Transcript of Special Leave application

[2011] HCATrans 344





Office of the Registry

Melbourne                                No M159 of 2011



B e t w e e n












Application for special leave to appeal












Copyright in the High Court of Australia





MR N.J. WILLIAMS, SC:   May it please the Court, I appear with MR P.R.D. GRAY, SC and MR D.F.C. THOMAS for the applicant.  (instructed by the Australian Government Solicitor)


MS J.J. BATROUNEY, SC:   If the Court pleases, I appear with MR D.J. McINERNEY, for the respondent.  (instructed by Mills Oakley Lawyers)


FRENCH CJ:   Yes, Mr Williams.


MR WILLIAMS:   Thank you, your Honour.  It was common ground below and accepted by the Federal Court at both levels that the duty to refund imposed by section 35‑5 of the GST Act is subject to an implication of a reasonable time to perform the duty.  The point of departure was the Commissioner’s contention that the relevant circumstances in deciding what is a reasonable time ‑ ‑ ‑


GUMMOW J:   I am not sure it is a duty, as I tried to point out to you a few weeks ago.  Why should we entertain a case on a possible false basis?


MR WILLIAMS:   Your Honour is referring to the ‑ ‑ ‑


GUMMOW J:   Shepherd v Hills ‑ ‑ ‑


MR WILLIAMS:   Yes.  The reason why a debt does not arise here is that the statute contains a contrary implication, consistently with Shepherd v Hills or Mallinson, a contrary implication in the statute is sufficient to ‑ ‑ ‑


GUMMOW J:   What is the contrary implication?


MR WILLIAMS:   If your Honours go to section 17‑15 ‑ ‑ ‑


FRENCH CJ:   The implication that was found was a qualification that you have enough time to process the return.




FRENCH CJ:   The implication for which you contend was that you would have enough time to investigate the correctness of the return.


MR WILLIAMS:   That is so.  The judgment below, at both levels, is predicated on the proposition that the amount written in a return and lodged itself gives rise to a duty ‑ ‑ ‑


FRENCH CJ:   As a matter of statutory construction.


MR WILLIAMS:   Yes, a duty to pay.  That is the point of departure.  If your Honours go to page 7 of the book ‑ ‑ ‑


FRENCH CJ:   You do not dispute, do you, a duty to pay?  You just say that the timing is qualified by the power to investigate, as it were, and obviously if you find it is wrong then the question arises, what happens then?  Do you issue an assessment or do you say we are not going to pay, or ‑ ‑ ‑


MR WILLIAMS:   Yes.  We rely on the orthodox statutory implication that a duty to pay, assuming there to be such a duty ‑ I will come back to your Honour Justice Gummow in a moment – a duty to pay without a time specified carries with it an implication of a reasonable time to pay and the measure of a reasonable time to pay is a question of fact in all the circumstances and there is nothing in the statute here justifying a reading down of the circumstances to only those relevant to the time it would take to process the form and pay the refund into the account.


GUMMOW J:   What relation, if any, does the financial management legislation have – it used to be called the Audit Act – and the regulations thereunder, on the position of the Commissioner holding someone else’s money?


MR WILLIAMS:   It has not been contended in the courts below that those provisions have any implication.  Section 16 of the Taxation Administration Act of course gives rise to an appropriation, “Where the Commissioner is required or permitted” by taxation legislation to make a refund.  The reason why this case cannot be a debt in the terms indicated is apparent from page 7 of the application book from the terms of section 17‑15.  This is the provision which their Honours have construed ‑ ‑ ‑


GUMMOW J:   I am sorry, which page?


MR WILLIAMS:   Page 7 of the application book.  At about point 10 on the page 17‑15 is set out.  This is the provision that in effect the Federal Court has read as the dominant provision.  It is, however, a machinery provision that allows a taxpayer to work out a net amount using an approved form and if an amount is so worked out it is treated, for at least some purposes, as “the net amount for the tax period”.  It is stated to have effect “despite section 17‑5”.  Nevertheless, when one looks back to 17‑5 on the facing page at the foot of page 6, 17‑5 is plainly talking about, and this comes from subsection (1) definition of “input tax credits”, credits to which the taxpayer is entitled.


That means true entitlement rather than some numbers written in a form and that, in turn, if the Court goes back to page 5 of the book, feeds back into the primary taxing provisions from about line 35 on the page.  The primary taxing provision is 7‑1 which creates “The basic template”, as his Honour described it, and then at about line 40, 7‑15:


The net amount for a tax period is the amount that the entity must pay to the Commonwealth –


Now, “net amount” is a defined term.  Your Honours will not find the definition in either of the judgments but “net amount” is defined in section 195-1 to mean, relevantly, the amount specified from 17‑5.


FRENCH CJ:   For present purposes what we are talking about is that class of net amount which is an excess of input tax credits over GST in respect of the same tax period.  Is that right?


MR WILLIAMS:   Yes.  By reason of the definition of “net amount” by reference to 7‑5 and not 7‑15 it is defined only by reference, relevantly, to 7‑5.  That, in our submission, indicates that the primary taxing provision ‑ ‑ ‑


FRENCH CJ:   I am sorry there is a numbering issue here.  Is there a paragraph 8?  The judgment at page 6 says section – that should be section 7‑5 provides as follows, I take it?


MR WILLIAMS:   I am sorry, page 6?


FRENCH CJ:   Of the application book, paragraph 8 of the judgment.


MR WILLIAMS:   No, your Honour, it is 17 ‑5.  His Honour starts by referring in the chapeau of the paragraph to 7‑5 and then goes on to set out 17‑5.


FRENCH CJ:   All right.  So 17‑5 is the key provision, is it not?


MR WILLIAMS:   Yes, particularly when read with the primary taxing provisions, 17‑5, combined with the primary taxing provisions are the dominant provisions and what the Federal Court has done is to read the practical mechanism provided by 17‑15 as the dominant provision.  Now, if the Federal Court’s construction be correct and your Honours will see its effect if your Honours go to page 12.  At about line 12 on page 12:


In short, once a net amount has been calculated under s 17‑15 of the GST Act, a positive sum must be paid to the Commissioner ‑ ‑ ‑


FRENCH CJ:   Well, 35‑10 has a bit to do with that, does it not?


MR WILLIAMS:   It does, yes.


FRENCH CJ:   It is no good just waving a wand over 17‑15 and saying they are calling it dominant.  I mean, there is – the entitlement arises when you give.


MR WILLIAMS:   Yes, we accept that, but the question is which is the dominant provision in terms of the amount?  In 17‑15, according to the primary judge, and the same approach was taken in the Full Court, a negative sum must be refunded, if that is what is shown, regardless of the underlying correctness of the amount.




MR WILLIAMS:   Now, if that be correct and if this indeed does create a debt then the mere unilateral act of lodging a return with some numbers written on it will give rise to an obligation on the part of the Commissioner to pay forthwith.


FRENCH CJ:   The consequences are obvious enough but the question is whether they inform the construction.


MR WILLIAMS:   In our submission, the consequences should, but there are legal consequences as well as the very large practical consequences in terms of potential for fraud.  The legal consequences – if the piece of paper itself is enough, the 17‑15 piece of paper in the GST return – mere lodgement of the piece of paper with numbers written in will give rise to an obligation to pay forthwith.  If that is not complied with – assuming it bears Shepherd v Hills debt – if that is not complied with the taxpayer can sue in debt, could obtain summary judgment by tendering no more than the copy of the return that was filed and could then plead that judgment in bar in answer to a collection claim by the Commissioner when the Commissioner is undertaking an investigation.


FRENCH CJ:   What about an assessment by the Commissioner?  What is the effect of that as against a GST return?


MR WILLIAMS:   There are three answers.  If an assessment is made before a debt is raised, if the Commissioner can get in with an assessment before a debt is raised in judgment, before summary judgment is given, then the Commissioner could exercise the assessment power and on any view the assessment power would be subject ‑ ‑ ‑


FRENCH CJ:   The only way home for the taxpayer then is through the review process.


