ACT CIVIL & ADMINISTRATIVE TRIBUNAL

	SNEZANA PTY LTD V THE COMMISSIONER FOR ACT REVENUE (Administrative Review) [2011] ACAT 39

AT10/32, AT10/43 – AT10/52

Catchwords:	ADMINISTRATIVE REVIEW- liability to pay duty on motor vehicle - dutiable value- GST in dutiable value - definition of motor vehicle for duty purposes - when is duty payable- interest and penalty tax

List of legislation:	ACT Civil and Administrative Tribunal Act 2008, 
s 68(3)(c)(ii)
	Duties Act 1999, ss 203, 205 and 207
                                   Taxation Administration Act 199, ss 26, 29, 31 and 37 

List of cases:	Ambiance (Arncliffe) Pty Ltd v Chief Commissioner of State Revenue [2002] NSW ADT 206
Commissioner of State Revenue v Royal and Sun Alliance Insurance Australia Ltd [2003] VSCA 177

Tribunal:		Mr Brian Hatch, Senior Member

			
Date of Orders:			1 June 2011 
Date of Reasons for Decision:	1 June 2011 
AUSTRALIAN CAPITAL TERRITORY		)
CIVIL & ADMINISTRATIVE TRIBUNAL	)

							AT10/32, AT10/43 – AT10/52

	BETWEEN:
SNEZANA PTY LTD
Applicant

AND:
                                        COMMISSIONER FOR 
ACT REVENUE
Respondent

TRIBUNAL:		                          	Mr Brian Hatch
Senior Member

DATE:					1 June 2011 

ORDER

1.	The following decisions are confirmed: 

i.	the decision of the Respondent in relation to YFT70A.

ii.	the decision of the Respondent in relation to YFX17H.

iii.	the decision of the Respondent in relation to YGM67K, YGQ31Y and YGM40B.

iv.	the decision of the Respondent in relation to T5115C.

v.	the decision of the Respondent in relation to YFH49Z.

vi.	the decision of the Respondent in relation to YFN92A and T5187B.

2.	I confirm the decision with respect to the GST being a part of the dutiable value for YGK92V, but I remit the issue pursuant to 
section 68(3)(c)(ii) of the ACT Civil and  Administrative Tribunal Act 2008  as to whether the hydraulic equipment  is part of the dutiable value to the Respondent.

3.	I set aside the decision of the Respondent in relation to T4307C and determine that only the cost of the trailer of $163,679.00 plus GST being $180,046.90 is dutiable and I remit that to the Respondent pursuant to section 68(3)(c)(ii) of the ACT Civil and  Administrative Tribunal Act 2008.

4.	I confirm each decision in relation to the imposition of interest and penalty tax other than the two decisions I have remitted to the Respondent in which cases those new Determinations should also include the appropriate interest and penalty tax.

………………………………..
Brian Hatch
                                            Senior Member

REASONS FOR DECISION

1.	This is a review of a decision of the Respondent of 12 May 2010 with respect to duty payable in relation to the purchase of motor vehicles. The Duties Act 1999 (Duties Act) defined motor vehicle at the relevant time in section 6 as  follows:                    
  		‘“motor vehicle” means—
(a) a motor vehicle or trailer within the meaning of the Motor Traffic Act; or
(b) a caravan;’

2.	The current definition of motor vehicle is different in that caravans and camper trailers are no longer dutiable.

3.	The Applicant is a transport business and it owns a number of trucks such as tippers and what were once tow trucks but today are more likely to be flat top trucks used for transporting items such as other vehicles. 

4.	The Applicant purchased eleven vehicles the subject of these proceedings between 30 October 2006 and 30 November 2009. For a number of these purchases the Applicant did not include the GST component of the purchase price. For others the issue is what was the purchase price for the purposes of assessing stamp duty.

5.	The first issue to deal with is the role of GST in assessing duty under the Duties Act. This is a matter that has been dealt with by the Supreme Court of Victoria and the New South Wales Administrative Decisions Tribunal. In the Victorian decision of Commissioner of State Revenue v Royal and Sun Alliance Insurance Australia Ltd [2003] VSCA 177 Ormiston JA said at para 15:

“15. Before dealing with the judge's reasons and the parties' contentions, it is necessary to set out briefly what appears to have been the structure and operation of the GST legislation, especially in the period 1 July to 31 December 2000. On 1 July 2000 that conceptually complex and convoluted legislative scheme came into force, the principal statute for present purposes being the GST Act, although there were some eight other Acts which came into operation at that time including the brief A New Tax System (Goods and Services Tax Imposition - General) Act 1999, as required by s.55 of the Constitution. Although I have a limited understanding of the totality of the scheme, there would seem little doubt that the GST tax was imposed on those who supplied goods and services, rather than on those who purchased or otherwise received them, in contrast to the sales tax payable in various states of the United States of America which is imposed on the purchaser. On the contrary a person who acquires goods, services and the like may in fact obtain a benefit described as an "input tax credit" if the acquirer makes what is called a "creditable acquisition" which in turn requires that a "thing" has been acquired for what is (remarkably) called a "creditable purpose": see ss.11-20, 11- 5 and 11-15.”

6.	His Honour continued and makes it clear that as the GST is imposed on the seller, in that case an insurer charging premiums for insurance products, then the GST forms part of the premium. At paragraphs 31 and 32 His Honour says:
“31. In so far as the insurer purported to claim stamp duty, fire services levy and GST as such from the insured, it had no right to do so in the sense that it was the only person upon whom a legal liability rested to pay the duty, the levy or the tax (as the case may be): see, as to the duty, s.97(2). Nobody can lawfully claim, without specific authorisation, to be paid a tax or impost which does not rest on the person upon whom the demand is made. With great respect, it is wrong to suggest, as Wallace, J. did in Wesfarmers[38], that the insurer, in separating out the government charges, required the insured to pay those charges, including the stamp duty "so as to enable it to discharge its statutory obligation". Perhaps an insurance contract may contain a term whereby the insured should indemnify the insurer against certain liabilities if and when they be paid, but that was not the case in Wesfarmers or in the present case. There has merely been a division of the consideration into a number of parts, so that all the parts made up the "consideration" which the insurer demanded should be paid to it, and not to any other party, as the price for granting cover to the insured. So in both Wesfarmers and the present case the insurer had no legal right to claim from the insured payment of government taxes or charges, the burden of which rested solely on the insurer, nor was there any relevant exception, at least in the present case.

32. More importantly, neither in the Act nor in the GST Acts was there any provision which placed a separate burden on the insured or made provision for the insurer to account for GST received or to treat it separately in its books of account, such as to deny its character as part of the consideration for the grant of insurance cover. There was again a concession to those seeking payment for goods and services inasmuch as they were entitled to designate separately the amount of GST directly incurred by reason of the provision of such goods and services, but that in no way changed the legal obligations of the parties to such transactions.”

7.	I can see no need to set out further decisions at length such as the NSW decision of Ambiance (Arncliffe) Pty Ltd v Chief Commissioner of State Revenue [2002] NSW ADT 206 as that case adds no more to the result that GST forms part of the consideration. 

8.	Where goods or services are sold the GST is part of the consideration. How the seller takes that into account in setting a final price for those goods or services is a matter for the seller and what the purchaser is prepared to pay.

9.	The next issue is the time at which the duty is calculated and payable. Dutiable value is defined in the Duties Act in section 203 as:

“dutiable value, of a motor vehicle, means the greater of the following amounts, less any premium paid for extended warranty insurance:
(a) the consideration in money (or money’s worth) given for the
acquisition of the vehicle;
(b) the market value of the vehicle at the time duty is payable.”

10.	Pursuant to section 207 of the Duties Act, duty becomes payable when the motor vehicle is registered. The Respondent submitted that bodies fitted to trucks form a part of the vehicle and form part of the value of the motor vehicle for duty purposes. I accept that submission. The Respondent’s submissions that bodies not attached at the time of registration are not part of the motor vehicle also follows. A taxpayer wanting to register a motor vehicle would be advised to attend to the registration prior to fitting a body. Of course, that may be impractical, and the motor vehicle may not be registerable until the body is fitted.

11.	In this case there is no evidence that the purchases were anything other than commercial transactions and that the purchase price reflects the market value. The issue is thereafter what the market value was at the time the vehicle was registered (section 207). 

12.	I will now turn to each motor vehicle in turn.

13.	The first motor vehicle is Mitsubishi Fuso Tipper YFT70A. The Applicant gave the dutiable value as $122,363.00. The Applicant was required by section 205 of the Duties Act to:

Lodgment of statement of dutiable value

A person who is required by law to make an application to register a
motor vehicle under the Vehicle Registration Act must lodge with
the application for registration a statement of the dutiable value of
the vehicle, unless the application is not chargeable with duty under
this chapter.

14.	The figure of $122,363.00 did not include GST as is required. The addition of GST takes the dutiable value to $134,600.00 as shown on the Tax Invoice given to the Applicant. Another Tax Invoice was sent to Esanda Finance Corporation Ltd (Esanda) for $135,000.00. This discrepancy was not explained but I do not see that anything turns on this minor variation. The Respondent reassessed duty based on $135,000.00 and I accept that as correct. 

15.	I confirm the decision of the Respondent in relation to YFT70A.

16.	The second motor vehicle is a Mercedes Benz Atego Flat Top YFX17H. The dutiable value declared was $122,727.27. This figure did not include GST and as such the proper value is $135,000.00.

17.	I confirm the decision of the Respondent in relation to YFX17H.

18.	The third, fourth and fifth motor vehicles are YGM67K, YGQ31Y and YGM40B. Each was another Atego truck purchased for $140,000.00 which did include GST. The Applicant arranged for bodies to be built separately at a cost of $56,363.64, $67,456.00, and $61,300.00 respectively. Mr Keir, a Director of the Applicant, gave evidence that these bodies were fitted to each motor vehicle at the time each was registered. As such the duty is payable on the value of the motor vehicle with the body fitted.

19.	The Respondent has calculated the dutiable value for the three Ategos as $140,000.00 plus the cost of the body. This method was not challenged and 
I cannot see any other way of calculating a value in the absence of some other evidence. Adding a body to a motor vehicle does not necessarily increase the value of the motor vehicle by the cost of the body, but in the absence of any other evidence I accept that value.

20.	I confirm the decision of the Respondent in relation to YGM67K, YGQ31Y and YGM40B. 

21.	The sixth motor vehicle is a Tidd Ross Todd T100-LL3340AE Flat Top T5115C. This is a trailer, and duty was payable at the time it was registered on 
12 November 2009. The dutiable value was given as $121,600.00, but that did not include GST. The value with GST was $133,760.00.

22.	I confirm the decision of the Respondent in relation to T5115C.

23.	The seventh is a MAN TGA Cab Over Prime Mover YGK92V. The Applicant declared dutiable value at $148,675.00. The invoice from the seller shows a total price of $181,715.00. Mr Keir gave evidence that the total price included the cost of a hydraulic system. That system can be fitted to the motor vehicle if a different trailer is used. The invoice figure includes GST, so the price without GST was $165,195.45, not $165,194.45 as the Respondent has it. Mr Keir said that he then deducted the cost of the hydraulic equipment and ended with a pre-GST figure of $148,675.00. That is, Mr Keir says the hydraulic equipment had a value of $16,520.00. Unfortunately there is no invoice or other evidence to corroborate that figure. I found Mr Keir to be a witness of truth, if somewhat misguided in his interpretation of tax law, and I accept his valuation of that equipment. I am left, however, with a lack of evidence as to whether that equipment was part of the motor vehicle at the time of its registration.

24.	I confirm the decision with respect to the GST being a part of the dutiable value for YGK92V, but I remit the issue pursuant to section 68(3)(c)(ii) of the ACT Civil and  Administrative Tribunal Act 2008 as to whether the hydraulic equipment  is part of the dutiable value to the Respondent.

25.	Eighth is a Hino FD Tilt Flat Top YFH49Z. The dutiable value was given as $100,000.00. That figure did not add the GST. The proper dutiable value is therefore $110,000.00.

26.	I confirm the decision of the Respondent in relation to YFH49Z.

27.	The ninth is a Smith Super Tilt Triaxle Trailer T4307C. Again GST was not added to the dutiable value. The other issue is that the Respondent added to the dutiable value the cost of an Under Run Board. The Respondent conceded that the evidence suggests that this board is a spare apart and not dutiable. Mr Keir gave evidence that the trailer was already fitted with such a board. As these boards are readily damaged, Mr Keir has a spare one ready to be fitted so that the trailer is off the road for a minimal time. I accept that evidence and find that the cost of the board is not dutiable.

28.	I set aside the decision of the Respondent in relation to T4307C and determine that only the cost of the trailer of $163,679.00 plus GST being $180,046.90 is dutiable and I remit that to the Respondent pursuant to 
section 68(3)(c)(ii) of the ACT Civil and  Administrative Tribunal Act 2008 . 

29.	The tenth and eleventh motor vehicles are a Hino FD1024 YFN92A and a Tidd SM2 trailer T5187B. The only issue with these two is that the dutiable value did not include GST as it should.

30.	I confirm the decision of the Respondent in relation to YFN92A and T5187B.

31.	The Respondent has added interest and penalty tax to the amounts it assessed as not having been paid. Part 5 of the Taxation Administration Act 1999 (TAA Act) covers this area. The first part is interest on unpaid tax. The interest component is calculated pursuant to section 26. That component can only be remitted where pursuant to section 29:

“Remission of interest
(1) The commissioner may remit all or part of the market rate
 		component or the premium component of interest, or both, if—
(a) the commissioner has determined that no penalty tax is payable
under section 31 (6); or
(b) the amount of penalty tax has been reduced under section 32 or
section 33; or
(c) penalty tax has been remitted in whole or in part under
section 37.

Note The commissioner’s decision refusing to remit interest in accordance
with a taxpayer’s application is a commissioner-reviewable decision
(see s 107, def commissioner-reviewable decision), and the
commissioner must give an internal review notice to the taxpayer (see
s 107B).
(2) The commissioner must not remit the market rate component unless
      the commissioner is also satisfied”

32.	As remission of the interest is determined by the issue of penalty tax I will now turn to that. 

33.	The Respondent in each assessment has added penalty tax at 50% pursuant to section 31 of the TAA Act which says:

“Amount of penalty tax
(1)  The amount of penalty tax payable in relation to a tax default is 25%
     of the amount of tax unpaid, subject to this division.
(2)  The amount of penalty tax payable in relation to a tax default is 50%
    of the amount of tax unpaid if the commissioner is satisfied that the
    tax default was caused wholly or partly by a failure by the taxpayer
    (or a person acting on behalf of the taxpayer) to take reasonable care
    to fulfil the taxpayer’s obligations under a tax law.
   (3) Subsection (2) does not apply if the tax payer satisfies the
           commissioner that the taxpayer (or a person acting on behalf of the
           taxpayer) had a reasonable excuse for the failure.
  (4)   Subsections (2) and (3) apply to a tax default that happened before
    	          their commencement in the same way as they apply to a tax default
   that happened after their commencement.
  (5)  The amount of penalty tax payable in relation to a tax default is 75% of          
  the amount of tax unpaid if the commissioner is satisfied that the
  tax default was caused wholly or partly by the intentional disregard
  by the taxpayer (or a person acting on behalf of the taxpayer) of a
  tax law.
 (6)   No penalty tax is payable in relation to a tax default if the
  commissioner is satisfied that—
(a) the taxpayer (or a person acting on behalf of the taxpayer) took
reasonable care to comply with the tax law; or
(b) the tax default happened solely because of circumstances
beyond the taxpayer’s control (or if a person acted on behalf of
the taxpayer, because of circumstances beyond either the
person’s or the taxpayer’s control) but not amounting to
financial incapacity.

34.	I had the opportunity to hear the evidence of Mr Keir. As I have said I regarded him as a witness of truth. That does not mean that I consider that any of the penalty tax should be remitted pursuant to section 31 (3) or (6). Mr Keir demonstrated to me that he did not have a reasonable excuse for the failure, nor that he took reasonable care, nor that there were circumstances beyond the control of the Applicant. The Respondent submitted that earlier breaches by the Applicant showed that it had the requisite knowledge of the law. I see the issue more simply.

35.	The Applicant is in the road transport business. The motor vehicles used are expensive, and the duty payable is a significant cost at $3 per $100. The GST system came into being nearly 11 years ago. I cannot see it as reasonable for the Applicant to have not come to terms with the payment of duty and how it is calculated. On occasions the Applicant had the dealer register the motor vehicle. The dealer registering the motor vehicle is not something that would normally be seen as beyond the control of the Applicant. It is incumbent on the Applicant to ensure that the dealer gets it right. At times that may not be discovered by a taxpayer until the final tax invoice is received from the dealer, but that is the time it could also be remedied. Raising that issue at the earliest time with the Respondent would on the face of it be a reasonable excuse in the terms of section 31(3) of the TAA ACT.

36.	I do not find that section 37 of the TAA Act is relevant as there were no steps taken to mitigate and no exceptional circumstances.

37.	I confirm each decision in relation to the imposition of interest and penalty tax other than the two decisions I have remitted to the Respondent in which cases those new Determinations should also include the appropriate interest and penalty tax.

………………………………..
BRIAN HATCH
                                            Senior Member

PUBLICATION DETAILS

TO BE PUBLISHED
To be completed by Tribunal Staff

PART A							FILE NO:	

APPLICANT:		
RESPONDENT:		

COUNSEL APPEARING:	APPLICANT: Mr PHILLIP WALKER	
RESPONDENT: SELF REPRESENTED	

SOLICITORS:			APPLICANT:ACT GS	 
RESPONDENT:	

OTHER:				APPLICANT:	
RESPONDENT:	

TRIBUNAL MEMBER/S:	BRIAN HATCH, SENIOR MEMBER

DATE/S OF HEARING:				PLACE: CANBERRA

DATE/S OF DECISION:				PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( )	CASE NOTE ( )	UNREPORTED DECISION ( )

COMMENTS: