B & L Linings Pty Ltd v Chief Commissioner of State Revenue

The Supreme Court of New South Wales considered an appeal by B & L Linings Pty Ltd (and a related entity, L & B Linings Pty Ltd) against the Chief Commissioner of State Revenue. The dispute concerned the application of the "two-person exemption" under section 3A(1)(f) of the *Pay-roll Tax Act 1971* (NSW) to the appellant companies. The Chief Commissioner had issued notices of assessment for pay-roll tax, which the appellant sought to have revoked.

The primary legal issues before the Court were whether the Administrative Decisions Tribunal Appeal Panel had erred in law in its interpretation and application of the "two-person exemption" and, consequently, whether the Supreme Court had the power to review the Tribunal's decision on a question of law alone. The Court also had to consider the scope of its appellate jurisdiction under the *Administrative Decisions Tribunal Act 1997* (NSW) and the *Supreme Court Act 1970* (NSW).

The Court reasoned that the Tribunal's decision involved a misinterpretation of the statutory exemption, particularly concerning the nature of the employment relationships and the control exercised by the directors of the appellant companies. The Court applied principles of statutory construction to determine the meaning of "employer" and "employee" in the context of the exemption. It found that the Tribunal had failed to properly consider the evidence regarding the actual arrangements and had applied an incorrect legal test.

The Court ordered that the notices of assessment issued to B & L Linings Pty Limited and L & B Linings Pty Limited for the financial years ending 30 June 2000 to 30 June 2003 be revoked. The assessment of pay-roll tax for these companies for the specified years was remitted to the Chief Commissioner for determination in accordance with the decision of the Administrative Decisions Tribunal Appeal Panel dated 2 July 2007. The appeal was otherwise dismissed with costs.