Chief Commissioner of State Revenue v Print National Pty Ltd

[2013] NSWCA 96

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Chief Commissioner of State Revenue v Print National Pty Ltd [2013] NSWCA 96

Hearing dates:

6 March 2013

Decision date:

17 April 2013

Before:

Bathurst CJ at [1];
Beazley P at [2];
Gzell J at [3]

Decision:

Questions answered in the affirmative. "Dissatisfied" in s 86(1)(b) of the Taxation Administration Act 1996 not limited to decisions having an immediate and direct effect on a person's actual or potential liability to tax.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

TAXES AND DUTIES - Payroll Tax - notices under s 72 of the Taxation Administration Act 1996 issued to third parties to ascertain the taxable facts of the plaintiff for payroll tax purposes - special case - questions for opinion of court referred by Administrative Decisions Tribunal - whether the plaintiff entitled to object under s 86(1)(b) to the decisions to issue the notices - whether the plaintiff could apply to the ADT for a review of an objection decision under s 96(1) of the Act - whether "dissatisfied" in s 86(1)(b) limited to decisions having an immediate and direct effect on the plaintiff's actual or potential liability to payroll tax

Legislation Cited:

Acts Interpretation Act 1901 (Cth)
Administrative Decisions Tribunal Act 1997 (NSW)
Income Tax Assessment Act 1936 (Cth)
Payroll Tax Act 2007 (NSW)
Taxation Administration Act 1953 (Cth)
Taxation Administration Act 1996 (NSW)

Cases Cited:

Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184
CTC Resources NL v Commissioner of Taxation [1994] FCA 947; (1994) 48 FCR 397
James v Chief Commissioner of State Revenue (No 2) [2011] NSWSC 654; (2011) 81 NSWLR 267
McCallum v Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458
McDonald's Australia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6; (2005) 58 ATR 260
Paspaley v Chief Commissioner of State Revenue [2007] NSWSC 1048; (2007) 67 ATR 319
Williment v Federal Commissioner of Taxation [2010] FCA 808; (2010) 190 FLR 234

Texts Cited:

N/A

Category:

Principal judgment

Parties:

Chief Commissioner of State Revenue (Applicant)
Print National Pty Ltd (Respondent)

Representation:

Counsel:
S Kaur-Bains/ A Gerard (Applicant)
A Henskens SC/ P Knowles (Respondent)
Solicitors:
Crown Solicitors Office (Applicant)
Bilbie Dan Solicitors (Respondent)

File Number(s):

CA 2012/211361

Publication restriction:

N/A

 Decision under appeal 

Jurisdiction:

9108

Citation:

N/A

Before:

O'Connor J

File Number(s):

2012/126024, 126025, 126026, 126027, 126028, 126029, 126030

Judgment

1. BATHURST CJ: I agree with Gzell J.

1. BEAZLEY P: I agree with Gzell J.

1. GZELL J:

The issue

1. The issue before the Court is the meaning of the word "dissatisfied" in s 86(1) of the Taxation Administration Act 1996 (NSW) (TA Act). It is in Div 1 of Pt 10 and is in the following terms:

"86 Objections

(1) A taxpayer who is dissatisfied with:

(a) an assessment that is shown in a notice of assessment served on the taxpayer, or

(b) any other decision (in the meaning of section 6 of the Administrative Decisions Tribunal Act 1997) of the Chief Commissioner under a taxation law,

may lodge a written objection with the Chief Commissioner."

1. The matter is before the Court by way of a special case. In proceedings between Print National Pty Limited (Print National) and the Chief Commissioner of State Revenue (Chief Commissioner) the Administrative Decisions Tribunal (ADT), at the request of the Chief Commissioner, referred the following questions to the Court for its opinion under s 79A of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act):

"1 Whether the Applicant, in respect of the decisions of the Chief Commissioner of State Revenue to issue 11 notices under s 72 of the Taxation Administration Act 1996 ("TAA") is entitled to object under s 86(1)(b) of the TAA to the decisions.

2 Whether pursuant to s 96(1) of the TAA, the Applicant may apply to the Administrative Decisions Tribunal for a review of the decisions."

1. If a taxpayer is dissatisfied with an assessment or other decision and lodges an objection with the Chief Commissioner, which is disallowed, the taxpayer may apply to the Supreme Court for a review of the objection decision under s 97 of the TA Act or the taxpayer may apply to the ADT for such review under s 96(1). It is in the following terms:

"96 Review by Administrative Decisions Tribunal

(1) A taxpayer may apply to the Administrative Decisions Tribunal for a review of a decision of the Chief Commissioner that has been the subject of an objection under Division 1 if:

(a) the taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection, or

(b) 90 days (not including any period of suspension under section 92) have passed since the taxpayer's objection was served on the Chief Commissioner and the Chief Commissioner has not determined the objection."

The special case

1. According to the special case, from about September 2007 the Chief Commissioner commenced an investigation into David James and his relationship to a number of companies, including Print National, to ascertain whether, for payroll tax purposes, there had been a failure to declare wages paid by entities that might constitute members of a group of entities. The entities included Print National.

1. Under a self-assessment regime, payroll tax is imposed on all taxable wages under s 6 of the Payroll Tax Act 2007 (NSW) (PT Act). The employer is liable for the tax under s 7 and s 8 provides that the amount is ascertained in accordance with Sch 1 and Sch 2. Sch 1 provides for a tax-free threshold. To avoid related entities each claiming the threshold, they are grouped under Pt 5 and Sch 1 provides the way in which the threshold is applied to the group.

1. In the course of the investigation of Mr James, the Chief Commissioner decided to issue 11 notices under s 72 of the TA Act (s 72 Notices). Mr James has not complied with two s 72 Notices and Raymond Walker has not complied with one. There has been compliance with the eight other s 72 Notices.

1. Section 72 is in Div 2 of Pt 9 of the TA Act. It is in the following terms:

"72 Power to require information, instruments and records, and attendance

(1) The Chief Commissioner may require a person, by written notice, to do any one or more of the following:

(a) to provide to the Chief Commissioner (either orally or in writing) information that is described in the notice,

(b) to attend and give evidence before the Chief Commissioner or an authorised officer,

(c) to produce to the Chief Commissioner any instrument or record in the person's custody or control that is described in the notice.

(2) The Chief Commissioner must, if the requirement is made of a person to determine that person's tax liability, indicate in the notice that the requirement is made for that purpose, but the Chief Commissioner is not otherwise required to identify a person in relation to whom any information, evidence, instrument or record is required under this section.

(3) The Chief Commissioner may require information or evidence that is not given orally to be provided in the form of or verified by statutory declaration.

(4) The Chief Commissioner may require evidence that is given orally to be given on oath or by affirmation and for that purpose the Chief Commissioner or an authorised officer may administer an oath or affirmation.

(5) A person who is required to attend and give evidence orally is to be paid expenses in accordance with the scale of allowances to witnesses in force for the time being under the rules of the District Court.

(6) Subsection (5) does not apply to a person, or a representative of a person, whose liability under a taxation law is being investigated by the Chief Commissioner.

(7) The Chief Commissioner may make a recording, by such means as the Chief Commissioner determines, of the evidence given orally by a person.

(8) The person to whom the notice is given must comply with the notice within such period as is specified in the notice or such extended period as the Chief Commissioner may allow.

Maximum penalty (subsection (8)):100 penalty units.

Note. An offence against subsection (8) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of corporation - see section 121."

1. Print National, which was not a recipient of any s 72 Notice, lodged written objections to the Chief Commissioner's decision to issue the s 72 Notices, which the Chief Commissioner disallowed under s 91 of the TA Act.

1. The Chief Commissioner subsequently issued assessments to a number of companies, including Print National, in relation to payroll tax liability for the period 1 July 2003 to 30 June 2010 on the basis that the companies were grouped as Mr James was their sole director and shareholder.

1. Print National then filed applications in the ADT seeking a review of the Chief Commissioner's decisions to issue the s 72 Notices (Decisions).

1. These final facts in the Special Case can be ignored as it was common ground that Hill J's observation in McCallum v Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458 at 464 that the right to object under the comparable s 175A of the Income Tax Assessment Act 1936 (Cth) (ITA Act) is to be determined at the time of objection, was good law.

The rival positions

1. Notwithstanding the Chief Commissioner's consideration and disallowance of Print National's objection as if s 91 of the TA Act applied, he now contends that Print National was not entitled to lodge written objections in relation to the Decisions under s 86(1)(b) and that Print National cannot apply to the ADT for a review of the objection decisions because objections to the Decisions are prerequisites to a review under s 96(1)(a). The Chief Commissioner submitted that both questions referred to the Court should be answered in the negative.

1. Print National accepts that if the answer to the first question is in the negative, the ADT has no jurisdiction to entertain an application for review under s 96 of the TA Act: see Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [27].

1. "Taxpayer" is defined in s 3(1) of the TA Act as follows:

"taxpayer means a person who has been assessed as liable to pay an amount of tax, who has paid an amount as tax or who is liable or may be liable to pay tax."

1. The Chief Commissioner argues that there must be a connection between the taxpayer and the decision of which s 86(1)(b) of the TA Act speaks and that connection requires that the dissatisfaction must be with a decision that affects a person's actual or potential liability as a taxpayer.

1. Counsel for the Chief Commissioner articulated the purpose of a s 72 notice in different ways but finally submitted that since the s 72 Notices were issued merely to determine the taxable facts for any payroll tax liability, the Decisions had no immediate and direct effect on the actual or potential liability of Print National to pay payroll tax and there was no dissatisfaction with a decision that had such an effect.

1. It was submitted that the requisite dissatisfaction was limited to decisions that had an immediate and direct effect as Gummow J had observed in CTC ResourcesNL v Commissioner of Taxation [1994] FCA 947; (1994) 48 FCR 397 at 404-405:

"However, in the past, the cause for the dissatisfaction of the taxpayer has been a particular assessment to tax which because it leads to the creation of a debt in favour of the Commonwealth undoubtedly has an immediate and direct effect in a legal sense upon the taxpayer. As a result there has been little discussion in the authorities as to the meaning of the term."

1. But this statement is of little assistance as it applies to an assessment and not to any other decision.

1. Print National submits that the nexus between dissatisfaction and the taxpayer in s 86(1)(b) of the TA Act should be as Gummow J described it in CTC Resources at 408:

"In my view, if regard is had to the context in which s 14ZZ appears, in its operation upon the jurisdiction of this Court, then the 'dissatisfaction' of the person initiating the proceeding is of the following nature. It is a dissatisfaction with the absence of a favourable decision upon the objection which would, if now rectified by the Court, place the party in the position for the administration of the taxation laws which should have applied if the ruling had been made by the Commissioner in the terms sought. A mere curiosity or interest in having a formal ruling by the Commissioner for some collateral commercial purpose of the applicant is not sufficient to amount to 'dissatisfaction' in the relevant sense."

1. Print National submits that there is no reason to depart from the ordinary meaning of "dissatisfied" in s 86(1) of the TA Act and the term describes Print National's attitude to the Decisions.

1. It was submitted that the first question should be answered in the affirmative with the consequence that the second question should also be answered in the affirmative.

1. It follows that the issue before the Court is the meaning of "dissatisfied" in s 86(1) of the TA Act.

The context

1. The TA Act does not raise taxes. That is the function of the other "taxation laws". That term is defined in s 4 of the TA Act to include the PT Act. The term also includes the TA Act.

1. The purpose of the TA Act is to enable the Chief Commissioner to carry out his statutory functions under the taxation laws. Thus s 61 of the TA Act provides that the Chief Commissioner has the general administration of the TA Act and the other taxation laws and may do all such things as are necessary or convenient to give effect to the TA Act and the other taxation laws.