MR WILLIAMS:   Through Part IVC.




MR WILLIAMS:   We say that is the correct scheme of the Act consistently with the broad structure of taxing legislation.  If, however, the position is that the taxpayer gets to the court first and gets summary judgment on the piece of paper that has 5 million, 10 million, 50 million written on it and the Commissioner does not have enough material on which to issue an assessment before that occurs, very large questions will arise as to whether the Commissioner can assess because any recovery would be barred by the earlier judgment.


The information available to the Commissioner at that early stage when the piece of paper is put in is, in effect, that set out at 68 to 69, I think, of the book, simply a form.  If your Honours see on page 68 of the book on the right‑hand side of that page – if a taxpayer were to write in numbers, whether they be correct or not – according to the Federal Court, at page 68 on the right‑hand side in the middle of the page at about line 30, if the taxpayer writes in numbers there that give rise to a large refund obligation that then feeds through on to the facing page, 69, at about line 40,  the “payment or refund amount” and that piece of paper, of itself, whether correct or not, will give rise to the obligation in the Commissioner to pay, and assuming that a debt could be raised, give rise to a right in the taxpayer to sue upon that and obtain summary judgment.  Now, with respect, that cannot be the correct construction.


GUMMOW J:   Did the Full Court deal with this argument?


MR WILLIAMS:   With the debt argument?


GUMMOW J:   The argument you have just been putting to us?


MR WILLIAMS:   The debt argument, no, but the argument about 17‑15 about the ‑ ‑ ‑


GUMMOW J:   About alarming consequences as informing statutory construction.


MR WILLIAMS:   Very much so, your Honour, yes.  It was certainly agitated to the extent ‑ ‑ ‑


GUMMOW J:   No, but did they deal with it?


MR WILLIAMS:   Yes.  At page 40, at paragraph 26 is the answer that the court put forward:


The answer which the legislation provides to the Commissioner’s disquiet –


about fraud is a straightforward one –


In such circumstances, he is entitled . . . to make an assessment –


Now, with respect, the piece of paper that your Honours have seen at 68 to 69 provides a scant basis for the exercise of the assessment power.  If the Commissioner suspects fraud or suspects mistake investigation would usually, and, perhaps almost always, be required in order to provide a proper foundation for an assessment.  It may be possible in some cases to estimate.  It may be possible to infer fraud from other things the Commissioner has, but in the great run of cases where the Commissioner has the piece of paper at 68 to 69, he will have nothing upon which a straightforward answer can be given as to the amount that should be written into an assessment, if he is minded to issue one, because in many cases there will – one assumes that even in fraudulent cases – be some entitlement.


One assumes that – leaving aside a company that is set up purely as a vehicle for fraud – there will be some trading activities going on.  Even in a case of fraud there will be some legitimate claims to GST and the Commissioner, absent investigation, will have no way of working out what they are and no proper basis for giving an assessment.  That is the difficulty which the construction adopted below gives rise.  We have set out in further response to your Honour Justice Gummow in paragraph 8 of our reply submissions at page 221 these matters plus some additional matters that, in our submission, point against a construction of this statute as one that gives rise to a debt.


GUMMOW J:   The question is when would the debt arise?  You agree at some stage that there could be mandamus, do you not?


MR WILLIAMS:   Mandamus, certainly.  Certainly, we have no difficulty with mandamus.


GUMMOW J:   At what stage, though?


MR WILLIAMS:   When a reasonable time has expired, a reasonable time ‑ ‑ ‑


GUMMOW J:   When some duty has arisen which has not been performed?


MR WILLIAMS:   We accept that there is a duty coming from 35‑5 to refund.  No time is specified and, of course, the legislation did change in this respect.  As enacted in 1999 the legislation gave 14 days.  Before it came into effect it was amended to remove the 14‑day period, so there is no time specified, so it is classically within the line of cases that says that where no time for the performance of a duty is stated a reasonable time is to be implied and a reasonable time is a function of all the circumstances.


GUMMOW J:   When that time has elapsed the duty arises?




GUMMOW J:   Why has there not been a debt as well?  What is the difference?


MR WILLIAMS:   The difficulty with the debt is that if the debt arises from the lodgement of the piece of paper ‑ ‑ ‑


GUMMOW J:   No.  I am just trying to put to you, at the time you agree the duty arises that will attract mandamus why is there not at that time a debt so it is just a question of alternative remedies, one of which is direct and the other one of which has a discretion attached to it.


MR WILLIAMS:   That may be so but if that were to be so that would be a matter that favoured the grant of special leave because the alternative remedy should have led the court below to refuse relief in the exercise of its discretion.


FRENCH CJ:   The key passage in the judgment of the Full Court I think is at 45.


MR WILLIAMS:   Yes, your Honour, that is the key passage, in paragraph 40 at page 45.


FRENCH CJ:   Yes.  This goes back to an observation you made at the beginning about a reasonable time, in the circumstances, but the circumstances of your complaint is that the range of circumstances is not – as it were – not at large, or not as large as you would like it to be.  So far as the Full Court is concerned, it is they must attend what is necessary to discharge the duty concerned which is to make the refund.  In other words, it is a processing time, in effect, is it not?


MR WILLIAMS:   That is the construction the Full Court has adopted, yes, your Honour.


FRENCH CJ:   That is the implied qualification, or the temporal qualification, if you like, on the obligation imposed by 35‑10.


MR WILLIAMS:   Yes.  That is the construction the Full Court has adopted.  The reasons why we do not accept that we have set out at some length, but in short that is a construction that facilitates fraud.


FRENCH CJ:   I am just looking at your semantic path for your construction.  Forget about generalised notions of dominance and consequential things, the construction still has to be open as a matter of language, so you say that underpinning the obligation to make the GST return is the notion that it must show the net amount and that has to be the real net amount, as an objective fact.


MR WILLIAMS:   Yes.  It is – a taxpayer can discharge the obligation under the Act by putting in a return, nevertheless a return that must be verified by declaration and signature as a correct return.  We say that, of itself, points to the Commissioner having time to investigate that fact, the correctness thereof, but given the operation of the primary taxing provisions, no obligation could arise without the Commissioner having an opportunity in an appropriate case.


No doubt, 18.02 million, or thereabouts, of the cases arising each year are cases that are completely straightforward and processed in less than a fortnight but where there is, as there was last year in about 42,000 cases, a question arising about the propriety and an audit leading to, in the last year, $600,000 million in reductions in the amounts claimed, those circumstances arising where there is some reason are circumstances in which the Commissioner should have the time reasonable, in the circumstances, to investigate.


FRENCH CJ:   Thank you, Mr Williams.  Yes, Ms Batrouney.


MS BATROUNEY:   If the Court pleases.  The respondent’s submissions are that this case is not an appropriate vehicle for the grant of special leave for the reasons set out in our submissions and they are, firstly, that the question before this Court is or will shortly become hypothetical, that is because within – if it has not already done so – the time within which the Commissioner has agreed that he will assess in this case has already expired.  Could I take you first to application book page 223?


FRENCH CJ:   That was 30 November, was it not?


MS BATROUNEY:   Yes, your Honour.  Page 223 is the – happily the Commissioner agreeing with, or setting out my submission and you will see at line 22 at application book 223 the Commissioner says:


However, the Commissioner merely seeks a reasonable period of time in which to investigate the circumstances said to give rise to the refund entitlement before a writ of mandamus ought issue.  If, after the expiry of that period, the Commissioner has not issued a corrective assessment, he accepts that he will be required to transfer the applicable net amount to the taxpayer.


So, your Honours, the question is what was a reasonable time within which the Commissioner must either, one, assess or, two, pay.  There is no third option.  As your Honour the Chief Justice mentioned, the Commissioner agreed and the court below found that that time would expire by 30 November.  Could I take you first to application book page 15, line 11?  You will see there that the court says:


It is, in the circumstances, submitted on behalf of the Commissioner that a reasonable period for the conduct of the investigation, and therefore for the making of the payments required by s 35‑5 of the GST Act, would be a period which ends on 30 November 2011.


