Attorney-General of NSW v Collector of Customs for NSW

The Attorney-General of New South Wales brought an action against the Collector of Customs for New South Wales concerning the liability of steel rails imported by the State for its railways to pay Customs duties. The matter came before the High Court of Australia by way of a special case stated for its opinion.

The central legal issues before the Court were whether the provisions of the Customs Act and the Customs Tariff applied to the Crown in its capacity as representing the State of New South Wales, thereby requiring payment of Customs duties on the imported steel rails. Specifically, the Court had to determine if the steel rails were exempt from duty by virtue of section 114 of the Constitution, which prohibits the Commonwealth from imposing any tax on property of any kind belonging to a State.

The Court reasoned that the rule established in *D'Emden v. Pedder*, which protects State instrumentalities from Commonwealth interference, does not apply to powers expressly conferred upon the Commonwealth that inherently involve control over State operations, such as the powers relating to trade and commerce with other countries and taxation. The Court held that the imposition of Customs duties is a means of regulating external trade and a form of taxation, and therefore, State rights to import goods are subject to Commonwealth Customs laws. Furthermore, the Court found that Customs duties are not a "tax on property" within the meaning of section 114 of the Constitution, as they are imposed on the act of importation rather than on the goods themselves as property.

Consequently, the High Court held that the Government of the State of New South Wales was liable to pay Customs duty on the imported steel rails. This decision followed the principle established in *The King v. Sutton*, which affirmed the liability of State governments to pay Customs duties.