Case: Queensland Rail v Commissioner of Taxation [2006] FCA 816 ; (2006) 153 FCR 524
Outcome: distinguished
The Commissioner attempts to meet this concern by speculating that the legislature may have been concerned in the rail context with hybrid vehicles such as "hi-rails," which are capable of travelling both on roads and on rail: see Queensland Rail v Commissioner of Taxation [2006] FCA 816 ; (2006) 153 FCR 524 at [19] , [23]-[24] for a description of these vehicles. Quite correctly, counsel for Asciano noted in oral argument that this speculation, even if correct, did not meet the point, because s 38 would already cover purchases for hi-rail use - when the fuel is purchased for on-rail use, it would be eligible for credit, but when the fuel is purchased for use in off-rail activities, whether on public roads or otherwise, it would be ineligible. Moreover, as Asciano submitted, the argument that the parenthetical language was included by inadvertence or out of an abundance of caution in the predecessor to s 53, (s 164(1)(ab) of the Customs Act 1901 (Cth) and s 78A(1)(ab) of the Excise Act 1901 (Cth)), was rejected by Dowsett J in Queensland Rail [2006] FCA 816 ; 153 FCR 524 at [40] for the reasons identified by Asciano above. 16 In short, the submissions of Asciano on ss 38(3)(g) and 53 (3) are not without force. However, that force, along with the vitality of Dowsett J's reasons in Queensland Rail , is diminished for at least two reasons. First, Dowsett J reached his view based in part on the premise that the rebate scheme found in s 164(1)(ab) of the Customs Act and s 78A(1)(ab) of the Excise Act was beneficial legislation and should be given a broad construction: Queensland Rail at [39]. Asciano argues that the same premise should be adopted in this case - the Court should take a commonsense and commercial approach in order to encourage the activities to which the Act applies. However, the Full Court of this Court recently rejected that premise in Commissioner of Taxation v Ostwald Bros Civil Pty Ltd (2008) 167 FCR 588 , relying on the legislative history for the proposition that the Act is to be construed narrowly in order to balance the beneficial purpose of encouraging the use of cleaner fuels with the important government interest of protecting the revenue: at [33]-[37]. 17 Secondly, at the time of the decision in Queensland Rail , the relevant language in the substantive provision, "use in rail transport," was not defined in the Customs Act . Dowsett J was thus led to consult the dictionary and a variety of other sources before reaching the view (at [44]) that: [T]he words "in rail transport" mean 'in a system or means of transportation or conveyance of people or goods by rail'. Such a system must inevitably involve loading and unloading activities and maintenance activities. The use of diesel fuel in the course of such activities is necessarily "in" that system, regardless of whether such use occurs on- or off-rail. 18 Given such an expansive definition of "in rail transport" (one which, I should add, I might have been inclined to embrace myself in the absence of any legislative guidance), it is not surprising that his Honour concluded that off-rail activities fell within the credit scheme. However, the Court now has the benefit of s 38 of the Act in which it is made clear that, however plausible Dowsett J's judicial definition of "in rail transport" as a "system" might be in the abstract, the legislature has chosen to define the term more narrowly as a subset of that whole system. As can be seen, the common thread in each of the s 38 subparagraphs is the limitation or linking of "in or on a rail vehicle" to "in rail transport". 19 It may well be that the introduction of s 38 has in fact made the parenthetical language in s 53(3) superfluous. Asciano submits that to the extent that there is any conflict between the operative s 53 and the definitional s 38 , the substantive provision must prevail: Project Blue Sky , 194 CLR at 382. That proposition is of course true, but it does not assist in resolving the present case because there is no conflict. Section 53(3) says only that fuel purchases for use in propelling a road vehicle along a public road are not eligible for credits. As to whether any other purchases for off-rail use are or are not eligible, s 53 is simply silent. In other words, this is not a situation where the substantive provision says X and the definition says "not X"; rather, this is a case where the substantive provision says "not X" (i.e. propelling a road vehicle along a public road) and the definition says "not X" and "not Y" (i.e. other off-rail activities). 23 Thus an argument about ambiguity has force only when backed by a presumption of construction that such ambiguity should be resolved in a particular way. For example, if the Act were considered beneficial legislation to be broadly construed, as the pre-2003 legislation was when Dowsett J handed down Queensland Rail , I might be inclined to favour Asciano's view. However, I am now bound to follow the Full Court's decision in Ostwald that the Act is to be construed narrowly, which creates a presumption in favour of the Commissioner. 