Snow v Chief Commissioner of State Revenue (No 2)

[2005] NSWADT 278

CITATION:	Snow v Chief Commissioner of the State Revenue [2005] NSWADT 278
DIVISION:	Revenue Division
PARTIES:	APPLICANT Jeffrey Ian Snow RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	056047
HEARING DATES:	19/07/05
SUBMISSIONS CLOSED:	07/19/2005
DATE OF DECISION:	12/02/2005
BEFORE:	O'Connor K - DCJ (President)
APPLICATION:	Duties Act - re-assessment
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Duties Act 1997 First Home Owner Grant Act 2000 Taxation Administration Act 1996
CASES CITED:	Snow v Chief Commissioner of State Revenue (No 1) [2005] NSWADT 244 Watson v Federal Commissioner of Taxation (1953) 87 CLR 353 Calvin v Carr [1977] 2 NSWLR 308 Re Lawrence; Ex parte Goldbar Holdings Pty Ltd (1994) LGERA 113 Goodwin v Phillips (1908) 7 CLR 1 Mitchell v Scales (1907) 5 CLR 405 Rose v Hric (1963) 108 CLR 353 Saraswati v R (1991) 100 ALR 193
REPRESENTATION:	In person B Baker, solicitor
ORDERS:	1. The Tribunal has jurisdiction to consider the application for review; 2. The application is dismissed. The Commissioner’s decision is affirmed.

1 The applicant, on 11 October 2001, applied for and was granted a First Home Owner Grant under the First Home Owner Grant Act 2000. He also received a concession from stamp duty (the concession) provided by the First Home Plus (FHP) provisions of the Duties Act 1997 (Duties Act), Part 8, Division 1. In the opinion of the respondent (the Commissioner) the applicant did not comply with the requirements of either scheme; and the Commissioner moved to recover the amount of the grant and the amount of the concession and imposed penalties.

2 In an earlier decision the Tribunal dismissed the applicant’s application for review of the Commissioner’s decision as it related to the First Home Owner Grant: Snow v Chief Commissioner of State Revenue (No 1) [2005] NSWADT 244. This decision deals with the applicant’s application for review of the Commissioner’s decision made 12 May 2005 disallowing his objection to the Commissioner’s assessment dated 5 February 2004 requiring to repay the amount of the concession ($4722) and interest (then, $1219.65).

3 The letter notifying the applicant of this decision advised him that he had a right to apply to the Tribunal for review of the decision. The applicant did so.

4 But at hearing he was met by an objection from the Commissioner that the Tribunal did not have jurisdiction to review the decision. This view, as I understand it, is now held by the Commissioner, in light of legal advice.

5 It is apparent from the substantive reasons given by me in respect of the First Home Owner Grant application that, if the Tribunal has jurisdiction, the applicant would be unsuccessful. The applicant does not satisfy the criteria governing the concession (Duties Act, s 76(1)) for the same reason that he does not satisfy the First Home Owner Grant criteria – he did not occupy the home the subject of the concession within 12 months of settlement as his principal place of residence. So, in a sense, the question of jurisdiction is a sterile one.

6 Nonetheless I will deal with the question. It is, of course, clear law that the Tribunal must always satisfy itself that it has jurisdiction to deal with an application: see, for example, Watson v Federal Commissioner of Taxation (1953) 87 CLR 353 at 370.

Provisions Conferring Jurisdiction

7 The Tribunal’s jurisdiction to hear applications for review relating to decisions of the Commissioner under the Duties Act is conferred by the Taxation Administration Act 1996 (TAA) in the following terms, as relevant to these proceedings. (The Duties Act is a ‘taxation law’ for the purposes of the TAA: TAA, s 4.)

‘ 86 Objections

(1) A taxpayer who is dissatisfied with:

(a) an assessment that is shown in a notice of assessment served on the taxpayer, or

(b) any other decision (within the meaning of section 6 of the Administrative Decisions Tribunal Act 1997) of the Chief Commissioner under a taxation law,

may lodge a written objection with the Chief Commissioner.

…

96 Review by Administrative Decisions Tribunal

(1) A taxpayer may apply to the Administrative Decisions Tribunal for a review of a decision of the Chief Commissioner that has been the subject of an objection … if:

(a) the taxpayer is dissatisfied with the Chief Commissioner’s determination of the taxpayer’s objection, …

(2) However, a taxpayer cannot apply to the Administrative Decisions Tribunal for review under this section in respect of:

(a) a decision of a kind prescribed by the regulations as an exempt decision for the purposes of this section, or

(Repealed)

…

(6) A regulation prescribing a kind of decision for the purposes of subsection (2) cannot be made without the concurrence of the Minister administering the Administrative Decisions Tribunal Act 1997 [i.e. the Attorney General].’

8 These provisions would appear, therefore, to give a taxpayer objecting to a decision made under the Duties Act a right of review by the Tribunal. No doubt this was the original understanding of the Commissioner.

Asserted Qualification to Jurisdiction

9 The complication, which has led to the submission that the Tribunal is without jurisdiction in respect of applications to review decisions relating to FHP concession decisions, flows from s 79 of the Duties Act. Section 79 relates to applications for the FHP concession. Section 79 provides:

‘ 79 Determination of applications

An application is to be determined solely at the discretion of the Chief Commissioner whose decision is final.’

