The appellants also turn to s 185 in an attempt to find support for their contention. This section provides that any taxpayer "dissatisfied with any assessment" may within sixty days after service of the notice of assessment, post to or lodge with the Commissioner "an objection in writing against the assessment", stating the ground on which he relies. How, it is asked, can a taxpayer bring himself within this section when his objection is that there has been no assessment at all? The answer to this question is again to be discovered in s 177 (1) and the legislative policy on which it proceeds. Although the sub-section is evidentiary and begins to operate when an appropriate document is produced in a court or board of review, and not before, its effect is to put the making of an assessment beyond challenge. In the nature of things the Commissioner will always rely on production of the notice of assessment or a copy of it. Section 185 proceeds on this assumption and on the footing that, once a notice of assessment is served, no question will arise as to the making of the assessment by reason of the Commissioner's reliance on s 177 (1)."
53 Section 177(1) was again considered by the High Court in Federal Commissioner of Taxation v Dalco (1989-1990) 168 CLR 614 which was concerned with the question of whether a taxpayer who challenges his liability for income tax discharges the burden of proving that the assessment is excessive where (a) he does not prove that the amount assessed as his taxable income in fact exceeds his taxable income, but (b) he shows that the Commissioner formed a judgment as to the amount of his taxable income on a wrong basis. The answer to the question depended upon the correct construction of provisions in the statute which are not relevant for present purposes. However, during the course of analysing those provisions Brennan J, with whom Mason CJ and Deane and Dawson JJ agreed, said (at 620):
"In a case arising under s 167(b), there are two functions for the Commissioner or his delegate to perform: first, he must decide whether he is satisfied with the return furnished, and, if he is not, he must form a judgment of the amount on which tax ought to be levied. In George's Case (1952) 86 CLR at pp 206-207 it was held that the former function was a procedural step and was thus part of the making of the assessment, the due making of which is conclusively proved by the production of a notice of assessment: s 177(1). By contrast, in proceedings on appeal against an assessment the function of forming a judgment of the amount on which tax ought to be levied is not conclusively proved by the production of a notice of assessment. That is because s 177 distinguishes "between the procedure or mechanism by which the taxable income and tax is ascertained or assessed on the one hand and on the other hand the substantive liability of the taxpayer. The former involves the due making of the assessment": George's Case ; McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 271; and see FJ Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 at 373."
54 The High Court again considered s 177(1) in Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1994-1995) 183 CLR 168. The proceedings raised the question as to whether the section operated to deprive the Federal Court of the jurisdiction conferred by s 39B(1) of the Judiciary Act 1903. A majority of the Court held that it did not and disapproved of the decision to the contrary by the Full Federal Court in David Jones Finance v Investments Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 484.
55 In his reasons (at 187) Mason CJ referred to the statement in the joint judgment of himself and Wilson J in F J Bloemen (at 376) (with which Stephen and Aicken JJ agreed) where they had said:
"The general tenor of the statutory provisions suggested that a taxpayer wishing to challenge a notice of assessment served upon him will be effectively confined to the Pt V procedures."
56 His Honour concluded (at 186) that subject only to the principle in R v Hickman: ex parte Fox (1945) 70 CLR 598, the effect of s 177(1) is to "condition the exercise of jurisdiction upon production of the notice of assessment or a copy of it so that it is treated as valid, otherwise than in Pt IVC proceedings."
57 In his reasons in Richard Walter Brennan J said (at 204):
"Although the Federal Court has jurisdiction to review a purported exercise of power that does not satisfy the Hickman principle, once the Richard Walter notices of assessment in respect of the 1981-1984 years have been produced in the s 39B proceeding, the Court is bound to conclude that the assessments (including the antecedent determinations) were duly made and that the amounts and all particulars thereof are correct."
58 McHugh J considered the policy of the legislation and concluded (at 240) that "assessments of tax are not challengeable in ordinary legal proceedings" (see also Dawson J at 220 and Toohey J at 233).
59 In Oates, Hill J relied upon the decisions in Federal Commissioner of Taxation v Cappid Pty Ltd (1970-71) 127 CLR 140 and W J and F Barnes Pty Limited v Commissioner of Taxation (Cth) (1957) 96 CLR 294 preferring them to the later decisions of the High Court. As his Honour points out there is no suggestion that s 177 was considered in Cappid and although referred to in submissions, it is not referred to in the judgment in Barnes. In these circumstances, in my opinion the later and clear statements of the High Court as to the effect of s 177(1) should guide this Court with respect to the operation of s 59.