Could I trouble the Court to go over the page to page 17, line 39 and you will see the Commissioner asked that if the court were disposed to grant mandamus that:


The Commissioner submitted in the alternative that, if mandamus were to go, the court should, in the exercise of its discretion in framing the terms of the order, defer the operation of the order until 1 December 2011, in order to allow the investigation to proceed to conclusion.


Thus, your Honours, the respondent says that at least by now but certainly by the time this case comes to be heard by this Court, which I would estimate would be in March or April next year, the Commissioner will have had to have either assessed or paid and so the question before the Court has become hypothetical.  Secondly, we say this case is not a suitable vehicle because it is desirable that a legislative rather than a judicial solution be found.  You will see that there has been exposure draft legislation drafted to deal exactly with the problem before the Court.


FRENCH CJ:   Item 192 of the Bill I do not think was actually included in the Act, as passed, was it?


MS BATROUNEY:   No, it was not, your Honour, no.  We do not say that.  It is exposure draft legislation that has been circulated, revised and recirculated.


FRENCH CJ:   Anything could happen.  Why should we take any notice of what the Executive says it wants the Parliament to do, especially this Parliament.


MS BATROUNEY:   We understand that this would not be relevant on the trial of the matter but it is simply a question as to whether or not special leave ought to be granted.  The solution lies in Parliament’s hands.  It has circulated an explanatory memorandum and draft legislation to deal exactly with this point.  It does not seem to be any hurry to deal with the issue.  The exposure draft legislation is expressed to have a commencement date of 1 July 2012 and so it is our submission that this is not a matter that this Court need to deal with.


And, as indeed was set out by Justice Edmonds in his reasons on the stay application, could I take this Court to that at page 113 of the application book at line 35?  You will see Justice Edmonds said:


As the legislation stands at the present time, the substantive issue is undoubtedly a matter of public interest.  However, as the Full Court pointed out at [1] and [41] of its reasons, the remedy for the Commissioner’s concern about the operation of s 35‑5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (‘the GST Act’) lies not with the courts, but with the legislature.  This conclusion is reinforced by the preparation of legislation by Treasury to provide the Commissioner with a power to retain refunds:  refer to s 8AAZLGA, Exposure Draft of Tax Laws Amendment (2011 Measures No 8) Bill 2011, dated 22 August 2011.


I note that that was before the trial judge and it was not actually mentioned to the trial judge:


The relevant provisions are intended to have a commencement date of 1 July 2012.  To the extent the payment of a refund to Multiflex (and other registered persons) could be regarded as a matter of public interest, it is a matter that the government intends to address – giving any jurisprudence on the topic a very short shelf life.


For those reasons, your Honour, we say that the Court ought not to grant special leave in this case.  In relation to the question of a debt, could I take the Court to tab 3 of our book of authorities, that is the decision of this Court in Federal Commission of Taxation v Official Receiver and Another 95 CLR 300.  Could I take the Court to page 324 at about point 3 on the page.  It is, I concede, in relation to different legislation, but it is submitted that the same principle ought to apply.  Justice Fullagar there said:


What s.221H(2)(b) really means is that the commissioner is to take all necessary steps to see that payment is made in the course of normal departmental procedure out of Consolidated Revenue Fund.  Mandamus might lie against him to compel him to take those steps.  An action might lie against the Commonwealth.  It is not necessary to determine these matters, but a consideration of them serves to emphasise that we have here nothing really analogous to an ordinary “debt”, but simply a statutory direction to an officer of the Commonwealth to cause a payment to be made out of consolidated revenue to a specified person and an appropriation of consolidated revenue for the purpose of that payment and of no other payment.


So, we say that mandamus will lie to compel the Commissioner.  Finally, in relation to the time within which the Commissioner must pay the amount my learned friend and the Court so far have focused attention on section 35‑5.  As my learned friend said, originally, section 35‑5 provided that the Commissioner must pay within 14 days.  That provision, the reference to 14 days has been removed, but the explanatory memorandum that dealt with that removal did not mention that there was some cathartic change in the way in which the Commissioner was to deal with refunds.


