News Flash! High Court to hand down Qantas decision on Tuesday morning

The High Court email notification service shows that the Court will hand down its decision in the Qantas case on Tuesday morning at 10.15am.  The decision involves the GST treatment of fares paid by passengers who did not show for the flight.  The Commissioner appealed against the decision of the Full Federal Court that no GST was payable (the Full Federal Court having allowed Qantas’ appeal against the decision of the Tribunal that GST was payable).

The decision should appear on the High Court website and austlii during the day.


Qantas wins Full Federal Court appeal on “no-shows”

In a dramatic development, the Full Federal Court has allowed the appeal by Qantas with respect to its liability to pay GST on forfeited airfares.

In Qantas Airways Limited v Commissioner of Taxation [2011] FCAFC 113, the Court (Edmonds and Perram JJ, with Stone J agreeing) allowed the appeal from the decision of the Tribunal and found that GST was not payable by Qantas where the passenger had paid the far, but cancelled or did not show for the fare and no refund was available or claimed.  The Court identified the air travel as the taxable supply, and as no travel took place there was no taxable supply.

The Court also found that there was no relevant distinction between fares which were non-refundable and fares which were fully refundable (but no claim for a refund was ever made).

This decision is arguably the most important GST case to date and the decision has ramifications far beyond the airline industry, with implications for all suppliers who may enter into transactions that do not complete.  Further, the decision is in direct conflict with the views of the Commissioner in GSTR 2009/3 ‘Goods and services tax: cancellation fees’.

The Commissioner has lodged an application for Special Leave to appeal to the High Court.