1. Section 7 of the TA Act sets out in more detail its purpose with a précis of the Parts of the legislation. It is as follows:

"7 Purpose of Act and relationship with other taxation laws

(1) The purpose of this Act is to make general provision with respect to the administration and enforcement of the other taxation laws.

(2) The other taxation laws include provisions with respect to:

(a) the imposition of tax and its payment, and

(b) exceptions to and exemptions from liability to the tax, and

(c) entitlements to refunds.

(3) This Act includes general provisions with respect to:

(a) assessment and reassessment of tax liability, and

(b) obtaining refunds of tax, and

(c) imposition of interest and penalty tax, and

(d) approval of special tax return arrangements, and

(e) collection of tax, and

(f) record keeping obligations of taxpayers and general offences, and

(g) tax officers and their investigative powers and secrecy obligations, and

(h) objections and reviews, and

(i) miscellaneous matters such as service of documents, corporate criminal liability and evidence."

1. The powers in Div 2 of Pt 9 of the TA Act, which includes the power under s 72, are circumscribed to the extent that s 71 provides that they may be exercised only for the purposes of a taxation law.

1. Div 2 of Pt 9 of the TA Act contains other provisions with respect to access to public records in s 73; inspection of documents and records provided to the Chief Commissioner or an authorised officer in s 74; the power of entry on premises in s 75; functions exercisable on entry in s 76; and search warrants in s 77.

1. Under the PT Act, employers are required to register under s 86 and are required by s 9 to pay the tax, and by s 87 to lodge a return, within 7 days after the end of a month other than June and within 21 days after the end of the month of June. Section 81(1) provides that if a member of a group fails to pay an amount that the member is required to pay, every member of the group is liable jointly and severally to pay that amount to the Chief Commissioner.

The resolution

1. There are three prerequisites to the entitlement to lodge an objection with the Chief Commissioner under s 86(1)(b) of the TA Act: a taxpayer, a decision and dissatisfaction with the decision.

1. The Chief Commissioner accepts that Print National was a taxpayer and the Decisions were "decisions" for the purpose of s 86(1)(b) of the TA Act.

1. In my view, there is nothing in the above context that requires "dissatisfied" in s 86(1)(b) of the TA Act to be given other than its ordinary meaning of displeased. Print National was displeased with the Decisions because they threatened the finding of facts that would render it liable to payroll tax.

1. The legislative intent with respect to s 86(1) of the TA Act was to treat any other decision of the Chief Commissioner in the same way as an assessment. Both were amenable to the review procedures in Pt 10.

1. And because "decision" was defined so broadly, the intent was that wide-ranging decisions were open to review. The definition in s 6 of the ADT Act was as follows:

"6 What is a decision?

(1) General meaning

A decision includes any of the following:

(a) making, suspending, revoking or refusing to make an order or determination,

(b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission,

(c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument,

(d) imposing a condition or restriction,

(e) making a declaration, demand or requirement,

(f) retaining, or refusing to deliver up, an article,

(g) doing or refusing to do any other act or thing."

1. It is unlikely that the parliament intended that this broad category should be cut down by an implied intent to give "dissatisfied" a special and limited meaning that would undermine the breadth of decisions of the Chief Commissioner open to review.

1. The TA Act deals with administrative matters. It is unlikely that the parliament intended that the ADT could only review decisions under its provisions that had a substantive rather than an administrative effect. That would mean that decisions of the Chief Commissioner under many Parts of the TA Act were not open to review.

1. Div 2 of Pt 9 of the TA Act deals with investigations. Counsel for the Chief Commissioner accepted that the argument that a taxpayer could not be dissatisfied with a decision of the Chief Commissioner to issue a s 72 notice applied equally to a decision to inspect public records under s 73; a decision to use documents provided to him under s 74; a decision to enter premises under s 75; a decision to require the occupants of premises entered to provide information and assistance under s 76; and a decision to apply for a search warrant under s 77.