Finally, could I take the Court to section 105‑15(2) which is at tab 11 of the authorities.  It is our submission that this must be read in tandem with section 35.  This is the Taxation Administration Act 1953.  You will see at tab 11 section 105‑15 is headed “Indirect tax liabilities do not depend on assessment”.  Could I take the Court to subsection (2):


The Commissioner’s obligation to pay:


(a)       a net amount under section 35‑5 of the GST Act; or



and the time by which it must be paid, do not depend on, and are not in any way affected by, the making of an assessment under this Subdivision.


Now, the Commissioner before this Court has said that what he wants is time sufficient for him to investigate –


GUMMOW J:   Was 105‑15 referred to in the Federal Court?


MS BATROUNEY:   Yes, your Honour, it was.  What the Commissioner is saying before this Court is that he must have a reasonable time to investigate the claim.  In my submission, investigate is the same thing as an assessment and section 105‑15 is very clear that the time within which the Commissioner ought to pay a refund is not affected by the making of an assessment or the undertaking, we would say, of any investigation.  If the Court pleases, they are the submissions of the respondent.


FRENCH CJ:   Yes, thank you, Ms Batrouney.  Yes, Mr Williams.


MR WILLIAMS:   Your Honours, the Commissioner’s case below was consistently at both levels that the reasonable time for undertaking the investigation had not expired and therefore mandamus had to be refused.  The submission attributed to the Commissioner on page 15 in the judgment of Justice Jessup does not, with respect, precisely record the Commissioner’s position.


The Commissioner’s position at trial was, as I have stated, that time had not expired.  That was informed by two letters that are in this book at page 224 and the reply at 226.  These were open letters concerning settlement that were exchanged shortly before trial, a matter of, I think, two or three days before trial and perhaps later in the case of the reply before Justice Jessup.  They were open letters and they were in evidence as exhibit 1.


The AGS letter proposed in paragraph 2 that if the matter were the subject of agreement and the case adjourned there would be a sampling undertaken and upon that agreement, with those limitations, the Commissioner then anticipated, and it is no more than an estimate and it is subject to the qualification that is set out in paragraph 3 – the Commissioner estimated then that it could be completed by 30 November but there was a very significant qualification in paragraph 3 and this was the evidence before his Honour as to what the Commissioner’s position was as to reasonable time.


There was no other evidence.  There was nothing to suggest that the Commissioner has stated, submitted or accepted that the date by which it had to be completed and the expiry date of the reasonable period was 30 November.  The letter, I might say, was the subject of a response at 226 where Multiflex accepted the reasonableness of the period and that it would not cause solvency problems, in effect, to Multiflex but no agreement was reached because, as your Honours see further down on 226, Multiflex wanted to be told in advance who the Commissioner was going to speak to in the course of the order.  That was the extent of the evidence.


There was indeed a secondary submission put.  Having said that mandamus would not lie because the reasonable time had not expired there was a secondary submission put that mandamus should be refused and, in effect, a tertiary submission, that which is at page 17, paragraph 35, that my friend has taken the Court to that if it:


were to go, the court should . . . defer the operation of the order until 1 December –


The basis of that submission was that on no basis could it be said that a reasonable time could expire prior to then in the light of the evidence before the Court.  I have taken your Honours to all of the evidence that was before the court in this relevant respect, so it was not 30 November is the cut‑off date.  The position since then – I think it will be common ground that the audit is continuing.  I doubt there will be dispute as to that because it is the fact – the position is that the audit has proved much more complex.  There is no evidence at the moment but it can be said that the end is not in sight.


In those circumstances where there was no more than an estimate given, if the matter were – if our construction were upheld in this Court it would have to go back to Justice Jessup for some up‑to‑date evidence as to whether a reasonable period had expired.  The case below was only ever that it had not, at the time of the hearing before Justice Jessup.  That is not an answer, with respect, to the case which the Commissioner brings and this is an important point of construction that should be ventilated.


GUMMOW J:   The order of the Full Court dismissed the appeal.




GUMMOW J:   What do you say is the order of the primary judge which still has some life?


