Re Dymond [1959] HCA 22

Re Dymond [1959] HCA 22 - HCA 1959 case summary — Zoe

[8]

The relevant Act in the present case is Act No. 2. The debtor finds a foothold for his argument in s. 46 of the Sales Tax Assessment Act (No. 1) 1930-1953 which, by s. 12 of the Assessment Act (No. 2), is made to "apply mutatis mutandis to the imposition assessment and collection of the tax chargeable under" Act No. 2. Section 46, so far as material, provides: - " any person who - (a) fails or neglects duly to furnish any return or information as and when required by this Act or the Regulations thereunder or by the Commissioner; or (b) fails to include any particulars of goods the sale value of which is subject to tax under this Act in any return, or includes those particulars in a column of the return provided for particulars of goods in respect of which sales tax is not payable, shall, if a taxpayer to whom paragraph (a) of this sub-section applies, be liable to pay additional tax at the rate of ten per centum per annum upon the amount of tax assessable to him or the sum of One pound, whichever is the greater, or, if a taxpayer to whom paragraph (b) of this sub-section applies, shall be liable to pay by way of additional tax the amount of One pound or double the amount of the difference between the tax properly payable and the tax payable upon the basis of the return lodged, whichever is the greater: Provided that the Commissioner may, in any particular case, for reasons which he thinks sufficient, remit the additional tax or any part thereof." There is in Act No. 2 itself another provision which must be mentioned. Section 10 (2A) authorises the commissioner to make what is commonly called a "default assessment" of the tax which in his judgment ought to be paid by any person, and s. 10 (2B) provides: - "Any person who becomes liable to pay sales tax by virtue of an assessment made under the last preceding sub-section shall also be liable to pay, by way of additional tax, double the amount of that sales tax or the amount of One pound whichever is the greater: Provided that the Commissioner may, in any particular case, for reasons which he thinks sufficient, remit the additional tax or any part thereof."

[14]

What has been said does not mean that the expression "imposing taxation" and the expression "dealing with the imposition of taxation" are precisely synonymous. It does not mean that an Act imposing taxation can do no more than say "An income tax is imposed at the following rates", and then specify the rates. It would not be "dealing with" anything other than the imposition of taxation if it prescribed the persons who were to pay the tax and the classes of income in respect of which they were to be taxed. It may very well be that an Act imposing an income tax could, without offending against s. 55, contain all or most of the provisions in fact contained in Pt. III of the Income Tax and Social Services Contribution Assessment Act, which is headed "Liability to Taxation". Such provisions do not impose taxation, but they deal with the imposition of taxation, because the specification of the persons who are to be liable to taxation and the definition of their liability is part of the denotation of the term "imposition of taxation". But provisions for administration and machinery, the appointment and powers and duties of a commissioner of taxation, the making of returns and assessments, the determination of questions of law and fact relating to liability, the collection and recovery of tax, the punishment of offences, stand on a different footing. They "deal with" matters which must be dealt with if the imposition of the tax is to be effective. But they cannot be said to deal with the imposition of taxation, because their subject matter is not comprehended within the meaning of the term "imposition of taxation". The creation of a liability and (for example) the enforcement of the liability by civil or criminal proceedings are different subject matters. "Dealing with the imposition of taxation" is a different thing from "dealing with taxation", and the former expression does not mean or include "dealing with matters incidental to the imposition of taxation". I can see no escape from the view that the Assessment Act does deal with matters other than the imposition of taxation.

[16]

It is true that the amount payable under s. 10 (2B) or s. 46, whether it be the sum of £1 or a larger sum, is expressed to be payable "by way of additional tax". And in Richardson v. Federal Commissioner of Taxation [1] this Court, dealing with the similar provision in s. 67 of the Income Tax Assessment Act 1922-1930, held that (to use the words of Dixon J.) " the procedure of assessment, objection, review and appeal does apply to additional tax under s. 67" [2] . But all this is matter of machinery, the appropriateness of which is indicated by the words "by way of additional tax". It does not affect the penal nature of the liability imposed. As Evatt J. said in Richardson's Case [1] : "But s. 67 is a penal provision, as is indicated by the heading to Pt. VII, and the amount of liability therein specified is an amount in the nature of a penalty. The liability is not to pay "additional tax" but to pay an amount "by way of" additional tax" [2] . The words "by way of additional tax" mean, I think, no more than that the amount of the penalty (to the extent to which it is not remitted) is to be notified, like the tax itself, by a notice of assessment, so that the quantified penalty and the quantified tax are, subject to the right of objection and appeal, made actually payable by the same machinery. The liability is imposed by the Act not as a consequence of a sale of goods but as a consequence of an attempt to evade payment of a tax on a sale of goods. The exaction is directly punitive, and only indirectly fiscal. It is imposed for the protection of the revenue, but as a sanction and not for the sake of revenue as such. It is not a tax on the sale of goods, and it is not a tax on anything else. No distinction can be drawn between the two provisions on which reliance was placed. Section 46 of the Sales Tax Assessment Act (No. 1), like s. 67 of the Income Tax Assessment Act 1922-1930, occurs in a part of the Act headed "Penal Provisions". It is on its face a provision of a penal character, and the liability imposed by s. 10 (2B) of the Sales Tax Assessment Act (No. 2) is not of a different character.

[24]

In the first place I wish to express my dissent from the dictum of Isaacs J. in Federal Commissioner of Taxation v. Munro [2] that it is "unquestionable" that "no sensible distinction can be drawn between a Bill " imposing taxation " and a Bill "dealing with the imposition of taxation " " [3] . To me it seems clear that a law may deal with the imposition of taxation and yet not, itself, directly impose taxation. Indeed this view seems consistently to have been entertained by members of the Court other than Isaacs J. when the question has arisen for consideration. As Fullagar J. has observed in the present case such a law may deal with the imposition of taxation by specifying or prescribing "the persons who were (are) to pay the tax and the classes of income in respect of which they were (are) to be taxed". A law of this character may be said to deal with the incidence of the tax and as such it would, to my mind, be a law dealing with the imposition of taxation. I do not, however, wish to be understood as suggesting that this lastmentioned expression is appropriate only to describe provisions commonly found in legislative chapters which purport to deal with liability to taxation or that it does not comprehend some provisions commonly relegated to other legislative chapters such as "Collection and Recovery of Tax". Indeed in Pt. VI of the Income Tax and Social Services Contribution Assessment Act - "Collection and Recovery of Tax" - there are to be found provisions which in my view are provisions which deal with the imposition of income tax. For instance s. 204 provides that any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the day upon which tax is due and payable. Section 205 contains provisions intended to operate in particular cases to accelerate the due date for payment and s. 208 stipulates that income tax when it becomes due and payable shall be a debt due to the King on behalf of the Commonwealth and payable to the commissioner in the manner and at the place prescribed. Such provisions are, it seems to me, provisions which deal with the imposition of taxation and their true character is to be found in a particular examination of their substance and effect and not by reference to the legislative category in which they have been placed. Secondly, it is apparent that a number of Justices of the Court have consistently held that provisions for the assessment collection and recovery of tax are provisions which deal with the imposition of taxation: see Munro's Case [1] ; per Higgins J. [2] , and Starke J. [3] ; Resch v. Federal Commissioner of Taxation [4] ; Cadbury-Fry-Pascall Pty. Ltd. v. Federal Commissioner of Taxation [5] , per Latham C.J. [6] and Starke J. [7] and Moore v. The Commonwealth [8] , per Latham C.J. [9] and McTiernan J. [10] . In these cases various forms of expression were used to describe a category of laws which, though they may not impose taxation, yet may be regarded as laws which deal with the imposition of taxation. In Munro's Case [1] both Higgins and Starke JJ. saw no reason why all of the provisions of the Income Tax Assessment Act as it then stood should not be included in an Act which directly imposed the tax. In Resch's Case [11] Starke J. saw no objection to the insertion in a law imposing taxation of any provision which is "fairly relevant or incidental to the imposition of a tax on one subject of taxation" [12] . This expression was taken from the judgment of Higgins J. in Osborne v. The Commonwealth and George Alexander McKay (Commissioner of Land Tax) [1] . In Moore's Case [2] Latham C.J. expressed the view that "provisions for the assessment, collection and recovery of tax are provisions which deal with the imposition of taxation even though only those which make the grant of the tax are to be regarded as provisions actually imposing taxation" [3] . On those occasions, as now, the Court had before it particular provisions for its consideration and the decisions remain unaffected by the fact that, perhaps, some of these broadly formulated views may be regarded as too wide. But once a distinction is allowed between a law imposing taxation and a law dealing with the imposition of tax it is apparent that a law prescribing or regulating the incidence of the tax falls within the latter category. Perhaps to say this, is to say no more and no less than was said by Starke J. in Resch's Case [4] . But in any event the question whether any particular provision may properly be so described can only be resolved by considering the character and effect of the particular provision and not by reference to the legislative category to which it has been assigned. Finally, I should say that I have examined those provisions of the second Act upon which the bankrupt's liability may be said to depend and it seems to me beyond doubt that he can obtain no assistance from s. 55 of the Constitution for even if the Act should be regarded as a law imposing taxation none of the provisions upon which his liability depends would be invalidated by the constitutional provision.

[29]

Since 1926 at least, differences of judicial opinion have been manifest about the extent of the prohibition in the first part of s. 55 which is as follows: "Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect." In Federal Commissioner of Taxation v. Munro [1] , Isaacs J. [2] stated his opinion that there is no distinction between "imposing taxation" and "dealing with the imposition of taxation" and that machinery provisions regulating the assessment, levy, collection and enforcement of taxation do not deal with the imposition of taxation and so cannot be part of an Act which imposes taxation. In the same case Higgins J. [3] and Starke J. [4] took a contrary view, asserting that the words "deal only with the imposition of taxation" allow much freer scope than if the section had read "laws imposing taxation shall only impose taxation". Starke J. after referring to this said: "Consequently, in my opinion, it is not unlawful to include in a taxing Act provisions incidental and auxiliary to the assessment and collection of the tax. This would include provisions for administration, returns, assessments, reviews of assessments and so forth" [4] . This opinion Starke J. reiterated in Resch v. Federal Commissioner of Taxation [5] . In Moore v. The Commonwealth [6] Latham C.J. [7] and McTiernan J. [8] both decided that "provisions for the assessment collection and recovery of tax are provisions which deal with the imposition of tax" and that such provisions can without contravening s. 55 be part of a law "imposing taxation". The question of the validity of s. 67 of the Income Tax Assessment Act 1922-1934 was referred to in two cases: Jolly v. Federal Commissioner of Taxation [9] and Federal Commissioner of Taxation v. Trautwein [10] . This section, like s. 10 (2B) and s. 46, imposed liability to pay £1 as minimum additional tax in case of default in complying with the provisions of the Income Tax Assessment Act which dealt inter alia with the assessment, collection and enforcement of income tax. In neither case was the validity of the provisions of the Act other than s. 67 called into question (as corresponding provisions are here) but in Jolly's Case [1] the question was raised by Rich and Dixon JJ. [2] to use the words of the headnote, "whether s. 67 in imposing the additional tax or the minimum sum of £1 does not contravene s. 55 of the Constitution as not imposing a tax upon income, which is the subject matter of the Act, or as not dealing with taxation at all" [1] . In Trautwein's Case [3] Evatt J. rejected the contention that s. 67 "imposes a tax, not upon income but upon a subject of taxation different from income, contrary to s. 55 of the Constitution " [4] . In both cases it seems to me that the view was taken that the Income Tax Assessment Act, apart from s. 67, is a law dealing with the imposition of income tax.

[34]

It is now necessary to examine the provisions of the Sales Tax Assessment Act (No. 2) which it is said are of no effect by reason of the first part of s. 55. The Sales Tax Assessment Act (No. 2), by s. 12, incorporates much of the Sales Tax Assessment Act (No. 1) and with that incorporation the Act (No. 2) deals with (i) the administration of the Act by the Commissioner of Taxation; (ii) the registration of taxpayers and the quotation of certificates; (iii) the liability to taxation; (iv) the making of returns; (v) the collection and recovery of tax; (vi) objections and appeals; (vii) the penal provisions; (viii) taxation prosecutions; and (ix) miscellaneous provisions relating to the construction of the Act, the making of regulations, the prevention of imposition by pretending to have paid tax and so on. In my opinion, these provisions, at least to the extent to which they are essential for the liability of the debtor for sales tax, viz. those dealing with administration, the registration of taxpayers, the quotation of certificates, the liability to taxation, the making of returns and the collection and recovery of tax including additional tax, do deal with the imposition of tax. In confining myself to deciding that laws providing machinery for the administration of laws imposing taxation and for the assessment, levying, payment and recovery of tax and additional tax do deal with the imposition of tax and that the provisions of the Sales Tax Assessment Act (No. 2) upon which the liability of the debtor for sales tax depends are laws of that description - I do not intend to state exhaustively what are laws dealing with the imposition of taxation; moreover, I refrain from expressing any opinion upon the question whether s. 46 or s. 10 (2B) impose taxation and whether there are any provisions of the Sales Tax Assessment Act (No. 2), with the incorporation effected by s. 12, which do not deal with the imposition of tax or upon the other questions that arose in the course of the argument.

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Judgment (35 paragraphs)