation to the production or manufacture of milk, or even in respect of or in relation to the first sale after production, and no imposition is a duty of excise within s. 90 of the Constitution unless it is so imposed. In connection with this submission Mr. Sholl supplied the Court with a valuable list of extracts from the judgments of this Court on the meaning of such duties of excise in Peterswald v. Bartley [6] ; R. v. Barger [7] ; Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [8] ; John Fairfax & Sons Ltd. v. New South Wales [9] and the cases which we have already mentioned. The lack of unanimity in these judgments indicates the difficulty of the problem. The views there expressed must, of course, be read in the light of the facts of each particular case, and there is not, in our opinion, any decision of this Court that a levy is only a duty of excise within the meaning of s. 90 of the Constitution if it is imposed in respect of the production or manufacture of goods or in respect of the first sale of such goods by the producer or manufacturer. In Peterswald v. Bartley [1] Griffith C.J. for the Court said that excise in s. 90 is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured and not in the sense of a direct tax or personal tax. At [2] he said that the term "duties of excise" as used in the Constitution is limited to taxes on goods in process of manufacture. If the latter statement is accepted literally, a levy on the first sale of goods produced or manufactured in Australia is not an excise duty. But it has been decided that such a levy is an excise: Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [3] ; John Fairfax & Sons Ltd. v. New South Wales [4] . It is submitted this is because the first sale of the goods is usually a sale by the producer or manufacturer, so that such a tax is in effect a tax on their production or manufacture. But we can see no reason why a levy should not be a duty of excise within the meaning of s. 90 of the Constitution although it is imposed at some subsequent stage. It must be imposed so as to be a method of taxing the production or manufacture of goods, but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer. As Higgins J. said in Commonwealth & Commonwealth Oil Refineries Ltd. v. South Australia [3] , "it matters not whether the duty is imposed at the moment of the actual sale or not, or sale and delivery, or consumption." Then there is the definition of excise duties cited by Rich J. in John Fairfax & Sons Ltd. v. New South Wales [5] , "an inland imposition, and one imposed sometimes on the manufacturer or dealer, sometimes on the commodity itself or the retail sale."

1. (1904) 1 C.L.R. 497. 2. (1908) 6 C.L.R. 41. 3. (1926) 38 C.L.R. 408. 4. (1927) 39 C.L.R. 139. 5. (1904) 1 C.L.R., at p. 509. 6. (1904) 1 C.L.R., at p. 512. 7. (1926) 38 C.L.R. 408. 8. (1927) 39 C.L.R. 139. 9. (1926) 38 C.L.R. 408. 10. (1927) 39 C.L.R., at p. 146.

We accept with respect the definition reached by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [6] , where his Honour, after a very full discussion of the subject, said: "to be an excise the tax must be levied "upon goods," but those apparently simple words permit of much flexibility in application. The tax must bear a close resemblance to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce." Each of the present levies fulfils these requirements. It is a contribution of a fraction of a penny for every gallon of milk sold or distributed by the taxpayer during a certain period. This affects the goods, that is the milk sold or distributed by these taxpayers as articles of commerce, the basis of assessment is the quantity of the goods sold or distributed, and it is a levy against which it is expected and intended that the taxpayer should indemnify himself at the expense of the persons to whom the milk is sold or distributed. It is the very form of levy which s. 30 of the Milk Board Act contemplates and intends, for the section provides for a contribution not exceeding a fraction of a penny per gallon for every gallon of milk sold or distributed from time to time (the italics are ours). The regulations and determinations under challenge carry this intention into effect. We are of opinion that the section, the regulations and determinations are all invalidated by s. 90 of the Constitution.

The question for decision upon this demurrer is whether the levy under the Milk Board Acts of Victoria of contributions to a fund kept in the Treasury called the Milk Board Fund is valid. Its validity is attacked on two grounds. One is that the levy of the contributions amounts to the imposition of a duty of excise within the meaning of s. 90 of the Commonwealth Constitution, which makes the power of the Federal Parliament to impose duties of excise exclusive. The other is that the levy has not been properly made under the authority of the Milk Board Acts because it covers a class of persons whom the statutes except. The jurisdiction of this Court to entertain the suit comes from the first ground, in virtue of which it is a matter arising under the Constitution or involving its interpretation.

The Milk Board Acts are four statutes of the State of Victoria, the principal Act (No. 4183) passed in 1933 and three amending Acts ( Nos. 4276,4463 and4676) passed in 1934, 1936 and 1939 respectively. I shall state the result of this somewhat troublesome agglutination of statutes so far as it is material to the two points to be decided.

It begins by establishing as a body corporate a Milk Board consisting of a chairman and two members. The Board is entrusted with wide powers for the control of the trade by which Melbourne and its suburbs are supplied with milk. But the Acts also contain provisions directly regulating the trade. The legislation provides for the distinct parts played by the dairy farmers who produce milk, the milk depots which obtain it and mix or treat it and the dairy where milk is kept for sale or dairy produce is prepared for sale and whence milk is distributed in the metropolis. There is one particular kind of dairy, the milk shop, which is registered as a shop, licensed as a dairy and sells milk only for delivery at the premises. For some purposes it is dealt with specially. "Dairyman" and "metropolitan milk distributor" are equivalent terms. Milk for sale or distribution in the metropolis must be purchased by the dairyman either from a dairy farm, a milk depot or another dairyman. Milk depots must keep records of the milk purchased from a dairy farm and must not mix it with milk received for purposes of manufacture. Milk purchased for sale or distributed in the metropolis whether from dairy farms, milk depots or by one dairyman from another can be purchased only under and in accordance with contracts the Board has approved. Both the dairyman and the owner of the dairy farm must make returns to the Board of what they buy and sell and their records may be examined by officers of the Board. The minimum price to be paid for milk to owners of dairy farms and to milk depots is fixed by the Board and also the maximum price at which milk may be sold by retail. The Board may specify the dairies from which milk may be distributed by retail in the metropolis. It may specify dairies which are to be restricted to selling milk for delivery at the dairy premises. When a dairy is not specified as one from which milk may be so sold by retail and when a dairy is restricted to sale "over the counter" it may be compensated. The Board assesses the compensation. A licensed dairy may not be transferred without the approval of the Board and without that approval no new licence may be granted. Annually the maximum quantity of milk to be forwarded by a milk depot to the metropolis in the ensuing year may be fixed by the Board. Another duty of the Board is to license carriers who transport milk by road to the metropolis or to railheads for consignment to the metropolis. It has wide powers, and indeed duties, of inquiry. The extensive field covered by its functions necessarily means a great deal of administration. To the ordinary expenses of administration are added the liability to pay compensation and an authority to expend money on promoting and encouraging by advertisement or otherwise the consumption of milk. The Milk Board Fund is established by the statutes as the fund from which the Board will meet its expenditure. Out of the fund there is to be paid what it expends in promoting the consumption of milk, the compensation and the costs of assessing it, and all costs and expenses of administration. Any advance the Treasurer makes to the Fund is to be repaid thereout. Lastly the Governor in Council may fix annual contributions from the Fund towards recouping expenditure incurred (sc. by the Treasury) under the Milk and Dairy Supervision Acts in improving the quality of milk for consumption in the metropolis.

