Port of Brisbane Corporation v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT 1 This is an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal ("the Tribunal") of 3 March 2004. The Tribunal determined that diesel fuel used in some aspects of the dredging operations of the Port of Brisbane Corporation ("the Corporation") was used "in marine transport" and diesel fuel used in other aspects was not. The effect of this determination was that the Corporation was entitled to a diesel fuel rebate under the Customs Act 1901 (Cth) ("the Customs Act") or the Excise Act 1901 (Cth) ("the Excise Act") in relation to diesel fuel used in some aspects of its dredging operations only. 2 While the present proceedings are described in s 44 as an appeal, they are proceedings in this Court's original jurisdiction and are limited to questions of law. The facts are not in dispute and it is convenient to repeat the Tribunal's account. The Corporation is a State Government owned corporation established in 1994. It is responsible for the operation and management of the Port of Brisbane. The Corporation's activities include the dredging of navigation channels in the Port of Brisbane and other ports and waterways to remove sand, silt and other spoil to ensure the efficient movement of ships and cargo. The spoil is either carried away by the dredging vehicle or pumped ashore through pipes. 3 The Corporation maintains a fleet of dredges of varying configurations to carry out this dredging. The Corporation used the following diesel fuel powered dredges: (i) The "SD Brisbane", a trailer suction hopper dredge, which is a self-propelled, crewed vessel 84 metres long and 16 metres wide which travels to the dredging site, and then deploys two drag arms that trail behind the vessel along the seabed. A vacuum pump sucks the spoil from the seabed into a hopper in the hold of the vessel. The water is then drained from the spoil. When the hopper is full, the vessel transports the spoil to a disposal site where it is either dumped through hydraulically operated valves in the bottom of the hopper or pumped ashore through long floating hoses. Diesel fuel powers the propulsion, pumping and other mechanical activities of the vessel. The "SD Brisbane" is best suited to dredging long straight channels. (ii) The "Sir Thomas Hiley", a trailer suction hopper dredge of the kind described in (i) above, was used by the Corporation until approximately November 2000, when it was replaced by the "SD Brisbane". (iii) The "Amity", a cutter suction dredge, which is a non-propelled barge 72 metres long and 14 metres wide with a cutter arm extending to the seabed. The arm rotates, cutting the seabed, and the displaced spoil is sucked up by a vacuum pump and pumped ashore using a floating hose and pipes. The hose or pipe is directed to a dumping area on nearby land under reclamation. The barge moves through the area being dredged using a system of anchors and winches together with hydraulic "spuds", steel pylons that rest on the seabed. Diesel fuel powers the cutter arm, pumps and other mechanical equipment. Because of its heavy duty metal cutter, the "Amity" is used for dredging large areas of more compacted material such as berth pockets or the areas in front of wharfs. (iv) The "Juno", a cutter suction dredge of the kind described in (iii) above, which was used by the Corporation until around July 2001, when it was replaced by the "Amity". (v) The "Ken Harvey", a grab dredge, which is a non-propelled barge 22 metres long and nine metres wide that uses a grab bucket fitted to a crane to grab and lift spoil from the seabed and deposit it in a separate hopper barge moored alongside. When full, the hopper barge is towed to a disposal site and emptied by dumping the spoil through hydraulic opening doors in the bottom of the barge. The barge moves through the area being dredged using a system of anchors and winches. Diesel fuel powers the crane and grab bucket, the winches and other mechanical equipment. 4 In 2001, 2002 and 2003, the Corporation lodged a number of applications for a diesel fuel rebate which, in various ways, claimed rebates for diesel used in the dredging operations of the "SD Brisbane", the "Sir Thomas Hiley", the "Amity" and the "Ken Harvey". These claims were refused and objections disallowed. The Corporation sought the review of those decisions by the Tribunal. 5 The decision of the Tribunal of 3 March 2004 was in the following terms: The Tribunal varies the decisions under review by determining that diesel fuel: (a) used by the self-propelled trailer suction dredges in travelling to and from dredging operations or dump sites; and (b) used to tow the cutter suction or grab dredges to and from dredging operations or dump sites; is used by the Corporation in marine transport for the purposes of s 164(1) of the Customs Act 1901 and s 78A(1) of the Excise Act 1901 so that a rebate of duty is payable. In effect, the Tribunal concluded that the Corporation was entitled to a diesel fuel rebate in relation to diesel fuel used for some of its dredging operations but not all of them. 6 Before explaining how the Tribunal reached this conclusion, it is convenient to set the relevant legislative provisions in force during 2001, 2002 and 2003. For that purpose, it is sufficient to refer only to s 164 of the Customs Act (and I do so from this point) as the relevant provisions of the Excise Act were in identical terms or imported relevant provisions of the Customs Act. Section 164 of the Customs Act and the relevant provisions of the Excise Act have been repealed and rebates of this character are now dealt with by the Energy Grants (Credits) Scheme Act 2003 (Cth). 