Union Steamship Company of New Zealand Limited v Federal Commissioner of Taxation

[1920] HCA 80

HIGH

COURT

[1920. H. C. OF A. not. It is enough to say it is not necessarily right. The evidence rejected ought to have been received and considered at the end with

W h it f e l d any other relevant facts proved on the question of “ just cause or

D e L a u e e t excuse.”

No definition o f j u s t cause or excuse ” has yet been given

& Co. L t d . would exclude the question under the circumstances. It ought to have been allowed so that the defence might be fully investigated.

A}>jX'al allowed. Order o^ppealed from varied by direrthuf that judgment he entered for ik defendant on the fourth count. Costs of appeal to be costs in the cause.

Solicitor for the appellant, J. T. Tillett, Crown Solicitor for New South Wales.

Solicitor for the respondent, .4. G. de L. Arnold.

B. L.

[HlGJl COURT OF AUSTRALIA.]

THE UNION STEAMSHIP COMPANY OF )

A ppellant ;

NEW ZEALAND LIMITED . .

. )

THE FEDERAL COMMISSIONER

OF )

R espondent.

T A X A T IO N ............................................ J

H. C. OF A.

Tax—Assf^sm tvi^Forfign company— Liability to tax^Faihn

Method of aAsessment— Objections to assessment—Eicessiit assessment— War-time Profits Tax Assessment Act 1917 (A'o. 33 of 191"). «<■*• S y d n e y , 7, 10, 16, 22, 28, 5.7 (1)—Income Tax Arf 1913-1916 (Ao. 3-lo/

1920.

Dec. 6. 7.

191.7—A’o. 39 of 1916). sec. 22.

(>avnn DufTy Isaacs, The Itusinesa o f a shipping company incorporated outside the Commonwealdi aiul Ricli J J .consisted of trading between ports outside and ports within the Commoa-

wealth, and of carrying passengers and cargo from ports outside the Coimno®' wealth to ports within the Commonwealth and vice versa. For this purpose the company owned certain land and was the lessee of certain other hind within

■29 C.L.R.]

OF AUSTXiALIA.

the Commonwealth whereon were offices, stores and wharves where employees

H. C. OF A.

of the company were engaged in performing services incidental to the com­1920.

pany’s business, and within the Commonwealth the company booked passen­

gers and cargo and made all usual contracts in connection therewith, and U n io n

St e a m s h ip completed in the Commonwealth the performance of similar contracts made

Co. OF N e w

elsewhere.

Z e a i â n d

L t d .

Held, tha t the company was assessable to tax under the War-time Profit

V.

Tax Assessment Act 1917 in respect of the business so carried on, and that for F e d e r a l

that purpose, under sec. in of that Act, sec. 22 of the Income Tax Assessment

C o m m is­

s io n e r OF

Act 1915-1916 was applicable.

T a x a t io n .

In the absence of any return by the company the Commissioner took as the basis of his assessment for the particular period the amount of the total receipts of the company within and without the Commonwealth for that period as shown by its returns for income tax purposes. Of that sum he took 10 per cent, to be its pro6t for tha t period. Of the amount so ascertained he took 5 per cent, to be the war-time profit for that period, and assessed the war time profits tax under the irar-<i»ie Profits Tax Act 1917 as being .50 per cent, of the sum so arrived at, and added 10 per cent, of the amount of tax so ascertained as additional tax under sec. .55 (1) of the Wnr-tlHip Profits Tax Assesstnent Act 1917 for not furnishing returns, and demanded the total sum from the company. •

Held, tha t in the absence of evidence by the company on the matter, the sum assessed was not excessive.

Where the Commissioner makes an assessment under sec. 22 (c) of the War-time Profits Tax Assessment Art 1917 of a person who has not furnished any return, the person assessed, in order to establish that the assessment is. excessive and so escape liability to tax, must object to the assessment in the manner provided by sec, 28. and may rely only on such grounds of objection as are stated in his objection, but he is not liiiiited in his objection to the quantum of the tax only.

Case

st a t e d .

On the hearing of an appeal by the Union Steamship Co. of Xew Zealand Ltd. to the Supreme Court of Xew South Wales from an assessment of it for war-time profits tax, CuUai C.J. stated a case, which was substantially as follows, for the opinion of the High Court:—

1. This is an appeal from assessment of war-time profits tax for the financial year commencing on 1st July IfiL).

2. The appellant is a foreign company incorporated in the Dominion of Xew Zealand, and having its board of directors and principal place of business and head office there.

HIGH COURT

86 [192U.

H. C. OF A. 3. The business of the appellant is that of a shipping company, and consists of trading between ports outside Australia and ports

U n io n within Australia, and of carrying passengers and cargo from ports

(̂ îl̂ side of Australia to ports within Australia and vice versa. For Zeal4ni> purpose of conducting such business the Company owns certain i*. land and is lessee of certain other lands within the Commonwealth

CoMMis- on which are offices, stores and wharves where certain employees of

the Company are engaged in performing services and duties inci- ----- dental to the Company's general business ; and in the Common­

wealth the Company books passengers and cargo and makes all usual contracts in connection therewith, and completes in the Com­ monwealth the performance of similar contracts made elsewhere.

4 (a). By notice in the Commonwealth Gazette of 15th Novem­ ber 1917 the Commissioner required persons carrying on business of any description deriving profits from sources within Australia to furnish returns in the prescribed form for the purpose of calculating the pre-war standard of profits and the capital of that business.

4 (6). From early in February 1918 to 21st March 1918 con­ versations and correspondence took place between the Commis­ sioner and the authorized officers of the appellant Company, with regard to the liability of the appellant Company to war-time ptofits •taxation under the said Act and, without prejudice thereto, with regard to the basis upon which the tax, if any, could be assessed against the Company under the said Act.

4 (c). On 12th February 1918 the Commissioner requested the appellant to furnish the following information, that is to say: (1) the total freights and passage money earned by the Company from all parts of the world for the said financial year ; (2) the total net profits for the said financial year from freights and passage money exclusive of interest from investments or any other income outside the shipping business.

4 (d). The appellant did not make the return in the p re sc rib e d form in par. (a) hereof mentioned or any return.

4 [e). Ihe appellant did not give the Commissioner the informa­ tion asked for as mentioned in par. 4 (c).

4 (/). During the period covered bv the said assessment the appellant made profits in the business described in par. 3 hereof.

29 C.L.R.]

OF AUSTRALIA.

4 ((/). The gross sum receivable by the appellant in Australia and .elsewhere throughout the world in respect of passages, general

C. or A.

freights (including live-stock), mails and subsidies during the twelve U n io n

months which ended 31st March 1910 was £956,553, and for the

twelve months which ended 31st March 1917 was £1,136,519.Ze a l a n o

L t d .

5 (a). The respondent alleges that upon the facts hereinbefore mentioned he had reason to believe that the appellant was a tax-

V.

F e d e r a l

Co m m is­

s io n e r o r

paver who had made default in furnishing a return.

T a x a t io n .

5 ih). The respondent accordingly, purporting to act under sec. 22 of the said ]Var-fime Profits Tax Assensment Act 1917 and the }ynr-time Profits Tax Art 1917 and all other powers vested in him as such Commissioner, made an assessment of the amount upon which in his judgment war-time profits tax ought to be levied in the case of the appellant, viz., the sum of £-5,008; and by notice of assessment and assessment required the appellant to pay tax thereon to the amount of £2.504. together with an amount of £250 8s.. being additional tax of 10 per cent, as penalty described in the said notice of assessment as penalty for late return.

6. The appellant paid the sum of £2,754 8s., being the said tax

£2,504 plus the said additional tax (10 per cent.) £250 8s., and bv notice of objection dulv objected to the said assessment, and claimed that the said assessment was excessive and that the appel­ lant was not liable for any war-time profits tax for the following reasons, that is to say : (1) that the amount of the assessment is excessive ; (2) that the assessment has not been made in accordance with the provisions of the War-Time Profits Tax Assessment Art ; (3) that the basis of assessment adopted by the Commissioner (namely, the arbitrary computation of profits at 5 per cent, of 10 per cent, of freights, passages, mails and subsidies as set out on Form No. 3 attached to the notice of assessment) is not authorized by the said Act, and the assessment is therefore invalid ; (4) that the basis of 10 per cent, of the amount of freights, passages, mails and subsidies adopted bv the Commissioner is not authorized by the A ct; (5) that the said assessment is invalid in that it is based on an amount which does not represent either the actual profits or the amount which should be arrived at by applnng sec. 7 and/or sec. 10 of the said A ct; (6) that the Company is not liable for the

88 HIGH COURT

11920.

H. C. OF A. tax or ally pai't thereof inasmuch as no method or means is provided

\yy the Act whereby the profits and gains of the business from

T n io n sources within Australia determinable under sec. 10 can be ascer­

tained or the actual profits of the business from sources within

Z e a l .\x d

L t d .

Australia can be determined ; (7) that the Company is not liable

•

*’• for the tax or any part thereof inasmuch as the said Act incorporates

F e d e r a l

Co m m is­

the principles prescribed by sec. 22 of the Income Tax AssessmeiU Act

s io n e r

OK

T a x a t io n .1915-19K) for ascertaining the amount upon which tax shall be pay­

able for purposes of the Commonwealth income tax, and such principles do not provide a means whereby the necessary monthly average of the profit or loss of the business arising in the accounting period from sources within Australia or the actual profits of the business arising from sources in Australia can be ascertained for the purpose of determining whether or not the Company has derived an alleged excess war-time profit upon w'hich the tax can be levied; (8) that the Company is not liable to furnish returns ; (9) that the Company is not liable to be assessed in respect of profit made by it from sources within Australia; (10) that the Company, being a foreign company not within the jurisdiction of the Commonwealth Legislature, is not subject to the Act, and that the assessment is therefore invalid : (11) that the alleged war-time or excess profits cannot be ascertained till the War has ended ; (12) that portion of such profits, if any, that may have been earned bv the Company in respect of the transactions upon which the assessment is made were prior to the passing of the Act distributed by the Company by way of dividends paid to certain shareholders of the Company who are not resident in Australia or within the jurisdiction of the Common­ wealth Legislature, and the Company has no right, power or authority to claim or enforce the repayment of such dividends .or any part thereof from such shareholders or any of them ; (13) that the Com­ pany is not liable to pay the sum of £250 8s. claimed as penalty for late return inasmuch as the Company is not liable to furnish any return or pay any tax under the A ct; (U) that the assessment is invalid inasmuch as the tax is claimed on excess profits ; (15) that the Company is not liable for the tax or any part thereof.

7,

The respondent disallowed the objections mentioned in par. b

hereof, and appellant duly asked the respondent to treat his said

‘29 C.L.R.]

OF AUSTRALIA.

objection as an appeal pursuant to sec. 28 of the said War-time H. C. o p a. ■

Profits Tax Assessment Act 1917, which was accordingly done.

8. For the purposes of this case the said assessment, the notice of same and the said notice of objection are to be taken to be before

*xe\v

the Court.Z e a l a n d

L t d .

9. On the hearing of the appeal before me the following questions, which in my opinion are questions of law, having arisen, at the request

V.

F e d e r a l

Co m m is­

s io n e r OF

of the respondent I state this case for the opinion of the High Court. The questions for the determination of the High Court are :—

T a x a t io n .

(1) Is the appellant liable to tax under the War-time Profits

Tax Assessment Act ?

(2) Is the appellant liable in the circumstances for any war-time profits tax in respect of the business carried on as aforesaid ? (3) Is the appellant under the circumstances set out in this case entitled to rely upon any objection other than the objection that the assessment is excessive ?

(4) If the appellant is liable for war-time profits tax as afore­ said, is the a.ssessment made by the Commissioner as afore­ said excessive within the meaning of sec. 22 of the War­ time Profits Tax Assessment Act 1917 upon the facts herein stated ?

Sir Edward Mitchelh K.C. (with him Harper), for the appellant.

Leverrier K.C. (with him Russell), for the respondent.

I.s.\ACS J. This is a case stated for the opinion of this C‘ourt under sec. 29 of the War-time Profits Tax Asse^ssment Act 1917 by the Chief Justice of Xew South Wales, who sat as a Court of appeal under the Act. His Honor has stated four questions for our deter­

mination.

The first question is : Is the appellant liable to tax under

the War-time Profits Tax Assessment Act ? That question appears to have reference to the tenth reason stated in the appellant’s objec­ tion to the assessment. That reason is not pressed by learned coun.se! before us, and on general principles it must be answered: Yes.

The second question is in these terms : Is the appellant liable in

HIGH COURT

90 [1920.

H. C. or A the circumstances for any war-time profits tax in respect of the business carried on as aforesaid ? The point of that question, as Uxtox appears from the argument before us, is that there is no workable New scheme in the Act for arriving at the war-time profits of a company Zealand carrying on such a business as is carried on bv the appellant. The

Lt d . . ^

.

circumstances are set out. so far as is relevant to this question, in

F e d e r .\t.

C o m m is ­

par. 3 of the case, which says :—“ The business of the appellant is

s io n e r

OF

T a x a t io n .that of a shipping company, and consists of trading between ports Isaacs J .outside Australia and ports within Australia, and of carrying pas­

sengers and cargo from ports outside of Australia to ports within Australia and vice versa. For the purpose of conducting such business the Company owns certain land and is lessee of certain other lands within the Commonwealth on w'hich are offices, stores and wharves where certain employees of the Company are engaged in performing services and duties incidental to the Company’s general business ; and in the Commonwealth the Company books passengers and cargo and makes all usual contracts in connection therewith, and completes in the Commonwealth the performance of similar contracts made elsewhere.” Those circumstances establish beyond doubt that the appellant carries on a business which is liable to tax. Sec. 7 of the Act provides a method of calculating the war­ time profits by having what is called an “ accounting period.” That period is a period of twelve months for which the accounts of the business are made up. There are other provisions for periods where the accounts of the business are not made up, but we may pass over them for the present case. As the accounting period may fall partly within one financial year and partly within another, monthly averages are to be taken of the respective portions of the accounting period which may fall in each particular financial vear, and the amounts of profit or loss are put together, and from the sum of the profits is deducted the pre-war standard of profits as defined for the purpose of the Act. .\fter that has been done, deductions may be made according to the circumstances. But it is said that in this case—this is the concrete point that is made—that there is no work­ able scheme. I t is said that the pre-war standard of profits caimot. as the Â-ct is framed, be ascertained in connection with such a busi­ ness as is carried on by the appellant. T need not consider the result

£0 C.L.R.]

OF AUSTRALIA.

if that were so.

It might be an unfortunate thing for the taxpayer H. c. o f a.

if in the circumstances of his case there was no possibility, by reason

of the absence of materials or other practical difficulties, of his estah- ĉ

n

lishing the pre-war standard of his profits.

I t might be that he would co *̂̂ o f N e \v

Z e a l a n d

have nothing to deduct from the profits of the accounting period.

L t d .

But that does not arise in this case, because it is provided by sec.

r.

F e d e h a l

16 (1) that “ the profits of any pre-war trade year shall be computed, Co m m is­

s io n e r OF Isaacs J.

on the same principles and subject to the same provisions as the

T a x a t io n .

profits of the accounting period.”

The particular years of pre-war

trading are, to a limited extent, within the selection of the taxpayer, and, when the amount is arrived at, the deduction is to be made. Whatever difficulty exists in this or any particular case in arriving at the pre-war standard of profits is not a legal difficulty but a com­ mercial difficulty. There may be difficulty of dissecting trading accounts or of book-keeping, but that is immaterial from a legal standpoint.

Those, then, are the provisions which apply in general cases, and sec. 10 provides that “ (1) The profits arising from any business shall be separately determined for the purposes of this Act, but shall be so determined on the same principles as the profits and gains of the business are or would be determined for the purpose of Commonwealth income tax, subject to the modifications set out in Part IV.” (which relates to the computation of pre-war profits) “ and to anv other provisions of this Act.” The result of that is that, except where some .specific provision is made in relation to any business or portion of a business or other matter with regard to war-time profits tax, the principles established by the Income Tax AssessyneiU Act are to be followed. When we turn to the circum­ stances of this case which 1 have mentioned, namely, the trade carried on by the appellant, we find that there is a section in that Act, sec. 22, which does apply to this very class of business, and as to which there is no modification in Part IV. or in any other provisions of this

Act so far as the questions raised in this case are concerned.

Sec. 22

of the Inx-ome Tax Assessment Act provides that “ (I) Every person whose principal place of business is out of Australia and who either as owner or charterer of any ship carries passengers, live-stock, mails

HIGH COURT

(1920.

H. C. OF A. or goods shippeil in A\istralia shall by his agent or other representa-

tivo in Australia^ when called upon by the Commissioner by notice U n io n publisbwi in the Gazttfe or by any other notice, make a return of the Cô 'ô 'xew amount payable to him (whether such amount be payable in or beyond Australia) in respect of the carriage of the passengers, live­ stock, mails and goods. (2) The agent shall be assessed thereon

F e o k r a l

Co m m is ­

and liable to pay tax on five pounds per centum of the amount so

s io n e r

OF

payable."

Now, in this case it is common ground that that is the

T .\x a t ii>n .

section under which the appellant ought to be taxed.

The result,

I*ucs

J .

so far. is that a perfectly workable scheme is provided, needing only the requisite information to apply it in any particular case. The information, of course, comes primarily from returns. The answer to the second question, therefore, must be : Yes.

The third question is : Is the appellant under the circumstances set out in this case entitled to rely upon any objection other than the objection that the assessment is excessive ? The answer to that question depends on the proper reading of sec. 22 of the War-tim Profits Tax Assessmoit Act, which is as follows : “ If . . . (c) the Commissioner has reason to believe that anv person (though he may not have furnished any return) is a taxpayer, the Commissioner may make an assessment of the amount upon which, in his judgment, war-time profits tax ought to be levied, and the person assessed shall be liable to war-time profits tax thereon, excepting so far as he establishes on objection that the assessment is excessive.” When an assessment is made which I may call a default assessment, the person assessed may or may not be in reality a taxpayer, he may be asses.sed in respect of a business which is exempt, or he may be assessed in respect of an amount which is erroneous. But for some reason or another he may be called upon bv the assessment to pay an amount which is more than he ought, under the (urcumstances, according to law to be called upon to pav. Now, in my opinion, the words “ that the a.ssessment is excessive ” in sec. 22 do not limit the person assessed to merely objecting to the quantum of the tax. When sec. 22 is read in conjunction with the other sections of the Act, my view is that it means simply that, although ir oi dinary cases returns are required to base an assessment upon them, yet, in the cases mentioned in sec. 22, if an assessment is made the person

29 C.L.K.]

OF AUSTRALIA.

shall be taken to be a taxpayer unless he renders an objection in

c. or a .

the way mentioned in sec. 28 and establishes that objection. When he raises the objection under sec. 28. which limits the time for raising it to thirty days after service of the notice of the a.ssessment. cô f «

and when he sets out the reasons for liis objection he is to have Zealand

the fullest opportunity of testing his liability on anv ground, but

FKDKR.iL

he is limited in his appeal to the reasons for objection set out in

siosKR or

his objection. He is in no better or worse j)osition than if he had TAX.iTJON.

made a return. Therefore, in the sense in which I take the woixls

I«aac» J.

“ that the assessment is excessive." that sense being that the appellant is bound to rely on an objection and on such grounds of objection as are raised in it. I think he Ls not entithxi to relv on any other than the ground mentiomxl. He cannot, for instance, rely on the want of a ret\irn. Whatever ground is taken in his ô )jec- tion for .saying that he has been a.sse.s.s(Hl for more tax than he is bound to pay, he is eutitUnl to rely on just iws if he had made a return.

That brings me to the fourth (pu*stion, which is : If theappellant

18 liable for war-time j)rofite tax as afort‘sai<l, is the asst*ssment made

by the Tommissioner as afore.said excessive withiji the meaning of sec. 22 of the Tax AssrssmftU Art I‘U7 upon the facts herein stat<*d't This case is stati^I under sck*. 2b. and that swtion limits the power to state a case to questions which in the opinion of the ( ourt are (juestions of law’, and this f’ourt .should answer those questions of law and remit its opinion to the Court below. That means that (juestions of law mav be sent to this Court and are to be answcr(*d bv this (’o u rt; and the question, therefore, as I read it, is this : Vpon the facts herein stat<*d what should the Court as a matter of law’ say as to whether the aaseasment is excessive or not ? The assessment for this puq>ose has to be regarded as consisting of two distinct parts : the primary tax and the additional tax by way of penalty. As to the primary tax the first thing to consider is the proper construction of the asse.ssment. Sec. 24 provides that “ The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied w’itli.” In that assessment the C’ommissioner put down for the accounting period ending 3lst March 1910 the sum of £950.553 as the amount

HIGH G Ol'RT

[1920.

H . C. orA received bv the appellant durinf! the full period, and £71T,41.'> »s

the amount received during the api>ropriate portion of that period. IMoN He then put down for the accounting periotl ending on.ilst Match O o ^ o r H H T the sum of £l.l:!l>,ol!l as the amount receivial by the appellant

ZE-\LAXD

L t d .during the full period, iuid £2S4,l.U) as tlie anu>unt received during

r. the appropriate portion of that periiKl. He then put down the

. Federal

amount of

being the sum of £717,415 juid £2t4.l:J0.

COMMTS

SION'ER OF

T a x -<t i o s .The figures which he ti>ok as the total receipts for the two accounting

Isaacs J .periods he got from the income tax returns made by the appellant

under the Ittcome Tax AssesstmtU Act. That sum of £1.<K)1.54.̂ was the onlv material the Commissioner had for calculating the war-time profits of the appellant except so far as he was able of his general knowledge and judgment to arrive at some basis that seemed to him to be fair. What he did then was to take 10 per cent, of that sum, namely. £100,154. as a working basis, which was in one sense a purely arbitrary sum, that appeared to him to represent the profits of the appellant. Then he went as near as he could to apply­ ing sec. 22*of the War-time Profits Tax Assessmetit Act and took 5 per cent, of the £100,154. and arrived at the sum of £5,008 as being the excess profits, and, since the War-time Profits Tax Act provided that 50 per c^nt. of the excess profits should be the amount of the tax, he arrived at the sum of £2.504 as representing, according to his view, the true amount of the war-time profits tax payable by the appellant. That appears to be such a method of proceeding in the absence of other information as cannot be said to be unlawfnl or to show any excess on the face of it. But then, inasmuch as there had been a failure by the appellant to send in any return or the return having been sent in too late, he added the sum of £250 8s. under the provisions of sec. 55 (1), which provides that any person who fails or neglects to furnish any return as and when required shall be liable by way of additional tax to pay 10 per cent, of the amount of tax assessable in addition to any additional tax payable under sec. 54, with a proviso that the Commissioner may, in any particular case, for reasons which he thinks fit, remit the additional tax or any part thereof. The total amount of the tax according to this assessment, including the additional Ux, amounts to £2,754 Ss.

29 C.L.R.]

OF AUSTRALIA.

And it now has to be considered whether, as contended bv the appel- H. c. or a .

lant,the assessment is excessive by reason of the additional tax of

£250 8s. It is now necessary to refer to some circumstances men-

imon

tinned in the case in pars. 4 (o), 4 (c). 4 {d) and 4 (e).

[His Honor

read those paragraphs and continued:—] 1 should add in reference

Z k a l a s o

Lt d .

to par. 4 (a) that in the notice in the Gazette the date for sending in

r.

F kokral

the reasons is stated as 15th December 1017. The position then

C*>MMIS- S tO N E R O F

was that the material which was asked for in the returns mentionetl T a x a t io n .

in the Gazette notice and the information which was otherwise asked

I&aaca J.

for by the Commissioner were not given, and the Commissioner, not being in possession of sufficient material upon which to proceetl strictly in accordance with the figures which would answer the requirements of sec. 2'2 of the Iru'ome Tax Assessmnit Act as read into the War-time Profits Tax AsscssinetU .Irt, made the assessment. The date of that assessment was 20th .April 1018, and that date indicates what is meant by the term “ late n‘tvirn." There was no return. The appellant urged that the return asked for by the Gazette notice was irrelevant to thi.s taxpayer's business. The answer is that that is no sufficient reason. The .\ct places the administration in the hands of the f’ommissioner; its terms are explicit and necessarily wide; returns are required in sec. 18 from “ ever)’ person liable to be taxed,” an expression which includes the present appellant; and the return ask(*d for goes no further than a full and complete statement of the net profits of his business, which is what the Act expresses. One purpose of returns is to enable the Commis.sioner to “ assess ” taxpavers, and the final outcome that appears—particularly in the absence of a return—cannot determine whether or not a return should or should not have been made. Sec. Ilk though not applicable in the circumstances of this case, shows that there is no such limitation as is contended for. There was a failure to comply, and the additional tax accrued by reason of sec, o5 (1). The position, so far, is that neither in respect of the primary tax nor of the additional tax is there anything to show an excess in any sense.