The fund is fed by contributions exacted under s. 30 of the Milk Board Act as amended. Section 29 directs the Board to prepare for every year an estimate of the probable expenditure of the year in administering the Acts and carrying out the duties of the Board. It must not exceed a limit fixed by the Minister and it must obtain the approval of the Governor in Council. The method of raising the money is then dealt with by s. 30, the material sub-sections of which are as follows: - "30. (1) (a) Towards the expenditure so estimated there shall be contributed by - (i) every dairyman (other than the owner of a milk shop) who sells or distributes milk in the metropolis; and (ii) every owner of a milk depot who sells or distributes milk to any person in the metropolis - such sum as is determined by the Board in accordance with the regulations but such sum shall not exceed a sum equal to one-quarter of a penny per gallon for every gallon of milk so sold or distributed. (b) Notwithstanding anything in the last preceding paragraph no contribution shall be payable by - (i) any dairyman (other than the owner of a milk shop) in respect of milk sold or distributed to another dairyman; (ii) any owner of a milk depot in respect of milk sold or distributed to a dairyman (other than the owner of a milk shop); or to any person for use in the manufacture of any prescribed article or commodity to be sold by such person by wholesale; (iii) any person in respect of milk sold or distributed to such charitable institutions as are prescribed by the regulations. (2) The contributions payable under this section shall be assessed and be paid at such times and in such manner as may be prescribed by regulations. (3) If any such sum is not paid as and when the same becomes payable the amount thereof may be recovered in a court of petty sessions as a civil debt recoverable summarily or in any court of competent jurisdiction by the Board; and if such sum is not so paid the licence of the dairyman or of the owner of the milk depot (as the case may be) may be cancelled by the Minister and shall thereupon cease to have any further force or effect." It should be noticed that the owner of a milk shop is specifically excluded from liability to make a contribution. Why it is important that this should be noticed is that it forms the foundation of the contention that the contribution has been levied on too wide a class. The regulation by which it is levied is said to be bad because it ignores the exception. It will be seen that it is left to the Board in accordance with regulations to determine the sum to be contributed. The Governor in Council is given a regulation-making power. It is expressed to extend to making regulations for or with respect to contributions payable under the Act by dairymen other than the owners of milk shops and by owners of milk depots. It will further be seen that a limitation is placed upon the sum to be exacted of a farthing a gallon. The limitation suggests that the contribution is to be at a rate per gallon or is to be measured by the quantity sold. All three exclusions made by par. (b) of sub-s. (1) are based on this assumption and they would not be workable unless the levy was calculated upon the amount of milk sold or distributed. For the exclusions are "in respect of milk sold or distributed" to the particular class of customer specified by the sub-paragraphs. But the actual words "such sum as is determined by the Board" occurring in par. (a) of sub-s. (1) do not expressly relate the sum to the quantity sold or restrict it to a rate per gallon. It is significant however that neither these words nor the limitation which follows limiting the levy to a farthing per gallon refer to a period of time. It is true that the budget under s. 29 is of course for a year and the rate of contribution must be determined every year. But the provision reads as if it contemplated only a contribution according to quantity, such as a rate per gallon, so that there was no need to calculate the amount per month or per annum. It would be impossible to discover whether a contribution of a sum fixed in any other manner exceeded the farthing a gallon unless the contribution was fixed according to an interval of time and over the same time the quantity of milk sold was taken and the amount at a farthing per gallon was reckoned in order to ascertain whether the limit had been exceeded. I do not think that the section authorizes the levying of a contribution otherwise than according to the quantity of milk sold or distributed.

The existing general regulations under the Milk Board Acts were made on 25th March 1947. Clause 6 is as follows: - " Contributions - Any determination by the Board under or pursuant to s. 30 of the Milk Board Acts shall be made at a meeting of the Board called for that purpose. In arriving at a determination the Board shall have regard to the probable revenue for the year based on the estimated quantity of milk to be sold or distributed in the metropolis. The contributions payable under and pursuant to s. 30 of the Milk Board Act 1933 as amended by the Milk Board Act 1936 and any determination made thereunder shall be assessed on the quantity of milk sold or distributed in the metropolis during each month by every dairyman and owner of a milk depot liable to pay such contributions and every such dairyman or owner of a milk depot shall pay to the Milk Board by the twenty-first day of each month the contributions payable by him in respect of the milk so sold or distributed during the preceding month." Two determinations of the Board in purported pursuance of this clause are involved in the demurrer, one adopting a rate of an eighth of a penny a gallon the other of one-tenth of a penny. These determinations, as they are alleged in the pleading, determined that the sum to be contributed by every dairyman who sold or distributed milk in the metropolis until the end of the year for which the determination was made should be in the one case one-eighth and the other one-tenth of a penny per gallon. No mention was made of a dairyman who was an owner of a milk shop. The pleading does not state that owners of milk depots were included in the determination as I think that s. 30 (1) (a) requires. The validity of the imposition was not attacked on this ground and I imagine the pleader omitted the words as immaterial. The Governor in Council made a regulation in each case to give effect to the determination. Again the owner of a milk shop was not expressly excepted. But owners of milk depots are included. Each of the two regulations required that the dairyman and owner of a milk depot should "under and pursuant to s. 30 of the Milk Board Act 1933 as amended by the Milk Board Act 1936 and the Milk Board Act 1939 and (pursuant) to a determination made thereunder by the Milk Board contribute in accordance with the Regulations made under the Milk Board Acts the sum of" &c.

The validity of the imposition is, as I have said, attacked upon the ground that owing to the failure in the Board's determinations and in the regulations lastly mentioned to except owners of milk shops, the levy includes too wide a class.

This of course is a matter of State law. But upon it depends the question whether there is a State imposition which would be effectual but for the Constitution. If it is authorized so far as State law is concerned then its validity depends on s. 90 of the Constitution. If it has not the authority of State law the State law cannot be treated as assuming to impose an excise.

In these circumstances I am of opinion that we have jurisdiction to decide the question. The case in respect of this matter is like O'Neill v. O'Connell [1] and Hopper v. Egg and Egg Pulp Marketing Board [1] . In Carter v. Egg & Egg Pulp Marketing Board [2] the claim under State law was collateral to and severable from that involving the Federal questions [3] .

1. (1946) 72 C.L.R. 101, at pp. 115, 116, 124, 125, 126. 2. (1939) 61 C.L.R. at pp. 673, 674, 680, 681. 3. (1942) 66 C.L.R. 557. 4. (1942) 66 C.L.R., at pp. 580, 587, 588, 593, 594, 601, 602.

The substance of the question depends upon the interpretation of the three steps in combination by which the statutory power was exercised; viz. (1) clause 6 of the regulations of 25th March 1947; (2) the two respective determinations of the Board; (3) the two respective regulations imposing the levy so determined on by the Board. The first clearly limits the determinations which its provisions govern to the class of persons liable. It speaks of "every dairyman and owner of a milk depot liable to pay such contributions." The second, the determinations, professed on their face to be in accordance with the Acts and regulations; and the third, the regulations imposing the levy, recite the Acts that affect the imposition, leaving out No. 4276 which does not, and they recite the determination. On the whole I think that there is enough to show that it was not intended to impose either levy on the owners of milk shops and the regulations imposing the levies should be so interpreted. This point therefore fails. The result is that the question whether the levy amounts to the imposition of an excise must be decided.

In my opinion the levy of the contribution does amount to the imposition of a duty of excise. In stating as briefly as I can my reasons for this conclusion I shall begin by mentioning the characteristics of the contribution in virtue of which I think it is a duty of excise. In the first place I think that it is clearly a tax. It is a compulsory exaction. It is an exaction for the purposes of expenditure out of a Treasury fund. The expenditure is by a government agency and the objects are governmental. It is not a charge for services. No doubt the administration of the Board is regarded as beneficial to what may loosely be described as the milk industry. But the Board performs no particular service for the dairyman or the owner of a milk depot for which his contribution may be considered as a fee or recompense. There is nothing comparable with the facilities for which the wharfage rates were imposed in Melbourne Harbour Trust Commissioners v. Colonial Sugar Refining Co. Ltd. [4] . The purposes for which the money is expended are extensive and cover not only all the activities in which the Board may engage, including the compensation of dairies whose licences are cancelled and promotion of milk consumption, but also subventions contributed towards the cost of the measures taken under the Milk and Dairy Supervision Acts to improve the quality of milk in Melbourne. In Matthews v. Chicory Marketing Board (Vict.) [1] in conditions that are very similar all the judges regarded the levy there in question as a tax. The contribution is a compulsory levy by a public authority for public purposes and that is enough to show that it is a tax: Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy, Ltd. [2] ; City of Halifax v. Nova Scotia Car Works Ltd. [3] .

1. (1926) V.L.R. 140. 2. (1938) 60 C.L.R. 263. 3. (1933) A.C. 168, at p. 175. 4. (1914) A.C. 992, at p. 998.

In the next place the tax is a tax upon goods. It is a levy of an eighth or a tenth of a penny upon every gallon of milk sold or distributed in the metropolis by a dairyman or a milk depot. That means a tax upon the milk sold or distributed for consumption in Melbourne. It is not a licence fee payable as a condition of a right to carry on a business. On the other hand it is a trading tax. "Customs and excise duties are, in their essence, trading taxes, and may be said to be more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted": Attorney-General for British Columbia v. Kingcome Navigation Co. [4] . Again the exaction is not a tax imposed upon the dairyman and owner of a milk depot because they are selected as the parties to the trading who should bear a particular contribution but on the contrary it is imposed on them as the persons to pay, it being a matter of indifference which of the parties ultimately bears the burden and the tax having from its nature a tendency to enter into the price obtained for the milk. The tax is therefore indirect: Attorney-General for British Columbia v. Kingcome Navigation Co. [5] . "The leading characteristic of an indirect tax is that it is susceptible of being passed on and customs and excise duties ordinarily exhibit this characteristic" (Matthews v. Chicory Marketing Board [6] , per Starke J.). It is a sales tax and as I understand it that is generally regarded as an excise.

1. (1934) A.C. 45, at p. 59. 2. (1934) A.C. 45, at p. 57. 3. (1938) 60 C.L.R. at p. 285.

Finally it falls within the definition of "excise" given by the Encyclopaedia Britannica, 11th ed., vol. 10, and adopted by the Oxford English Dictionary s.v. viz.: "a term now well known in public finance, signifying a duty charged on home goods, either in the process of their manufacture or before their sale to the home consumers."

Only if the conception of what is an excise is limited by the condition that the tax must be levied on the manufacturer, that is to say upon the goods while they are still in his hands, can I see any escape from the conclusion that the levy of the contribution is an excise.

I cannot adopt the view that this is an essential feature of the conception. What probably is essential is that it should be a tax upon goods before they reach the consumer. Though in Commonwealth & Commonwealth Oil Refineries v. South Australia [1] Higgins J. said: "Excise means a duty on the manufacture, production &c. in the country itself; and it matters not whether the duty is a duty imposed at the moment of actual sale or not or sale and delivery or consumption." In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it 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. A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production. If the exclusive power of the Commonwealth with respect to excise did not go past manufacture and production it would with respect to many commodities have only a formal significance.

I am aware that Isaacs J. in Commonwealth & Commonwealth Oil Refineries v. South Australia [2] expressed the view that a tax with respect to the sale of goods as existing articles of commerce independently of the fact of their local production is not an excise duty. But upon this there are two observations to be made. One is that in Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [3] Starke J. explicitly said on the authority of Peterswald v. Bartley [4] that the Constitution limited the words to duties charged upon goods produced or manufactured in Australia itself or upon a sale of such commodities; and Latham C.J. pointed out that the negative proposition was not essential to the judgment of Isaacs J.

1. (1926) 38 C.L.R. at p. 426. 2. (1937) 56 C.L.R. at pp. 401, 408. 3. (1904) 1 C.L.R. 497.

The other observation is that the Milk Board Acts ensure that, excepting milk shops, the sale and distribution of milk in the metropolitan area of Melbourne will be through dairies and milk depots. They will obtain the milk from the dairy farms. Thus the case is, I imagine, one which Isaacs J. would regard as coming within the qualification he made to his proposition. In his language, the tax is "so connected with the production of the article sold or is otherwise so imposed as in effect to be a method of taxing the production of the article."

In Matthews v. Chicory Marketing Board (Vict.) [1] I examined the history of the word "excise" and its meaning and I shall not go over the same ground again. It is probably a safe inference from Atlantic Smoke Shops, Ltd. v. Conlon [2] , which has since been decided, that a tax on consumers or upon consumption cannot be an excise. This decision perhaps makes it necessary to that extent now to modify the statement: "that so far there is no direct decision inconsistent with the view that a tax on commodities may be an excise although it is levied not upon or in connection with production, manufacture or treatment of goods or the preparation of goods for sale or for consumption, but upon sale, use or consumption and is imposed independently of the place of production" [3] . The modification is with respect to consumption.

1. (1938) 60 C.L.R., at pp. 287 et seq. 2. (1943) A.C. 550. 3. (1938) 60 C.L.R., at p. 300.

I do not regard Hartley v. Walsh [4] as governing the decision of the present case. The liability to contribute to which reference was there made was imposed upon persons in whose name packing sheds were registered under the Dried Fruits Act 1928. The contribution was to be determined by the Dried Fruits Board and was not to exceed a thirty-second of a penny a pound of the quantity of fruit sold from the packing shed and also the quantity of dried fruits forwarded therefrom for the purposes of trade or sale in the preceding year. A packing shed performs a service in processing or packing the fruit. It may do so for the grower or it may purchase the unprocessed fruit. The contribution was therefore levied upon the person responsible for the performance of the service and, at all events as to the limitation on the charge, was calculated on the goods passing through his hands in the preceding twelve months. It was therefore not a levy directly imposed upon a commodity.

Further I do not think that the question of the validity of the levy could have been material to the decision in Hartley v. Walsh [4] . It was an appeal from a conviction upon an information for selling dried fruits which had not been packed in a registered packing shed contrary to a regulation made under the Dried Fruits Acts. The levy was made under s. 18 of the Act. The validity of the regulation could not have been affected even if s. 18 were void and of course the liability of the packing shed to pay a contribution had no relevance to the charge. Evatt J. said so much expressly [5] . The opinions that were expressed were, I think, obiter dicta. Three judges dealt with the liability of the packing shed to pay contributions. Latham C.J. said: "This contribution is specifically provided as a contribution towards carrying out the Act and as a payment for services rendered and cannot, in my opinion, be regarded as a tax forbidden by s. 90 of the Constitution. A similar charge was dealt with by this Court in Crothers v. Sheil [1] . In that case an Act dealing with the marketing of milk provided that the price of the milk should be paid to the suppliers with a deduction for charges incurred in the treatment, carriage, distribution and sale of the milk and for the costs, charges and expenses of the administration of the Act by the Milk Board. It was held that this provision for deductions did not "convert the scheme into one for taxation." In view of this decision I do not see how it can be held that the charge made under the Dried Fruits Act is a contravention of s. 90 of the Constitution " [2] .

