Wesfarmers Federation Insurance Ltd and Deputy Commissioner of Taxation

DECISION AND REASONS FOR DECISION [2001] AATA 698

ADMINISTRATIVE APPEALS TRIBUNAL )

) No WT1999/61

TAXATION APPEALS DIVISION )
           Re      WESFARMERS FEDERATION INSURANCE LTD
  Applicant
           And    DEPUTY COMMISSIONER OF TAXATION
  Respondent

DECISION

Tribunal Mr R D Fayle, Senior Member

Date3 August 2001
PlacePerth

Decision      Pursuant to s43 of the Administrative Appeals Tribunal Act 1975, the decision of the respondent of 8 April 1999, (page 280 of the T documents) to disallow the applicant's objection against the refusal of the respondent to allow a claim for sales tax credit, is affirmed.
  ...........(sgd R D Fayle)...........
  Senior Member
CATCHWORDS
SALES TAX – credit grounds – Exemptions and Classifications – parts used by repairers in repair of assured's property under insurance indemnity – whether parts were supplied to exempt users (the assured) - whether repairers agents of insurer – whether contract between assured and repairer and all rights subrogated to insurer – whether assured entitled to sales tax credit for parts purchased to repair their chattels,
Sales Tax Assessment Act 1992, ss5, 11, 16, 24, 25, 51, 59 & Credit grounds CR1, CR2, CR2A & CR5A
Sales Tax (Exemptions and Classifications) Act 1992, s4, Schedule 1, Items 3 & 194
Godfrey Davis Ltd v Culling & Hecht [1962] 2 Lloyds List LR 349
Cooter & Green Ltd v Tyrrell [1962] 2 Lloyd's List LR 377
Castellain v Preston (1883) 11 QBD 380 (CA)
Chippendale Printing Co Pty Ltd v FCT & Anor 97 ATC 4175
CCH's Australian Sales Tax Legislation, 16th edition, 1998, paragraphs 91,003 & 91,005
Kenneth Sutton, 3rd edition, LBC Information Services, 1999

REASONS FOR DECISION

3 August 2001 Mr R D Fayle, Senior Member

On 17 September 1997, Wesfarmers Federation Insurance Ltd ("the applicant") filed with the Deputy Commissioner of Taxation ("the respondent"), an application for refund of sales tax on the basis that sales tax had been paid on goods for the applicant's own use, which goods were supplied to persons for use in exempt circumstances pursuant to Item 194, Schedule 1 of the Sales Tax (Exemptions and Classifications) Act 1992 ("the E & C Act").
By interaction between the E & C Act and the Sales Tax Assessment Act 1992 ("the Assessment Act"), that provision operates to exempt goods falling within it. Item 194 of Schedule I of the E & C Act states:
Item 194: [Goods for supply to a person for use in exempt circumstances]
Goods for use by a person for supply to another person under a contract (other than a contract of sale) if:
(a) property in the goods is to pass to the other person under the contract; and
(b) the other person would have been entitled to quote for the purchase in reliance on an exemption Item, if the other person had purchased the goods.
In essence, the applicant's basis for its claim for a refund of sales tax is that it has, through its agent (the repairer) paid sales tax on goods, mainly spare parts. The claim covered the period from 1 April 1994 to 30 June 1997. The claim involved parts used to repair vehicles and machinery owned by primary producers (being persons eligible to claim sales tax exemption on those parts if they had purchased them). The parts were supplied pursuant to a contract of insurance between the applicant and those exempt users indemnified under those contracts. The contractual relationship between the parties, which is fundamental to this case is discussed in some detail when these reasons consider the submissions of parties below.
On 7 May 1998, the respondent advised the applicant that its request for the refund claim (then said to be for $1,192,737) had been disallowed in full. That letter provided reasons for the disallowance. On 3 July 1998, the applicant lodged a notice of objection against the disallowance and subsequently, before the objection had been determined, gave notice of an additional ground of objection on 23 September 1998. On 8 April 1999 the respondent advised the applicant that the objection had been disallowed. That notice was accompanied by detailed reasons. On 4 June 1999, the applicant, pursuant to s14ZZ of the Taxation Administration Act 1953, referred that decision to this Tribunal for review.
At the hearing the applicant was represented by Mr T Lampropoulos of counsel, assisted by Ms Driesen, solicitor. Mr M Corboy of counsel, assisted by Mr T Burrows solicitor, appeared for the respondent. The Tribunal had before it the documents filed pursuant to s37 of the Administrative Appeals Tribunal Act 1975 ("the T documents") and the following exhibits were taken into evidence:
A1      Statement by Malcolm Mansfield dated 5 May 2000;
A2      Statement by Bob Scott dated 5 May 2000;
A3      Statement by Neil Price dated 5 May 2000;
A4      Statement by Wayne Phipps dated 5 May 2000;
A5      Statement by Terry Austin dated 5 May 2000;
A6      Statement by Paul Schaffe dated 5 May 2000;
A7      Statement by Steve Economidis dated 5 May 2000;
A8      Statement by Mike O'Callaghan dated 5 May 2000; and
A9      Statement by Heather Kerr dated 5 May 2000.

Not other evidence was adduced.

The evidence

The applicant is a general insurer. Its assured include primary producers who insure farm plant, machinery, improvements including buildings and crops. These policies come within the category of the applicant's Rural Plan. An extract from the Rural Plan Policy Booklet is provided in the T documents (pp.35-53). Each assured is provided with a Certificate of Insurance (or Renewal), specifying those parts of the Rural Plan Policy applying to them. The General section of the Rural Plan Policy applies to all assured. Insurance cover is subject to payment of the appropriate premium. The following provisions of the General section apply to claims:
Claims
On the happening of any event giving rise or likely to give rise to a claim under a Policy You shall:
a)        give Us immediate notice of any such event and promptly submit written details together with all such proofs as may be required including (if required) a statutory declaration of the truth of the claim and any connected matters;
b)        take immediate steps to minimise the loss and all reasonable steps to prevent further loss, destruction, damage or injury;
c)        give Us such information and assistance as We may require;
d)        give immediate notice to the police if loss occurs or if malicious acts or any other crime is the cause or is suspected of being the cause of loss, destruction damage or injury;
e)        not carry out repairs or dispose of any damaged property (including animal carcasses) until We or a person authorised by Us has had the opportunity to inspect such property;
f)        not abandon or relinquish any property to Us whether We have taken possession or it or not;
g)        not negotiate, pay, settle or admit any claim.
The Rural Plan policy sets out the rights of the insurer (the applicant), as below:
Our Rights
Without incurring any liability and without diminishing Our right to rely upon any of the provisions of a Policy, We may:
a)        enter any building or area and take possession of property assured and deal with salvage in a reasonable manner;
b)        take over and conduct in Your name the defence or settlement of any claim or at Our expense and for Our benefit proceed in Your name against any person for the recovery of any amounts the subject of a claim under any Policy. We shall have full discretion in the conduct of any proceedings and in the settlement of any claim and having taken over the conduct of any claim may relinquish the same. You shall give all information and assistance as We may require in the prosecution, defence or settlement of any claim;
c)        represent You or any other person who may be entitled to claim at any inquest or official enquiry.
Also, the Rural Plan policy, under the heading of "Reinstatement of property assured", includes the following subclause:
We shall not be bound to rebuild, replace, repair, restore or reinstate exactly or completely but only as circumstances permit and in a reasonably sufficient manner.
The Rural Plan policy, under the Motor Vehicle Policy section sets out the provisions relating to settlement of claims and states:
Claims Settlements
We will at Our option repair, replace or pay to You the cost of repairs or the Retail Value of the Vehicle, Cycle, Caravan or Trailer at the time of accidental damage or theft. Where a Sum Assured is shown on the Certificate We will not pay more than the Sum Assured or the Retail Value (which ever is lesser).

And further states:

Repairs
You shall not authorise repairs to Your Vehicle, Cycle, Caravan or Trailer without our Consent.

As mentioned, the exhibits, A1 to A9, were taken into evidence. No examination-in-chief or cross-examination of the witnesses was made. The respondent however, did object to aspects of some of the statements, mainly in relation to speculative opinions which went beyond the witness' own knowledge of fact and relevant experience. The Tribunal noted those objections and has accepted them in context since none of the witnesses were giving expert evidence but rather, evidence to fact.
Heather Kerr (ex. A9) is the WA Claims Manager for the applicant and by May 2000, the date of her statement, Ms Kerr had worked for the applicant for some six and a half years. Her role is to oversee the processing of all claims including motor vehicle, farm vehicles, machinery and equipment and for commercial properties. Ms Kerr outlined the procedures. Claims are notified by various means in writing, some through brokers. The claims officer reviews the claim to ensure that the assured has the appropriate policy cover and that the premiums have been paid. That officer will then advise the assured whether to obtain one or two quotes and whether an assessor will assess the extent of the damage. The assessor reports to the applicant. In specific circumstances, the assessor is empowered to authorise repairs on behalf of the applicant. Sometimes assessors may be appointed on instruction from the applicant's solicitors or an investigator may be appointed to investigate the cause of an accident. If the damaged vehicle is drivable then usually two quotes for the cost of repairs are obtained. In these cases the claims officer may authorise a repairer to proceed (and sometimes the quotes are subject to a desk assessment). An alternative is for the assured to obtain one quote and subject it to a desk assessment. The desk assessor will review the quote in the light of the claim form disclosures and assesses whether the parts and labour quotes correlate to the damage claimed. Often the assessor will be required to inspect the damaged vehicle and, according to paragraph 44 of Ms Kerr's statement (ex. A9), only rarely in cases where the claim relates to machinery breakdown.
The claims assessors used by the applicant are under contract. They are required to comply with the applicant's instructions and to enter into an agreement with the applicant (annexure A). The agreement covers such things as the requirement to maintain a professional appearance and to observe professional ethical and moral standards. It also obliges the assessor to inform persons of their status as acting for the applicant; to provide a report which meets set standards, including signed witness statements where possible; and that all material and documents etc obtained in the course of their appointment as assessor belong to the applicant. The assessor, called "the Supplier" in the agreement, agrees to indemnify the applicant against any claims, costs or expenses incurred by the applicant as a result of any negligence or wrongful act by the Supplier. And the Supplier is required to maintain a specified level of professional indemnity insurance.
Paragraph 15 of Ms Kerr's statement (A9) sets out the role of assessors in approving claims:
15       Assessors receive instructions on a standard form from WFI which is attached as Annexure "C". They may be asked to do either of two kinds of assessments:
(i)        "Assess only" – which means that they are to assess without prejudice, as liability has not yet been accepted by WFI for the claim. This requires the assessor to determine the extent of damage, the cost and duration time to repair damage. They prepare a report for WFI. They are not authorised by WFI to do anything other than prepare the report and must await WFI's specific instructions to take the claim further. This type of instruction is not given frequently.
(ii)       "Assess and authorise" subject to the specified policy excess. This means WFI has accepted liability for the claim and that the assessor can assess the cost of repair of damage and authorise repairs subject to the excess on the policy. Here the assessor usually obtains a single quote or adjusts a quote provided by the Panel Beater. Panel Beaters do not like to quote against each other and hence the importance of getting an assessor to adjust a quote. On occasion two quotes are submitted and the better quote is checked and adjusted.
16       The assessor does not have to refer to WFI for specific authority to "authorise" repairs under this instruction but the assessor must provide a written report to WFI on the assessment within 14 days of receiving the instruction.
In the opinion of the Tribunal paragraph 20 of exhibit A3 is speculative and should be ignored.
Paragraph 24 of exhibit A9 states that repairers, when billing the applicant, add a mark-up to the cost of parts and also add sales tax, the latter presumably only when new parts are used. To the extent that this refers to sales tax, the Tribunal cannot accept it on face value. The Tribunal has perused the T documents, which contain copies of several repairer estimates, quotes or invoices, for costs to repair damaged vehicles. None mention sales tax apart from two (see previous footnote), each of which indicate that sales tax was not specified. Paragraphs 26 to 30 inclusively of exhibit A9, to the extent that they are speculative or express an opinion are therefore ignored. Nothing else in those paragraphs is, in the opinion of the Tribunal, of assistance.
Ms Kerr describes what happens on the occasion when an assured may not be satisfied with the repair work carried out by the repairer. This may result in more work on the vehicle or it may not. In this regard Ms Kerr states at paragraph 37:
37. If we are satisfied that a repair job is adequate and the client remains unsatisfied, we will pay the repairer, advise the client of our view and refer the client to the internal dispute resolution process and finally the insurance enquiries and complaints (sic).
The remaining witness' statements, A1 to A8 inclusively, fall into one of two groups – loss assessors used by the applicant (ex.A1 and A8) or repairers/panel beaters (ex. A2 to A7 inclusively). The pertinent evidence from those statements is summarised below.

Evidence of the loss assessors (ex. A1 and A8)

Exhibit A1 is the statement of Malcolm Mansfield, a loss adjuster (assessor) for 27 years and who has provided assessments to the applicant. He specialises in loss assessments for damaged buildings, state wide. His evidence aligns with that of Ms Kerr (A9) in that he is either given the authority to authorise the repairs once he is satisfied with the quote or he assesses "without prejudice", meaning that he reports to the applicant and cannot authorise the repairs. When authorised Mr Mansfield will directly advise the builder (whose quote has been assessed) and obtain a signed "builder's authority" from the assured. This together with the authorised quote is sent to the applicant. Paragraphs 13, 18 and 19 are speculative and are ignored. If a builder should carry out unauthorised work on an assured's building (because it is not indemnified by the policy) then the builder must bear the cost. At paragraph 26 Mr Mansfield states:
26. We generally ask the farmer or the manufacturer if they are able to obtain an item or piece of machinery sales tax free. If so, we obtain a tax exempt figure for repair/replacement of the item which we submit to WFI. …
Mr Mansfield's further evidence relates to finalisation of a claim and this depends on whether the assured has signified satisfaction with the work carried out by the builder. If the assessor and the assured agree that the work is faulty or not up to required standard then the builder is required to remedy that work before the builder's account is authorised for payment.
Exhibit A8 is the statement of Mike O'Callaghan, a consulting automotive engineer and loss assessor with some 28 years experience. Mr O'Callaghan has carried out loss assessments for the applicant for about 4 years and states that he also "works in-house" for the applicant when required. He concentrates his work in the Perth metropolitan area or in relatively close rural and coastal areas. His evidence of the procedures which he is required to follow in assessing claims, conforms with the evidence of Ms Kerr (ex. A9) and Mr Mansfield (ex. A1). Paragraphs 10, 11, 15 and 20 are largely speculative and are ignored. Similarly, because of the qualification in paragraph 14, the Tribunal takes paragraph 13 to be speculative and therefore it should be given little if any weight. It relates to a situation where, after proposed repairs to a motor vehicle have been approved the repairer discovers a need for extra work which has not been authorise and which may make the overall repair uneconomical compared, presumably, with a "write-off" disposal of the wreck.
Mr O'Callaghan states that the repairer obtains the parts at trade price including sales tax. However, there is neither independent corroborating evidence nor evidence to the contrary in this regard. In any event, parties have requested the Tribunal at this time, not to deal with the quantitative aspects of the applicant's claims. Therefore, for the present purposes it is sufficient to assume, for the sake of the arguments to follow, that parts etc used by repairers are acquired by them, albeit at trade price, but including sales tax. Should this matter be taken further then it will be incumbent on parties to bring evidence to support or refute, as the case may be, that that assumption is, or is not, a fact. Paragraph 18 of Mr O'Callaghan's statement is an expression of opinion about a question of law and is therefore to be ignored. His statement (para.17) that the repairer adds a margin to the trade price of parts purchased for the repair, the subject of the claim, is supported elsewhere in the T documents and is accepted as fact, although the margin may vary from claim to claim. The remainder of Mr O'Callaghan's statement, in relation to the procedure for release from liability, conforms with the statements of Ms Kerr and Mr Mansfield.

Evidence of repairers (exhibits A2 to A7 inclusively)

The evidence contained in the statements of Scott (A2), Price (A3), Phipps (A4), Austin (A5), Schaffer (A6) and Economidis (A7) provides an understanding of the procedures carried out by those witnesses when undertaking repairs of damaged goods (buildings and vehicles) owned by assured clients of the applicant. The evidence can be summarised. A detailed quote to repair the damage arising from the accident (or event such as fire in the case of buildings) is prepared and submitted to the applicant, either by the repairer or the assured, but always with the claim form. Work was authorised sometimes by telephone, in the case of relatively small claims, or after the claim and quote had been assessed, subject to agreed adjustments required by the assessor. If the assessor reports that the cost to repair is prohibitive in terms of the assured value and scrap value then it is not repaired. Generally, repairers order replacement parts or materials (new, reconditioned or second hand) once the claim and quote has been authorised. In any event, the assessors generally do not purchase parts or materials unless they can be returned to the supplier if they are not wanted for whatever reason. Parts and materials are usually purchased by repairers at a discount off list price and, in the case of new parts, subject to sales tax. They are, in turn, invoiced to the applicant at that price inflated by an agreed margin. Once the owner is satisfied with the repaired vehicle (equipment or building etc) then a release is signed by its owner (the assured). Release also depends on whether the assured has paid any applicable policy excess or, when previously agreed with the owner, any contribution toward wear and tear (i.e. when the repair improves the vehicle or building compared to its pre-accident state).

Issues

In broad terms the issue before the Tribunal is whether the applicant has overpaid sales tax in relation to the payment of insurance claims relating to repairs to vehicles, plant, equipment and buildings owned by persons who themselves would be exempt from sales tax had they purchased the parts and materials used in the repair. Specifically, whether:
(a)sales tax has been overpaid in terms of credit ground CR1 in Table 3 to Schedule 1 of the Assessment Act;
(b)the applicant is eligible for a credit of sales tax in terms of credit ground CR2 (as above), in particular:

have the exempt assured "borne tax" pursuant to s11 of the Assessment Act for that purpose; and
if so, is the applicant eligible to act on behalf of the exempt assured as their agent or under the doctrine of subrogation;
(c)the has applicant borne tax on parts used by repairers under the terms of credit ground CR2A (as above), in particular:
have the repairers "borne tax" pursuant to s11 of the Assessment Act for that purpose;
are the repairers eligible to quote an Exemption Declaration in respect of goods used in the course of repairs;
are the repairers agents of the applicant;
does title in the parts/materials used by the repairer pass to the applicant from the suppliers of those parts; and
if so, has the applicant "borne tax" on the parts and applied the goods to its own use ("AOU") in accordance with the terms of credit ground CR2A;
(d)the applicant has borne tax pursuant to credit ground CR5A (as above), in particular:
has the repairer acted as agent for the applicant (when purchasing parts/materials in carrying out repairs on assured property);
does title in the parts/materials used by the repairer pass to the applicant from the suppliers of those parts;
have the repairers "borne tax" pursuant to s11 of the Assessment Act;
if title in the parts/materials passes to the applicant, has it "borne tax" on them and applied them to its own use ("AOU") within paragraph (d) of the definition of "application to own use" in section 5 of the Assessment Act;
is the repairer eligible to quote an Exemption Declaration in respect of goods used in the course of repairs;
(e)the provisions of Item 194 of Schedule 1 of the E & C Act apply in that:
(i)the parts/materials were supplied to the assured under a contract of insurance;
(ii)the property in the parts/materials passed to the assured under that contract; and
(iii)the assured would have been entitled to quote (an exemption certificate) for the purchase of those parts/materials relying on exemption Item 2 or 3 of Schedule 1 of the E & C Act;
(f)the applicant is eligible to enter into an agreement with the respondent regarding entitlement to credit (of sales tax paid) pursuant to the provisions of s59(1) of the Assessment Act, as an alternative to credit grounds CR1, CR2, CR2A, and CR5A.

As mentioned, the Tribunal is not at this time concerned with any issues as to quantum of claims for credit of sales tax, should the applicant be entitled.

The Legislation

The relevant provisions of the Assessment Act and the E & C Act are sighted below.
Sales Tax Assessment Act 1992 ("the Assessment Act")
S5 In this Act, unless the contrary intention appears:
"application to own use", in relation to goods, includes any of the following:
(a)     consuming goods;
(b)     giving the goods away, or transferring property in the goods under a contract that is not a contract of sale;
(c)     …
(d)     using the goods as materials in … repair, renovation …
"borne tax" has the meaning given by section 11;
"CR1" means the credit ground of that name in Table 3, and CR2, CR3 etc have corresponding meanings;
"exemption declaration" means a statement of declaration for the purposes of any provision of the sales tax law that refers to quoting an exemption declaration;
"exemption Item" means an Item or subitem to the Exemptions and Classifications Act;
"non-lease AOU" means an application to own use that does not consist of the granting of a lease;
"Table 1", "Table 2" or "Table 3" means the table of that number in Schedule 1;
"taxpayer" means:
(a)a person who is, has been or may be liable to tax;
(b)a person who is or has been the claimant for a credit

11 Meaning of borne tax and tax borne
(1)       This section sets out the 3 situations in which a person is taken to have borne tax on goods.
(2)       A person is taken to have borne tax on goods if the person has become liable to tax on an assessable dealing with the goods. However, the tax for which the person has become liable is not counted to the extent to which it has been the basis of a credit entitlement.
(3)       A person is taken to have borne tax on goods if the person purchased the goods for a price that included tax. However, the amount of tax borne is to be reduced by any amount of the tax included in that price that has been refunded or credited to the person.
(4)       A person is taken to have borne tax on goods if the person was the customer for an AD4a delivery of the goods and did not quote for the delivery.
16 General rules for taxing assessable dealings
(1)       Table 1 sets out all the assessable dealings that can be subject to sales tax.
(2)       If the time of an assessable dealing (as specified in column 4 of the Table) is on or after the first taxing day, and no exemption applies under Division 2 of this Part, then:
(a)       the dealing is a taxable dealing;
          (b)       the person specified in column 3 is the person liable to the tax;
          (c)       the tax becomes payable at the time of the dealing, as specified in column 4;
          (d)       the tax is due for payment at the time that applies under Division 2 of Part 5.

(3)       To calculate the amount of the tax:
(a)       determine the taxable value of the dealing under Division 3 of this Part;
          (b)       deduct any exempt part of the taxable value that applies under Division 4 of this Part;
          (c)       multiply the result by the rate that applies under the Exemptions and Classifications Act.

24 Exemption if exemption Item is unconditionally satisfied
An assessable dealing is not taxable if:
(a)       the goods are covered by an exemption Item that is in force at the time of the dealing; and
(b)       all the requirements of that Item have been met at or before the time of the dealing.
25 Exemption for non-lease AOU if applier intends to satisfy exemption Item
A non-lease AOU is not taxable if the applier, at the time of the AOU, intends to deal with the goods so as to satisfy an exemption Item that is in force at the time of the AOU.
51 Credit entitlements
(1)       Tables 3 and 3A set out the situations in which a claimant is entitled to a credit.
(2)       A claimant is not entitled to a credit for an amount of tax for which a credit entitlement has previously arisen (whether for the claimant or another person).
(3)       A claimant is not entitled to a credit unless the claim for the credit is lodged within 3 years after the time when the credit arises.
(4)       A claim for a credit must be made in the form and manner approved by the Commissioner, and must be accompanied by such supporting evidence as the Commissioner requires.
59 Agreement with Commissioner regarding credits
(1)       The Commissioner may enter into an agreement with a person regarding the circumstances in which the person is to be entitled to credits and the manner of calculating and claiming such credits.
(2)       So far as the agreement is inconsistent with this Act, the agreement prevails.
(Schedule 1Table 3 of the Assessment Act – next page)

Table 3: Credit grounds

[1] No.          [2] Summary of ground        [3] Details of ground           [4] Amount of credit            [5] Time credit arises
CR1    Tax overpaid   Claimant has paid an amount as tax that was not legally payable.         The amount overpaid, to the extent that the claimant has not passed it on        when the amount became overpaid
CR2    Claimant has borne tax, even though entitled to quote registration number        Claimant has borne tax on a tax-bearing dealing for which the claimant was entitled to quote a registration number (whether or not the claimant quoted). Claimant has not sold the goods. If claimant has applied the goods to own use, the AOU would not have been taxable assuming it were an assessable dealing.         The tax borne, to the extent that the claimant has not passed it on       time of the tax-bearing dealing
CR2A Claimant has borne tax, even though entitled to quote exemption declaration      Claimant has borne tax on a tax-bearing dealing for which the claimant was entitled to quote an exemption declaration (whether or not the claimant quoted). Claimant has not sold the goods. If claimant has applied the goods to own use, the AOU would not have been taxable assuming it were an assessable dealing.         The tax borne, to the extent that the claimant has not passed it on       time of the tax-bearing dealing
CR5A AOU in certain cases where exemption Items satisfied            Claimant has borne tax on goods and has applied the goods to own use while still assessable goods. The AOU satisfies exemption Item 192, 193 or 194.   The tax previously borne to the extent that the claimant has not passed it on          time of AOU

Sales Tax (Exemptions and Classifications) Act 1992 ("E & C Act")
4 Effect of Schedule 1
(1) Schedule 1 has effect for the purposes of those parts of the Assessment Act that refer to exemption Items. The Schedule does not by itself have the effect of exempting an assessable dealing from sales tax.
(2) In broad terms, Schedule 1 has the following effects (through the Assessment Act):
          (a)       if all the requirements of an exemption Item are satisfied at or before the time of an assessable dealing, the dealing is not taxable;
[For details, see section 24 of the Assessment Act.]
          (b)       a non-lease AOU is not taxable if, at the time of AOU, the applier has the intention of satisfying the requirements of an exemption Item;
[For details, see section 25 of the Assessment Act.]
          (c)       …
          (d)       an intention to satisfy the requirements of an exemption Item can be a ground for quoting;

SCHEDULE 1 - EXEMPTION ITEMS
Sub-Chapter 1.1: Mining and primary production
Item 3: [Vehicles etc. for use in agricultural industry]
The following goods for use by a person mainly in carrying out activities in agricultural industry:
          (a)       motor vehicles known as four wheel drive vehicles, with body type of jeep, platform, pick-up or utility;
          (b)       motor cycles that:
(i)        have a heavy duty rear carrier; and
(ii)       have a front mudguard position that allows high clearance; and
(iii)      have no passenger footrests and no seat strap;

(c)       trailers and similar vehicles, but not including motor vehicles or semi-trailers;
          (d)       livestock carriers designed for use with vehicles.
          [Parts, accessories and attachments]

Chapter 15: Miscellaneous
Item 194: [Goods for supply to a person for use in exempt circumstances]
Goods for use by a person for supply to another person under a contract (other than a contract of sale) if:
(a) property in the goods is to pass to the other person under the contract; and
(b) the other person would have been entitled to quote for the purchase in reliance on an exemption Item, if the other person had purchased the goods.

Submissions and Reasons

Mr Lampropoulos, for the applicant, submitted that a person carrying on primary production activites, is entitled to exemption from sales tax on purchases of parts and materials for use in those activities, which parts etc would be exempt in terms of Items 2 or 3 of Schedule 1 of the E & C Act. He further submitted that Item 194 of that schedule operates to exempt from sales tax goods for use by a person for supply under contract to a person exempt by Items 2 or 3 of the E & C Act. In these circumstances, it was submitted, neither transaction would be an assessable dealing under s16(2) of the Assessment, because an exemption applies pursuant to either section 24 or 25 of the that Act..
Mr Lampropolous submitted it is a fundamental principle of indemnity insurance that the assured's rights are subrogated to the insurer who "stands in the shoes" of the assured and in support cites Insurance Law in Australia, Sutton, 3rd Ed at p1218 etc. He submitted that in arranging repairs to an assured's property, the insurer is acting for and on behalf of the assured. If, therefore, the repairer undertakes the work negligently, the assured has a cause of action directly against the repairer. He argues that it then follows that in this sense the insurer and the assured are one and the same. He further submits that, at least in discharging the responsibility of repairing assured property, the insurer is acting as agent for the assured. Also, seemingly fundamental to the applicant's submissions is the contention that the repairer, in being authorised to carry out repairs of an assured's damaged property, is acting as agent for the insurer (the applicant).
The Tribunal pauses at this juncture to make some observations in regard to the last mentioned submission. What is fundamental, in the Tribunal's opinion, is the actual contractual relationships between the insurer (the applicant) and the assured, on the one hand; between the insurer (the applicant) and the repairer, on another; and thirdly, between the assured and the repairer.
Firstly, in the Tribunal's opinion the relationship between the applicant and the assured is a contract indemnifying the assured on payment of a premium, that is, a policy, and that policy circumscribes the rights of both parties. In the present case it is accepted by parties that if an assured suffers a loss insured against then the applicant is contractually obliged to take whatever steps are necessary to make good the loss (or damage) assured against. At all times the property, the subject of the claim remains the property of the assured and will continue to do so unless the applicant exercises its right to pay out the claim according to the policy contract. If so, then the property passes to the applicant. No doubt the assured has rights to be satisfied that the work carried out to make good the damage is of an acceptable standard and should the assured not be satisfied then he/she would have rights against the applicant in term of the policy. In the Tribunal's opinion there is no evidence in the present matter that the assured has any right of action against the repairer in relation to making good the assured damage. It may be a different thing however, in the opinion of the Tribunal, if due to the negligence or otherwise of the repairer the assured suffered further loss. Assuming that that further loss was not indemnified by the applicant under the policy, then the assured clearly has a right of action against the repairer which does not arise as a consequence of, or in relation to, the policy.
In this regard, in the opinion of the Tribunal, there is no implicit or explicit contract established between the assured and the repairer when the assured submits his/her assured goods to the repairer for repair pursuant to the policy of indemnity. There is clearly a duty of care owed by the repairer – and essentially that is toward the applicant (insurer) who is required by the policy to ensure a proper standard of work in a timely fashion. And finally, in this context, in the opinion of the Tribunal the repairer is contracted to the applicant, to provide labour, parts and materials as specified and as authorised by the applicant, to remedy the damage (loss). This of course, is subject to the valid insurance claim by the assured (see Godfrey Davis Ltd v Culling & Hecht; and Cooter & Green Ltd v Tyrrell (ibid footnote). When the job is completed and the assured's repaired property is released the repairer invoices the applicant for a single composite (fungible) sum making no distinction between labour, parts and consumables used. On that evidence it cannot be asserted that the applicant has paid sales tax as such. Even if it could be implied that the applicant has paid sales tax indirectly, in the Tribunal's opinion, it cannot on that basis alone be inferred that that sales tax was not legally payable. Nor, in the opinion of the Tribunal, can it be inferred from the evidence that the repairer acts as agent for the applicant in carrying out the contract to repair. The repairers are independent contractors who carry out their trade using their skills and experience notwithstanding that on occasion the insurer, through the agency of the assessor, may direct the use of particular parts or limit the scope of the repairs. On the other hand, the evidence supports the contention that the assessors/loss adjusters are appointed agents in cases where the applicant has empowered them to authorise repairers to proceed and to authorise the release of an assured's goods once repaired.
In the opinion of the Tribunal, there is no evidence before it to support the contention by the applicant that:
"Once repairs are authorised by the insurer, and in reliance upon that authorisation the repairer purchases parts for the purpose of carrying out those repairs, then the insurer would be liable to pay for those parts, and to then be entitled to take possession of them, if the work does not proceed and the repairer is unable to return them, or use them elsewhere. If a repairer who incorporates such parts in repair work receives them from the supplier on credit, and does not pay for them, then the supplier can take action against the undisclosed principal, namely the insurer. In that way, the actions of the repairer can create a liability in the insurer to a third party."
The Tribunal has a further difficulty with the application before it. This matter is referred to at this juncture and before consideration of the substance of the applicant's submissions based on the relevant legislation. The difficulty is this. The evidence, as put to the Tribunal, is that repairers neither quote a registration number nor an exemption declaration (in terms of s84 of the Assessment Act) when purchasing new parts for use in repairing damaged goods used in primary production activities. This would appear to be the case without exception. The evidence of some of the repairers, which is accepted, is that when they undertake repairs directly for those persons engaged in primary production activities, they may quote the customer's registration or provide the customer's exemption declaration, to acquire the parts sales tax exempt. Therefore, when repairs are carried out under a policy between the applicant and the assured then parts (and materials) are purchased without a sales tax exemption. CCH's Australian Sales Tax Legislation, 16th edition, 1998 sets out the broad aim of the sales tax law as:
"The broad aim of the sales tax law is to tax the last wholesale sale of goods (usually the sale from the last wholesaler to the retailer). The system of quoting (Part 7) is designed to avoid tax becoming payable on earlier sales. The system of credits (Part 4) deals (among other things) with situations where sales tax has become payable more than once on the same goods. (p. 91,003)
At page 91,005, in relation to Credits, it states:
"Credits are available to persons who have borne tax on goods that should not have been taxed. Credits can be applied against tax liabilities, with any excess being refunded."
The Tribunal understands that sales tax exemption is granted in relation to purchases by a wholesaler, an importer or a manufacturer as they in turn, collect sales tax when the goods are the subject of an assessable dealing (in terms of s16 of the Assessment Act). However, the sales tax law provides that some users are exempt from sales tax on specified goods for that use, as provided in the E & C Act. It is understood that the purpose of those exemptions is to benefit the particular end user (see Schedule 1 of the E & C Act). Two cases in point are " … goods for use by a person mainly in carrying out activities in agricultural industry" (Item3 of Schedule 1), and "… goods for use by a person exclusively in a remote area, if that use is mainly for transporting livestock" (Item 4 of Schedule 1). Given that scenario, it is not apparent to the Tribunal how those persons who may otherwise qualify for exemption from sales tax (e.g pursuant to Items 3 above) would directly benefit should the applicant be granted a credit for sales tax paid on goods used to repair those users' insured property. That is, if the credit, the subject of this application, is granted, it begs the question of who benefits? The assured has paid a premium to the applicant. The assured has no liability beyond that premium (and possibly a claim excess) and, in terms of their policy, it make no difference as to what may be the cost of any indemnified repairs paid for by the applicant.

In his submissions Mr Lampropolous referred to Chapter 16 of Sutton's Insurance Law in Australia, which deals with "Subrogation". At paragraph 16.1 it states in broad principle that the two aspects of subrogation are therefore:
(a) that the insurer who has indemnified the assured can step into the assured's shoes and pursue in her or his name any right of action available which may diminish the loss assured against; and
(b) that the assured cannot make a profit from the loss and is accountable to her or his insurer for any profit the assured does make. (p.1218-9)
At paragraph 16.2 Sutton states that the leading case on the doctrine of subrogation is Castellain v Preston (1883) 11 QBD 380 (CA). That case concerned an assured vendor of a building, which burnt down before the sale had been settled. The vendor claimed insurance on the loss caused by the fire and was paid. The property sale then settled with no adjustment to the pre-fire agreed price. On discovering this, the insurer sought reimbursement of the insurance payment and succeeded before the English Court of Appeal. Sutton states in this regard:
In the course of his judgment Brett LJ pointed out that the contract of insurance contained in a marine or fire policy was a contract of indemnity only, and that the assured, in case of a loss covered by the policy, should be fully indemnified, but never more than fully indemnified. The doctrine of subrogation did not arise upon any of the terms of the contract of insurance, but was a proposition in favour of an insurer which had been adopted in order to prevent the assured from recovering more than a full indemnity. His Lordship said:
"as between the underwriter and the assured the underwriter is entitled to the advantage of every right of the assured, … which can be, or has been exercised or has accrued, and whether such right could or could not be enforced by the insurer in the name of the assured, by the exercise or acquiring of which right or condition the loss against which the assured is insured, can be or has been diminished." (Castellain v Preston, ibid 338)
… On payment by him [of the claim], the insurer was not only entitled to enforce all remedies which the assured has against third parties to compel them to make good the loss assured against, but if the assured had enforced or received the advantage of such remedies, the insurer was entitled to receive from the assured the advantage of such remedies. (p.1219-1220)
At paragraph 16.3 Sutton (supra) continues:
Cotton LJ agreed that a policy of fire insurance was a contract to indemnify the assured for the loss he had sustained as a result of the fire, and that, in order to ascertain what that loss was, everything had to be taken into account which had been received by the assured and which had diminished that loss. His Lordship referred to Burnand v Rodocanachi (1882) 7 App Cas 333 at 339 in which Lord Blackburn said that if the indemnifier had paid the loss and something which diminished that loss came into the hands of the person to whom he had paid it, then it became an equity that the person who had already paid the full indemnity was entitled to be recouped by having that amount back. Cotton LJ enunciated the principle:
" if there is a money or other benefit received which ought to be taken into account in diminishing the loss or in ascertaining what the real loss is against which the contract of indemnity is given, the indemnifier ought to be allowed to take advantage of it in order to calculate what the real loss is, even though the benefit is not a contract or right of suit which arises and has its birth from the accident assured against." (1883) 11 QBD 380 at 395.
16.4 Bowen LJ likewise refused to accept the proposition that the law only gave an insurer the right to stand in the shoes of the assured as to rights which arose out of, or in consequence of, the loss. In his view the true test was, could the right to be insisted on be deemed to be one of the enforcement of which would diminish the loss? Subrogation he said, was itself only the particular application of the principle of indemnity to a special subject matter. If there were means of diminishing the loss, the insurer might pursue them, whether he or she was asking for contracts to be carried out in the name of the assured, or whether he or she was suing in tort. (ibid at 403-404, Bowen LJ at 402)
…
The principles governing indemnity are therefore bound up with the doctrine of subrogation and indeed are complementary to it. (p.1220)
For those reasons it follows that should the assured make a successful claim for a credit of sales tax in relation to the claim the subject of the indemnity afforded by the policy, then the applicant would be entitled to be reimbursed by the assured. This of course assumes that the assured has been fully indemnified by the insurer and a credit for sales tax arising would unjustly enrich the assured. And arising from the foregoing, there is also the proposition that if the assured has a right to a credit claim arising from the indemnity then to that extent the assured may be required to exercise that right and reimburse the insurer (the applicant) accordingly. This then raises the fundamental question of whether the assured has any right, pursuant to the sales tax law, to secure a credit for sales tax paid on parts etc used by a repairer pursuant to a claim for indemnity for damages under the Rural Plan policy. As the Tribunal understands it, Mr Lampropolous submits that the assured does have such a right and therefore, by inference, the right is subrogated to the applicant.
Mr Lampropolous submitted that the applicant was entitled to claim credit for sales tax paid pursuant to credit grounds CR1, CR2, CR2A or CR5A. That entitlement arises from the provisions of s11(3) and or (4) and s51 of the Assessment Act. Each of those credit grounds is dealt with in turn in the light of the facts as established by the evidence.

Credit ground CR1

As mentioned Table 3 of Schedule 1 of the Assessment Act sets out the credit grounds, "CR1" etc being defined in those terms in s5 of that Act. CR1 provides for a credit for sales tax in the following conditions:
(a)Tax has been overpaid.
(b)Claimant has paid an amount of tax that was not legally payable.
(c)A credit entitlement arises equal to the amount overpaid that has not been passed on and when the amount (of sales tax) overpaid became overpaid.
It was submitted for the applicant that tax has indeed been overpaid in each instance when the repairer purchased taxable goods without quotation of a registration number or exemption declaration in terms of ss.82 and 83 of the Assessment Act. It was submitted that those assessable dealings are not taxable because of the provisions of exemption Items (within Chapter 1 of Schedule 1 of the E & C Act), with a particular focus on Item 3 in relation to goods for use mainly in carrying out activities in agricultural industry as specified. The basis of this submission is the assumption that the assured would have been entitled to sales tax exemption if that person, acting for themself, had purchased the parts directly. It is the Tribunal's understanding that the respondent concedes that where an exempt user makes a purchase that is otherwise an assessable dealing they are entitled to exemption from sales tax pursuant to sections 24 or 25 etc of the Assessment Act. That concession was qualified by reference to the pre-requisite of the exemption Item that the (intended or actual) use determines the eligibility for exemption, not the status of the claimant. The Tribunal accepts that qualification which is clear from the exemption items in question.
In the present situation the applicant is not the person who has borne the sales tax pursuant to s11 of the Assessment Act. The parts have been purchased by the repairer who is liable for and paid the tax to the wholesale supplier in terms of s11(2) and s11(3) respectively.
In the present situation therefore, for the applicant to be entitled to a credit pursuant to CR1, it relies on the provisions of Item 194 of Schedule 1 of the E & C Act. In the Tribunal's opinion, Item 194 in the present context, does not apply to subrogate to the applicant the entitlement to a credit pursuant to CR1. Item 194 applies to a situation where goods are purchased for use by a person for supply to another person under a contract, not being a contract of sale, and where two further conditions are satisfied. That is, (a) the property in the goods is to pass to the other person under the contract; and (b) the other person would have been entitled to quote for the purchase in reliance on an exemption Item, if the other person had purchased the goods.
In the Tribunal's opinion, and having regard to the evidence before it, the applicant's contention in relation to Item 194 cannot be sustained. That is because of the two separate contractual relationships between the three parties involved – firstly, the contract of insurance indemnity between the applicant and the assured; and second, the contract to repair a third party's goods (the damaged goods belonging to the assured) between the applicant and the repairer. For reasons already mentioned, there is no contract between the repairer and the assured. In that event it cannot be sustained that when a repairer purchases parts to repair the assured's property under the policy, that that is a supply of goods by the repairer to the assured under a contract between those parties. And since the property in those goods passes to the assured (because the parts are incorporated in the chattel being repaired) those goods become the assured's property as a result of the contract (policy) between the applicant and the assured. In the opinion of the Tribunal Item 194 deals only with situations where goods pass from one party to a contract to the other. It does not apply where, incidental to a contract between A and B goods become incorporated into C's property as a term of the contract between A and B. In the Tribunal's respectful opinion Item 194, in those terms, applies only where goods for use by A (say parts to be used in a repair) for supply to B (for whom the repair is undertaken) under a contract between A and B for A to repair B's property. The Item would apply to allow B to quote (for exemption from sales tax otherwise applicable) as if B, not A, had purchased the goods. That is clearly not the situation in the present case for reasons already mentioned. Also, in the present case it is the repairer (if registered) or the wholesaler supplier to the repairer who has paid the sales tax and, for reasons stated, it was legally payable. So, in these terms CR1 does not establish a basis for a credit to the applicant.
Further, having regard to the observations already made in relation to subrogation, (and for the reasons above in relation to CR1), the applicant has no right of subrogation in relation to any credit for sales tax. This obtains because the assured has no right to a credit in circumstances where the parts are acquired by the repairer to fulfil the contractual duty to the applicant.

Credit ground CR2

Credit ground CR2 requires that the claimant has borne tax, even though entitled to quote a registration number. It further requires that the claimant has borne tax on a tax-bearing dealing for which the claimant was entitled to quote a registration number (whether or not the claimant quoted). And further, the claimant has not sold the goods. If the claimant has applied the goods to own use, the AOU would not have been taxable assuming it was an assessable dealing. The claimant, it is submitted, is the applicant. The applicant has not directly borne the tax (in terms of s11 of the Assessment Act). At best, the tax was borne by the repairer (or by the wholesale supplier). Therefore, the first requirement to satisfy CR2 is not met. It is also apparent that the applicant is not entitled to quote a registration number in relation to parts purchased by the repairer pursuant to the contract to repair the assured's damaged goods. At no time is the applicant an exempt user of the parts in question.
Further, for reasons already expressed, reimbursement would only follow if sales tax previously paid by the repairer was the subject of a successful credit application. That is, any subrogated right of the applicant in this respect is subject to a third party's right which cannot be exercised by the applicant. In any event, in the present circumstances, it is not apparent from the evidence how any right could arise given that the assured has no right to a credit anyway and neither would it appear, does the repairer (as already discussed). And it would not appear to be tenable for the applicant to assert that it has applied the parts purchased by the repairer to (the applicant's) own use (for the purposes of CR2). That follows having regard to the definition of "application to own use" in s5 of the Assessment Act. Specifically, the applicant is not consuming the goods (parts), or transferring them under a contract that is not a contract of sale. This obtains because, in the opinion of the Tribunal, the parts never become the property of the applicant (as discussed in relation to the evidence). Rather, because they are incorporated into the assured's property by the repairer, they become the assured's property as a result of it completing its contractual obligation to the applicant. The applicant is not the transferor of the property in that sense. And for the same reason, in the opinion of the Tribunal there is no application for own use of the parts pursuant to the s5 of the Assessment Act definition, paragraph (d), because it is not the applicant's property being repaired.
For those reasons, in the opinion of the Tribunal, the applicant has no basis for a credit ground claim pursuant to CR2.

Credit ground CR2A

In essence CR2A is similar in all respects to CR2 with the difference being the basis for the original entitlement stemming from the quotation of an exemption declaration as distinct from a registration number (refer ss82 & 83 of the Assessment Act). Since the distinction is not material to the present case then the Tribunal adopts the reasons under the previous heading for this credit ground submission. Therefore, in the opinion of the Tribunal the applicant has no basis for a credit ground claim pursuant to CR2A.

