KAP Motors Pty Ltd v Commissioner of Taxation [2008] FCA 159

FEDERAL COURT OF AUSTRALIA

KAP Motors Pty Ltd v Commissioner of Taxation [2008] FCA 159 TAXATION - GOODS AND SERVICES – refund of GST paid to Commissioner under the mistaken belief that transaction involved a supply – whether section 105-65 of Schedule 1 of the Taxation Administration Act 1953 (Cth) applies to transactions involving no supply – whether s 105-65 relevant only to transactions involving a supply RESTITUTION – whether a common law action for money had and received can be resisted by a respondent on the basis that the applicant may be a constructive trustee of the funds for a third party – whether constructive trust relevant to the enforcement of common law claim A New Tax System (Goods and Services Tax) Act 1999 (Cth) Taxation Administration Act 1953 (Cth), Schedule 1, s 105-65 CIC Insurance Ltd v Bankstown Football Club Ltd (1997)187 CLR 384 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 R v PLV (2001) 51 NSWLR 736 KAP MOTORS PTY LTD ACN 009 645 845 and ACN 087 069 065 PTY LTD (FORMERLY GAP MOTORS (NT) PTY LTD v COMMISSIONER OF TAXATION NSD 2070 OF 2006

EMMETT J

28 February 2008

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 2070 OF 2006

BETWEEN: KAP MOTORS PTY LTD

ACN 009 645 845

First Applicant

ACN 087 069 065 PTY LTD

(FORMERLY GAP MOTORS (NT) PTY LTD

Second Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: EMMETT J

DATE: 28 february 2008

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This proceeding concerns the question of whether two taxpayers who overpaid goods and services tax (GST) to the Commissioner of Taxation are entitled to recover the overpaid GST. It raises a question as to the construction of s 105-65 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (the Administration Act) and a question as to whether the taxpayers should, as a condition of being entitled to recover the overpaid GST, be required to account for the refunded amount to persons who paid the amount of the GST to the taxpayers. 2 The proceeding has been conducted on the basis of agreed facts. The parties have posed two specific questions for the Court on the basis that the outcome of the proceeding will be determined by the answers to those questions.