1. (1937) 57 C.L.R. 372. 2. (1937) 57 C.L.R., at p. 396. 3. (1933) 49 C.L.R. 399. 4. (1937) 57 C.L.R., at p. 376.

If the contribution in that case was for services rendered, nevertheless I am quite certain that the contribution levied upon dairymen and owners of milk depots in the present case was not of that description. As to the decision in Crothers v. Sheil [1] , I should respectfully doubt whether it was in point in Hartley v. Walsh [3] . But I am clearly of opinion that it is quite irrelevant to the present case. Like Hopper v. Egg & Egg Pulp Marketing Board [4] , Crothers v. Sheil [1] was a case in which there was no tax (cf. [5] ).

1. (1933) 49 C.L.R. 399. 2. (1937) 57 C.L.R. 372. 3. (1939) 61 C.L.R. 665. 4. (1933) 49 C.L.R. 399. 5. (1939) 61 C.L.R., at pp. 676, 677.

The New South Wales Milk Act 1931 vested the milk in a Milk Board. Section 28 (2) then provided: - "The Board shall, out of the proceeds of milk disposed of by the Board under this Act, make provision for expenditure incurred in the treatment, carriage, distribution, and sale of milk, the costs, charges, and expenses of the administration by the Board of this Act, and any amounts necessary to repay advances made to, and to provide a sinking fund in respect of any loan raised by the Board, and interest on any such advance or loan; and subject to this Act shall make payments to each dairyman in respect of the milk delivered by him on the basis of the minimum price or prices notified in relation thereto."

The point was put by Rich J.: - "The provisions of the Milk Act do not exact any pecuniary payment from the dairy farmer. They do not impose any liability in respect of the ownership, transfer, sale or production of goods. They merely contain a scheme for the compulsory acquisition of milk and the payment of the price of compensation to be borne by the proceeds arising from the resale by the Board. The fact that these proceeds are subject to deductions would not convert the scheme into one for taxation. In the Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy, Ltd. Case [1] there was an actual levy of a money sum upon the producers of milk who sold it in a liquid form; here there is no tax and no duty of excise" [2] . In Hartley v. Walsh [3] Evatt J. also referred to Crothers v. Sheil [4] . But he does not appear to have expressed himself definitively. Evatt J. said: "Having regard to the decision in Crothers v. Sheil [4] , it is very difficult to regard the charge as a duty of excise, more especially as the charge is not intended to be passed on to the consumer, but back to the grower. Even if the charge was a duty of excise, its invalidity would not affect the validity of the rest of the Act (see s. 2 of the Acts Interpretation Act 1930 of the State of Victoria)." McTiernan J. simply said: "I agree that there is no substance in the submission (see Crothers v. Sheil [4] )" [5] .

1. (1933) A.C. 168. 2. (1933) 49 C.L.R., at p. 408. 3. (1937) 57 C.L.R. at p. 396. 4. (1933) 49 C.L.R. 399. 5. (1933) 49 C.L.R. 399. 6. (1933) 49 C.L.R. 399. 7. (1937) 57 C.L.R., at p. 400.

Before leaving Hartley v. Walsh [6] it is perhaps desirable to refer again to the character of the levy in that case. Not only was the imposition upon the proprietor of the packing shed and one measured, at least as to the maximum, by the fruit handled, but the fruit was the fruit of the previous year. This appears to me to place the imposition more in the category of a licence fee in respect of a business calculated on past business done; something like the licence fee of a licensed victualler calculated on the amount expended by him in the previous year in purchasing liquor, which I should not regard as an excise.

But for the reasons I have given I think that the contribution which the two regulations in the present case purport to impose under s. 30 of the Milk Act 1933 Vict. as amended amounts to an excise and the purported imposition is void.

The principal question is whether s. 30 of the Milk Board Acts 1933-1939 of Victoria invades the field reserved by s. 90 of the Constitution to the Parliament of the Commonwealth, because the payment which s. 30 requires to be made to the Government is a duty of excise within the meaning of s. 90. This section does not give the Commonwealth Parliament the power to impose duties of customs and of excise. This power is derived from s. 51 (ii.) of the Constitution. There is no definition of the classes of duties, whether customs or excise, which the Commonwealth Parliament has power to impose. The Parliament is given power to legislate with respect to taxation. Customs and excise are of course included in the term "taxation." The extent to which the taxing powers of the States are curtailed by s. 90 depends upon the interpretation of the words "duties of customs and of excise." It is necessary to consider the meaning of the words, their connection with other parts of the Constitution and the object of providing that after the imposition of uniform duties of customs only the Parliament of the Commonwealth shall have power to impose "duties of customs and of excise."

