Print National Australia Pty Ltd v Chief Commissioner of State Revenue  NSWSC 297
|Date of judgement||16 March 2012||Proceeding No.||2012/76332|
|Court or Tribunal||Supreme Court of NSW|
|Legislation cited||Income Tax Assessment Act 1997 (Cth)
Pay-roll Tax Act 1971
Payroll Tax Act 2007
Supreme Court Act 1970
Taxation Administration Act 1953 (Cth)
Taxation Administration Act 1996
|Catchwords||PROCEDURE - civil - interlocutory issues - application for injunction - injunction necessary for the administration of justice in New South Wales -demonstration of substantial hardship not sufficient basis for restraint of actions - right to recovery of tax owing expressly conferred - restraint would not further administration of justice - Supreme Court Act 1970 (NSW) s 23
PROCEDURE - civil - interlocutory issues - application for stay of recovery proceedings - application that Chief Commissioner of State Revenue be restrained for taking further steps to recover sums assessed in way of payroll tax - alternative application for restraint until after determination of objections lodged - claimed extreme personal hardship suffered if recovery or winding up proceedings initiated - no evidence given as to whether attempts have been made to meet assessments by borrowing on security of assets
TAXATION AND REVENUE - assessment for payroll tax - objections and review - alleged incorrect grouping of companies for purpose of calculation of payroll tax - challenge as to the imposition of penalties - taxpayers right to object to assessment and review adverse determination to such objections - tax can be recovered as if no objection or review pending - amounts assessed due and owing
|Cases cited||Clyne v Deputy Commissioner of Taxation (1982) 56 ALJR 857
Commissioner of Taxation v Futuris Corporation Limited  HCA 32; (2008) 237 CLR 146
CSR Limited v Cigna Insurance Australia Limited  HCA 33; (1997) 189 CLR 345
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd  HCA 41; (2008) 237 CLR 473
Deputy Commissioner of Taxation v Mackey (1982) 45 ALR 284; (1982) 13 ATR 457
Deputy Commissioner of Taxation v TDE Nominees Pty Ltd (No. 2)  NSWSC 1528
Deputy Commissioner of Taxation (WA) v Australian Machinery and Investment Company Pty Ltd (1945) 3 AITR 236
Deputy Federal Commissioner of Taxation v Gergis (1991) 91 ATC 4510; (1991) 22 ATR 1
Snow v the Deputy Commissioner of Taxation (WA) (1987) 14 FCR 119
This was an application by eight companies (“the taxpayers”) for an order that the Chief Commissioner be restrained from taking any steps to recover the sums assessed by way of payroll tax for the period 1 July 2003 to 20 June 2010 until objections proposed to be lodged by the applicants had been determined. The total amount assessed as owing for payroll tax, interest and penalty tax was in excess of $4.2m, and the assessments were issued in respect of 12 companies.
White J declined to grant the application having regard to the general principles that apply in proceedings to stay recovery actions, as well as the provisions in the Taxation Administration Act permitting the Chief Commissioner to recover unpaid assessments of tax notwithstanding pending objections or review applications. The taxpayers were ordered to pay the Chief Commissioner’s costs.
The taxpayers brought the application on two principal grounds, namely:
that the assessments would be challenged by way of objection on various grounds, and
that an injunction was necessary for the administration of justice in New South Wales, in the sense that it would preserve the basis for future proceedings, namely, the likely proceedings for review of an adverse determination by the Chief Commissioner of the proposed objections. The basis for this submission was that the taxpayers claimed that they would suffer extreme hardship if the Chief Commissioner were to institute recovery proceedings or winding up proceedings. The taxpayers submitted that, by analogy to the principles by which it is recognised that a court has a power to stay such recovery proceedings, an injunction against the institution of proceedings should be granted.
On 16 March 2012, White J delivered his judgment, ruling in favour of the Chief Commissioner.
His Honour noted ss.94 and 103 of the Taxation Administration Act 1996 (“the TAA”), pursuant to which the Chief Commissioner has a right to recover tax even if an objection or a review application to the ADT or a court had been lodged, as if no objection or review were pending: .
His Honour noted the effect of the provisions is that even if the plaintiffs' arguments are correct and the assessments are wrong and should be set aside on review, the amounts assessed are currently due and owing. His Honour also noted that by reason of s 119 of the TAA, it is not open to the plaintiffs to challenge the correctness of the assessments in these proceedings because the assessments were conclusive: .
His Honour stated that the same principles that apply to an application for a stay of recovery proceedings do not apply to the present application for an injunction because the jurisdiction in each case is different. However, his Honour did highlight that the policy considerations applying to a stay application, “apply with at least equal force to the present application”. The mere demonstration of substantial hardship to the plaintiffs is not a sufficient basis for preventing the Chief Commissioner from exercising the rights to recover unpaid assessments conferred by the TAA. Further, the evidence of hardship did not go so far as to show that future review proceedings would be thwarted if recovery proceedings were instituted by the defendant: .
His Honour reviewed the evidence of hardship in detail. He concluded that, whilst it was possible that if recovery proceedings were instituted by the Chief Commissioner, that might be treated by the taxpayers’ lender as an event of default, the evidence did not show that was likely: . White J noted that David James, the director of the taxpayers, did not give evidence as to whether any attempts had been made to borrow on the security of the companies’ assets, or of the ability of the taxpayers to raise funds to pay the assessments: . Further, his Honour remarked that even if the taxpayers were wound up, that would not in itself preclude a liquidator from pursuing review proceedings: .
His Honour noted that the justice to be administered in the State includes not only the taxpayers’ right of review under the TAA, but also the right of the Chief Commissioner to institute proceedings for recovery of tax notwithstanding pending objections or reviews: ,  and . His Honour expressed the view that in this case, to restrain the Chief Commissioner from instituting proceedings as a result of the issue of the notices of assessment, would not further the administration of justice: .
Alternatively, his Honour held that, if he were wrong in his view that the principles applicable to a stay of recovery proceedings ought not to apply in the present application, he would nonetheless not be satisfied on the present evidence that by analogy with those principles, an injunction should be given: .
In doing so, he considered the line of authority established by decisions in the federal courts that recognise the policy evidenced by ss.94, 103 and 119 of the TAA, namely, Parliament’s intention that the revenue be placed in a special position of advantage and should, in general, be free to pursue recovery proceedings notwithstanding the unfairness and hardship that that might entail: .
Accordingly, his Honour declined to grant the injunction sought. The summons was dismissed and the taxpayers ordered to pay the Chief Commissioner’s costs.