The Chief Executive Officer of Customs v Pusztai

[2000] QDC 229

DISTRICT COURT OF QUEENSLAND

CITATION:

The Chief Executive Officer of Customs v. Pusztai [2000] QDC 229

PARTIES:

THE CHIEF EXECUTIVE OFFICER OF CUSTOMS  Plaintiff/Respondent
v.
ANTON PUSZTAI  
Defendant/Applicant

FILE NO/S:

D 5021 of 1998

DIVISION:

PROCEEDING:

ORIGINATING COURT:

District Court Brisbane

DELIVERED ON:

24 August 2000

DELIVERED AT:

Brisbane

HEARING DATE:

21 August 2000

JUDGE:

Judge Forde

ORDER:

Declaration that the customs duty payable on cigarettes and tobacco products forwarded from Norfolk Island to Australia on 4 June 1998 was a valid duty pursuant to s.122 of the Constitution.
Order that the applicant to pay the respondent's costs of and incidental to this application including reserve costs to be assessed on the scale appropriate when the amount recovered is less than $50,000.

CATCHWORDS:

Constitutional Law - Constitutional legislative power -Customs duty on tobacco products and cigarettes imported from Norfolk Island to Australia - whether a contravention of s.51(ii) and/or 55 of the Australian Constitution. Whether Norfolk Island falls within the meaning of "States or parts of States" under s.51(ii). Whether s.122 of the Constitution is a plenary power which includes a subject of taxation in its own right.

The Commonwealth Constitution;
Customs Act 1901 (Cth);
Customs Tariff Act 1995 (Cth);
Customs Tariff Amendment Act (No.5) 1997;
Acts Interpretation Act 1901 (Cth);
Norfolk Island Act 1913 (Cth).

Ha & Anor v. State of New South Wales (1996-1997) 189 CLR 465;
Berwick Limited v. Gray (1975-1976) 133 CLR 603;
Buchanan & Anor v. The Commonwealth & Anor (1913) 16 CLR 315;
Teori Tau v. The Commonwealth [1969] 119 CLR 564;
Capital Duplicators Pty Ltd v. Australian Capital Territory (1992) 177 CLR 248.

COUNSEL:

Mr D.J.Campbell for the Applicant
Mr D.M.J. Bennett Q.C., with him Mr L. Kelly for the Respondent

SOLICITORS:

Adamson Bernays Kyle & Jones for the Applicant
Australian Government Solicitor for the Respondent

Introduction

1. This is an application for a determination of a question of law.  By a plaint dated 26 November  1998, the Chief Executive Officer of Customs (hereinafter referred to as the respondent) commenced an action against Anton Pusztai as defendant (hereinafter referred to as the applicant) for the recovery of customs duties pursuant to the provisions of the Customs Act 1901. By an order of this court dated 8 June 2000, the following question for determination was agreed upon:

"If customs duty was payable on cigarettes and tobacco products imported from Norfolk Island to Australia on 4 June 1998, was such duty invalid because it contravened s.51 (ii) and s.55 of the Australian Constitution?"

1. The same order gave leave to the applicant to amend paragraph 9 of the defence and counterclaim as follows:

"If duty is payable (which is denied) then, to the extent that such duty was calculated as being 52.32% of the wholesale list price of the imported goods (as mentioned in paragraph 9 of the plaint) it is invalid as it contravenes s.52 (ii) and/or s.55 of the Australian Constitution".

Background

1. On 4^th day of June 1998, the applicant arrived in Australia on a flight from Norfolk Island.  In his possession he had a quantity of cigarettes and tobacco which are listed in paragraph 5 of the plaint.  According to the plaint, the sum of $4,515.03 was the duty payable on such cigarettes and tobacco.  The quantum of the claim is not disputed.  The particulars of the claim are as follows:-

"12775 "Winfield Blue" cigarettes

Weight - 9.04 kilo

Wholesale List Price (WLP) @ $227.25 per 1000 = $2,903.12

"White Ox" tobacco and "Drum" tobacco

Weight = 8.5 kg + 2.1 kg = 10.6 kg

WLP of 10.6 kg @ $252.55 per kg = $2,677.03

Total weight = 9.04 kg + 10.6 kg = 19.64 kg

Total WLP = $2,903.12 + $2,677.03 = $5,580.15

Duty payable pursuant to Customs Tariff Act 1995,

Schedule 1, items 24.02.20.10 and 2403.10.20

@ $86.92 per kg for 19.64 kg = $1,707.10
             @ 50.32% of WLP of $5,580.15 = $2,870.93

Total duty = $1,707.10 + $2,807.93 = $4,515.03."

In fact, Schedule 3 of the Customs Tariff Act 1995 was amended by Schedule 1 of the Customs Tariff Amendment Act (No. 5) 1997.

1. Duty then payable under the Customs Tariff Act 1995 as amended had a two tier character. Firstly, there was the duty payable with respect to weight and that amounted to $1,707.10. Secondly, there was a duty payable as a percentage of the wholesale list price. In that case it was 50.32% of the wholesale list price which amounted to $2,870.93. The total duty then amounted to $4,515.03. The question is whether or not duty based on this percentage of the wholesale list price, namely $2,870.93, is owed to the respondent. This depends upon the determination of the point as raised in the defence, namely, whether the relevant provision of Schedule 3 of the Customs Tarriff Act 1995 as amended (hereafter referred to as the Customs Tariff Act) is constitutional.

Arguments for the applicant

1. The Customs Act 1901 controls the importation and exportation of specified goods into and out of Australia. "Australia" is defined in s.4 of the Act to exclude the external territories. The effect of that is that the Act applies to goods imported into mainland Australia from Norfolk Island. The system for taxing products in Australia was altered after the High Court decision in Ha & Anor v. State of New South Wales (1996-1997) 189 CLR 465. It was submitted that that decision held that an excise imposed by the states and territories on tobacco (and liquor and petroleum) products was in breach of s.90 of the constitution. In response to that decision and to ensure that the State's revenue remained in tact, the Commonwealth Government imposed uniform excise duties on (inter alia) all tobacco products sold within Australia.

1. The applicant relies heavily on a press release of the Treasurer which acknowledged that the excise duty so collected represented a "state tax imposed and collected by the Commonwealth at the request and on behalf of the states and territories".  That press release is dated 6 August 1997.  This is referred to by the applicant as the "1997 excise duty".  Of course, the respondent does not accept that it is an excise duty but rather a customs duty lawfully imposed.  Prior to 1997, imports of tobacco products from Norfolk Island to Australia for home consumption were only levied with the normal customs duty.  It was exempt from other State fees and charges.  The alteration is made up of the two components previously discussed namely the charge on the weight of tobacco which reflected the old Commonwealth custom duty payable prior to 1997 and the additional payment of 50.32% of the wholesale list price.  It was the second component which was introduced by the Commonwealth in 1997 in response to the decision in Ha, ibid.

1. The applicant relies upon the statement by the Treasurer as being evidence of the purpose of the amendments to the Customs Tariff Act: s.15AA of the Acts Interpretation Act 1901 (Cth).

Section 51 (ii) of the Commonwealth Constitution.

1. This section of the Constitution provides as follows:

"The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to -

(i)         …. :

(ii)       Taxation but so as not to discriminate between States or parts of States:"

1. The first question is whether Norfolk Island could fall within the meaning of "States or parts of States".  The applicant relied upon the decision of Berwick Limited v. Gray (1975-1976) 133 CLR 603 at 608. It was argued that the case was authority for the proposition that s.51(ii) applies to external territories in general and in particular to Norfolk Island, which in view of its history is to be regarded as part of the Commonwealth. Therefore, it was argued that the second component of the customs duty was discriminated between the States and Norfolk Island.

1. It was also suggested that there was a second way by which taxation or such laws could apply to Norfolk Island and that is under s.122 of the Constitution. That was referred to in Berwick at p.607. The applicant relies on s.51(ii) notwithstanding the broad provisions of s.122. The next question is whether the power to impose the duties under the Customs Tariff Act was discriminatory because s.51(ii) requires such duties not to be imposed in a discriminatory manner.  It was submitted that the imposition of such duties was discriminatory because similar taxation was not imposed on the movement of tobacco products internally between States.  If that argument were accepted it was submitted that the amendments in 1997 may be discriminatory in respect of s.51(ii) and therefore invalid.

Section 55 of the Commonwealth Constitution.

1. This section of the Constitution provides as follows:

"Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect."

1. It was conceded  by counsel for the applicant that there is some doubt as to whether s.55 is a law which relates to Norfolk Island: Buchanan & Anor v. The Commonwealth & Anor (1913) 16 CLR 315. Here, it was held that the limitation imposed by s.55 of the Constitution upon the making of laws imposing taxation applies only to such laws as are made under the power conferred by s.51(ii), and do not apply to laws made under power to make laws for the Government of any territory acquired by the Commonwealth conferred by s.122, the two powers being independent of one another. It followed therefore that a law imposing taxation in the Northern Territory was enacted under s.122 and that s.55 as it relates to s.51(ii) was irrelevant.

1. Notwithstanding that decision, counsel for the applicant relied upon the submission that s.55 does apply and that the component of the Customs Tariff Act which deals with the percentage of the wholesale list price is, in effect, implementing an element of taxation law not a law with regards to customs because it forms part of the scheme which the Treasurer was introducing to compensate the States as a result of the loss of revenue which flowed from the decision of Ha, op.cit.  Therefore, the argument continues there is a separate taxation subject which is introduced under the guise of customs duty pursuant to the Customs Tariff Act and therefore was in breach of s.55 because the real nature of the taxation which is imposed is not a customs duty but an excise or some other form of taxation in line with the taxation remedies referred to by the Treasurer and implemented under the amendment of 1997.  Counsel for the applicant conceded that the statement by the Treasurer is the strongest basis for the argument. 

1. The arguments under s.51(ii) and s.55 have been referred to to preserve the applicant's position if this matter goes elsewhere. It is unnecessary to decide those questions because of the view which I take in relation to the application of s.122 of the Constitution.

Section 122 of the Commonwealth Constitution.

1. This section provides as follows:

" The Parliament may make laws for the government of any territory surrendered by any State to and accepted by the Commonwealth, or of any territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such territory in either House of the Parliament to the extent and on the terms which it thinks fit."

1. It was submitted by Mr Bennett Q.C. for the respondent that s.122 is a plenary power which includes a subject of taxation in its own right. It follows that the Commonwealth did not need to rely upon s.51(ii) at all. It should be mentioned that the respondent presented contrary arguments to those pursued by the applicant in relation to ss.51(ii) and 55.

1. The respondent argued that when the Commonwealth legislates, it can do so under every power and there is no need for it to place a label upon the exact section upon which it relies: Berwick v.Gray at 611 per Jacobs J:

"The impugned legislation is a law with respect to taxation within the meaning of s.51(ii). It is also a law with respect to the Territory of Norfolk Island within the meaning of s.122. It is therefore within Commonwealth power."

See also Mason J at 607:

"The short and compelling answer to this argument is that the power conferred by s.122 to make laws for the Government of a Territory is a plenary power and all that need be shown to support an exercise of the power is that there should be a sufficient nexus or connection between the law and the territories."

See also Teori Tau v. The Commonwealth [1969] 119 CLR 564 at 570.

1. Mason J. was dealing there with the submission that a provision of the Income Assessment Act (1936-1937) (Cth) which extended to Norfolk Island was invalid because it was not supported by the power conferred by s.122 of the Constitution to make laws of the Government of a territory.

Other arguments

1. One further contention dealt with and rejected by the respondent was an argument that because Norfolk Island is part of Australia, a duty on goods imported from it to a State is an excise rather than a customs duty.

1. Mr Bennett argued that s.17 of the Acts Interpretation Act 1901 (Cth) excluded Norfolk Island from the definition of Australia and the Commonwealth; see also s.6 of the Constitution. S.3 of the Norfolk Island Act 1913 describes it as being a territory under the authority of Australia. The Acts of the Australian Parliament are not in force unless expressly stated (s.5). The case of Capital Duplicators Pty Ltd v. Australian Capital Territory (1992) 177 CLR 248 at 274 was referred to.

1. It is unnecessary to deal with these arguments.  Also, subject to what was decided in the present case, Mr Bennett submitted that if the respondent's arguments concerning s.51(ii) were not accepted, then Berwick's case was wrongly decided.

Conclusions

1. The question of law to be determined in this case can be answered as follows, and it is declared: that the customs duty payable on cigarettes and tobacco products forwarded from Norfolk Island to Australia on 4 June 1998 was a valid duty pursuant to s.122 of the Constitution. It is unnecessary to decide therefore whether it convenes s.51(ii) or s.55 of the Australian Constitution as the power conferred by s.122 to make laws for the government of a Territory is a plenary power.

1. It is ordered that the applicant do pay the respondent's costs of and incidental to this application including reserved costs to be assessed on the scale appropriate when the amount recovered is less than $50,000.