Federal Commissioner of Taxation v Official Liquidator of E O Farley Limited (in Liquidation) [1940] HCA 13

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278 HIGH COURT

(HIGH COURT OF AUSTRALIA.]

THE FEDERAL COMMISSIONER OF eee APPELLANTS ; TION AND ANOTHER : RESPONDENTS,

AND

THE OFFICIAL LIQUIDATOR OF E. CFI FARLEY LIMITED (IN LIQUIDATION) - ResponpeEnts. AND ANOTHER Sees eee + APPLICANT AND RESPONDENT,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

H.C, or A. Crown—Debts due to Crown—Commonwealth and State debts—Priority inter se—

1940. Winding up—Companies—Taxation—Powers of Commonwealth and State YW Parliaments to affect prioritiés—The Constitution (63 & 64 Vict. c. 12), sec. Sypyey, 51 (ii), (xvii.), (xx.), (xxxix.)—Companies Act 1899 (N.S.W.) (No. 40 of 1899), April 2-4; secs, 134 (a), 264—Income Tax Assessment Act 1922-1934 (No. 37 of 1922— June 28, No. 51 of 1934), secs, 57 (1), 59—Sales Tax Assessment Act (No. 1) 1930-1935 Tatham O., (No. 25 of 1930—No. 8 of 1935), secs. 30 (1), 32 (1) (2) (4)—Post and Telegraph Richy saree Act 1901-1934 (No. 12 of 1901—No. 45 of 1934), secs. 4, 5, 93, 97 (m)—Income

and 'McTiernan Tax (Management) Act 1928 (N.S.W.) (No. 35 of 1928), secs, 56, 58.

In the winding up of an insolvent company under the Companies Act 1899 (N.S.W.) debts due to the Crown in right of the Commonwealth and debts due to the Crown in right of the State of New South Wales have priority, by virtue of the prerogative, over debts due to a subject; but as between the debts due to the two Governments there are but coexisting rights standing on an equality in the absence of valid legislation disturbing that position.

Neither sec. 59 of the Income Tax Assessment Act 1922-1934 nor sec. 32 of the Sales Tax Assessment Act (No. 1) 1930-1935 operates to give priority in the winding up of a company in a State to debts owing to the Crown in right of the Commonwealth in respect of income tax and sales tax over debts owing