7 Subsection (1AA) of s 164 provided: (1AA) This section makes provision for a rebate to be payable in respect of diesel fuel purchased for certain usages. In particular (but without limiting the effect of the provisions), it sets out: (a) the particular usages of diesel fuel that would entitle a person to apply for rebate (subsection (1)); and (…) The circumstances in which the use of diesel fuel attracted a rebate were set out in subs (1) which provided: (1) A rebate is, subject to subsections (2) and (4A) and to such conditions and restrictions as are prescribed (being conditions and restrictions that relate to goods generally, to goods included in a class of goods that includes diesel fuel or to diesel fuel only), payable to a person who purchases diesel fuel for use by the person: (a) in mining operations (otherwise than for the purpose of propelling any vehicle on a public road); (aa) in primary production (otherwise than for the purpose of propelling a road vehicle on a public road); (ab) in rail transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise; (ac) in marine transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise; (ad) at particular premises to generate electricity for use in the course of carrying on, at those premises, an enterprise that: (i) has, as its principal purpose, the retail sale of goods or services or the provision of hospitality; and (ii) does not have, at those premises, ready access to a commercial supply of electricity; (b) at residential premises to generate electricity for use in: (i) providing food and drink for; (ii) providing lighting, heating, air-conditioning, hot water or similar amenities for; or (iii) meeting other domestic requirements of; residents of the premises; (c) at a hospital or nursing home or at any other institution providing medical or nursing care; or (d) at a home for aged persons. (Emphasis added) 8 Subsection (7) contained definitions. The expression "marine transport" was defined: marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry. The definition of "mining operations" in the subsection made reference to dredging as an activity (undertaken for specified purposes) not comprehended by that expression. The definition commenced: mining operations means: (a) exploration or prospecting for minerals, or the removal of overburden and other activities undertaken in the preparation of a site to enable mining for minerals to commence; or (…) and was followed by paragraphs concluding with (w) identifying the circumstances in which diesel fuel might be used which would constitute "mining operations" as defined. The definition included further paragraphs identifying circumstances in which diesel fuel might be used which would not constitute "mining operations". Those paragraphs commenced: but does not include: (x) quarrying or dredging operations to the extent that the purpose of the operations is to obtain materials for use in building, road making, landscaping, construction or similar purposes; or (…) (Emphasis added) 9 Subsection (2) of s 164 made it clear that the entitlement to a rebate only arose from actual use for a specified purpose or activity. That subsection provided: (2) A person is not entitled to be paid diesel fuel rebate, or to retain diesel fuel rebate paid to the person, in respect of diesel fuel purchased by the person for use by the person in a manner referred to in subsection (1) that is specified in the application for that rebate if, in fact, the person: (a) uses the fuel otherwise than in that manner; or (b) sells or otherwise disposes of the fuel; or (c) loses the fuel (whether because of accident, theft or any other reason). 10 Various rates of rebate were specified in s 164. Subsection (4C) provided that use in marine transport attracted the same rate of rebate as use in primary production. The subsection provided: (4C) The rebate payable under subsection (1) to a person in respect of diesel fuel purchased by the person for use in a manner referred to in paragraph (1)(ab) or (ac) (rail or marine transport) or in a manner referred to in paragraph (1)(ad) (generation of electricity for retail or hospitality purposes) is payable at the rate that the rebate would be payable if the use of the diesel fuel had been in primary production. Subsection (5) specified the rates and provided: (5) Subject to subsections (5AA) and (5AC), the rebate payable under subsection (1) to a person in respect of any diesel fuel purchased by the person for use in a manner referred to in a paragraph of that subsection is payable at the rate of: (a) in the case of paragraph (1)(a) - $0.07619 per litre; (b) in the case of paragraph (1)(aa) - $0.10007 per litre; (c) in the case of paragraph (1)(b) - $0.07619 per litre; (d) in the case of paragraph (1)(c) - $0.07619 per litre; (e) in the case of paragraph (1)(d) - $0.07619 per litre. It can be seen that the rate specified for use in mining operations ((a) above) was different to the rate for use in primary production ((b) above). The rate for primary production was, because of subs (4C), also the rate for use in marine transport. 