29 Finally, much was made by both sides of the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003 (Cth). At times, the parties made efforts to parse the language of the Explanatory Memorandum as if it were itself a statutory instrument. It suffices to say for present purposes that I do not think so much can be made of the Explanatory Memorandum. At a broader level, the point made by Asciano was that the Explanatory Memorandum demonstrated Parliament's intent to maintain the same level of benefits in the Act as in the pre-2003 credit scheme. I accept that premise. However, the argument then proceeded that because Dowsett J found in Queensland Rail that purchases for off-rail use were credit-eligible prior to 2003, it must be the case that Parliament intended for those benefits to be preserved in the Act . 30 The flaw in this argument is that Queensland Rail was not handed down until 2006. The relevant pre-2003 provisions themselves make no explicit mention of whether purchases for certain off-rail uses are eligible for credit. Thus the knowledge that such benefits were deemed to be available under the old scheme cannot be imputed to Parliament in 2003. (The situation might of course be different had the decision in Queensland Rail been issued prior to passage of the Act , in which case it would be presumed that Parliament had taken that decision into account when passing the new legislation: Pearce DC and Geddes RS, Statutory Interpretation in Australia (5 th ed 2001) at para [3.39] and [3.40].) Thus it is perfectly consistent, notwithstanding Queensland Rail , to impute to Parliament the view that purchases for off-rail use were not eligible for credit prior to 2003 and that the Act would indeed maintain the same level of benefits in that purchases for off-rail use would continue to be ineligible. 31 The Commissioner adopted this latter view, submitting that Parliament was likely to be aware that such credits for off-rail activities were not available when drafting the Act . In June 2000, the Commissioner issued Excise Bulletin EB 2000/3, which stated that benefits were not available for off-rail uses of the kind now claimed by Asciano: Queensland Rail at [14]. The Explanatory Memorandum to the Act states that "[t]he [Commissioner] has released administrative guidelines on which activities are eligible for a rebate" under the marine and rail categories, but that there is no further clarification in the Customs Act and continued "uncertainty surrounding which activities are actually eligible": Explanatory Memorandum at [1.39]-[1.40]. It seems tolerably clear that the Explanatory Memorandum was referring to Excise Bulletin EB 2000/3. 32 The Explanatory Memorandum then goes on to state (at [1.41]): In order to remove this uncertainty and align the current administration of the marine transport and rail transport categories with the legislation, the new expressions 'use in marine transport' and 'use in rail transport' have been introduced into the [Act], so as to set out clearly in the legislation which activities in these categories will qualify for the off-road credit. 33 Obviously, Parliament's attempts to achieve clarity in this regard cannot be termed an unqualified success. Two points do, however, emerge from these paragraphs. The first is that Parliament intended to align the regimes for marine and rail transport. It was conceded by Asciano that, with respect to marine transport, the location of the equipment is relevant in all cases - if the equipment is not located on a vessel, purchases for use in that equipment are not credit-eligible. In other words, para [1.41] supports the contention that given that Parliament intended to harmonise the marine and rail transport credit regimes and given that credits are not available under the marine transport regime for off-vessel activities, the better view is that credits are not (unless explicitly stated otherwise) available under the rail transport regime for off-rail activities. 35 The definitions now found in s 38 of the Act must be given effect according to their terms. Those definitions were not in the rebate scheme legislation under consideration in Queensland Rail and it follows that the decision in Queensland Rail does not govern the present case. The purchase of off-road diesel fuel for use in equipment not located in or on a rail vehicle is not entitled to a credit under s 53 of the Act even if it is used for a purpose incidental to the use of a vehicle in rail transport. 36 Accordingly, I will dismiss the application with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 16 September 2008 Counsel for the Applicant: Mr J de Wijn QC and Mr D McInerney Solicitor for the Applicant: PricewaterhouseCoopers Legal Counsel for the Respondent: Mr N Williams SC and Mr S Lloyd Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 8 September 2008 Date of Judgment: 16 September 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/1401.html