High Court of Australia Mason C.J. Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ. Philip Morris Ltd v Commissioner of Business Franchises [1989] HCA 38 ORDER Answer the questions in the stated case as follows: A. Were the fees referred to in the statement of claim in so far as they were paid by:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, invalid as being exacted contrary to the provisions of s. 90 of the Constitution? Answer: (i) No. (ii) No. (iii) No. B. Is the Act invalid in so far as it applies to a person in the position of:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? Answer: (i) No. (ii) No. (iii) No. C. Are ss. 7 and 10 of the Act invalid in so far as they apply to a person in the position of:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? Answer: (i) No. (ii) No. (iii) No. The plaintiffs to pay the defendants' costs of the stated case. Cur. adv. vult. The following written judgments were delivered:— Aug. 24 Mason C.J. and Deane J. This is a case stated pursuant to s. 18 of the Judiciary Act 1903 Cth. The case raises questions as to the validity of licence fees payable under the Business Franchise (Tobacco) Act 1974 Vict. ("the Act"). The plaintiffs contend that the licence fees are invalid because they are duties of excise within the meaning of s. 90 of the Constitution. The plaintiffs, Philip Morris Ltd. ("P.M.L."), Statewide Tobacco Services Ltd. ("S.T.S.") and G.P.M. Cigarette Distributors (Australia) Ltd. ("G.P.M."), are wholly owned subsidiaries of Philip Morris (Australia) Ltd. The first defendant is the officer responsible for the administration of the Act. The facts raised in the stated case may be recounted briefly. At the date of the commencement of the action in which the case was stated, 23 December 1987, the plaintiffs jointly held a group wholesale tobacco merchant's licence. The first defendant issued that licence on 1 December 1987. The licence was for a one month period. During each of the months between October 1978 and November 1987 the plaintiffs jointly held a group wholesale tobacco merchant's licence issued by the first defendant. Each such licence was for a one month period and was issued at the beginning of the relevant month or thereabouts. Similarly, during each month since December 1987 the plaintiffs have jointly held a group wholesale tobacco merchant's licence issued by the first defendant. Again, each such licence was for a one month period and was issued at the beginning of the month or thereabouts. In order to obtain the December licence the plaintiffs made written application to the first defendant and paid to her a cheque for the sum of $1,903,522.78. The plaintiffs calculated that this sum was the amount of the licence fee due and payable for a group wholesale tobacco merchant's licence for the month of December 1987. The amount was paid under protest. The plaintiffs followed a similar procedure when applying for licences before and after December 1987, save that they did not make the payments under protest before April 1980 or for the months of September, October and December 1984. P.M.L. has at all material times carried on the business of manufacturing, importing, distributing and selling tobacco products for human consumption in all States and Territories of Australia. P.M.L.'s manufacturing operations involve the manufacture of cigarettes at Moorabbin in Victoria. The tobacco leaf used by P.M.L. in its manufacturing operation consists partly of leaf grown within Australia and purchased at auctions in Victoria and Queensland and partly of leaf imported from overseas. After P.M.L. manufactures the cigarettes they are packaged, placed in containers at Moorabbin and transported to P.M.L.'s central warehouse facility at Noble Park in Victoria or to its similar facilities in other States. At these warehouse facilities, the cigarettes are placed in bonded stores. P.M.L. distributes and sells throughout Australia its manufactured cigarettes to wholesale vendors of tobacco products, including S.T.S., and to retail vendors of tobacco products, including large retail chain stores. The breakdown of P.M.L.'s sales in Victoria for the year ended 31 December 1987 was approximately as follows: Purchaser Percentage of Sales Statewide Tobacco Services Ltd. 13.6 Other wholesalers holding a wholesale tobacco merchant's licence 69.1 Retail chains 16.3 Other retail vendors 1.0 100.0 P.M.L. only pays a licence fee under the Act based upon its sales in Victoria of tobacco products to retail vendors. P.M.L. also imports finished tobacco products from overseas. It distributes, sells and supplies these products throughout Australia to both wholesale and retail vendors of tobacco products. These imported tobacco products represented only 1.55 per cent of P.M.L.'s sales during 1987. P.M.L. exports its manufactured products and its imported products to countries in the Pacific region. This export trade is a very minor part of P.M.L.'s overall business. S.T.S. has at all material times carried on the business of distributing and selling tobacco products in Victoria, South Australia and New South Wales and to a limited extent in the Northern Territory. In the course of its business, which is essentially a wholesale distribution business, S.T.S. purchases from P.M.L. cigarettes which P.M.L. has manufactured at Moorabbin. In addition, S.T.S. purchases imported tobacco products from P.M.L., including some brands of cigarette. S.T.S. also purchases and obtains supplies of tobacco products, including cigarettes, from other Australian manufacturers. During the year ended 31 December 1987, S.T.S. purchased tobacco in approximately the following proportions: Manufacturers/Distributors Percentage of Purchases P.M.L. 52.5 Rothmans 43.3 Wills 2.1 Others 2.1 100.0 S.T.S. distributes and sells tobacco products purchased by it to both wholesale and retail vendors of tobacco products. In 1987 it made approximately three per cent of its sales in Victoria to other wholesale vendors holding either a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence. S.T.S. pays no licence fee in relation to such sales. In 1987 it made approximately ninety-seven per cent of its wholesale sales in Victoria to retail vendors of tobacco products. S.T.S. took these sales to retail vendors into account in calculating licence fees which it paid to the first defendant. G.P.M. ceased to carry on the business of selling and distributing tobacco and tobacco products on or about 30 November 1983. Prior to that date G.P.M. had carried on business in Victoria and elsewhere in Australia as a distributor of tobacco products to wholesale and retail vendors of such products. The revenue collected by the States and the Northern Territory from business franchise fees has risen markedly from the year ended 30 June 1979 to the year ended 30 June 1988. In the year ended 30 June 1988 the revenue collected from business franchise fees in Victoria amounted to 11.21 per cent of that State's total tax revenue. In the case of other States, the percentages for that year were: New South Wales 10.54 per cent; Queensland 4.90 per cent; South Australia 13.62 per cent; Tasmania 23.95 per cent; Western Australia 17.91 per cent; and in the case of the Northern Territory it was estimated at 19.26 per cent. With the exception of Queensland, all States and the Northern Territory collect business franchise fees in relation to tobacco, petroleum and liquor. South Australia also collects business franchise fees in relation to gas. Queensland collects business franchise fees in relation to liquor only. The questions asked in the stated case are: A. Were the fees referred to in the statement of claim in so far as they were paid by:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, invalid as being exacted contrary to the provisions of s. 90 of the Constitution? B. Is the Act invalid in so far as it applies to a person in the position of:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? C. Are ss. 7 and 10 of the Act invalid in so far as they apply to a person in the position of:— (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? The Act is described in its long title as "An Act with respect to the licensing of Persons who sell Tobacco in Victoria and for other purposes". Section 6 of the Act provided at the relevant time: (1) A person shall not on or after 1 January, 1975 carry on tobacco wholesaling unless he is the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence. (2) A person shall not on or after 1 July, 1975 carry on tobacco retailing unless he is the holder of a retail tobacconist's licence under this Act. Penalty: 10 penalty units. (3) Where a person is convicted of an offence under sub-section (1) or (2) in addition to any other penalty imposed on that person, the court may order him to pay to the Commissioner double any amount which the court is satisfied should have been but has not been paid to the Commissioner by way of a licence fee if a licence had been issued under this Act. (4) Without prejudice to any other method of recovery thereof as an order of the court for payment of a civil debt any amount ordered to be paid pursuant to sub-section (3) shall, only for the purposes of its recovery and the consequences of failure to pay, be regarded as a fine imposed by the court upon a conviction in the exercise of that court's ordinary criminal jurisdiction. The Act makes provision for the making of applications for a retail tobacconist's licence (s. 7(1)(a)), a wholesale tobacco merchant's licence (s. 7(1)(b)) and a group wholesale tobacco merchant's licence (s. 7(1)(c)). The Commissioner is required to issue a licence to an applicant where a fee has been paid which is, in the opinion of the Commissioner at the time at which the licence is issued, the fee required to be paid under the Act (s. 7(3)). The expression "tobacco retailing" is defined to mean "the business of selling tobacco by retail in Victoria either alone or in conjunction with any other merchandise and includes such business carried on as part of or in conjunction with any other business" (s. 2(1)). The expression "tobacco wholesaling" is defined to mean "the business of selling tobacco in Victoria for the purposes of resale either alone or in conjunction with any other merchandise and includes such business carried on as part of or in conjunction with any other business" (s. 2(1)). Section 8(1) provided at the relevant time: On or after the 1st day of July, 1975 a person shall not sell tobacco in Victoria unless he is the holder of a licence under this Act. Penalty: 10 penalty units. Section 8(3) provided: A licensee who carries on the business of tobacco retailing or tobacco wholesaling on premises which are not specified in the licence as premises to be used for that business shall be guilty of an offence against this Act. Penalty: 10 penalty units. A retail tobacconist's licence, other than a retail tobacconist's licence which is revocable at will, a wholesale tobacco merchant's licence and a group wholesale tobacco merchant's licence shall be in force from the date specified in the licence as the date of commencement until, unless it sooner ceases to have effect, the last day of the month in which it commenced (s. 9(1)). Section 10(1) prescribed the fees for licences as follows: (a) For a wholesale tobacco merchant's licence a fee of $50 together with an amount of 25 per centum of the value of tobacco sold by the applicant in Victoria in the relevant period (other than tobacco sold to the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence); (b) For a group wholesale tobacco merchant's licence a fee of $50 together with an amount of 25 per centum of the value of tobacco sold by the members of the group of wholesale tobacco merchants of which the applicant is a member in Victoria in the relevant period (other than tobacco sold to the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence); (d) For a retail tobacconist's licence of the duration specified in section 9(1) a fee of $10 together with an amount of 25 per centum of the value of tobacco sold by the applicant in the course of tobacco retailing in the relevant period (other than tobacco purchased in Victoria from the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence). The rate of the variable portion of these fees was 12 per cent prior to December 1983 and was increased to 30 per cent in February 1988. Section 2(6A) provides that a reference to "the relevant period" in relation to a retail tobacconist's licence of the duration specified in s. 9(1), a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence which, if granted, will expire at the end of a particular month is a reference to the last preceding month but one, so that, if the licence is granted for the month of July, the relevant period is the month of May last past. Section 2(6A)(b) makes different provision for a retail tobacconist's licence revocable at will but that is not presently material. Section 10 went on to provide: (2) The value of tobacco sold for the purpose of sub-section (1) shall be determined by the Commissioner as 100/125 of the gross amount (including any duties thereon) for which in his opinion it would ordinarily be expected to be purchased by persons engaged in tobacco retailing. (3) Where an application is made for a retail tobacconist's licence and the applicant did not carry on the business of a retail tobacconist at all of the premises specified in the application for the whole of the relevant period, the fee payable by the applicant in respect of the licence shall be such amount as is assessed by the Commissioner as being just and reasonable in the circumstances of the case having regard to the tobacco that would have been handled by the applicant had he been carrying on the business in respect of which the application for the licence was made at all of those premises for the whole of the relevant period, the relevant principles of determining fees under sub-section (1) and the period that the licence, if granted, will be in force. [Sub-sections (4) and (5) provide for wholesale tobacco merchant's licences and group wholesale tobacco merchant's licences in terms similar to sub-s.(3).] (6) The value of any tobacco sold for delivery and consumption outside the State shall be disregarded in determining the fees payable under this section. (7) Where a person has applied for a licence pursuant to section 7 of this Act and that person has not paid or tendered the fee which is, in the opinion of the Commissioner payable under section 10(1) for the licence, the Commissioner may make an assessment of the amount which in his opinion should be paid for the issue of the licence and that person shall be liable to pay that amount less any amount previously paid by that person except in so far as he establishes on objection or appeal that the assessment is excessive. In so far as the Act requires the payment of a licence fee upon the issue of a retail tobacconist's licence it is indistinguishable from the similar provisions in the Tasmanian legislation which this Court held to be valid in Dickenson's Arcade Pty. Ltd. v. Tasmania [91] where the Court followed its earlier decision in Dennis Hotels Pty. Ltd. v. Victoria [92] . The plaintiffs sought to overcome this obstacle to their success by submitting that the Court should now overrule so much of its decision in Dennis Hotels as held that s. 19(1)(a) of the Licensing Act 1958 Vict. did not impose a duty of excise, as well as the decision in Dickenson's Arcade. For its part, the State of South Australia submitted that Dennis Hotels and Dickenson's Arcade should be overruled to the extent that they held that some of the fees involved were excise duties. The Commonwealth and the other intervening States opposed the reopening of those two decisions or of the decision in H.C. Sleigh Ltd. v. South Australia [1] which followed them. 1. (1974) 130 C.L.R. 177. 2. (1960) 104 C.L.R. 529. 3. (1977) 136 C.L.R. 475. This is not the first occasion on which the Court has been asked to reconsider these authorities. In Evda Nominees Pty. Ltd. v. Victoria [2] the Court declined to hear further argument urging it to depart from the actual decision reached in those cases. Gibbs C.J., Mason, Murphy, Wilson, Brennan and Dawson JJ. said [3] Although the Court is not bound by its own decisions, that does not mean that the Court will hear full argument on every occasion when counsel wishes to contend that a previous case was wrongly decided. In the present case, the legislation which the plaintiffs seek to impugn as imposing a duty of excise is indistinguishable from that which was upheld in Dickenson's Arcade Pty. Ltd. v. Tasmania. In that case, the Court heard argument directed to show that the earlier decision in Dennis Hotels Pty. Ltd. v. Victoria should not be followed, but declined to accept that argument. Again, in H.C. Sleigh Ltd. v. South Australia the Court held that those cases should be followed. The Court does not consider that it should now hear further argument urging it to depart from the actual decision reached in those cases, particularly since the States have organized their financial affairs in reliance on them. 1. (1984) 154 C.L.R. 311. 2. (1984) 154 C.L.R., at p. 316. In the present case, after hearing outline of argument for and against an overruling of the three decisions, the Court announced that it did not propose to reconsider the correctness of the actual decisions in the three cases in question. Thereafter the plaintiffs presented arguments seeking to distinguish the present case from those previous decisions. In order to examine these arguments, it is necessary to look to the text of s. 90, the long history of its interpretation by the Court, its antecedent history and its relationship to other provisions in the Constitution. The first limb of the section provides: On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive. The central problem which this provision presents to those who seek to interpret it is that, though the Constitution treats the term "duties of excise" "as if it had a definite, fixed, invariable meaning" (John Fairfax & Sons Ltd. and Smith's Newspapers Ltd. v. New South Wales [4] ), the term "has never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application", to use the words of Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [5] . For this reason efforts have been made to elucidate the meaning of the text by reference to what has been seen as the constitutional purpose that the section is designed to serve. The quest for a constitutional purpose has proved to be almost as contentious as the quest for a meaning of the text has been elusive. In the result the absence of a judicial consensus as to the meaning of "duties of excise" and the purpose which s. 90 serves led to the controversial and difficult decision in Dennis Hotels and the cases which followed in its wake. 1. (1927) 39 C.L.R. 139, at p. 144. 2. (1938) 60 C.L.R. 263, at p. 293. We pause only to observe that we do not regard reference to the history of successive drafts of s. 90 or to the Convention debates as being at all helpful to the problem of eliciting what may be the constitutional purpose of the section. This view is due not to a refusal to acknowledge the relevance of the historical context in which the provision was drafted and enacted, but to the sheer lack of evidence of a convincing or consistent nature from the available materials. The interrelationship of s. 90 and other sections of the Constitution sheds rather more light upon the issue. First, the reference to "duties of excise paid on goods produced or manufactured in a State" in s. 93 supports the view that the necessary relation between taxpayer and goods is that "the taxpayer is taxed by reason of, and by reference to, his production or manufacture of goods", to use the words of Fullagar J. in Dennis Hotels [6] . But we do not regard this reference as compelling the conclusion that a tax on the sale or distribution of goods stands outside the constitutional conception of an excise. 1. (1960) 104 C.L.R., at p. 555. Secondly, and more importantly, s. 90 must be read together with s. 92. Section 90 gives exclusive power to the Parliament of the Commonwealth to impose duties of customs and of excise and to grant bounties on the production and export of goods. Section 92 requires freedom of trade, commerce and intercourse among the States. Together, these sections combine with the safeguards against Commonwealth discrimination in s. 51(ii) and (iii) and s. 88 to ensure equality of opportunity both for interstate trade and commerce and for local manufacture and goods and ordain that the Commonwealth be an economic union, not an association of States each with its own domestic economy: Hematite Petroleum Pty. Ltd. v. Victoria [7] . Customs duties, excise duties and bounties are measures which are designed to affect domestic production and manufacture of goods and the supply of goods to the domestic market. The Commonwealth having exclusive power over these aspects of fiscal policy, the sources of State revenue in relation to commerce in goods are correspondingly confined. This led Dixon J. to say in Parton v. Milk Board (Vict.) [1] , that s. 90 "was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action". 1. (1983) 151 C.L.R. 599, at pp. 631, 660-662. 2. (1949) 80 C.L.R. 229, at p. 260. In the very first decision on s. 90, Peterswald v. Bartley [2] , the Court held that a brewer's licence fee of £30 a year imposed under s. 71 of the Liquor Act 1898 N.S.W. was not a duty of excise within the meaning of s. 90. The amount of the licence fee was not quantified by reference to the amount of beer brewed or sold by the brewer. The Court considered that the purpose of the relevant statutory provisions was to regulate and control the production of beer. For example, the Liquor Act required the brewer to permit inspectors to enter premises with a view to preventing adulteration. The Court concluded that the term "excise" was "intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax" [3] . In arriving at this definition, which was not essential to the actual decision in the case, Griffith C.J., who delivered the judgment of the Court (comprising himself, Barton and O'Connor JJ.), referred at some length [4] to the discussion in Quick and Garran's Annotated Constitution of the Australian Commonwealth (1901), pp. 837-838, of the origin and use of the term "excise" in England and Australia. There the learned authors said: The fundamental conception of the term is that of a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco, and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth. In an earlier passage (p. 837) the authors stated that in England fees charged for licences to manufacture, produce or dispose of goods or for licences to carry on a business or engage in an activity were all known as "duties of excise". 1. (1904) 1 C.L.R. 497. 2. (1904) 1 C.L.R., at p. 509. 3. (1904) 1 C.L.R., at pp. 508-509. Griffith C.J. observed [5] that the extended use in England of the term "duties of excise" had no parallel in the Australian States. According to his Honour, whereas taxes upon beer, spirits and tobacco were known in Australia as duties of excise, fees for publicans' licences and for licences for various other businesses were not commonly understood as included under the head of excise duties. This proposition seems to have been distilled from classification of excise duties in statutes of the Australian colonies, though the statutes were not identified by their Honours. In this way the Court arrived at what was a distinctively Australian meaning of "duties of excise", namely, that set out in the preceding paragraph, a meaning described as the popular meaning in this country at the time of federation. The Court acknowledged that the imposition of a fee for a licence might in substance amount to an imposition of a duty of excise, but denied that s. 71 imposed such a duty. The reasons for this conclusion are not presently relevant as they drew on the now discredited doctrine of reserved powers. But the lump sum character of the licence fee and the regulatory character of the statutory provisions were influential factors pointing towards the conclusion which the Court reached. 1. (1904) 1 C.L.R., at p. 509. It has always been accepted, as it was accepted in Peterswald , that an excise is a particular form or category of tax. An impost will not constitute an excise unless it is a tax. In other words, a person seeking to invalidate an impost on the ground that it is an excise must establish initially that it is "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and not a payment for services rendered", to use the words of Latham C.J. in Matthews [6] . As the Court recently observed in Air Caledonie International v. The Commonwealth [7] , Latham C.J.'s definition is not exhaustive and it needs to be understood in the light of the comments made in that case. In Air Caledonie, the Court, after discussing the positive attributes of a tax mentioned in the definition, went on to say [7] : Thus, a charge for the acquisition or use of property [and] a fee for a privilege are other examples of special types of exactions of money which are unlikely to be properly characterized as a tax notwithstanding that they exhibit those positive attributes. On the other hand, a compulsory and enforceable exaction of money by a public authority for public purposes will not necessarily be precluded from being properly seen as a tax merely because it is described as a "fee for services." It follows that, if an exaction is in truth no more than a fee for a licence, it does not amount to a tax and, accordingly, is not an excise. That was the view taken of the licence fee in Peterswald . 1. (1938) 60 C.L.R., at p. 276. 2. (1988) 165 C.L.R. 462, at p. 467. 3. (1988) 165 C.L.R. 462, at p. 467. As the passage quoted from Air Caledonie impliedly recognizes, the statutory description or label "fee for a licence" may serve as a cloak for the imposition of a tax and, what is more important for present purposes, a tax that amounts to an excise. When a statute fixes a lump sum in a moderate amount as a licence fee there is no necessary reason to characterize the exaction as a tax or as an excise. On the other hand, when the statute exacts, as the fee for a licence to carry on a business of manufacturing, producing, selling or distributing a commodity, an amount calculated by reference to the quantity or value of the commodity manufactured, produced, sold or distributed by the licensee during a particular period, the exaction has the attributes of a tax. Although the exaction is expressed to be for the grant of the right to engage in the business, which is collateral to actual manufacture, production, sale or distribution, the mode of calculation of the fee reveals its character as a tax on the activity carried on by the licensee under the licence. So, in the present case, the licence fees in question are taxes. That is the description that is generally given to them. Indeed, as appears from the facts recited in the stated case, taxes of this kind form a substantial proportion of the revenues of the States. Whether the licence fees are taxes amounting to excise duties is another question to which we now turn. In the course of time it became apparent that the Peterswald definition of "duties of excise" was too narrow: see the judgment of the Court in Browns Transport Pty. Ltd. v. Kropp [8] (where the Court went on to say that "the decision in that case has never been doubted"). The illuminating discussion of the history of excise duties by Dixon J. in Matthews [9] , demonstrated that the reliance in Peterswald [10] on the views of Quick and Garran was misplaced to some extent, though it is well established that the term "duties of excise" in s. 90 does not include many classes of impost which in England have been described by that name: Matthews [11] ; Browns Transport [12] . 1. (1958) 100 C.L.R. 117, at p. 128. 2. (1938) 60 C.L.R., at pp. 293-299. 3. (1904) 1 C.L.R. 497. 4. (1938) 60 C.L.R., at pp. 276, 277. 5. (1958) 100 C.L.R., at pp. 128-129. The suggestion in the Peterswald definition that an excise is an indirect tax was thought by some to introduce the distinction made by John Stuart Mill between "direct" and "indirect" taxation which was a feature of the Privy Council's interpretation of s. 92(2) of the British North America Act 1867 Imp. which gave exclusive power to Provincial legislatures to make laws in relation to "direct taxation within the province". But it has since been recognized that the troublesome and confusing distinction has little relevance to the interpretation of s. 90, which, as Fullagar J. pointed out in Dennis Hotels [13] , "was adopted in a quite different setting and employs much more specific terminology": see Browns Transport [14] . Accordingly, the reference in Peterswald [15] to "a direct and personal tax" is now taken to amount to no more than an example of an impost which is not a duty of excise. 1. (1960) 104 C.L.R., at p. 554. 2. (1958) 100 C.L.R., at p. 129. 3. (1904) 1 C.L.R., at p. 509. Two crucial problems with the Peterswald definition arose from the suggestions that, in order to constitute an excise, the tax must be imposed upon the production or manufacture of goods, as distinct from the sale or distribution of goods, and that the tax must be calculated by reference to the quantity or value of the goods. The two matters are interrelated. First, there is the question whether the tax must be imposed upon production or manufacture. Isaacs J. in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [16] , held that opinion, as did Fullagar J. in Dennis Hotels [17] . But that view has been decisively rejected. John Fairfax & Sons Ltd. and Smith's Newspapers Ltd [18] , the Commonwealth Oil Refineries Case and Parton [19] were all cases in which a tax levied at the point of sale or distribution was held to be an excise. It is possible to say of the first two of these cases, but not of the third, that the tax was imposed upon the producer because the producer was the seller. Nonetheless it was sale, not production, that attracted the liability to tax: see Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [20] ; but cf. Dennis Hotels [21] , per Fullagar J. Subsequently, in Browns Transport, the Court, in reference to an excise, said [22] : Its essential distinguishing feature is that it is a tax imposed "upon" or "in respect of" or "in relation to" goods, and cited Dixon J.'s judgment in Matthews [23] for that proposition. There was no suggestion at all that the concept of an excise is limited to a tax upon production or manufacture and that it does not extend to a tax upon sale or distribution. 1. (1926) 38 C.L.R. 408, at p. 426. 2. (1960) 104 C.L.R., at p. 557. 3. (1927) 39 C.L.R. 139. 4. (1949) 80 C.L.R. 229. 5. (1937) 56 C.L.R. 390, at p. 401. 6. (1960) 104 C.L.R., at pp. 556-558. 7. (1958) 100 C.L.R., at p. 129. 8. (1938) 60 C.L.R., at p. 304. In Matthews Dixon J. had earlier remarked [24] : The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities. His Honour went on to say [23] : The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. In Parton [25] his Honour qualified that statement by omitting the reference to "consumption". 1. (1938) 60 C.L.R., at p. 303. 2. (1938) 60 C.L.R., at p. 304. 3. (1949) 80 C.L.R., at p. 261. In Dennis Hotels, two years after Browns Transport, all the members of the Court, with the exception of Fullagar J., were agreed that a tax on the distribution or sale of goods was, or could in certain circumstances amount to, an excise, even though the tax was imposed not on the producer but upon a distributor or seller [26] . And in Bolton v. Madsen [27] the Court was able to say in its unanimous judgment: It is now established that for constitutional purposes duties of excise are taxes directly related to goods imposed at some step in their production or distribution before they reach the hands of consumers. The later cases accept the correctness of this proposition: see, e.g., Western Australia v. Chamberlain Industries Pty. Ltd. [28] ; Hematite [29] ; Gosford Meats Pty. Ltd. v. New South Wales [30] . 1. (1960) 104 C.L.R., at pp. 540-541, 549, 559, 573, 590, 601. 2. (1963) 110 C.L.R. 264, at p. 271. 3. (1970) 121 C.L.R. 1. 4. (1983) 151 C.L.R. 599. 5. (1985) 155 C.L.R. 368. A theoretical justification for the view appears in the judgment of Rich and Williams JJ. in Parton [31] , endorsed by Kitto J. in Anderson's Pty. Ltd. v. Victoria [32] , and by Barwick C.J. in Chamberlain Industries [33] , in these terms: a tax upon goods at any stage of their distribution will, in general, and sooner or later, according to circumstances, bear on the rate or level at which they are manufactured or produced or if not locally produced, on the extent of their importation. But there is no warrant, in my opinion, to require it to be established in any particular case that the tax in question will in fact so bear on manufacture or production. Its relevant effect will be presumed: it is enough that the impost is upon or in respect of goods before they have actually reached the consumer. 1. (1949) 80 C.L.R., at pp. 251-252. 2. (1964) 111 C.L.R. 353, at pp. 374-375. 3. (1970) 121 C.L.R., at p. 13. However, in Bolton v. Madsen [34] the Court went on to make the statement that: [I]t is the criterion of liability that determines whether or not a tax is a duty of excise. The tax is a duty of excise only when it is imposed directly upon goods or, to put the same thing in another way, when it directly affects goods, and to establish no more than that its imposition has increased the cost of putting goods upon the market by a calculable amount falls short of establishing the directness of relation between the tax and the goods that is the essential characteristic of a duty of excise. This statement reflected the earlier comments of Kitto J. in Dennis Hotels [35] concerning "the criterion of liability" which concluded with the proposition [36] that the concept of an excise excludes "a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all". See also Matthews [37] . 1. (1963) 110 C.L.R., at p. 271. 2. (1960) 104 C.L.R., at pp. 559-560. 3. (1960) 104 C.L.R., at p. 560. 4. (1938) 60 C.L.R., at p. 300. Kitto J.'s treatment in Dennis Hotels of the victualler's licence fee imposed by s. 19(1)(a) of the Licensing Act illustrates what his Honour meant by the notion of a tax imposed directly upon goods, especially in the context of a fee for a licence to carry on a particular type of business. His Honour conceded that if the section had imposed as the payment to be made for the licence what was in truth a sales tax, "so that a liability for the tax arose every time a sale of liquor was made under the licence", it would be an excise. He then continued [38] : The fact which makes a licence fee not a duty of excise is not that the exaction is for the licence; it is that the exaction is only in respect of the business generally, and not in respect of any particular act done in the course of the business. So, according to his Honour, as the licence fee was calculated by reference to sales made during a period antecedent to the commencement of the licence, the relation of the licence fees to the goods to be sold under the licence did not connect any part of the fee with any particular goods; on the contrary, it was simply the relation between a fee for a licence to carry on a business and the business itself. 1. (1960) 104 C.L.R., at p. 563. Although this application of the criterion of liability goes beyond what was subsequently said by the Court in Bolton , the statement of principle in Bolton has often been invoked in support of the proposition that a licence fee calculated by reference to sales made in a period before the commencement of the licence is not an excise: see Dickenson's Arcade [39] ; M.G. Kailis (1962) Pty. Ltd. v. Western Australia [40] ; H.C. Sleigh [41] ; Hematite [42] ; Gosford Meats [43] . 1. (1974) 130 C.L.R., at pp. 213, 223-224, 235-236. 2. (1974) 130 C.L.R., 245, at pp. 258-259, 260-262. 3. (1977) 136 C.L.R., at pp. 491-492, 501. 4. (1983) 151 C.L.R., at pp. 620-621, 643-646. 5. (1985) 155 C.L.R., at pp. 377-380, 400-402, 416-418. However, a long line of cases has made it abundantly clear that the Bolton formula, at least when applied in this way, no longer commands the acceptance of the Court. The decision in Chamberlain Industries was inconsistent with the formula; see the dissenting judgment of Walsh J. in that case. In Logan Downs Pty. Ltd. v. Queensland [44] Barwick C.J., Mason, Jacobs and Murphy JJ. refused to accept the formula. In H.C. Sleigh [45] Mason J. indicated that as a result of the intervening cases the Bolton formula no longer commanded the unqualified acceptance of the Court, a view which we restated and endorsed respectively in Hematite [46] . 1. (1977) 137 C.L.R., 59. 2. (1977) 136 C.L.R., at p. 499. 3. (1983) 151 C.L.R., at pp. 629-630, 664-665. The point of dissension between the members of the Court, as it has been manifested in the more recent cases, is best illustrated by the contrasting approaches of Barwick C.J. and Kitto J. in Chamberlain Industries. Barwick C.J. [47] asserted for the reasons we have already quoted that it should be regarded as settled doctrine that a tax "will be a duty of excise if it is upon or in respect of goods at any point including the point of manufacture or production, as they pass to consumption". According to his Honour, the criterion of liability is not to be applied as a test and is "not [to] be found exclusively in the verbal formulae of the statute" [48] . 1. (1970) 121 C.L.R., at p. 13. 2. (1970) 121 C.L.R., at p. 15. On the other hand, Kitto J. [49] , while not denying that a tax upon the taking of a step in the distribution of goods is an excise, asserted that a tax is a duty of excise only if it is imposed specifically, on the true construction of the legislation, upon the taking of a step in the production, manufacture or distribution of the goods. Thus, the point of disagreement was whether, in characterizing the tax with a view to determining whether it is an excise, the Court looks only to the legal operation of the statute rather than to its practical or substantial operation as well. On this issue the Court was divided, Windeyer and Owen JJ. taking a similar view to that expressed by Barwick C.J., while McTiernan and Walsh JJ. took a similar view to that expressed by Kitto J. Menzies J. concluded that the tax on receipts was an excise without committing himself to either view. This division of opinion, rather than any other issue, pervaded the later cases: see, e.g., Logan Downs and Hematite . 1. (1970) 121 C.L.R., at pp. 19-23. The division of opinion which has thus arisen mirrors the similar controversy which arose in relation to the characterization of a law for the purpose of determining whether it infringed the freedom of interstate trade and commerce guaranteed by s. 92. That controversy was recently resolved by the unanimous judgment in Cole v. Whitfield [50] , holding that a law is to be characterized by reference to its practical operation. Granted that s. 92 strikes down discriminatory protectionist laws, the conclusion reached in Cole v. Whitfield does not dictate a similar answer in the context of s. 90. But it must be said that the characterization of a law by reference exclusively to its strict legal operation, without regard to its practical or substantial operation, is bound to yield, at least in some instances, highly artificial results. In the field of excise duties under s. 90, where the Constitution is concerned with substance not form, there is no reason at all for contemplating artificial results. One such artificial result has been the distinction between a licence fee based on a prior period (not an excise) and a licence fee based on a current period (an excise), a distinction which has been severely criticized: see H.C. Sleigh [51] ; Hematite [52] ; Gosford Meats [53] . Brennan J. has pointed out that the statutory criterion of liability to pay a tax and the statutory description of a tax are both indications of the character of the tax, neither being necessarily conclusive, and that some statutes prescribe more than one criterion of liability: Gosford Meats [54] . The majority decision in that case rejected the proposition that an abattoir licence fee calculated by reference to the number of animals slaughtered in a period prior to the commencement of the licence was not an excise. 1. (1988) 165 C.L.R. 360, at pp. 399-400. 2. (1977) 136 C.L.R., at p. 527. 3. (1983) 151 C.L.R., at p. 630. 4. (1985) 155 C.L.R., at p. 389. 