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15 Section 74 of the Assessment Act relevantly provides as follows:

"74(1)This section allows the Commissioner to collect money from a person who owes money to a taxpayer who has a sales tax debt. 74(2) The Commissioner may direct a person ('the third party') who owes, or may later owe, money ('the available money') to the taxpayer to pay some or all of the available money to the Commissioner in accordance with the direction. The Commissioner must send a copy of the direction to the taxpayer to the last place of address known to the Commissioner. 74(3) The direction cannot require an amount to be paid to the Commissioner at a time before it becomes owing by the third party to the taxpayer. 74(4) The third party must comply with the direction, so far as the third party is able to do so. Penalty: $2,000. ……………………… 74(6) Any payment made by the third party under this section is taken to have been made with the authority of the taxpayer and of all other persons concerned, and the third party is indemnified for the payment. 74(7) If the whole of the sales tax debt of the taxpayer is discharged before any payment is made by the third party, the Commissioner must immediately give notice to the third party of that fact. 74(8) The third party is taken to owe money to the taxpayer if: (a) money is due or accruing by the third party to the taxpayer; or (b) the third party holds money for or on account of the taxpayer; or (c) the third party holds money on account of some other person for payment to the taxpayer; or (d) the third party has authority from some other person to pay money to the taxpayer; whether or not the payment of the money to the taxpayer is dependent on a pre-condition that has not been fulfilled. ……………………… 74(10) In this section: ……………………… 'person' includes: (a) the Commonwealth, a State or a Territory; (b) a public authority of the Commonwealth or of a State or Territory, whether or not the authority is incorporated; 'sales tax debt' means any of the following amounts payable by a person (whether or not the amount has become due for payment): (a) sales tax; (aa) an amount payable under Part 7A; (b) penalty under Part 9 and late-payment penalty; (c) a judgment debt, or costs, for sales tax, penalty under Part 9 or late-payment penalty; (d) a fine, or costs, that a court has imposed for an offence against the sales tax law; (e) an amount that a court has ordered the person to pay to the Commissioner, following conviction of the person for an offence against the sales tax law." 16 Sections 101 and 99 of the Assessment Act provide, respectively, as follows: "101(1) The Commissioner may at any time make an assessment of tax payable by a person on an assessable dealing or assessable dealings (whether or not the Commissioner has previously made an assessment in relation to that dealing or any of those dealings). 101(2) This section does not apply to an amount payable because of the cancellation of a tax benefit under section 93A". "99(1) The Commissioner must make an assessment of penalty that is payable under this Part. 99(2) Notice of the assessment may be included in any other notice of assessment under this Act that relates to the same person. 99(3) Penalty under this Part becomes due for payment on the day specified in the notice of assessment. The day must be at least 14 days after the date of issue of the assessment."

THE ASSESSMENTS 17 Each of the Notices refers to an assessment under section 101 of the Assessment Act "in respect of goods purchased tax free incorrectly" during a period specified in the Notices. The details of the Notices and the amounts claimed are as follows: Date of Period for Type of Taxable Tax Penalty Total Notice of which Goods Value Payable Sec. 99 of assessed Assessment Assessment 22/9/95 1/7/95 to 31/7/95 Item 1(1)(n) of $42,443.00 $5,093.16 $5,347.82 $10,440.98 Schedule 2 @ 12% 22/9/95 18/8/93 to 30/6/95 Item 1(1)(n) of $473,352.00 $52,068.72 $54,672.16 $106,740.88 Schedule 2 @ 11% 22/9/95 1/1/93 to 17/8/93 Item 1(1)(n) of $57,241.00 $5,724.10 $6,010.31 $11,734.41 Schedule 2 @ 10% 15/2/96 18/8/93 to 30/6/95 Item 7 of $67,784.00 $21,013.04 $22,063.65 $43,076.69 Schedule 5 @ 31% 15/2/96 1/1/93 to 17/8/93 Item 7 of $7,806.00 $2,341.80 $2,458.89 $4,800.69 Schedule 5 @ 30%

