Case: Ha v New South Wales [1997] HCA 34 ; (1997) 189 CLR 465
Outcome: applied
I do not agree that the words "manufactured" or "produced" must be read so as to apply only to goods that are intended to reach a third party consumer or to "go into the market", rather than to goods that might be consumed by a manufacturer itself in the course of its operations. Duties of excise are inland taxes on "a step in the production, manufacture, sale or distribution of goods": see Ha v New South Wales [1997] HCA 34 ; (1997) 189 CLR 465 ( Ha ) at 490. In Matthews v Chicory Marketing Board (Vict) [1938] HCA 38 ; (1938) 60 CLR 263 ( Matthews ) at 304, Dixon J said: To be an excise the tax must be levied "upon goods," but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. (In Parton v Milk Board (Victoria) [1949] HCA 67 ; (1949) 80 CLR 229 Dixon J qualified this statement to remove the reference to consumption, following the decision of the Privy Council in Atlantic Smoke Shops Ltd v Conlon [1943] AC 550.) 78 The disjunctive language used in the passages from Ha and Matthews demonstrates that a tax imposed on any one of the steps referred to will qualify as a duty of excise. For example a tax imposed on the sale of goods to consumers would be an excise, as would a tax imposed on the manufacture of goods without any necessary reference to their sale. In support of its contention Caltex relied particularly upon passages in Anderson's Pty Ltd v Victoria [1964] HCA 77 ; (1964) 111 CLR 353 ( Anderson's) and Bolton v Madsen [1963] HCA 16 ; (1963) 110 CLR 264 ( Bolton ), which were followed by the Full Court of this Court in Commissioner for A.C.T. Revenue v Kithock Pty Ltd [2000] FCA 1098 ; (2000) 102 FCR 42 ( Kithock ) . In Anderson's , Barwick CJ said at 364: [T]he judicial formulation of the nature of a duty of excise within the meaning of the Constitution has progressed over the intervening years. It has now, however, in my opinion, received definitive exposition by this Court, and, however much other views might have been possible at an earlier stage, it ought now to be taken as settled that the essence of a duty of excise is that it is a tax upon the taking of a step in a process of bringing goods into existence or to a consumable state, or of passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. (Emphasis added.) 83 Assuming they fall within the Schedule, the impost in this case is levied directly on the residual oils as the "subjects of manufacture" and affects them as commodities in the hands of Caltex. The residual oils are of use to Caltex and serve an economic purpose. Without them Caltex would need to acquire fuel oil from an alternative source at higher cost. The impost is not levied upon the consumption of the residual oils by Caltex. Nor is it a tax on the ownership of the residual oils. It is an excise in the most obvious sense; a tax upon the step of manufacturing or producing a defined good. In my view, to accept the limitation contended for by Caltex would be counter to the trend of the High Court's decision making from the early decision in Peterswald v Bartley [1904] HCA 21 ; (1904) 1 CLR 497 through to Ha [1997] HCA 34 ; 189 CLR 465 , which has been to enlarge the field of permissible steps of taxation in the context of duties of excise. 84 Further, Caltex's argument arrives at a position whereby excise duties would be limited to taxes bearing the characteristics of an indirect tax a tax levied on a person with the expectation that that person will not bear the financial burden of the tax but pass it on to another. The indirectness or otherwise of a tax has been rejected as a necessary element of an excise: see Dennis Hotels Pty Ltd v Victoria [1960] HCA 10 ; (1960) 104 CLR 529 ( Dennis Hotels ) at 583, 585 and 590 (Menzies J); see also Ha 189 CLR at 509. The effect of adopting Caltex's position would be to reject the step of manufacture or production as an occasion in itself for the imposition of an excise and necessitate an inquiry into the subjective intentions of the relevant manufacturer. As I have said the cases demonstrate the stand alone nature of each permissible taxation step and it would not be consistent in my view to introduce a limitation focussed on intention. In this connection, I adopt what Menzies J said in Dennis Hotels 104 CLR at 583: I find nothing in the language of the Constitution which would exclude from the categories of duties of customs or duties of excise, duties to be borne as well as paid by the importer or manufacturer. In other words, unless it be by the use of the words "customs" and "excise" themselves, the Constitution does not adopt the distinction between direct and indirect taxes so that, unless the usage of the words otherwise requires, an import duty on goods imported for use or consumption by the importer would be a customs duty, and a duty upon the production of goods for the producer's own use or consumption would be an excise duty, and both would be beyond the power of the Parliament of a State. In my view a thing capable of description as a manufactured good, and consumed or otherwise applied by its manufacturer in that manufacturer's commercial operations, is capable of being the subject of an excise duty.