Mhat, then, should be the answer to the fourth question ? hec. 25 provides that " (1) The production of any notice of assess- ttient . . . shall (a) be conclusive evidence of the due

96 H IG H

COURT

[1920. H. C. OF A . of the assessment, and Ih) be conclusive evidence that the amount and all the particulars of the assessment are correct- UsioN except in proceedings on appeal against the assessment, when it Co. ok V eu shall be prima facie evidence only.” This is a proceeding on an appeal, and therefore the notice of assessment is prima facie evidence

F e d e r a lonlv. Reading secs.

22 and 25 together, it appears to me that the

COMMIS-position is this :—The amount claimed is

prima facie proved to be

.SION'EB OF

correct, and upon the evidence before us the question is, is there anv evidence to the contrary ? There is no evidence whatever that

T a x a t io n ,

Isaacs

J .

the assessment is incorrect for any reason. The position is one in which, if we were to apply the term used in trials before a jurv, the evidence is all one way, and in that view the question must, in my opinion, be answered that on the facts stated in the case the assessment made by the Commissioner is not excessive within the meaning of sec. 22.

Gavax D u ffy J. I agree with the answers suggested by my brother Isaacs, but I should like to put the answer to the fourth question in these terms, which I think are not inconsistent with anything he has said : 1 am unable to say whether the assessment is excessive or not. but in my opinion the appellant has not estab­ lished that it is excessive.

R ich .1. 1 would add a few words on one or two of the questions asked bv the case. As to the first question, it is apparent on the face of the irrtr-7'jme Profits Tax Assessment Art that the ordinary liability of a foreign company drawing profits from Australia is not to be lost. The proviso to sec. 15 (1) makes special provision for a person not resident in Australia.” 1’hen sec. 46 requires every company which carries on business in Australia to have a public officer here, and that obviously includes a foreign company. With regard to the fourth question, the Legislature in passing a taxing Act, in which so much depends on information given by the taxpayer or possible taxpayer, is sometimes forced to require people to give information which may turn out to be immaterial, but it may be material. I t is essential for the efficient working of the Department that returns should be furnished so that the Commissioner may

29 C.L.R.1

OF AUSTRALIA.

proceed oil the making of the assessment.

In this connection I H, c. ui- .t.

would quote a few words from the opinion of Lord Loreburn L.C. in

Attorneit-General v. Till (1). There his Lordship, discussing the

u.vro.v

delivery of returns under the English Income. Tax Act, said “ It is necessary, therefore, that there should be a sharp weapon avail­ able in order to prevent the requirements of the Act being trifled

F k d e r a j,

with. On the other hand the making of the return or statement is not always easy, and mistakes may occur notwithstanding that

CoMMIS-

SIONKU OF

rare mav have been used to avoid them, still more when proper care has not been used. Accordingly provision is made for penalties which are to fall in the event either of unpunctuality or of inaccuracy in the return or statement required. But alongside of that are to be foimd provisions to relieve a man from the penalty if he mends his mistake. . . . 1 see nothing either harsh or unreasonable in this. A fair balance is held, and while the revenue is protected against procrastination and carelessness which, if practised on any large . scale, would make the collection of the tax an intolerable business, anvone who though honest has been neglectful may redeem his neglect.” Those remarks apply to the statutory duty of furnishing returns and to the imposition and remission of penalties under sec. 5o of the Act now under consideration. I agree with what has been said by my brother Isaacs, and with the answers to the questions proposed by him.

Questions ayiswered ; (1) Yes; (2) Yes; (3) Ao, in the sense that “ excessive ” means jnore than the ajypellant is hound to pay ; (4) ^o.

Solicitors for the appellant, Minter Simpson <& Co.

Solicitor for the respondent, Gordon H. Castle, Crowm Solicitor

for the Commonwealth.

B . L .

(l)

(1910) A.C., 50, at p. 53.