Credit ground 5A

This ground applies to an AOU in instances where an exemption Item is satisfied. It applies where the claimant has borne tax on assessable goods, which have been applied to the claimant's own use. And, in this case, the AOU would need to satisfy the exemption Item 194. In that event then the ground applies to credit tax previously borne (to the extent that it has not been passed on).
For reasons already canvassed, in the opinion of the Tribunal, CR5A cannot apply because it cannot be established on the evidence or otherwise that the applicant has borne tax on the parts in question nor can it satisfy the provisions of exemption Item 194. Therefore, in the opinion of the Tribunal the applicant has no basis for a credit ground claim pursuant to CR5A.

Section 59 Agreement

In the course of his submissions for the applicant Mr Lampropolous contended that s59 of the Assessment Act, cited above, provides a basis on which the respondent could remedy what is clearly an anomalous situation in the circumstances. The Tribunal understands the submission has two prerequisite conditions. Firstly, that inequity arises from the disentitlement of the applicant to a credit for sales tax paid on parts incorporated into exempt users' vehicles, plant, equipment and buildings. The second condition arises as a result of practical complexity in making a credit claim in respect of each and every instance when such a repair is carried out pursuant to a Rural Plan policy. Given those preconditions, it was submitted, then an agreement pursuant to s59 of the Assessment Act is warranted. The terms of that agreement would settle a commercially viable and fair basis for the applicant to make regular claims for credits for sales tax overpaid on parts etc supplied to assured policy holders for exempt uses. In particular the applicant submitted that there are two limbs to s59(1) of the Assessment Act. That is, firstly the respondent may enter into a agreement with a person regarding the circumstances in which the person is entitled to credits and secondly, regarding the manner of calculating and claiming such credits. It was submitted that those two limbs are independent and that the respondent does not recognise the former, nor, it was submitted, does the respondent recognise that s59(2) of the Assessment Act is authority for the proposition that a s59(1) agreement can be inconsistent with the Assessment Act. The applicant submits that without a credit being granted, the respondent is unjustly enriched. That enrichment arises from collecting sales tax on sales of parts for exempt use. This, it was submitted, obtains in circumstances such as the present. That is, assuming such goods had been supplied directly to the exempt user then no sales tax would have been payable. Therefore, it was submitted, not to grant a credit is an unconscionable retention of the sales tax benefit to the respondent. The applicant further submitted that given that the system of credits in the sales tax law is to remedy situations where clearly sales tax has been overpaid then s59 of the Assessment Act should be broadly applied to bring that about.
In response to the submissions made by the applicant in this regard, the respondent made the following submissions. Fundamental to the applicant's submission is the assumption that it is entitled to a credit on one of the credit grounds on which it relies. However, it was submitted, the applicant's request for an agreement must fail if the applicant cannot bring its claim within any of the credit grounds since:
(a)       The statutory credit grounds provide an exhaustive and exclusive code for recovery of tax overpaid: Chippendale Printing Co Pty Ltd v FCT & Anor 96 ATC 4175 (and the principle in such cases as David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 and Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 has no application to the Assessment Act).
(b) Section 59 of the Assessment Act is intended to be facilitative and not to enable the respondent to enter into agreements granting credits for sales tax where no (other) legislative basis for such exists under the Assessment Act. The power to confer credits under s59 of the Assessment Act is to be read in the context of that Act as a whole. As mentioned in (a) above, the credit grounds set out in the Assessment Act are an exclusive code. Therefore, unless the applicant can bring itself within that code then the scheme of the Act would be undermined if the respondent granted credits when no credit ground exists: c/f Case 46/97 97 ATC 477
(c) Even if on a literal construction of s59 of the Assessment Act the respondent does have the power to enter into an agreement granting credits for sales tax paid where no (other) ground exists (which power, the Tribunal understands, is denied), the respondent cannot have erred by declining to do so having regard to the scheme of the Assessment Act.
(d)       The respondent has not received sales tax, which on a proper application of the exemption provision of the sales tax law, was not legally payable.
(e)       The applicant cannot bring itself within any of its contended for credit grounds, not merely because it did not properly follow procedural steps, but because having regard to the facts and the substantive requirements of the nominated credit grounds, none apply.
(f)        The respondent has not been unjustly enriched as a consequence of no credit having been granted to the applicant.
(g)       There has been no mistaken sales tax payment.
(h)      It cannot be unconscionable for the respondent to collect and retain sales tax properly payable under that Assessment Act and not to enter into an agreement pursuant to s59 of that Act in that respect.
(i)        That if, as the applicant has submitted, it had gone about arranging its affairs differently and put itself in a position to receive credits for sales tax but not doing so for logistical reasons, then the applicant has abandoned any rights it may otherwise have had in that regard

With respect, the Tribunal agrees with those submissions of the respondent. It therefore finds that, having regard to the evidence and factual matrix of this case, there is no statutory basis on which the respondent could enter an agreement pursuant to s59 of the Assessment Act to accommodate a basis for allowing credits for sales tax paid on parts etc used in the manner described in these reasons.
The final task of the Tribunal in this matter is to reflect on each issue (as embodied indirectly in the grounds of objection) and answer each in the context of what has been decided above. Referring to paragraph 23 above, the Tribunal answers each issue question set out there as follows:
(a)       No.
(b)       Re: first dot point – No.
(c)       Re: first four dot points – No
(d)       Re: first three dot points – No. And re: last dot point – No.
(e)       On all three points – No.
(f)        No.

Decision

For the above reasons and pursuant to s43 of the Administrative Appeals Tribunal Act 1975, the decision of the respondent of 8 April 1999, (page 280 of the T documents) to disallow the applicant's objection against the refusal of the respondent to allow a claim for sales tax credit, is affirmed.

I certify that the 55 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R D Fayle, Senior Member
Signed:
............................….(sgd S Railton)................................
Associate
Date/s of Hearing  30 April 2001
Date of Decision  3 August 2001
Counsel for the Applicant        Mr T Lampropolous
Solicitor for the Applicant         Ms M Driesen
Counsel for the Respondent    Mr M Corboy
Solicitor for the Respondent    Mr T Burrows, AGS Office

Key Legal Topics

Areas of Law

Taxation Law

Legal Concepts

Sales Tax
Credit Grounds
Exemptions and Classifications
Contract Formation
Breach of Contract

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Citations

Wesfarmers Federation Insurance Ltd and Deputy Commissioner of Taxation [2001] AATA 698

Cases Citing This Decision

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Cases Cited

2

Statutory Material Cited

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David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48

Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] HCA 61

David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48

[2001] AATA 698

3 August 2001

Key Legal Topics

Areas of Law

Taxation Law

Legal Concepts

Sales Tax

Credit Grounds

Exemptions and Classifications

Contract Formation

Breach of Contract