18 The relevant part of each of the Notices is identical, except for the figures, periods and rates. For example, one of the Notices dated 22 September 1995 provides as follows:

  "ASSESSMENT UNDER SECTION 101 OF SALES TAX ASSESSMENT ACT 1992
  In respect of goods purchased tax free incorrectly during the period from 1 July 1995 to 31 July 1995 (both dates inclusive) -
  Total Taxable Value (as per attached Schedule) $42,443.00
  Total amount of tax thereon at 12.00% $5,093.16
  Less tax previously paid $.00
  Amount of tax now payable $5,093.16
  Assessment of penalty under section 99 of Sales Tax
  Assessment Act 1992 $5,347.82
  (The amount imposable under Section 97 of Sales Tax Assessment
  Act 1992 has been reduced pursuant to section 100 of Sales Tax
  Assessment Act 1992)
  Total Amount due under this assessment $10,440.98
  The total amount due under this assessment is $10,440.98. The tax payable of $5,093.16 should be paid forthwith. The amount of $5,347.82 penalty becomes due for payment on 12 October 1995."
19 The calculations of sales tax referred to in the Notices appear to have been made on the basis that all of the goods purchased by the applicant under quote were subsequently sold by him. Those sales, by the operation of section 16 and item AD2b, would be assessable dealings. The Commissioner calculated sales tax on the basis that the notional wholesale selling price in respect of the goods was the price paid for those goods. In preparing the Notices and calculating the total taxable value as shown in the above table, the Commissioner had recourse to a report prepared by Mr Alexander Penklis, a forensic accountant. Mr Penklis purported to calculate the total purchase price paid by the applicant in connection with the purchase of goods under quote.
20 The applicant contends that the assessments purportedly made under section 101 of the Assessment Act are defective for several reasons as follows:

· the Commissioner assessed tax on purchases by the applicant rather than sales by the applicant; · the Commissioner made an arbitrary assumption that all goods sold by the applicant were obtained under quote incorrectly; · the Commissioner failed to take account of the effect of the fire; · the Commissioner failed to make any assessment of the quantities of goods sold or the time of sale in relation to any assessable dealing.

21 The applicant also contends that the preconditions for the imposition of penalties under section 97 were not satisfied and, accordingly, the assessment of penalties was defective.
22 I shall deal separately with each basis advanced by the applicant for impugning the assessments.

ASSESSMENT ON PURCHASES NOT SALES 23 The applicant contends that, on the true construction of the Notices and the evidence relating to the process of assessment undertaken by the Commissioner, the Commissioner assessed sales tax on the purchases of the goods by the applicant rather than on any sale of the goods by the applicant. In particular, the applicant contends that the Commissioner made no attempt to assess the time when any sake of the goods occurred. The applicant relies on a number of matters as follows. 24 First, the Notices are expressed to be assessments "in respect of goods purchased tax free incorrectly". No mention is made in the Notices of any sale by the applicant. Accordingly, so it is said, the Notices demonstrate that the Commissioner assessed tax on the purchase of goods by the applicant. 25 However, the language of the Notices is equivocal. They refer to neither purchases nor to sales. In other words, they do not refer to any dealing at all. Rather, they identify goods by reference to the circumstances in which the goods were purchased. That is to say, they describe goods that were purchased under quote. 26 Secondly, when the Notices were originally sent to the applicant, the schedule referred to in each of the Notices was not attached. A copy of the schedule was sent with the Commissioner's letter of 27 October 1995 written to the applicant's solicitors. The schedule was as follows: VENEZIA DESIGN LIGHTING PURCHASES JAN-93-JUNE93 JUL 93-JUN94 JULY 94-JAN95 57241 @ 10% 5724-00 7,806 @ 30% 2341-00

195,490 @ 11% 21,504 40,040 @ 30% 12,412

157,213 @ 11% 17293 27744 @ 31% 8601

FEB95-JUNE95 120,649 @ 11% 13,271

Jul-95 42,443 @ 12% 5,093

SUMMARY

57,241 @ 10% $5,724 473352 @ 11% $52,068 42,443 @ 12% $5,093 42381 @ 30% $12,714 27744 @ 31% $8,600

TOTAL $84,199

The figure of $42,443 shown in the schedule as well as in the Notice referred to above is derived from figures calculated by Mr Penklis from sales records of suppliers of goods to the applicant.

