In Crown Estates (Sales) Pty Ltd v Commissioner of Taxation  FCA 335 the Federal Court dismissed the taxpayer’s appeal of the decision of the Tribunal in Crown Estates (Sales) Pty Ltd and Commissioner of Taxation  AATA 94. The Tribunal found that the taxpayer was not entitled to claim input tax credits in respect of acquisitions made in providing property management services to owner-clients because the taxpayer was acting as the agent of those owner-clients. My post on that decision can be accessed here.
The Court upheld the Commissioner’s objection to the appeal on the ground that the notice of appeal did not specify any question of law. The Court noted that an appeal can be made from a decision of the Tribunal only on a question of law and that the question of law must be specified in the notice of appeal.
The decision illustrates the difficulties in properly framing an appeal from a decision of the Tribunal.
The amended questions of law were stated to be as follows:
(1) Whether the Tribunal erred in properly construing and applying s 11.5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) in concluding that the Applicants did not make creditable acquisitions in the course of their dealings with suppliers of goods and services to properties owned by the clients of the Applicants.
(2) Whether the Tribunal erred in construing and applying the law of agency in determining that the Applicants acted as agents in the course of all their dealings with suppliers of goods and services to properties owned by the clients of the Applicants.
The Court considered that the questions of law did nothing more than solicit a broad and hypothetical enquiry as to the construction and operation of statutory provisions. They did not identify a question of law.
The Court observed that an additional reason why the Commissioner submitted that question 2 (expressly) and also 1 (by necessary implication) in the notice of appeal raised no question of law was that a conclusion that the taxpayer was an agent of the property owners was one of fact. The Court considered that questions as to the existence of agency are usually questions of fact and that those questions of fact emerge from settled legal principles. However, the Court considered that it was not impossible to conceive of a case where a question of law might be found in posing as a question that, having found particular facts, was the Tribunal obliged in law to conclude that an agency relationship existed? The Court noted that neither question of law was pleaded in this way.
The Court also observed that another way putting such a proposition would be to pose as a question whether, on the facts found, the Tribunal was obliged in law to conclude that it was the taxpayer which had made the creditable acquisition? Once again, that is not the way in which either question was pleaded.
The Court nevertheless addressed the issue raised in the appeal, which was whether the taxpayer had made “creditable acquisitions” for the purposes of the GST Act – i.e., whether the taxpayer was acting as a principal that acquired goods and services from third parties which it resupplied to its owner-clients, or was it dealing with the contractors et al. as the agent of the owners in each case.
The Court observed that the taxpayer chose not to give detailed evidence as to the circumstances appertaining to each and every creditable acquisition for each and every period in question to establish that the taxpayer was the entity that made the acquisition. Further, the Tribunal was not shown any evidence that suggested that the finding of agency was wrong – for example invoices or other documents evidencing or describing transactions in a way that suggested the third party and the taxpayer intended that goods or services would be supplied to the taxpayer as principal, rather than to a property-owning client.
The Court concluded that the relationship of principal and agent between the taxpayer and its client was the correct conclusion in law.