High Court refuses special leave in ATS Pacific

The High Court has refused the taxpayer’s application for special leave to appeal the decision of the Full Federal Court in ATS Pacific Pty Ltd v Commissioner of Taxation [2014] FCAFC 33. The transcript can be accessed here.

The case involved the proper characterisation of the supply by Australian travel agents or tour operators to non-resident travel agents or tour operators in booking or arranging accommodation, goods and services for the customers of the non-resident travel agents or tour operators, namely the non-resident tourists. The Full Federal Court dismissed the appeal brought by the taxpayer and allowed the Commissioner’s cross-appeal against the finding of the primary judge that there were two supplies, the supply of a promise to ensure that the products would be supplied to the tourists (taxable) and the supply of arranging or booking services (GST-free), and found that the taxpayer made only one supply which was wholly taxable. My analysis of the decision of the Full Federal Court can be accessed here.

Before the High Court, the taxpayer sought to challenge the methodology of the Full Federal Court by contending that it focused entirely on the practical business test and what it is that the tourists received, and erred by not undertaking a contractual analysis. The High Court found that the case turned on the characterisation, for GST purposes, of particular commercial arrangements and did not raise any issue of general important sufficient to warrant a grant of special leave.

The applicants referred briefly to the decision of the UK Supreme Court in Revenue & Customs v Secret Hotels2 Ltd [2014] UKSC 16 which involved similar facts (my analysis of the decision of the UK Supreme Court can be accessed here). In characterising the transaction, for VAT purposes, the UK Supreme Court appeared to limit the scope of the investigation to the terms of the agreement – relying on traditional contract law principles. However, the High Court did not consider it to be of much assistance to be taken to “different facts and different legislation”.

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