It is obviously necessary to imply after the words "customs" and "excise" some subject matter to which these duties are appropriate.

The term "duty of customs" means a duty upon the importation or exportation of goods or any duty which, irrespective of its form, burdens the importation or exportation of goods: for example a tax upon the importer in respect of the sale of the goods. It may be inferred from the term "duties of customs" that Parliament is intended to have exclusive power to impose duties upon the importation of goods into or the exportation of goods from the Commonwealth.

But by the term "excise," s. 90 does not so plainly indicate the subject matter upon which only the Parliament of the Commonwealth can impose duties of excise.

The term "excise" includes exactions for licences to carry on certain trades or occupations and it is used to cover miscellaneous taxes on various articles and sometimes as a synonym for inland revenues. Excise also means a duty on the manufacture, production, sale or consumption of goods. A duty of excise of this kind and a duty of customs are classified as indirect taxes.

Duties of customs on imported goods have a relationship to the price paid by the user or consumer of the goods similar to that which duties of excise imposed upon goods produced or manufactured in the country have to the price paid by the user or consumer of those goods. There is an important relationship between duties of customs and duties of excise levied upon production or manufacture. In Stephen's Commentaries on the Laws of England, 16th ed., vol. II, p. 668, there is this statement: "The relationship of excise to customs duties is always of great importance; though the views taken of it naturally vary with the fiscal policy followed by the country at any given time. Thus, for example, if the desire of Parliament is to favour British manufacturers at the expense of the nation at large, customs duties will be placed on articles coming from abroad which could be manufactured in the United Kingdom, but no corresponding or "countervailing" excise duties on articles produced at home will be levied. If, on the other hand, Parliament takes the view that open competition between British and foreign manufacturers will, in the long run, produce the best results for the country, then, on every article which is taxed at the Custom House, it will place a "countervailing" excise duty on the articles of the same class manufactured in the United Kingdom."

It may be inferred from the event mentioned in s. 90 and the inclusion of customs, excise and bounties in the section that the duties of excise to which it refers have this relationship to duties of customs and that the object of the section is a uniform fiscal policy for the Commonwealth. The meaning of the term "excise" in s. 90 is governed by the object of the section.

In Peterswald v. Bartley [1] , Griffith C.J. cites a passage in the work written by Quick & Garran "on the origin and use of the term "excise" " in which the learned authors say: "The fundamental conception of the term is that of 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 has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth."

Section 90 does not restrict the power of a State legislature to the utmost extent that the widest meaning of the words "duties of excise" would allow, but to the extent only that the object of the section requires.

The words "duties of customs and excise" are used in ss. 86, 90 and 93. In s. 93 the term "customs" is used to mean a duty chargeable "on goods imported into a State," and "excise" to mean a duty "paid on goods produced or manufactured in a State."

In Peterswald v. Bartley [2] it was decided that the duties of excise mentioned in s. 90 are taxes levied on the production or manufacture of goods. In the Motor Spirit Case [3] a State tax levied upon the "first sale" made by "a producer" was held to be a tax on production and consequently a duty of excise within the meaning of s. 90. In John Fairfax & Sons Ltd. & Smiths Newspapers Ltd. v. New South Wales [4] another State tax was held to be such a duty of excise for the same reason. The nature and incidence of the tax may be ascertained by reference to s. 2. of the Finance (Taxation Management) Act 1926 and s. 3 of the Finance (Newspaper Taxation) Act 1926. In Matthews v. Chicory Board (Vict.) [1] a State tax was held to be a duty of excise within s. 90 because it was levied upon production. In an earlier case, Attorney-General v. Homebush Flour Mills Ltd. [2] , a contribution levied upon a miller in respect of the sale of flour was held to be an excise tax which s. 90 put beyond the powers of the State legislature.

1. (1904) 1 C.L.R. 509. 2. (1926) 38 C.L.R. 408. 3. (1927) 39 C.L.R. 139. 4. (1938) 60 C.L.R. 263. 5. (1937) 56 C.L.R. 390.

In the Motor Spirit Case [3] Isaacs J. said, after referring to the interdependence of customs, excise and bounties in the Constitution, that he agreed with the reasoning in Peterswald v. Bartley [4] .

1. (1926) 38 C.L.R., at p. 426. 2. (1904) 1 C.L.R. 497.

In that case Griffith C.J. [5] said that, "when used in the Constitution it (the term "excise") is used in connection with the words "on goods produced or manufactured in the States," the conclusion is almost inevitable that, whenever it is used, it is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax. Reading the Constitution alone, that seems to be the proper construction to be put upon the term."

The passage in the reasons for judgment of Isaacs J. in the Motor Spirit Case [6] in which he expressed agreement with the reasoning in Peterswald v. Bartley [4] is as follows: "Licences to sell liquor or other articles may well come within an excise duty law, if they are so connected with the production of the article sold or are otherwise so imposed as in effect to be a method of taxing the production of the article. But if in fact unconnected with production and imposed merely with respect to the sale of the goods as existing articles of trade and commerce, independently of the fact of their local production, a licence or tax on the sale appears to me to fall into a classification of governmental power outside the true content of the words "excise duties" as used in the Constitution. Such taxing regulations are, in my opinion, not "withdrawn" from the States, however they might stand in presence of relevant Commonwealth legislation respecting foreign or inter-State trade. I agree with the reasoning in Peterswald v. Bartley [4] ."

1. (1926) 38 C.L.R. 408, at p. 426. 2. (1904) 1 C.L.R. 497. 3. (1904) 1 C.L.R. 497.

Higgins J. [7] gives instances of excise duties within the meaning of s. 90. One is a tax upon the distillation of spirits: another is a duty imposed upon tobacco manufactured in any tobacco factory and entered for home consumption. There is also this statement by Higgins J. [1] :"for the purpose of section 90 and our Constitution as a whole, customs duty is a duty on the importation or exportation whether by land or by sea; whereas excise duty means a duty on the manufacture, production etc. in the country itself; and it matters not whether the duty is imposed at the moment of actual sale or not, or sale and delivery, or consumption." This means that it matters not if a duty "on the manufacture, production etc." is imposed "at the moment of" any of the transactions which are mentioned.

1. (1926) 38 C.L.R., at p. 434. 2. (1926) 38 C.L.R., at p. 435.

The weight of judicial authority favours the view that s. 90 withdraws from the States power to levy a duty on the production or manufacture of goods, but not that s. 90 goes as far as to withdraw from the States the power to levy a tax on goods which is in fact unconnected with their production and is imposed merely with respect to the sale of the goods as existing articles of commerce.

Section 30 of the Milk Board Act 1933-1939 requires "a dairyman other than the owner of a milk shop" and "every owner of a milk depot" to contribute towards the expenditure incurred in the administration of the Acts. The dairyman as owner of a milk depot is made subject to liability only if he sells or distributes milk in the metropolis. In order to ascertain what is meant by "dairyman" and "owner of a milk depot," it is necessary to refer to definitions in the Milk Board Acts and the Milk and Dairy Supervision Act 1928. Upon reference to those definitions, it is seen that the authority given by s. 30 is limited to exacting contributions from distributors of milk and not from dairy farmers or producers as such. The Act gives authority to exact a contribution in respect of sale or distribution. The Milk Board is given power to determine the sum to be paid by any person who is liable to contribute but subject to the condition that "such sum shall not in the case of any such dairyman or owner exceed a sum equal to one quarter of a penny per gallon for every gallon of milk so sold or distributed."

The pecuniary impost which s. 30 authorizes is a burden upon the sale or distribution of milk to users and consumers. It is not levied upon the producers and it is in fact not connected with production. The impost is levied with respect to the sale of milk as an existing article of commerce independently of the production of the commodity. The impost is not a duty of excise within the meaning of s. 90.

The sellers and distributors who are required to make the payment provided by s. 30 may pass on the amount of the liability to the users and consumers of the milk and the Parliament may have expected that they would do so. The burden of the payment may be an indirect tax, but the Constitution does not withdraw power from the States to impose any indirect tax unless it is a duty of customs or of excise within the meaning of s. 90.

The payment which s. 30 requires to be made is a tax because it is a forced contribution to the government for public purposes. The objects of the Acts are directed to the general welfare rather than to the performance of services for the sellers and distributors who may be required to contribute. But the tax is not a duty of excise within s. 90 and is therefore within the constitutional power of the State.

As s. 30 is not in conflict with the Constitution, the question whether the regulations and determinations are invalid arises under and involves only the interpretation of the Milk Board Acts. Such a question is not within the original jurisdiction of this Court. No declaration should therefore be made as to the validity of the regulations and the determination: Carter v. The Egg Board [1] .