11 I turn to consider the Tribunal's reasons for decision. It set out the critical legislative provisions (s 164(1)(ac) and the definition of "marine transport" in s 164(7)). It then set out the terms of a Bulletin published by the Australian Taxation Office (Excise Bulletin EB2000/3 "Diesel Fuel Rebate Scheme"). As quoted, the Bulletin stated, amongst other things, that the use of diesel fuel in the operations of a dredge was not eligible for the rebate perhaps in the mistaken belief that the qualification in the definition of "mining operations" operated as an exclusion in the legislative scheme more generally. The Tribunal said of the Bulletin: 16. The Tribunal assumes the Excise Bulletin constitutes departmental policy. The Tribunal notes that in the case of relevant policy of a government department or agency, in the absence of a statutory obligation to do so, the Tribunal will ordinarily apply that policy unless it is unlawful or its application would cause injustice, or there are other cogent reasons for not applying it in the circumstances of the particular case: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645. 12 The Tribunal then set out what it understood to be the issue for determination. It said: 19. Essentially, therefore, the question to be determined by the Tribunal is one of statutory interpretation. How is the expression "use in … marine transport" to be interpreted? Does it include the relevant activities of the Corporation's dredges? This paragraph stated correctly, in my opinion, the issue raised. The Tribunal then referred to concessions of the Deputy Commissioner of Taxation ("the Commissioner") which were to the effect that a rebate was payable to the Corporation in respect of diesel used to propel the trailer suction hopper dredges (the "SD Brisbane" and the "Sir Thomas Hiley" - both self-propelled dredges) from the dredging site to the disposal site (of the spoil recovered by the dredging) and diesel used to propel a self-propelled dredge to and from the point of dredging (and from port to port). 13 The Tribunal then noted that because of these concessions: …the issue to be determined was narrowed to whether the use of diesel while a dredge is engaged in dredging processes can properly be characterised as use in marine transport. If the answer to this question is "No", then diesel fuel powering the pumps, winches and other on-board equipment used to extract spoil from the seabed, transfer spoil to the vessel and dispose of spoil from the vessel would be excluded. Thus, the entirety of the operations of the cutter suction dredges and the grab dredges would be excluded, and the operations of the trailer suction hopper dredges involving the actual dredging process. The Tribunal referred to authority indicating the legislation should be construed beneficially rather than restrictively and to another authority concerning the meaning of the word "in", namely Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1. 14 After setting out the submissions of the parties, the Tribunal explained its reasoning: 31. The Tribunal agrees with the parties that the phrase "use in … marine transport" should be accorded its ordinary and natural meaning. In this context, the normal association of "marine" with the sea is extended by the definition of "marine transport" in s 164(7) to include fresh water. That same definition, which "includes transport by vessels in or on fresh water", while not an exhaustive definition because it is extending the ordinary meaning of "marine" to include an association not only with sea water but also with fresh water, nevertheless refers to transport by vessels. 32. In the Tribunal's opinion, the ordinary meaning of "marine transport" does not include the conveying of things via a pipe that is in, ie passes through, water or floats on water. Otherwise, one can foresee it might be argued that the pumping of natural gas or oil from an off-shore drilling rig to shore via a pipeline could constitute "marine transport". In the Tribunal's opinion, the key to the meaning of "marine transport" lies in the meaning of the word "transport". The Concise Macquarie Dictionary (3rd edition 1988) lists as the sixth meaning of transport: 6. a means of transporting, as a ship, truck or plane used for transporting soldiers or miliary stores, or convicts. The first meaning of transport in the Oxford English Dictionary is: