Saga Holidays Ltd v Commissioner of Taxation - [2005] FCA 1892

FEDERAL COURT OF AUSTRALIA
Saga Holidays Limited v Commissioner of Taxation [2005] FCA 1892
GOODS AND SERVICES TAX – packaged tour holiday of Australia involving overnight accommodation of overseas tourists at hotels located in Australia – negotiations for inclusion in tours finalised in United Kingdom by British tour operators for participation by British tourists – complex issues as to nature and location of supply – whether provision of accommodation component of tour taxable supply of real property connected with Australia – whether merely supply of right effected by tour operators in United Kingdom and therefore not connected with Australia for GST purposes – whether components of accommodation supply referrable to supply of real property – whether components of accommodation supply being real property merely incidental to supply of remainder of other elements of tour
ANew Tax System (Goods and Services Tax) Act 1999 (Cth) ss 9-5(c), 9-10, 9-25, 96-5, 96-10, 195-1
Tax Laws Amendment (2005 Measures No. 1) Act 2005 (Cth)
Value Added Tax Act 1994 (UK)
International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company (1958) 100 CLR 644 cited
Scott v Davis (2001) 204 CLR 333 cited
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 cited
Commissioner of Taxation v The Distribution Group Ltd (2003) 130 FCR 517 cited
Chaudhri v Commissioner of Taxation (2001) 109 FCR 416 cited
ACP Publishing Pty Ltd v Commissioner of Taxation (2005) 142 FCR 533 cited
Customs and Excise Commissioners v Pippa-Dee Parties Ltd [1981] STC 495 discussed
Customs and Excise Commissioners v Diners Club Ltd [1989] 2 All ER 385 discussed
American Express International Inc v Commissioner of State Revenue (2003) 52 ATR 285 cited
Commissioner of Customs and Excise v Plantiflor Ltd [2002] 1 WLR 2287 discussed
Commissioners of Customs and Excise v Sinclair Collis [2001] STC 989 discussed
Swedish State v Stockholm Lindopark AB [2001] STC 103 cited
Radaich v Smith (1959) 101 CLR 209 referred to
Livingston v Commissioner of Stamp Duties (Qld) (1960) 107 CLR 411 cited
Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 cited
HP Mercantile Pty Limited v Commissioner of Taxation (2005) 143 FCR 553 referred to
Sterling Guardian Pty Limited v Federal Commissioner of Taxation (2005) ATC 4796 referred to
Allina Pty Ltd v Federal Commissioner of Taxation (1991) 99 ALR 295 cited
Interlego AG v Croner Trading Pty Limited (1992) 39 FCR 348 cited
Faaborg-Gelting Linien A/S v Finanzamt Flensburg [1996] ECR I‑2395 discussed
Beynon and Partners v Commissioner of Customs and Excise [2005] 1 WLR 86 discussed
Burton v Honan (1952) 86 CLR 169 referred to
Customs and Excise Communities v Madgett and Baldwin (t/a Howden Court Hotel) [1998] STC 1189 discussed
Card Protection Plan Ltd v Customs and Excise Commissioners (No 2) [2002] 1 AC 202 cited
D C Pearce and R S Geddes in Statutory Interpretation in Australia, 5^th ed
SAGA HOLIDAYS LIMITED v COMMISSIONER OF TAXATION
NSD 1915 OF 2004
CONTI J
22 DECEMBER 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1915 OF 2004

BETWEEN:

SAGA HOLIDAYS LIMITED
APPLICANT

AND:

COMMISSIONER OF TAXATION
RESPONDENT

JUDGE:

CONTI J

DATE OF ORDER:

22 DECEMBER 2005

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The parties are to provide to the Court and each other draft orders (and any appropriate declaratory relief) giving effect to these reasons for judgment within 28 days.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1915 OF 2004

BETWEEN:

SAGA HOLIDAYS LIMITED
APPLICANT

AND:

COMMISSIONER OF TAXATION
RESPONDENT

JUDGE:

CONTI J

DATE:

22 DECEMBER 2005

PLACE:

SYDNEY

REASONS FOR JUDGMENT
Background

Saga Holidays Limited (‘SAGA’) is a company incorporated in the United Kingdom. SAGA’s business activities are at least primarily undertaken in and from the United Kingdom. It has no premises or employees in Australia. Those activities comprise sales to persons resident outside of Australia, being predominantly residents of the United Kingdom, of packaged tours conducted in various parts of the world, including Australia.
It appears that SAGA does not have a place of business in Australia and is a non-resident as defined by s 195‑1 of the ANew Tax System (Goods and Services Tax) Act 1999 (Cth) (‘GST Act’). Nevertheless SAGA is eligible for registration, and is registered, under Part 2‑5 of the GST Act, presumably on the footing that it carries on an enterprise within the scope of s 9‑20 of the GST Act, which includes ‘an activity or series of activities… in the form of a business; or… of an adventure or concern in the nature of trade’ (see also s 23‑10 as to qualification for registration). The central issue arising for determination may be broadly stated as whether SAGA made a taxable supply, within s 9‑5 of Subdivision 9‑A of Division 9 of Part 2‑2 of Chapter 2 of the GST Act, when it sold to its customers, being non-residents of Australia, the Australian accommodation component of its holiday or touring packages. There is no issue directly arising in relation to any of the other components of the touring packages. Part 2‑2 of the GST Act relates to Supplies and acquisitions, and the s 9‑1 note broadly explains that ‘GST is payable on taxable supplies’. So much reflects the preceding s 7‑1(1) which provides that ‘GST is payable on taxable supplies and taxable importations’. Division 9 is headed ‘Taxable supplies’, and according to the note to s 9‑1 thereof, it not only ‘defines taxable supplies’, but ‘states who is liable for the GST’, and further ‘describes how to work out the GST on supplies’.
One of the holiday packages merchandised by SAGA is a 21-night packaged tour of Australia called ‘A Taste of Australia’, which was advertised in the United Kingdom and was conducted at least during the 2004 calendar year. It is in relation to tours conducted during that calendar year that the central issue here arising falls for determination, apparently by way of a test case. In its written submissions, SAGA put forward the names of four persons who had participated in various ‘A Taste of Australia’ tours during 2004. SAGA suggested that the selection of those four persons had been agreed between the parties. The Commissioner denied having so agreed and withheld from conceding that the class of people were representative of the wider group of tourists with whose ‘A Taste of Australia’ tours we are now concerned. SAGA did not point to any relevant distinguishing features between each of those persons and their respective tours, aside from those apparent in their confirmation and tour dates. Since nothing turned on those distinctions, I have not considered this matter any further. The questions posed by this test case are not susceptible to ready or convenient summary.
The terms and conditions of SAGA’s customer arrangements applicable to that particular tour are contained in a number of documents, those material for present purposes being broadly as follows:
(i)that headed ‘Hotel Confirmation’ comprising a basic printed format of explanations and provisions for insertion of details of tour arrangements and their cost; it states ‘Your holiday is confirmed subject to SAGA’s booking conditions’;
(ii) a detailed itinerary for what is called ‘A Taste of Australia’ holiday; and
(iii)a further document headed ‘Overseas Booking Conditions and Helpful Information 2004/2005’, which stated inter alia that ‘Your holiday is confirmed when we send you a written confirmation invoice and it is then that a contract is created’, and further that ‘[a]ll bookings are confirmed subject to these booking conditions’, and which further stated as follows:
‘SAGA Holidays Limited is responsible for the proper performance of the contract. SAGA will not, however, be liable for any failure or improper performance where reasonable care and skill has been exercised or where such failure or improper performance is:
…
(b)attributable to a third party unconnected with the provision of your holiday and is unforeseeable or unavoidable;
(c)due to an event which SAGA or our suppliers, even with all due care, could not foresee or forestall.’
It was SAGA’s evidence that the above documentation was in precisely the same terms for each tourist who took ‘A Taste of Australia’ tour in calendar year 2004.
Introduction to the relevant statutory provisions and to the issues arising for consideration
The resolution of the central issue arising for determination turns in the first place on whether the supply of the Australian accommodation component of SAGA’s ‘A Taste of Australia’ tour packages in evidence constituted a ‘supply… connected with Australia’ within s 9-5(c) of the GST Act, which section reads as follows:
‘You make a taxable supply if:
(a) you make the supply for consideration; and
(b)the supply is made in the course or furtherance of an enterprise that you carry on; and
(c)the supply is connected with Australia; and
(d)you are registered or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST‑free or input taxed.’
Largely because of the number of provisions of the GST Act that were brought into focus by each party, in the course of comprehensive addresses both in chief, and in reply by each party, and subsequent joinder by SAGA, it is not a simple task to present the issues in a definitive and sequential way. It was however, common ground that each subsection in s 9‑5 was here satisfied excepting the s 9‑5(c) requirement that the supply be one that is connected with Australia.
Section 9‑25 defines the circumstances where there are ‘Supplies connected with Australia’:
‘9-25 Supplies connected with Australia
Supplies of goods wholly within Australia
(1)A supply of goods is connected with Australia if the goods are delivered, or made available, in Australia to the recipient of the supply.
Supplies of goods from Australia
(2)A supply of goods that involves the goods being removed from Australia is connected with Australia.
Supplies of goods to Australia
(3)A supply of goods that involves the goods being brought to Australia is connected with Australia if the supplier either:
(a)imports the goods into Australia; or
(b)installs or assembles the goods in Australia.
Supplies of real property
(4)A supply of real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia.
Supplies of anything else
(5)A supply of anything other than goods or real property is connected with Australia if either:
(a)the thing is done in Australia; or
(b)the supplier makes the supply through an enterprise that the supplier carries on in Australia.
…’
The statutory notion of supply is defined in s 9‑10, which section is later extracted.
SAGA’s principal contention was that the provision by SAGA to overseas tourists of packaged tours of Australia, involving overnight hotel accommodation, during the relevant period did not involve [a] form of supply that was connected with Australia, pursuant to ss 9‑5(c) and 9‑10(1) of the GST Act, in any of the ways stipulated by s 9‑25 of the GST Act, contrary to the Commissioner’s case, and in particular did not involve ‘[a] supply of real property… connected with Australia within s 9‑25(4), irrespective of the expansive definition of real property appearing in s 195(1) of the GST Act’. Thus SAGA contended that it had not supplied, provided, granted or created any goods, services or real property (as the case may be) within pars (a), (b) or (d), nor had it supplied, etc any right within par (e), of subsection (2) of s 9-10 of the GST Act, and further that those contractual rights to services it had supplied, etc to its customer tourists, were not created in Australia. Upon that footing, SAGA emphasised that ‘… the only supply it made was not connected with Australia because the thing was not done, that is, the contractual right was not created, in Australia, within s 9-25(5) of the GST Act’. The essence of SAGA’s case was that what SAGA had provided to its customers by way of the ‘A Taste of Australia’ tour was a mere contractual right entitling the holder to, inter alia, supply of hotel accommodation upon arrival at each destination.
Alternatively, SAGA contended that if the hotel accommodation it had arranged to have provided in Australia to overseas tourists did involve a form of supply by way of a grant or assignment… of…real property within s 9‑10(1) and s 9‑10(2)(d), being real property which is connected with Australia within s 9‑5(c) and s 9‑25(4) of the GST Act, that supply of realty is to be treated as a separate supply in accordance with s 96‑5 of Division 96 of the GST Act, and ‘then balanced against the notionally separate remaining supply which is not connected with Australia’, the same inclusively comprising ‘return flights from the United Kingdom to Australia, domestic flights within Australia, travel insurance, train travel on the Indian Pacific, coach travel, meals, sightseeing tours and other excursions, and the services of a professional tour manager’. Such other supply was said to comprise a tour package whereof ‘the accommodation component of the total tour package ought reasonably be regarded as being incidental to the other supply’, and not exceeding ‘in relation to any single supply of a total tour package by SAGA to an overseas tourist’ the sum of $50,000. In those circumstances, s 96‑5(4) was said to apply to the accommodation component of the ‘A Taste of Australia’ tour thereby rendering it a part of the other kind of supply (being the other aspects of the tour outlined above) and hence not connected with Australia under s 9‑5(c).
SAGA submitted further in the alternative that if by reason of the agreement of SAGA to provide the accommodation component of the ‘A Taste of Australia’ tour there is a supply connected with Australia, then that taxable supply does not extend to the agreement of SAGA to provide so much of the accommodation component as is ‘fairly attributable’ to the additional services and facilities provided by the hotels. The services and facilities so identified comprised the meals, porterage, cleaning and household services and the use of room cleaning services, gym facilities and swimming pools. SAGA contended that each of the foregoing were in principle outside the said definition of ‘real property’, notwithstanding that the same comprised a physical part, or were within, areas which formed part, of an Australian hotel infrastructure. SAGA proposed to invoke s 96‑10 of the GST Act as the basis for this submission.
SAGA did not press for the remaining declaratory relief sought by par 4 of the Details of Claim the subject of its Application filed in the proceedings, the same being referrable to GST-free item 4(b) of s 38-190 of the GST Act, and concerning ‘the supply… to an entity that is not an Australian resident and is outside Australia when the thing supplied is done’.
A primary aspect of the Commissioner’s case had its focus upon par (c) of the s 195‑1 definition of real property, which stipulates for the inclusion within that definition of ‘a license to occupy land or any other contractual right exercisable over or in relation to land’. That component of the definition was said to pick up the right of a hotel guest to occupy a hotel room in the course of a SAGA packaged tour, by reason of that right being related to supply of real property connected with Australia within the s 9‑25(4) notion.
As I have foreshadowed, there is no issue that the supply provided by SAGA satisfies the elements the subject of pars (a), (b) and (d) of s 9‑5, the critical issue arising under s 9-5 being whether the supply is connected with Australia within par (c) thereof. The Commissioner’s contention was that when SAGA caused to be supplied the accommodation component of its holiday packages in Australia, it thereby supplied a license to occupy land or any other contractual right over or in relation to land within the par (c) of the definition of real property appearing in s 195‑1 of the GST Act. That contention involved the adoption of a perspective to be taken as at the time the tour arrangements were finalised between SAGA and the customer, and therefore prior to departure of those customers on the tour from overseas to Australia.
SAGA’s Australian tours and its contractual arrangements in more detail
An overseas tourist seeking to book ‘A Taste of Australia’ tour package with SAGA entered into a contract with SAGA in the normal course outside of Australia. Pursuant to that contract, the tourist agreed to pay one inclusive price to SAGA, and SAGA agreed to provide to the overseas tourist a touring package which included:
(i)        travel insurance and cancellation cover;
(ii)       travel within the United Kingdom to Heathrow Airport;
(iii)scheduled economy flights from Heathrow Airport to Sydney, and from Melbourne to Heathrow Airport;
(iv)specified transportation within Australia, being scheduled economy flights, train travel on the Indian Pacific from Perth to Adelaide, coach travel comprising transfers between accommodation and airports, tours in each of Sydney, Alice Springs, Adelaide and Melbourne, travel from Alice Springs to Uluru, travel from Adelaide to Melbourne via Mount Gambier, a harbour cruise in Sydney, and a full day catamaran journey to Green Island including a cruise in a glass-bottomed boat;
(v)       all airport taxes, fees and charges;
(vi)      the services of a representative to help check-in at Heathrow Airport;
(vii)accommodation on certain specified days at certain specified times in hotels (or sometimes a motel) at various capital cities and towns in Australia;
(viii)     porterage of luggage at each accommodation;
(ix)      meals comprising breakfasts (19), lunches (4) and dinners (10);
(x)obtaining a visa if required; and
(xi)      services of a tour guide in Australia.
The services and facilities provided by hotel operators to tourists on the ‘A Taste of Australia’ tour were described by SAGA as ‘extending beyond the provision of accommodation in hotel (or motel) rooms’ including as they did porterage, meals, health and fitness facilities and other cleaning and household services.
The resolution of the issue as to whether a taxable supply within ss 9-5 and 9-10 occurred in the present kind of travel context was said by the Commissioner to be of substantial significance to the Australian revenue, not only because SAGA and other overseas tour operators would not be liable to pay GST in respect of what the Commissioner contended to constitute taxable supply in the present circumstances. The further reason was that SAGA is registered under Part 2-5 of the GST Act, and has apparently claimed substantial input tax credits under Part 2-2 of the GST Act in relation to its acquisition of the accommodation component of the holidays from Australian hotel suppliers, and therefore would have acquired a substantial source of GST input tax credits for so-called creditable acquisitions pursuant to Division 11 of the GST Act. Those observations do not of course bear strictly upon the complex issues of statutory interpretation I am required to resolve.
The terms and conditions made applicable to SAGA’s tours contained in the document entitled ‘Booking Conditions And Helpful Information 2004/2005’, to which SAGA drew attention, were as follows:
(i) the tour contract is governed by English law;
(ii) any dispute is to be resolved in an English court;
(iii)the whole of the tour price is to be paid to SAGA more than 56 days before the tour departs from the United Kingdom;
(iv)the right is reserved to SAGA to cancel the tour, because of insufficient bookings, no later than 56 days prior to departure, in which case a full refund becomes available;
(v)the further right is reserved by SAGA to alter the tour itinerary, including the accommodation, subject to the proviso that if the alteration occurs within 56 days of departure and involves a lower quality of accommodation, and the stay is for three nights or more, then the tourist at his or her election is entitled to cancel the tour and obtain a full refund plus a discount voucher, or receive a specified discount; moreover if any changes are made to the tour itinerary more than 56 days before the tour departure date, SAGA agrees to notify the affected customers by letter; if any such changes are made less than 56 days prior to departure, a SAGA representative is to communicate with the affected customers by telephone to notify the changes.
To that aspect I have already added reference to what appears under the heading ‘Responsibility for your holiday’, being ‘[SAGA] is responsible for the proper performance of the contract’.

For the purpose of implementation of its Australian tour arrangements with individual customer tourists, SAGA entered into an agreement in writing with an Australian company, AOT Group Pty Ltd (‘AOT’), whose business comprises the provision of inbound and destination management services throughout Australia and New Zealand for overseas based tour operators and independent travellers and travelling groups. That agreement is headed ‘Longhaul Agent Agreement’, and consists of 14 pages of printed terms and conditions, with attachments for inclusion of individual details to accommodate each traveller’s circumstances. No reference to or mention of AOT appears in the documentation provided by SAGA to the travellers taking its ‘A Taste of Australia’ tour; on the contrary, there are references in that documentation to SAGA representatives being present at the hotels or otherwise assisting in the conduct of the tour. AOT negotiates directly with the Australian service providers in relation to the provision of services, including the prices charged for services to be provided in Australia, and SAGA does not enter into any contractual arrangements with the Australian service providers, other than in relation to certain domestic air flights. AOT’s chief executive officer, Mr Burnes (a resident of Melbourne), explained in his affidavit evidence that AOT offers inbound and destination management services throughout Australia for overseas based tour operators, as well as for independent travellers and group travellers. All that presently involves some 90,000 passengers per annum, none of whom, so it may be inferred, appear to have been residents of Australia. The Longhaul Agent Agreement relates to all Australian aspects of the ‘A Taste of Australia’ tour, apparently excluding domestic flights, and AOT provides a professional tour manager to operate and conduct each such tour. The Australian service providers (such as hotels) issue invoices to AOT alone, which AOT pays as they fall due.
Notwithstanding the documentary description Longhaul Agent Agreement, and the reference therein to AOT as ‘Agent’, SAGA asserted that there has not existed at any material time any relationship of principal and agent between itself and AOT, and referred in that regard to dicta appearing in the unanimous reasons for judgment of the High Court in International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company (1958) 100 CLR 644 at 653, which concerned the misuse of the term ‘agent’ sometimes to be seen in the context of contracts granting distribution rights in respect of certain geographic areas, in which context their Honours observed that it is rare that the ‘…manufacturer or the head supplier contracts with the ultimate buyer or “consumer” as vendor’. More recently in Scott v Davis (2001) 204 CLR 333 at 408, Gummow J (as one of the High Court majority) referred to the ‘… considerable terminological confusion in this area’, and adopted the description of agency appearing in International Harvester at 652, that being ‘… to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties’.
Hence SAGA’s submission that the reference to ‘Agent’ in clause 2(a) of the ‘Terms and Conditions (General)’ of the Longhaul Agent Agreement reflected the language of commerce and not of law. The full text of the provisions of those terms and conditions, so far as are presently material, is as follows::
‘1)      Definitions
… “Agency” means the appointment of the Agent by SAGA in accordance with and subject to the terms of this Agreement … “Services” means the services to be provided by the Agent previously agreed with SAGA in advance which shall include, but not be limited to the provision of flights, transfers, excursions, coaching services, customer assistance and the provision and/or monitoring of hotel accommodation;
…
2)        Appointment
a)SAGA appoints the Agent as its non-exclusive agent in the Territory … to represent and assist SAGA in SAGA’s operations in the Territory as requested from time to time, subject to the terms and conditions set out in this Agreement.
b)The Agent may supply part of the services on its own behalf as supplier and shall be entitled to remuneration for those Services as set out in this Agreement.
…
4)Capacity as Agent
a)Except as herein contained, the Agent shall only have authority to act as SAGA’s agent in order to collect payments for excursions booked by SAGA customers, which shall be carried out in accordance with the procedures outlined in the Reference Manual and any other instructions given to the Agent by SAGA.
b)The Agent shall not incur any liability on behalf of SAGA nor in any way pledge or purport to pledge SAGA’s credit or accept any order or make any contract binding upon SAGA unless it is permitted under this Agreement or the Reference Manual or it has received the express written consent of SAGA.
c)The Agent shall not at any time act nor hold itself out as being directly connected (sic) or owned by SAGA.
d)The Agent shall not make any statement, or admission, either written or oral, in relation to SAGA or to any aspect of the holidays SAGA operates or Services performed by the Agent, which could result in a liability being incurred by SAGA.
e)Except as expressly stated in this Agreement the Agent is not entitled to any remuneration for Services supplied to SAGA or SAGA Customers and shall account to SAGA on demand for any such other remuneration the Agent may receive.
5)Obligations of the Agent
The Agent:
a)shall provide the Services which SAGA may require and which are notified to and agreed with the Agent in advance;
…
6)        Monitoring of hotel accommodation
a)the Agent shall monitor the hotels used by SAGA within the Territory (including those operated or owned by the Agent) and in particular shall ensure:-
(i)that the proprietors of the hotels within the Territory contracted by SAGA or by the Agent maintain the availability of the rooms they have previously allocated to SAGA or to the Agent in accordance with their contractual obligations;
(ii)that all accommodation allocated to SAGA by any hotel within the Territory will comprise rooms within the main building of the hotel…’
Those services were required to be provided to the ‘requisite level’ as thereafter described in clause 10 of the Terms and Conditions. SAGA submitted that the principal subject matter of the Longhaul Agent Agreement are the services which AOT contracts to provide to SAGA, those services not being in the nature of services provided by AOT to the tourists as agent for SAGA, but rather as principal. The implications of that submission were not developed satisfactorily or at all by reference to the provisions of the GST Act here material, and it does not seem to me that the submission takes SAGA’s case any distance of significance in relation to whether the arrangements between SAGA and the persons for whom it sells participation in ‘A Taste of Australia’ tours constitute any form of supply within s 9-10 of the GST Act.
As to the process of formation of the arrangements entered into between AOT and the Australian hotel operators, Mr Burnes further explained in his affidavit evidence, as did the Finance Director of SAGA, Mr Parker, that shortly before the commencement of each Australian tour, SAGA notified AOT of the number of persons who would be undertaking the Australian tour, and of their relevant details as tourists. AOT then finalised the bookings by notifying the various hotel operators involved of the number and identity of the persons to undertake the tour. On arrival of the touring party at the hotel, the hotel operator customarily provided the tour manager with a list specifying the rooms which had been allocated by the hotel to the persons whereof it had been earlier advised would be making the tour, and further provided the keys to the rooms to be occupied by the respective overseas tourists.
Mr Burnes’ affidavit evidence continued with his account of the implementation of the Longhaul Agent Agreement, as follows:
‘10.All invoices for the services referred to in paragraph 7 [referring thereby to all domestic aspects of the tour exclusive of domestic air travel and inclusive of coach travel, accommodation, meals and excursions] are issued by the service providers to AOT and are paid by AOT as they fall due …’
Thus all such invoices are apparently addressed to AOT. Mr Burnes’ affidavit further continued at [11]:
‘At the end of each month, AOT issues an invoice to [SAGA] in relation to the total charge for each of the tours that commenced during that month, even if the tour is not completed until the following month.’
AOT’s charges to SAGA for its services are based on the number of tourists on the particular tour, those prices including AOT’s so‑called ‘margin’. Mr Parker on behalf of SAGA confirmed the practice which I have outlined. There was no evidence of the terms of any contracts made between the hotels and AOT (or anyone else) in relation to the provision of the relevant accommodation.
The respective submissions in broad introductory outline of the parties
The principal issue arising for determination, as broadly framed by SAGA, is whether the supply by SAGA to the overseas tourists to Australia of the hotel accommodation component of SAGA’s ‘A Taste of Australia’ tour package is subject to GST in SAGA’s hands. That determination, so SAGA submitted, ‘… turns on whether the supply by SAGA to the tourists with whom it contracts is to any extent a taxable supply, pursuant to s 9-5 and s 96-5 of the GST Act’, though I observe that s 96-5 adopts the expression actual supply rather than taxable supply. Such determination was said by SAGA to involve consideration of the issue whether the supply by SAGA of the hotel accommodation component of the tour involved a supply of real property connected with Australia within s 9-25(4) of the GST Act, being real property within the defined meaning of that expression appearing in s 195-1 of the GST Act, and in particular (as I have earlier foreshadowed) par (c) thereof. SAGA further said that ‘[i]f, as SAGA contends, there is no supply of real property connected with Australia, then SAGA should succeed’, but if, ‘… as the [Commissioner] contends there is a supply of real property, then further questions characterising the accommodation component arise’.
In addressing the nature of the supply made by SAGA to its tourists to Australia, SAGA commenced its analysis by threshold reference to s 7(1) of the GST Act, which states that ‘GST is payable on taxable supplies and taxable importations’. SAGA then addressed those elements of s 9-5 of the GST Act (the text whereof I have already extracted), in particular s 9‑5(c) thereof, comprising supply and connected with Australia, and posited the first controversial step involved as being ‘to characterise what it is that is supplied by SAGA to the overseas tourists’, and the second step involved as being ‘to determine whether that supply is “connected with Australia”’. ‘Supply’ is defined by s 9‑10 of the GST Act, and was reproduced by SAGA, so far as is or may be here material, as follows:
‘(1)     A supply is any form of supply whatsoever.
(2)      Without limiting subsection (1), supply includes any of these:
…
(b)a supply of services;
…
(d)       a grant, assignment or surrender of real property;
(e)a creation, grant, transfer, assignment or surrender of any right;
…
(g)an entry into, or release from, an obligation:
(i)        to do anything; or
…
(h)any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).’
Hence the requirement for consideration of the issue perhaps more definitively arising as to whether the supply by SAGA of the hotel accommodation component of its ‘A Taste of Australia’ tour is or involves a supply by way of a grant [or] assignment… of real property within s 9-10(d) of the GST Act, being [a] supply of real property which is connected with Australia within s 9-25(4).
SAGA outlined that ‘[t]he only basis upon which the [Commissioner] contends that there is a supply that is connected with Australia is that the supply by SAGA to the overseas tourist of the accommodation component is a supply of real property (perhaps with some incidental goods or other things)’, or to repeat the s 9-10(d) expression, a grant… of real property. The Commissioner’s position, which I will outline shortly, was that irrespective of whether or not the particular supply by SAGA fell within the terms of s 9‑10(2)(d), so much was irrelevant to the question of whether the supply was a supply of real property under s 195‑1 and hence a supply under s 9‑10(1). The s 195-1 non-exclusive definition of real property, which I have foreshadowed earlier in particular as to par (c) thereof, upon which the Commissioner most emphatically relies, is of wider import than traditionally appears in other legislative contexts, the same reading as follows:
‘real property includes:
a)any interest in or right over land; or
b)a personal right to call for or be granted any interest in or right over land; or
c)a license to occupy land or any other contractual right exercisable over or in relation to land.’
That defined meaning thus extends beyond proprietary interests in realty to rights of a contractual nature in relation to realty, such as rights to occupation of realty in the nature of licences.
SAGA contended that there is no supply of real property… connected with Australia, within s 9-25(4) of the GST Act, that occurs in relation to its overseas tourists to Australia, but merely a supply by way of creation of any contractual right within par (e) of s 9-10(2) ‘and probably also s 9‑10(2)(g)(i)’ being the entry into… an obligation to do anything. Or as put another way by SAGA, the accommodation component of ‘A Taste of Australia’ tour did not constitute real property in any relevant sense. Upon that footing, so SAGA’s case proceeded, it should succeed, since any such contractual right created would not have been done in Australia within s 9-25(5)(a) of the GST Act, and moreover would not have been connected with Australia within s 9-25(4). That statutory notion of connected with Australia first appears in s 9-5(c) and is subsequently repeated in the first five subsections of s 9-25 (inclusive of course of subsection (4)). If contrary to its primary case, there is involved nevertheless a supply of real property by reason of its implementation of ‘A Taste of Australia’ tour, and in that regard I refer in particular to par (d) of subsection (2) of s 9-10 earlier extracted, which uses the description real property, an issue relating to the characterisation of the accommodation component of the hotels in Australia the subject of its travel package was asserted by SAGA to further arise in relation to the operation adversely to the Commissioner of the apportionment provisions of Division 96 of the GST Act. SAGA’s further submission in the alternative sought to limit any GST that might be found payable in respect of the accommodation component of the tours to the provision of a licence to occupy the hotel room, exclusive of porterage, meals, concierge, etc.
The Commissioner’s case in outline was that the only relevant transaction or supply involved in the circumstances the subject of the dispute was the supply by SAGA to the customers of its ‘A Taste of Australia’ packaged holiday, that being a mixed supply containing separately identifiable components, including as here the subject of critical attention, the hotel accommodation component, being the supply (to adopt the GST statutory expression) of accommodation at certain specified hotels on certain specified days. That supply was described by the Commissioner as the right or licence to occupy hotel rooms in Australia and to use such hotel facilities.
The Commissioner’s starting point for review of what are previously unexplored construction issues involving the GST Act was the often cited dicta of the leading judgment of the High Court in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 (per Brennan CJ, Dawson, Toohey and Gummow JJ), as follows:
‘… inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.’
That dicta has been applied in a sales tax context where ambiguity or obscurity was perceived in relation to the description of a sales tax item (Commissioner of Taxation v The Distribution Group Ltd (2003) 130 FCR 517 at 523). The same approach was adopted by a Full Federal Court judgment in a fiscal context in Chaudhri v Commissioner of Taxation (2001) 109 FCR 416 at 418 (per Hill, Drummond and Goldberg JJ), where it was said as follows:
‘[t]he guiding principle of statutory interpretation may be summed up as being the ascertaining of the meaning of words which Parliament has used by reference to the context in which they appear, where “context” has the wide meaning which extends to the legislative history, the Parliamentary intention and the mischief to which a particular provision has been directed, as well as the narrower meaning which would dictate reading the words to be construed by reference to the immediately surrounding or otherwise related provisions.’
The Commissioner emphasised that GST is a value-added tax, as is of course the corresponding tax the subject of the earlier United Kingdom Value Added Tax Act 1994 (UK) and its legislative predecessors, being designed to levy a net amount of tax on the proceeds secured by the enterprise in respect of value-added by the enterprise to what is supplied by it. Understandably therefore the parties addressed in the course of submissions a number of United Kingdom judicial authorities on that legislation. In ACP Publishing Pty Ltd v Commissioner of Taxation (2005) 142 FCR 533 at 535, Hill J described the characteristics of GST as a value-added tax as follows:
‘… (output tax) being levied, in effect, upon substantially all supplies… being generally, although not exclusively, supplies of goods or services made by a registered person, or person required to be registered, for consideration (and having the necessary connection with Australia) and the deduction… (popularly known as an “input tax credit”) being given to a registered person, or person required to be registered, who makes a creditable acquisition, as that expression is defined.’
GST is of course payable by an enterprise carrying on business at the rate of 1/11^th of the taxable supplies made by it, less credits for 1/11^th of the taxable supplies made to it. Effectively therefore, an enterprise pays GST on 1/11^th (10% of the pre-GST amount) of its gross profit, calculated without deduction of the value-added by the enterprise’s own labour inputs and its financing and other input taxed costs.
A contextual consideration involved in construing the GST Act is that GST is traditionally a tax on ‘businessmen’, to be assessed and paid by businessmen, and to be administered and interpreted in accordance with the understanding of businessmen. This is in contrast to other forms of taxation, such as income tax, which is ordinarily assessed by the Commissioner. Moreover as the Commissioner emphasised, the GST Act contemplates that GST will be payable on the wide variety of business transactions which constitute a taxable supply (s 9-5), and as a necessary consequence, the legislation is expressed in general terms to facilitate its application to that wide variety of transactions. Hence the Commissioner’s observation that the legislation should not be construed in a narrow and technical way, but rather should be construed in a broad and practical way. I have later drawn attention to English authority reflective of a similar approach to the application of its analogous value-added taxation.

The Commissioner submitted for operation in the present circumstances the observation of Ralph Gibson J of the Queens Bench Division made in the value-added tax context of Customs and Excise Commissioners v Pippa-Dee Parties Ltd [1981] STC 495, where at 501 the following appears:
‘It is clear therefore that a technical analysis of one part of a transaction, or of one set of obligations within a contract, even though accurate in legal principle, which is capable of explaining the service supplied, or the consideration given, in a restricted way, is not necessarily the right answer in law to the application of the provisions of this statute. I accept counsel for the Crown’s submission that this approach does indicate that taxable transactions should not be artificially dissected so as to demonstrate as being the service provided, or the consideration given, something other or less than that which appears to have been the service provided or consideration given upon an examination of the entire transaction.’
That approach to construction of value-added taxation statutes provides support for the Commissioner’s asserted ‘substance and reality’ approach. It is an approach which I think aptly accommodates those provisions of the GST Act falling in particular within Subdivision 9-A of which ss 9‑5, 9‑10 and 9‑25 form an integral part. Earlier in Pippa-Dee at 500, Ralph Gibson J recorded that ‘[i]n order to explain the reasons for my conclusion I will start by going back to the real transaction… [which] was the supply… of a garment...’, and at 501, his Honour described the value-added issue falling to be resolved as ‘… to determine what was supplied for the money paid… [being] the consideration… given for the goods supplied’. Those goods comprised clothing sold to the hostesses of parties held in their own homes at which parties other garments of the relevant taxpayer company were sold, and for which sales the hostesses received the option of either cash commissions or the right to purchase garments from the company at prices reduced commensurately with the value of sales achieved by the hostess at her party. Subsequently at 502, his Lordship’s analysis of the transaction the subject of disputation, relevantly for value-added tax purposes, was as follows:
‘It appears to me that even upon this analysis of the transaction, which consisted of dissecting it into two independent contracts (and for the reason I have given that approach, in my judgment, is not right in law) the contract under which the party was held was not “exhausted” when the garment was supplied. The grant of the option by the taxpayer company, upon that analysis, was in truth past consideration, but, as counsel for the Crown pointed out, when the supply of the garment comes to be considered it is not the grant of the option which was relevant, but the use and disposition by the hostess of the rights acquired by her under the “option”. Those rights were in no sense exhausted.’
Reference was thereafter made at 503 to the Crown’s submission in the following terms:
‘I accept counsel for the Crown’s submission that the consideration for the supply of the garment by the taxpayer company to the hostess, as revealed by the terms of the entire contract, was not a consideration consisting wholly of money. The taxpayer company agreed that if the hostess organised and held a party, then, according to the sale results achieved at the party, the taxpayer company would either pay a cash commission, or allow to the hostess a credit against the retail prices of their garments in accordance with the hostess discount scheme. The consideration for the supply of the garment on the agreed terms was, in my judgment, firstly the holding of the party, which produced the right to cash or credit as stated, and next the surrender or use of that right to credit, coupled with any additional payment to bring the amount of the credit up to the retail price.’
It was asserted by the Commissioner that the commended approach to interpretation, as espoused in Pippa-Dee by reference to the entirety of transactions without artificial dissection, was subsequently applied by the Court of Appeal in England in Customs and Excise Commissioners v Diners Club Ltd [1989] 2 All ER 385, which case was referred to with approval by Harper J in American Express International Inc v Commissioner of State Revenue (2003) 52 ATR 285 at 294. The issue arising in Diners Club was whether two credit charge card financiers ‘made supplies’ to retailers who had agreed to accept their cards by way of the benefits of the credit or charge card operations of those financiers, or whether the relationship was properly to be described as a factoring arrangement by which the charge card financiers bought the rights of the retailers to receive cash payments for the goods and services they supplied to their customer card holders. Woolf LJ (as he then was) adopted at 395 the former of those two alternatives, observing that by its credit card operations, the charge card financiers not only provided ‘a means by which the retailer can increase his business by holding himself out as being prepared to accept’ the relevant credit cards, but also ‘[conferred] on the retailer … the service of providing the payment which is assured by the credit card company’; hence the charge card companies were found to have ‘made supplies’ to the merchants who accepted its credit card. In characterising the supply in that manner, Woolf LJ purported to follow the approach of Ralph Gibson J in Pippa-Dee, whereby:
‘it [was] necessary not only to look at the contract between the retailer and the credit card company but the other bilateral contract between the member and the credit card company. They all form part of the entire transaction which has to be taken into account in deciding whether or not [the charge card companies] made supplies to the retailer.’
The Commissioner sought to invoke, as here appropriate in principle, that constructive and substantive approach to tripartite arrangements, in the sense that here what was organised by SAGA for its customers was supply mainly by the accommodation industry/transportation industry of a holiday package. Diners Club exemplifies in any event the breadth of the notion of supply in the VAT context, which has been mirrored in the GST Act, and by ss 9-10 and 9-25 in particular.
Before addressing the nature and implications relevantly of the supply here involved, it is appropriate to observe that there was a variation in approach adopted by the respective parties in relation to the operation of the GST Act upon the circumstances of SAGA’s business operations. An aspect of SAGA’s submissions was focused on the bundle of contractual rights said by SAGA to be on true analysis what it supplied to its travel customers. The Commissioner asserted that the proper approach in principle to analysing transactions, for the purpose of determining how the GST Act operates in respect thereof, required a consideration of the ‘substance and reality’ of the relevant supply or supplies, or as put another way by the Commissioner, ‘… looking to the actual thing supplied’. The Commissioner described what SAGA supplied relevantly to its customers relevantly to the present litigation as being accommodation, by way of ‘a license to occupy a portion of the land on which the hotels involved are situated, or another contractual right exercisable over or in relation to [that] land’, to pick up part of the text of par (c) of the s 195(1) definition of real property.
The focus of the Commissioner’s case was therefore upon those provisions of the GST Act which I have earlier extracted in these reasons, and in particular, a grant… of real property within s 9-10(2)(d) or perhaps a creation, grant… of any right within s 9-10(2)(e) or any combination of [those] matters within s 9-10(2)(h), to be read contextually of course in the wider context of [a] supply… connected with Australia contained in s 9-5(c). As to the statutory notion of real property defined by s 195-1, the Commissioner’s emphasis placed on par (c) thereof involves a connection or relationship to realty that might perhaps be conceptually wider in scope than that of the more traditional licence between an owner and occupier of realty, in the light of the second limb of par (c) involving… any other contractual right exercisable over or in relation to land.
The nature and implications of the supply relevantly involved – SAGA’s elaboration upon the operation of the GST Act in relation to the circumstances of its tour operations in Australia
SAGA submitted that the formation of the transaction involving the ‘A Taste of Australia’ tour, made between SAGA and its overseas tourist customer, involved essentially:
(i)the overseas tourist agreeing to pay, and in fact paying in full eight weeks before departure, one inclusive price to SAGA; and
(ii)SAGA agreeing to provide to, or procure, for the overseas tourist the ‘A Taste of Australia’ package of services and facilities consisting of the eleven elements or items I have earlier listed in these reasons, the item here of critical importance being hotel/motel accommodation in Australia, hotel accommodation being predominant.
As I have foreshadowed, SAGA contended that what was created, at the time of the formation of the touring contract ‘A Taste of Australia’, was no more than a contractual right or bundle of such rights that was or were merely executory in character.
Of the eleven elements of the total tour package, SAGA explained that the only ones provided by SAGA’s employees were the services of a representative to help each tourist to check‑in at Heathrow airport in the United Kingdom, the obtaining of a visa for each tourist in the United Kingdom, and the procuring of flights to and from Australia, and within Australia, from the airline service providers. The domestic train, coach and marine transportation services, accommodation, luggage, porterage, meals and tour guides were said by SAGA to be obtained by the customer from AOT, and were in turn procured by AOT from the service providers actually involved, such as the hotels. I observe that the expressions ‘service provider’ and ‘supplier’ are not defined as such by the GST Act, but reference to supply appears in the statutory Dictionary contained in s 195-1, which picks up in turn reference to s 9-10, which is headed Meaning of supply, and which section I have reproduced already to the extent here material.
SAGA acknowledged that the factors of assistance at Heathrow and of obtaining of visas, each provided directly by SAGA to the overseas tourist in advance of the tour of Australia, would constitute a supply of services within s 9‑10(2)(b) of the GST Act. SAGA submitted nevertheless that those are ‘a very minor component of the total tour package costing many thousands of British pounds’, each of which two components takes place in any event in the United Kingdom, and are not therefore connected with Australia (the s 9-5(c) expression), and may be ‘put to one side, as irrelevant to the characterisation of the supply made by SAGA’. What the tourist receives from SAGA in respect of all other elements of the tour was described by SAGA as a bundle of contractual rights, being rights which fall within the s 9‑10(2)(e) description of ‘a creation… of any right’, and probably also the s 9‑10(2)(g)(i) notion of ‘an entry into … an obligation … to do anything’, and that ‘[a]ccordingly, the supply by SAGA to the overseas tourist who purchases “A Taste of Australia” tour package is a supply within s 9-10(2)(e) and/or s 9-10(2)(g)(i)’.
In the context therefore of SAGA’s submissions purportedly as to ‘[t]he real issue between the parties’, SAGA contended that ‘[i]t is probably common ground that only if [SAGA’s emphasis] the supply made by SAGA is a supply of real property can the supply be a taxable supply’, and therefore that ‘[i]f the supply is merely the supply of a right, namely the bundle of contractual rights against SAGA, then there is no connection with Australia, because SAGA does not carry on an enterprise in Australia and the “thing” that is done [namely the promise to provide the tour] is not done in Australia’. I was referred in that regard by SAGA to s 9‑25(5) of the GST Act, which I have earlier extracted, and which follows of course immediately after s 9-25(4) also earlier extracted. I observe that such submission seemingly involves an approach which pays regard, not to the place where the supply actually occurs, but where the prior right to the supply is created.
SAGA asserted that the only basis upon which the Commissioner contends in the present circumstances that there takes place a supply (semble that is connected with Australia within s 9-25), is that the supply by SAGA of the hotel accommodation component to an overseas tourist is [a] supply of real property, perhaps along with the supply of some incidental goods or other things; in that regard, the Commissioner pleaded by the defence filed in the proceedings as follows:
‘In further answer to the whole of the statement of claim, the [Commissioner] says that the supply by the applicant of the accommodation component of each “A Taste of Australia” packaged tour was a “taxable supply” pursuant to s 9-5 of the GST Act for the following reasons:
15.1the supply is made for consideration;
15.2the supply is made in the course of an enterprise that the applicant carries on;
15.3the supply is a supply of real property as defined in s 195‑1 of the GST Act;
15.4in the alternative to 15.3, the supply is a supply of real property and goods that may reasonably be regarded as incidental to the supply of real property, with a value, if they were treated as a separate taxable supply, not exceeding $50,000;
15.5in the alternative to 15.3 and 15.4, the supply is a supply of real property and things other than goods or real property that may reasonably be regarded as incidental to the supply of real property, with a value, if they were treated as a separate taxable supply, not exceeding $50,000;
15.6the real property the subject of the supply is in Australia and the supply is therefore connected with Australia by reason of s 9‑25(4) of the GST Act;
15.7the supply may not reasonably be regarded as incidental to any other kind of supply for the purposes of s 96‑5(4) of the GST Act and is not therefore treated as part of any other kind of supply…’
SAGA did not dispute that the s 195‑1 definition of real property includes a licence to occupy land, or any other contractual right exercisable over or in relation to land; nor did SAGA dispute that supplies of Australian real property are connected with Australia, referring thereby to s 9‑25(4) of the GST Act. The issue therefore falling for consideration is whether SAGA made a supply of Australian real property.
Whether SAGA supplied its tourists with real property in Australia or merely with rights in the United Kingdom unconnected with Australia – a narrative of the respective submissions of the parties and some initial observations in relation thereto
SAGA acknowledged that ultimately, the overseas tourist the subject of its ‘A Taste of Australia’ tour received the benefit of accommodation at successive hotels in Australia, that result being said by SAGA to have occurred in the following circumstances:
(i)in advance of commencement of a tour, AOT confirmed to each of the hotels in Australia that it thereby reserves a certain number of hotel rooms, and thereby incurred a liability to the hotel operators, but obtained the benefit of rights under its own arrangements so made with the hotels;
(ii)in discharge of AOT’s obligations to SAGA, AOT ensured that the tourists obtained in due course the rooms to which they were respectively entitled, and in discharge of the hotel operator’s obligations to AOT, the hotel operator supplied those rooms;
AOT is of course an Australian company. SAGA submitted that it did not thereby make for its part a taxable supply (ie, within Subdivision 9-A of the GST Act) to the overseas tourist. Of course the tourist deals contractually with SAGA alone, and not with AOT, and it would seem that the tourist is unlikely even to be informed of AOT’s role or function commissioned by SAGA.
By placing particular emphasis upon the role played by AOT in the supply to the tourist of accommodation, SAGA sought to demonstrate that SAGA did not ‘make’ those further supplies to the tourist within s 9‑5(a). In reality, so SAGA contended, it supplied nothing more that a right to each putative tourist to call upon the supply of the goods and services specified in the contract underlying the ‘A Taste of Australia’ tour. The supply of those services, namely accommodation services, by the service providers to those tourists, per medium of AOT, amounted in effect to a separate supply according to SAGA.
SAGA also submitted that even if SAGA was found to have made the supplies or at least some of them, to the overseas tourists, it could not be said that it made those supplies for consideration, in conformity with s 9-5(a), but rather in fulfilment of the tourist’s contractual right to supply of specific goods and services, which does not give rise to any separate taxable supply. In that regard, I was referred by SAGA to s 9-15(3)(a) of the GST Act, which provides as follows:
‘(a) if a right or option to acquire a thing is granted, then:
(i)the consideration for the supply of the thing on the exercise of the right or option is limited to any additional consideration provided either for the supply or in connection with the exercise of the right or option; or
(ii)if there is no such additional consideration – there is no consideration for the supply…’
The potential problem with that latter SAGA analysis might be thought to involve the pursuit of the kind of artificial dissection eschewed in the dictum in Pippa-Dee at 501 which I have earlier extracted, rather than addressing the substance of what is supplied or undertaken to be supplied. In any event, it is essentially as I have outlined above that the battle lines, as it were, were drawn between SAGA and the Commissioner.
The Commissioner’s case was that at the centre of the dispute is the supply of hotel accommodation, and not the right thereto as part of a bundle of rights the subject of the ‘A Taste of Australia’ packaged tour arranged in the United Kingdom, and there ‘supplied’ in the GST sense, the hotel accommodation involving the occupation of hotel rooms in Australia and the use of the hotel’s facilities. Those distinctions fall to be resolved as a matter of statutory construction, being a task which is assisted by the judicial approaches to the operation of value-added tax apparent in the British authorities cited in these reasons. The scope of the Subdivision 9-A notion of supply is in any event cast so widely by s 9-10 as to relate to a creation… of any right, as well as to a grant… of real property and indeed, to any form of supply whatsoever, though of course SAGA’s analysis in terms of rights to accommodation would seek to categorise the same as supply which is not connected with Australia within s 9-5(c), as I have already foreshadowed.
The Court was referred by SAGA to Commissioner of Customs and Excise v Plantiflor Ltd [2002] 1 WLR 2287 at [49], where the following appears at the commencement of the speech of Lord Millett (with whose opinions and reasons two of the other Law Lords agreed) by way of description of the nature of value-added tax:
‘My Lords, value-added tax is charged on the value of the supply of goods or services made in the United Kingdom for a consideration and is a liability of the person making the supply. In the ordinary case the supply and the liability to pay the consideration for the supply are reciprocal, that is to say the supply is made to the person who is liable to pay the consideration and the consideration is payable to the supplier by the person who receives the supply. But this is not always the case. Tripartite arrangements which result from two or three separate but related bilateral contracts call for close analysis in order to determine their tax consequences.’
That general approach was said by SAGA to be material where, as here in relation to relevantly analogous fiscal legislation, there are three bilateral but related contracts, first as between SAGA and each overseas tourist, the second as between SAGA and AOT, and the third as between AOT and each hotel operator.

The Commissioner pointed out, and I think correctly so, that the present circumstances may be distinguished from those tripartite arrangements involved in Plantifor, for what that may ultimately matter, in that the contractual arrangements made between SAGA and its tourist customers, as I have foreshadowed, made no mention of or reference to AOT, or the fact now presently asserted by SAGA that all that SAGA promises the tourist is that it would arrange for AOT (or someone else) to provide the accommodation component of the ‘A Taste of Australia’ tour. What SAGA undertakes to its tourist customer is to arrange and thus make available the tour of Australia in which the customer is to participate, inclusive of the accommodation. In the speech of Lord Slynn of Hadley in Plantiflor at [33], reference is made with approval to earlier authority which ‘… indicates clearly that a distinction may have to be drawn between a situation where a person supplies a product or service by himself or by his subcontractor and the situation where a person agrees to arrange for the supply of that product or service’. In Plantiflor, it was held to be the latter situation. Hence his Lordship’s further observation at [23] that ‘… the appropriate question [being] whether one act (here the arranging of delivery) is “ancillary or incidental to another” (here the supply of certain flower bulbs) or is “a distinct supply”’, and his Lordship’s further view that ‘[i]t seems to me on the contractual documents between Plantiflor and the customer which are before the House that these arrangements constituted a single supply. What the customer wanted and what Plantiflor agreed to provide was bulbs delivered to the home’. The Commissioner asserted that the SAGA travel arrangements attract a similar principled approach, and thus a similar outcome.
Irrespective of what arrangements by way of subcontracts are made collaterally with third parties, there will be in my opinion circumstances where the head contractor is liable to pay GST in relation to what is supplied, particularly in the light of the broad scope or reach of the statutory explanation of s 9-10(1) together with the opening words to s 9-10(2) comprising without limiting subsection (1), supply includes…, each to be read in the light of the s 195‑1 par (c) definition of real property. As the Commissioner rightly pointed out, what the Court must address is the nature of the supply made by the alleged taxpayer, and do so in a substantive sense.
SAGA sought to explain why it did not supply real property, and in particular why SAGA did not make a grant… of real property within s 9-10(2)(d) of the GST Act, for the following more detailed reasons:
(i)as I have foreshadowed, the supply made by SAGA to an overseas tourist constitutes a supply merely of rights, being contractual rights enforceable exclusively in England against SAGA, and those rights do not constitute any grant… of real property within s 9-10(2)(d); it was acknowledged by SAGA that it ‘supplies’ a promise that the tourist will receive the benefit of the hotel accommodation in Australia; however the supply of a promise to receive a benefit was said by SAGA not to constitute the supply of that benefit; the structure of the statutory meaning of supply contained in ss 9-5, 9-10 and 9-25 of the GST Act was therefore said by SAGA to make clear that the GST Act, in relation to any supply for consideration… made in the course or furtherance of an enterprise… connected with Australia (within s 9-5), distinguishes between the supply of things, such as goods, services and real property, and the supply merely of rights to receive any of those things; this submission was elaborated upon in greater detail in SAGA’s submissions in reply, to which I shall shortly draw attention;
(ii)there could be no supply of realty by SAGA in the circumstances here postulated, since at the time of formation of the contracts, neither SAGA nor AOT held realty in Australia which either could supply; moreover the hotel rooms had not at that time been allocated; even if it could be assumed, favourably to the Commissioner, that the supply of hotel accommodation amounted to a supply of realty, nevertheless for there to be a licence to occupy realty, the same must be identifiable; there can be no licence to occupy realty without identifying the particular realty which is possessed and controlled, reliance being placed upon a passage from the reasons for judgment of Lord Scott of Foscote in Commissioners of Customs and Excise v Sinclair Collis [2001] STC 989 at [73]-[77].
I would make the preliminary observation that the Meaning of supply provisions of s 9-10 include in particular, by par (e) of subs (2), the creation or grant… of any right, and by the preceding par (d), a grant… of real property, and further include, by par (h) of the same subsection, any combination of any 2 or more of the matters referred to in (ie the preceding) paragraphs (a) to (g). By s 9‑10(1) supply is defined as ‘any form of supply whatsoever’. Those are statutory notions of wide import and operation. It is unnecessary for me to decide whether the supply by SAGA is of a contractual right in relation to land by way of a license to occupy land, or whether it is the supply of a license to occupy land, since both notions are here attracted in relation to the SAGA traveller.
In Sinclair Collis, Lord Scott of Foscote encapsulated at [73]-[74] the following principles in a value‑added tax context involving a tobacco company’s placement of tobacco vending machines in clubs in exchange for a specified percentage of profits which were paid to those clubs, and where the critical statutory description involved specified that a supply of services that amounted to ‘[t]he grant of an interest in or right over land or of any license to occupy land’ was exempt from VAT:
‘73.So what are the characteristics that distinguish a licence to occupy from a mere licence to use? There are, in my opinion, two characteristics, one or other of which must, in some sufficient degree, be present. One is possession. The other is control. If neither is present, I find it difficult to understand how the licensee could be said to “occupy”.
74There is some assistance to be gained from authority. In R v St Pancras Assessment Committee (1877) 2 QBD 581, 588, Lush J said:
“Occupation includes possession as its primary element…”
And in Newcastle City Council v Royal Newcastle Hospital [1959] AC 248, 255, Lord Denning said:
“Occupation is matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering…”
These two elements, possession and control, seem to me to be the important ingredients of a relationship between an individual and land apt to be described as “occupation”. A “licence to occupy” is, in my opinion, to be read as meaning a licence to go into possession, not necessarily exclusive possession, or to go on to the land and take some degree of control of it. If neither of these features is present, the licence cannot, in my opinion, properly be described as a licence to occupy.’
I have difficulty in comprehending why the occupier of a hotel room does not for the time being, and however briefly, ‘go into possession though not necessarily exclusive possession’ of that room, and thereby ‘take some degree of control of it’; moreover a hotel room occupier for the time being possesses, in at least a practical sense, ‘sufficient measure of control to prevent strangers from interfering…’. Earlier at [56], his Lordship had observed:
‘So it seems that Parliament thought that taking a room for a night in a hotel, or reserving car parking space, or taking a seat at the theatre, sports ground etc would, or at least might, be regarded as involving the grant of a license to occupy land.’
His Lordship provided the following contrasting illustrations of the kind of occupations or licences to occupy which would or would not satisfy the description of occupation:
‘75.Accordingly, a person entitled to place an advertisement on a wall cannot, in any meaningful sense, be described as being in occupation of the space occupied by the advertisement. The commissioners’ practice in regard to advertisements is, in my opinion, correct. It is not concessionary. It is a recognition that the right granted is not a “letting” of land and that the exercise of it does not involve the occupation of land. For the same reasons the grant of a right for a salesperson with a tray suspended from his or her neck to wander around a public house or the foyer of a theatre offering for sale the contents of the tray would not constitute the grant of a licence to occupy. There would be no part of the premises of which the salesperson could be said to be in possession or control or, therefore, in occupation. Nor, in my opinion, would the result be any different if the salesperson were obliged under the agreement to be stationed in a specific corner of the premises. There would still be nothing that could reasonably be thought to constitute “occupation” or a “letting” of land.
76.On the other hand, the grant of a licence to set up and maintain a stall or a kiosk in some defined area of the premises in order for a salesperson to sell some product or other from the stall or kiosk might create in the licensee something that could be called “occupation”. There might well be a sufficient degree of control of the area in question.
77.So how is the right to install and maintain a vending machine under the terms of such an agreement as this case involves to be regarded? A “licence to occupy” is something to be enjoyed by persons, whether natural or corporate. It is people or companies who must be in possession or exercise control, not inanimate objects like tables, kiosks, cars or vending machines. A right, for example, to use a safe deposit box at a bank does not grant the customer a “licence to occupy” the safe deposit box. It is the bank that is in possession and control of the whole of its premises, including the space taken up by the box. The customer has no more than a right to put things in the box and is not, in any meaningful sense, in occupation of the space taken up by the box.’
Taking the above passage with that extracted earlier from Lord Scott’s speech in Sinclair Collis as authority, SAGA submitted that there could be no licence to occupy land without first identifying the particular land which is possessed and controlled, albeit temporarily.
In the result, it seems to me that rather than supporting SAGA’s case, aspects of the foregoing dicta in Sinclair Collis tend to tell against it. The circumstances I must address here involve, to use his Lordship’s further description ‘… people… who must be in possession or exercise control, not inanimate objects…’. I should also refer to the speech of Lord Slynn of Hadley at [20] in Sinclair Collis, where his Lordship cited with apparent approval the reasons for judgment of Advocate General Jacobs of the European Court of Justice in Swedish State v Stockholm Lindopark AB [2001] STC 103 at [30]-[32], which effectively drew, or at least acknowledged, that kind of distinction, significantly in my opinion for present purposes, by reference to ‘occupation of a hotel bedroom’:
‘30.… I consider for at least two reasons that Lindopark’s business, as it has been described to the court, did not fall within the concept of leasing or letting of immovable property.
31.First, there is the general question whether the transaction should be regarded as the occupation of the immovable property or as the supply of services for which the property is an incidental, albeit essential, prerequisite.
32.An example of that distinction might be provided by comparing the provision of accommodation in a hotel – which could be considered to fall within the Community definition of leasing and letting for these purposes on the ground that otherwise there would have been no need to exclude it from the exemption – with the provision of a meal in the hotel restaurant. Whereas the occupation of a hotel bedroom for one or more nights (or even for a shorter period) may well be classified as a let in various legal systems, this is unlikely ever to be the case for the consumption of a meal in the public dining room in the same hotel. In the case of the occupation of a bedroom, the dominant feature of the contract is the use of the premises, whereas in the case of the restaurant meal the dominant feature is the provision of the meal, no matter how important the décor or other facilities may be in the customer’s choice of venue.’
SAGA sought to emphasise that not only are there no specific hotel rooms in respect of which the right to occupy is originally granted to its customers travelling to Australia, being ‘originally in the sense of the time of hotel reservation’, but also that SAGA may change the itinerary. As such, continued SAGA, no particular land the subject of the putative licence was capable of identification at the time of formation of contract between SAGA and the tourist. At the time of formation of the travel contract, and at the time of full payment by the tourist, SAGA emphasised that it therefore possessed ‘no real property it can supply’, and nor did AOT. But a difficulty with that SAGA submission is with the breadth of operation of the statutory notion of supply as it appears in Subdivision 9-A, which is not necessarily confined to any sense of simultaneous or immediate actual supply in the context of a grant… of real property or the creation, grant,… of any right. The statutory notion of supply is a broad one in temporal terms, and need not be confined in scope of operation, as a general rule, to a single point in time, nor in my opinion is it so confined here by any implication. Its basic operation is exemplified in each of the critical ss 9‑5, 9‑10 and 9‑25 (and also in s 9‑15 concerning Consideration, s 9‑20 concerning the conduct of Enterprises). SAGA’s case would necessarily seek to confine the occurrence of supply to the point in time of a tour reservation made in favour of the tourist, and upon that footing by way of a bundle of rights. The Commissioner disputes of course that the occurrence of supply is here to be determined as at the point in time of making a tour reservation, or at the time of confirmation of a reservation of an accommodation booking of a place on a tour. A broader conspectus is seemingly required in the light of the breadth of the statutory terms employed, and in the light of the nature or character of what is a value-added business tax. The combination provision of par (h) of s 9‑10(2), and the generality of the non-exclusive s 9‑10(1) description of supply as being any form of supply whatsoever, together serve to demonstrate the conceptual scope of attraction of GST. The Commissioner’s case here is that the circumstance that a SAGA customer might not be allocated a specific hotel room until he or she ultimately arrives at the hotel, or in any event at some point in time subsequent to a tour group reservation, has no bearing upon the resolution of the issue whether in all the circumstances, SAGA supplies its customers relevantly with real property.
It may therefore be said that the right to occupy a hotel guest room located within a given hotel complex, in the course of a SAGA ‘A Taste of Australia’ tour, will actually crystallise in favour of a particular named tourist at a point in time between the original group booking and the tourist’s arrival at the hotel. By crystallise I refer to the specific allocation by the hotel staff of a specific guest room by reference to its number (or other designation) and floor location (if more than a ground level complex). In the meantime any person joining the SAGA list of tourists obtains what might be described as an inchoate right to being accommodated at the itinerary designated hotel, as between that person and SAGA, which right is contractual in operation. When that right ultimately crystallises or manifests by way of allocation to that person in the hotel’s reservation system will obviously vary. The point in time of supply of the hotel accommodation is a broad notion, as is to be seen from the authoritative dicta cited in these reasons. Hence supply may take any form of supply whatsoever, including a grant... of real property… connected with Australia,… or a creation… of any right within the scope of ss 9‑10(d) and 9‑10(2)(d) and (e), together with s 9‑25(4). It is significant that the s 195‑1 definition of real property includes the notion, and hence the broad conceptual implications, of a personal right to call for or be granted any interest in or right over land, and also a license to occupy land or any other contractual right exercisable over or in relation to land. A hotel room is rightly to be characterised in law as a form of real property, notwithstanding that it is likely to comprise part only of the strata, or of the single level, of a hotel building complex erected on land somewhere in Australia.
A licence under the general law of property in Australia is of course at odds with the notion of exclusive possession. So much does not mean however that conversely, a purported grant of possession excludes the implementation or operation of a contractual licence. A licence of realty may include the grant of a right of lawful entry upon that realty for a contractually agreed period of time, and for the use of that realty for some stipulated purpose or purposes (see Radaich v Smith (1959) 101 CLR 209 at 222-223, per Windeyer J). The occupier of a hotel room enjoys the sole occupation of that room for the duration of the contractual period of time of occupation, together with a right of entry into common areas of a hotel building, at least in order to access that room for his or her occupation, and those common areas designated for dining, leisure etc. SAGA submitted that what the tourist receives from SAGA at the material time, being his or her inclusion in the touring party prior to leaving for Australia, is no more or higher than the contractual right to be provided with accommodation, being a right ‘subject to the other terms of the contract’, and being therefore part of the bundle of contractual rights that constitute the package called ‘A Taste of Australia’. That thesis however, in the context of the GST legislation, and Subdivision 9A in particular, is artificially confined or restricted in scope of operation.
A similar basis upon which SAGA contended for exclusion of the operation of the GST Act in the present circumstances was that SAGA does not own or possess real property which it is capable of supplying to an overseas tourist, and all that SAGA is able to supply is a contractual right (or rights) emanating from third parties to its travel arrangements, SAGA not being the owner or lessee of the tourist hotels which it patronises from time to time for use by its customer tourists. As I have sought to explain, that submission tends to beg the critical issue as to the scope of the statutory notion of supply, being as I have earlier emphasised an expression of wide import, particularly in the context of Subdivision 9-A, which extends to any right, inclusive of a right to a supply of real property connected with Australia, being real property within the broad sweep of the s 195‑1 definition. Part of SAGA’s response not already recorded, but consistently nevertheless with its submissions I have recorded, was that the definition of real property should be ‘read narrowly’, in the light of the context of the opening words of the critical par (c) of that definition, being ‘a license to occupy land’. I observe however that par (b) of the definition refers to any interest in or right over land, and the second component of par (c) of the definition extends to any other contractual right exercisable over or in relation to land. The GST Act does not define ‘land’ or ‘occupy’. Normally a reference to land, at least in a statutory context, imports the notion of realty inclusive of any improvements erected on land, and there is no reason why that notion is here to be excluded from operation, and the contrary was not suggested by SAGA. A hotel forms part of the realty upon which it is erected, irrespective of the hotel’s tenure of ownership or occupation of that land, and a hotel room used for tourist occupation forms part of the hotel’s building structure, as do the common areas of the hotel dedicated to guest access and use.

