FEDERAL COURT OF AUSTRALIA Multiflex Pty Ltd v Commissioner of Taxation [2011] FCA 1112 Citation: Multiflex Pty Ltd v Commissioner of Taxation [2011] FCA 1112 Parties: MULTIFLEX PTY LTD (ACN 137 111 598) v THE COMMISSIONER OF TAXATION File number: VID 446 of 2011 Judge: JESSUP J Date of judgment: 30 September 2011 Catchwords: TAXATION – Goods and services tax – Net amount calculated under taxpayer's GST return – Net amount negative – Commissioner obliged to refund net amount to taxpayer – Timing of that obligation – Whether refund to be made within reasonable period – Commissioner undertaking investigation into correctness of GST return – Commissioner's suspicion of fraud – Whether refund may be deferred pending completion of investigation – Whether taxpayer entitled to immediate or prompt payment. Legislation: A New Tax System (Goods and Services Tax) Act 1999 (Cth) s 7, 9, 11, 17, 33, 35, 38 Taxation Administration Act 1953 (Cth) s3A, s 8AAZLA, 8AAZLB, 8AAZLF, 8AAZLG, s 105, A New Tax System (Tax Administration) Act 1999 (Cth) Sch 15 Administrative Decisions (Judicial Review) Act 1977 Judiciary Act 1903 s39B Cases cited: Virgin Blue Airlines Pty Ltd v Commissioner of Taxation [2010] FCAFC 137 Saga Holdings Limited v Commissioner of Taxation (2006) 156 FCR 256 Date of hearing: 19, 20 and 21 September 2011 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 37 Counsel for the Applicant: Mr F O'Loughlin Solicitor for the Applicant: Mills Oakley Counsel for the Respondent: Mr N Williams SC with Mr P Gray Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 446 of 2011 BETWEEN: MULTIFLEX PTY LTD (ACN 137 111 598) Applicant AND: THE COMMISSIONER OF TAXATION Respondent JUDGE: JESSUP J DATE OF ORDER: 30 SEPTEMBER 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. A writ of mandamus issue directing the respondent to comply with s 35-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and s 8AAZLF of the Taxation Administration Act 1953 (Cth) by forthwith paying to the applicant the net amount notified to the respondent in the applicant's GST return for each of the tax periods January, February, March, April and May 2011. 2. The respondent pay the applicant's costs. 3. The operation of Order 2 above be stayed for 14 days, during which period the parties have liberty to apply. 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 446 of 2011 BETWEEN: MULTIFLEX PTY LTD (ACN 137 111 598) Applicant AND: THE COMMISSIONER OF TAXATION Respondent JUDGE: JESSUP J DATE: 30 SEPTEMBER 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 In this proceeding, the applicant, Multiflex Pty Ltd, claims to be entitled to the immediate payment of refunds said to be due to it under Div 35 of Pt 2-7 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the GST Act"). The business which the applicant carries on involves purchasing mobile phones and similar goods from suppliers in Australia, and exporting them to customers situated overseas. The returns lodged by the applicant under the GST Act in respect of the months January-May 2011 disclosed that it had made creditable acquisitions when it purchased those goods locally, and that it had collected no goods and services tax ("GST") upon the sale of the goods overseas, since exports are GST-free. The resulting excess of input tax credits over GST gave rise, so the applicant alleges, to refund entitlements under the GST Act, and under the Taxation Administration Act 1953 (Cth) ("the Administration Act"). 2 The respondent, the Commissioner of Taxation ("the Commissioner"), accepts that, if things are as they appear to be from the contents of the applicant's returns, the applicant is entitled to the payments which it seeks. However, the Commissioner has grave suspicions that things are not as they appear to be, and that the documentary foundations for the applicant's claim to be allowed input tax credits – substantially, as I understand it, involving tax invoices ostensibly issued by third parties – are, to a substantial extent at least, fraudulent. The Commissioner suspects that, when the facts are investigated and the true position revealed, it will be shown that the applicant did not in fact make the creditable acquisitions which it claims to have made, and that its claims for refunds in respect of the period January-May 2011 will be shown to be baseless, at least to a substantial degree. 3 The Commissioner says that the provisions of the GST Act and of the Administration Act to which I shall refer presently, under which the applicant is prima facie entitled to refunds, are subject to an implied proviso that the obligation to make those refunds need not be complied with instantly, but must be complied with within a reasonable period of the Commissioner having received the applicant's returns. At present, the Commissioner is in the course of undertaking an investigation into the justification for the applicant's assertion that input tax credits arose, and, it seems, this investigation is complex to a significant degree. The Commissioner says that the reasonable period within which he must comply with his statutory obligation to make the refunds claimed by the applicant is one which would take into account the conduct of that investigation, assuming it to be progressed with expedition. The questions at issue, therefore, are, first, whether the Commissioner's implication point with respect to the relevant statutory provisions is a good one, and, if so, secondly, whether a reasonable period has expired in the circumstances of the present case. 4 The basic template for the operation of the GST Act is given in s 7-1 thereof: (1) GST is payable on taxable supplies and taxable importations. (2) Entitlements to input tax credits arise on creditable acquisitions and creditable importations. Under s 7-5, amounts of GST and of input tax credits "are set off against each other to produce a net amount for a tax period". Under s 7-15, 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. 5 Division 9 of the GST Act, in Part 2-2 thereof, deals with "taxable supplies", upon which GST is payable. It is sufficient in the present case to say that the supplies of goods made by the applicant are "GST-free" under s 9-30(1)(a) and s 38-185(1) of the GST Act, because the goods in question are exported from Australia. The controversy in the present case does not relate to this aspect of the applicant's business. There is no suggestion made by the Commissioner that the applicant's sales did not relate to supplies which were GST-free. 6 The case is, however, concerned with creditable acquisitions, which are the subject of Div 11, in Part 2-2, of the GST Act. Section 11-5 provides as follows: You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, consideration for the supply; and (d) you are registered, or required to be registered. As I understand the position taken by the Commissioner, it is accepted that, to the extent that the applicant acquired mobile phones and similar goods, and provided consideration therefor, it made creditable acquisitions within the meaning of s 11-5. Rather, the Commissioner's suspicions are that the applicant may not have made the acquisitions reflected in its returns at all. 7 Section 11-20 of the GST Act is a simple but potentially important provision in the context of the present case. It provides as follows: You are entitled to the input tax credit for any creditable acquisition that you make. Section 11-25 deals with the amount of an input tax credit which arises upon the making of a creditable acquisition. It provides: The amount of the input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. However, the amount of the input tax credit is reduced if the acquisition is only partly creditable. 8 As mentioned above, s 7-5 of the GST Act introduces the subject of "net amounts". That subject is dealt with at the level of detail in Div 17, within Part 2-4, of the GST Act. Section 17-5 provides as follows: (1) The net amount for a tax period applying to you is worked out using the following 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. (2) However, the net amount for the tax period may be increased or decreased if you have any adjustments for the tax period. 9 However, s 17-5 is subject to s 17-15, in circumstances to which it relates: (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. (2) This section has effect despite section 17-5. On the facts of the present case, the "approved form" was the applicant's Business Activity Statement for each of the relevant periods. That statement was the applicant's "GST return" for the purposes of Div 31. The effect of s 17-15 was that, for each such period, the applicant's "net amount" was the amount notified to the Commissioner in its GST return. 10 Division 33, within Part 2-7, of the GST Act deals with the subject of the payment of GST. Under s 33-5(1) – (1) If the net amount for a tax period (other than a quarterly tax period) applying to you is greater than zero, you must pay the net amount to the Commissioner on or before the 21st day of the month following the end of that tax period. The applicant operated by reference to monthly tax periods, and it was this provision that would have required it to pay any positive net amount which arose to the Commissioner on or before the twenty-first day of the following month. However, as mentioned above, in the five months with which these reasons are concerned, the applicant's net amount was never positive. It was always negative. That meant that the applicant was entitled to a refund with respect to each of those months. 11 The subject of refunds is covered by Div 35 of the GST Act. Section 35-5 provides as follows: (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 is also relevant on the facts of this case, and it provides as follows: Your entitlement to be paid an amount under section 35-5 arises when you give the Commissioner a GST return. These two sections are central to the applicant's claim for refunds. I note that the sections do not in terms refer to "refund", but, given the heading to Div 35, and the terms of s 7-15, nothing turns on that circumstance. 12 The Commissioner also relied on the legislative history of s 35-5 of the GST Act. As originally enacted, that section provided as follows: (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 within 14 days after you give to the Commissioner, under Division 31, your GST return for that tax period. (2) However, if you have a liability to the Commonwealth arising under or because of an Act of which the Commissioner has the general administration, the Commissioner may: (a) apply that net amount against the liability; and (b) pay to you any part of that net amount not so applied. The accompanying Explanatory Memorandum noted that the effect of this provision was that, in the absence of liability under another Act administered by the Commissioner, "the Commissioner must pay you any amount by which your net amount for a tax period is less than zero". The memorandum continued that this payment must be made "generally" within 14 days after the taxpayer's return was given to the Commissioner. Counsel for the Commissioner were unable to explain how the notion of "generally" found sustenance in the actual wording of s 35-5 as it then stood. 13 Section 35-5 was repealed, and the present section substituted, by item 1 of Sched 15 to the A New Tax System (Tax Administration) Act 1999 (Cth). Of that amendment, the Explanatory Memorandum said the following: Section 35-5 currently requires the Commissioner to refund a net amount for a tax period that is negative, (i.e. where input tax credits exceed the GST), to an entity within 14 days after the GST return is given under Division 31. This provision is being amended to subject the refund to the generic refund rules in subsection 8AAZLF(1) of the TAA 1953. Those rules allow the Commissioner to apply the amount owing as a credit against any other tax debt of the entity. A new definition of credit is being placed in section 8AAZA of the TAA 1953 which will define a credit as an amount the Commissioner must pay a taxpayer under a taxation law, which would include an amount under section 35-5. On the submission of the Commissioner, the removal of the categorical 14-day period from s 35-5 necessarily left reasonableness as the defining criterion for the period within which a refund under that section had to be made. As discussed below, while I accept that there is sense in that submission, I am not disposed to view the 1999 amendment as necessarily, in all cases, allowing the Commissioner a longer period within which to make the required refund than had been specified under s 35-5 as originally enacted. 14 The Commissioner relied also upon provisions of the Administration Act for the statutory implication which he proposes. Part IIB of that Act provides for the establishment of "Running Balance Accounts" ("RBAs") to which monies owing by, and credits available to, particular taxpayers may be allocated. Division 3 of that Part requires the Commissioner to treat payments which he receives in respect of current or anticipated tax debts, and credits to which a taxpayer is entitled, under s 8AAZLA or s 8AAZLB of the Administration Act. Relevantly, a "credit" includes the sum to which a taxpayer would be entitled to under s 35-5 of the GST Act. Division 3A of Part IIB of the Administration Act contemplates that there may be credits in favour of a taxpayer which are not allocated or applied under Division 3. Section 8AAZLF provides that the Commissioner "must refund" the amount of any such credit. Save with respect to the operative machinery of the relevant RBA, it does not appear that s 8AAZLF adds anything to the Commissioner's obligation arising under s 35-5 of the GST Act itself. 15 Section 8AAZLG of the Administration Act provides as follows: (1) The Commissioner may retain an amount that he or she otherwise would have to refund to an entity under section 8AAZLF, if the entity has not given the Commissioner a notification: (a) that affects or may affect the amount that the Commissioner refunds to the entity; and (b) that the entity is required to give the Commissioner under any of the BAS provisions (as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 ). (2) The Commissioner may retain the amount until the entity has given the Commissioner that notification or the Commissioner makes an assessment of the amount, whichever happens first. A "notification", within the meaning of this section, includes a GST return as required by Div 31 of the GST Act. Save for such contribution as, in my view explained below, it makes to the process of construction with which the court is presently concerned, it was not suggested that s 8AAZLG played any part with respect to the facts of the present case. 16 Part 3-10 of Sched 1 to the Administration Act deals with the subject of indirect taxes. This includes GST. By s 105-5 of the Schedule, the Commissioner may, at any time, make an assessment of the "net amount" of a taxpayer under the GST Act. By s 105-10, the taxpayer may request the Commissioner to make such an assessment. By s 105-100, the production of an assessment is conclusive evidence that the assessment was properly made and, save under Part IVC of the Administration Act, "that the amounts and particulars in the Assessment … are correct". However, s 105-15 of the Schedule provides as follows: (1) … [T]he time by which a net amount … must be paid, [does] not depend on, and [is] 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; … 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. Section 105-25 provides for the making of amended assessments, and s 105-30 resolves any inconsistency between an earlier assessment and a later assessment in favour of the later assessment. 17 The Commissioner's starting point with respect to the issue of construction which arises under s 35-5 (and, to the extent necessary, under s 8AAZLF of the Administration Act) was that, where a statute imposes a positive duty to act upon an identified office holder, but provides no stated period within which that duty is to be performed, a reasonable period for performance will be implied. That was the extent of the implication for which the Commissioner contended. Counsel resisted any suggestion that their client's position required them to specify, with detail, the terms of an implied proviso which dealt with particular situations in which the immediate payment of a refund need not be made. Their point was that the refund should be made within such period as was reasonable in the circumstances. One then turned to the circumstances of the particular case to give content to the Commissioner's duty. 18 At base, however, 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]. 19 An entity's obligation to pay GST depends upon the taxable supplies which it has in fact made; and its entitlement to input tax credits depends upon the creditable acquisitions which it has in fact made: GST Act, s 7-1. One way in which the system operates in practice is to require the calculation of a single sum, positive or negative, which represents the difference between the entity's GST and its input tax credits: GST Act, s 17-5. However an alternative way is to use the "approved form" to work out, and to notify the Commissioner of, the entity's (positive or negative) net amount: GST Act, s 17-15. This alternative procedure, which seems to be encouraged, is available "despite section 17-5". That is to say, where the alternative procedure is used, the "net amount" so calculated may not correspond with what would be the true difference between GST and input tax credits as would be calculated under s 17-5. No doubt the approved form contemplated by s 17-15 would be designed to provide for a calculation which would correspond with that required by s 17-5, but, whether or not that be the outcome in a particular case, what is yielded as the "net amount" under s 17-15 is the amount that must be paid to, or refunded by, the Commissioner: ss 33-5(1) and 35-5(1). 20 If the Commissioner takes the view that there may be a want of correspondence between an entity's net amount worked out under s 17-15 and the true difference between the GST and the input tax credits in the case of the entity, he may make an assessment under s 105-5 of Sched 1 to the Administration Act. If the entity takes that view, it may request an assessment under s 105-10 of that Schedule. However, the time by which the entity must pay a positive net amount worked out under s 17-15 of the GST Act does not depend on, and is not affected by, the making of an assessment: Administration Act, Sched 1, s 105-15(1). Likewise, the Commissioner's obligation to refund a negative net amount worked out under s 17-15 of the GST Act, and the time by which the refund must be paid, do not depend on, and are not affected by, the making of an assessment: Administration Act, Sched 1, s 105-15(2). In short, once a net amount has been calculated under s 17-15 of the GST Act, a positive sum must be paid to the Commissioner, or a negative sum must be refunded by the Commissioner, regardless of the underlying correctness, as it were, of that calculation. Neither the entity nor the Commissioner may retain its or his money pending ascertainment of the true figure which represents the difference between GST and input tax credits. 21 Section 8AAZLG of the Administration Act is consistent with this view of the provisions already discussed. It provides for a specific situation in which the Commissioner may defer making a refund in circumstances which include those arising under s 35-5 of the GST Act. It allows the retention of the refund where, in a context relevant to the present case, the entity presumptively entitled to the refund has not lodged its GST return. As a matter of construction, and taking into account also the other provisions discussed above, it seems scarcely likely that the legislature would have intended that the Commissioner, acting by reference to his general power of administration under s 3A of the Administration Act, would be able to retain refunds, to which a prima facie entitlement arose under s 35-5 of the GST Act, by reference to circumstances not mentioned in s 8AAZLG. 22 This understanding of how the relevant provisions operate is also consistent with the perception of the GST as "a practical business tax", and as "one that is designed, where practical, to quarantine business from the ultimate burden of the tax": Saga Holidays Limited v Commissioner of Taxation (2006) 156 FCR 256, 264 [29]-[30]. The scheme of the sections to which I have referred is such as to give predictability and immediacy to the short-term cash flow obligations and entitlements of registered businesses. It would make it possible for a business which was in control of its own transactions and accounts to factor those obligations and entitlements into its cash flow predictions, and provisions, in respect of a particular period. Thus a business which operates by reference to monthly periods should have a firm expectation that it will, by the 21st day of each month, make payment to the Commissioner of a positive net amount as disclosed on its GST return. Likewise, such a business should legitimately expect to receive from the Commissioner the payment of any negative net amount which is disclosed in its GST return in respect of a completed tax period, and to do so without having to await the making of the detailed and possibly complex calculations that might be necessary to ascertain the true figure yielded by the subtraction referred to in s 17-5 of the GST Act. 23 It is uncontroversial that a reasonable period for the purposes of s 35-5 would at least be such as may be required to enable the necessary administrative steps to be taken within the office of the Commissioner to process the taxpayer's GST return, and to authorise, and physically to make, the necessary payment. It seems tolerably clear that the original period of 14 days specified by s 35-5 as enacted in 1999 had these necessary administrative steps in mind. For an implication to arise in this way would, in my view, properly be regarded as necessary and convenient for the achievement of the purposes with which the section itself is manifestly concerned, in the context of the scheme of the GST Act and of the Administration Act as referred to above. However, since that scheme contemplates the making or receipt of payments by reference to the calculations set out in the entity's GST return, it would, in my view, be antagonistic to the objects and purpose of the scheme for the understanding of what was "reasonable" to be such as would accommodate an investigation by the Commissioner of the underlying facts giving rise to GST as such and to input tax credits as such. 24 As against these considerations, which might be regarded as conventional constructional ones, the Commissioner's implication case tended to be substantially informed by the facts of the case. Those facts were not, however, the facts which related to GST and input tax credits. The Commissioner eschewed any suggestion that his case involved, or that the court should consider, facts of that kind. Rather, he relied upon what he alleged was a track record of malfeasance on the part of taxpayers under the control of the individuals with whom the applicant is now associated. 25 In an affidavit sworn on 4 August 2011, Damian Thomas Channell, the leader of the team in the Commissioner's office undertaking an audit of the applicant's compliance with the GST Act, said that three companies in the same group as the applicant (referred to as the "Mercantile Group") had, in the period leading up to 2009, been involved in "sham transactions through a supply chain". Mr Channell continued: 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. In June 2009, the Commissioner issued "audit finalisation letters" to these three companies. He also issued GST assessment notices and tax shortfall penalty notices to these companies, together involving a liability of just over $26m. The companies objected to the assessments, the objections were disallowed and the companies appealed to the Administrative Appeals Tribunal. 26 According to Mr Channell, on 14 May 2009 some new companies, including the applicant, were incorporated. The director of the applicant was also a director of the other newly-incorporated companies, and had been a director of each of the original companies. On 1 July 2009, one of the new companies took over the employees and payees of the original companies, and that and another of the new companies purchased the business and assets of the original companies. On 3 December 2010, the director of the applicant resigned his directorships of the original companies. On 7 February 2011, the original companies were placed into liquidation, and the liquidator discontinued the applications in the Administrative Appeals Tribunal. The applicant's chief financial officer, Tanu Ghosh, justified the liquidation of the original companies on the ground that the Commissioner's assessments of June 2009 could not be paid, which meant that the companies would have been engaging in insolvent trading if they had not been liquidated. GST and penalties as assessed by the Commissioner have not been recovered. 27 Mr Channell deposed that the Commissioner – … has reason to suspect that the Applicant may be knowingly involved in a significant fraud designed to produce refunds or input tax credits for purchases or alleged purchases of goods where one or more of the suppliers of the goods has not paid GST. He deposed that the investigation currently being undertaken was complex and difficult. He explained why, and I accept that explanation. I also accept that the investigation is proceeding with all expedition, and that the Commissioner has devoted nothing less than the degree of resources to the investigation that would reasonably be expected in such a case. The Commissioner has informed the applicant that he expects the investigation to be concluded by the end of November 2011, following which an assessment may issue (ie if the Commissioner takes the view that the applicant's GST returns have not truly reflected its GST and input tax credits). It is, in the circumstances, submitted on behalf of the Commissioner that a reasonable period for the conduct of the investigation, and therefore for the making of the payments required by s 35-5 of the GST Act, would be a period which ends on 30 November 2011. 28 If the present question related only to the length of what should be regarded as a reasonable period for the conduct of the investigation into the applicant's GST returns, I would have no reason not to accept the Commissioner's estimate, nor to accept the period to 30 November 2011 as a reasonable one. However, that question would arise only if the relevant provisions of the GST Act and the Administration Act, on their proper construction, contemplated 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. For reasons explained above, I do not accept that the relevant provisions can wear any such construction. For me to take account of the obviously difficult position in which the Commissioner now finds himself as a basis for impressing such a construction on these provisions would be to give currency to the old truism that hard cases make bad law. It is not a course which I propose to follow. 29 For the above reasons, I reach the conclusion that, to the extent that s 35-5 of the GST Act implicitly contemplates that the payment for which it provides should be made within a reasonable period, that period is only such as would facilitate the making of the payment as a matter of administration. It would not encompass the time taken to undertake an investigation of the accuracy of the returns themselves. It follows that, as at the date of these reasons, the Commissioner has failed to perform the duty which is cast upon him by s 35-5 of the GST Act and s 8AAZLF of the Administration Act. 30 The relief sought by the applicant in the present case was that said to be available under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"), by way of mandamus under s 39B of the Judiciary Act 1903 (Cth), and for a declaration. Counsel for the applicant, however, made no submission about his client's cause of action under the ADJR Act. Counsel for the Commissioner submitted that, if otherwise I should be disposed to accept the applicant's case, it would be preferable for me to grant relief by way of mandamus, rather than by making a declaration. Counsel for the applicant was content that I should follow that course, in the event that his client succeeded. 31 Counsel for the Commissioner submitted, however, that I should, as a matter of discretion, decline the applicant's application for mandamus; and, to the extent necessary, should also reject any application for a declaration on discretionary grounds. Given the approach which counsel for the Commissioner have taken, I shall confine myself to a consideration of the discretionary basis upon which mandamus may be refused. I was referred to a number of authorities in this regard, but the applicable principles were not relevantly in dispute. The position, in my view, is this. If a court reaches a conclusion that a mandatory, unqualified, statutory duty remains unperformed, mandamus should go on the application of a party with an appropriate interest. The remedy may, however, be refused in a proper case. The situations in which the remedy may be refused have never been the subject of exhaustive catalogue, but, generally, it would seem to lie upon the statutory office holder in default of his or her obligations to bring forward some circumstance or justification which would make mandamus inappropriate, unnecessary, futile or the like. None of those conventional propositions has any obvious application to the facts of the present case. 32 The discretionary circumstance upon which the Commissioner relies is, of course, the existence of the investigation into the accuracy, and honesty, of the applicant's GST returns. The point which the Commissioner made on his constructional case was, in effect, reiterated: an order in the nature of mandamus would require the Commissioner to make a substantial payment which might then have to be claimed back from the applicant if the investigation currently in progress leads to the rejection, by assessment, of the applicant's claimed input tax credits. 33 The Commissioner gave these submissions added emphasis by reference to the original, now liquidated, companies in the same group as the applicant, to which I have referred earlier in these reasons. It was submitted on his behalf that those circumstances showed how easy it was for GST-registered entities under the same control as the applicant, and conducting effectively the same business, to bring about a situation in which payments made under s 35-5 became irrecoverable, notwithstanding the making of a subsequent assessment. In the submission of the Commissioner, the present case was not merely one in which time was necessary to permit an investigation to be carried out: it was one in which the history of the matter gave every reason to think that the Commissioner's gravest suspicions might well be justified. 34 These submissions on behalf of the Commissioner had considerable forensic impact, but, ultimately, I am not persuaded that the circumstances to which they relate should be allowed to inform the exercise of the discretion to refuse mandamus with respect to the duty arising under ss 35-5 and 8AAZLF. Having found, as I do, that these provisions give rise to an obligation to make a payment which is not qualified in the way proposed by the Commissioner, I consider that it would be antagonistic to the purpose and objects of them to excuse, in effect, a failure to perform that obligation upon the ground that an investigation is being conducted, however powerful be the other circumstances which give rise to the suspicion that the applicant's GST returns may not have been correct. Put another way, when mandamus is available to compel the performance of a particular statutory duty, such discretion as there is to decline the remedy should not be exercised in such a way, or by reference to such considerations, as would be antagonistic to the terms, object or purposes of the sections under which the obligation arises. 35 The Commissioner submitted in the alternative that, if mandamus were to go, the court should, in the exercise of its discretion in framing the terms of the order, defer the operation of the order until 1 December 2011, in order to allow the investigation to proceed to conclusion. It will be clear that this is just another, perhaps more limited, way of expressing essentially the same argument as that which I have rejected in the previous paragraph. For the same reasons as were there laid out, I would reject this alternative argument also. 36 In conclusion, I record a submission made on behalf of the applicant that a fraudulent return would never found a valid claim for an input tax credit, and therefore for a refund under s 35-5. Counsel submitted that the net amount calculated in the taxpayer's GST return must be accepted by the Commissioner for the purposes of s 35-5 of the GST Act, but only at what might be described as the prima facie level. The inaccuracy of a GST return would provide the Commissioner with a good defence to a proceeding by the taxpayer to enforce the duty arising under s 35-5. In the present case, the Commissioner could have put on a defence which placed the accuracy of the applicant's GST returns directly in issue, and could have proved that those returns were incorrect, fraudulent or the like. But the Commissioner had not conducted the present case on that footing. He had chosen not to contest the applicant's returns head-on, as it were, but merely submitted that s 35-5 should be so construed as to permit him to make such an investigation as would permit a definite position to be adopted with respect to the underlying facts. The Commissioner did not accept that it was appropriate for him to use a defence to a proceeding such as the present, rather than an assessment, as the means by which an entity's GST obligations might be conclusively determined. I shall say no more on this subject, since I do not consider that the present case squarely raises for determination the correctness of the proposition put by counsel for the applicant, or the legitimacy of the Commissioner's response. The fact is that the Commissioner's case did not involve a direct challenge to the applicant's GST returns. I consider that any determination of the issues mentioned in this paragraph should await a proceeding in which such a challenge is in fact made. 37 For the reasons given above, I propose to make an order which will require the Commissioner forthwith to make the refunds claimed by the applicant. Costs will follow the event, but, lest there be some consideration of which I am unaware touching the applicant's entitlement to its costs, I shall stay the operation of my costs order for 14 days, and give the parties liberty to apply. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 30 September 2011