Case: Giris Pty Ltd v Commissioner of Taxation [1969] HCA 5 ; (1969) 119 CLR 365 
Outcome: discussed
The Taxpayers rely on Giris Pty Ltd v Commissioner of Taxation [1969] HCA 5 ; (1969) 119 CLR 365 (" Giris "). Giris concerned the alternative bases of assessment of the income of trust estates provided for by ss 99 and 99A of the ITAA. Section 99A did not apply only if the Commissioner was "of the opinion that it would be unreasonable" that it should apply, in which case s 99 applied. The Commissioner assessed under s 99A. 60 In the High Court, Menzies J referred to a Full Court the question of the constitutional validity of relevantly, s 99A. All members of the Court held that s 99A was not constitutionally invalid as imposing an incontestable tax, because the taxpayer had access to the court to challenge the Commissioner's opinion. 61 Barwick CJ and Windeyer J indicated how this access might be availed of. The Chief Justice said that the Commissioner was under a duty to form an opinion and that the taxpayer was entitled to be informed of it, "and upon the taxpayer's request, the Commissioner should inform the taxpayer of the facts he has taken into account in reaching his conclusion" (p 373). His Honour added (at 374): "Thus the Commissioner must hold the opinion. The Court can decide whether or not he did hold it. In my opinion, the Court can require him to form it. It can determine whether the opinion is held bona fide and, although as I have said, the discretion is wide and though being really legislative in nature, what is relevant to its formation may range over an extremely wide spectrum of fact and consideration, the Court can determine whether or not the opinion was formed arbitrarily or fancifully, or upon facts or considerations which could not be regarded as relevant even to such a question as the unreasonableness of applying a taxing provision to a particular taxpayer in respect of the income of a particular year. In my opinion, it cannot properly be said that there is here an unchallengeable tax as that expression is used in reasons for decisions given in this Court." Windeyer J also observed (at 384) that the Commissioner could be asked by a taxpayer to state the grounds of his opinion, and, if asked, that he should do so. 62 Owen J approached the matter differently. His Honour seems to have accepted that the taxpayer might not be in a position to prove that the Commissioner had taken into consideration irrelevant matters (at 388-389). His Honour said that all that mattered for constitutional validity purposes, was that the taxpayer was not prevented from invoking the aid of the courts to determine whether his tax liability had been lawfully and correctly assessed. It did not matter for that purpose that it might be "difficult or impossible to exercise the right of appeal successfully because the facts necessary to success [could not] be established" (at 388). 63 Neither Kitto J at first instance nor the members of the Full Court referred to the relationship between ss 177(1) and 190(b) of the ITAA. 64 Giris was another state of mind case. Moreover, examinability of the Commissioner's opinion was, in substance, all that stood between a contestable tax and an incontestable one. On the assumption that there was no challenge to the Commissioner's assessment of the taxpayer's taxable income, the only question going to the excessiveness of his assessment of tax was his opinion that it was not unreasonable that the special rate of tax imposed pursuant to s 99A should apply. 78 Barwick CJ dissented. His Honour said (at 541) that the Commissioner should have recorded "his relevant state of mind and the facts or his view of the facts on which it is based", and that it should not be left to the Court to draw inferences as to whether he had considered a matter. The Chief Justice added, citing his own judgment in Giris , that the Commissioner "must expose to the taxpayer, particularly if so requested , both his state of mind at the relevant time and its basis" (at 541) (emphasis added). Like the majority and Windeyer J in Brian Hatch , his Honour saw the issue as being one of fact: was the Commissioner in fact satisfied at the point of assessment or not? His Honour disagreed with the majority, however, as to the Commissioner's right to support his state of dissatisfaction at the time by a course of reasoning devised later. 154 The position established by Peabody (see [119] above), Sleight (see [136] [145] above), and Syngenta (see [146] [150] above) seems to be that a distinction is to be drawn between cases in which the ITAA specifies a state of mind on which the assessment of the amount of taxable income (and tax) depends (cf Avon Downs , George , Giris , Duggan , Brian Hatch , Kolotex , WA Capital , Dalco ), and those in which it specifies, not a state of mind, but the making of a determination, as the event on which the amount of taxable income (and tax) depends (cf Jackson , Peabody , Richard Walter , Binetter, Sleight , Syngenta ). In the latter class of case, the legislature is taken to indicate that the interaction between s 177(1) of the ITAA and s 14ZZO(b) of the TAA produces the result that the Commissioner's state of mind, on the basis of which the determination was made, is part of the due making of the assessment, and cannot be put in issue by the taxpayer.