Given that the supply of the SAGA tour in all its aspects, or having regard to all its components, constitutes a mixture of goods and of real property and of anything other than goods or real property within s 96‑5(1), the issue raised by SAGA is whether the supply of the real property is such that it may reasonably be regarded as incidental to any other kind of supply of the SAGA tour, or one (but not both) of the other kinds of supply that form part of the actual supply. The Commissioner contended to the negative of that question, and asserted that ‘the converse is more likely to be the case’, pointing out thereby that ‘the other services could more reasonably be regarded as incidental to the accommodation’.
In my opinion the Commissioner’s contentions are essentially correct for the reasons he has given. A major highlight of the tour is the accommodation component, involving as it does not just evening comfort and recreation at the end of a day’s sight-seeing, but also the further opportunity for town or city sight-seeing. I reject the notion that s 96‑5(4) has any application to the circumstances here prevailing.
SAGA’s further alternative submission concerning components of the accommodation supply and s 96‑10 of the GST Act
SAGA further submitted in the alternative that ‘[i]f the Court finds that the supply by SAGA of the total tour package includes a supply of real property, the question then is whether the supply of real property comprises all or only part of the accommodation component’. The following reasoning was advanced by SAGA on that ensuing issue. At the outset I record that one difficulty which arose in addressing that question was the absence of any common ground as to what fell within the accommodation component.
First it was said by SAGA to be ‘necessary to observe that the supply of accommodation by the hotel operators is properly characterised as a multiple supply of:
(i) the right to occupy the room; and
(ii) the services and facilities related to the room (eg cleaning); and
(iii)the services and facilities of hotel operations…’
Those services and facilities were categorised by SAGA as the provision of meals, porterage, concierge services and recreational and sporting facilities; facilities were said to include, to varying extents, tennis courts, swimming pools, gymnasiums, saunas, gaming rooms, ‘Jacuzzi’, sundeck, tour desk, laundry facilities and safety deposit boxes, depending of course on the particular hotels.
Secondly it was next said by SAGA to be necessary to determine whether any or all of the services and facilities referred to in sub-paragraphs (ii) or (iii) immediately above constitute ‘part of the supply of real property, being the supply of the right to occupy the [hotel] room’ making reference to s 96‑10(1). That section reads as follows:
‘s 96‑10The value of the taxable components of supplies that are only partly connected with Australia.
(1) If a supply (the actual supply):
(a)is, because of s 96‑5, to be treated as separate supplies; and
(b)the part of the actual supply that is connected with Australia is a taxable supply, or is partly a taxable supply and partly a supply that is GST-free or input-taxed;
the value of that part of the actual supply is worked out as follows:
(c)work out the value of the actual supply, under s 9‑75 as if it were solely a taxable supply; and
(d)work out the proportion of that value of the actual supply that the taxable supply represents; and
(e) multiply that value by the proportion in paragraph (d).
…’
Further reference was made by SAGA to the speech of Lord Scott in Sinclair Collis, and in particular to his Lordship’s description of a ‘licence to occupy’ as ‘… a licence to go into possession, not necessarily exclusive possession, or to go on to the land and take some degree of control of it’. SAGA asserted that ‘[t]here is nothing in that description of a “license to occupy” which explicitly or implicitly extends such a license to cover the services and facilities which might be associated with the occupation of the land in issue’.
Contextual support for that approach to the operation of the GST Act was said by SAGA to be found in s 87-15 of the GST Act, which appears within Division 87 of Part 4-2 of the GST Act, headed ‘Long-term accommodation in commercial residential premises’, though of course it was not suggested that the hotel accommodation the subject of ‘A Taste of Australia’ tours constituted any such Long-term accommodation. The note to Division 87 appearing in s 87-1 stipulates that ‘[l]ong-term stays in commercial residential premises are given a lower value than would otherwise apply, reducing the amount of GST payable’. That expression ‘commercial accommodation’ is defined by s 87-15 to mean:
‘… the right to occupy the whole or any part of commercial residential premises, including, if it is provided as part of the right so to occupy, the supply of:
(a)      cleaning and maintenance; or
(b)      electricity, gas, air-conditioning or heating; or
(c)       telephone, television, radio or any other similar thing.’
Section 87-20 thereafter defines the meaning of long-term accommodation etc as follows:
‘(1)Long-term accommodation is provided to an individual if commercial accommodation is provided, for a continuous period of 28 days or more, in the same premises:
(a)to that individual alone; or
(b)to that individual, together with one or more other individuals who:
(i)are also provided with that commercial accommodation; and
(ii)are not provided with it at their own expense (whether incurred directly or indirectly).
…’
Two material aspects of that definition of commercial accommodation were said by SAGA to be ‘noteworthy’ for present purposes:
(i)‘the Legislature found it necessary or appropriate expressly to provide that the services and facilities referred to in paras (a) to (c) of the definition [of commercial accommodation in s 87‑15] form part of [that] “commercial accommodation” when they are provided as part of the right to occupy commercial residential premises’; that was said by SAGA to suggest that ‘otherwise, [those] services and facilities would not form part of commercial accommodation (ie the simple right to occupy)’;
(ii)‘the services and facilities referred to in paras (a) to (c) of the definition [of commercial accommodation] relate to the room being occupied’; and moreover ‘[t]he services and facilities of the establishment, other than those related specifically to the room, are not included at all, and rightly so; such services and facilities are not involved in the licensee’s possession and control of a hotel room.’
The foregoing references to paras (a) to (c) are not of course to those paragraphs comprising the non-exclusive s 195-1 definition of real property, but (as above stated) to the exclusive definition of commercial accommodation. Hence SAGA’s contention that if the Legislature has undertaken such specificity of description in relation to the analogous circumstances of Long-term accommodation in commercial premises, the absence of any such kind of specificity in relation to short term hotel accommodation should be afforded significance. However any significance in relation to any such absence might be thought to cut both ways.
SAGA drew further attention to the following contents of the Explanatory Memorandum to the GST Act concerning Long term accommodation in commercial residential premises:
‘6.134If long term accommodation was input taxed like the supply of residential rent (see 5.164), the supplier of the accommodation would have to apportion input tax credits between that part that relates to the residential accommodation and that part that relates to services;
(SAGA asserted that the Explanatory Memorandum ‘proceeds on the basis that the services associated with a room to be occupied were not necessarily included in the licence to occupy the room’).
6.139You must charge GST on the full value of supplies of incidental goods and services such as meals, drinks, laundry and service charges…’
(SAGA further observed in that regard that ‘it is clear that the establishment’s services and facilities which were not related to the room are not part of the licence to occupy the room’).
The foregoing provisions of the Explanatory Memorandum were said by SAGA to confirm, for the purposes of Division 87 of the GST Act, ‘that services and facilities related to the room being occupied are included to ensure that, where they are provided as part of the right to occupy the room, they form part of commercial accommodation’, but that ‘where the services and facilities of an establishment do not relate to the room being occupied, they do not form part of the commercial accommodation’.
I do not think that the provisions of Division 87 (relating of course only to Long-term accommodation in commercial residential premises) provide sufficient assistance to the issue here arising for resolution in relation to the operation of s 96‑10. The Legislature did not consider it to be appropriate to provide any such definitive detail in relation to the supply of real property. Hotel accommodation is traditionally or normally of course of a short term and more expensive nature than so-called long-term accommodation. The critical consideration therefore, as SAGA framed the same in the context of s 96‑10, is whether ‘a finding of fact’ should be made that the ‘supply of real property comprises all or only part of the accommodation component.’
The Commissioner conceded that meals should not be considered to be part of the supply of real property, but maintained that all other services and facilities provided by the hotels ought to be regarded as ancillary or incidental to the supply of real property, and thus should be considered as part of a single supply for the purposes of s 96‑10. The Commissioner again relied upon Madgett and Baldwin, this time analogously for the proposition that the services and facilities provided by each hotel are most appropriately viewed as a means of ‘better enjoying’ the accommodation. That is, the ‘use of the other facilities and services simply contribute to the proper performance of the principal supply, being the accommodation or use of the room.
Owing to the Commissioner’s concession, I would exclude from the accommodation component meals and drinks, however I have come to the view that that concession was unwarranted, since the provision of meals within the rubric of a single fixed cost for overnight accommodation, as a part of that supply of accommodation, appears to fall adequately within the notion of supply of real property. Were SAGA tourists to elect to pay separate charges for a-la-carte food and drink, that would give rise to different considerations, not the least of which would be the inescapable fact that either goods or services had been provided by an enterprise carrying on business in Australia, so that the present issue would not in any event conceivably arise.
In my further opinion, those other services and facilities such as porterage or gyms, which may or may not be utilised by the tourist, are in principle merely incidental to what the tourist must in any event require and pay for, namely his or her hotel accommodation. In those circumstances I am unable to comprehend why the same (excluding of course, the provision of standard meals) should bear relevantly upon the operation of the GST Act in relation to the supply of real property, which is primarily fulfilled by reference to the accommodation element.
Conclusions
The complexity of the issues arising for resolution has rendered it appropriate for me to record in detail the comprehensive submissions of both parties, and in each particular context of submissions, to provide at least tentative observations and views. The nature and statutory context of the issues tendered by SAGA for resolution were also such as to make it appropriate in many instances to cite the precise text of the respective submissions of the parties, and to make observations upon what I have considered to be the strength or relevance of those submissions. It will have been appreciated from those observations and views that there are significant obstacles in the path of SAGA making good its case for an absence of liability to GST in relation to what has been broadly described as the Australian hotel accommodation component of the SAGA holiday package called ‘A Taste of Australia’.
The primary case for an absence of exposure of SAGA to GST has centred upon the operation of the scheme of Subdivision 9‑A of the GST Act relating to taxable supplies, and in particular supply by way of a grant… of real property and the creation [or] grant… of any right, being a case which I have sought to summarise and address in the detail required from the perspective of both the Commissioner and SAGA. SAGA has also sought to place reliance also upon the supplies partly connected with Australia taxing scheme of Division 96, which, for reasons I have already given, is not sustainable. I have also rejected for the most part SAGA’s further alternative submission that those services and facilities provided by each hotel, in addition to the accommodation rooms per se, did not constitute a supply of real property, and were therefore to be excluded from the calculation of GST because their provision lacked the necessary connection to Australia. A principal supply of the tour connected with Australia is the provision of the tourists’ hotel accommodation, for which they would normally be charged basic room rates, given those rates to be inclusive of certain limited collateral benefits which are included within the rates. Any additional charges made separately by the hotels, for instance, for liquor, lunches, dinners and amenities, and thus not forming part of the basic room rates, would not be merely incidental to the basic room rates and therefore would not be incidental to the notion of hotel accommodation and in turn to real property. The issues arising did not in any event involve any consideration by the Court of any such additional charges.
Central to the resolution of the issues posed by SAGA’s approach to the construction and operation of the GST Act, in relation to model circumstances such as are here in dispute, has been a wide-ranging consideration of the nature and scope of taxable supply rendered taxable by way of GST, or else excluded from such taxation. The interpretation of the GST Act in relation to the critical subject and notion of taxable supply requires a reasonably broad and comprehensive perspective to be taken, being a perspective which is also ambulatory in nature, having regard to the parameters of a supplier’s business activities and the transactions in issue. That requirement for a substantive and comprehensive approach, by paying regard to the entirety of a transaction addressed by the legislation, is evident from the judicial dicta appearing in the United Kingdom VAT authorities of Pippa-Dee, Diners Club, Plantifor and Sinclair Collis (in particular in the latter instance from the passage from the European Court of Justice’s reasons for judgment in Stockholm Lindopark that was cited with approval in the speech of Lord Slynn of Hadley) which I have cited. That approach is also apparent from judicial observations of principle appearing in the Australian authorities of HP Mercantile and Sterling Guardian which I have also earlier cited.
To those authorities I would add for completeness reference to the further speech of Lord Slynn of Hadley (with whom the other members of the House of Lords agreed) in Card Protection Plan Ltd v Customs and Excise Commissioners (No 2) [2002] 1 AC 202, where the following appears at 212-3 in relation to the approach to examination of a transaction, in terms as to what are its essential and ancillary features:
‘It is clear from the [European] Court of Justice’s judgment that the national court’s task is to have regard to the “essential features of the transaction” to see whether it is “several distinct principal services” or a single service and that what from an economic point of view is in reality a single service should not be “artificially split”. It seems that an overall view should be taken and over-zealous dissecting and analysis of particular clauses should be avoided.
…
If one asks what is the essential feature of the scheme or its dominant purpose – perhaps why objectively people are likely to want to join it – I have no doubt it is to obtain a provision of insurance cover against loss arising from the misuse of credit cards or other documents.
…
In so far as there are services which are not independently to be categorised as insurance they are in my view ancillary and in some cases minor features of the plan… I doubt whether they can in any event be regarded as sufficiently coherent as to be treated as one separate supply but even if they can it is ancillary to the provision of insurance.’
I would also draw attention to that aspect of the later speech of Lord Hoffman (with whom the other members of the House of Lords agreed) in the VAT case of Beynon, where his Lordship emphasised at [21] ‘the need to examine the circumstances in which the transaction takes place’, and referred to authorities which clarified the further need for consideration of what may satisfy the notion of supply from an economic perspective, and for eschewing any artificial dissection of transactions. The latter observation is also material to the conclusion I have reached in relation to a basic hotel room rate, to the extent that it is inclusive of certain incidental matters such as porterage. I interpolate to observe that in the light of the Commissioner’s apparent concession in relation to the cost of meals included within the single daily accommodation rate, being not confined to breakfasts, an exclusionary adjustment referrable thereto would have to be calculated and the resulting calculation excluded from the assessment of GST on the room charge.
What seems to me to be the most significant shortcoming in SAGA’s submissions upon the operation of relevant aspects of Subdivision 9‑A of the GST Act is an unwarranted and artificial focus upon the point in time when the overseas traveller commits to participation in ‘A Taste of Australia’ tour, and hence an analysis of the operation of the GST Act upon taxing circumstances asserted by SAGA to prevail at that point in time. The correct approach should involve the determination of what SAGA undertakes to provide (and thus to supply for the purposes of the GST Act) as relevant components of that pending tour, in so far as the same would be connected with Australia for the purposes of and within s 9‑5(c) of the GST Act, and thus at the time of supply. That statutory notion of connected with is of wide import, subject always to the context of the prevailing circumstances. Hence the authorities I have cited demonstrate that what constitutes a supply falling for consideration may well require a temporal survey of future as well as past and present activities undertaken by the business operations of the taxpayer, or by third parties, in order to bring about the completion or other effectuation of supply (see Plantifor and Diners Club).
In other words the statutory notion of supply is pervasive in operation or application, in that it encompasses what takes place by way of an economic process in the nature of a supply which culminates in the consumer, whether as purchaser, conveyee or other ultimate acquirer or consumer, obtaining the good or service to be gained or enjoyed, pursuant to and in connection with the supplier’s operations. So much depends therefore upon the nature and extent of the circumstances of the supply or commitment to be put in place, in order to effect the supply. It is within that range or scope of notions of supplies that the present tense is used in s 9‑25 to describe the essential requirement of connected with Australia. Thus a supply and its connection to Australia are to be ascertained, irrespective of the duration of the process or event which constitutes the taxing event or circumstance said to constitute the supply. Were that not the case, then at least prior to the 2005 amendments to the GST Act described earlier, taxpayers might readily have had recourse to the undertaking of merely executory obligations put in place offshore, in order to artificially advance the notion of creation of rights to supply offshore, where the reality of the ultimate supply of the taxable item occurs onshore (ie, in Australia).