27 In the letter of 27 October 1995 the Commissioner, inter alia, said:

"The assessments are based on the purchases made by Venezia Design Lighting during the period 1 January 1993 to 31 July 1995." The applicant contends that that statement, coupled with the terms of the schedule, indicates that the Commissioner made the assessment in respect of the purchases of the goods referred to in the Notices rather than any sale of the goods.

28 However, while the statement is infelicitous, it is equivocal. Having regard to the method of assessment adopted by the Commissioner, it is correct to say that the assessments are "based on" the purchases made by the applicant during the relevant periods. They were based on those purchases in the sense that the purchases were used as the basis for calculating the notional wholesale price of the goods sold during the period. Neither the schedule nor the letter of 27 October 1995 indicates that the Commissioner assessed tax on purchases by the applicant.
29 Thirdly, on 21 November 1995, the applicant objected to the assessments notified by the Notices dated 22 September 1995. The grounds included the following:
     "2) The taxpayer claims that conditions for the imposition of tax did not exist."

The applicant contends that that ground is sufficiently wide to include the contention that there was no assessable dealing within the meaning of section 16 that formed the basis for the assessments. 30 Two of the five assessments made by the Commissioner contained an arithmetical error. The Commissioner issued amended assessments dated 15 February 1996 in relation to those two assessments. In the Commissioner's notice of objection decision of 6 February 1996 the Commissioner said, by way of explaining in part why the objections were otherwise disallowed: "The assessments were based on purchases made." That statement by the Commissioner is said to be a further confirmation that the assessments were made in respect of purchases rather than sales.

31 However, once again, the phrase employed by the Commissioner, while infelicitous, is equivocal. In other words, it is correct to say that the assessment was based on purchases, to the extent that it was based on the price paid for the purchase of the goods.
32 Fourthly, the applicant also relies on a document described as "The Objection Decision Report" dated 6 February 1996. The precise character of the document is not entirely clear although, on its face, it appears to be the Commissioner's reasons for the objection decision. The applicant relies on the following statement, which is contained under the heading "STATE FINDINGS ON MATERIAL QUESTIONS OF FACT":

"These assessments were based on total purchases included in the trading accounts of Venezia Design Lighting." However, before that statement the following appears: "7. Mr Punin, trading as Venezia Design Lighting, incurred a liability for sales tax by way of assessable dealing AD2b, when he sold goods by retail to Meriton Apartments and to other customers. 8. No sales tax has been paid on the goods that Mr Punin has sold through Venezia Design Lighting." (Emphasis added.) Thus, it is clear that the decision maker was mindful of the item in Table 1 that describes the relevant assessable dealings, being sales rather than purchases. That is confirmed in the part of the reasons that appears under the heading: "STATE REASONS FOR THE DECISION INCLUDING A SPECIFIC RESPONSE TO EACH OF THE GROUNDS OF OBJECTION STATED ABOVE." In relation to ground 2, the reasons say: "If an unregistered person purports to quote a registration number then that person will nevertheless be regarded as obtaining the goods under quote. Consequently that person will be liable on any subsequent sale of the goods. Mr Punin, trading as Venezia Design Lighting, incurred a liability for sales tax by way of assessable dealing AD2b, when he sold goods by retail to Mereton Apartments and to other customers. No sales tax has been paid on the goods that Mr Punin has sold through Venezia Design Lighting." (Emphasis added.) That is an unequivocal response to ground 2, indicating that the assessment was made in respect of sales by the applicant.

