Case: Commissioner of Taxation v Ostwald Bros Civil Pty Ltd (2008) 167 FCR 588
Outcome: followed
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]. 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. 24 That is to say, if it be "the intent of the diesel fuel rebate scheme to pay rebate only on those activities that are explicitly mentioned in the legislation and not to activities that are said to be integral to, associated with or connected with these activities," ( Ostwald at [34] quoting the legislative history) then I consider it is for Parliament, not this Court, to broaden the scope of the scheme. To the extent there is any doubt as to whether off-rail activities are covered, that doubt must be judicially resolved in the Commissioner's favour because on any view it cannot be said that off-rail activities are explicitly included by ss 38 and 53 of the Act . 25 Asciano also raises a policy argument that the result (that whether a purchase for a particular use is credit-eligible turns on whether the use occurs on or off-rail) is anomalous. For example, the evidence disclosed that a train's brakes may be safety-tested by using special on-rail equipment or by using off-rail equipment (in the form of a compressor) next to the track. Asciano submits that to say that diesel fuel purchases in the first case, but not the second, would be credit-eligible is bizarre because the same activity in both cases is integral and incidental to the carrying on of Asciano's rail transport business. 34 The second point is that para [1.41] is consistent with the broader statement in the Explanatory Memorandum (at 3) that the Act was designed to make minor amendments to the existing schemes "to clarify the Government's position on certain activities." It is also consistent with the view, now endorsed by the Full Court in Ostwald , that the benefits conferred by the Act should be construed narrowly.