Commissioner of Taxation v Reliance Carpet Co Pty Limited [2008] HCA 22

HIGH COURT OF AUSTRALIA

GLEESON CJ

GUMMOW, HEYDON, CRENNAN AND KIEFEL JJ

THE COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA APPELLANT

AND

RELIANCE CARPET CO PTY LIMITED RESPONDENT

Commissioner of Taxation v Reliance Carpet Co Pty Limited

[2008] HCA 22

22 May 2008

M163/2007

ORDER

1. Appeal allowed.

2. Set aside orders 1 and 2 of the orders of the Full Court of the Federal Court of Australia dated 5 July 2007 and, in their place, order that the appeal to that Court be dismissed.

3. The appellant pay the costs of the respondent.

On appeal from the Federal Court of Australia

Representation

A Robertson SC with J O Hmelnitsky for the appellant (instructed by Australian Government Solicitor)

J J Batrouney SC with C M Sievers for the respondent (instructed by Ambry Legal)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Commissioner of Taxation v Reliance Carpet Co Pty Limited

Taxes and duties – Goods and services tax – Taxable supply – A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("the Act"), s 9-10 – Contract for sale of land – Whether there is a taxable supply when a deposit held as security for the performance of a purchaser's obligations is forfeited for failure by the purchaser to perform its obligations.

Vendor and purchaser – Deposit – Characteristics of deposit – Whether payment of deposit was "in connection with a supply" by vendor taxpayer for the purpose of s 9-15(1) of the Act – Whether forfeited deposit treated as consideration for a supply under s 99-5 of the Act.

Words and phrases – "consideration for a supply", "deposit", "grant, assignment or surrender of real property", "in connection with a supply", "real property", "supply", "taxable supply".

A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 9-5, 9-10, 9‑15, 99-1, 99-5, 99-10.