Stature Pty Ltd v Chief Commissioner of State Revenue

[2002] NSWADT 271

CITATION:	Stature Pty Ltd -v- Chief Commissioner of State Revenue [2002] NSWADT 271
DIVISION:	Revenue Division
PARTIES:	APPLICANT Stature Pty Ltd RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	026020
HEARING DATES:	26/09/2002
SUBMISSIONS CLOSED:	09/26/2002
DATE OF DECISION:	12/20/2002
BEFORE:	Verick A - Judicial Member
APPLICATION:	Land tax exemption - failure to inform of liability
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Income Tax Assessment Act 1936 (Cth) Land Tax Management Act 1956
CASES CITED:	FC of T v Wade (1951) 84 CLR 104 Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 Federal Commissioner of Taxation v Ryan (2000) 168 ALR 704 AGC(Investments) Ltd v FC of T 91 ATC 4180
REPRESENTATION:	APPLICANT D Montgomery, agent RESPONDENT D Martin, agent
ORDERS:	1. That the Chief Commissioner correctly exercised his statutory power to make and issue the Land Tax assessments for the 1999 to 2002 tax years to the applicant.

1 The applicant seeks a review of an objection decision made by the Chief Commissioner of State Revenue (Chief Commissioner) in relation to land tax assessments for the 1999 to 2002 tax years. At issue is the applicant's fairly novel claim that there has been a denial of natural justice and that the doctrine of estoppel applies to prevent the Chief Commissioner from making the assessments under review.

Background

2 The applicant was issued with 1999 to 2002 land tax assessments in relation to a property situated at Balgowlah which the applicant had acquired in 1993. The assessments were issued as part of a compliance activity conducted by the Chief Commissioner. The Chief Commissioner also imposed interest at both the premium and market rates in the assessments as the applicant had failed to lodge a land tax return for the years in question.

3 The applicant objected against the assessments on the grounds that the property was exempt from land tax under section 10(1)(r) of the Land Tax Management Act 1956 (LTM Act) and that there were grounds to remit the interest included in the assessments for late lodgement of the relevant returns. The objection was disallowed on the grounds that the property did not qualify as a principal residence within the provisions of s 10(1)(r) of the LTM Act. The property was occupied by the applicant to carry out a chiropractic practice. The exemption provided for in s 10(1)(r) of the LTM Act only applies to residential properties. However, the Chief Commissioner remitted the interest imposed at both market and premium rates on grounds that the applicant was not aware of any land tax liability.

4 In its objection the applicant had also relied on the ground that it had been wrongly charged to land tax retrospectively. The Chief Commissioner did not address this ground in his objection decision.

5 Before the Tribunal the applicant accepted that it was liable to land tax and that the exemption sought under s 10(1)(r) did not apply to the applicant. But the applicant submits that his objection should be favourably considered on two grounds. Firstly, on moral and ethical grounds. In this regard the applicant relies on the failure by the Chief Commissioner to inform the applicant of its liability for three years notwithstanding that the Chief Commissioner was in possession of knowledge of the applicant's liability to land tax. The applicant claims that this failure to inform it of its liability amounts to "a denial of natural justice".

6 Secondly, the applicant relies on what is submitted by the applicant is its "legal position". This ground is expanded on the basis that the Chief Commissioner's website (www. osr.gov.au) in a document entitled "Our Service Commitment" contains, inter alia, the following commitment:

"1. Taxpayers have a right to be informed of their tax obligations, how they are determined and the means by which they can be discharged, and
11.Have certainty in the way the tax laws are applied."

7 The applicant claims that the above commitment contains a "basic principle" which governs the relationship between the Office of State Revenue (O.S.R.) and their clients. The applicant submits that the "principle is that of Estoppel, as exists in Common and Equity Law." The applicant claims that "O.S.R has not done this and has breached the principle of Estoppel by allowing Stature Pty Ltd to assume a state of affairs which did not exist" and that "O.S.R. should now be Estopped from charging Stature back taxes which it has not had an opportunity to budget for".

8 The Chief Commissioner's case is put quite simply. Firstly, it is argued that the onus of lodging a land tax return and paying the tax rests with the taxpayer. The Chief Commissioner relies on the statutory provisions found in s 12 of the LTM Act. Section 12(1) provides that the Chief Commissioner may by order published in the Gazette require all persons or specified classes of persons to furnish land tax returns and ss 12(1A) provides that "every person subject to such requirement shall furnish a land tax return to the Chief Commissioner on or before 31 January in that year". The Chief Commissioner submits that the applicant failed to lodge the necessary returns in the relevant years as required by the law.

9 Secondly, the Chief Commissioner submits that notwithstanding what information is found on his website the Chief Commissioner is entitled to assess back land taxes because (relying on the High Court decision in FC of T v Wade (1951) 84 CLR 104) "it is clear that no conduct on the part of the Commissioner can operate as an estoppel against the operation of the Act".

Reasons and Decision

10 It is fairly basic to say that "moral and ethical grounds" have very little role in construing revenue statutory provisions. As submitted by the Chief Commissioner, there is a clear statutory duty on persons who fall within the Chief Commissioner's Gazette notification published under the provisions of s 12(1) of the LTM Act to lodge land tax returns by virtue of the provisions found in ss 12(1A) of the LTM Act. In the present matter the applicant failed to lodge the land tax returns for the relevant years. The assessments were made pursuant to information obtained by the Chief Commissioner through his compliance activity. The Chief Commissioner acted quite properly within the statutory framework of the law. Accordingly, it cannot be said that there was any denial of natural justice in this matter.

11 I also agree with the Chief Commissioner's submission that the doctrine of estoppel does not apply to prevent the Chief Commissioner from attending to his statutory duties. It is well established that the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commonwealth Commissioner of taxation assessing tax pursuant to the statutory duty so to do. (cf. Kitto J in Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 at 117 and approved by the High Court in several subsequent cases including Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466, Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 and Federal Commissioner of Taxation v Ryan (2000) 168 ALR 704). As stated by Hill J, very succinctly and unequivocally, in AGC(Investments) Ltd v FC of T 91 ATC 4180 at p. 4195:

"....there is no room for the doctrine of estoppel operating to preclude the Commissioner of Taxation from pursuing his statutory duty to assess tax in accordance with law. The Income Tax Assessment Act imposes obligations upon the Commissioner and creates public rights and duties, which the application of the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commissioner assessing pursuant to his duty so to do. The cases certainly support that view."

12 The accepted view is, therefore, clearly that no conduct on the part of revenue can operate as an estoppel against an obligation imposed by revenue legislation to assess for the correct amount of tax subject, of course, to any specific statutory provisions which prevent the revenue from exercising its statutory duties. In the present matter the Chief Commissioner has acted correctly within his statutory powers to make assessments where there was a failure on the part of a taxpayer to lodge land tax returns as required by the law. Accordingly, the doctrine of estoppel cannot assist the applicant to assert that the Chief Commissioner was not entitled in all the circumstances of the case to issue the assessments for land tax for the years in question.