FEDERAL COURT OF AUSTRALIA Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142 Citation: Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142 Appeal from: Multiflex Pty Ltd v Commissioner of Taxation [2011] FCA 1112 Parties: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v MULTIFLEX PTY LTD ACN 137 111 598 File number: VID 1082 of 2011 Judges: STONE, EDMONDS AND LOGAN JJ Date of judgment: 11 November 2011 Corrigendum: 18 November 2011 Catchwords: TAXATION – Goods and Services Tax – negative net amount calculated in respondent's Business Activity Statement – whether obligation to pay refund subject to implication that payment occur within a reasonable period – whether a reasonable period includes the period of time required to conduct an investigation into the correctness of respondent's activity statements – reasonable period is time required to administratively process statement and refund the amount – reasonable time does not include a period of time to investigate a taxpayer's statements – respondent entitled to refund ADMINISTRATIVE LAW – constitutional writs – availability of mandamus – respondent entitled to writ of mandamus as appellant not complying with statutory duty – where no disentitling conduct on behalf of respondent Legislation: A New Tax System (Good and Services Tax) Act 1999 (Cth) ss 2-5, 2-30, 5-5, 7-1, 7-5, 7-10, 7-15, 9-20, 17-5, 17-15, 23-15, 31-15, 35-5, 105-15, 182-10, Div 195 Taxation Administration Act 1953 (Cth) ss 8AAZLF, 8AAZLG Sch 1 Goods and Services Tax Act 1985 (NZ) s 46 Value Added Tax Act 1983 (UK) ss 14, 16 Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 cited Commissioner of Inland Revenue v Sea Hunter Fishing Ltd (2002) 20 NZTC 17-478 considered Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 applied Contract Pacific Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 302 considered Deputy Commissioner of Taxation for South Australia v Ellis & Clark Ltd (1934) 52 CLR 85 cited HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 considered Multiflex Pty Ltd v The Commissioner of Taxation [2011] FCA 789 cited Multiflex Pty Ltd v Commissioner of Taxation [2011] FCA 1112 affirmed Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 cited R v Commissioners of Customs and Excise; ex parte Strangewood Ltd (1987) 3 BVC 60; [1987] STC 502 considered Re Refugee Review Tribunal; Ex Parte Aala (2000) 204 CLR 82 applied Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510 cited Travelex Ltd v Federal Commissioner of Taxation (2009) 178 FCR 434 considered Date of hearing: 28 October 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 43 Counsel for the Appellant: Mr N Williams SC with Mr M Flynn and Mr P Gray Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: Ms J Batrouney SC with Mr F O'Loughlin Solicitor for the Respondent: Mills Oakley Lawyers FEDERAL COURT OF AUSTRALIA Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142 CORRIGENDUM 1 In paragraph 42 of the Reasons for Judgment, in the second sentence, the page reference following the citation "(1994) 182 CLR 51" should read "88". I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justices Stone, Edmonds and Logan. Associate: Dated: 18 November 2011 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1082 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Appellant AND: MULTIFLEX PTY LTD ACN 137 111 598 Respondent JUDGES: STONE, EDMONDS AND LOGAN JJ DATE OF ORDER: 11 NOVEMBER 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal is dismissed. 2. The appellant is to pay the respondent's costs of the appeal to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1082 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Appellant AND: MULTIFLEX PTY LTD ACN 137 111 598 Respondent JUDGES: STONE, EDMONDS AND LOGAN JJ DATE: 11 NOVEMBER 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In a paper entitled: To Interpret or Translate? The judicial role for GST cases, delivered on Friday, 5 August 2005 at a conference organised by Monash University on "Interpreting the GST Law", Hill J, writing extra-judicially, observed: "It is not often that the courts are given the opportunity of interpreting legislation providing for the implementation of an entirely new tax and especially one which is intended to operate broadly over the entire sphere of economic activity. The tools which permit judges to interpret in a purposive way with an eye to ensuring that the tax works as it may be assumed to be intended to work in the real world are there, but with one exception. There will obviously be unintended consequences which arise in the implementation of a new tax drafted in a way which in many respects differs from comparable legislation in other jurisdictions. While, in part, such unintended consequences can be dealt with by the ruling system that is not a satisfactory long-term solution to problems. There is a need for the legislature to cure defects from time to time. Yet there seems to be a refusal on the part of the government to admit there are defects and to make amendments other than amendments which may be thought necessary to overcome avoidance. In some cases, the courts may be able to resolve difficulties by applying a purposive construction but in the Australian constitutional context where there is a sharp separation of the legislative and judicial powers there is a limit to what one can expect of the courts. Ultimately the courts cannot act as legislators. Parliament cannot stand by and then blame the courts if a decision is one that does not favour the revenue when the problem lies not in how the legislation is to be interpreted in a common sense way, but in how it is written." The enduring wisdom of this observation came to mind in the course of the hearing of this appeal. In his challenge to the judgment below the Commissioner contended that it was implicit in the otherwise imperative language of s 35-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) in respect of the refunding by him of a "net amount" that he was allowed a reasonable time to do this, including the allowance to him of such time as was reasonably necessary to determine by investigation whether that net amount was truly payable to the respondent, Multiflex Pty Ltd (Multiflex). It will be necessary later to refer in some detail not only to s 35-5 but also to other provisions in the GST Act and in the Taxation Administration Act 1953 (Cth) (TAA). For the reasons which follow, even construing that provision in context and giving full voice to a preference for a purposive construction of the scheme of taxation revealed, materially, by the GST and the TAA, this is a case where no such implication can be drawn. If that be a defect in the scheme of taxation, the defect is one for Parliament to address. 2 Further, as will also be seen, the need for the Commissioner's pressing for the drawing of such an implication would have been obviated had heed been taken of amendments long ago made to the legislation governing New Zealand's GST system. That country's GST system provided much inspiration in the drafting of the core concepts of Australia's GST system. However that may be, the remedial precedent offered by the New Zealand legislation has not been taken up in Australia's GST system. 3 The nature of the Commissioner's challenge to the judgment below and why it must be rejected will be apparent from what follows. The reasons why that challenge must be rejected in substance reflect the reasons of the learned primary judge which were, in turn, substantially those advanced both before his Honour and us by Multiflex. For that reason, we do not separately detail the submissions made on behalf of that company. 4 Section 35-5 of the GST Act provides: 35 5 Entitlement to refund (1) If the *net amount for a tax period is less than zero, the Commissioner must, on behalf of the Commonwealth, pay that amount (expressed as a positive amount) to you. Note 1: See Division 3A of Part IIB of, and section 105 65 in Schedule 1 to, the Taxation Administration Act 1953 for the rules about how the Commissioner must pay you. Division 3 of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that you owe to the Commonwealth. Note 2: Interest is payable under the Taxation (Interest on Overpayments and Early Payments) Act 1983 if the Commissioner is late in refunding the amount. (2) However, if the amount paid, or applied under the Taxation Administration Act 1953, exceeds the amount to which you are properly entitled under subsection (1), the excess is to be treated as if it were GST that became payable, and due for payment, by you at the time when the amount was paid or applied. Note: The main effect of treating the amount as if it were GST is to apply the collection and recovery rules in Part 3-10 in Schedule 1 to the Taxation Administration Act 1953, such as a liability to pay the general interest charge under section 105 80 in that Schedule. Section 35-10 of that Act provides that this entitlement to a refund arises, "when you give the Commissioner a *GST return". 5 The presence of an asterisk before a term in the GST Act signals that the term is one which is defined for the purposes of that Act. Within the "Dictionary" in Div 195 of the GST Act, a GST return is defined thus: GST return means a return of the kind referred to in Division 31, that complies with all the requirements of sections 31-15 and 31-25 of this Act and section 388-75 in Schedule 1 to the Taxation Administration Act 1953, and includes a return given in accordance with section 58 50 of this Act. 6 Materially, s 31-15 of the GST Act requires that a return be in the approved form. The form known as a business activity statement is such a form. 7 Multiflex reports monthly for GST purposes. Earlier this year, it lodged with the Commissioner business activity statements for the months of January, February, March, April and May 2011. In those it claimed to be entitled to refunds of GST in the total amount of $970,759.00. 8 The evidence led by Multiflex below was that the nature of its business was the buying and selling of information and communication technology products, such as mobile phones and iPads. It was said to operate on small margins between the purchase and sale price and thus it had a correspondingly small profit margin. In 2010, the cost of its product purchases was $18.8 million against which it received sale proceeds of $19.9 million. The outstanding GST refund was said to be essential working capital the receipt of which was essential to the solvency of Multiflex. This evidence persuaded Dodds-Streeton J that the case ought to be determined expeditiously: Multiflex Pty Ltd v The Commissioner of Taxation [2011] FCA 789. So it was. The case was heard over three days, concluding on 21 September 2011. A little over a week later, the learned primary judge, Jessup J, delivered judgment: see Multiflex Pty Ltd v Commissioner of Taxation [2011] FCA 1112. 9 Like considerations influenced the setting down of the hearing as a special fixture outside the Court's usual appeal sittings. 10 It was common ground before us, as it was before the primary judge, that, if the position were as disclosed by Multiflex on its business activity statements, it was indeed entitled to the refund claimed. For his part, the Commissioner asserted that there was a basis for suspecting that the documentary foundation for Multiflex's claimed input tax credits on these returns, namely tax invoices ostensibly issued by third parties, was wholly or substantially fraudulent. The Commissioner's suspicion was that investigation would disclose that Multiflex did not in fact make the creditable acquisitions giving rise to the claimed input tax credits. 11 The basis for the Commissioner's suspicion was summarised by the primary judge by reference to affidavit evidence given by the leader of his audit team. That officer deposed that three companies in the same group as Multiflex (referred to as the "Mercantile Group") had, in the period leading up to 2009, been involved in "sham transactions through a supply chain". The Commissioner's audit of these three companies concluded in June 2009. Based on that audit, the officer stated: The first company in the supply chain imported electronic goods into Australia, they were then on-sold (usually on the same day) through several different intermediary or buffer companies. These products were not entered into Australia for domestic consumption but remained in a bonded warehouse. Each of the companies in the Mercantile Group … was the final link in the chain and operated as the exporter. Non-reporting of GST by the "missing traders" in the supply chain has lead to revenue leakage. The tax office position is that the supply chain was a contrived sham arrangement for which the Mercantile Group was a participant. In the United Kingdom this type of fraud is called "missing trader intra-community fraud". The revenue leakage is caused by the non-reporting of GST by the "missing trader". This and similar frauds have apparently cost the Government in the United Kingdom a significant sum of tax revenue. The "tax office position" as described by this officer was reflected in the issuing by the Commissioner to the three companies of GST assessments and related shortfall penalty notices with a total liability of some $26 million. Following subsequent adverse objection decisions, these companies sought the review by the Administrative Appeals Tribunal of those objection decisions. Those review proceedings were pending in the Tribunal when, in February 2011, the three companies were placed in liquidation. The director of these three companies was one and the same as the director of Multiflex and a number of other new companies. On 1 July 2009, one of these new companies took over the employees and payees of the original companies and another of the new companies purchased the business and assets of the original companies. The liquidation of the three original companies was preceded by the resignation, in December 2010, of the person who was also the director of the new companies. 12 The learned primary judge accepted that the investigation in respect of the foundation for the claimed input tax credits was proceeding with all due expedition. His Honour also accepted the audit team leader's evidence that this investigation was complex and difficult such that it was not expected to be completed before the end of November 2011. Only then did that officer expect that assessments might issue, were the result of the investigation to be that there was no basis for the claimed input tax credits. 13 The learned primary judge examined s 35-5 of the GST Act in the context of that Act's central provisions, as found in Ch 2, Pt 2-1, Div 7, which set out the general scheme of the GST and also comprehensively reviewed other provisions in that Act and the TAA bearing upon how input tax credits and an entitlement to a refund arise, the obligation to furnish returns and the running balance account (RBA) system and the Commissioner's related ability to apply amounts otherwise refundable against other taxation liabilities. In the course of so doing, his Honour observed (at [18]) of a submission by the Commissioner, which was repeated before us, that there was to be implied into a conceded positive duty created by s 35-5 a reasonable period for performance with the circumstances of a particular case then giving content to the Commissioner's duty: At base … the present problem involves the question: by reference to what considerations is content to be given to the duty to make a refund which arises under s 35-5? That question is not completely answered by proposing that a "reasonable period" will always be allowed. Further, the two-step approach advanced by the Commissioner tends to effect an uncoupling, in the analysis required, of the terms of the section from the effect which they would have as a matter of concrete obligation. If a two-step approach is to be taken, any consideration of what constitutes a "reasonable period" in a particular case must be informed – indeed governed – by the objects and purpose of the section itself, in the statutory context in which it is to be found. As in any exercise in the nature of statutory construction, the reach of a particular section "requires consideration in its statutory context before its application to the facts": Virgin Blue Airlines Pty Ltd v Commissioner of Taxation [2010] FCAFC 137 at [31]. His Honour concluded (at [28]) that, "the relevant provisions of the GST Act and the TAA, on their proper construction, [did not contemplate] the withholding of a payment under s 35-5 of the GST Act pending the ascertainment, by the Commissioner, of the true state of affairs with respect to GST and input tax credits". 14 Having reached this conclusion, the primary judge decided that there was no basis, in the exercise of a judicial discretion, to deny to Multiflex the granting of a mandamus directed to the Commissioner requiring the payment of the refund. That was because it would be inconsistent with, and subversive of, the Commissioner's obligation to make a refund and of his conclusion as to the absence of any qualification by implication of that obligation arising from a pending investigation to refuse the remedy. 15 Like sales tax before it, the various Acts providing for liability to and the imposition of GST constitute "a single legislative scheme to the complete operation of which all are necessary and they should be construed together": Deputy Commissioner of Taxation for South Australia v Ellis & Clark Ltd (1934) 52 CLR 85 at 89. In respect of the GST legislative scheme, it is necessary to construe together the particular statutes dealing with GST in conjunction with the more generic TAA. This is because, both in the interval between when the GST legislative scheme was originally enacted and when it commenced and also later, Parliament was persuaded of the wisdom of assimilating within the TAA provisions relevant to the collection and recovery of a range of Commonwealth taxes, including GST. This marked a departure from past practice, including the position which had prevailed with respect to sales tax, in which administrative provisions were incorporated within a legislative scheme which was self contained for particular taxes. Whether the resultant dense prose and lengthy alphanumeric section numbers of the TAA as amended are any improvement is moot. The result is that it is necessary not only to look, materially in this case, to the GST Act to understand the scheme of taxation but to read the provisions of that Act in conjunction with the TAA. This necessity was plainly appreciated by the learned primary judge, who set out the pertinent provisions from each of these Acts. The price of understanding the nature of the challenge which the Commissioner makes to his Honour's conclusions and explaining why that challenge lacks merit is first a degree of repetition of provisions already set out in the judgment below. 16 The "basic rules" for the GST are set out in Ch 2 of the GST Act, specifically in s 2-5. That section informs the reader that, within that Chapter, are to be found such "basic rules" as, materially: how to work out payments and refunds of GST; and when and how payments and refunds are to be made. Basic though these rules may be, s 2-30 alerts the reader that provisions relating to the administration of the GST, and to collection and recovery of amounts of GST, are found in Pts 3-10, 4-15 and 5-5 in Sch 1 to the TAA. 17 Within Ch 2, Pt 2-1, Div 7 sets out the "central provisions". That centrality dictates that these should be set out in full. 7-1 GST and input tax credits (1) GST is payable on *taxable supplies and *taxable importations. (2) Entitlements to input tax credits arise on *creditable acquisitions and *creditable importations. For taxable supplies and creditable acquisitions, see Part 2 2. For taxable importations and creditable importations, see Part 2 3. 7-5 Net amounts Amounts of GST and amounts of input tax credits are set off against each other to produce a *net amount for a tax period (which may be altered to take account of *adjustments). For net amounts (including adjustments to net amounts), see Part 2 4. 7-10 Tax periods Every entity that is *registered, or *required to be registered, has tax periods applying to it. For registration, see Part 2 5. For tax periods, see Part 2 6. 7-15 Payments and refunds The *net amount for a tax period is the amount that the entity must pay to the Commonwealth, or the Commonwealth must refund to the entity, in respect of the period. For payments and refunds (and GST returns), see Part 2 7. Note: Refunds may be set off against your other liabilities (if any) under laws administered by the Commissioner 18 These "central provisions", including the obligation on the part of the Commissioner in s 7-15 to make a refund to an entity where the net amount resulting from the setting off of input tax credits against GST is in favour of that entity, have nothing to say about the status of any of these items as shown on that entity's business activity statement for the period concerned. Nor, for that matter, is there any express qualification of the otherwise imperative language of s 7-15 of the GST Act in relation to the making of a refund of a net amount to an entity by the Commissioner. 