Commissioner’s Submission

10 It is submitted that these words, in particular the words ‘solely at the discretion’ and ‘final’ manifest an intention by the Parliament to immunise from review decisions by the Commissioner on applications for FHP concessions. The Commissioner’s submission is:

‘While s 79 of the Duties Act would not have the effect of precluding judicial review by the Supreme Court against a decision of the Commissioner concerning the First Home Plus Concession, it does have the effect of precluding review by this Tribunal: Calvin v Carr [1977] 2 NSWLR 308 at 338; Re Lawrence; Ex parte Goldbar Holdings Pty Ltd (1994) LGERA 113 at 122; Watson v Federal Commissioner of Taxation (1953) 87 CLR 353 at 371.’

11 The Commissioner submits that because s 79 relates to a specific type of decision (FHP decisions), and s 96 of the TAA relates to tax decisions generally, to the extent of any inconsistency between s 79 and the TAA, s 79 must prevail. The Commissioner relies on Goodwin v Phillips (1908) 7 CLR 1 at 14.

12 It is possible for a later Act to repeal an earlier Act in whole or in part by implication rather than by express terms: see, for example, Mitchell v Scales (1907) 5 CLR 405 per Isaacs J at 417, Goodwin at 7 and Rose v Hric (1963) 108 CLR 353 at 360. But this is seen by the law as an extreme conclusion. Barton J said in Goodwin at 10:

‘Before coming to the conclusion that there is a repeal by implication ‘The Court must’, to use the words of Hardcastle in his work on the Interpretation of Statutes ( Craies on Statute Law , 4th ed, p 303) ‘be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together, before they can from the language of the later imply the repeal of an express prior enactment, i.e. the repeal must, if not express, flow from necessary implication.’ If, therefore, there is fairly open on the words of the later Act, a construction by adopting which the earlier Act may be saved from repeal, that construction is to be adopted.’
To the same effect, Saraswati v R (1991) 100 ALR 193 per Gaudron J.

13 In this instance s 79 states that the Commissioner’s decision on the application is ‘final’. That precludes, as I see it, from review the original decision of the Commissioner on the application. The applicant can not contest that decision by way of appeal or review on the merits.

Does s 79 cover the Decision the Subject of the Review Application?

14 But there is a live question as to whether the matter now before the Tribunal is a determination of an application. The Commissioner’s submissions proceed on that assumption. I am not satisfied that this is a proper characterisation of the nature of the matter now before the Tribunal.

15 It is clear that the Commissioner granted the application. This occurred in October 2001. At that time, the applicant had followed the procedure for making an application set out in s 78, which provides:

‘ 78 Making of applications

(1) An application is made to the Chief Commissioner by completing a statutory declaration in an approved form.

(2) (Repealed)

(3) The Chief Commissioner may at any time (whether before or after the approval of an application) require the applicant or applicants to provide such further information as the Chief Commissioner may consider necessary for the proper administration of the scheme.’

16 This is an instance where the Commissioner ‘after approval of an application’ required the applicant to provide further information. As a result of receiving that information from the applicant, the Commissioner wrote to the applicant on 4 February 2004 in the following terms:

‘I refer to the First Home Plus concession that was granted to you to assist with the purchase of [Address set out].

Based on the information now available, we have reversed the decision to offer you the concession. Accordingly, you are required to repay the Chief Commissioner $5941.68.

Please forward the payment with the enclosed remittance advice, to the Chief Commissioner at the address shown on the advice.

If you are dissatisfied with the Chief Commissioner’s decision on our application (including a decision to reverse or vary an earlier decision) you are entitled to lodge a written objection within 60 days after the date of the decision. The grounds of your objection must be stated in full and in detail in the notice of objection.’

17 At this point the Commissioner was, in my view, clearly involved in the making of a (negative) assessment. This is confirmed, I consider, by the document which is attached to the letter headed ‘Duties Notice of Assessment’. The power being exercised at that point is found in TAA, s 8. It provides:

‘ 8 General power to make assessment

(1) The Chief Commissioner may make an assessment of the tax liability of a taxpayer.

(2) An assessment of a tax liability may consist of a determination that there is not a particular tax liability.’

18 The power to issue a notice of assessment is found in TAA, s 14. It provides:

‘ 14 Notice of assessment, reassessment or withdrawal of assessment

(1) The Chief Commissioner may issue a notice of assessment (showing the amount of the assessment).

(2) If the Chief Commissioner has not issued a notice of assessment of the tax liability of a taxpayer, the Chief Commissioner must issue the notice if a request to do so is made by the taxpayer within 5 years after the liability arose.

(3) If the Chief Commissioner makes a reassessment, the Chief Commissioner must issue a notice of assessment (showing the amount of the reassessment).

(4) If the Chief Commissioner withdraws an assessment, the Chief Commissioner must issue a notice of withdrawal of assessment.

(5) The notice is to be in a form approved by the Chief Commissioner.’

19 In this case the notice required repayment of interest in the amounts of the market rate and premium components (12.78% accruing daily). These amounts are determined having regard to ss 21-25 of the TAA, and the requirement that they be included in the notice is found in s 15, which provides:

‘ 15 Inclusion of interest and penalty tax in notice of assessment

A notice of assessment of a taxpayer’s tax liability issued following a tax default by the taxpayer must specify any interest and penalty tax payable by the taxpayer under Part 5 or section 95 in respect of the default.’

20 In this instance, as noted earlier, the taxpayer utilised the right given by s 86(1), i.e.

‘ 86 Objections

(1) A taxpayer who is dissatisfied with:

(a) an assessment that is shown in a notice of assessment served on the taxpayer, or

(b) any other decision (within the meaning of section 6 of the Administrative Decisions Tribunal Act 1997) of the Chief Commissioner under a taxation law,

may lodge a written objection with the Chief Commissioner.’

21 The 60 day rule appears at s 89. The Commissioner is obliged to determine the objection. Section 91(1) provides:

‘ 91 Determination of objection

(1) The Chief Commissioner must consider an objection and either allow the objection in whole or in part or disallow the objection.’

22 The obligation to give notice appears at s 93:

‘ 93 Notice of determination

(1) The Chief Commissioner must give notice to the objector of the determination of the objection.

(2) The Chief Commissioner must, in the notice, give the reasons for disallowing an objection or for allowing an objection in part only.

(2A) The reasons for a determination of an objection in respect of an assessment or other decision that the Administrative Decisions Tribunal has jurisdiction under Division 2 to review must set out the matters referred to in section 49 (3) of the Administrative Decisions Tribunal Act 1997 in respect of the determination.

(2B) The notice must also inform the objector of the objector’s right to make an application for review under Division 2 in the case of a determination to disallow the objection or to allow the objection in part only.

(3) The notice is to be in a form approved by the Chief Commissioner.’

23 When the Commissioner issued the notice of assessment to the applicant, his office commenced to engage in the process of recovery of a concession granted in circumstances where the evidence suggested that the taxpayer had not complied with a condition governing the grant of the concession. This, in my view, is not conceptually the same as the process of approving the application. The approval had occurred.

24 It so happens that this scheme is structured so that an application can be approved (and stamp duty waived) ahead of compliance by the recipient with the condition of the approval. If, as it turns out, the applicant does not comply with the condition subsequent, the action that the Commissioner then takes is not one relating to the ‘approval of the application’. At this point the Commissioner is engaged in a new process. The Commissioner is now exercising his general powers to require the taxpayer to meet his liability (having failed to satisfy the condition) to pay the usual duty on the purchase transaction. In this case that is what the Commissioner unequivocally was doing.

Conclusion

25 In my view s 79 of the Duties Act has a limited role. It immunises the Commissioner from review in respect of the decision on the application, being the decision at the time of approval of the application. If that decision proves not to be well founded, because an assurance given by the applicant is not honoured by the applicant, and therefore a condition of the grant of the concession is not fulfilled, that does not mean that the process that the Commissioner then undertakes is the making a new decision on the application. At this point the Commissioner is exercising his general powers under the TAA to have paid the amount due, by issuing an assessment and following the TAA’s procedures.

26 On the other hand, as already noted, were the Commissioner to refuse an application, that refusal would not be reviewable in the Tribunal.

27 Therefore it is not necessary to resort to cases dealing with apparent conflict between two statutes. As I see it there is no conflict between the statutes. As a matter of interpretation s 79 simply does not apply to the present situation.

28 I note that in the course of submissions the Commissioner did indicate that a legislative amendment was to be brought forward to overcome the difficulty raised by this case. This will resolve doubt for the future (see now State Revenue Legislation Further Amendment Bill 2005, awaiting assent).

Assessment

29 The Tribunal therefore can look at the merits of the decision reflected in the notice of assessment. The circumstances relevant here are the same as those relevant to the decision on the First Home Owner Grant. For the same reasons, the Tribunal agrees with the decision of the Commissioner.

30 In this instance, there is a difference in the sanction used by the Commissioner to punish default. Under the First Home Owner Grant legislation the Commissioner has power to impose a flat rate penalty tax. This is unusual. Normally the penalty takes the form of imposition of interest and, if there are certain further adverse factors, the imposition of penalty tax.

31 Here the Commissioner has imposed interest made up of premium rate and market rate components. In my view the imposition of both components, as occurred here, was appropriate. The taxpayer had the benefit of the concession for some years in circumstances where he did not satisfy the key condition for the concession. It is reasonable to apply the market rate (which covers the loss to the revenue in not having the money at its disposal in that period) and the premium component (which I see as having a general deterrent effect, in discouraging conduct which may see it as economically advantageous not to pay tax on time if the only interest charged for late meeting of obligations was the market rate of interest, presently in the range of 4 to 5%). There are no mitigating circumstances in this case suggesting that there might be grounds for relieving the taxpayer from one or both interest components, for the reasons given in the earlier decision.

ORDER

1. The Tribunal has jurisdiction to consider the application for review.

2. The application is dismissed. The Commissioner’s decision is affirmed.