Darrell Lea Chocolate Shops Pty Ltd v Commissioner of Taxation [1995] FCA 241

IN THE FEDERAL COURT OF AUSTRALIA ) Limited Distribution ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG754-757 of 1994 ) GENERAL DIVISION ) BETWEEN: DARRELL LEA CHOCOLATE SHOPS PTY LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent CORAM: HILL J PLACE: SYDNEY DATED: 21 APRIL 1995 REASONS FOR JUDGMENT On 31 May 1991 the respondent Commissioner of Taxation served upon the applicant, Darrell Lea Chocolate Shops Pty Limited ("Darrell Lea"), four notices of assessment. The letter enclosing the notices indicated that they had been based on a review of the sales tax affairs of Darrell Lea. Each of the assessments covered the period 1 October 1987 to 31 January 1991. Darrell Lea duly objected against these assessments. The objections were disallowed on 19 October 1994 and Darrell Lea appealed to the Court against the Commissioner's decision to disallow each assessment. The background of the sales tax dispute can be seen from statements of facts, issues and contentions filed by the parties. I would stress, however, that in the comments which follow I make no findings of fact. No evidence has been adduced before me and the applications to this Court are presently at an interlocutory stage.

It would seem that, in the relevant period, Darrell Lea purported to appoint various third parties as agents for the purpose of making sales by retail on its behalf. In total, seventy-five persons are said to have been "full agents", selling Darrell Lea products solely or in conjunction with another business, 154 persons are said to be "compact agents", selling Darrell Lea products as a small section within a larger business and seventy-eight persons are said to have been sub-agents. The Commissioner took the view that the arrangements entered into did not give rise to a relationship of principal and agent or principal and sub-agent and the assessments which issued proceed on a different basis. The notification of the first assessment reads as follows: "SALES TAX ASSESSMENT ACT (NO 1) 1930 (AS AMENDED) You are hereby notified that Darrell Lea Chocolate Shops Pty Limited is liable to pay sales tax as shown hereunder in accordance with an assessment that has been made under the provisions of sub-section 25(1), or alternatively 25(2) or in the further alternative 25(2A) of Sales Tax Assessment Act (No 1) 1930 (as amended). SALES TAX ASSESSMENT ACT (NO 1) 1930 (AS AMENDED)