The focus of SAGA’s case upon the effectuation of supply of a tour as at and by reference to the time of entry into the agreement or arrangement for participation in that tour, whereby the traveller as a consequence may be said by SAGA to receive thereby a supply of rights of various kinds by way of satisfaction of the statutory notion of supply, is therefore in my opinion at odds with the scope and breadth of the statutory notion of supply inherent as well as apparent in the provisions of the GST Act to which I have drawn attention, and in particular those exemplified in the general descriptions appearing within Subdivision 9‑A. In income tax contexts, assessable income may be conceivably derived by a taxpayer as at the point of time of entry into an executory contract. As I have found, the GST notion of taxable supply is conceptually wider in its scope of operation, albeit that in some business contexts nevertheless, the supply may alone involve the creation… of any right within s 9‑10(2)(e), such as a tradable option over a commodity or derivatives thereof, or chose. That type of supply is not in my opinion exemplified in the circumstances addressed in this case, where what is the mutually intended subject matter of supply is not a chose against a travel agent but the provision of accommodation which the travel agent has been able to organise as his supply to his customer.
As observed by Lord Slynn of Hadley in Plantifor at [33], being a passage to which I have earlier drawn attention, a distinction may have to be drawn between the supply of a product or service for instance by a subcontractor, and the arrangement of the supply of that product or service by the principal, albeit per medium of a third party or parties. What falls ultimately to be appraised will constitute a single or distinct statutory notion of supply, the nature whereof being determined in a substantive sense, and thus by reference to persons who, in all the circumstances prevailing, are able to bring about or effectuate the supply of something of taxable relevance in Australia. As I have earlier mentioned, a broad and comprehensive conspectus of the operation of the legislation relevantly is required, in the light of the width of expression of the encompassing statutory terms of the GST Act, and in particular the notion of supply… connected with Australia, corresponding as they largely do with the United Kingdom prescriptions as to liability to value-added tax. As I have already foreshadowed, the notion of supply in the statutory GST context is conceptually broad, looking at what is to be ultimately supplied to a person exercising the role or function of a consumer of the subject matter of supply. In this case what was ultimately supplied by SAGA to its customers was a holiday, an essential part of which included the supply of a right of occupation exercisable over hotel rooms allocated to those same customers during the course of the tour. For the reasons that I have outlined earlier in my judgment, the presence of those hotels within Australia together with the nature of the rights held by each tourist as guest in the same provided the requisite connection required by s 9‑5(c).
In so concluding I nevertheless acknowledge that the point in time when the prior right or entitlement of a SAGA tour traveller to occupy a particular or specific hotel room, pursuant to an advance reservation made by a travel agent on his or her behalf, would in fact crystallise, by way of allocation of that room specifically to that SAGA traveller may of course vary according to the circumstances of each case. In the first place, the traveller is assured of accommodation at the hotel, pursuant to the SAGA reservation, albeit in a room or suite yet to be specifically allocated by the hotel to that traveller. Although the physical assumption of that accommodation by the traveller will not occur until the time of his or her arrival at the hotel and after being handed the keys to the hotel room, it seems to me that the broad and comprehensive notion and description of supply will nevertheless be fulfilled, particularly in the light of observations and views which I have above made or explained. Without the conferral of the right to occupy a hotel room on a SAGA tour prior to the commencement thereof, being a right which is then inchoate in the sense of incomplete as to identification of the particular hotel suite to be occupied by the putative tourist to Australia, that tourist would likely have had no occasion to enter and stay at that particular hotel.
In the case of the supply of a right per se, being the contrasting predication for which SAGA would contend, that which falls for consideration and evaluation for revenue assessment in the context of the GST Act, pursuant to s 9‑10(2)(e), from which the Commissioner would seek to draw assistance, is whether or not a taxable supply is demonstrated by reference to its value merely as a chose, such as perhaps tradable rights to the item supplied. In the circumstances however where as here, any supposed right is only intended to be exercised by way of its implementation or realisation, and thus by way of its enjoyment of that implementation or realisation, different considerations may apply in relation to what is the subject matter of supply. Given that such subject matter constitutes real property within the s 195‑1 definition, which I think to be here the case, by reason of the supply of accommodation of part of realty, there occurs in principle a connection relevantly with Australia, and thus in the circumstances addressed in the present proceedings.
In the result I am of the opinion that SAGA’s application must be dismissed, and at least in principle, SAGA must pay the Commissioner’s costs of the proceedings. At the request of SAGA however I will defer the making of the final orders pending resolution of the terms of the final orders to be made in conformity with these reasons. The parties should provide to the Court and each other draft orders (and any appropriate declaratory relief) giving effect to these reasons within 28 days.

I certify that the preceding one hundred and sixteen (116) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.
Associate:
Dated: 22 December 2005

Counsel for the Applicant: S Gageler SC and M Leeming

Solicitor for the Applicant: Heidtman & Co Lawyers

Counsel for the Respondent: A Robertson SC and M Wigney

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 22 August 2005

Date of Judgment: 22 December 2005

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1915 OF 2004

BETWEEN:	SAGA HOLIDAYS LIMITED APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	CONTI J
DATE OF ORDER:	22 DECEMBER 2005
WHERE MADE:	SYDNEY

JUDGE:	CONTI J
DATE:	22 DECEMBER 2005
PLACE:	SYDNEY

Counsel for the Applicant:	S Gageler SC and M Leeming
Solicitor for the Applicant:	Heidtman & Co Lawyers
Counsel for the Respondent:	A Robertson SC and M Wigney
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	22 August 2005
Date of Judgment:	22 December 2005