19 One clue as to how these "central provisions" are intended to operate in conjunction with other provisions in the GST Act is offered by s 5-5, which sets out diagrammatically how all of the "basic rules" within Ch 2 relate to one another: 5-5 The structure of this Chapter The diagram on the next page shows how the basic rules in this Chapter relate to each other. It also shows their relationship with: • the exemptions (Chapter 3)—these provisions exempt from the GST what would otherwise be taxable; and • the special rules (Chapter 4)—these provisions modify the basic rules in particular situations, often in quite limited ways. 20 Section 5-5 is what the GST Act terms an "explanatory section". That is because, though it does not commence with the words, "What this Division is about", it fulfils an alternative specification in s 182-10(1) as to what constitutes an "explanatory section" as it is the last section in a Division of the Act. As an explanatory section, s 5-5 may only be used in one or more of the ways set out in s 182-10(2) of the GST Act, viz: (a) in determining the purpose or object underlying the provision; or (b) to confirm that the provision's meaning is the ordinary meaning conveyed by its text, taking into account its context in this Act and the purpose or object underlying the provision; or (c) in determining the provision's meaning if the provision is ambiguous or obscure; or (d) in determining the provision's meaning if the ordinary meaning conveyed by its text, taking into account its context in this Act and the purpose or object underlying the provision, leads to a result that is manifestly absurd or is unreasonable. 21 For present purposes, what is significant about the diagram which forms part of s 5-5 are the arrows which respectively point from the "central provisions" found in Pt 2-1 to Pt 2-4, which deals with net amounts and adjustments, and to Pt 2-7, which deals with returns, payments and refunds. Section 35-5 of the GST Act lies within Part 2-7. These confirm links between those central provisions and provisions dealing with the working out of net amounts and those dealing with returns, payments and refunds which a study of the GST Act would otherwise suggest even were s 5-5 not present. Subject to exceptional cases for which the TAA makes provision, the general scheme of the GST is that Parliament has consigned to the registered entity concerned the task of working out the "net amount". 22 In keeping with that Parliamentary intention, though s 17-5 provides that a "net amount" is worked out using the formula: GST – Input tax credits where: GST is the sum of all of the GST for which you are liable on the *taxable supplies that are attributable to the tax period. input tax credits is the sum of all of the input tax credits to which you are entitled for the *creditable acquisitions and *creditable importations that are attributable to the tax period. GST – Input tax credits, s 17-15 goes on to provide that it is for the entity to do that "working out" on its business activity statement. Further, when the entity does that, the Act deems the amount so worked out to be that entity's net amount for that period. The section provides: 17-15 Working out net amounts using approved forms (1) You may choose to work out your *net amount for a tax period in the way specified in an *approved form if you use the form to notify the Commissioner of that net amount. The amount so worked out is treated as your net amount for the tax period. Note: Choosing to use section 17-5 to work out your net amount does not mean your GST return is not in the approved form: see subsection 31-15(3). (2) This section has effect despite section 17-5. 23 The Commissioner submitted that the primary judge's conclusion that the net amount as worked out under s 17-15 became, if in favour of the entity, the amount which s 35-5 obliged the Commissioner to refund to that entity gave insufficient weight to the wider context of the audit, assessment and appeal or review provisions found in the TAA and applicable, materially, to GST. He further submitted that account needed to be taken of s 105-15 of Schedule 1 to the TAA. That section provides, materially: 105-15 Indirect tax liabilities do not depend on assessment (1) Your liability to pay * indirect tax … , and the time by which a * net amount … or an amount of indirect tax must be paid, do not depend on, and are not in any way affected by, the making of an assessment under this Subdivision. (2) The Commissioner's obligation to pay: (a) a * net amount under section 35-5 of the * GST Act; or (b) ; and the time by which it must be paid, do not depend on, and are not in any way affected by, the making of an assessment under this Subdivision. Note: However, a notice of assessment can be used as evidence of liability: see section 105-100. 24 That account must be taken not only of the text of s 35-5 but also the context in which it appears in the GST Act and, in turn, in the wider context of provisions in the TAA relevant to GST is a given: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78]. The Commissioner's submission is that only the amount which "actually" constitutes the net amount is the amount which, if in favour of the entity, he is obliged to refund to that entity. He submitted that he is not obliged to refund an amount calculated in accordance with s 17-15 if he knows it to be wrong. 25 Consideration of context does not favour the acceptance of the Commissioner's submission. Not only does s 17-15(1) provide that the amount "worked out" on the approved form is treated as the entity's net amount for a period but s 17-15(2) also underscores the primacy of the amount so worked out by providing that the section has effect despite s 17-5. Further, though s 105-15(1) of Schedule 1 to the TAA makes it plain that the incidence of a GST liability does not depend on the making of an assessment by the Commissioner, s 105-15(2) in that schedule makes it equally plain that the obligation which s 35-5 creates for the Commissioner to refund a net amount does not in any way depend on his having first made an assessment. Each of these provisions, s 17-15 and s 35-5 of the TAA and s 105-15 of Schedule 1 to the TAA operate harmoniously so as to provide for a system of taxation in which, generally speaking and in the first instance, the duty of assessing ("working out") the liability to make a payment or, as the case may be, the entitlement to receive a refund is placed on the entity concerned, not on the Commissioner. 