P.F.T.F Stock Pty Ltd v Deputy Commissioner of Taxation

[2010] FCA 557

FEDERAL COURT OF AUSTRALIA

P.F.T.F Stock Pty Ltd v Deputy Commissioner of Taxation [2010] FCA 557

Citation:		P.F.T.F Stock Pty Ltd v Deputy Commissioner of Taxation [2010] FCA 557
Parties:		P.F.T.F STOCK PTY LTD v DEPUTY COMMISSIONER OF TAXATION
File number:		NSD 228 of 2010
Judge:		EMMETT J
Date of judgment:		28 May 2010
Catchwords:	ADMINISTRATIVE LAW - decision made by Deputy Commissioner of Taxation to withhold funds - where Taxpayer seeks review - decisions - whether purported decisions are decisions under an enactment within the meaning of s 3 of the Administrative Decisions (Judicial Review) Act 1977 (Cth)
Date of hearing:	28 May 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	24
Solicitor for the Applicant:	Reid Legal Lawyers
Counsel for the Respondent:	M Allars
Solicitor for the Respondent:	Maddocks Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 228 of 2010

BETWEEN:	P.F.T.F STOCK PTY LTD Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	28 MAY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The applicant pay the respondent’s costs of the application.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 228 of 2010

BETWEEN:	P.F.T.F STOCK PTY LTD Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent
JUDGE:	EMMETT J
DATE:	28 MAY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The applicant, P.F.T.F Stock Pty Limited (the Taxpayer), seeks review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the Judicial Review Act), of decisions said to have been made by the respondent, the Deputy Commissioner of Taxation (the Commissioner), to withhold refunds said to be payable to the Taxpayer under the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act).

2. The Taxpayer seeks a declaration that purported decisions by the Commissioner to withhold refunds due and payable to the Taxpayer under the GST Act are unlawful together with an order that the Commissioner pay to the Taxpayer forthwith the refunds that are due and payable. The Commissioner has moved the Court for summary dismissal of the proceeding under s 31A of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act), on the basis that the Taxpayer has no reasonable prospect of obtaining the relief sought in the proceeding. 

3. Section 5(1) of the Judicial Review Act provides that a person who is aggrieved by a decision to which the Judicial Review Act applies may apply to the Court for an order of review in respect of that decision on one or more of the grounds set out in section 5(1). Under s 3, the phrase decision to which the Judicial Review Act applies means a decision of an administrative character made under an enactment. Enactment is defined in s 3 as including an Act of the Commonwealth Parliament. The Commissioner contends that the Court has no jurisdiction to grant the relief claimed because the purported decisions are not decisions under an enactment within the meaning of s 3.

4. The Taxpayer is unable to point to any enactment under which the purported decisions were made, other than s 3A of the Taxation Administration Act 1953 (Cth) (the Administration Act). Section 3A simply says that the Commissioner has the general administration of the Administration Act. In order to put the issue in context, it is necessary to say something more about the GST Act and the Administration Act.

5. Division 35 of Part 2-7 of Chapter 2 of the GST Act is concerned with the Commissioner’s obligation to pay a taxpayer’s entitlements to input tax credits that remain after off-setting amounts of GST. Section 35-5 provides that, if the net amount for a tax period is less than zero, the Commissioner must pay that amount to the Taxpayer. Under 17-5 of the GST Act, the net amount for a tax period applying to a taxpayer is worked out by subtracting input tax credits from the sum of all of the GST for which that taxpayer is liable on taxable supplies that are attributable to the relevant tax period.  Input tax credits is the sum of all of the input tax credits to which that taxpayer is entitled for creditable acquisitions and creditable importations that are attributable to the tax period. 

6. Chapter 3 of the Administration Act is concerned with the collection, recovery and administration of Other Taxes.  Part 3-10 is concerned with Indirect Taxes. Section 105-5 provides that the Commissioner may, at any time, make an assessment of the net amount of a taxpayer for a tax period. However, under s 105-15(1), a taxpayer’s liability to pay indirect tax, such as GST, does not depend upon, and is not in any way affected by, the making of an assessment under s 105-5. Further, under s 105-15(2), the Commissioner’s obligation to pay a net amount under s 35-5 of the GST Act and the time by which it must be paid, do not depend on, and are not in any way affected by, the making of an assessment under s 105-5. On the other hand, under s 105-100, the production of a notice of assessment is conclusive evidence that the amounts and particulars in the assessment or declarations are correct.

7. The Taxpayer lodged with the Commission a Business Activity Statement (the May BAS) in respect to the period 1 May 2009 to 31 May 2009.  The May BAS showed a refund due of $9,837.  On 29 June 2009 an officer of the Commissioner wrote to the Taxpayer saying that he was verifying the May BAS and asked for certain records and documents used to prepare the May BAS.  The Taxpayer responded by email of 1 July 2009.  By email of 7 July 2009, an officer of the Commissioner requested further records and documents from the Taxpayer that were used to prepare the May BAS.

8. On 10 August 2009, an exchange of emails within the Commissioner’s office recorded approval of a request for retention of refund stopper by an officer of the Commissioner in respect of the Taxpayer.  An internal document of the Commissioner recorded that, on 10 September 2009, a decision was made to conduct a desk audit in respect of some aspects of the affairs of the Taxpayer and related entities of the Taxpayer. 

9. The Taxpayer received emails on 1 October 2009, 15 October 2009 and 19 October 2009 from an officer of the Commissioner dealing with the GST in respect of the May BAS.  In the email of 15 October 2009, the Commissioner's officer said that he was finalising the audit of the May BAS and that the refund amount had been reduced, by reason of different treatment of a motor vehicle purchased by the Taxpayer.  The email of 19 October 2009 said that the amount of refund in respect of the May BAS had been reduced to $4,450, an overall adjustment of $5,983. 

10. The Commissioner wrote to the Taxpayer on 19 October 2009 enclosing an interim report relating to the Taxpayer in relation to the May BAS.  The letter invited the Taxpayer to comment and provide any additional information or evidence that supports the Taxpayer’s position.  The letter went on to say that, once the Commissioner had finalised the audit, a notice of assessment for any adjustments made would be sent to the Taxpayer.  The interim report referred to the Commissioner's treatment of the purchase of the motor vehicle and said, after describing the adjustments and the reasons for the adjustments, that the GST claimed by the Taxpayer would be amended. 

11. On 20 October 2009, the Commissioner issued to the Taxpayer a Notice of Assessment of GST Net Amount for the period 1 May 2009 to 31 May 2009.  The Notice of Assessment stated that the Taxpayer's GST net amount had changed from $9,837 credit to $3,854 credit.  That was confirmed in a letter of 5 November 2009 from the Commissioner to the Taxpayer.  That letter was entitled, Completion of audit for your information and action.  After stating that the May BAS had been revised by reducing the refund from $10,433 to $4,450, the letter said:

    We will pay the refund and interest if applicable, to your nominated account.  However, if you have other outstanding tax liabilities, we will offset the refund against those amounts.

    The letter went on to say that the Commissioner did not intend to audit the May BAS again, but that the Commissioner may need to look at the records again if new information suggested the need for further enquiries.  Attached to the letter was a document entitled Reasons for Our Decision, which repeated the contents of the interim report that had been attached to the letter of 19 October 2009. 

12. On 26 November 2009, the Taxpayer enquired about payment of outstanding moneys.  The Taxpayer received a response from an officer of the Commissioner on 4 December 2009.  The response said that the refund may have been held up as there was an audit underway with a company related to the Taxpayer.  The response said that usually, if there is a debt with one entity, it may prevent a credit amount on another from being released. 

13. On 12 February 2010, the Taxpayer’s solicitors wrote to the Commissioner complaining about delays in making refunds of GST that were due to the Taxpayer.  The Commissioner responded on 17 February 2010.  The Commissioner’s letter ended by saying that the Commissioner was considering a more comprehensive audit of the Taxpayer in relation to the refund that was the subject of the original review and that subsequent refunds lodged by the Taxpayer were currently held up.  The letter said that a decision would be made shortly and that the Taxpayer would be advised of the decision. 

14. This proceeding was commenced on 15 March 2010, claiming the relief to which I have already referred. By notice of 14 May 2010, the Commissioner objected to the competency of the proceeding on the ground that the application does not identify any decision that is justiciable under the Judicial Review Act. That is the basis upon which the Commissioner moves for summary dismissal under s 31A of the Federal Court of Australia Act.

15. A reviewable decision, for the purposes of the Judicial Review Act, is one for which provision is made by or under a statute. Generally, that will entail a decision that is final or operative and determinative, at least in the practical sense, of the issue falling for consideration. A conclusion reached as a step along the way in the course of reasoning, leading to an ultimate decision, does not ordinarily constitute a reviewable decision (see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 328).

16. Section 3A of the Administration Act authorises the general administration of the Administration Act by the Commissioner. In the course of that administration, the Commissioner makes numerous decisions of many kinds. For example, a decision to vote at a proposed composition of creditors by a Taxpayer is authorised by a provision such as s 3A (see Hutchins v Commissioner of Taxation (1996) 65 FCR 269 at 276) (Hutchins Case).

17. The recovery of tax and the making of refunds of tax where appropriate are important functions of the Commissioner. A provision such as s 3A impliedly authorises the Commissioner to do what is reasonably necessary to recover tax that is a debt due to the Commonwealth and payable to the Commissioner. That authorisation is very general and the conduct authorised by it will necessarily include decisions to recover tax, for example, by proving in the estates of bankrupt taxpayers, or proving in the winding up of insolvent companies. However, although s 3A may authorise the Commissioner to engage in such conduct, the section does not make provision for that conduct, such that the decision to engage in the conduct can be said to be a decision under s 3A. If the relationship between the text of the enactment in question and the decision that is said to have been made under that enactment is too remote and non-specific, then there will be no decision made under the enactment (see Hutchins Case at 273).

18. It may be that the effect of the provisions of the Administration Act, to which I have referred, is that there is presently a liability owing by the Commissioner to the Taxpayer that can be sued upon. It may be that, in any such suit, the notice of assessment of 20 October 2009 could be relied on by the Taxpayer as evidence of the Commissioner’s liability.

19. Nevertheless, the Commissioner has power, under s 3A, to decide not to make a payment to satisfy that liability, in circumstances where the Commissioner is concerned that there may be other moneys owing by the Taxpayer to the Commissioner, in respect of which there would be a right of set off. The decision to enforce that right of set off would be one authorised by s 3A. However, that would not be a decision under the enactment within the meaning of the Judicial Review Act. Rather, it is simply the exercise of a discretion in the administration of the Administration Act. A determination to delay making a payment does not affect any entitlement or right on the part of the Taxpayer. The Taxpayer is either entitled to sue and get judgment against the Commissioner, or it is not. The fact that the Commissioner has elected or determined not to make the refund at this stage, does not in any way affect or decide any question as between the Commissioner and the Taxpayer.

20. I do not consider that there is any reasonable prospect that the Taxpayer will establish, in this proceeding, that there has been a decision under the Administration Act that is capable of review under the Judicial Review Act. In any event, there may be some question as to whether or not, even if there were a decision under the Administration Act, the Court would grant the relief sought. The making of a declaration would be of no utility to the Taxpayer, unless the Court also made an order that the Commissioner make the refund. It may be that such an order falls within the terms of s 16(1)(d) of the Judicial Review Act, which authorises the making of an order directing the Commissioner to do an act that the Court considers necessary to do justice between the Commissioner and the Taxpayer.

21. However, it would be highly unlikely that the Court would order the Commissioner to make a payment, in circumstances where the Commissioner was considering the application of rights of set off in respect of other possible liabilities that the Taxpayer may have.  Further, even if relief in the nature of an order requiring the Commissioner to make a payment were available, there is every chance that the Court would decline to grant such relief in circumstances where it is open to the Taxpayer to sue the Commissioner in debt and obtain judgment for the amount owing. 

22. Be that as it may, as I have said, I am persuaded that there is no reasonable prospect that the Taxpayer can establish that there has been a decision made under an enactment, within the meaning of the Judicial Review Act. The Taxpayer did not suggest that it was entitled to the relief on any other basis. The Commissioner advanced contentions against the granting of relief under s 39B of the Judiciary Act 1903 (Cth) (the Judiciary Act). However, the Taxpayer did not contend that the Court should grant relief under the Judiciary Act. In all of the circumstances, I consider that the proceeding should be dismissed. The Taxpayer should pay the Commissioner’s costs of the proceeding.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:       8 June 2010