Saga Holidays Limited v Commissioner of Taxation

Introduction to the relevant statutory provisions and to the issues arising for consideration 5 The resolution of the central issue arising for determination turns in the first place on whether the supply of the Australian accommodation component of SAGA's 'A Taste of Australia' tour packages in evidence constituted a 'supply… connected with Australia'within s 9-5(c) of the GST Act, which section reads as follows: 'You make a taxable supplyif: (a) you make the supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with Australia; and (d) you are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST‑free or input taxed.' Largely because of the number of provisions of the GST Act that were brought into focus by each party, in the course of comprehensive addresses both in chief, and in reply by each party, and subsequent joinder by SAGA, it is not a simple task to present the issues in a definitive and sequential way. It was however, common ground that each subsection in s 9‑5 was here satisfied excepting the s 9‑5(c) requirement that the supply be one that is connected with Australia. 6 Section 9‑25 defines the circumstances where there are 'Supplies connected with Australia': '9-25 Supplies connected with Australia Supplies of goods wholly within Australia (1) A supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply. Supplies of goods from Australia (2) A supply of goods that involves the goods being removed from Australia is connected with Australia. Supplies of goods to Australia (3) A supply of goods that involves the goods being brought to Australia is connected with Australia if the supplier either: (a) imports the goods into Australia; or (b) installs or assembles the goods in Australia. Supplies of real property (4) A supply of real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia. Supplies of anything else (5) A supply of anything other than goods or real property is connected with Australia if either: (a) the thing is done in Australia; or (b) the supplier makes the supply through an enterprise that the supplier carries on in Australia. …' The statutory notion of supply is defined in s 9‑10, which section is later extracted. 7 SAGA's principal contention was that the provision by SAGA to overseas tourists of packaged tours of Australia, involving overnight hotel accommodation, during the relevant period did not involve [a] form of supply that was connected with Australia, pursuant to ss 9‑5(c) and 9‑10(1) of the GST Act, in any of the ways stipulated by s 9‑25 of the GST Act, contrary to the Commissioner's case, and in particular did not involve '[a] supply of real property… connected with Australia within s 9‑25(4), irrespective of the expansive definition of real property appearing in s 195(1) of the GST Act'. Thus SAGA contended that it had not supplied, provided, granted or created any goods, services or real property (as the case may be) within pars (a), (b) or (d),nor had it supplied, etc any right within par (e),of subsection (2) of s 9-10 of the GST Act, and further that those contractual rights to services it had supplied, etc to its customer tourists, were not created in Australia. Upon that footing, SAGA emphasised that '… the only supply it made was not connected with Australia because the thing was not done, that is, the contractual right was not created, in Australia, within s 9-25(5) of the GST Act'. The essence of SAGA's case was that what SAGA had provided to its customers by way of the 'A Taste of Australia' tour was a mere contractual right entitling the holder to, inter alia, supply of hotel accommodation upon arrival at each destination. 8 Alternatively, SAGA contended that if the hotel accommodation it had arranged to have provided in Australia to overseas tourists did involve a form of supply by way of a grant or assignment… of…real property within s 9‑10(1) and s 9‑10(2)(d), being real property which is connected with Australia within s 9‑5(c) and s 9‑25(4) of the GST Act, that supply of realty is to be treated as a separate supply in accordance with s 96‑5 of Division 96 of the GST Act, and 'then balanced against the notionally separate remaining supply which is not connected with Australia', the same inclusively comprising 'return flights from the United Kingdom to Australia, domestic flights within Australia, travel insurance, train travel on the Indian Pacific, coach travel, meals, sightseeing tours and other excursions, and the services of a professional tour manager'. Such other supply was said to comprise a tour package whereof 'the accommodation component of the total tour package ought reasonably be regarded as being incidental to the other supply', and not exceeding 'in relation to any single supply of a total tour package by SAGA to an overseas tourist' the sum of $50,000. In those circumstances, s 96‑5(4) was said to apply to the accommodation component of the 'A Taste of Australia' tour thereby rendering it a part of the other kind of supply (being the other aspects of the tour outlined above) and hence not connected with Australia under s 9‑5(c). 9 SAGA submitted further in the alternative that if by reason of the agreement of SAGA to provide the accommodation component of the 'A Taste of Australia' tour there is a supply connected with Australia, then that taxable supply does not extend to the agreement of SAGA to provide so much of the accommodation component as is 'fairly attributable' to the additional services and facilities provided by the hotels. The services and facilities so identified comprised the meals, porterage, cleaning and household services and the use of room cleaning services, gym facilities and swimming pools. SAGA contended that each of the foregoing were in principle outside the said definition of 'real property', notwithstanding that the same comprised a physical part, or were within, areas which formed part, of an Australian hotel infrastructure. SAGA proposed to invoke s 96‑10 of the GST Act as the basis for this submission. 10 SAGA did not press for the remaining declaratory relief sought by par 4 of the Details of Claim the subject of its Application filed in the proceedings, the same being referrable to GST-free item 4(b) of s 38-190 of the GST Act, and concerning 'the supply… to an entity that is not an Australian resident and is outside Australia when the thing supplied is done'. 11 A primary aspect of the Commissioner's case had its focus upon par (c) of the s 195‑1 definition of real property, which stipulates for the inclusion within that definition of 'a license to occupy land or any other contractual right exercisable over or in relation to land'. That component of the definition was said to pick up the right of a hotel guest to occupy a hotel room in the course of a SAGA packaged tour, by reason of that right being related to supply of real property connected with Australia within the s 9‑25(4) notion. 12 As I have foreshadowed, there is no issue that the supply provided by SAGA satisfies the elements the subject of pars (a), (b) and (d) of s 9‑5, the critical issue arising under s 9-5 being whether the supply is connected with Australia within par (c) thereof. The Commissioner's contention was that when SAGA caused to be supplied the accommodation component of its holiday packages in Australia, it thereby supplied a license to occupy land or any other contractual right over or in relation to land within the par (c) of the definition of real property appearing in s 195‑1 of the GST Act. That contention involved the adoption of a perspective to be taken as at the time the tour arrangements were finalised between SAGA and the customer, and therefore prior to departure of those customers on the tour from overseas to Australia.

SAGA's Australian tours and its contractual arrangements in more detail 13 An overseas tourist seeking to book 'A Taste of Australia' tour package with SAGA entered into a contract with SAGA in the normal course outside of Australia. Pursuant to that contract, the tourist agreed to pay one inclusive price to SAGA, and SAGA agreed to provide to the overseas tourist a touring package which included: (i) travel insurance and cancellation cover; (ii) travel within the United Kingdom to Heathrow Airport; (iii) scheduled economy flights from Heathrow Airport to Sydney, and from Melbourne to Heathrow Airport; (iv) specified transportation within Australia, being scheduled economy flights, train travel on the Indian Pacific from Perth to Adelaide, coach travel comprising transfers between accommodation and airports, tours in each of Sydney, Alice Springs, Adelaide and Melbourne, travel from Alice Springs to Uluru, travel from Adelaide to Melbourne via Mount Gambier, a harbour cruise in Sydney, and a full day catamaran journey to Green Island including a cruise in a glass-bottomed boat; (v) all airport taxes, fees and charges; (vi) the services of a representative to help check-in at Heathrow Airport; (vii) accommodation on certain specified days at certain specified times in hotels (or sometimes a motel) at various capital cities and towns in Australia; (viii) porterage of luggage at each accommodation; (ix) meals comprising breakfasts (19), lunches (4) and dinners (10); (x) obtaining a visa if required; and (xi) services of a tour guide in Australia. The services and facilities provided by hotel operators to tourists on the 'A Taste of Australia' tour were described by SAGA as 'extending beyond the provision of accommodation in hotel (or motel) rooms' including as they did porterage, meals, health and fitness facilities and other cleaning and household services. 14 The resolution of the issue as to whether a taxable supply within ss 9-5 and 9-10 occurred in the present kind of travel context was said by the Commissioner to be of substantial significance to the Australian revenue, not only because SAGA and other overseas tour operators would not be liable to pay GST in respect of what the Commissioner contended to constitute taxable supply in the present circumstances. The further reason was that SAGA is registered under Part 2-5 of the GST Act, and has apparently claimed substantial input tax credits under Part 2-2 of the GST Act in relation to its acquisition of the accommodation component of the holidays from Australian hotel suppliers, and therefore would have acquired a substantial source of GST input tax credits for so-called creditable acquisitions pursuant to Division 11 of the GST Act. Those observations do not of course bear strictly upon the complex issues of statutory interpretation I am required to resolve. 15 The terms and conditions made applicable to SAGA's tours contained in the document entitled 'Booking Conditions And Helpful Information 2004/2005', to which SAGA drew attention, were as follows: (i) the tour contract is governed by English law; (ii) any dispute is to be resolved in an English court; (iii) the whole of the tour price is to be paid to SAGA more than 56 days before the tour departs from the United Kingdom; (iv) the right is reserved to SAGA to cancel the tour, because of insufficient bookings, no later than 56 days prior to departure, in which case a full refund becomes available; (v) the further right is reserved by SAGA to alter the tour itinerary, including the accommodation, subject to the proviso that if the alteration occurs within 56 days of departure and involves a lower quality of accommodation, and the stay is for three nights or more, then the tourist at his or her election is entitled to cancel the tour and obtain a full refund plus a discount voucher, or receive a specified discount; moreover if any changes are made to the tour itinerary more than 56 days before the tour departure date, SAGA agrees to notify the affected customers by letter; if any such changes are made less than 56 days prior to departure, a SAGA representative is to communicate with the affected customers by telephone to notify the changes. To that aspect I have already added reference to what appears under the heading 'Responsibility for your holiday', being '[SAGA] is responsible for the proper performance of the contract'. 16 For the purpose of implementation of its Australian tour arrangements with individual customer tourists, SAGA entered into an agreement in writing with an Australian company, AOT Group Pty Ltd ('AOT'), whose business comprises the provision of inbound and destination management services throughout Australia and New Zealand for overseas based tour operators and independent travellers and travelling groups. That agreement is headed 'Longhaul Agent Agreement', and consists of 14 pages of printed terms and conditions, with attachments for inclusion of individual details to accommodate each traveller's circumstances. No reference to or mention of AOT appears in the documentation provided by SAGA to the travellers taking its 'A Taste of Australia' tour; on the contrary, there are references in that documentation to SAGA representatives being present at the hotels or otherwise assisting in the conduct of the tour. AOT negotiates directly with the Australian service providers in relation to the provision of services, including the prices charged for services to be provided in Australia, and SAGA does not enter into any contractual arrangements with the Australian service providers, other than in relation to certain domestic air flights. AOT's chief executive officer, Mr Burnes (a resident of Melbourne), explained in his affidavit evidence that AOT offers inbound and destination management services throughout Australia for overseas based tour operators, as well as for independent travellers and group travellers. All that presently involves some 90,000 passengers per annum, none of whom, so it may be inferred, appear to have been residents of Australia. The Longhaul Agent Agreement relates to all Australian aspects of the 'A Taste of Australia' tour, apparently excluding domestic flights, and AOT provides a professional tour manager to operate and conduct each such tour. The Australian service providers (such as hotels) issue invoices to AOT alone, which AOT pays as they fall due. 17 Notwithstanding the documentary description Longhaul Agent Agreement, and the reference therein to AOT as 'Agent', SAGA asserted that there has not existed at any material time any relationship of principal and agent between itself and AOT, and referred in that regard to dicta appearing in the unanimous reasons for judgment of the High Court in International Harvester Company of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Company (1958) 100 CLR 644 at 653, which concerned the misuse of the term 'agent' sometimes to be seen in the context of contracts granting distribution rights in respect of certain geographic areas, in which context their Honours observed that it is rare that the '…manufacturer or the head supplier contracts with the ultimate buyer or "consumer" as vendor'. More recently in Scott v Davis (2001) 204 CLR 333 at 408, Gummow J (as one of the High Court majority) referred to the '… considerable terminological confusion in this area', and adopted the description of agency appearing in International Harvester at 652, that being '… to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties'. 18 Hence SAGA's submission that the reference to 'Agent' in clause 2(a) of the 'Terms and Conditions (General)' of the Longhaul Agent Agreement reflected the language of commerce and not of law. The full text of the provisions of those terms and conditions, so far as are presently material, is as follows:: '1) Definitions … "Agency" means the appointment of the Agent by SAGA in accordance with and subject to the terms of this Agreement … "Services" means the services to be provided by the Agent previously agreed with SAGA in advance which shall include, but not be limited to the provision of flights, transfers, excursions, coaching services, customer assistance and the provision and/or monitoring of hotel accommodation; … 2) Appointment a) SAGA appoints the Agent as its non-exclusive agent in the Territory … to represent and assist SAGA in SAGA's operations in the Territory as requested from time to time, subject to the terms and conditions set out in this Agreement. b) The Agent may supply part of the services on its own behalf as supplier and shall be entitled to remuneration for those Services as set out in this Agreement. … 4) Capacity as Agent a) Except as herein contained, the Agent shall only have authority to act as SAGA's agent in order to collect payments for excursions booked by SAGA customers, which shall be carried out in accordance with the procedures outlined in the Reference Manual and any other instructions given to the Agent by SAGA. b) The Agent shall not incur any liability on behalf of SAGA nor in any way pledge or purport to pledge SAGA's credit or accept any order or make any contract binding upon SAGA unless it is permitted under this Agreement or the Reference Manual or it has received the express written consent of SAGA. c) The Agent shall not at any time act nor hold itself out as being directly connected (sic) or owned by SAGA. d) The Agent shall not make any statement, or admission, either written or oral, in relation to SAGA or to any aspect of the holidays SAGA operates or Services performed by the Agent, which could result in a liability being incurred by SAGA. e) Except as expressly stated in this Agreement the Agent is not entitled to any remuneration for Services supplied to SAGA or SAGA Customers and shall account to SAGA on demand for any such other remuneration the Agent may receive. 5) Obligations of the Agent The Agent: a) shall provide the Services which SAGA may require and which are notified to and agreed with the Agent in advance; … 6) Monitoring of hotel accommodation a) the Agent shall monitor the hotels used by SAGA within the Territory (including those operated or owned by the Agent) and in particular shall ensure:- (i) that the proprietors of the hotels within the Territory contracted by SAGA or by the Agent maintain the availability of the rooms they have previously allocated to SAGA or to the Agent in accordance with their contractual obligations; (ii) that all accommodation allocated to SAGA by any hotel within the Territory will comprise rooms within the main building of the hotel…' Those services were required to be provided to the 'requisite level' as thereafter described in clause 10 of the Terms and Conditions. SAGA submitted that the principal subject matter of the Longhaul Agent Agreement are the services which AOT contracts to provide to SAGA, those services not being in the nature of services provided by AOT to the tourists as agent for SAGA, but rather as principal. The implications of that submission were not developed satisfactorily or at all by reference to the provisions of the GST Act here material, and it does not seem to me that the submission takes SAGA's case any distance of significance in relation to whether the arrangements between SAGA and the persons for whom it sells participation in 'A Taste of Australia' tours constitute any form of supply within s 9-10 of the GST Act. 19 As to the process of formation of the arrangements entered into between AOT and the Australian hotel operators, Mr Burnes further explained in his affidavit evidence, as did the Finance Director of SAGA, Mr Parker, that shortly before the commencement of each Australian tour, SAGA notified AOT of the number of persons who would be undertaking the Australian tour, and of their relevant details as tourists. AOT then finalised the bookings by notifying the various hotel operators involved of the number and identity of the persons to undertake the tour. On arrival of the touring party at the hotel, the hotel operator customarily provided the tour manager with a list specifying the rooms which had been allocated by the hotel to the persons whereof it had been earlier advised would be making the tour, and further provided the keys to the rooms to be occupied by the respective overseas tourists. 20 Mr Burnes' affidavit evidence continued with his account of the implementation of the Longhaul Agent Agreement, as follows: '10. All invoices for the services referred to in paragraph 7 [referring thereby to all domestic aspects of the tour exclusive of domestic air travel and inclusive of coach travel, accommodation, meals and excursions] are issued by the service providers to AOT and are paid by AOT as they fall due …' Thus all such invoices are apparently addressed to AOT. Mr Burnes' affidavit further continued at [11]: 'At the end of each month, AOT issues an invoice to [SAGA] in relation to the total charge for each of the tours that commenced during that month, even if the tour is not completed until the following month.' AOT's charges to SAGA for its services are based on the number of tourists on the particular tour, those prices including AOT's so‑called 'margin'. Mr Parker on behalf of SAGA confirmed the practice which I have outlined. There was no evidence of the terms of any contracts made between the hotels and AOT (or anyone else) in relation to the provision of the relevant accommodation.

The respective submissions in broad introductory outline of the parties 21 The principal issue arising for determination, as broadly framed by SAGA, is whether the supply by SAGA to the overseas tourists to Australia of the hotel accommodation component of SAGA's 'A Taste of Australia' tour package is subject to GST in SAGA's hands. That determination, so SAGA submitted, '… turns on whether the supply by SAGA to the tourists with whom it contracts is to any extent a taxable supply, pursuant to s 9-5 and s 96-5 of the GST Act', though I observe that s 96-5 adopts the expression actual supply rather than taxable supply. Such determination was said by SAGA to involve consideration of the issue whether the supply by SAGA of the hotel accommodation component of the tour involved a supply of real property connected with Australia within s 9-25(4) of the GST Act, being real property within the defined meaning of that expression appearing in s 195-1 of the GST Act, and in particular (as I have earlier foreshadowed) par (c) thereof. SAGA further said that '[i]f, as SAGA contends, there is no supply of real property connected with Australia, then SAGA should succeed', but if, '… as the [Commissioner] contends there is a supply of real property, then further questions characterising the accommodation component arise'. 22 In addressing the nature of the supply made by SAGA to its tourists to Australia, SAGA commenced its analysis by threshold reference to s 7(1) of the GST Act, which states that 'GST is payable on taxable supplies and taxable importations'. SAGA then addressed those elements of s 9-5 of the GST Act (the text whereof I have already extracted), in particular s 9‑5(c) thereof, comprising supply and connected with Australia, and posited the first controversial step involved as being 'to characterise what it is that is supplied by SAGA to the overseas tourists', and the second step involved as being 'to determine whether that supply is "connected with Australia"'. 'Supply' is defined by s 9‑10 of the GST Act, and was reproduced by SAGA, so far as is or may be here material, as follows: '(1) A supplyis any form of supply whatsoever. (2) Without limiting subsection (1), supplyincludes any of these: … (b) a supply of services; … (d) a grant, assignment or surrender of real property; (e) a creation, grant, transfer, assignment or surrender of any right; … (g) an entry into, or release from, an obligation: (i) to do anything; or … (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).' 23 Hence the requirement for consideration of the issue perhaps more definitively arising as to whether the supply by SAGA of the hotel accommodation component of its 'A Taste of Australia' tour is or involves a supply by way of a grant [or] assignment… of real property within s 9-10(d) of the GST Act, being [a] supply of real property which is connected with Australia within s 9-25(4). 24 SAGA outlined that '[t]he only basis upon which the [Commissioner] contends that there is a supply that is connected with Australia is that the supply by SAGA to the overseas tourist of the accommodation component is a supply of real property (perhaps with some incidental goods or other things)', or to repeat the s 9-10(d) expression, a grant… of real property. The Commissioner's position, which I will outline shortly, was that irrespective of whether or not the particular supply by SAGA fell within the terms of s 9‑10(2)(d), so much was irrelevant to the question of whether the supply was a supply of real property under s 195‑1 and hence a supply under s 9‑10(1). The s 195-1 non-exclusive definition of real property, which I have foreshadowed earlier in particular as to par (c) thereof, upon which the Commissioner most emphatically relies, is of wider import than traditionally appears in other legislative contexts, the same reading as follows: 'real property includes: a) any interest in or right over land; or b) a personal right to call for or be granted any interest in or right over land; or c) a license to occupy land or any other contractual right exercisable over or in relation to land.' That defined meaning thus extends beyond proprietary interests in realty to rights of a contractual nature in relation to realty, such as rights to occupation of realty in the nature of licences. 25 SAGA contended that there is no supply of real property… connected with Australia, within s 9-25(4) of the GST Act, that occurs in relation to its overseas tourists to Australia, but merely a supply by way of creation of any contractual right within par (e) of s 9-10(2) 'and probably also s 9‑10(2)(g)(i)' being the entry into… an obligation to do anything. Or as put another way by SAGA, the accommodation component of 'A Taste of Australia' tour did not constitute real property in any relevant sense. Upon that footing, so SAGA's case proceeded, it should succeed, since any such contractual right created would not have been done in Australia within s 9-25(5)(a) of the GST Act, and moreover would not have been connected with Australia within s 9-25(4). That statutory notion of connected with Australia first appears in s 9-5(c) and is subsequently repeated in the first five subsections of s 9-25 (inclusive of course of subsection (4)). If contrary to its primary case, there is involved nevertheless a supply of real property by reason of its implementation of 'A Taste of Australia' tour, and in that regard I refer in particular to par (d) of subsection (2) of s 9-10 earlier extracted, which uses the description real property, an issue relating to the characterisation of the accommodation component of the hotels in Australia the subject of its travel package was asserted by SAGA to further arise in relation to the operation adversely to the Commissioner of the apportionment provisions of Division 96 of the GST Act. SAGA's further submission in the alternative sought to limit any GST that might be found payable in respect of the accommodation component of the tours to the provision of a licence to occupy the hotel room, exclusive of porterage, meals, concierge, etc. 26 The Commissioner's case in outline was that the only relevant transaction or supply involved in the circumstances the subject of the dispute was the supply by SAGA to the customers of its 'A Taste of Australia'packaged holiday, that being a mixed supply containing separately identifiable components, including as here the subject of critical attention, the hotel accommodation component, being the supply (to adopt the GST statutory expression) of accommodation at certain specified hotels on certain specified days. That supply was described by the Commissioner as the right or licence to occupy hotel rooms in Australia and to use such hotel facilities. 27 The Commissioner's starting point for review of what are previously unexplored construction issues involving the GST Act was the often cited dicta of the leading judgment of the High Court in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 (per Brennan CJ, Dawson, Toohey and Gummow JJ), as follows: '… inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.' That dicta has been applied in a sales tax context where ambiguity or obscurity was perceived in relation to the description of a sales tax item (Commissioner of Taxation v The Distribution Group Ltd (2003) 130 FCR 517 at 523). The same approach was adopted by a Full Federal Court judgment in a fiscal context in Chaudhri v Commissioner of Taxation (2001) 109 FCR 416 at 418 (per Hill, Drummond and Goldberg JJ), where it was said as follows: '[t]he guiding principle of statutory interpretation may be summed up as being the ascertaining of the meaning of words which Parliament has used by reference to the context in which they appear, where "context" has the wide meaning which extends to the legislative history, the Parliamentary intention and the mischief to which a particular provision has been directed, as well as the narrower meaning which would dictate reading the words to be construed by reference to the immediately surrounding or otherwise related provisions.' 28 The Commissioner emphasised that GST is a value-added tax, as is of course the corresponding tax the subject of the earlier United Kingdom Value Added Tax Act 1994 (UK) and its legislative predecessors, being designed to levy a net amount of tax on the proceeds secured by the enterprise in respect of value-added by the enterprise to what is supplied by it. Understandably therefore the parties addressed in the course of submissions a number of United Kingdom judicial authorities on that legislation. In ACP Publishing Pty Ltd v Commissioner of Taxation (2005) 142 FCR 533 at 535, Hill J described the characteristics of GST as a value-added tax as follows: '… (output tax) being levied, in effect, upon substantially all supplies… being generally, although not exclusively, supplies of goods or services made by a registered person, or person required to be registered, for consideration (and having the necessary connection with Australia) and the deduction… (popularly known as an "input tax credit") being given to a registered person, or person required to be registered, who makes a creditable acquisition, as that expression is defined.' GST is of course payable by an enterprise carrying on business at the rate of 1/11th of the taxable supplies made by it, less credits for 1/11th of the taxable supplies made to it. Effectively therefore, an enterprise pays GST on 1/11th (10% of the pre-GST amount) of its gross profit, calculated without deduction of the value-added by the enterprise's own labour inputs and its financing and other input taxed costs. 29 A contextual consideration involved in construing the GST Act is that GST is traditionally a tax on 'businessmen', to be assessed and paid by businessmen, and to be administered and interpreted in accordance with the understanding of businessmen. This is in contrast to other forms of taxation, such as income tax, which is ordinarily assessed by the Commissioner. Moreover as the Commissioner emphasised, the GST Act contemplates that GST will be payable on the wide variety of business transactions which constitute a taxable supply (s 9-5), and as a necessary consequence, the legislation is expressed in general terms to facilitate its application to that wide variety of transactions. Hence the Commissioner's observation that the legislation should not be construed in a narrow and technical way, but rather should be construed in a broad and practical way. I have later drawn attention to English authority reflective of a similar approach to the application of its analogous value-added taxation. 30 The Commissioner submitted for operation in the present circumstances the observation of Ralph Gibson J of the Queens Bench Division made in the value-added tax context of Customs and Excise Commissioners v Pippa-Dee Parties Ltd [1981] STC 495, where at 501 the following appears: 'It is clear therefore that a technical analysis of one part of a transaction, or of one set of obligations within a contract, even though accurate in legal principle, which is capable of explaining the service supplied, or the consideration given, in a restricted way, is not necessarily the right answer in law to the application of the provisions of this statute. I accept counsel for the Crown's submission that this approach does indicate that taxable transactions should not be artificially dissected so as to demonstrate as being the service provided, or the consideration given, something other or less than that which appears to have been the service provided or consideration given upon an examination of the entire transaction.' That approach to construction of value-added taxation statutes provides support for the Commissioner's asserted 'substance and reality' approach. It is an approach which I think aptly accommodates those provisions of the GST Act falling in particular within Subdivision 9-A of which ss 9‑5, 9‑10 and 9‑25 form an integral part. Earlier in Pippa-Dee at 500, Ralph Gibson J recorded that '[i]n orderto explain the reasons for my conclusion I will start by going back to the real transaction… [which] was the supply… of a garment...', and at 501, his Honour described the value-added issue falling to be resolved as '… to determine what was supplied for the money paid… [being] the consideration… given for the goods supplied'. Those goods comprised clothing sold to the hostesses of parties held in their own homes at which parties other garments of the relevant taxpayer company were sold, and for which sales the hostesses received the option of either cash commissions or the right to purchase garments from the company at prices reduced commensurately with the value of sales achieved by the hostess at her party. Subsequently at 502, his Lordship's analysis of the transaction the subject of disputation, relevantly for value-added tax purposes, was as follows: 'It appears to me that even upon this analysis of the transaction, which consisted of dissecting it into two independent contracts (and for the reason I have given that approach, in my judgment, is not right in law) the contract under which the party was held was not "exhausted" when the garment was supplied. The grant of the option by the taxpayer company, upon that analysis, was in truth past consideration, but, as counsel for the Crown pointed out, when the supply of the garment comes to be considered it is not the grant of the option which was relevant, but the use and disposition by the hostess of the rights acquired by her under the "option". Those rights were in no sense exhausted.' Reference was thereafter made at 503 to the Crown's submission in the following terms: 'I accept counsel for the Crown's submission that the consideration for the supply of the garment by the taxpayer company to the hostess, as revealed by the terms of the entire contract, was not a consideration consisting wholly of money. The taxpayer company agreed that if the hostess organised and held a party, then, according to the sale results achieved at the party, the taxpayer company would either pay a cash commission, or allow to the hostess a credit against the retail prices of their garments in accordance with the hostess discount scheme. The consideration for the supply of the garment on the agreed terms was, in my judgment, firstly the holding of the party, which produced the right to cash or credit as stated, and next the surrender or use of that right to credit, coupled with any additional payment to bring the amount of the credit up to the retail price.' 31 It was asserted by the Commissioner that the commended approach to interpretation, as espoused in Pippa-Dee by reference to the entirety of transactions without artificial dissection, was subsequently applied by the Court of Appeal in England in Customs and Excise Commissioners v Diners Club Ltd [1989] 2 All ER 385, which case was referred to with approval by Harper J in American Express International Inc v Commissioner of State Revenue (2003) 52 ATR 285 at 294. The issue arising in Diners Club was whether two credit charge card financiers 'made supplies' to retailers who had agreed to accept their cards by way of the benefits of the credit or charge card operations of those financiers, or whether the relationship was properly to be described as a factoring arrangement by which the charge card financiers bought the rights of the retailers to receive cash payments for the goods and services they supplied to their customer card holders. Woolf LJ (as he then was) adopted at 395 the former of those two alternatives, observing that by its credit card operations, the charge card financiers not only provided 'a means by which the retailer can increase his business by holding himself out as being prepared to accept' the relevant credit cards, but also '[conferred] on the retailer … the service of providing the payment which is assured by the credit card company'; hence the charge card companies were found to have 'made supplies' to the merchants who accepted its credit card. In characterising the supply in that manner, Woolf LJ purported to follow the approach of Ralph Gibson J in Pippa-Dee, whereby: 'it [was] necessary not only to look at the contract between the retailer and the credit card company but the other bilateral contract between the member and the credit card company. They all form part of the entire transaction which has to be taken into account in deciding whether or not [the charge card companies] made supplies to the retailer.' 32 The Commissioner sought to invoke, as here appropriate in principle, that constructive and substantive approach to tripartite arrangements, in the sense that here what was organised by SAGA for its customers was supply mainly by the accommodation industry/transportation industry of a holiday package. Diners Club exemplifies in any event the breadth of the notion of supply in the VAT context, which has been mirrored in the GST Act, and by ss 9-10 and 9-25 in particular. 33 Before addressing the nature and implications relevantly of the supply here involved, it is appropriate to observe that there was a variation in approach adopted by the respective parties in relation to the operation of the GST Act upon the circumstances of SAGA's business operations. An aspect of SAGA's submissions was focused on the bundle of contractual rights said by SAGA to be on true analysis what it supplied to its travel customers. The Commissioner asserted that the proper approach in principle to analysing transactions, for the purpose of determining how the GST Act operates in respect thereof, required a consideration of the 'substance and reality' of the relevant supply or supplies, or as put another way by the Commissioner, '… looking to the actual thing supplied'. The Commissioner described what SAGA supplied relevantly to its customers relevantly to the present litigation as being accommodation, by way of 'a license to occupy a portion of the land on which the hotels involved are situated, or another contractual right exercisable over or in relation to [that] land', to pick up part of the text of par (c) of the s 195(1) definition of real property. 34 The focus of the Commissioner's case was therefore upon those provisions of the GST Act which I have earlier extracted in these reasons, and in particular, a grant… of real property within s 9-10(2)(d) or perhaps a creation, grant… of any right within s 9-10(2)(e)or any combination of [those] matters within s 9-10(2)(h), to be read contextually of course in the wider context of [a] supply… connected with Australia contained in s 9-5(c). As to the statutory notion of real property defined by s 195-1, the Commissioner's emphasis placed on par (c) thereof involves a connection or relationship to realty that might perhaps be conceptually wider in scope than that of the more traditional licence between an owner and occupier of realty, in the light of the second limb of par (c) involving… any other contractual right exercisable over or in relation to land.

The nature and implications of the supply relevantly involved - SAGA's elaboration upon the operation of the GST Act in relation to the circumstances of its tour operations in Australia 35 SAGA submitted that the formation of the transaction involving the 'A Taste of Australia' tour, made between SAGA and its overseas tourist customer, involved essentially: (i) the overseas tourist agreeing to pay, and in fact paying in full eight weeks before departure, one inclusive price to SAGA; and (ii) SAGA agreeing to provide to, or procure, for the overseas tourist the 'A Taste of Australia' package of services and facilities consisting of the eleven elements or items I have earlier listed in these reasons, the item here of critical importance being hotel/motel accommodation in Australia, hotel accommodation being predominant. As I have foreshadowed, SAGA contended that what was created, at the time of the formation of the touring contract 'A Taste of Australia', was no more than a contractual right or bundle of such rights that was or were merely executory in character. 36 Of the eleven elements of the total tour package, SAGA explained that the only ones provided by SAGA's employees were the services of a representative to help each tourist to check‑in at Heathrow airport in the United Kingdom, the obtaining of a visa for each tourist in the United Kingdom, and the procuring of flights to and from Australia, and within Australia, from the airline service providers. The domestic train, coach and marine transportation services, accommodation, luggage, porterage, meals and tour guides were said by SAGA to be obtained by the customer from AOT, and were in turn procured by AOT from the service providers actually involved, such as the hotels. I observe that the expressions 'service provider' and 'supplier' are not defined as such by the GST Act, but reference to supply appears in the statutory Dictionary contained in s 195-1, which picks up in turn reference to s 9-10, which is headed Meaning of supply,and which section I have reproduced already to the extent here material. 37 SAGA acknowledged that the factors of assistance at Heathrow and of obtaining of visas, each provided directly by SAGA to the overseas tourist in advance of the tour of Australia, would constitute a supply of services within s 9‑10(2)(b) of the GST Act. SAGA submitted nevertheless that those are 'a very minor component of the total tour package costing many thousands of British pounds', each of which two components takes place in any event in the United Kingdom, and are not therefore connected with Australia (the s 9-5(c) expression), and may be 'put to one side, as irrelevant to the characterisation of the supply made by SAGA'. What the tourist receives from SAGA in respect of all other elements of the tour was described by SAGA as a bundle of contractual rights, being rights which fall within the s 9‑10(2)(e) description of 'a creation… of any right', and probably also the s 9‑10(2)(g)(i) notion of 'an entry into … an obligation … to do anything', and that '[a]ccordingly, the supply by SAGA to the overseas tourist who purchases "A Taste of Australia" tour package is a supply within s 9-10(2)(e) and/or s 9-10(2)(g)(i)'. 38 In the context therefore of SAGA's submissions purportedly as to '[t]he real issue between the parties', SAGA contended that '[i]t is probably common ground that only if [SAGA's emphasis] the supply made by SAGA is a supply of real property can the supply be a taxable supply', and therefore that '[i]f the supply is merely the supply of a right, namely the bundle of contractual rights against SAGA, then there is no connection with Australia, because SAGA does not carry on an enterprise in Australia and the "thing" that is done [namely the promise to provide the tour] is not done in Australia'. I was referred in that regard by SAGA to s 9‑25(5) of the GST Act, which I have earlier extracted, and which follows of course immediately after s 9-25(4) also earlier extracted. I observe that such submission seemingly involves an approach which pays regard, not to the place where the supply actually occurs, but where the prior right to the supply is created. 39 SAGA asserted that the only basis upon which the Commissioner contends in the present circumstances that there takes place a supply (semble that is connected with Australia within s 9-25), is that the supply by SAGA of the hotel accommodation component to an overseas tourist is [a] supply of real property, perhaps along with the supply of some incidental goods or other things; in that regard, the Commissioner pleaded by the defence filed in the proceedings as follows: 'In further answer to the whole of the statement of claim, the [Commissioner] says that the supply by the applicant of the accommodation component of each "A Taste of Australia" packaged tour was a "taxable supply" pursuant to s 9-5 of the GST Act for the following reasons: 15.1 the supply is made for consideration; 15.2 the supply is made in the course of an enterprise that the applicant carries on; 15.3 the supply is a supply of real property as defined in s 195‑1 of the GST Act; 15.4 in the alternative to 15.3, the supply is a supply of real property and goods that may reasonably be regarded as incidental to the supply of real property, with a value, if they were treated as a separate taxable supply, not exceeding $50,000; 15.5 in the alternative to 15.3 and 15.4, the supply is a supply of real property and things other than goods or real property that may reasonably be regarded as incidental to the supply of real property, with a value, if they were treated as a separate taxable supply, not exceeding $50,000; 15.6 the real property the subject of the supply is in Australia and the supply is therefore connected with Australia by reason of s 9‑25(4) of the GST Act; 15.7 the supply may not reasonably be regarded as incidental to any other kind of supply for the purposes of s 96‑5(4) of the GST Act and is not therefore treated as part of any other kind of supply…' SAGA did not dispute that the s 195‑1 definition of real property includes a licence to occupy land, or any other contractual right exercisable over or in relation to land; nor did SAGA dispute that supplies of Australian real property are connected with Australia, referring thereby to s 9‑25(4) of the GST Act. The issue therefore falling for consideration is whether SAGA made a supply of Australian real property.

Whether SAGA supplied its tourists with real property in Australia or merely with rights in the United Kingdom unconnected with Australia - a narrative of the respective submissions of the parties and some initial observations in relation thereto 40 SAGA acknowledged that ultimately, the overseas tourist the subject of its 'A Taste of Australia'tour received the benefit of accommodation at successive hotels in Australia, that result being said by SAGA to have occurred in the following circumstances: (i) in advance of commencement of a tour, AOT confirmed to each of the hotels in Australia that it thereby reserves a certain number of hotel rooms, and thereby incurred a liability to the hotel operators, but obtained the benefit of rights under its own arrangements so made with the hotels; (ii) in discharge of AOT's obligations to SAGA, AOT ensured that the tourists obtained in due course the rooms to which they were respectively entitled, and in discharge of the hotel operator's obligations to AOT, the hotel operator supplied those rooms; AOT is of course an Australian company. SAGA submitted that it did not thereby make for its part a taxable supply (ie, within Subdivision 9-A of the GST Act)to the overseas tourist. Of course the tourist deals contractually with SAGA alone, and not with AOT, and it would seem that the tourist is unlikely even to be informed of AOT's role or function commissioned by SAGA. 41 By placing particular emphasis upon the role played by AOT in the supply to the tourist of accommodation, SAGA sought to demonstrate that SAGA did not 'make' those further supplies to the tourist within s 9‑5(a). In reality, so SAGA contended, it supplied nothing more that a right to each putative tourist to call upon the supply of the goods and services specified in the contract underlying the 'A Taste of Australia' tour. The supply of those services, namely accommodation services, by the service providers to those tourists, per medium of AOT, amounted in effect to a separate supply according to SAGA. 42 SAGA also submitted that even if SAGA was found to have made the supplies or at least some of them, to the overseas tourists, it could not be said that it made those supplies for consideration, in conformity with s 9-5(a), but rather in fulfilment of the tourist's contractual right to supply of specific goods and services, which does not give rise to any separate taxable supply. In that regard, I was referred by SAGA to s 9-15(3)(a) of the GST Act, which provides as follows: '(a) if a right or option to acquire a thing is granted, then: (i) the consideration for the supply of the thing on the exercise of the right or option is limited to any additional consideration provided either for the supply or in connection with the exercise of the right or option; or (ii) if there is no such additional consideration - there is no consideration for the supply…' The potential problem with that latter SAGA analysis might be thought to involve the pursuit of the kind of artificial dissection eschewed in the dictum in Pippa-Dee at 501 which I have earlier extracted, rather than addressing the substance of what is supplied or undertaken to be supplied. In any event, it is essentially as I have outlined above that the battle lines, as it were, were drawn between SAGA and the Commissioner. 43 The Commissioner's case was that at the centre of the dispute is the supply of hotel accommodation, and not the right thereto as part of a bundle of rights the subject of the 'A Taste of Australia'packaged tour arranged in the United Kingdom, and there 'supplied' in the GST sense, the hotel accommodation involving the occupation of hotel rooms in Australia and the use of the hotel's facilities. Those distinctions fall to be resolved as a matter of statutory construction, being a task which is assisted by the judicial approaches to the operation of value-added tax apparent in the British authorities cited in these reasons. The scope of the Subdivision 9-A notion of supply is in any event cast so widely by s 9-10 as to relate to a creation… of any right, as well as to a grant… of real property and indeed, to any form of supply whatsoever, though of course SAGA's analysis in terms of rights to accommodation would seek to categorise the same as supply which is not connected with Australia within s 9-5(c), as I have already foreshadowed. 44 The Court was referred by SAGA to Commissioner of Customs and Excise v Plantiflor Ltd [2002] 1 WLR 2287 at [49], where the following appears at the commencement of the speech of Lord Millett (with whose opinions and reasons two of the other Law Lords agreed) by way of description of the nature of value-added tax: 'My Lords, value-added tax is charged on the value of the supply of goods or services made in the United Kingdom for a consideration and is a liability of the person making the supply. In the ordinary case the supply and the liability to pay the consideration for the supply are reciprocal, that is to say the supply is made to the person who is liable to pay the consideration and the consideration is payable to the supplier by the person who receives the supply. But this is not always the case. Tripartite arrangements which result from two or three separate but related bilateral contracts call for close analysis in order to determine their tax consequences.' That general approach was said by SAGA to be material where, as here in relation to relevantly analogous fiscal legislation, there are three bilateral but related contracts, first as between SAGA and each overseas tourist, the second as between SAGA and AOT, and the third as between AOT and each hotel operator. 45 The Commissioner pointed out, and I think correctly so, that the present circumstances may be distinguished from those tripartite arrangements involved in Plantifor, for what that may ultimately matter, in that the contractual arrangements made between SAGA and its tourist customers, as I have foreshadowed, made no mention of or reference to AOT, or the fact now presently asserted by SAGA that all that SAGA promises the tourist is that it would arrange for AOT (or someone else) to provide the accommodation component of the 'A Taste of Australia' tour. What SAGA undertakes to its tourist customer is to arrange and thus make available the tour of Australia in which the customer is to participate, inclusive of the accommodation. In the speech of Lord Slynn of Hadley in Plantiflor at [33], reference is made with approval to earlier authority which '… indicates clearly that a distinction may have to be drawn between a situation where a person supplies a product or service by himself or by his subcontractor and the situation where a person agrees to arrange for the supply of that product or service'. In Plantiflor, it was held to be the latter situation. Hence his Lordship's further observation at [23] that '… the appropriate question [being] whether one act (here the arranging of delivery) is "ancillary or incidental to another" (here the supply of certain flower bulbs) or is "a distinct supply"', and his Lordship's further view that '[i]t seems to me on the contractual documents between Plantiflor and the customer which are before the House that these arrangements constituted a single supply. What the customer wanted and what Plantiflor agreed to provide was bulbs delivered to the home'. The Commissioner asserted that the SAGA travel arrangements attract a similar principled approach, and thus a similar outcome. 46 Irrespective of what arrangements by way of subcontracts are made collaterally with third parties, there will be in my opinion circumstances where the head contractor is liable to pay GST in relation to what is supplied, particularly in the light of the broad scope or reach of the statutory explanation of s 9-10(1) together with the opening words to s 9-10(2) comprising without limiting subsection (1), supply includes…, each to be read in the light of the s 195‑1 par (c) definition of real property. As the Commissioner rightly pointed out, what the Court must address is the nature of the supply made by the alleged taxpayer, and do so in a substantive sense.

