Vacuum Oil Company Pty Ltd v Queensland

Vacuum Oil Company Pty Ltd v Queensland - [1934] HCA 5 - HCA 1934 case summary — Zoe

[9]

The facts to which this demurrer is pleaded are set out in the statement of claim and need not be restated. The Motor Spirit Vendors Act of 1933 of Queensland contains a well-considered scheme for burdening petrol with a charge in favour of power alcohol. A study of the Act, particularly of secs. 3 and 6, satisfies me that the requirement of a licence to sell petrol is directed at the first person who in Queensland has possession of or receives petrol for sale or who there sells it. This consequence is brought about by requiring that no one shall sell petrol without a licence unless he has bought the petrol from a licensed person and providing that any person who buys from a licensed person shall be deemed a licensed person. The result is that all sales of petrol acquired from or under a licensed person, however many intervening sales have occurred, are permissible. All sales in Queensland, and by virtue of the definition of sale, receipt or possession of petrol in Queensland are forbidden before the petrol passes through or into the hands of a licensed person. The situation produced and intended to be produced is that it is unlawful for the first person who handles petrol in Queensland to sell it without a licence, but for no other person unless he has acquired the petrol from an offender. Licensed persons must buy a ratable quantity of power alcohol calculated by reference to their sales of petrol. As no petrol can be received for sale in Queensland, or held there for sale, or sold by the person so receiving it, without incurring in this manner the obligation to buy power alcohol, every importer of petrol is saddled with that burden. As the burden is not imposed on anyone else unless he buys petrol from an offender, the importer is saddled with the liability in his character as importer. Importers fall into two classes - those who import direct from overseas and those who import from other States. The fact that the legislation does not distinguish between these classes does not, I think, affect the truth of the proposition that the burden is imposed upon an importer from another State because of his participation in the inter-State transaction. Any burden placed upon a man because he has taken part in an inter-State transaction involves an invasion of sec. 92 of the Constitution if it immediately and directly relates to the inter-State character of the transaction (R. v. Vizzard; Ex parte Hill[1]). When the person chosen for the imposition of the liability is selected because he is the importer, it inevitably follows that a direct burden is imposed on inter-State trade. In my opinion the Queensland Act involves a violation of sec. 92 and to that extent, at least, it is invalid. Much of the trade done by the plaintiff consists in the importation of petrol from other States, and in respect of that trade he is entitled to seek relief. Accordingly, I think the demurrer should be overruled.

[22]

The State cannot encourage the production of power alcohol by means of a bounty, because sec. 90 of the Commonwealth Constitution makes the power of the Federal Parliament to grant bounties on the production or export of goods exclusive. It cannot impose a tax or duty upon petrol as an import from abroad, because the Federal power to impose duties of customs is also exclusive. To impose an internal tax upon the ownership, sale, or disposal of petrol, would provoke a contention that it was, or included, an excise, which again is within the exclusive power of the Commonwealth. (See The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia[12].) It could not burden by a duty or otherwise the introduction of petrol from other States, because to do so would infringe upon the freedom of inter-State trade preserved by sec. 92. These considerations, doubtless, led to the adoption of the plan to which the Motor Spirit Vendors Act 1933 seeks to give legislative force. That plan, briefly, is to require that, for every hundred gallons of petrol supplied in Queensland, a specified quantity of power alcohol at a specified price should be purchased by the supplier. It is left to the Executive Government to fix both the quantity and the price. The power alcohol must be of Australian manufacture, but no provision is made to ensure a sufficient supply. Apparently there is no fear that enough power alcohol will not be forthcoming to satisfy the requirements created by the enactment. The suppliers of petrol, who are compelled to buy power alcohol, are left free to do what they like with it when they have got it. Unless the fate of the power alcohol, after the manufacturer receives the fixed price, was a matter of indifference, the view must have been taken that, once they bought it and paid for it, vendors of petrol would turn it to account in the provision of motor fuel. Notwithstanding the argument to the contrary, I think that this plan involved no infringement upon the exclusive powers of the Commonwealth to impose duties of customs and of excise and to grant bounties. The contention may be correct that to require the seller of a commodity to pay an amount calculated by reference to the volume of his sales to those who manufacture or supply a given quantity of another commodity is only to achieve in one step the result which would be effected by the two steps of levying upon the first commodity the same sum in the guise of an excise or customs duty payable to the Treasury and paying it again out of the Treasury as a bounty upon the second commodity. It may also be true that the character of the operation is not altered in substance by the circumstance that the seller of the first commodity incidentally obtains the given quantity of the second commodity, since he does not want it and it may be of little or no value to him. But, in my opinion, there is imposed neither customs nor excise, for the reason that the compulsory payment required of the suppliers of petrol does not answer the description of taxation. It is not a liability to the State, or to any public authority, or to any definite body or person authorized by law to demand or receive it. The liability to make the payment is not imposed by the enactment itself, but arises only when the suppliers of petrol proceed to fulfil the requirements of the enactment and purchase power alcohol; and then liability arises exclusively out of the contract of sale. The power of the Commonwealth Parliament to impose duties of customs and of excise, which sec. 90 makes exclusive, is conferred by sec. 51 (II.) as part of the power to make laws with respect to taxation. I cannot think that, in the exercise of that power, the Commonwealth Parliament could pass such an enactment as that contained in the Queensland Motor Spirit Vendors Act 1933. The payment received by the seller of power alcohol is not a bounty on the production of goods. It is not paid for or on behalf of the State, or any authority under the State. It is not a premium, but the price on a sale.

[24]

Sec. 3 begins by prohibiting any sale in Queensland of motor spirit situate in Queensland at the time of sale for delivery in Queensland unless the seller is licensed under the Act as a motor spirit vendor. It is to be noticed that, by the express restriction of its operation to motor spirit situated in the State, the provision avoids applying its prohibition to sales of petrol which, although made in Queensland, are to be fulfilled by delivery from another State, and that, by the restriction to delivery in Queensland, it avoids applying its prohibition to sales for delivery from Queensland into another State. Thus it is not open to objection as a direct interference with the making of inter-State contracts. It is not in this respect that it violates sec. 92. Further, prima facie, it is a general fetter on sales of motor spirit which is uniform and does not particularly affect the importer. This prima facie uniformity of operation is, however, controlled by the provisos to sec. 3 and sec. 6, the effect of which is strengthened by the definition of "sell." The very wide definition of the verb "to sell" and its derivatives includes supplying for profit, dealing in, receiving for sale, having in possession for sale, and forwarding or delivering for sale. By sec. 6, the holder of a motor spirit vendor's licence shall during its currency, which is twelve months, purchase and pay for the quantity of power alcohol, which bears the required proportion to the quantity of petrol he sells. The proviso to sec. 3, which prohibits sale without licence, is as follows: "Provided that any person who buys motor spirit for the purposes of sale from a person who holds a motor spirit vendor's licence under this Act shall be deemed to have complied with the provisions of this section upon proof that the person from whom he buys such motor spirit is so licensed, and any such person shall for the purposes of this Act be deemed to be a licensed person and the agent of the licensee accordingly." The effect of this provision is to relieve from the necessity of obtaining a licence all persons who sell petrol which has been already sold by a licensed vendor. No doubt, in the ordinary course the importer supplies the petrol directly to the retailers who, through petrol pumps or otherwise, supply the consumer. But, however many intermediate transactions there might be, it is, I think, the purpose and effect of the proviso to sec. 3 to exclude from the requirement of a licence all but the first. This result is produced by the last part of the proviso, which, for the purposes of the Act, deems the buyer from a licensed person to be a licensed person and to be the agent for the licensee. As the buyer is deemed to be a licensed person for the purposes of the Act, when he sells, his buyer will be in the same position as if he bought from a licensed person, and, indeed, as the seller is deemed the agent of the licensee, he is to be regarded as buying from the licensed person. Each successive sale will thus be within the proviso. Sec. 6, which requires the licensed motor spirit vendor to purchase the power alcohol, ends with a corresponding proviso, which, although depending entirely on statutory agency for the licensed person, produces the same result in relieving subsequent purchasers who might, as persons deemed to be licensed, come within the requirement of sec. 6.

[25]

It is not surprising, in view of the decision of this Court in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia[13], that secs. 3 and 6 are not framed in such a way as explicitly to deal with sales by the importer as such. But, apart from this consideration, the sections may well have been drawn with a view to ensure that in the course of the distribution of petrol all dealings should be penalized until it reached the hands of a licensed person. Although this may sufficiently account for the generality of the prohibition of sales by unlicensed persons expressed in sec. 3, it does not alter the real effect of the enactment, which is to throw upon the first person who, after petrol reaches the State, receives or holds it for sale, or sells it, the burden of buying a proportionate quantity of power alcohol. This appears to me directly to burden the person who introduces petrol into Queensland for sale, in a way in which others are not burdened. It is true that, upon the face of the statute, it affects all first sales of petrol alike, and does not differentiate petrol imported from another State from petrol imported from abroad, or from petrol produced in Queensland. The last may be neglected because petrol is not produced in Queensland, and this fact is one which determines the actual operation of the statute, as, no doubt, it determined its policy. But when a special burden is placed upon persons importing a commodity, the fact that foreign and inter-State trade are affected uniformly does not mean that the freedom of inter-State trade is preserved, but rather that the freedom of foreign and inter-State trade alike is impaired. Upon examination it becomes reasonably clear that the incidence of the obligation is upon the person importing petrol for sale, and that the burden is placed upon him by reason of a consequence inseparable from his character of importer, namely, that he is necessarily the first person who in Queensland has the commodity in his hands for sale. Inasmuch as he is selected because of this circumstance, he is, in substance burdened in his character of importer, that is, because it is he who introduces the goods into Queensland for sale. The legislation does not impose upon the commodity, when it is imported, a burden of which the same commodity is free if produced in the State. The case is one in which the same commodity cannot be produced in the State. But, for the advantage of another commodity which is produced within the State, a commodity contributing to the same purpose, it burdens an imported commodity in the hands of the importer. It does not deal with the imported commodity independently of its importation, because, in allocating the burden, it adopts a criterion which of its very nature distinguishes the person who introduces it for sale from all others.

At a glance

Court

Decision date

Before

Source

Judgment (112 paragraphs)

Vacuum Oil Company Pty Ltd v Queensland (No 1) [1934] HCA 5; (1934) 51 CLR 108 (23 April 1934)

Parties

Legislation Cited (1)

Cases Cited (1)