5. (1985) 155 C.L.R., at p. 406. Of course the controversy over the criterion of liability has not been confined to the issue of legal operation versus practical operation of the statute. As the preceding discussion has revealed, the controversy had its focus on what are the elements in the concept expressed in the term "a tax upon goods". In other words, what relationship between the tax and the goods is necessary to constitute an excise? The reference in the Peterswald [55] definition to a duty imposed upon the goods "in relation to quantity or value" has not been regarded as an essential characteristic of an excise. So, in Matthews a levy imposed by reference to areas planted with chicory was held to be an excise, though it was impossible to establish a precise relation between the areas planted (and thus the levy) and the quantity or value of chicory produced. In that case Dixon J. observed [56] : [T]here is no ground for restricting the application of the word to duties calculated directly on the quantity or value of the goods. A definition which makes quantity and value the only basis of taxation which would satisfy the notion of "excise" has no foundation either in history, economic or fiscal principle, nor in any accepted specialization. Since then the majority decision in Hematite established that a lump sum pipeline operation fee (a licence fee) was an excise. As Brennan J. said [57] : In principle, it is sufficient to establish that a tax is a duty of excise if it is a tax, however calculated, upon a step in the process of production, manufacture or distribution. The fact that the tax is imposed upon such a step in the relevant process constitutes the necessary relation between the tax and the goods to give the tax the character of an excise. 1. (1904) 1 C.L.R. 497, at p. 509. 2. (1938) 60 C.L.R., at pp. 302-303. 3. (1983) 151 C.L.R., at p. 657. In the foregoing passage, Brennan J. was not denying that a range of factors must be taken into consideration when determining whether or not a particular impost amounts to an excise for the purposes of s. 90. That this is so was recognized and endorsed by Barwick C.J. in Anderson's [58] , and by us in Hematite [59] , and it is consistent with the test of substantial and practical operation. 1. (1964) 111 C.L.R., at p. 365. 2. (1983) 151 C.L.R., at pp. 629, 669. The concept of an excise, as we have just expressed it, does not require that it be an indirect tax, though a tax upon goods in the sense discussed will often, if not generally, be an indirect tax. An indirect tax is one that is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another: Matthews [60] ; Attorney-General (Manitoba) v. Attorney-General (Canada) [61] . It may well be that the early and mistaken emphasis on the notion that an excise is essentially an indirect tax partly contributed to the development of the idea that the relation between the tax and the goods was to be found in the imposition of the tax by reference to the quantity or value of the goods so that the amount of the tax could be seen to be passed on to the next purchaser down the line. 1. (1938) 60 C.L.R., at p. 300. 2. [1925] A.C. 561, at p. 566. Be that as it may, it was perceived to be necessary to define the conditions under which a tax described as a fee for a licence to engage in a business amounts to an excise; and that perception was the genesis of the criterion of liability with its emphasis on an arithmetical relationship between the tax and the goods sold under the licence: see Dennis Hotels [62] ; Gosford Meats [63] . Central to this thinking was the proposition that it was natural or appropriate to calculate a licence fee by reference to the size or worth of a business measured by the volume of its past purchases or sales: Gosford Meats [64] . But there is no fundamental dichotomy between the category of licence fees and the category of excise duties. A particular impost or exaction may be accurately described as being both a licence fee and a tax which amounts to an excise. Indeed, in the present case it is not disputed that the imposts are both licence fees and taxes; the dispute is whether they are taxes that amount to excise duties. And that question brings us back to the relationship between the tax and the goods necessary to characterize the tax as an excise duty. In answering that question the fact, if it be a fact, that it is natural or appropriate to levy a licence fee by reference to the size or worth of a business measured by the volume of past sales does not tell us very much. 1. (1960) 104 C.L.R., at pp. 563-567. 2. (1985) 155 C.L.R., at pp. 418-419. 3. (1985) 155 C.L.R., at p. 418. The test for distinguishing between a mere licence fee and a duty of excise has been expressed negatively in this way: a tax which has no closer connexion with the production or distribution of goods than that it is exacted for the privilege of engaging in the process of production, manufacture, distribution or sale is not a duty of excise: Dennis Hotels [65] ; and see M.G. Kailis [66] ; Hematite [67] ; Gosford Meats [68] . In a context where regard must be had to substance, the "no closer connection" test is not an absolute one. It postulates a question of degree, to be answered not by reference merely to the form of the statute imposing the tax but by reference to its operation. There are diverse factors which are relevant to the nature and extent of any connexion between a licence fee and a step in production, manufacture, distribution or sale of goods by the holder of the licence or franchise, as Barwick C.J. pointed out in Anderson's [69] . The amount of the licence fee is, of itself, one such factor. 1. (1960) 104 C.L.R., at pp. 560, 561. 2. (1974) 130 C.L.R., at p. 254. 3. (1983) 151 C.L.R., at p. 634. 4. (1985) 155 C.L.R., at p. 404. 5. (1964) 111 C.L.R., at pp. 365-366. As Dixon J. noted in Matthews [70] , it may be difficult to say when a licence fee or duty ceases to be a tax upon the person expected to bear the burden and becomes an element incorporated in the price of every article and becomes a tax upon goods. But in the general run of cases the imposition of a licence fee amounting to a tax, yielding a substantial amount of revenue, calculated by reference to past sales, will as a matter of commercial necessity be incorporated in the purchase price of goods produced or sold under renewed licences, the renewal of the licences being an incident and a sine qua non of the carrying on of the relevant business. In the end the reason why a tax upon any step in the production, manufacture, sale or distribution of goods is held to be a duty of excise is that such a tax has a general tendency to be passed on to persons down the line to the consumer and will prejudice the demand for the goods burdened by the imposition of the tax. "It is the nature and general tendency of the tax and not its incidence in particular or special cases which must determine its classification and validity", said Lord Cave, speaking for the Judicial Committee in City of Halifax v. Fairbanks' Estate [71] , a passage cited by Dixon J. with evident approval in Matthews [72] . 1. (1938) 60 C.L.R., at p. 301. 2. [1928] A.C. 117, at p. 126. 3. (1938) 60 C.L.R., at p. 300. It is against this background of principle and authority that we turn to Dennis Hotels and Dickenson's Arcade. In Dennis Hotels, where the victualler's licence fee was calculated by reference to sales in a past period, it was held not to be an excise. The minority, Dixon C.J., McTiernan and Windeyer JJ., considered that the fee was an excise despite the fact that the fee was so calculated. Of the majority, Fullagar J. alone was of the opinion [73] that the licence fee was not an excise because an excise was a tax upon production or manufacture, not upon sale or distribution. However, like the minority, he did not regard the imposition of the tax by reference to sales in a past period as compelling the conclusion that it was not an excise. This was because he did not consider that it was an essential element of an excise that it should be measured by reference to the quantity or value of the goods [74] . Kitto, Taylor and Menzies JJ. concluded that the fee was truly a fee for the franchise to carry on a business and not an excise because, among other reasons, it was not a tax on the licensee's sales during the currency of the licence. 1. (1960) 104 C.L.R., at pp. 554-556. 2. (1960) 104 C.L.R., at p. 556. Three of the four Justices who constituted the majority on the issue arising under s. 19(1)(a) (Fullagar, Kitto and Taylor JJ.) also concluded that the temporary licence fee under s. 19(1)(b) was not an excise for the reason which they had given in relation to the victualler's licence fee. The three Justices who formed the minority on the s. 19(1)(a) question (Dixon C.J., McTiernan and Windeyer JJ.) found that the s. 19(1)(b) fee was an excise. On that question Menzies J. joined them to form a majority. And he joined them because he regarded the temporary licence fee as imposing a tax upon every purchase of liquor for sale under the licence [75] . Consequently, his Honour alone appears to have treated the presence or absence of the formula according to which the licence fee was calculated by reference to sales made in a past period as the critical consideration. 1. (1960) 104 C.L.R., at p. 591. In this situation Dennis Hotels is not authority for the proposition that, as a matter of principle, the presence or absence of such a formula is of critical significance in determining whether a licence fee is or is not an excise. The case is authority only for the proposition that the presence or absence of the formula is a relevant consideration in determining such a question. Nonetheless, by reason of the approach of Menzies J. the presence or absence of the formula was critical to the actual decision in Dennis Hotels. So it was not surprising that when the decision was subsequently considered in Dickenson's Arcade, where Barwick C.J. and Mason J. disagreed with the reasoning of the majority on the s. 19(1)(a) question in Dennis Hotels, attention was focused on the presence of the calculation of the licence fee by reference to sales in a past period. In the meantime, Bolton had decided that a tax on a step in the sale or distribution of goods, as well as on a step in the production or manufacture of goods, was, or could amount to, an excise, thereby eliminating the ground on which Fullagar J. reached his conclusion in Dennis Hotels. So that ground was no longer a matter to be taken into account in Dickenson's Arcade. The approach taken in Dickenson's Arcade was again followed in H.C. Sleigh [76] . 1. (1977) 136 C.L.R. 475. Thus, the fact that Dennis Hotels stands as authority for a result, rather than for any strand of reasoning common to a majority of Justices, has on two occasions led to its being followed due to the close similarity between the facts of the respective cases. In this way the supposed principle has arisen that a fee for a licence to conduct a business calculated by reference to sales made by the business in a past period is not to be viewed as an excise. But, as we have sought to demonstrate, no such principle in truth exists. The reasoning underlying such a principle is inconsistent with the broad approach of the authorities in cases not involving licence fees, which insist on a range of criteria being taken into account. As we have said, there is no basis for claiming a rigid dichotomy between licence fees and excise duties. However, on the authority of Dennis Hotels, Dickenson's Arcade and H.C. Sleigh, the States have enacted laws imposing licence fees calculated upon trading in an antecedent period in businesses of liquor and tobacco retailing and sale of petroleum products. In Evda Nominees and again in argument in this case the Court decided not to reopen the three earlier cases. There are powerful considerations against overruling the actual decisions in those cases. Financial arrangements which are of great importance to the governments of the States and perhaps to the economy of the nation have been made for a long time past on the faith of these decisions. The power of this Court to overrule its previous decisions would not be properly exercised to disturb those arrangements unless, in the light of later insights into the true meaning of the Constitution, obedience to its terms or the interests of certainty in those arrangements clearly demanded that those decisions be reconsidered. That cannot presently be said of at least the first two of the trilogy of cases. Dennis Hotels [77] and Dickenson's Arcade can be rationalized by reference to traditional considerations relating to the licensing of dealings in alcohol and tobacco and to the particular characteristics of those items of personal consumption. 1. (1960) 104 C.L.R. 529. What is desirable is a clearer statement of the scope of the authority of Dennis Hotels and Dickenson's Arcade in so far as they upheld the validity of the franchise fees there in question. Speaking of Dennis Hotels, Barwick C.J. in Dickenson's Arcade [78] said: There being no reason for decision common to the majority of the Justices, the Court's decision in Dennis Hotels Pty. Ltd. v. Victoria, in my opinion, is authority only in relation to the statutory and factual situation it resolved and in relation to a case which has, if not precisely, at least substantially and indistinguishably the same statutory and factual situation. Cf. Lord Haldane in Great Western Railway Co. v. Owners of S.S. "Mostyn" [79] . I do not consider myself bound by any of the several reasons given by the individual Justices for the conclusion to which they came: and, in particular, I do not regard myself as bound to use any of those reasons as a base on which to construct some further or other conclusion. 1. (1974) 130 C.L.R., at p. 188. 2. [1928] A.C. 57, esp. at pp. 71-72. The basis upon which the decision in Dennis Hotels can be accepted is, we think, to be found in the circumstance that the impost took the form of a fee for a licence to sell liquor and that legislation providing for the issue of liquor licences has traditionally been of a regulatory character arising from the various public interest considerations relating to the sale and consumption of alcohol. The regulatory character of the legislation was a factor in the majority decision that the victualler's licence fee under s. 19(1)(a) was not an excise. Thus Taylor J. said [80] : Though a system of licensing may frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties, this is not the part played by the system of licensing erected by the Licensing Act for the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words the requirement that liquor shall not be sold or disposed of without a licence appears as a substantive provision and not merely as an adjunct to a revenue statute. Viewed in this way, Dennis Hotels [81] may be regarded as an example of a licensing fee which does not amount to an excise because the imposition of the licensing fee is an element in regulatory legislation controlling the sale and distribution of a particular commodity, which is designed to protect the public interest in the light of the characteristics of that commodity. 1. (1960) 104 C.L.R., at p. 576. 2. (1960) 104 C.L.R. 529. To say this is merely to add to the list of factors which must be taken into account when considering whether or not a given impost is an excise. Notwithstanding that it may well be seen as the decisive factor in Dennis Hotels, it is a factor which will rarely be present. Nevertheless its presence is the most satisfactory way of reconciling the result of Dennis Hotels with the general principles formulated in other decisions. The need for such reconciliation arises because of the disparity of reasoning in that case and the resulting absence of any compelling general principle which emerges from it. The Court has refused to retreat from its decision in Dennis Hotels because of the need to ensure certainty in the area of State business franchise fees relating to alcohol. Similar policy arguments dictate that the same view be taken of Dickenson's Arcade. It would be possible to achieve this result by confining the two decisions strictly to their facts and going no further, in accordance with the approach indicated by Barwick C.J. in Dickenson's Arcade. Attractive though that course may be to those who, like ourselves, disagree with the decisions in those cases to the extent that they held that the licence fees were not duties of excise, we have come to the conclusion that we should not follow it. It appears to us that the effect of that course would be merely to force the States to impose artificiality and inefficiency in business and taxing procedures in order to ensure that taxing laws in the special fields of alcohol and tobacco enjoyed the protection of those decisions. The preferable approach is to accept Dennis Hotels and Dickenson's Arcade as authority for the proposition that, in the special fields of licences to sell alcohol and tobacco, a licence fee which would otherwise be regarded as a duty of excise will not be so regarded if it can properly be characterized as a fee for carrying on business and if it is calculated by reference to sales made during a period other than the period of the licence. Liquor licensing has a unique history and it is not easy to imagine a range of commodities whose characteristics and history would lead to a similar outcome. However, in our opinion, a similar view may be taken of tobacco, though it lacks the long history of legislative regulation that has been a feature of the merchandising of liquor. Tobacco and tobacco products have like characteristics which invite regulatory control and that control is appropriate to sale and distribution of the commodities. In the case of neither is a tax imposed in relation to sale or distribution likely to be passed on as a significant component of the cost of different and dissimilar manufactured goods. It is on this footing that we would uphold the decision in Dickenson's Arcade. For the purpose of deciding the present case it is unnecessary to reconsider H.C. Sleigh [82] . Whether it stands conveniently with Dennis Hotels and Dickenson's Arcade is not a matter that we need to determine, though it may well be that petroleum products are not to be treated in the same way as alcohol and tobacco. 1. (1977) 136 C.L.R. 475. We should emphasize that in the foregoing discussion we have been dealing with circumstances in which what might appear to be a tax upon the sale or distribution of goods is seen to be no more than a licence fee standing outside the prohibition in s. 90. But that analysis has no application to a tax upon actual production or manufacture, just as the decision in Dennis Hotels is not applicable in those circumstances as we explained in Gosford Meats [83] ; Brennan J. [84] agreed with that view, but cf. Gibbs C.J. [85] , Wilson J. [86] and Dawson J. [87] . Neither the decision in Dennis Hotels nor the special considerations we have set out can prevent a tax upon production or manufacture from being characterized as an excise. 1. (1985) 155 C.L.R., at p. 385. 2. (1985) 155 C.L.R., at pp. 409-410. 3. (1985) 155 C.L.R., at pp. 379-380. 4. (1985) 155 C.L.R., at pp. 394-399. 5. (1985) 155 C.L.R., at p. 420. In the present case, subject to one matter that remains to be considered, the tobacco licence fees are within the special category of case falling within the criteria described above and protected by the decisions of this Court in Dennis Hotels and Dickenson's Arcade. The question that remains is whether the exaction of the licence fee from a wholesaler who happens to be a manufacturer of tobacco products amounts to an excise. A similar question arose in H.C. Sleigh where, as here, the licence fee was calculated by reference to the value of products sold by the applicant for a licence during a period prior to the commencement of the licence. The appellant was a distributor of petrol in South Australia which it obtained under a system of refinery exchange from a refinery in South Australia operated by other oil companies. It was suggested that the licensing fee was a tax on manufacture because the appellant included one or more additives in the petroleum products which it obtained from the refiners [88] . In response to this argument Mason J. pointed out [88] that the prohibition in the relevant legislation was against selling, not against manufacturing. The fee was, accordingly, a fee for a licence to sell and could not be regarded as a tax on manufacture or production. For this reason it was held not to be an excise. 1. (1977) 136 C.L.R., at p. 503. 2. (1977) 136 C.L.R., at p. 503. By parity of reasoning, the licence fee in the present case is an impost on sale, not on manufacture. Because it is an impost on sale, the impost is to be characterized as a licence fee rather than as a tax on manufacture and thus an excise. The case is therefore on all fours with Dickenson's Arcade [89] . The fact that the licence fee is payable by a wholesaler who happens to be a manufacturer is not a relevant point of distinction. 1. (1974) 130 C.L.R. 177. The questions in the stated case should be answered "No". Brennan J. The judgment of Mason C.J. and Deane J. describes the businesses of the plaintiffs and the relevant provisions of the Business Franchise (Tobacco) Act 1974 Vict. ("the Act") which impose the group wholesale licence fee which is borne by those businesses. It suffices to restate the chief features of the Act, omitting unimportant qualifications. The Act requires a person carrying on or proposing to carry on the business of tobacco wholesaling or tobacco retailing to obtain a licence to do so. Licences are in force from the date specified in the licence until the end of the same month and are obtainable as of right from the Commissioner provided the Commissioner is of the opinion that the required fee has been paid. The required fee consists in a small fixed sum and a variable sum calculated on the value of tobacco sold by the applicant for the licence during the month last but one preceding the month in which the licence would expire. The form of the Act may be attributed to three cases in which a tax imposed by a State law as a fee for a licence to carry on a business for a period and calculated in accordance with a formula applicable to transactions in an earlier period was held not to be a duty of excise and therefore not to be invalid by reason of s. 90 of the Constitution: Dennis Hotels Pty. Ltd. v. Victoria [90] ; Dickenson's Arcade Pty. Ltd. v. Tasmania [89] ; H.C. Sleigh Ltd. v. South Australia [91] ("the franchise cases"). The formulae for calculating the licence fees which were upheld in the franchise cases were similar. In each case, a rate of tax was applied to the value of a commodity in which prescribed transactions had taken place in a period prior to the period for which the licence was to be current. I shall call such a formula a Dennis Hotels formula. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1977) 136 C.L.R. 475. During argument the plaintiffs with support from the State of South Australia applied for leave to reargue these cases. The application was refused. The cogency of the considerations which led the Court to refuse a similar application for leave inEvda Nominees Pty. Ltd. v. Victoria [92] had been enhanced by that decision. As the judgment of Mason C.J. and Deane J. sets out, the States have placed increasing reliance on the franchise cases in organizing their financial affairs. Each State or Territory resorts to the tax base which these cases have preserved or provided to obtain a substantial but differing proportion of its tax revenue. It appeared inappropriate for this Court to permit argument to undermine the authority of earlier decisions and to cast doubt on the division of the tax base between Commonwealth and States effected by these cases, even though a new doctrine might emerge on reargument which would be logically better or more refined than the doctrine to be found in those cases. Better, it seemed, to adhere to existing principle and to resolve the instant case in the light of existing authority. For my part, the problem has proved to be more difficult than it then appeared. The licence fee in this case has many similarities to the fees which the franchise cases held to be valid, yet a consideration of the group wholesale licence fee in the light of established principle seems to show it to be a duty of excise. Which view should prevail? The tension between these cases and the existing principles is reflected in the divergent reasons for judgment in this case. Whether the time has come when a review of the cases decided under s. 90 should be undertaken, as the Court undertook a review of the cases under s. 92 in Cole v. Whitfield [1] , is a question which is not now to be answered. In the present state of the authorities, however, whenever an attempt is made to distinguish the franchise cases, the attempt will succeed or fail and the width of the States' tax base will contract or expand according to the position of the dividing line determined by a majority of Justices between existing principles and the scope of those cases as precedents. That hardly seems to be a satisfactory approach to a judicial declaration governing an important field of taxation which affects not only the liability of taxpayers but also the financial arrangements between the Commonwealth and the States. 1. (1984) 154 C.L.R. 311. 2. (1988) 165 C.L.R. 360. I should identify the propositions of principle relevant to this case which, I apprehend, have evolved in the decisions of this Court. Proposition 1: Tax on a step. It is unnecessary for present purposes to go back to cases prior to Matthews v. Chicory Marketing Board (Vict.) [2] . In that case, Dixon J. concluded [3] : To be an excise the tax must be levied "upon goods," but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise. In Parton v. Milk Board (Vict.) [4] , his Honour modified that statement to exclude a tax on consumers or upon consumption from the category of duties of excise. So modified, his Honour's proposition formed the basis of the test of a duty of excise formulated by Kitto J. in Dennis Hotels [5] which a unanimous Court adopted in Bolton v. Madsen [6] . Kitto J.'s formulation was as follows: a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. 1. (1938) 60 C.L.R. 263. 2. (1938) 60 C.L.R., at p. 304. 3. (1949) 80 C.L.R. 229, at p. 261. 4. (1960) 104 C.L.R., at p. 559. 5. (1963) 110 C.L.R. 264, at p. 273. This formulation has been divided into two propositions: one, that a tax on the taking of a step of the stated kind is a duty of excise; the second, that, to ascertain the character of a statutory impost, one looks exclusively to the statutory criterion of liability. The former proposition has commanded majority assent; the latter has not. As to the former proposition, Barwick C.J. in Anderson's Pty. Ltd. v. Victoria [7] , said that "it ought now to be taken as settled that the essence of a duty of excise is that it is a tax upon the taking of a step in a process of bringing goods into existence or to a consumable state, or of passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer". The test was similarly expressed by Kitto J. [1] . This test has been generally accepted by the Justices in later cases (Murphy J. excepted), but there have been conflicting opinions (presently to be examined) expressed as to the criterion of liability approach. In Logan Downs Pty. Ltd. v. Queensland [2] Gibbs J. noted that, since Dennis Hotels — conflicting opinions have been expressed as to whether the criterion of liability under the statute imposing the tax, or the practical effect of the legislation, is determinative of the question whether the tax is a duty of excise. The difference of opinion that exists as to the importance of the criterion of liability has not extended to the other statements made in Bolton v. Madsen. The description there given of the nature of an excise has since been regarded as authoritative. It would be superfluous to multiply authority on this point, since in Dickenson's Arcade Pty. Ltd. v. Tasmania the majority of the members of the Court have so recently treated Bolton v. Madsen as correctly explaining the nature of duties of excise: particularly [3] . 1. (1964) 111 C.L.R. 353, at p. 364. 2. (1964) 111 C.L.R., at p. 373. 3. (1977) 137 C.L.R. 59, at p. 64. 4. (1974) 130 C.L.R., at pp. 185, 209, 213, 223, 229-230, 235 and also at p. 238. The continued acceptance of the test of "tax on a step" and the continuing conflict of opinion as to the "criterion of liability" approach can be seen in the reasons for judgment (other than those of Murphy J.) in the latest decisions on this point: see Hematite Petroleum Pty. Ltd. v. Victoria [4] , and Gosford Meats Pty. Ltd. v. New South Wales [5] . If there be any rock in the sea of uncertain principle, it is that a tax on a step in the production or distribution of goods to the point of receipt by the consumer is a duty of excise. 1. (1983) 151 C.L.R. 599, at pp. 615, 629-630, 655, 665-666. 2. (1985) 155 C.L.R. 368, at pp. 377-378, 383-384, 400-401, 404, 414-416. Proposition 2: No closer connexion. Steps which are taken in the production or distribution of goods are ordinarily taken by those engaged in a business of producing or distributing. In Dennis Hotels [6] Kitto J. drew a distinction between a tax on a step in production or distribution and a fee for a licence to engage in a business in which such steps are taken: the impost is nevertheless a duty of excise if it operates as a tax upon the taking of a step in a process of producing or distributing goods. To say so much is to exclude a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all. If the tax takes the form of a fee for a licence to carry on a business for a period, it may be that the tax "has no closer connexion" in the sense in which Kitto J. distinguishes such a tax (which is not a duty of excise) from a tax on a step (which is). His Honour did not place licence fees in a category of immunity from s. 90. Holding that a licence fee might be a duty of excise, his Honour said [7] : The fact which makes a licence fee not a duty of excise is not that the exaction is for the licence; it is that the exaction is only in respect of the business generally, and not in respect of any particular act done in the course of the business. This is a fine distinction when the fee is calculated on the value of the commodity in which transactions in the business took place, and it is not surprising that judicial minds have differed about the side of the dividing line on which a case should fall. But the distinction is at the heart of the franchise cases (see, e.g., M.G. Kailis (1962) Pty. Ltd. v. Western Australia [8] , per Menzies J.) and it was accepted in terms by Gibbs J. in Dickenson's Arcade [9] , and in Gosford Meats [10] ; by McTiernan J. in Swift Australian Co. (Pty.) Ltd. v. Boyd Parkinson [11] ; by Mason J. in Hematite [12] ; by Wilson J. and by Dawson J. in Gosford Meats [13] ; and by me in Hematite [14] , and in Gosford Meats [15] . In the cases subsequent to Dennis Hotels, where principles (other than absence of any ground of distinction from the tax in an earlier case) have been applied to determine the character of a licence fee, the prevailing inquiry has been whether the fee is a "tax on a step" in production or distribution or has "no closer connexion" with production or distribution than that it is exacted for the privilege of engaging in the process. In Western Australia v. Chamberlain Industries Pty. Ltd. [16] , not a licence fee case, Owen J. identified the question in Western Australia v. Hamersley Iron Pty. Ltd. [No. 1] [17] in similar terms [18] : "whether there was a sufficiently close connexion between the duty imposed and a sale of the goods in the course of their passage from producer to consumer to justify the conclusion that the duty was a duty of excise." 1. (1960) 104 C.L.R., at p. 560. 2. (1960) 104 C.L.R., at p. 563. 3. (1974) 130 C.L.R. 245, at p. 254. 4. (1974) 130 C.L.R., at p. 225. 5. (1985) 155 C.L.R., at p. 378. 6. (1962) 108 C.L.R. 189, at p. 206. 7. (1983) 151 C.L.R., at pp. 633-634. 8. (1985) 155 C.L.R., at pp. 404, 414. 9. (1983) 151 C.L.R., at p. 656. 10. (1985) 155 C.L.R., at p. 407. 11. (1970) 121 C.L.R. 1. 12. (1969) 120 C.L.R. 42. 13. (1970) 121 C.L.R., at p. 30. Proposition 3: Substance, not criterion of liability alone. In Bolton v. Madsen [19] , the Court unanimously accepted the proposition that the character of a tax depended on the statutory criterion of liability. In Anderson's Pty. Ltd. v. Victoria [20] , Kitto J. explained that there is a tax upon goods when "some conduct is selected by the relevant legislation as being a step in the production, manufacture or distribution of goods and in that character is made of the essence of the tax". This view was shared by Taylor J. [21] and Windeyer J. [22] . And in Chamberlain Industries [23] , Kitto J. said that, to find the answer to the question whether a tax is "of a character referred to in a constitutional provision which denies to the State Parliaments the power to impose duties of that character" it is necessary to go to the taxing legislation and to that alone. As the Court said in Bolton v. Madsen [24] , "It is upon the legislation itself that attention must be focused". And there is no other way of determining from legislation the character of a tax that it imposes than by ascertaining what criterion of liability the legislation selects. To say this is not to substitute a formula for the words of the Constitution; it is simply to recognize the essential nature of the question that arises when a particular tax is said to possess a character to which the Constitution refers. In the same case [25] , Walsh J. said: When it has been said that the character of a duty depends upon the operation and effect rather than upon the form of the Act by which it is imposed I think that what has been meant is that an examination must be made of the provisions of the Act to determine its legal effect, according to the proper construction of its operative provisions, whatever their form may be and whatever label may be attached by the Act to the duty which is imposed by it. The duty so imposed cannot be characterized as being "in reality" a duty imposed upon the act or transaction of selling goods and as, therefore, being an excise, unless it can be seen upon an examination of the provisions of the Act that it is that act or transaction which has been made the condition of the liability of the vendor to pay it. 1. (1963) 110 C.L.R. 264. 2. (1964) 111 C.L.R., at pp. 373-374. 3. (1964) 111 C.L.R., at p. 376. 4. (1964) 111 C.L.R., at pp. 378-379. 5. (1970) 121 C.L.R., at p. 20. 6. (1963) 110 C.L.R., at p. 273. 7. (1963) 110 C.L.R., at pp. 37-38. In Dickenson's Arcade [26] Gibbs J. marshalled the authorities in favour of the criterion of liability approach. He said: The three members of the Court who were in a minority in [Western Australia v. Chamberlain Industries Pty. Ltd.] all accepted the view that the criterion of liability determines whether the tax is an excise (see per McTiernan J. [27] , per Kitto J. [23] and per Walsh J. [28] ) and one member of the majority, Menzies J. [29] , differed from the minority not on this ground but only because of the different view that he took of the effect of the statute in question. In my opinion the statement in Bolton v. Madsen [30] should be accepted as an authoritative expression of principle. In deciding whether a tax is a duty of excise the Court must identify the criterion of liability under the statute which imposes the tax. Of course, as Walsh J. pointed out in Western Australia v. Chamberlain Industries Pty. Ltd. [31] , it is necessary to examine the provisions of the taxing statute to determine their legal effect according to their proper construction, "whatever their form may be and whatever label may be attached by the Act to the duty which is imposed by it". 1. (1974) 130 C.L.R., at p. 223. 2. (1970) 121 C.L.R., at p. 18. 3. (1970) 121 C.L.R., at p. 20. 4. (1970) 121 C.L.R., at pp. 35-38. 5. (1970) 121 C.L.R., at p. 25. 6. (1963) 110 C.L.R., at p. 271. 7. (1970) 121 C.L.R., at p. 37. The majority acceptance of the criterion of liability approach was gradually eroded. The assault on the notion was launched by Barwick C.J. in Anderson's Pty. Ltd. v. Victoria [32] : in arriving at the conclusion that the tax is a tax upon the relevant step, consideration of many factors is necessary, factors which may not be present in every case and which may have different weight or emphasis in different cases. The "indirectness" of the tax, its immediate entry into the cost of the goods, the proximity of the transaction it taxes to the manufacture or production or movement of the goods into consumption, the form and content of the legislation imposing the tax — all these are included in the relevant considerations. But in the end what must be decided is that the tax is in substance a tax upon the relevant step. That being the central question in a controversy as to the nature of the tax, it will not, in my opinion, necessarily be resolved by the form of the tax or by identifying what according to that form the legislature has made the criterion of its imposition, however important in any particular case those matters may be. In Chamberlain Industries [33] , his Honour pursued the point, observing that "the criterion of the liability to pay the tax will not be found exclusively in the verbal formulae of the statute". In Dickenson's Arcade [34] , his Honour adhered to the views he had expressed and he was joined by Mason J. [35] who said: In the later cases Barwick C.J. has said that the criterion of liability to tax "will not be found exclusively in the verbal formulae of the statute" (Western Australia v. Chamberlain Industries Pty. Ltd. [33] . And it is apparent that neither Windeyer J. nor Owen J. considered the criterion of liability to tax as precluding an examination of the substance and effect of the tax thereby imposed. In these circumstances I am not bound to accept what was said in Bolton v. Madsen [36] as a precise definition of a broad expression used in the Constitution to denote taxes on goods. I find myself in agreement with the observations of the Chief Justice inWestern Australia v. Chamberlain Industries Pty. Ltd., to which I have already referred, and with his earlier observations in Anderson's Pty. Ltd. v. Victoria [37] . 1. (1964) 111 C.L.R., at p. 365. 1. (1964) 111 C.L.R., at pp. 365-366. 2. (1970) 121 C.L.R., at p. 15. 3. (1974) 130 C.L.R., at p. 186. 4. (1974) 130 C.L.R., at p. 241. 5. (1970) 121 C.L.R., at p. 15. 6. (1963) 110 C.L.R., at p. 271. 7. (1964) 111 C.L.R., at p. 365. The conflicting opinions expressed as to the criterion of liability approach were noted by Gibbs J. in Logan Downs [38] in a passage which I have already cited. 1. (1977) 137 C.L.R. 59. In Hematite [39] , Mason J. was able to assert that — The Bolton v. Madsen formula has not emerged unscathed from the more recent decisions on s. 90. It no longer commands the acceptance of the Court as a whole, or even of a majority, as a conclusive guide as to what is an excise. Although Gibbs C.J. [40] assented to and Wilson J. [41] did not dissent from the Bolton v. Madsen criterion of liability approach, Murphy J. (for reasons dissociated from the present point), Deane J. and I rejected the criterion of liability as an exclusive test. Deane J. said [42] : It also appears to me that at least four justices (Barwick C.J., Mason, Jacobs and Murphy JJ.) in Logan Downs Pty. Ltd. v. Queensland declined to accept that formula as constituting such a test. While the judgment in Bolton v. Madsen plainly provides important guidance in formulating the indicia of a duty of excise, it does not, in the light of these subsequent cases, compel acceptance of the proposition that, in the interests of desirable certainty in the law of the Constitution, the question whether a tax is a duty of excise is to be answered conformably with whether the legal effect of the impugned legislative provisions is such as to satisfy the formal requirements of some formularized criterion of liability. For myself, I decline, in the absence of compelling authority, to accept any such proposition. I expressed my preference for the broader approach [43] . 1. (1983) 151 C.L.R., at p. 629. 2. (1983) 151 C.L.R., at p. 621. 3. (1983) 151 C.L.R., at p. 646. 4. (1983) 151 C.L.R., at pp. 664-665. 5. (1983) 151 C.L.R., at p. 659. In Gosford Meats [44] , Mason and Deane JJ. reaffirmed their view that substance rather than form was to determine the character of a tax, saying [45] : The fact that the question whether an impost is a duty of excise is to be answered by reference to matters of substance rather than form underlies the refusal in subsequent cases in this Court to accept what was said in the joint judgment in Bolton v. Madsen as an exhaustive and definitive test of whether or not a tax is a duty of excise. Acceptance of the Bolton v. Madsen formula as such a test is inconsistent with the decision inWestern Australia v. Chamberlain Industries Pty. Ltd. (see the dissenting judgment of Walsh J. [46] and the judgment of Barwick C.J. [47] ) and with what was said in the judgments of at least four justices (Barwick C.J., Mason, Jacobs and Murphy JJ.) in Logan Downs Pty. Ltd. v. Queensland [48] . It is also inconsistent with what was said in the judgments of each of the four members of the Court (Mason, Murphy, Brennan and Deane JJ.) who constituted the majority in Hematite Petroleum Pty. Ltd. v. Victoria [49] . Recognition of the need for regard to be paid to substance rather than form must inevitably involve rejection of the notion that the question whether a tax is a duty of excise can be resolved by reference to whether the legal effect of the law imposing it satisfies the strict requirements of a formularized criterion of liability. If regard is truly to be had to substance rather than form, the question whether an impost is a duty of excise must be determined not by reference to some comprehensive formula of inclusion but as the result of "consideration of many factors , factors which may not be present in every case and which may have different weight or emphasis in different cases": see per Barwick C.J., Anderson's Pty. Ltd. v. Victoria [50] , and Hematite [51] . I expressed a similar view [52] : The statutory criterion of liability to pay a tax and the statutory description of a tax are both important indications of the character of the tax, but it cannot be said that one or other is always conclusive. Gibbs C.J. [53] and Dawson J. [54] adhered to the criterion of liability approach, but Wilson J. was prepared, for the purposes of argument, to approach the matter as a question of substance rather than formal expression [55] . Murphy J. [56] rejected Bolton v. Madsen [57] for reasons which do not affect the present discussion. The weight of opinion has come down, though by no means conclusively, in favour of substance and against criterion of liability alone. 1. (1985) 155 C.L.R. 368. 2. (1985) 155 C.L.R., at pp. 383-384. 3. (1970) 121 C.L.R., at p. 35ff. 4. (1970) 121 C.L.R., at p. 13ff. 5. (1977) 137 C.L.R. 59. 6. (1983) 151 C.L.R. 599. 7. (1964) 111 C.L.R., at p. 365. 8. (1983) 151 C.L.R., at pp. 633, 638, 658-659, 663-664. 9. (1985) 155 C.L.R., at p. 406. 10. (1985) 155 C.L.R., at p. 378. 11. (1985) 155 C.L.R., at pp. 415-416. 12. (1985) 155 C.L.R., at p. 400. 13. (1985) 155 C.L.R., at p. 286. 14. (1963) 110 C.L.R. 264. In Cole v. Whitfield [58] , one of the grounds advanced by the Court for rejecting the criterion of operation doctrine in reference to s. 92 was that the doctrine "looks to the legal operation of the law rather than to its practical operation or its economic consequences" [59] . This reasoning does not necessarily lead to the rejection of the criterion of liability approach under s. 90 (consider, e.g., the reasons advanced by Stephen J. in H.C. Sleigh [60] for distinguishing between licence fees calculated on past sales and fees calculated on current sales). In Gosford Meats, Wilson J. [61] and Dawson J. [62] considered that the kind of questions considered under s. 92 provided no assistance in determining the nature of a tax for the purposes of s. 90. Although it might be argued that the approach to s. 92 taken in Cole v. Whitfield should be applied to s. 90 and that the application of s. 90 will then be seen to depend on the substantive effect of the impugned tax on a step in production or distribution, it can be argued in reply that the logical validity of applying the approach adopted in Cole v. Whitfield depends on whether s. 90 is a provision which looks to the legal effect of the law or to its practical operation. In other words, it is circular to construe s. 90 by reference to the Cole v. Whitfield approach to s. 92, for the logical validity of translating to s. 90 that approach depends on the very question which the translation of that approach is intended to answer. Perhaps the Cole v. Whitfield approach takes the present inquiry no further than this: it is consistent with the proposition which presently prevails with respect to s. 90, namely, that in ascertaining the character of a tax, the Court will not be restricted to considering the statutory criterion of liability alone but will consider other factors in determining whether the tax is in substance a tax upon a step in production or distribution. 1. (1988) 165 C.L.R. 360. 2. (1988) 165 C.L.R., at p. 401. 3. (1977) 136 C.L.R., at p. 497. 4. (1985) 155 C.L.R., at pp. 401-402. 5. (1985) 155 C.L.R., at p. 418. Proposition 4: Fee calculated on a Dennis Hotels formula may yet have "closer connexion". In Dennis Hotels [63] , the licensed victualler's fee under s. 19(1)(a) of the Licensing Act 1958 Vict. was calculated on the purchase price of liquor purchased for the premises during a 12- month period ending on 30 June preceding the date of application for grant or renewal of the licence. In Dickenson's Arcade [64] , the ordinary retail tobacconist's fee under Pt III of the Tobacco Act 1972 Tas. was calculated on the value of the tobacco handled in the course of the business conducted on the premises in respect of which the licence was granted during an average month in a 12- month period ending six months before the commencement of the licence period. In H.C. Sleigh [65] the variable component of the fee for a class 5 petroleum seller's licence under the Business Franchise (Petroleum) Act 1974 S.A. was calculated on the value of the quantity of petroleum products sold by the applicant for the licence during the year ending 30 June preceding the commencement of the licence period reduced by, inter alia, the quantity of any petroleum product sold by the licensee to another licensee during that period for resale by the latter licensee. Each of these fees was held not to be a duty of excise. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1977) 136 C.L.R. 475. In Dennis Hotels, the reasons of the majority for holding the s. 19(1)(a) fee not to be a duty of excise were diverse. Among the majority Kitto, Taylor and Menzies JJ. each found the calculation of the fee on the value of liquor purchased for sale in a previous period to be relevant to the character of the fee as not a duty of excise. When the character of the temporary licence fee under s. 19(1)(b) was considered, Menzies J. alone [66] found that the calculation of the fee on the value of liquor purchased for sale under the current licence was critical to its having the character of a duty of excise. Kitto J. held that both the s. 19(1)(a) and the s. 19(1)(b) licence fees were not taxes on the liquor purchased but were exacted merely as fees for the licences. Taylor J. relied substantially on the regulatory nature of the licensing regime prescribed by the Licensing Act. He said [67] : Examination of the character and incidence of the legislation leads me to conclude that the fee payable for a victualler's licence is not a duty of excise. Though a system of licensing may frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties, this is not the part played by the system of licensing erected by the Licensing Act for the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words the requirement that liquor shall not be sold or disposed of without a licence appears as a substantive provision and not merely as an adjunct to a revenue statute. See also per Fullagar J. [68] . Taylor J. saw the amount of the fee as a business overhead rather than a levy on the units of liquor purchased. He said [67] : The substance of the matter is that the fee payable for his licence represents but one item of expenditure in the conduct of a licensed victualler's business and, although it may, as such a factor, affect the prices at which he sells his stock — and, no doubt, the prices charged for other services provided by him in the course of his business — it is not a tax either upon his sales or upon the subject matter of his sales. Neither Kitto J. nor Taylor J. drew the distinction on which Menzies J. based his judgment between taxes based on a previous period's transactions and taxes based on transactions in the current licence period. Windeyer J. expressly rejected that view [69] . Dixon C.J. [70] and perhaps Windeyer J. appear to have taken the previous period basis of calculation into account but to have found that factor not to be critical to the character of the fee [71] . The previous period basis of calculation was immaterial to the reasoning of McTiernan J. (in the minority on the s. 19(1)(a) fee) and of Fullagar J. (in the majority). So far as Dennis Hotels stands as authority for a proposition with respect to such a basis of calculation, the proposition is that a calculation of a licence fee on the value of liquor purchased for sale during a previous period is a relevant but not the conclusive factor in determining the character of the fee. Once it is accepted that the character of a licence fee depends on whether it is a "tax on a step" or is a tax which has "no closer connexion", it is clear that the choice requires the evaluation of all indicia relevant to the assessment of the closeness of the connexion between the tax and a step in the production or distribution of the commodity. As judgments in more recent cases have perceived, Dennis Hotels never was an authority for the proposition that a licence fee calculated under a Dennis Hotels formula cannot be a duty of excise. 1. (1960) 104 C.L.R., at p. 591. 2. (1960) 104 C.L.R., at p. 576. 3. (1960) 104 C.L.R., at p. 550. 4. (1960) 104 C.L.R., at p. 576. 5. (1960) 104 C.L.R., at p. 595. 6. (1960) 104 C.L.R., at pp. 538-539. 7. (1960) 104 C.L.R., pp. 542-543, 596-597. In Dickenson's Arcade [72] , Menzies J. found the difference between validity and invalidity to depend on the distinction between a fee based on sales during a previous period and a fee based on sales during a current licence period and Gibbs J. [73] thought that Dennis Hotels is "authority for the proposition that legislation which provides for the grant of a licence to sell goods, on payment of a licence fee, the quantum of which is based on the value of the goods purchased for the premises in a previous year, does not impose a tax directly related to the goods". The reasoning of Stephen J. [74] indicated an acceptance of the same view. A contrary view of the proposition accepted in Dennis Hotels was taken by the other members of the Court. Barwick C.J. [75] said: There being no reason for decision common to the majority of the Justices, the Court's decision inDennis Hotels Pty. Ltd. v. Victoria, in my opinion, is authority only in relation to the statutory and factual situation it resolved and in relation to a case which has, if not precisely, at least substantially and indistinguishably the same statutory and factual situation. I do not consider myself bound by any of the several reasons given by the individual Justices for the conclusion to which they came: and, in particular, I do not regard myself as bound to use any of those reasons as a base on which to construct some further or other conclusion. His Honour preferred the views expressed by Dixon C.J., McTiernan and Windeyer JJ. (the minority on the s. 19(1)(a) fee) in Dennis Hotels. Mason J. said [76] : Although I doubt whether I should have been inclined, even in the context of the Licensing Act 1958 Vict. to draw a distinction between licence fees prescribed by reference to the quantity of goods sold under the licence and those prescribed by reference to goods sold in an antecedent period, this circumstance does not warrant my declining to follow the authority of Dennis Hotels in its application to licence fees of a like kind. Both Barwick C.J. and Mason J., holding the retail licence fee in Dickenson's Arcade to be indistinguishable in any relevant respect from the fee upheld in Dennis Hotels, accepted the authority of the actual decision in Dennis Hotels and upheld the validity of the fee in Dickenson's Arcade. McTiernan J. (in dissent) did not regard Dennis Hotels as governing authority and concluded [77] that "the method of calculation of the licence fee in the present Act does not prevent it from being a duty of excise". 1. (1974) 130 C.L.R., at pp. 211-212. 2. (1974) 130 C.L.R., at p. 226. 3. (1974) 130 C.L.R., at p. 236. 4. (1974) 130 C.L.R., at p. 188. 5. (1974) 130 C.L.R., at p. 240. 6. (1974) 130 C.L.R., at p. 206. In Dickenson's Arcade, the retail licence fee was not distinguished from the s. 19(1)(a) fee upheld in Dennis Hotels. Although three Justices in the majority reached this conclusion by regarding Dennis Hotels as authority for the proposition that the presence of a Dennis Hotels formula is conclusive of the validity of a licence fee, that proposition is not the ratio of Dickenson's Arcade. The ratio of Dickenson's Arcade is simply that the fees in the two cases were not materially distinguishable. The judgments in M.G. Kailis [78] were published on the same day as the judgments in Dickenson's Arcade and the reasons expressed by the respective Justices with respect to the proposition here considered were, as one would expect, in accord with those expressed by them in Dickenson's Arcade. Mason J. added this observation [79] : To hold that Dennis Hotels is decisive of the present case would, I think, give the constitutional prohibition contained in s. 90 a formal operation, having little substantial importance. It would enable the States to impose a tax on the manufacture or production of any goods by the simple expedient of a compulsory licensing scheme under which production and manufacture are taxed by prescribing licence fees to be assessed, not by reference to the quantity of goods produced under the licence, but by reference to the raw materials used in the process of production in a period ending before the licence commenced to operate. Such a result would be quite inconsistent with the view that the object of s. 90 was to repose in the Commonwealth Parliament "a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action", as Dixon J. expressed it in Parton v. Milk Board (Vict.) [80] , or, as McTiernan J. expressed it in the same case [81] , to secure "a uniform fiscal policy for the Commonwealth". It would concede to the Commonwealth an exclusive power to grant bounties on the production of goods, yet enable the States to hamper that production by taxing it indirectly. 