CARROLL & SINCLAIR

This matter concerned an application by the plaintiffs, Carroll and Sinclair, for an interlocutory injunction to restrain the defendant, the Commissioner of Taxation, from proceeding with the recovery of certain sums of money. The plaintiffs sought to prevent the Commissioner from levying execution or taking any further steps to recover the amounts claimed to be due and owing by them under the *Income Tax Assessment Act 1936* (Cth) and the *Sales Tax Assessment Act (No 1) 1930* (Cth).

The central legal issue before Young J was whether the court possessed the power to grant an interlocutory injunction in circumstances where the plaintiffs were seeking to restrain the collection of tax assessed under Commonwealth legislation. Specifically, the court had to consider the implications of section 177 of the *Income Tax Assessment Act 1936* (Cth) and section 11 of the *Sales Tax Assessment Act (No 1) 1930* (Cth), which purport to prevent courts from granting injunctions to restrain the collection of tax.

Young J reasoned that the statutory provisions prohibiting injunctions were intended to prevent interference with the collection of tax by the Commissioner. However, his Honour noted that such provisions do not operate to prevent a court from exercising its equitable jurisdiction to grant an injunction where there are fundamental questions of law to be determined, particularly concerning the validity of the assessment itself. In this instance, the plaintiffs raised arguable points regarding the Commissioner's power to make the assessments, which warranted further examination. The court concluded that it retained jurisdiction to grant an injunction to preserve the status quo pending a final determination of these arguable legal issues.

Consequently, Young J granted the interlocutory injunction sought by the plaintiffs, restraining the Commissioner from taking further steps to recover the assessed amounts, on the condition that the plaintiffs provide an undertaking as to damages. The injunction was to remain in force until the trial of the action or further order of the court.