1. That would make virtually any decision under Div 2 of Pt 9 unassailable before the ADT.

1. Section 49 is the only provision in Pt 8 of the TA Act empowering the Chief Commissioner to make a decision. The same applies to a decision under that provision requiring a person to keep, or cause to be kept, such additional records as he specifies.

1. It is no answer to say that a taxpayer remains able to seek judicial review before the Supreme Court. James v Chief Commissioner of State Revenue (No 2) [2011] NSWSC 654; (2011) 81 NSWLR 267 is an example of such proceedings with respect to s 72 notices.

1. On the Chief Commissioner's argument the taxpayer is denied access to the ADT under s 96 of the TA Act and is denied access to the Supreme Court under s 97. And there are cost implications in seeking judicial review rather than a hearing before the ADT. Furthermore, judicial review is not a merits review.

1. The effect of the Chief Commissioner's submission is that any decisions he makes under Pt 8 and Pt 9 of the TA Act (and other Parts may be affected) cannot be the subject of an objection under s 86(1)(b) with the consequence that they cannot be the subject of review either before the ADT under s 96 or before the Supreme Court under s 97. Both those provisions are within Div 2 of Pt 10. Thus the review procedures in Pt 10 are not open.

1. Section 103A of the TA Act is in Div 2 of Pt 10. It contains a privative provision with exceptions. It is in the following terms:

"103A Review or appeal by other courts or tribunals

(1) No court or tribunal (or other body or person) has jurisdiction or power to consider any question concerning an assessment or other decision of the Chief Commissioner under a taxation law (including the determination of an objection under Division 1) except as provided by this Part.

(2) Subsection (1) does not apply to a decision of the Chief Commissioner under Part 4, 7, 8, 9 or 11 (not being an assessment).

Note. This subsection preserves the inherent jurisdiction of the Supreme Court to entertain an application for judicial review of any such decision of the Chief Commissioner."

1. If the Chief Commissioner's submission is correct, there is no need for the exception of Pt 8 and Pt 9 of the TA Act from the operation of the privative provision in s 103A(1) because the decisions under those Parts do not fall within Pt 10. The reference to Pt 8 and Pt 9 in s 103A(2) is otiose.

1. The Chief Commissioner submits that there is a lack of utility in an objection to a decision of the Chief Commissioner to issue a s 72 notice, if Print National's construction of s 86(1)(b) of the TA Act is correct. It was submitted that there is no provision effectively staying the effect of such a decision pending a review by the ADT.

1. Section 72(8) of the TA Act empowers the Chief Commissioner to extend the period for compliance with a s 72 notice. But if he chooses not to extend time the information must be provided or an offence is committed.

1. It is not likely that the defence in s 80 of the TA Act will be established. It provides that a person is not guilty of an offence under Div 2 of Pt 9 if the Court is satisfied that the defendant could not, by the exercise of reasonable diligence, have complied with the requirement to which the charge relates, or that the defendant complied with the requirement to the extent of his or her ability to do so.

1. Section 264 of the ITA Act and s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) (CTHTA Act) are similar to s 72 of the TA Act.

1. In Williment v Federal Commissioner of Taxation [2010] FCA 808; (2010) 190 FLR 234 the applicants sought urgent injunctive relief requiring the respondent to extend the time for compliance with notices issued under those provisions so that they could challenge the validity of the notices without fear of committing an offence by failing to comply with the original return date.

1. Perram J observed at 235 [3] that while it would be possible to stay the administrative decision that led to the issuance of the notices, it would not necessarily be possible to stay the notice that resulted from the exercise of that decision:

"Once a notice has been issued it takes effect in accordance with its terms. It requires the intercession of no person in order for it to take its effect and, on one view of things, once it is issued there is little that can be done about it."

1. His Honour dismissed the application on the basis of unexplained delay but opined that it was within the Court's power to make an interim order to compel the respondent to exercise power under s 33(3) of the Acts Interpretation Act 1901 (Cth) (AI Act) in such a way as to adjourn or prolong the time for compliance with the notices which had issued.

1. Section 33(3) of the AI Act was in the following terms:

"33 Exercise of powers and performance of functions or duties

...

(3) Where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument."

1. For Print National it was submitted that s 60(2) of the ADT Act is broader than a power to stay the operation of a decision and offered relief of an expansive nature. Section 60 of the ADT Act was in the following terms:

"60 Operation and implementation of decisions pending applications for review

(1) Subject to this section, an application to the Tribunal for a review of a reviewable decision does not affect the operation of the decision under review or prevent the taking of action to implement that decision.

(2) On the application of any party to proceedings for an application for a review of a reviewable decision, the Tribunal may make such orders staying or otherwise affecting the operation of the decision under review as it considers appropriate to secure the effectiveness of the determination of the application.

(3) The Tribunal may make an order under this section only if it considers that it is desirable to do so after taking into account:

(a) the interests of any persons who may be affected by the determination of the application, and

(b) any submission made by or on behalf of the administrator who made the decision to which the application relates, and

(c) the public interest.

(4) While an order is in force under this section (including an order that has previously been varied on one or more occasions under this subsection), the Tribunal may, on application by a party to the proceedings, vary or revoke the order by another order."

1. It is a question that might arise in the future whether the Tribunal would entertain an urgent application by a taxpayer under s 60(2) of the TA Act to relieve a recipient of a s 72 notice from the effect of non-compliance in order that the taxpayer might challenge the decision to issue the notice without fear that the recipient was committing an offence or that information would be provided to the Chief Commissioner that he might use.

1. The Chief Commissioner's argument of a lack of utility in challenging a s 72 notice if Print National's construction of s 86(1)(b) of the TA Act is correct, is limited to the ADT as a statutory body restricted to the powers conferred upon it by legislation. He accepts that different considerations would apply if Print National elected to seek urgent interim relief from the Supreme Court.

1. Even if the Chief Commissioner's argument that it is only with respect to a decision that has an immediate and direct effect upon the actual or potential tax liability of the taxpayer that can be the subject of dissatisfaction is correct, there is much to be said for the argument that the Decisions had that effect.

1. The determination of the taxable facts was all that was necessary to determine actual tax liability. Liability under the PT Act is self-executing. There is no other step that the Chief Commissioner need take to establish the liability. The issue of an assessment or an amended assessment merely reflects the liability imposed by the PT Act upon the taxable facts.

1. In McDonald'sAustralia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6; (2005) 58 ATR 260 at 268 [47]-[48], I rejected a submission of the Chief Commissioner that only a decision with duty consequences entitled a taxpayer to lodge an objection under s 86(1)(b) of the TA Act.

1. In Paspaley v Chief Commissioner of State Revenue [2007] NSWSC 1048; (2007) 67 ATR 319 at 323 [18] I saw no reason to change the view I had expressed in McDonald's.

1. On appeal, Chief Commissioner ofState Revenue v Paspaley [2008] NSWCA 184, Basten JA, with whom Giles and Campbell JJA agreed, agreed with my view at [36]. The appeal was allowed on other grounds.

1. In neither of those matters was the argument raised that the term "dissatisfied" in s 86(1)(b) of the TA Act had a special and limited meaning. Having heard argument in this case to that effect, I have no reason to depart from my view that decisions of the Chief Commissioner that do not involve duty consequences may yet be the subject of objection under s 86(1)(b).

1. The judgment I propose is as follows:

(1) Whether the Applicant, in respect of the decisions of the Chief Commissioner of State Revenue to issue 11 notices under s 72 of the Taxation Administration Act 1996 ("TAA") is entitled to object under s 86(1)(b) of the TAA to the decisions - yes.

(2) Whether pursuant to s 96(1) of the TAA, the Applicant may apply to the Administrative Decisions Tribunal for a review of the decisions - yes.

(3)   The Chief Commissioner pay Print National's costs of the referral.

(4)   Judgment not to be entered for seven days.

**********

Amendments

05 June 2013 - included paragraphs

Amended paragraphs: 44 - 66

Decision last updated: 05 June 2013