26 The answer which the legislation provides to the Commissioner's disquiet as to being obliged to make a refund based on a claimed net amount in a business activity statement which he knows to be wrong is straightforward. In such circumstances, he is entitled at any time to make an assessment of that net amount: s 105-5 of Sch 1 to the TAA. The net amount so assessed by the Commissioner necessarily supersedes whatever amount the entity earlier worked out on its approved form, if indeed it lodged such a form. The Commissioner's ability to assess is not conditioned on an entity's having lodged a business activity statement in respect of the period in question. Subject to the outcome of any subsequent objection or later appeal or review proceeding, the entity's net amount will be the amount as assessed by the Commissioner. 27 If, on the other hand, there is no assessment by the Commissioner for a period but the entity has worked out that it has an entitlement to a refund for that period, the only express qualification on the otherwise imperative language of the obligation to refund created by s 35-5 of the GST Act arises from the running balance account system for which Part IIB of the TAA provides. Under that system, an amount otherwise refundable to an entity under a taxation law may, instead of being refunded, be applied against a liability of that entity arising under a taxation law. Only if there is what is known as an "RBA surplus" or a credit in the entity's favour which has not been allocated or applied in the entity's favour is the Commissioner obliged to make a refund: s 8AAZLF of the TAA. Even then, the Commissioner may retain that amount if he has not received from the entity a required notification that affects or may affect the amount refundable to that entity: s 8AAZLG of the TAA. It was common ground that there was no such notification outstanding from Multiflex. 28 Notwithstanding these express provisions concerning refunds in the GST Act and the TAA, it was put on behalf of the Commissioner that the existence of an ability on the part of the Commissioner to make an assessment carried with it by necessary implication a qualification that the obligation to refund created by s 35-5 of the GST Act was subject to a qualification that the Commissioner was to be allowed a reasonable time within which to decide whether he was satisfied with the information given on that approved form as to taxable supplies, creditable acquisitions, net amount and the like and, if not satisfied, to make inquiries and to issue an assessment. 29 In support of that submission, reference was made to a line of United Kingdom authority concerning that country's value added tax (VAT) system, the earliest of which is R v Commissioners of Customs and Excise; ex parte Strangewood Ltd (1987) 3 BVC 60; [1987] STC 502 (Strangewood's Case). That country's then VAT legislation, the Value Added Tax Act 1983 (UK) (Value Added Tax Act) contained a provision, s 14(5), which was broadly analogous to s 35-5 of the GST Act in that it provided for the refunding by the Customs and Excise Commissioners of the amount of a credit or of any excess of credits over output tax in respect of a period. As in this case, a mandamus was sought against the Commissioners on the basis of the position disclosed in its relevant monthly return. Also, as in this case the Commissioners had their suspicions as to whether the position was as disclosed in that return. In the result, the trial judge, Otton J, accepted the Commissioners' submission that the true construction of the legislation was that they were only obliged to pay if they were satisfied that the two conditions referred to in the refund provision were fulfilled, ie if they were satisfied that there was a credit or an excess over output tax payable. 30 The learned primary judge was not referred to Strangewood's Case, which is unfortunate, given the prominence it came to have in support of the Commissioner's submission that the obligation created by s 35-5 of the GST Act was subject to a like qualification by implication. That means that we do not have the benefit of his Honour's consideration of it. The case does not provide a basis for disturbing his conclusion that no such implication was to be drawn from the GST Act and the TAA. The aptness of the analogy between s 14(5) of the Value Added Tax Act and s 35-5 of the GST Act arises only from reading each in isolation. It is removed not only by the different context in which s 35-5 is found when other provisions of the GST Act and the TAA are considered but also upon closer study of the context in which s 14(5) appears in the Value Added Tax Act. 31 We have already referred to other provisions of the GST Act and the TAA which intrude on the apparently imperative terms of s 35-5 in relation to the obligation to refund. In particular, it is not apparent that the Value Added Tax Act contained an equivalent of s 17-15 of the GST Act so as to treat a returned credit or excess as the credit or excess for that period in the absence of an assessment to the contrary by the Commissioners. 32 As to the Value Added Tax Act and as Multiflex submitted, further analysis of its provisions discloses that the returned excess of the applicant, Strangewood Ltd, depended upon its claimed export supplies being "zero-rated". By s 16(6) of the Value Added Tax Act, such supplies were zero-rated only if the Commissioners were satisfied that the goods supplied had been exported. The evidence before the court was that the Commissioners were not so satisfied. In that circumstance, an implication that the Commissioners were not obliged to make a refund unless so satisfied is more readily drawn. So much seems to have been persuasive for Otton J who stated: It is abundantly clear to me [the affidavit of a revenue officer] that the Commissioners are not yet satisfied that the goods in question have been exported. It follows that unless and until the Commissioners are so satisfied the goods cannot be zero-rated. Accordingly, the output tax is in the meantime due. 33 It is not necessary to refer to the later United Kingdom authorities which follow Strangewood's Case. The short point is that this line of authority is of no assistance because the legislative context in which the requirement to refund is found is different to the present. 34 Other overseas authorities were also referred to in the course of submissions. Of these it is necessary to refer only to two New Zealand authorities, Commissioner of Inland Revenue v Sea Hunter Fishing Ltd (2002) 20 NZTC 17-478 (Sea Hunter) and Contract Pacific Ltd v Commissioner of Inland Revenue [2011] 1 NZLR 302 (Contract Pacific). 35 In New Zealand and in marked contrast to the Australian position, s 46 of the Goods and Services Tax Act 1985 (NZ) expressly qualifies an obligation on the part of the Commissioner of Inland Revenue to make a refund of GST within 15 days of the receipt of a registered person's return by providing for the postponement of that obligation in the event that the Commissioner gives notice of his intention to investigate the circumstances of that return within 15 days following the day upon which that return is received. In Sea Hunter the Commissioner failed to give such a notice within that time but nonetheless sought to postpone the making of a refund of GST pending completion of an investigation. The Court of Appeal held that the effect of s 46 was that the Commissioner was obliged to make the refund. That court was pressed with a similar submission to that made on behalf of the Commissioner of Taxation before us, which was that the sheer number of returns (in Australia business activity statements) was such that the Commissioner could not possibly be expected to examine all of them within the time fixed for payment, in New Zealand 15 days; in Australia, at least within a reasonable time to process a payment, no express time having been fixed in s 35-5 of the GST Act as a result of legislative amendment. In rejecting this, the Court of Appeal observed (at [18]) of New Zealand's GST legislation that it "has to act in a business environment where undue delay in the making of tax refunds may have very considerable adverse effects on taxpayers". 36 The correctness of Sea Hunter was accepted in the later New Zealand GST case, Contract Pacific with the Supreme Court (at [22] – [23]) making the following observations about New Zealand's GST system and the role played by s 46 within that system: [22] The way in which the GST system works is that after each taxable period a taxpayer makes a return bringing to account that person's outputs and inputs during that period, and then either pays a debit balance to the Inland Revenue Department or claims from it a credit balance. Confidence in the GST system would be lost and great inconvenience potentially caused to businesses if the Department were routinely to delay making refunds of credit balances appearing in GST returns. Therefore Parliament has put in place a control on the Commissioner's right to withhold a GST refund pending the conclusion of his review of a GST return. That is the function of s 46. Its policy is to require the Commissioner to act promptly in processing returns and paying refunds. But although there are good policy reasons why the Commissioner should refund GST promptly, the tax system would be subject to abuse if the Commissioner were required in all cases to pay first and investigate later. [23] Section 46 seeks to balance the two policy considerations just referred to. It does this by providing a 15 day time limit within which the Commissioner must act under s 46(4) and (5), in default of which the Commissioner must make the refund sought. 37 That GST legislation must likewise operate in a business environment with consequential ramifications for its construction is a proposition which has been similarly voiced in this Court in relation to the construction of the GST Act: see, for example, Travelex Ltd v Federal Commissioner of Taxation (2009) 178 FCR 434 at [46] per Stone J, Edmonds J agreeing, and the authorities to which Stone J there makes reference. The outcome of that case was, by majority, later reversed in the High Court: Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510. In none of the judgments delivered in the High Court in that later appeal is the relevance of that proposition rejected although it must equally be acknowledged that in none of them is it adopted in a discussion of how the controversial provisions in that case were to be construed. 38 What cannot be denied is that entities engaged in a business activity are required by the GST Act to be registered (s 23-5 (requirement to be registered) and s 9-20 (definition of "enterprise") of the GST Act). In that sense, GST is intended to operate and does operate in a business environment. Further, though GST is intended to be borne by the ultimate consumer, that result is, in general, achieved by an offsetting, in the chain of supply to the consumer, of input tax credits from the GST payable on a supply. In this fashion, a "cascading" of tax is avoided: see HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553 at [10] to [15] per Hill J, Stone and Allsop JJ agreeing. The requisite offsetting calculation is, again in general, undertaken by the entity upon its submission of its business activity statement. Against this background, the importance of a prompt refund, as calculated by an entity, being made by the Commissioner to that entity is no less evident from a consideration of the GST Act than it was in Sea Hunter from a consideration of New Zealand's GST legislation. 39 Further, the description by the Supreme Court in Contract Pacific in the passage quoted of the way in which New Zealand's GST system works and of how confidence in that system might be eroded by delay on the part of the Commissioner in making refunds are, at a general level of abstraction, no less relevant in respect of Australia's GST system. As originally enacted, s 35-5 gave the Commissioner 14 days from his receipt of an entity's GST return within which to make a refund (subject to an ability to apply what would otherwise have been refundable against an amount otherwise owing to the Commonwealth under a tax Act administered by the Commissioner). All that the amendment of s 35-5 so as to delete this 14 day period did was, as the primary judge noted (at [13]) by reference to the relevant explanatory memorandum, "to subject the refund to the generic refund rules in s 8AAZLF of the TAA". There is nothing about the amendment which suggests any intention on the part of Parliament to grant to the Commissioner, by implication, a period to make a refund limited by reference to such time as may be reasonably necessary to investigate the accuracy of the entries on an entity's business activity statement. 40 It may readily be accepted that the imperative language of s 35-5 of the GST Act as to the making of a refund is at least attended with the implication that the refund must be made within a time which is reasonable in the circumstances. However, those circumstances must attend what is necessary to discharge the duty concerned, which is to make the refund, not to undertake an investigation which may or may not result in the raising of a GST assessment by the Commissioner. The trial judge was correct to reject any such wider implication as to what were circumstances relevant to the ascertainment of a reasonable time. The system of taxation for which the GST Act, read with the TAA, provides envisages that, depending upon the calculation of the net amount which the entity makes it will either pay that net amount to the Commissioner within the time fixed by the GST Act or, as the case may be, receive a refund from the Commissioner within a time fixed by what is reasonably necessary to make that refund. The only other qualifications upon the Commissioner's obligation are those expressed either in the GST Act itself or in the TAA, as already mentioned. 41 Such potential as there may be for the abuse by an entity of an obligation to make a refund promptly, as identified in Contract Pacific, did not lead our Parliament to subject that obligation to the express qualification found in the New Zealand legislation. In the face of the express terms of the scheme of taxation as found in the GST Act and the TAA it is not, for the reasons given, open to find any qualification of that kind by implication. 42 Once it is concluded that, on the true construction of s 35-5 of the GST Act and in the prevailing circumstances, the Commissioner is subject to an obligation to make a refund it would indeed, as the primary judge observed (at [34]), be "antagonistic to the terms, object or purposes of the sections under which the obligation arises" to refuse Multiflex a mandamus on the basis of the Commissioner's suspicions. Mandamus may be granted in order to compel the payment of public money: Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 82 (including the authorities cited at fn 94) per Brennan J, Toohey and McHugh JJ agreeing. Respect for the rule of law by officers of the Commonwealth dictates that, though the remedy is discretionary, it should ordinarily be granted where an officer of the Commonwealth is refusing or neglecting to comply with an obligation to which he is subject: Re Refugee Review Tribunal; Ex Parte Aala (2000) 204 CLR 82 at [55] per Gaudron and Gummow JJ, Gleeson CJ at [5] agreeing. The remedy may be refused on discretionary grounds where an applicant has engaged in behaviour which is inconsistent with the granting of that relief (for example, undue delay, bad faith in relation to the transaction out of which the public duty arises or in its dealings with the court or absence of clean hands) or where there would be no injustice by a discretionary refusal (for example, absence of any different outcome even if the public duty had been performed or the existence of an adequate alternative remedy). The Commissioner has not proved that any such basis for discretionary refusal exists. 43 The appeal must be dismissed, with costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Stone, Edmonds and Logan. Associate: Dated: 11 November 2011