ATO ID 2006/77: Excise: manufacturer's licence - suspend a licence
Date of decision: 10 March 2006
Business line: Indirect Tax

Issue
Is the Commissioner able to suspend a manufacturer licence pursuant to paragraph 39G(1)(m) of the Excise Act 1901 if the licence holder has been charged with offences under the Excise Act including non-payment of duty on excisable goods?

Decision
Yes. The Commissioner is able to suspend a manufacturer licence pursuant to paragraph 39G(1)(m) of the Excise Act if the licence holder has been charged with offences under the Excise Act including non-payment of duty on excisable goods.

Facts
A person (the licensee) holds an excise manufacturer licence. The licensee has been charged with offences under the Excise Act. The offences include non-payment of duty on excisable goods.

Reasons for decision
Summary: Section 4 of the Excise Act provides that the term 'Collector' means the 'CEO' which in turn means the 'Commissioner'. Subsection 39G(1) of the Excise Act provides that the Collector may suspend a licence in a number of circumstances. One of the circumstances is if the Collector has reasonable grounds for believing that it is necessary for the protection of the revenue to suspend the licence. The expression 'protect the revenue' is not defined in the Excise Act. In an unreported decision, Re Francesco Martino Applicant v. Australian Taxation Office Respondent [2002] AATA 1242 (unreported, Deputy President Forgie, 29 November 2002) (the Martino Case ), the tribunal referred to the judgment of Hodges J. in Stephens v. Abrahams (1902) 23 ALT 233; (1902) 27 VLR 753; (1902) 8 ALR 112 where he defined the term 'revenue' as '...moneys which belong to the Crown, or moneys to which the Crown has a right, or moneys which are due to the Crown...'. Although the Martino Case considered the suspension of a tobacco producer licence, the Tribunal's views on what constitutes 'necessary to protect the revenue' are equally relevant to excise manufacturer licences. The Tribunal found that the protection of the revenue has two aspects. Firstly, the Commonwealth must be certain of receiving all the excise duty that is ultimately payable. The second aspect is that the Commonwealth should not have to spend more than would normally be necessary in carrying out its supervisory duties and responsibilities under the Excise Act. Further, the Tribunal took the view that the word necessary does not mean essential. The word necessary means that which is reasonably required. In this instance, the licensee has been charged with offences under the Excise Act. The offences include non-payment of excise duty. Given the licensee's alleged failure to remit all excise duty properly payable, it is reasonable to conclude that suspension of their excise manufacturer licence is warranted. If the licence is not suspended, both of the reasons for protecting of the revenue identified by the Tribunal in the Martino Case become relevant. Firstly the licensee's alleged past failures indicate a risk that the Commonwealth may miss out on duty properly payable. Secondly, given the client's alleged failure to comply with excise laws, the Commonwealth would have to boost its compliance efforts, thus requiring expenditure of additional sums in carrying out its supervisory duties and responsibilities under the Excise Act. Therefore, where the holder of an excise manufacturer licence has been charged with offences under the Excise Act, including non-payment of excise duty, the Collector may suspend their licence pursuant to paragraph 39G(1)(m) of the Excise Act.

Legislative references: Excise Act 1901 section 4 section 39G subsection 39G(1) paragraph 39G(1)(m)
Case references: Stephens v. Abrahams (1902) 23 ALT 233 (1902) 27 VLR 753 (1902) 8 ALR 112
Related ATO interpretative decisions: ATO ID 2006/78 | ATO ID 2006/79
Subject references: Excise Excise collections Licensed manufacturer Tobacco producer licence