47 SAGA sought to explain why it did not supply real property, and in particular why SAGA did not make a grant… of real property within s 9-10(2)(d) of the GST Act, for the following more detailed reasons: (i) as I have foreshadowed, the supply made by SAGA to an overseas tourist constitutes a supply merely of rights, being contractual rights enforceable exclusively in England against SAGA, and those rights do not constitute any grant… of real property within s 9-10(2)(d); it was acknowledged by SAGA that it 'supplies' a promise that the tourist will receive the benefit of the hotel accommodation in Australia; however the supply of a promise to receive a benefit was said by SAGA not to constitute the supply of that benefit; the structure of the statutory meaning of supply contained in ss 9-5, 9-10 and 9-25 of the GST Act was therefore said by SAGA to make clear that the GST Act, in relation to any supply for consideration… made in the course or furtherance of an enterprise… connected with Australia (within s 9-5), distinguishes between the supply of things, such as goods, services and real property, and the supply merely of rights to receive any of those things; this submission was elaborated upon in greater detail in SAGA's submissions in reply, to which I shall shortly draw attention; (ii) there could be no supply of realty by SAGA in the circumstances here postulated, since at the time of formation of the contracts, neither SAGA nor AOT held realty in Australia which either could supply; moreover the hotel rooms had not at that time been allocated; even if it could be assumed, favourably to the Commissioner, that the supply of hotel accommodation amounted to a supply of realty, nevertheless for there to be a licence to occupy realty, the same must be identifiable; there can be no licence to occupy realty without identifying the particular realty which is possessed and controlled, reliance being placed upon a passage from the reasons for judgment of Lord Scott of Foscote in Commissioners of Customs and Excise v Sinclair Collis [2001] STC 989 at [73]-[77]. 48 I would make the preliminary observation that the Meaning of supply provisions of s 9-10 include in particular, by par (e) of subs (2), the creation or grant… of any right, and by the preceding par (d), a grant… of real property, and further include, by par (h) of the same subsection, any combination of any 2 or more of the matters referred to in (ie the preceding) paragraphs (a) to (g). By s 9‑10(1) supply is defined as 'any form of supply whatsoever'. Those are statutory notions of wide import and operation. It is unnecessary for me to decide whether the supply by SAGA is of a contractual right in relation to land by way of a license to occupy land, or whether it is the supply of a license to occupy land, since both notions are here attracted in relation to the SAGA traveller. 49 In Sinclair Collis, Lord Scott of Foscote encapsulated at [73]-[74] the following principles in a value‑added tax context involving a tobacco company's placement of tobacco vending machines in clubs in exchange for a specified percentage of profits which were paid to those clubs, and where the critical statutory description involved specified that a supply of services that amounted to '[t]he grant of an interest in or right over land or of any license to occupy land' was exempt from VAT: '73. So what are the characteristics that distinguish a licence to occupy from a mere licence to use? There are, in my opinion, two characteristics, one or other of which must, in some sufficient degree, be present. One is possession. The other is control. If neither is present, I find it difficult to understand how the licensee could be said to "occupy". 74 There is some assistance to be gained from authority. In R v St Pancras Assessment Committee (1877) 2 QBD 581, 588, Lush J said: "Occupation includes possession as its primary element…" And in Newcastle City Council v Royal Newcastle Hospital [1959] AC 248, 255, Lord Denning said: "Occupation is matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering…" These two elements, possession and control, seem to me to be the important ingredients of a relationship between an individual and land apt to be described as "occupation". A "licence to occupy" is, in my opinion, to be read as meaning a licence to go into possession, not necessarily exclusive possession, or to go on to the land and take some degree of control of it. If neither of these features is present, the licence cannot, in my opinion, properly be described as a licence to occupy.' I have difficulty in comprehending why the occupier of a hotel room does not for the time being, and however briefly, 'go into possession though not necessarily exclusive possession' of that room, and thereby 'take some degree of control of it'; moreover a hotel room occupier for the time being possesses, in at least a practical sense, 'sufficient measure of control to prevent strangers from interfering…'. Earlier at [56], his Lordship had observed: 'So it seems that Parliament thought that taking a room for a night in a hotel, or reserving car parking space, or taking a seat at the theatre, sports ground etc would, or at least might, be regarded as involving the grant of a license to occupy land.' 50 His Lordship provided the following contrasting illustrations of the kind of occupations or licences to occupy which would or would not satisfy the description of occupation: '75. Accordingly, a person entitled to place an advertisement on a wall cannot, in any meaningful sense, be described as being in occupation of the space occupied by the advertisement. The commissioners' practice in regard to advertisements is, in my opinion, correct. It is not concessionary. It is a recognition that the right granted is not a "letting" of land and that the exercise of it does not involve the occupation of land. For the same reasons the grant of a right for a salesperson with a tray suspended from his or her neck to wander around a public house or the foyer of a theatre offering for sale the contents of the tray would not constitute the grant of a licence to occupy. There would be no part of the premises of which the salesperson could be said to be in possession or control or, therefore, in occupation. Nor, in my opinion, would the result be any different if the salesperson were obliged under the agreement to be stationed in a specific corner of the premises. There would still be nothing that could reasonably be thought to constitute "occupation" or a "letting" of land. 76. On the other hand, the grant of a licence to set up and maintain a stall or a kiosk in some defined area of the premises in order for a salesperson to sell some product or other from the stall or kiosk might create in the licensee something that could be called "occupation". There might well be a sufficient degree of control of the area in question. 77. So how is the right to install and maintain a vending machine under the terms of such an agreement as this case involves to be regarded? A "licence to occupy" is something to be enjoyed by persons, whether natural or corporate. It is people or companies who must be in possession or exercise control, not inanimate objects like tables, kiosks, cars or vending machines. A right, for example, to use a safe deposit box at a bank does not grant the customer a "licence to occupy" the safe deposit box. It is the bank that is in possession and control of the whole of its premises, including the space taken up by the box. The customer has no more than a right to put things in the box and is not, in any meaningful sense, in occupation of the space taken up by the box.' 51 Taking the above passage with that extracted earlier from Lord Scott's speech in Sinclair Collis as authority, SAGA submitted that there could be no licence to occupy land without first identifying the particular land which is possessed and controlled, albeit temporarily. 52 In the result, it seems to me that rather than supporting SAGA's case, aspects of the foregoing dicta in Sinclair Collis tend to tell against it. The circumstances I must address here involve, to use his Lordship's further description '… people… who must be in possession or exercise control, not inanimate objects…'. I should also refer to the speech of Lord Slynn of Hadley at [20] in Sinclair Collis, where his Lordship cited with apparent approval the reasons for judgment of Advocate General Jacobs of the European Court of Justice in Swedish State v Stockholm Lindopark AB [2001] STC 103 at [30]-[32], which effectively drew, or at least acknowledged, that kind of distinction, significantly in my opinion for present purposes, by reference to 'occupation of a hotel bedroom': '30. … I consider for at least two reasons that Lindopark's business, as it has been described to the court, did not fall within the concept of leasing or letting of immovable property. 31. First, there is the general question whether the transaction should be regarded as the occupation of the immovable property or as the supply of services for which the property is an incidental, albeitessential, prerequisite. 32. An example of that distinction might be provided by comparing the provision of accommodation in a hotel - which could be considered to fall within the Community definition of leasing and letting for these purposes on the ground that otherwise there would have been no need to exclude it from the exemption - with the provision of a meal in the hotel restaurant. Whereas the occupation of a hotel bedroom for one or more nights (or even for a shorter period) may well be classified as a let in various legal systems, this is unlikely ever to be the case for the consumption of a meal in the public dining room in the same hotel. In the case of the occupation of a bedroom, the dominant feature of the contract is the use of the premises, whereas in the case of the restaurant meal the dominant feature is the provision of the meal, no matter how important the décor or other facilities may be in the customer's choice of venue.' 53 SAGA sought to emphasise that not only are there no specific hotel rooms in respect of which the right to occupy is originally granted to its customers travelling to Australia, being 'originally in the sense of the time of hotel reservation', but also that SAGA may change the itinerary. As such, continued SAGA, no particular land the subject of the putative licence was capable of identification at the time of formation of contract between SAGA and the tourist. At the time of formation of the travel contract, and at the time of full payment by the tourist, SAGA emphasised that it therefore possessed 'no real property it can supply', and nor did AOT. But a difficulty with that SAGA submission is with the breadth of operation of the statutory notion of supply as it appears in Subdivision 9-A, which is not necessarily confined to any sense of simultaneous or immediate actual supply in the context of a grant… of real property or the creation, grant,… of any right. The statutory notion of supply is a broad one in temporal terms, and need not be confined in scope of operation, as a general rule, to a single point in time, nor in my opinion is it so confined here by any implication. Its basic operation is exemplified in each of the critical ss 9‑5, 9‑10 and 9‑25 (and also in s 9‑15 concerning Consideration, s 9‑20 concerning the conduct of Enterprises). SAGA's case would necessarily seek to confine the occurrence of supply to the point in time of a tour reservation made in favour of the tourist, and upon that footing by way of a bundle of rights. The Commissioner disputes of course that the occurrence of supply is here to be determined as at the point in time of making a tour reservation, or at the time of confirmation of a reservation of an accommodation booking of a place on a tour. A broader conspectus is seemingly required in the light of the breadth of the statutory terms employed, and in the light of the nature or character of what is a value-added business tax. The combination provision of par (h) of s 9‑10(2), and the generality of the non-exclusive s 9‑10(1) description of supply as being any form of supply whatsoever, together serve to demonstrate the conceptual scope of attraction of GST. The Commissioner's case here is that the circumstance that a SAGA customer might not be allocated a specific hotel room until he or she ultimately arrives at the hotel, or in any event at some point in time subsequent to a tour group reservation, has no bearing upon the resolution of the issue whether in all the circumstances, SAGA supplies its customers relevantly with real property. 54 It may therefore be said that the right to occupy a hotel guest room located within a given hotel complex, in the course of a SAGA 'A Taste of Australia' tour, will actually crystallise in favour of a particular named tourist at a point in time between the original group booking and the tourist's arrival at the hotel. By crystallise I refer to the specific allocation by the hotel staff of a specific guest room by reference to its number (or other designation) and floor location (if more than a ground level complex). In the meantime any person joining the SAGA list of tourists obtains what might be described as an inchoate right to being accommodated at the itinerary designated hotel, as between that person and SAGA, which right is contractual in operation. When that right ultimately crystallises or manifests by way of allocation to that person in the hotel's reservation system will obviously vary. The point in time of supply of the hotel accommodation is a broad notion, as is to be seen from the authoritative dicta cited in these reasons. Hence supply may take any form of supply whatsoever, including a grant... of real property… connected with Australia,… or a creation… of any right within the scope of ss 9‑10(d) and 9‑10(2)(d) and (e), together with s 9‑25(4). It is significant that the s 195‑1 definition of real property includes the notion, and hence the broad conceptual implications, of a personal right to call for or be granted any interest in or right over land, and also a license to occupy land or any other contractual right exercisable over or in relation to land. A hotel room is rightly to be characterised in law as a form of real property, notwithstanding that it is likely to comprise part only of the strata, or of the single level, of a hotel building complex erected on land somewhere in Australia. 55 A licence under the general law of property in Australia is of course at odds with the notion of exclusive possession. So much does not mean however that conversely, a purported grant of possession excludes the implementation or operation of a contractual licence. A licence of realty may include the grant of a right of lawful entry upon that realty for a contractually agreed period of time, and for the use of that realty for some stipulated purpose or purposes (see Radaich v Smith (1959) 101 CLR 209 at 222-223, per Windeyer J). The occupier of a hotel room enjoys the sole occupation of that room for the duration of the contractual period of time of occupation, together with a right of entry into common areas of a hotel building, at least in order to access that room for his or her occupation, and those common areas designated for dining, leisure etc. SAGA submitted that what the tourist receives from SAGA at the material time, being his or her inclusion in the touring party prior to leaving for Australia, is no more or higher than the contractual right to be provided with accommodation, being a right 'subject to the other terms of the contract', and being therefore part of the bundle of contractual rights that constitute the package called 'A Taste of Australia'. That thesis however, in the context of the GST legislation, and Subdivision 9A in particular, is artificially confined or restricted in scope of operation. 56 A similar basis upon which SAGA contended for exclusion of the operation of the GST Act in the present circumstances was that SAGA does not own or possess real property which it is capable of supplying to an overseas tourist, and all that SAGA is able to supply is a contractual right (or rights) emanating from third parties to its travel arrangements, SAGA not being the owner or lessee of the tourist hotels which it patronises from time to time for use by its customer tourists. As I have sought to explain, that submission tends to beg the critical issue as to the scope of the statutory notion of supply, being as I have earlier emphasised an expression of wide import, particularly in the context of Subdivision 9-A, which extends to any right, inclusive of a right to a supply of real property connected with Australia, being real property within the broad sweep of the s 195‑1 definition. Part of SAGA's response not already recorded, but consistently nevertheless with its submissions I have recorded, was that the definition of real property should be 'read narrowly', in the light of the context of the opening words of the critical par (c) of that definition, being 'a license to occupy land'. I observe however that par (b) of the definition refers to any interest in or right over land, and the second component of par (c) of the definition extends to any other contractual right exercisable over or in relation to land. The GST Act does not define 'land' or 'occupy'. Normally a reference to land, at least in a statutory context, imports the notion of realty inclusive of any improvements erected on land, and there is no reason why that notion is here to be excluded from operation, and the contrary was not suggested by SAGA. A hotel forms part of the realty upon which it is erected, irrespective of the hotel's tenure of ownership or occupation of that land, and a hotel room used for tourist occupation forms part of the hotel's building structure, as do the common areas of the hotel dedicated to guest access and use. 57 It was asserted by SAGA nevertheless that the contractual rights obtained by the overseas tourist from SAGA are not exercisable over or in relation to land, and are limited to enforcement against SAGA. All that the tourist receives, and all that SAGA supplies, the SAGA submissions continued further, '… is a chose in action comprising the rights arising under the contract'. Upon that footing or at least in that context, it was asserted by SAGA that the prevailing position on true analysis is 'not entirely dissimilar' from the principle underpinning the ratio in Livingston v Commissioner of Stamp Duties (Qld) (1960) 107 CLR 411 (High Court) and Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 (Privy Council), to the effect that beneficial interests do not definitively crystallise in relation to the assets of a deceased estate for death duty purposes until the administration of executorial duties has been substantially completed. That purported exemplification does not sufficiently bear in my opinion upon or have any analogy to the statutory notions of personal right and contractual right, at leastwithin the context in which they appear in the s 195-1 definition of real property, being a definition which extends of course beyond equitable interests in property to mere contractual rights, albeit rights exercisable over or in relation to realty. The acceptance of a hotel room or suite booking or reservation communicated by a hotelier, as I have already indicated, confers a personal right of a contractual nature in relation to the use and occupation of the hotel room for the duration of the booking or reservation, together with a right of entry upon the common guest areas of the hotel building in order to access that room, and over parts of the hotel building provided for use by hotel guests, generally. In the light of the analysis of the implications of the definition of real property, it is readily apparent that the GST Act definition of real property extends beyond legal and equitable interests in real property, and indeed the traditional notions of a licence over land. Nothing appearing in Australian Taxation Office ruling GSTR 2003/7 at [91] justifies any narrower reading of the s 195‑1 definition, for what that might ultimately matter. 58 Specifically as to the ambit of the expression in relation to appearing in par (c) of the s 195-1 definition of real property, I was referred by the Commissioner to the view of a Full Federal Court in HP Mercantile Pty Limited v Commissioner of Taxation (2005) 143 FCR 553 at [35], to the effect that such expression signifies 'some connection between two subject matters', being a '… connection or association … [which] may be direct or indirect, substantial or real', but nevertheless 'must be relevant and usually a remote connection [will] not suffice… [the] sufficiency of the connection or association [being] a matter for judgment which will depend, among other things, upon the subject matter of the inquiry, the legislative history, and the facts of the case… the degree of relationship implied by the necessity to find a relationship will depend upon the context in which the words are found' (per Hill J with whom Stone and Allsop JJ agreed). As I have already indicated, any hotel in Australia erected on realty (or comprising a strata of realty) would be expected to be subject to a proprietary interest in that realty held by the hotel owner or lessee or sublessee, such as to authorise or empower the hotelier to grant licenses to guests or prospective guests in respect of the individual accommodation suites forming part of its structure, together with rights of entry to and use of other areas in common with the other guests. There is persuasive force in the Commissioner's proposition that '[i]f, as a matter of substance and reality, there is a connection between a right arising from a contract and certain land, that connection will bring the transaction within the definition of real property', and furthermore that '… [t]he… connection or relationship need not be direct but may be indirect', and '[t]he definition should not be construed as requiring, for example, that the contractual right be directly exercisable against the owner of the land'. The operator of a hotel in Australia, not being an owner or lessee (or sublessee) of a hotel, may hold merely a form of licensing arrangement with the owner or lessee of the hotel, but that does not exclude that operator effecting A supply of real property… connected with Australia. Nor should such technical considerations act as a hindrance on the otherwise broad terms of s 195-1 definition of real property and the sub-div 9A notion of supply, insofar as they relate to the supply effected in the present case by SAGA. 59 A further submission advanced by SAGA, by way of attempted distinction of the operation of authorities relating to the licensed occupation of parts of realty structures, nevertheless remains for yet further consideration, to the extent that I may not have already addressed or fully addressed the same. That submission was related further to the theme that at the time an intending tourist finalises or formalises his or her entry into overseas travel arrangements with SAGA such as 'A Taste of Australia', it may well be the case that 'rooms have not been allocated', and whether it may therefore be said with sufficient justification that there is thereby constituted a … supply … connected with Australia within s 9-5(c). SAGA asserted that it was necessary to address the point in time when the accommodation is originally 'booked' or reserved on behalf of the tourist, at which time, all that '… the tourists receive, and all SAGA supplies, is a chose in action comprising the rights arising under the contract'. It reflects an emphasis which is not readily persuasive from any consideration of the GST Act, and in particular Part 2-2 thereof headed Supplies and acquisitions which addressesthe subject of taxable supplies. It also tends to be at odds with the general observation made by Stone J of this Court in Sterling Guardian Pty Limited v Federal Commissioner of Taxation (2005) ATC 4796 at 4806 that '[t]he clear thrust of the GST Act, both in its wording and as explained in the [Explanatory Memorandum], is that of a business tax imposed with respect to elements of commerce' (my emphasis), and where her Honour adopted the approach that '… although in economic terms the burden of the GST is borne by the ultimate consumer, in terms of "imposition, collection and administration", it is a tax on business', and further that in the context of preparation of business activity statements and payment of the appropriate GST, '… abstract propositions about interests in land and the acquisition of a brand new set of rights arising from registration of a strata plan are irrelevant'. Of course the circumstances as such in Sterling Guardian were different to those here involved, but her Honour's approach to the operation of the legislation and in particular its application in relation to realty, seems to me to be generally in line with the approach in principle taken by the English authorities on value-added tax. Those approaches have the relevant effect on notions of timing arising under the GST Act that I have discussed earlier in my reasons for judgment. 60 It was further contended by SAGA that on true analysis, the 'accommodation component was not real property' at all, but comprised no more than a bundle of rights in relation to accommodation services made up of various components, including 'the right to occupy unspecified rooms albeit on specific dates, the use of furniture and facilities within each such room, cleaning and linen changing services, and the other usual facilities of a hotel room and of a hotel's common areas'. Those services and facilities, aside from the right to occupy, were described by SAGA as parts of its 'larger accommodation package', albeit important and integral parts of the so-called wider supply of services involved, and were not to be seen as merely incidental to the supply of the right to occupy a room. Those services and facilities were asserted by SAGA to extend, not just to meals, porterage, cleaning, linen, television and concierge services, but also to recreational facilities 'beyond the hotel room', for instance of sport or physical exercise. It was therefore submitted by SAGA that the entire supply by hotel operators in the subject context should indeed be characterised alone as 'a supply of services' within s 9-10(2)(b) of the GST Act rather than as a supply of real property. Hotel accommodation was described by SAGA as made up of a substantial number of elements, albeit that the same are provided for or included at a single price charged by SAGA to its travelling customer. Whilst one of those elements involves the right to occupy a room, that element was said by SAGA to be not so dominant that it resulted in hotel accommodation being characterised, for the purposes of the GST Act,by reference to that element. Perhaps a complicating factor is that a tourist will not necessarily use all of the services made available, whilst some services, such as meals, may be separately charged for. 61 At least one difficulty with that SAGA proposition is that without conferral of the right to occupy the hotel room, the SAGA tourist would have no occasion to enter and stay at the hotel in Australia in the first place. Realistically the right to accommodation is the principal focus of an accommodation hotel's business purposes and operations, and of an overseas traveller's patronage. Moreover without the accumulation of rights to accommodation at the successive hotels the subject of tour pre-bookings, a tourist would doubtless not acquire a SAGA holiday tour package in the first place. The inference reasonably open to be drawn is that the provision of hotel accommodation is a fundamental component of SAGA's 'A Taste of Australia' holiday tour package. The viability and reality of SAGA's submission that '[w]hile one of these elements involves a right to occupy the room, that element is not so dominant that it would result in the accommodation being properly characterised by reference to it' seems to me to be difficult to sustain. SAGA's submission, that features of hotel accommodation available for guest use and enjoyment, as incidents to its packages, should be characterised as discrete rights within the ambit of, and not as merely incidental to, the right to hotel room accommodation, is I think at odds with at least the broad sweep of s 9-10, operating as it does in the context of what has been described in the authorities as 'a tax on business'. 62 SAGA's case on this point was alternatively framed upon the basis that the supply provided by the hotel operators to SAGA's customers per medium of AOT (of course undisclosed) is that of the creation or grant… of any right within the ambit specifically of para (e) of s 9-10(2) of the GST Act, for the following reasons: (a) the accommodation component is obtained by AOT, not for its own use, but for on-sale to SAGA and thereafter to the overseas tourists who ultimately use and enjoy the accommodation provided by the hotel operators; and (b) at the time of the supply of the contractual rights to accommodation made by the hotel operators in response to the advance booking requests of AOT, there is no right granted in respect of any particular area of property, it not being likely that the hotel room or rooms would have been by then specifically allocated. SAGA's analysis would thus continue to confine the time for evaluation or determination of the fulfilment or otherwise of the statutory notion of supply, in the subject circumstances,as at the occasion of acceptance by SAGA of the tour booking. I would repeat what seems to me to be the inherent difficulty of attributing to that threshold circumstance the significance for which SAGA contends, for such an approach curtails the extent of practical business tax operation of the GST Act. Moreover it is similarly difficult to afford any decisive relevance to the circumstance, in a GST supply context, that SAGA contracted in the first place with a third party (ie AOT) for the organisation of the hotel accommodation, in the light of the structure of this revenue legislation. For what it may matter, the Commissioner pointed out that SAGA's contractual documented arrangements with its customer tourists make no reference to any other supplier to the customer, and thus to the circumstance that SAGA obtains the holiday accommodation from another entity which in turn obtains it from the hotels. SAGA description of 'on-sale' is not apposite, bearing in mind the nature and substance of the SAGA/AOT contractual structure which I have earlier summarised. 63 As I understood that SAGA submission to be, being a further submission apparently in the alternative, it is only when the accommodation component is supplied by AOT to SAGA, in discharge of AOT's obligations under its agreement with SAGA, that such component may conceivably fall to be characterised as a form of supply, and then still only by way of any right falling within s 9-10(2)(e) of the GST Act. SAGA reasoned in that context that although the overseas tourist to Australia ultimately obtains the benefit of accommodation provided by the hotel operators in Australia, the tourist acquires the right to that accommodation from SAGA, and not from the Australian hotel operators. Hence, so this SAGA submission continued, that right could only be enforced litigiously by the tourist against SAGA, and the forum for any such litigation would be exclusively confined to a court of competent jurisdiction in the United Kingdom. Bearing in mind that the present statutory context is of course that of the GST Act, where the notion relevantly involved is that of any form of supply whatsoever falling within s 9‑10(1), and further bearing in mind the exemplifications of that generality of expression by way of the broadly conceived s 9‑10(2) descriptions of grant… of real property appearing in par (d), creation and grant… of any right appearing in par (e), and entry into… an obligation to do anything in par (g), and the comprehensive statutory notion of supply, there are evident difficulties in accordingviability to that further SAGA submission. Of course as earlier pointed out, the SAGA tourist makes his or her arrangements solely with SAGA, and does not purport to deal directly or indirectly with AOT, whose services are alone retained by SAGA for its assistance.

SAGA's expanded case purportedly in reply following upon the respective parties' initial written submissions 64 Following upon SAGA's initial comprehensive written submissions of 12 August 2005 and the Commissioner's written responses of 17 August 2005 and of course the conduct of the hearing itself, SAGA furnished on 26 August 2005 further comprehensive written submissions, purportedly in reply. The commencing point of those submissions was repetition of the theme that 'the only "supply" it made at the time of entering into a contract overseas [with each of its customers] was the creation of a contractual right', explicitly by reference to s 9‑10(2)(e) of the GST Act, being however a supply which was not connected with Australia within s 9‑25(5) and hence not within s 9‑5(c), because the thing was not done in Australia within s 9‑25(5). That contractual right was described as 'executory', and as including 'a right to be provided with specific goods, services and other things at specified times and specified places in the future'. It was seemingly acknowledged that '[t]he subsequent provision to the tourist of those goods, services and other things constituted further "supplies"', and that '… to the extent that those further supplies were supplies of "real property"… relating to land in Australia', which was denied in any event by SAGA, that 'supply of "real property" was also connected with Australia within s 9‑25(4)'. Those submissions in reply may be described as variations upon the theme of the SAGA submissions in chief in spite of the Commissioner's suggestion to the contrary. 65 SAGA acknowledged that the subsequent provision to the tourist of goods, services and other things (or some of them), made in the context of 'A Taste of Australia'tour, were supplies that were connected with Australia, but asserted that none of them constituted a taxable supply within s 9‑5 'for two quite distinct and alternative reasons', which were as follows: (i) SAGA did not make any of those supplies to the tourist within s 9‑5(a) of the GST Act; rather the persons who made those supplies were the various service providers, such as airlines and hotels with whom SAGA or AOT contracted, and '[t]he fact that the making of the supplies by those third parties fulfilled the contractual right which the tourist had against SAGA does not affect that analysis'; (ii) even if it could be said that SAGA made those supplies or some of them to the tourist, it could not be said that SAGA made those supplies for consideration within s 9‑5(a), since '[t]he making of a supply merely in fulfilment of a contractual right to the supply does not give rise to a separate taxable supply'; that was said to be 'the clear effect of s 9‑15(3)(a)' of the GST Act, which provision provides that the consideration for the supply of a thing, in relation to which an option had been granted, needs to be in addition to that provided in exchange for the option in order to come within the terms of s 9‑5(a). 66 SAGA described s 9‑15(3)(a) as involving 'an outworking of the general scheme of the GST Act in its application to executory contracts', that scheme being 'to tax once (if at all) at the point of the creation of the contractual right'; hence '[t]hrough the operation of s 9‑15(3)(a), there is no further taxation at the point of fulfilment of the contractual right'. That so much reflected the scheme of the GST Act in respect of executory contracts was said by SAGA to be confirmed by the 'language and operation of s 9‑10(2) and s 9‑30(1)(b) and (2)(b)', each of which were said to refer to a 'supply of a right to receive a supply', the effect whereof being that 'if the supply would be GST free or input taxed, the supply of the right to receive that supply is similarly GST-free or input taxed'. 67 The Commissioner pointed out that the foregoing submission, advanced for the first time in reply, involved the proposition that executory contracts are to be considered as a separate or specific species of supply, but observed that s 9‑30(1)(b) does not obviate the need to first determine what is the character of the supply, and further that '[i]f… the supply is merely an option then no doubt that provision could apply'. Of course however, what SAGA in substance supplied to its client tourists could hardly be described as options per se inspite of SAGA's contrary urgings. It is difficult to comprehend how SAGA's submission extended in any way, in substance or reality, beyond the SAGA case in chief as to the provision of rights in the United Kingdom, which I have already addressed. The Commissioner pointed out that SAGA's contention amounted to the proposition that it is impermissible to enquire as to what right the subject of an executory contract relates, and moreover that SAGA's central proposition I have just outlined would produce the result that 'almost all supplies would be framed merely as supplies of rights'. The Commissioner further pointed out that not only would parties be thereby able to avoid GST by contracting outside the country, but '… Division 66 would not operate and neither would Division 75', those Divisions relating respectively to Second hand goods and Sale of freehold interests. 68 The Commissioner's response to this area of the SAGA submissions was further that each of ss 9‑10(1) and 9‑30(1)(b) and (2)(b) relied upon by SAGA '… only operate if the supply is properly characterised as a supply of a right to receive a supply in the first place, and therefore do not point to a more general proposition regarding the treatment of all supplies made under executory contracts'. Alternatively the Commissioner's response was that '… such a supply may not be under an executory contact at all, as in the case, say, of a transfer of an option not preceded by a promise to transfer the option for consideration'. There is force in those submissions of the Commissioner, which tend to demonstrate the artificiality of approach on SAGA's part to the evident import of the legislation. 69 SAGA submitted in any event that the scheme of the GST Act in respect of executory contracts, for which it thus contended as above, was confirmed by the amendments introduced by Schedule 3 of the Tax Laws Amendment (2005 Measures No. 1) Act 2005 (Cth), which added to s 9‑25(5) (headed Supplies of anything else)a third alterative, by way of par (c) to that subsection, the same now reading: '(5) A supply of anything other than goods or real property is connected with Australia if either: … (c) all of the following apply: (i) neither paragraph (a) nor (b) applies in respect of the thing; (ii) the thing is a right or option to acquire another thing; (iii) the supply of the other thing would be connected with Australia. Example: A holiday package for Australia that is supplied overseas might be connected with Australia under paragraph (5)(c).' That submission as to the purpose of and reason for adding par (c) to s 9‑25(5) provoked considerable debate, including reference to authority. It may be inferred, for what it might matter, that the amendment was made in the light of the present SAGA proceedings, which were commenced on 20 December 2004. 70 SAGA referred at some length to the Explanatory Memorandum which accompanied that last amendment, the outline thereto stating at [3.1] that the purpose of that and other contemporaneous amendments being '… to ensure that the GST Act applies to the offshore supply of options or rights to goods, services and other things, where the goods, services and other things are connected with Australia'. SAGA then drew attention to what appeared under the heading 'Comparison of key features of new law and current law: 'New law Current law

Offshore supplies of rights or options will be connected with Australia if the rights or options are to acquire something that would be connected with Australia. If all other requirements of section 9‑5 of the GST Act are satisfied, these supplies will be taxable supplies and therefore subject to the GST. The GST does not apply to supplies of rights or options to acquire goods, services or other things in Australia (other than real property) where the rights or options are created, granted, transferred or assigned outside Australia by a non-resident. This is because such supplies are not "connected with Australia" and are therefore not subject to the GST.'

71 Thereafter at [3.8] of that Explanatory Memorandum, the following appears under the heading 'Detailed explanation of new law': '3.8 The meaning of "connected with Australia" in subsection 9‑25(5) of the GST Act is broadened to include supplies of rights or options to acquire something, the supply of which would be connected with Australia [Schedule 3, items 1 and 2, paragraph 9‑25(5)(c)]. This amendment will ensure the supply of such rights or options will be subject to the GST if the other requirements of section 9‑5 of the GST Act are met. Example 3.1 Smart Travel is a non-resident tour operator based in Canada that is registered for the GST in Australia. Smart Travel acquires Australian package holidays on a GST inclusive basis from Oz Travel, a resident tour wholesaler in Sydney. The Australian package holidays are on-sold by Smart Travel to tourists wishing to travel to Australia as rights or options to acquire goods, services and other things in Australia. The supply of Australian holiday packages by Smart Travel to tourists are treated as connected with Australia under the GST Act even though Smart Travel issues or grants these rights or options in Canada. Smart Travel is registered for the GST in Australia and all other requirements of "taxable supply" are satisfied under section 9‑5 of the GST Act. Therefore, Smart Travel is making taxable supplies when it on-sells the Australian holiday packages to tourists and must remit GST in respect of the supply. However, it can also claim an input tax credit on the GST paid when the holiday packages are acquired from Oz Travel.' Changing 'Smart Travel' to SAGA, 'Canada' to the 'United Kingdom' and 'Oz Travel' to 'AOT', SAGA contended that '[c]onsistently with the explanation of the legislative scheme in the Explanatory Memorandum and with the example in the new s 9-25(5)(c) itself, this case may be caught by the "new law" but is not caught by the "existing law"'. 72 The issue therefore arose as to the effect or consequences of the foregoing amendments upon the text relevantly of the GST Act in force prior to the amendment. SAGA submitted that '[w]hat is critical is that the operation of the new s 9-25(5)(c) is premised on an assumption about the scheme of the GST Act in its application to executory contracts which SAGA embraces but which [the Commissioner] in this case has chosen to deny', and further that '[t]he new provision only makes sense and itself only has a legal operation if there can be a supply (outside Australia) of a right to another supply (within Australia)'. I was referred by SAGA in that context to various authorities for support of the proposition that the construction of a statute may be affected by assumptions made in subsequent legislation or amending legislation, being authorities enumerated by D C Pearce and R S Geddes in Statutory Interpretation in Australia, 5th ed at [3‑30] and [3‑31] under the heading 'Subsequent amending Acts'. One of the authorities cited in response by the Commissioner was Allina Pty Ltd v Federal Commissioner of Taxation (1991) 99 ALR 295 at 303, where a Full Federal Court comprising Lockhart, Burchett and Gummow JJ said: 'There was some debate before us as to the circumstances in which courts are entitled to examine a later statute to determine whether it throws any light upon the interpretation of an earlier statute. Plainly this course can be taken when the words of the earlier statute are ambiguous, but if the words of the earlier statute are clear, little assistance may be gained from the later statute. Also, care must be exercised to ensure that the words in the later statute have not been inserted to remove possible doubts…'. Another was Interlego AG v Croner Trading Pty Limited (1992) 39 FCR 348 at 382, where Gummow J (with whose reasons Black CJ and Lockhart J agreed) said: 'There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, at least to avoid a result which would render the amendment unnecessary, or futile, or deficient… But in doing so caution should be exercised… It is, after all, a curious way of revealing parliamentary intention at the time of passing the earlier provision. As was observed by Viscount Haldane LC in Re Samuel [1913] AC 514 at 526: "It is not a conclusive argument as to the construction of an earlier Act to say that unless it be construed in a particular way a later enactment would be surplusage. The later Act may have been designed… to remove possible doubts".' 73 The Commissioner pointed out that the addition in 2005 of s 9‑25(5) nevertheless left s 9‑25(4), upon which the Commissioner primarily relied in the present proceedings, 'untouched'. Moreover the Commissioner submitted that in any event, all that the amendment to s 9‑25 did was to confirm the result that already operated under s 9‑25. So much was said by the Commissioner to be evident by reason of 'the structure of the amendment to s 9‑25(5), which refers, to the new provision operating where 'neither paragraph (a) nor (b) applies in respect of the thing'. Hence so the Commissioner's response continued, '… the very hypothesis on which the amendment to s 9-25(5) proceeds means that it does not assist on the question of construction that is before the court'. Accordingly, the Commissioner asserted that the amendment 'evokes the reservation of the Full Court in Allina that care must be exercised to ensure that the words in the later statute have not been inserted to remove possible doubts'. Additionally, the Commissioner submitted that the amendments introduced in the Senate by s 188‑15 to allow foreign tour operators not to register for GST would have achieved their objective without the introduction of the new s 188 ‑15(3)(b), if SAGA's approach be correct. That is to say, if the supply of accommodation is a supply of a right rather than a supply of real property as defined by s 195‑1, the new s 188‑15(3)(b) would have operated to exclude the supply of the accommodation from the registration threshold calculation. Moreover, so the Commissioner's submission continued, the Parliament dealt separately with accommodation by introducing s 188‑15(3)(c), addressing as it does specifically supplies of 'commercial accommodation'. In that regard, the text of the newly introduced s 188-15(3)(c) is in the following terms: '(3) In working out your current annual turnover, disregard: (a) any supply that is not connected with Australia; and (b) any supply that is connected with Australia because of paragraph 9‑25(5)(c); and (c) any supply (other than a supply covered by paragraph (a) or (b)): (i) of a right or option to use commercial accommodation in Australia; and (ii) that is not made in Australia; and (iii) that is made through an enterprise that the supplier does not carry on in Australia.' The Commissioner submitted that the foregoing s 188‑15(3)(c) thus introduced 'would serve no purpose if [SAGA's] construction is correct'. 74 The Commissioner contended in a similar vein in support of its foregoing contentions as to the operation of the 2005 amendments, that the transitional provision comprising Item 18 in Schedule 3, which allows entities that were registered for GST before the amendments to deregister in the transitional period, specifically requires supplies of a right to accommodation, through a non-resident entity, to be disregarded in the turnover calculation in the 3 months up to the commencement of the new provisions on 1 October 2005. The text of that Item 18 transitional provision is as follows: 'For the purposes of sections 188‑15 and 188‑20 of the [GST Act], in working out an enterprise's current annual turnover, or projected annual turnover, at a time during July, August or September 2005, disregard a supply if: (a) the enterprise through which the supply is made is not carried on in Australia, and (b) the supply: (i) is a supply of a right or option to use commercial accommodation in Australia; and (ii) is not made in Australia.' The Commissioner pointed out that the foregoing provision would have no operation if SAGA's construction was correct, since on that construction, the accommodation supplies would not have been connected with Australia under the pre-amendment provisions and would not then have been relevant to the turnover calculation in any event . 75 SAGA for its part further submitted that once the scheme of the GST Act, in itsapplication to executory contracts, was properly understood, there was nothing surprising or anomalous about the way in which it put its case. SAGA asserted that prior to 1 October 2005, no part of a contractual right created by SAGA by entering into an overseas contract with an overseas tourist involved a taxable supply, because the supply of that right was not connected with Australia, even though the right was in part to further supplies, if and when made, would be connected with Australia. SAGA acknowledged that the contractual right created by SAGA, in entering into it's 'A Taste of Australia' tour package contract with an overseas tourist after 1 October 2005, would be connected with Australia, and therefore would constitute a taxable supply within s 9‑5, to the extent that the right to any and all further supplies, if and when made, would be connected with Australia. SAGA submitted that the relevant anomaly lay in singling out before 1 October 2005 the accommodation component of the right to the package tour, and treating it alone as connected with Australia within s 9‑5(c). That was said by SAGA to be the approach taken administratively by the Commissioner since November 2003, and reflected in Australian Taxation Office tax ruling GSTD 2004/3 issued on 31 March 2004. SAGA asserted that '[i]t was doubtless in recognition of the anomalous nature of the present position that it was submitted orally on behalf of the Commissioner that other components of the contractual right to the package tour were also "connected with Australia", and therefore [constituted] "taxable supplies", and were simply not taxed by the Commissioner as a matter of "administrative concession"'. If that be correct, SAGA's submission continued, '… not only does it represent a serious failure of public administration but it contradicts the explanation given to the Parliament in the Explanatory Memorandum for the Amending Act as to the operation of the "current law", and as to the reasons for introducing the new s 9‑25(5)(a) [sic]'. The precise oral submission relied upon by SAGA was not articulated. It is patently clear however that the explanatory memorandum was predicated on the 'existing law' encompassing the supply of real property.

76 SAGA next referred to the Commissioner's case, described by SAGA to the effect 'that the contractual right created by SAGA fell within par (c) of the s 195‑1 definition of real property, in so far as it extended to accommodation'. So much was submitted by SAGA to be based on a misreading of the final words of par (c), being any other contractual right exercisable over or in relation to land. To essay a summary of this further SAGA contention, it was to the effect that the more natural and appropriate construction of par (c) would be to treat those words as referring to 'a contractual right exercisable… in relation to land… [t]hat is, the relevant relationship is not between the contractual right and the land but between the exercise of the contractual right and the land', and further that '[i]t is only where the contractual right is capable of being exercised in relation to land that the creation of that contractual right bears the character of a grant of "real property" within the extended definition in par 195‑1'. A perhaps somewhat tautological example given by SAGA was of '… a licence falling short of a licence to occupy'. Upon the footing of the distinction which SAGA thus sought to draw in relation to the two inclusive descriptions of real property appearing in par (c), SAGA asserted that the contractual right created by SAGA was only 'one sounding in damages against SAGA for breach… [being a] right… not capable of being exercised in relation to land'.

77 I do not think that such supposed grammatical distinction can be accorded in any event the significance of relevance it seeks to achieve. Whether a licence or a contractual right of the respective descriptions appearing in par (c) of s 195‑1 definition of real property may be specifically enforceable, or would be limited to damages for breach, does not bear upon the fiscal exposure or otherwise of SAGA in the circumstances here postulated by the Commissioner. The evident intention of the s 195‑1 par (c) definition of real property, as originally framed from the outset, is to expand the limits of proprietary interests in realty in order to encompass not just the traditional notion of licence to occupy realty bearing some degree or extent of analogy with leases or tenancies of realty (though not of course approximating the same), but also the creation of contractual relationships relating to the occupation or use of realty which might extend beyond the licence to occupy realty historically manifested so prominently in order to circumvent the tenancy restrictions of wartime protected tenancy legislation (see, for example, Radaich). The circumstance that 'the only contractual right created by SAGA [in favour of its travel customers] was one sounding in damages against SAGA', does not mean that it involves a 'right not capable of being exercised in relation to land'. I think that SAGA's submission seeks to read into the text of par (c) distinctions of significance which are not open in the light of the scope of the descriptions of real property used within the same. I am unable to understand why the use of a hotel room by an invitee does not necessarily involve a licence to occupy that room, or in any event to amount to the exercise of a contractual right in relation to that room. Of course the two references to land in par (c), as in the case of paras (a) and (b), would inherently encompass the notion of realty generally, and hence of improvements, inclusive of fixtures forming part of realty, in the absence of contractual restraint to the contrary.

78 SAGA's further argument in support of its contention that 'the only contractual right created by SAGA was one sounding in damages against SAGA for breach', being a right '… not capable of being exercised in relation to land', was that SAGA was not obliged to make any particular hotel room available to the tourist, or even to make a room available in any particular room or hotel, and in any event, SAGA had no interest in any particular hotel room or hotel which would have enabled it to confer any contractual right to occupy or use such a room or hotel, and yet further again, no room was allocated to the tourist until arrival at the hotel, and that allocation was not made by SAGA. That contention runs contrary to the Commissioner's submissions which I have earlier recorded as to the substantive nature of the operation of the GST Act in relation to circumstances of realty, and generally tends also to run counter to the principles of statutory construction of the analogous VAT legislation, apparent for instance in the dicta in Pippa-Dee and Diners Club that I have earlier extracted,which eschew an artificial dissection of transactions, and adopt a broad and comprehensive approach to the determination of the consideration for a supply, and a substantive approach to the determination as to what supplies are made.

79 SAGA's submissions in reply returned to an earlier contention to the effect that 'having regard to its essential character, the provision of a room in a hotel is properly seen as the provision of a single accommodation service and not as the provision of a contractual right exercisable… in relation to land'. SAGA sought support for that thesis by way of analogy to the situation of a person dining in a restaurant, which situation was addressed by the European Court of Justice in the value-added tax case of Faaborg-Gelting Linien A/S v Finanzamt Flensburg [1996] ECR I‑2395, especially at 2411-2412 where the following passage appeared in the Court's reasons for judgment:

'13. The supply of prepared food and drink for immediate consumption is the outcome of a series of services ranging from the cooking of the food to its physical service in a recipient, whilst at the same time an infrastructure is placed at the customer's disposal, including a dining room with appurtenances (cloak rooms, etc), furniture and crockery. People, whose occupation consists in carrying out restaurant transactions, will have to perform such tasks as laying the table, advising the customer and explaining the food and drink on the menu to him, serving at table and clearing the table after the food has been eaten. 14. Consequently, restaurant transactions are characterized by a cluster of features and acts, of which the provision of food is only one component and in which services largely predominate. They must therefore be regarded as supplies of services within the meaning of article 6(1) of the Sixth Directive. The situation is different, however, where the transaction relates to 'take-away' food and is not coupled with services designed to enhance consumption on the spot in an appropriate setting.' The emphasis in the text above was added by SAGA. The foregoing passages were subsequently cited by Lord Hoffman in Beynon and Partners v Commissioner of Customs and Excise [2005] 1 WLR 86 at [21]. 80 SAGA submitted that a patron who books a table at a restaurant contracts for and receives a single service (cf s 9‑10(2)(b) relating to a supply of services) does not in any meaningful sense contract for and receive goods (the latter expression appearing of course in s 9‑10(2)(a), and each of s 9‑25(1), (2) and (3) relating to a supply or supplies of goods connected with Australia), although the supply of food is an incident of the service. SAGA added that '[s]imilarly, the patron does not in any meaningful sense contract for or receive a right in relation to land, much less a right exercisable in relation to land, even though the patron may book the seat at a particular table', and submitted therefore that '[t]he same must be true of a person purchasing a ticket to the theatre or to a football game or to the Royal Easter Show'. I have difficulty however with the adequacy of drawing an analogy between residence in the privacy of a hotel room for a mutually agreed period of time (at least overnight in the present circumstances) and the receipt of a service by way of provision of food and drinks at a restaurant table in a dining room area shared with such other diners as may be present. I refer also generally to the dicta at [32] of the European Court of Justice in Stockholm Lindopark, to which I earlier made reference. 81 In any event I should record the circumstances involved in Faaborg-Gelting. The applicant ferry boat operator was established in Denmark and the respondent was the German fiscal authority. The transactions in issue consisted of the supply of meals for consumption on board ferries which provided a scheduled service between ports in Denmark and Germany. The issue centred on the place at which taxable transactions were deemed to be supplied, the answer depending on whether the supplies were of goods or of services. The applicant contended that the restaurant transactions constituted supplies of services, and further that the place of supply was deemed to be the place where the supplier had established its business. The respondent revenue contended that the restaurant operations constituted supplies of goods which were deemed to be carried out at the place where the goods were placed when the supply occurred. What fell to be resolved by way of preliminary ruling was whether restaurant transactions constituted supplies of goods which were deemed to be carried out at the place where the goods were situated at the time when the supplies took place, or whether the transactions constituted supplies of service, and were hence deemed to be carried out at the place where the supplier had established its business. Paragraph 12 of the reasons for judgment, to which the Commissioner drew specific attention, reads as follows: 'In order to determine whether such transactions constitute supplies of goods or supplies of services, regard must be had to all the circumstances in which the transaction in question takes place in order to identify its characteristic features.' In the result, the Court held, as a matter of fact, that the services largely predominated. The Commissioner submitted on that footing that such issues involve essentially matters of fact, and that the same result would not necessarily follow in the case of the provision of accommodation in a hotel. 82 In Beynon, the House of Lords had to determine whether the personal administration of a drug by a doctor to a patient was a taxable supply for the purposes of VAT. The issue was whether the administration ought to be characterised as a supply of goods, separate from the supply of medical services, or whether the provision of the drug was merely an ancillary. Lord Hoffman, with whom the other Law Lords agreed, held at [31] that 'the level of generality which corresponds with social and economic reality is to regard the transaction as the patients' visit to the doctor for treatment and not to split it into smaller units', and thus a single supply of services. 83 The Commissioner further rejoined that the circumstances in Beynon similarly reflected no relevant analogy to the present circumstances, and to the extent of any degree of analogy, there is support from that authority for a conclusion to the effect that the tourist hotel accommodation here relevant is not incidental, and that the services involved are correctly to be characterised as incidental to the supply of the hotel accommodation. I prefer the view on balance that Beynon does not afford sufficient assistance to the issues here arising, but if it becomes necessary to express anything more affirmative on the issue of assistance or otherwise from Beynon, the hotel accommodation provided to SAGA customers is not in the nature of a merely incidental supply.

Applicability or otherwise of Division 96 of Part 4-2 of the GST Act - SAGA's alternative contention as to supplies partly connected with Australia 84 Upon the hypothesis that contrary to SAGA's submissions, the hotel accommodation component of SAGA's 'A Taste of Australia'tour falls within the description of real property as defined non-exclusively in s 195‑1 of the GST Act, and as a consequence, in the events which happened, SAGA was found to have supplied thereby real property… connected with Australia pursuant to s 9-25(4) thereof, SAGA submitted that the provisions of Division 96 of Part 4‑2 of the GST Act should in any event operate in its favour, and thus exclude any liability on its part to GST. The heading to Division 96 is 'Supplies partly connected with Australia', and the purpose of that Division is explained in the introductory note the subject of s 96‑1 reading as follows: 'This Division treats a supply that is partly connected with Australia as separate supplies, so that only the part of a supply that is connected with Australia is included in the GST system.' 85 The operative provision of Division 96 was identified by SAGA as s 96-5, bearing the sub-heading 'Supplies that are only partly connected with Australia', the effect of which was described by SAGA as the treatment of 'a single supply as multiple supplies, except where one isreasonably regarded as incidental to the other and its value, if separate, is less than $50,000'. Section 96‑5 is in the following terms: '96-5 Supplies that are only partly connected with Australia (1) If, because a supply (the actual supply) is a supply of more than one of these kinds: (a) a supply of goods; (b) a supply of real property; (c) a telecommunication supply (d) a supply of anything, other than goods or real property, that is not a telecommunication supply; only part of the actual supply is connected with Australia, then the actual supply is to be treated as if it were separate supplies in the following way. (2) The part of the actual supply that is connected with Australia is to be treated as if it were a separate supply that is connected with Australia. (3) The part of the actual supply that is not connected with Australia is to be treated as if it were a separate supply that is not connected with Australia. (4) However, if one of the kinds of supply that forms part of the actual supply may reasonably be regarded as incidental to: (a) the other kind of supply that forms part of the actual supply; or (b) one (but not both) of the other kinds of supply that form part of the actual supply; and its value (if it were a separate taxable supply) would not exceed $50,000, it is treated as part of that other kind of supply. (5) This section has effect despite section 9-25 (which is about when supplies are connected with Australia).' For what it may matter, no monetary calculations were provided by SAGA in order to exemplify with precision the operation of s 96-5(4) in the context of sample instances of SAGA's 'A Taste of Australia' tour packages. It is appropriate that I address and conclude upon this Division 96 issue before returning to conclude upon what may be described as the principal issue arising, namely that referrable to Subdivision 9A. 86 SAGA's submission was that if, contrary to SAGA's primary submissions I have already recorded, its supply to an overseas tourist of 'A Taste of Australia' tour package includes a supply of real property within s 96-5(1)(b), 'then that supply is to be treated as a separate supply, in accordance with s 96-5(2), and balanced against the notionally separate remaining supply which is not connected with Australia', and which was said by SAGA to include 'return flights from the United Kingdom to Australia, domestic flights within Australia, travel insurance, train travel on the Indian Pacific, coach travel, meals, sightseeing tours and other excursions and the services of a professional tour manager'. SAGA further submitted that 'the other supply, in this context, is properly characterised as the supply of a tour, as is indicated by the tour's name "A Taste of Australia"', and that '[c]onsequently, the accommodation component of the total tour package ought reasonably be regarded as being incidental to the other supply', or as SAGA elsewhere expressed its submission, incidental to the supply of 'the transportation and sight-seeing elements of that package'. As to the notion of incidental appearing in Division 96 and s 96-5(4) in particular, I was referred by SAGA to Burton v Honan (1952) 86 CLR 169 at 177, where the principle as to incidence to the main purpose of a power was described by Dixon CJ (with whose reasons for judgment the other members of the High Court agreed) as follows: '… everything which is incidental to the main purpose of a power is contained within the power itself so that it extends to matters which are necessary for the reasonable fulfilment of the legislative power over the subject matter …'. That authority related to the validity of the forfeiture of seized goods by reason of the unlawful importation of a luxury motor vehicle into Australia, notwithstanding that the vehicle had subsequently passed into the hands of a bona fide purchaser for value. The issue here arising is not incidence to exercise of a legislative or executive power but incidence to classification of the statutory notion of taxable supplies. 87 SAGA next asserted that '[t]he value of the accommodation component of the total tour package would not, in relation to any single supply of a total tour package by SAGA to an overseas tourist, exceed $50,000', and '[t]herefore the supply of the accommodation component would be treated as part of the other supply, pursuant to s 96‑5(4) of the GST Act'. It followed, so SAGA next submitted, that '[a]s the other supply is not connected with Australia, the accommodation component would also be treated as not being connected with Australia', and therefore 'that s 96‑5 has no work to do, because the supply of the accommodation component would be re-characterised as being part of the kind of supply within s 96‑5(1) and no longer a supply of real property to any extent, so that the terms of s 96-5(1)(d) are not applicable'. Section 96-5(1)(d) addresses the residual situation of 'a supply of anything, other than goods or real property, that is not a telecommunication supply'. 88 The principal response of the Commissioner to SAGA's case for the operation of Division 96 was that putting aside the issue of whether other components of the holiday package are not connected with Australia, it could not be concluded that the accommodation component may reasonably be regarded as incidental to the supply of the other component or components pursuant to s 96‑5(4). The Commissioner contended that 'the accommodation component of a [SAGA] holiday package would generally be regarded as being one of the most significant, if not the most significant, component of the holiday', and 'could not reasonably be regarded as incidental toair, train, or coach travel… or porterage, tour guides or meals', much of the SAGA travel… being directed to getting the traveller to the next accommodation. As pointed out by the Commissioner, an overseas traveller would tend to occupy a material length of time, in terms of any daily period of 24 hours, at his or her place of overnight accommodation, comparable to the amount of time occupied by sight-seeing. 89 The Commissioner's further response was that hotel accommodation 'is not supplied simply to ensure that the customers better enjoy these other services and does not take up only a marginal proportion of the package compared to the other services', as SAGA was said to have contended. My attention was drawn by the Commissioner to the value-added tax decision of the Court of Justice of the European Communities (Fifth Chamber) of Customs and Excise Communities v Madgett and Baldwin (t/a Howden Court Hotel) [1998] STC 1189 where the issue which arose was described at 1191 of the reasons for judgment of the Advocate-General as to how the taxable amount of '… value-added tax… intended for travel agents and tour operators, may apply to a hotelier who, in addition to accommodation, offers his customers travel to and from the hotel and arranges an excursion during the stay, in return for a single payment'. What was sought to be resolved was described specifically by the Advocate-General as '… how to compute the taxable amount for such a transaction, the special feature of which is that it includes both accommodation provided by the hotelier from his own resources, which in principle falls within the general system of VAT, and services bought in from third parties for the direct benefit of the traveller…'. The operation of Article 26 of EC Council Directive 77/388 (the Sixth Directive), which fell for interpretation in Madgett and Baldwin, stated relevantly as follows: '2. All transactions performed by the travel agent in respect of a journey shall be treated as a single service supplied by the travel agent to the traveller. It shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has provided the services. The taxable amount and the price exclusive of tax, within the meaning of Article 22(3)(b), in respect of this service shall be the travel agent's margin, that is to say, the difference between the total amount to be paid by the traveller, exclusive of value-added tax, and the actual cost to the travel agent of supplies and services provided by other taxable persons where these transactions are for the direct benefit of the traveller.' 90 The following views appear in the reasons for decision of the Advocate-General in Madgett and Baldwin in relation to a service to be described as 'ancillary' (that being in my view an expression similar to the notion of accessory or auxiliary, and to be distinguished from incidental, the latter connoting fortuitous or subordinate conjunction with something else): '36. I consider that a service is ancillary if, first, it contributes to the proper performance of the principal service and, second, it takes up a marginal proportion of the package price compared to the principal service. It does not constitute an object for customers or a service sought for its own sake, but a means of better enjoying the principal service. 37. So that is the case, for example, with transport which a hotel might arrange locally to take its customers to nearby destinations. 38. By contrast, a service may be categorised as a service equivalent to the principal service provided by the trader if its relative share of the total amount paid by the traveller is substantial, so that it cannot be regarded as ancillary, compared with the other services supplied, whether by its price or its value from the customer's point of view. It should be added that to deserve that categorisation the service must be supplied with a certain frequency, as if it is merely occasional it is in the nature of the ancillary service. 39. Thus where a hotel habitually offers its customers, in addition to accommodation, services such as tourist excursions which are outside the tasks traditionally entrusted to hotels and which cannot be performed without having a substantial effect on the package price charged, it seems to me that the associated… services supplied may not be treated as ancillary services. By reason of their existence the activity of the trader then takes on a different character.' Of course the s 9‑10(1) meaning of supply includes by virtue of s 9‑10(2)(b) a supply of services. Purportedly contrasting those principles or at least descriptions, the Commissioner submitted here that the accommodation is not supplied simply to ensure that the customer 'better enjoys' those other services making up the 'A Taste of Australia' tour. 91 The Explanatory Memorandum to the 1998 Bill, in so far as it relates to Division 96, reads as follows: '6.159 Section 9‑25 provides for when supplies are connected with Australia… Whether or not a supply is taxable can depend on whether or not the supply is connected with Australia - paragraph 9‑5(c)… For the purposes of deciding whether a supply is connected with Australia a distinction is made between supplies of goods, supplies of real property, and supplies of things other than goods or real property. However, a supply may be a mixture of any of these three things, such as a mixture of goods and services. This can mean that part of a supply is connected with Australia under section 9‑25 and another part of the supply is not connected with Australia. The result of this is that part of a supply will be taxable and part will not be. Division 96 provides for what to do in such circumstances. 6.160 If a supply is a mixture of goods or real property, or anything other than goods or real property, and only part of the supply is connected with Australia, the supply will be treated as separate supplies. Subsection 96‑5(1). 6.161 The amount of GST in input tax credits in respect of a supply are calculated under the general rules in relation to the value of the supply… In the circumstances to which Division 96 applies, the GST or input tax credit should not be calculated in relation to the whole value of the supply, only to the value of the supply that is connected with Australia. 6.162 Section 96‑10 provides how to work out the value of the part of the supply that is connected with Australia. The value of the part of the supply that is connected with Australia is the proportion of the whole supply that is connected with Australia, multiplied by the value of the whole supply. Incidental supplies 6.163 If a supply is partly connected with Australia and partly not connected with Australia, part of the supply may be merely incidental to another part of the supply. A part is merely incidental if it is minor relative to the other part of the supply. It if is incidental, it is treated in the same way as that other part rather than treating the two or three parts of the supply as separate supplies. Subsection 96‑5(4).' There is some difficulty in discerning whether only part of the actual supply here involved is connected with Australia, and if so, what part. The place of residence of the supplier and of the person or entity supplied is not material to the operation or otherwise of Division 96 which is thereby contemplated. As the text of the s 96‑1 note indicates, it is necessary to predicate, for the operation of the partial connection provisions of s 96‑5, a component part of the actual supply which is not connected with Australia, so that only the part of a supply that is connected with Australia is included in the GST system. As has earlier been mentioned, 'connected with Australia' is one of the supply requirements of subsections (1) to (5) of s 9‑25, and it is defined by s 195‑1 in relation to a supply as having the meaning given by sections 9‑25 and 85‑5 (s 85‑5 definesincidentally [w]hen telecommunications supplies are connected with Australia). 92 Given that the supply of the SAGA tour in all its aspects, or having regard to all its components, constitutes a mixture of goods and of real property and of anything other than goods or real property within s 96‑5(1), the issue raised by SAGA is whether the supply of the real property is such that it may reasonably be regarded as incidental to any other kind of supply of the SAGA tour, or one (but not both) of the other kinds of supply that form part of the actual supply. The Commissioner contended to the negative of that question, and asserted that 'the converse is more likely to be the case', pointing out thereby that 'the other services could more reasonably be regarded as incidental to the accommodation'. 93 In my opinion the Commissioner's contentions are essentially correct for the reasons he has given. A major highlight of the tour is the accommodation component, involving as it does not just evening comfort and recreation at the end of a day's sight-seeing, but also the further opportunity for town or city sight-seeing. I reject the notion that s 96‑5(4) has any application to the circumstances here prevailing.

SAGA's further alternative submission concerning components of the accommodation supply and s 96‑10 of the GST Act 94 SAGA further submitted in the alternative that '[i]f the Court finds that the supply by SAGA of the total tour package includes a supply of real property, the question then is whether the supply of real property comprises all or only part of the accommodation component'. The following reasoning was advanced by SAGA on that ensuing issue. At the outset I record that one difficulty which arose in addressing that question was the absence of any common ground as to what fell within the accommodation component. 95 First it was said by SAGA to be 'necessary to observe that the supply of accommodation by the hotel operators is properly characterised as a multiple supply of: (i) the right to occupy the room; and (ii) the services and facilities related to the room (eg cleaning); and (iii) the services and facilities of hotel operations…' Those services and facilities were categorised by SAGA as the provision of meals, porterage, concierge services and recreational and sporting facilities; facilities were said to include, to varying extents, tennis courts, swimming pools, gymnasiums, saunas, gaming rooms, 'Jacuzzi', sundeck, tour desk, laundry facilities and safety deposit boxes, depending of course on the particular hotels. 96 Secondly it was next said by SAGA to be necessary to determine whether any or all of the services and facilities referred to in sub-paragraphs (ii) or (iii) immediately above constitute 'part of the supply of real property, being the supply of the right to occupy the [hotel] room' making reference to s 96‑10(1). That section reads as follows: 's 96‑10 The value of the taxable components of supplies that are only partly connected with Australia. (1) If a supply (the actual supply): (a) is, because of s 96‑5, to be treated as separate supplies; and (b) the part of the actual supply that is connected with Australia is a taxable supply, or is partly a taxable supply and partly a supply that is GST-free or input-taxed; the value of that part of the actual supply is worked out as follows: (c) work out the value of the actual supply, under s 9‑75 as if it were solely a taxable supply; and (d) work out the proportion of that value of the actual supply that the taxable supply represents; and (e) multiply that value by the proportion in paragraph (d). …' 97 Further reference was made by SAGA to the speech of Lord Scott in Sinclair Collis, and in particular to his Lordship's description of a 'licence to occupy' as '… a licence to go into possession, not necessarily exclusive possession, or to go on to the land and take some degree of control of it'. SAGA asserted that '[t]here is nothing in that description of a "license to occupy" which explicitly or implicitly extends such a license to cover the services and facilities which might be associated with the occupation of the land in issue'. 98 Contextual support for that approach to the operation of the GST Act was said by SAGA to be found in s 87-15 of the GST Act, which appears within Division 87 of Part 4-2 of the GST Act, headed 'Long-term accommodation in commercial residential premises', though of course it was not suggested that the hotel accommodation the subject of 'A Taste of Australia'tours constituted any such Long-term accommodation. The note to Division 87 appearing in s 87-1 stipulates that '[l]ong-term stays in commercial residential premises are given a lower value than would otherwise apply, reducing the amount of GST payable'. That expression 'commercial accommodation' is defined by s 87-15to mean: '… the right to occupy the whole or any part of commercial residential premises, including, if it is provided as part of the right so to occupy, the supply of: (a) cleaning and maintenance; or (b) electricity, gas, air-conditioning or heating; or (c) telephone, television, radio or any other similar thing.' Section 87-20 thereafter defines the meaning of long-term accommodation etc as follows: '(1) Long-term accommodation is provided to an individual if commercial accommodation is provided, for a continuous period of 28 days or more, in the same premises: (a) to that individual alone; or (b) to that individual, together with one or more other individuals who: (i) are also provided with that commercial accommodation; and (ii) are not provided with it at their own expense (whether incurred directly or indirectly). …' 99 Two material aspects of that definition of commercial accommodation were said by SAGA to be 'noteworthy' for present purposes: (i) 'the Legislature found it necessary or appropriate expressly to provide that the services and facilities referred to in paras (a) to (c) of the definition [of commercial accommodation in s 87‑15] form part of [that] "commercial accommodation" when they are provided as part of the right to occupy commercial residential premises'; that was said by SAGA to suggest that 'otherwise, [those] services and facilities would not form part of commercial accommodation (ie the simple right to occupy)'; (ii) 'the services and facilities referred to in paras (a) to (c) of the definition [of commercial accommodation] relate to the room being occupied'; and moreover '[t]he services and facilities of the establishment, other than those related specifically to the room, are not included at all, and rightly so; such services and facilities are not involved in the licensee's possession and control of a hotel room.' The foregoing references to paras (a) to (c) are not of course to those paragraphs comprising the non-exclusive s 195-1 definition of real property, but (as above stated) to the exclusive definition of commercial accommodation. Hence SAGA's contention that if the Legislature has undertaken such specificity of description in relation to the analogous circumstances of Long-term accommodation in commercial premises, the absence of any such kind of specificity in relation to short term hotel accommodation should be afforded significance. However any significance in relation to any such absence might be thought to cut both ways. 100 SAGA drew further attention to the following contents of the Explanatory Memorandum to the GST Act concerning Long term accommodation in commercial residential premises: '6.134 If long term accommodation was input taxed like the supply of residential rent (see 5.164), the supplier of the accommodation would have to apportion input tax credits between that part that relates to the residential accommodation and that part that relates to services; (SAGA asserted that the Explanatory Memorandum 'proceeds on the basis that the services associated with a room to be occupied were not necessarily included in the licence to occupy the room'). 6.139 You must charge GST on the full value of supplies of incidental goods and services such as meals, drinks, laundry and service charges…' (SAGA further observed in that regard that 'it is clear that the establishment's services and facilities which were not related to the room are not part of the licence to occupy the room').

101 The foregoing provisions of the Explanatory Memorandum were said by SAGA to confirm, for the purposes of Division 87 of the GST Act, 'that services and facilities related to the room being occupied are included to ensure that, where they are provided as part of the right to occupy the room, they form part of commercial accommodation', but that 'where the services and facilities of an establishment do not relate to the room being occupied, they do not form part of the commercial accommodation'. 102 I do not think that the provisions of Division 87 (relating of course only to Long-term accommodation in commercial residential premises)provide sufficient assistance to the issue here arising for resolution in relation to the operation of s 96‑10. The Legislature did not consider it to be appropriate to provide any such definitive detail in relation to the supply of real property. Hotel accommodation is traditionally or normally of course of a short term and more expensive nature than so-called long-term accommodation. The critical consideration therefore, as SAGA framed the same in the context of s 96‑10, is whether 'a finding of fact' should be made that the 'supply of real property comprises all or only part of the accommodation component.' 103 The Commissioner conceded that meals should not be considered to be part of the supply of real property, but maintained that all other services and facilities provided by the hotels ought to be regarded as ancillary or incidental to the supply of real property, and thus should be considered as part of a single supply for the purposes of s 96‑10. The Commissioner again relied upon Madgett and Baldwin, this time analogously for the proposition that the services and facilities provided by each hotel are most appropriately viewed as a means of 'better enjoying' the accommodation. That is, the 'use of the other facilities and services simply contribute to the proper performance of the principal supply, being the accommodation or use of the room. 104 Owing to the Commissioner's concession, I would exclude from the accommodation component meals and drinks, however I have come to the view that that concession was unwarranted, since the provision of meals within the rubric of a single fixed cost for overnight accommodation, as a part of that supply of accommodation, appears to fall adequately within the notion of supply of real property. Were SAGA tourists to elect to pay separate charges for a-la-carte food and drink, that would give rise to different considerations, not the least of which would be the inescapable fact that either goods or services had been provided by an enterprise carrying on business in Australia, so that the present issue would not in any event conceivably arise. 105 In my further opinion, those other services and facilities such as porterage or gyms, which may or may not be utilised by the tourist, are in principle merely incidental to what the tourist must in any event require and pay for, namely his or her hotel accommodation. In those circumstances I am unable to comprehend why the same (excluding of course, the provision of standard meals) should bear relevantly upon the operation of the GST Act in relation to the supply of real property, which is primarily fulfilled by reference to the accommodation element.

Conclusions 106 The complexity of the issues arising for resolution has rendered it appropriate for me to record in detail the comprehensive submissions of both parties, and in each particular context of submissions, to provide at least tentative observations and views. The nature and statutory context of the issues tendered by SAGA for resolution were also such as to make it appropriate in many instances to cite the precise text of the respective submissions of the parties, and to make observations upon what I have considered to be the strength or relevance of those submissions. It will have been appreciated from those observations and views that there are significant obstacles in the path of SAGA making good its case for an absence of liability to GST in relation to what has been broadly described as the Australian hotel accommodation component of the SAGA holiday package called 'A Taste of Australia'. 107 The primary case for an absence of exposure of SAGA to GST has centred upon the operation of the scheme of Subdivision 9‑A of the GST Act relating to taxable supplies, and in particular supply by way of a grant… of real property and the creation [or] grant… of any right, being a case which I have sought to summarise and address in the detail required from the perspective of both the Commissioner and SAGA. SAGA has also sought to place reliance also upon the supplies partly connected with Australia taxing scheme of Division 96, which, for reasons I have already given, is not sustainable. I have also rejected for the most part SAGA's further alternative submission that those services and facilities provided by each hotel, in addition to the accommodation rooms per se, did not constitute a supply of real property, and were therefore to be excluded from the calculation of GST because their provision lacked the necessary connection to Australia. A principal supply of the tour connected with Australia is the provision of the tourists' hotel accommodation, for which they would normally be charged basic room rates, given those rates to be inclusive of certain limited collateral benefits which are included within the rates. Any additional charges made separately by the hotels, for instance, for liquor, lunches, dinners and amenities, and thus not forming part of the basic room rates, would not be merely incidental to the basic room rates and therefore would not be incidental to the notion of hotel accommodation and in turn to real property. The issues arising did not in any event involve any consideration by the Court of any such additional charges. 108 Central to the resolution of the issues posed by SAGA's approach to the construction and operation of the GST Act, in relation to model circumstances such as are here in dispute, has been a wide-ranging consideration of the nature and scope of taxable supply rendered taxable by way of GST, or else excluded from such taxation. The interpretation of the GST Act in relation to the critical subject and notion of taxable supply requires a reasonably broad and comprehensive perspective to be taken, being a perspective which is also ambulatory in nature, having regard to the parameters of a supplier's business activities and the transactions in issue. That requirement for a substantive and comprehensive approach, by paying regard to the entirety of a transaction addressed by the legislation, is evident from the judicial dicta appearing in the United Kingdom VAT authorities of Pippa-Dee, Diners Club, Plantifor and Sinclair Collis (in particular in the latter instance from the passage from the European Court of Justice's reasons for judgment in Stockholm Lindopark that was cited with approval in the speech of Lord Slynn of Hadley) which I have cited. That approach is also apparent from judicial observations of principle appearing in the Australian authorities of HP Mercantile and Sterling Guardian which I have also earlier cited. 109 To those authorities I would add for completeness reference to the further speech of Lord Slynn of Hadley (with whom the other members of the House of Lords agreed) in Card Protection Plan Ltd v Customs and Excise Commissioners (No 2) [2002] 1 AC 202, where the following appears at 212-3 in relation to the approach to examination of a transaction, in terms as to what are its essential and ancillary features: 'It is clear from the [European] Court of Justice's judgment that the national court's task is to have regard to the "essential features of the transaction" to see whether it is "several distinct principal services" or a single service and that what from an economic point of view is in reality a single service should not be "artificially split". It seems that an overall view should be taken and over-zealous dissecting and analysis of particular clauses should be avoided. … If one asks what is the essential feature of the scheme or its dominant purpose - perhaps why objectively people are likely to want to join it - I have no doubt it is to obtain a provision of insurance cover against loss arising from the misuse of credit cards or other documents. … In so far as there are services which are not independently to be categorised as insurance they are in my view ancillary and in some cases minor features of the plan… I doubt whether they can in any event be regarded as sufficiently coherent as to be treated as one separate supply but even if they can it is ancillary to the provision of insurance.' I would also draw attention to that aspect of the later speech of Lord Hoffman (with whom the other members of the House of Lords agreed) in the VAT case of Beynon, where his Lordship emphasised at [21] 'the need to examine the circumstances in which the transaction takes place', and referred to authorities which clarified the further need for consideration of what may satisfy the notion of supply from an economic perspective, and for eschewing any artificial dissection of transactions. The latter observation is also material to the conclusion I have reached in relation to a basic hotel room rate, to the extent that it is inclusive of certain incidental matters such as porterage. I interpolate to observe that in the light of the Commissioner's apparent concession in relation to the cost of meals included within the single daily accommodation rate, being not confined to breakfasts, an exclusionary adjustment referrable thereto would have to be calculated and the resulting calculation excluded from the assessment of GST on the room charge. 110 What seems to me to be the most significant shortcoming in SAGA's submissions upon the operation of relevant aspects of Subdivision 9‑A of the GST Act is an unwarranted and artificial focus upon the point in time when the overseas traveller commits to participation in 'A Taste of Australia'tour, and hence an analysis of the operation of the GST Act upon taxing circumstances asserted by SAGA to prevail at that point in time. The correct approach should involve the determination of what SAGA undertakes to provide (and thus to supply for the purposes of the GST Act)as relevant components of that pending tour, in so far as the same would be connected with Australia for the purposes of and within s 9‑5(c) of the GST Act, and thus at the time of supply. That statutory notion of connected with is of wide import, subject always to the context of the prevailing circumstances. Hence the authorities I have cited demonstrate that what constitutes a supply falling for consideration may well require a temporal survey of future as well as past and present activities undertaken by the business operations of the taxpayer, or by third parties, in order to bring about the completion or other effectuation of supply (see Plantifor and Diners Club). 111 In other words the statutory notion of supply is pervasive in operation or application, in that it encompasses what takes place by way of an economic process in the nature of a supply which culminates in the consumer, whether as purchaser, conveyee or other ultimate acquirer or consumer, obtaining the good or service to be gained or enjoyed, pursuant to and in connection with the supplier's operations. So much depends therefore upon the nature and extent of the circumstances of the supply or commitment to be put in place, in order to effect the supply. It is within that range or scope of notions of supplies that the present tense is used in s 9‑25 to describe the essential requirement of connected with Australia. Thus a supply and its connection to Australia are to be ascertained, irrespective of the duration of the process or event which constitutes the taxing event or circumstance said to constitute the supply. Were that not the case, then at least prior to the 2005 amendments to the GST Act described earlier, taxpayers might readily have had recourse to the undertaking of merely executory obligations put in place offshore, in order to artificially advance the notion of creation of rights to supply offshore, where the reality of the ultimate supply of the taxable item occurs onshore (ie, in Australia). 112 The focus of SAGA's case upon the effectuation of supply of a tour as at and by reference to the time of entry into the agreement or arrangement for participation in that tour, whereby the traveller as a consequence may be said by SAGA to receive thereby a supply of rights of various kinds by way of satisfaction of the statutory notion of supply, is therefore in my opinion at odds with the scope and breadth of the statutory notion of supply inherent as well as apparent in the provisions of the GST Act to which I have drawn attention, and in particular those exemplified in the general descriptions appearing within Subdivision 9‑A. In income tax contexts, assessable income may be conceivably derived by a taxpayer as at the point of time of entry into an executory contract. As I have found, the GST notion of taxable supply isconceptually wider in its scope of operation, albeit that in some business contexts nevertheless, the supply may alone involve the creation… of any right within s 9‑10(2)(e), such as a tradable option over a commodity or derivatives thereof, or chose. That type of supply is not in my opinion exemplified in the circumstances addressed in this case, where what is the mutually intended subject matter of supply is not a chose against a travel agent but the provision of accommodation which the travel agent has been able to organise as his supply to his customer. 113 As observed by Lord Slynn of Hadley in Plantifor at [33], being a passage to which I have earlier drawn attention, a distinction may have to be drawn between the supply of a product or service for instance by a subcontractor, and the arrangement of the supply of that product or service by the principal, albeit per medium of a third party or parties. What falls ultimately to be appraised will constitute a single or distinct statutory notion of supply, the nature whereof being determined in a substantive sense, and thus by reference to persons who, in all the circumstances prevailing, are able to bring about or effectuate the supply of something of taxable relevance in Australia. As I have earlier mentioned, a broad and comprehensive conspectus of the operation of the legislation relevantly is required, in the light of the width of expression of the encompassing statutory terms of the GST Act, and in particular the notion of supply… connected with Australia, corresponding as they largely do with the United Kingdom prescriptions as to liability to value-added tax. As I have already foreshadowed, the notion of supply in the statutory GST context is conceptually broad, looking at what is to be ultimately supplied to a person exercising the role or function of a consumer of the subject matter of supply. In this case what was ultimately supplied by SAGA to its customers was a holiday, an essential part of which included the supply of a right of occupation exercisable over hotel rooms allocated to those same customers during the course of the tour. For the reasons that I have outlined earlier in my judgment, the presence of those hotels within Australia together with the nature of the rights held by each tourist as guest in the same provided the requisite connection required by s 9‑5(c). 114 In so concluding I nevertheless acknowledge that the point in time when the prior right or entitlement of a SAGA tour traveller to occupy a particular or specific hotel room, pursuant to an advance reservation made by a travel agent on his or her behalf, would in fact crystallise, by way of allocation of that room specifically to that SAGA traveller may of course vary according to the circumstances of each case. In the first place, the traveller is assured of accommodation at the hotel, pursuant to the SAGA reservation, albeit in a room or suite yet to be specifically allocated by the hotel to that traveller. Although the physical assumption of that accommodation by the traveller will not occur until the time of his or her arrival at the hotel and after being handed the keys to the hotel room, it seems to me that the broad and comprehensive notion and description of supply will nevertheless be fulfilled, particularly in the light of observations and views which I have above made or explained. Without the conferral of the right to occupy a hotel room on a SAGA tour prior to the commencement thereof, being a right which is then inchoate in the sense of incomplete as to identification of the particular hotel suite to be occupied by the putative tourist to Australia, that tourist would likely have had no occasion to enter and stay at that particular hotel. 115 In the case of the supply of a right per se, being the contrasting predication for which SAGA would contend, that which falls for consideration and evaluation for revenue assessment in the context of the GST Act, pursuant to s 9‑10(2)(e), from which the Commissioner would seek to draw assistance, is whether or not a taxable supply is demonstrated by reference to its value merely as a chose, such as perhaps tradable rights to the item supplied. In the circumstances however where as here, any supposed right is only intended to be exercised by way of its implementation or realisation, and thus by way of its enjoyment of that implementation or realisation, different considerations may apply in relation to what is the subject matter of supply. Given that such subject matter constitutes real property within the s 195‑1 definition, which I think to be here the case, by reason of the supply of accommodation of part of realty, there occurs in principle a connection relevantly with Australia, and thus in the circumstances addressed in the present proceedings. 116 In the result I am of the opinion that SAGA's application must be dismissed, and at least in principle, SAGA must pay the Commissioner's costs of the proceedings. At the request of SAGA however I will defer the making of the final orders pending resolution of the terms of the final orders to be made in conformity with these reasons. The parties should provide to the Court and each other draft orders (and any appropriate declaratory relief) giving effect to these reasons within 28 days. I certify that the preceding one hundred and sixteen (116) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.

Associate: Dated: 22 December 2005 Counsel for the Applicant: S Gageler SC and M Leeming

Solicitor for the Applicant: Heidtman & Co Lawyers

Counsel for the Respondent: A Robertson SC and M Wigney

Solicitor for the Respondent: Australian Government Solicitor