33 Fifthly, the applicant relies on the following paragraphs in Mr Penklis's report:
     "59. In order to calculate the sales tax liability of the Insured, detailed analysis of his purchases are required to be carried out, including dissection of all purchases by item of product, ie lighting and other items.
     ………………………
     62. Sales tax application to other goods being sold by the Insured appear to be 31%…
     63. Detailed calculations of the Insured's sales tax liability accrued is on Appendix 5.3 and is further summarised below:
         Period Sales Tax
         Ended Liability
              30 June 1993 26,038
              30 June 1994 33,916
              31 January 1995 25,894
         $85,848"

The applicant relies on those paragraphs as indicating that the information relied on by the Commissioner was limited to information concerning purchases by the applicant and not sales by the applicant. However, for the reasons indicated above, the material quoted relates to the calculation of a notional wholesale selling price to be applied to the sales assumed to have been made in respect of the goods purchased under quote.

34 Sixthly, the applicant relies on the following further paragraphs of Mr Penklis's report:
         "Sales Trend
         33. From the documentation provided we have calculated the Insured's monthly sales over the period 1 July 1992 to 31 January 1995 and attach as Appendices 3 and 4 our calculations of monthly and other periodic sales trends.
         34. You will note from Appendix 3 that there was a 13.45% positive trend in sales over the 7 months July 1993 to January 1994 compared to the same period in the previous year and 9.37% positive trend when the 1994 financial year is compared to the 1993 financial year.
         35. The details on Appendix 4 calculate 0.26% positive trend over the 12 months February 1994 to January 1995 compared to the previous year.
         36. However, there was a 0.14% negative trend over the 7 months preceding the fire.
         37. We draw your attention to the sales in January 1994 ($6,248) which appears to be abnormally low in comparison with the Insured's sales in other months.
         38. These lower sales in January 1994 are unexplained and require clarification."
35 The appendices referred to in those paragraphs are not in evidence. Nevertheless, the paragraphs are inconsistent with the applicant's contentions. They demonstrate that attention was given to sales made by the applicant.
36 I do not consider that any of the above matters leads to the conclusion that the Commissioner made assessments in respect of purchases rather than in respect of sales.

WHETHER ALL GOODS OBTAINED UNDER QUOTE 37 Another basis advanced by the applicant for impugning the assessments and the calculation of sales tax referred to in the Notices is that the Commissioner made an arbitrary assumption that all goods sold by the applicant were incorrectly obtained under quote. The applicant relies on the fact that he was convicted of the offence of purchasing goods under an invalid sales tax quote. The sales tax that would have been payable on the goods that were the subject of the transactions that gave rise to the convictions totalled approximately $7,500. On the other hand, as appears above, the sales tax allegedly payable under the Notices is far in excess of that sum. The applicant contended that there was no information before the Commissioner from which a conclusion could be drawn that all of the goods that were the subject of the dealings that are the subject of the assessments referred to in the Notices were obtained under an invalid quote. 38 However, there is an inference available to be drawn from all of the material before the Commissioner that the applicant at no time had a valid sales tax number. Nevertheless, he acquired goods during the periods identified in the notices. Mr Penklis's report establishes the total purchase price paid by the applicant to obtain those goods. It is a fair inference that all of the goods were obtained under an invalid quote.

SIGNIFICANCE OF THE FIRE 39 There is evidence that the applicant in fact sold fire damaged goods for $20,000. A question may arise as to whether that was a sale by retail. Whatever it was, it was a sale that was an assessable dealing. Sales tax would be payable on the notional wholesale sale price of the goods, irrespective of the price at which they were actually sold. 40 The applicant contends however that there must be a possibility that some goods obtained under quote were destroyed in the fire and that, accordingly, they were not sold. Nevertheless, it is at least arguable that goods destroyed in the fire were goods applied for own use by the applicant within item AD3c in Table 1. That item is in the following terms: