Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd

The Chief Commissioner of State Revenue appealed to the Court of Appeal of New South Wales against a decision of the Supreme Court concerning the application of payroll tax to payments made by Downer EDI Engineering Pty Ltd (Downer) to its subcontractors. The dispute centred on whether certain payments made by Downer under subcontract agreements were exempt from payroll tax under the *Payroll Tax Act 2007* (NSW).

The primary legal issues before the Court of Appeal were whether the payments made by Downer to its subcontractors constituted payments for the supply of goods, and if so, whether those goods were supplied under a relevant contract for the purposes of an exemption. Specifically, the court had to determine whether the passing of legal title to goods was a necessary condition for a supply of goods to occur, and whether the installation services provided by the subcontractors were ancillary to the supply of those goods. The court also considered whether the payments were made "under" the subcontract in a manner that would attract the exemption.

The Court of Appeal, comprising Bathurst CJ, Macfarlan and Meagher JJA, reasoned that the definition of "supply" in the *Payroll Tax Act 2007* (NSW) did not require the passing of legal title for a supply of goods to be considered as having occurred. The court found that the contracts in question involved the provision of both goods and services, and that the payments were made for the overall supply, including the installation, which was integral to the transaction. The court concluded that the payments were made "under" the relevant contracts and that the exemption provisions were not applicable in this instance.

Consequently, the appeal was dismissed, and the Chief Commissioner of State Revenue was ordered to pay Downer EDI Engineering Pty Ltd’s costs of the appeal.