Avon Products Pty Limited v Commissioner of Taxation

Avon Products Pty Limited appealed to the High Court of Australia against a decision of the Full Federal Court concerning a claim for a credit for sales tax overpaid. The dispute centred on whether Avon had successfully discharged its onus of proving that it had not passed on the overpaid sales tax to its customers, as required by the relevant provisions of the *Sales Tax Assessment Act 1992* (Cth).

The primary legal issue before the High Court was to determine the correct interpretation of the "passing on" provisions in the context of sales tax refunds. Specifically, the court had to consider whether a taxpayer could establish that an overpayment had not been passed on solely by demonstrating that its pricing policy, including its regular prices and discounting strategies, remained unchanged following a reduction in the applicable sales tax rate. The court also considered the nature of sales tax and its tendency to be passed on in ordinary commercial practice.

The High Court, in dismissing the appeal, reasoned that the nature of sales tax is such that it is ordinarily passed on to consumers. The court found that Avon's evidence of maintaining its regular prices and discounting policies was not determinative of whether the overpaid tax had been passed on. Instead, the court affirmed the approach of the Full Federal Court, which had regard to the broader commercial realities and concluded that Avon had failed to discharge its burden of proof. The court distinguished an analogous United States case relied upon by Avon, noting that in that case, the court had inferred an intention not to pass on the tax based on the taxpayer making a loss.

The High Court ordered that Avon's appeal be dismissed with costs.