Industrial Equity Limited & Anor v The Deputy Commissioner of Taxation & Ors; Industrial Equity Limited v Crawley

Industrial Equity Limited and Bankers Trust Australia Limited sought special leave to appeal to the High Court of Australia against decisions of the Deputy Commissioner of Taxation. The dispute concerned the validity of notices issued by the Deputy Commissioner under sections 263 and 264 of the *Income Tax Assessment Act* (Cth) (the Act). These notices were issued in the context of the Commissioner's adoption of random audit procedures, which were introduced following the implementation of a "self-assessment" regime for taxpayers.

The primary legal issues before the High Court were whether the notices issued under sections 263 and 264 of the Act were valid, particularly in light of the random audit procedures and the factual background that the taxpayer had been informed that its selection for an audit was largely random. The applicants contended that the broad nature of the notices and the circumstances of their issuance raised arguable questions of law of public importance, affecting all taxpayers under the self-assessment system.

The applicants argued that the random nature of the audit selection, as communicated to the taxpayer, undermined the Commissioner's authority to issue such broad notices. They submitted that the notices were not sufficiently particularised and that the Commissioner's reasons for issuing them, as provided under the *Administrative Decisions (Judicial Review) Act* 1977 (Cth), did not adequately justify their scope. The court was therefore required to consider the proper interpretation and application of sections 263 and 264 of the Act in the context of modern tax administration and the principles of administrative law.