60 Accordingly, I am of the opinion that, once the assessments and declarations were tendered in the proceedings, s 59 of the Administration Act operated with the consequence that the taxpayer cannot go behind them other than in proceedings pursuant to Part IVC of the Act or in the circumstances provided in Hickman.
61 The claimants nevertheless contend that the Commissioner should not have issued the assessments while the present proceedings were on foot. It is further submitted that the notices of assessments were tendered "for a purpose foreign to the proper administration of the Taxation Administration Act and the GST Act and, accordingly, should not have been received by the Court." It is submitted that the purpose of the tender was for the sole or substantial reason that the Commissioner did not want the Supreme Court to hear the summons, notwithstanding that the proceedings were properly commenced before the creation of the assessments.
62 There is no substance in these submissions. Section 59 has been included in the Administration Act for the purpose of facilitating the administration of the taxation legislation. Giving binding force to a notice of assessment or declaration does not exclude a challenge to the Commissioner's determination but confines that challenge to proceedings under Part IVC. There can be no illegitimate purpose in the Commissioner making an assessment or declaration which activates s 59, even if this renders collateral proceedings futile.
63 The claimants commenced proceedings in this Court when they were aware that the Commissioner was conducting an investigation of the relevant transactions and with the knowledge that it was open to the Commissioner and, indeed inevitable, that assessments and declarations would be issued. The Commissioner never undertook to refrain from taking this step until the proceedings had been concluded. The assessment and declarations having been made, in my opinion an obligation fell upon the Commissioner to inform the Court of the position, with the inevitable consequence that the summons would be dismissed.
64 As I have indicated, the Commissioner has issued an assessment for ILFCA which shows a liability for GST in the relevant period of $71,650,031. He has also, by his delegate, issued a declaration in respect of ILFCA negating the benefit of a GST scheme by the sum of $71,650,031. In these circumstances, it is submitted that the Commissioner has issued inconsistent determinations which were not made bona fide and both the assessment and the declaration are a nullity.
65 As I understand the argument it is submitted that the assessment which excluded the relevant GST amount is inconsistent with the declaration, which could only be made if a liability to GST existed. Accordingly, it is submitted that the principle in Hickman operated and s 59 would not exclude a challenge.
66 The submission was founded upon the decision in Darrell Lea Chocolate Shops Pty Ltd v Commissioner of Taxation (1996) 72 FCR 175 which was concerned with the now repealed sales tax legislation. In that case the taxpayer successfully challenged notices of assessment which the Commissioner had issued which were wrong because they treated all the goods assessed for sales tax as imported when some were manufactured locally. Critical to the Court's decision that the assessments should be set aside was the fact that, when the Commissioner made each assessment, he actually knew them to be wrong. The Full Court distinguished the position where the Commissioner is uncertain as to the facts, in which event, even if multiple assessments are issued which are inconsistent, they will not be struck down as mala fide (see the discussion in the joint judgment of Spender, Burchett and Hill JJ at p 186).
67 In Richard Walter Brennan J said at 200-201:
"It must be remembered that the Commissioner's function is administrative, not judicial. The power to assess is, as s 167 shows, not limited to cases where the Commissioner has enough information on which to make a positive finding of fact. The Commissioner is not required to determine on the balance of probabilities that one person rather than another is the person subject to the tax liability in respect of the particular income. Where the facts known to the Commissioner are such that he is unable to determine which of two or more persons is liable to tax on the same item of income in the same year, he may adopt the view in the case of any or all of those persons that there is a substantial possibility that the item of income is assessable income of that person. If that view is adopted in respect of two or more of those persons, he may validly assess each of them to tax." (emphasis added).
68 There can be no suggestion in the present case that the Commissioner has not bona fide exercised his powers. It may be the case that both the assessment and the declaration with respect to ILFC cannot be sustained but that is a matter to be determined pursuant to the statutory mechanisms for review. There is nothing to suggest that the Commissioner had issued either the assessment or the declaration knowing they were wrong. In any event the suggested problem does not apply to IATC which received an assessment but no declaration.