MR WILLIAMS:   Page 3.  At page 3 of the book, paragraph 1:


A writ of mandamus issue directing [compliance] by forthwith paying to the applicant –


That is the order that still has life.  It has not been complied with.  There has been, as your Honours are aware, a stay granted.


FRENCH CJ:   That stay was a stay of the order of the Full Court, was it not?


MR WILLIAMS:   Yes, that is what ‑ ‑ ‑


FRENCH CJ:   All that did was to dismiss the appeal.  It is useless in terms of any effect on the mandamus, is it not?


MR WILLIAMS:   It may be, your Honour, that the form of order that this Court would make, if it granted leave, would be directed at Justice Jessup’s order.


FRENCH CJ:   Yes.  I am just talking about the actual status quo.  It just struck me as odd that you stay a dismissal of an appeal.


MR WILLIAMS:   That was the order that his Honour made in the Full Court.


FRENCH CJ:   It did not give you any protection.


MR WILLIAMS:   I think the common understanding of the parties ‑ ‑ ‑


FRENCH CJ:   Contrary to the words of the order.


MR WILLIAMS:   That might be so, but orders can be construed if some ambiguity can be found in light of the judgment.


FRENCH CJ:   “Ambiguity” might be a pretty generous word there.


MR WILLIAMS:   It might be, your Honour.  We think the intention was clear enough.  Could I say just one thing?  I notice the light is on.  Can I say just one thing about 105 -15?




MR WILLIAMS:   That section does no more than to say that the time for payment and the duty to pay are not affected by the issuing of an assessment.  It is question begging to say that that imposes a duty on the Commissioner to pay forthwith.  The question of time for payment is one to be answered by reference to 35‑5 construed in accordance with orthodox principles that a reasonable time to pay is to be implied and we say a reasonable time, in all the circumstances, not simply those directed to the mechanics of how quickly it can be paid.  Manifestly, that provision is to be read in light of 105‑100 which gives primacy, which gives conclusive effect to the notice of assessment, if issued, outside Part IVC proceedings and the existence of that assessment power in our submission implies, necessarily, a reasonable time to consider whether to exercise it, so the assessment power counts against the Full Court’s construction.


FRENCH CJ:   Thank you, Mr Williams.


MR WILLIAMS:   Those are our submissions.


FRENCH CJ:   The Court will adjourn briefly to consider what course it should take.












FRENCH CJ:   Section 35-5 of the A New Tax System (Goods and Services Tax) Act imposes upon the Commissioner of Taxation an obligation to pay to a taxpayer the amount of the excess, if any, of input credits attributable to a period over the GST for which the taxpayer is liable on taxable supplies attributable to that period.


Section 17-5 provides that that net amount can be worked out as specified in an approved form which includes a business activity statement and that business activity statement is a GST return for the purposes of section 35-10 which provides:


Your entitlement to be paid an amount under section 35-5 arises when you give the Commissioner a GST return.


The Commissioner seeks special leave to appeal against the decision of the Full Federal Court upholding a decision of Jessup J to issue mandamus to the Commissioner in relation to the performance of the duty under sections 35‑5 and 35‑10.  That decision was based upon his Honour’s view that the Commissioner’s obligation to pay is not subject to an implied qualification that he has a reasonable time before making the payment to investigate the correctness of the GST return.  There is a reasonable time qualification limited to the time necessary to process the return.  The implication for which the Commissioner contended was one which, in the view of both the primary judge and the Full Court, the statute does not bear.


The obligation, when it crystallises, gives rise to a debt:  see Pape v Commissioner of Taxation, but by operation of section 105-15 of the Taxation Administration Act, the obligation to pay and the time by which a net amount must be paid is not affected by the making of an assessment.  It may be that there is a statutory lacuna which gives rise to inconvenience and to risk to the revenue.  If statutory change is necessary, and it has, in fact, been foreshadowed, that is a matter for the Parliament.


In our opinion, the decision of the Full Federal Court is not attended with sufficient doubt to warrant the grant of special leave.  Special leave will be refused with costs.





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