Deputy Commissioner of Taxation v Hankin

The Deputy Commissioner of Taxation (the Commissioner) brought an action against Alec Hankin to recover unpaid sales tax and interest. Hankin had imported goods into Australia on three separate occasions and, at the time of entry for home consumption, had calculated and paid sales tax at a rate of 10 per cent on the declared sale value of the goods. However, the correct rate of sales tax applicable to these goods was 25 per cent. The Commissioner subsequently issued a notice of assessment for the outstanding balance of the tax, which Hankin disputed. The matter came before the High Court of Australia by way of a case stated.

The primary legal issues before the Court were whether the Commissioner was entitled to recover the unpaid balance of sales tax, whether the notice of assessment and accompanying letter constituted sufficient compliance with the relevant statutory provisions, and whether the onus was on Hankin to prove that his imported goods fell within any exemptions from the definition of "goods." The Court was also required to consider whether the sales tax legislation imposed an "incontestable" tax, which would raise constitutional questions.

A majority of the Court held that Section 9 of the Sales Tax Assessment Act (No. 5) required the payment of the sales tax actually payable according to law at the time of entry for home consumption, not merely the amount shown on the import entry form. The Court found that the Commissioner was authorised to exercise his powers under Section 10 of the Act to collect the unpaid balance of tax, and that the notice of assessment and accompanying letter together constituted sufficient compliance with the statutory requirements for notification. Furthermore, the Court determined that the definition of "goods" in Section 3 of the Sales Tax Assessment Act (No. 1) contained true exceptions, and the onus was on the defendant taxpayer to prove that their goods fell within such exceptions. The Court also concluded that the legislation did not impose an incontestable tax, and therefore Section 55 of the Constitution was not applicable.

The Court answered the question posed by the case stated in the affirmative, finding that the plaintiff (the Commissioner) was entitled in law to recover the sum of £554 15s. 8d. from the defendant (Hankin).