Qantas Airways Limited v Commissioner of Taxation

Qantas Airways Limited brought an appeal against the Commissioner of Taxation concerning the taxation of certain domestic air travel transactions. The central issue was whether Qantas was required to pay goods and services tax (GST) when passengers paid for their tickets but either cancelled their reservations or did not show up for their flights, and no refund was claimed. The Administrative Appeals Tribunal (AAT) had previously ruled that Qantas was liable to pay GST in these circumstances, finding that the supply occurred when the reservation was made and payment was received. Qantas argued that the supply was the actual flight service, which was not provided, and hence, no taxable supply occurred.

The court examined whether the supply of a reservation constituted a taxable event under the A New Tax System (Goods and Services Tax) Act 1999 (Cth). It found that the AAT erred in identifying the supply as the reservation rather than the flight service. The court held that the supply in question was the flight service itself, which was not provided when passengers did not board the flight or cancelled their bookings without claiming a refund. Therefore, no taxable supply occurred in such instances, and Qantas was not liable for GST on the unused reservations.

The court concluded that the AAT's decision was flawed in its interpretation of the supply and the timing of the taxable event. The appeal was allowed, and the AAT's decision was set aside. The objection lodged by Qantas was upheld in full, and the Commissioner was ordered to pay Qantas' costs of the appeal. This ruling clarifies that GST is only payable on the supply of the flight service when it is actually provided, not merely upon the reservation and payment.