1. (1949) 80 C.L.R., at p. 260. 2. (1949) 80 C.L.R., at p. 265. In M.G. Kailis, a majority held the fee to be a duty of excise but for diverse reasons. The case did not affect the relative weight of opinion expressed in Dickenson's Arcade [82] with respect to the proposition now under consideration. 1. (1974) 130 C.L.R. 245. 2. (1974) 130 C.L.R., at p. 265. 3. (1949) 80 C.L.R., at p. 260. 4. (1949) 80 C.L.R., at p. 265. 5. (1974) 130 C.L.R. 177. In H.C. Sleigh [83] , Gibbs and Stephen JJ. adhered to the view which they had previously taken of the ratio in Dennis Hotels [84] . For his part, Barwick C.J. [85] did not accept the reasoning in Dennis Hotels but was unable to find in H.C. Sleigh [85] "any substantially distinguishing feature" which made Dickenson's Arcade inapplicable. Mason J. said [86] : Since Dennis Hotels it has been accepted that liquor licensing fees calculated by reference to past sales are not an excise and the States have continued to rely on liquor licensing fees as an important source of revenue. Likewise, since Dickenson's Arcade States have relied on tobacco licensing fees, similarly calculated, as an additional source of government revenue. His Honour pointed out [87] that, in his view, the feature in M.G. Kailis which distinguished the fee in that case from the fees in Dennis Hotels and Dickenson's Arcade was that the fee was payable in respect of manufacture and production, not in respect of sales. The observation by Mason J. in H.C. Sleigh as to the accepted effect of Dennis Hotels is expressed as applying only to liquor licensing fees. His Honour's judgment (jointly with Deane J.) in Gosford Meats [88] shows that, if the proposition which his Honour applied to liquor licensing fees were applied more generally, it would conflict with the rejection of the criterion of liability approach. Murphy J. in H.C. Sleigh said that, in his Honour's opinion, it "makes no difference whether the calculation of the licence fee is based upon transactions of a past financial year or on those of the current year" [89] . Jacobs J., in dissent, also rejected that proposition. He observed [90] : What has happened is that decisions that a licence fee is not necessarily a duty of excise where the amount of the fee is calculated on the basis of dealings in a commodity for a preceding period has been taken by the legislature to be a decision that a licence fee cannot be a duty of excise provided that the fee is so calculated. This has been treated as a so-called "logical" consequence and the State has chosen to pass legislation accordingly. So-called "logical" extensions of a past decision are seldom a sufficient ground for forecasting a future decision, because a regard only to the so-called logic fails to take account of the further factors which make the later case not merely an application but an extension of the earlier decision. His Honour was prepared to distinguish Dennis Hotels and Dickenson's Arcade by reason of particular factors present in those cases but absent in H.C. Sleigh. 1. (1977) 136 C.L.R. 475. 2. (1960) 104 C.L.R. 529. 3. (1977) 136 C.L.R., at p. 488. 4. (1977) 136 C.L.R., at p. 488. 5. (1977) 136 C.L.R., at p. 501. 6. (1977) 136 C.L.R., at p. 500. 7. (1985) 155 C.L.R. 368. 8. (1977) 136 C.L.R., at p. 527. 9. (1977) 136 C.L.R., at p. 525. If Dennis Hotels is to stand as an authority for the proposition that liquor licensing fees calculated on a Dennis Hotels formula are not duties of excise, and if that proposition is to be reconciled with the test of "no closer connexion", the factor which permits the reconciliation is the regulatory nature of the scheme for licensing liquor sellers and the premises from which liquor is sold. That was the chief ground on which Taylor J. rested his judgment in Dennis Hotels and the ground on which Jacobs J. was prepared to distinguish Dennis Hotels in H.C. Sleigh [91] . 1. (1977) 136 C.L.R., at p. 526. Evda Nominees [92] confirmed the authority of Dennis Hotels, Dickenson's Arcade and H.C. Sleigh without expressing a view about the significance of calculating a licence fee on transactions in a previous period. 1. (1984) 154 C.L.R. 311. In Gosford Meats [1] , the Justices in dissent (Gibbs C.J., Wilson and Dawson JJ.) each accepted the validity of a licence fee calculated on a Dennis Hotels formula. Murphy J. concluded that the abattoir licence fee was invalid for reasons which do not bear on that proposition. Mason and Deane JJ. said [2] : a general proposition that a tax cannot be a duty of excise if it takes the form of a licence fee that is quantified by reference to goods produced, manufactured or sold during some period prior to the actual period of the licence is simply inconsistent with the well established and fundamental principle to which reference has already been made, namely, that the question whether a tax is a duty of excise must be determined by reference to substance rather than form. Although Dennis Hotels has been allowed to stand as an authoritative decision on its own facts, it would fly in the face of both principle and authority to accept it as establishing a general proposition that can be applied to a tax made payable, in the form of a licence fee, by a manufacturer or producer of goods. After a review of the authorities, I stated my conclusion [3] : I am unable to regard Dennis Hotels as an authority for the proposition that a fee for a licence to carry on a process of producing goods calculated on steps in production during a preceding period is not a duty of excise. I was thus able to adhere to the view I had earlier stated [4] : The circumstance that the tax is, and is described as, a fee for a licence to operate an abattoir during the licence period does not deny the tax the character of a duty of excise on the goods produced from the animals slaughtered in the preceding relevant period, and I would so hold unless a contrary view is compelled by authority. (As to this approach, see Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [5] ; Dennis Hotels [6] ; and H.C. Sleigh [7] .) 1. (1985) 155 C.L.R., at pp. 378, 402-403, 418, 420. 2. (1985) 155 C.L.R., at p. 385. 3. (1985) 155 C.L.R., at p. 409. 4. (1985) 155 C.L.R., at p. 407. 5. (1937) 56 C.L.R. 390, at pp. 399-400, 412. 6. (1960) 104 C.L.R., at pp. 542-543. 7. (1977) 136 C.L.R., at p. 525. The tax in Gosford Meats [1] was imposed on production — the heartland of duties of excise — not on a step in distribution. That is a point of distinction between Gosford Meats and the franchise cases but that distinction is material only because a fee for a licence to engage in a business of distribution may be seen more easily than a fee for a licence to engage in a business of production to have "no closer connexion" with the steps taken in the business. Perhaps that is because the existence of goods as integers of commerce depends on the business of the producer who makes them but their distribution does not depend on the business of any particular distributor. It is more difficult for a fee for a licence to engage in a business of production to avoid the character of a tax on production. Nevertheless, the decision in Gosford Meats is inconsistent with the notion that Dennis Hotels [2] , Dickenson's Arcade [3] or H.C. Sleigh [4] are authorities for a general proposition that licence fees calculated on a Dennis Hotels formula cannot be duties of excise. In the light of the existing cases, the proposition to which effect has most recently been given is that, in determining whether a licence fee has any closer connexion with the production or distribution of goods than that it is a fee for the privilege of engaging in the process, the calculation of that fee on a Dennis Hotels formula is a relevant but not conclusive factor for consideration. And that, of course, is consistent with the judgments in Dennis Hotels itself, except the judgment of Menzies J. 1. (1985) 155 C.L.R. 368. 2. (1960) 104 C.L.R. 529. 3. (1974) 130 C.L.R. 177. 4. (1977) 136 C.L.R. 475. If this proposition be accepted, the relevance of a Dennis Hotels formula must be considered in the particular circumstances of each case. As the majority in Dennis Hotels perceived the relevance of the formula, the tax, being calculated by reference to a prior period, appears not to be levied on goods in which transactions occur in the current period. But the weight of that consideration may be diminished or removed in two situations. The first, when the proximity of the two periods is such that the transactions of the prior period are referred to merely to provide a reliable forecast of the transactions that will occur during the currency of the licence, discrepancies between the forecast and actual transactions being eliminated in successive calculations. And second, when, in a particular context, the licence fee is in substance a tax upon steps taken in the earlier period, the payment of which is a condition of the grant of a licence for the later period. Another relevant aspect of the formula is this: as the tax is calculated on the value of goods in which transactions have occurred or are forecast to occur, the formula tends to give the tax the character of a duty of excise for the reason given by Stephen J. in Dickenson's Arcade [5] : Perhaps the clearest way in which a tax may be seen to fall upon the taking of such a step in the process of distribution is when it is calculated by reference to the quantity or value of purchases or sales of goods by the taxpayer. This method of calculation is not an essential feature of a duty of excise but its adoption provides a significant indication that the tax is an excise because it tends to demonstrate that what is being taxed is the step of dealing in particular goods. The very act of measuring the amount of tax by reference to the number, weight, volume or value of the goods dealt in will usually be explicable only as disclosing that what is being taxed is the taxpayer's dealing with those goods. Only exceptionally, in an appropriate context, will it perhaps indicate no more than that the value of a franchise, monopoly or business is being measured, the tax being a fee on grant of that franchise or monopoly or a tax on that business rather than an excise. The significance of a Dennis Hotels formula in the determination of the character of a licence fee calculated by using such a formula varies from case to case. Its significance must vary according to the statutory context in which the formula appears and the actual operation of the statute. 1. (1974) 130 C.L.R., at p. 235. Are liquor and tobacco in a special category? Before turning to examine the scope of the authority of the franchise cases in the light of the principles which have emerged from the course of decisions in this Court, I would refer to a point raised in the judgment of Mason C.J. and Deane J. in this case. The point is whether licence fees for dealing in liquor or tobacco are to be sequestered from the operation of general principles by which the character of fees for licences to deal in other commodities is ascertained. There are, in my opinion, three reasons why a negative answer must be given to that question. First, the Constitution makes no distinction among commodities for excise purposes. Second, if the nature of the commodity were relevant to the character of a tax related to dealings in it, liquor and tobacco are historically the prime excisable commodities. Third, if liquor and tobacco had been thought to be commodities to which special principles applied, the decisions in Dennis Hotels and Dickenson's Arcade would have been distinguished on that ground in H.C. Sleigh. Thus, respectfully, I am in agreement with Stephen J. in H.C. Sleigh [6] on this point and in disagreement with the contrary view expressed by Mason C.J. and Deane J. I would hold that liquor or tobacco are in no special category which denies to a tax on any step in their production or distribution the character of a duty of excise. However, the nature of these commodities is such that licensing schemes which affect them may be truly regulatory (as Taylor J. held in Dennis Hotels) and that feature of a licensing scheme is relevant to the character of a fee exacted for a licence. 1. (1977) 136 C.L.R., at p. 496. Reconciling principle with precedent. In the light of this laboured analysis of the cases, I come to the conclusion that, with the possible exception of Dennis Hotels, the franchise cases cannot be satisfactorily reconciled with the existing principles by which the character of a fee for a licence to produce or distribute a commodity is to be determined unless the franchise cases are confined to their particular circumstances. Once it is accepted that a licence fee calculated by reference to the value of a commodity in which transactions took place in a previous period may be a duty of excise and that the character of the fee is to be determined by reference to its actual effect (if any) on a step in production or distribution and not merely by reference to the statutory criterion of liability, the franchise cases cannot stand as a source of inconsistent principle. The tension between general principle and the applicability of cases as precedents when they cannot be satisfactorily reconciled with general principle must be resolved by restricting the applicability of the cases to circumstances which are substantially the same. This imposes a strict limitation on the applicability of each of the franchise cases as a precedent by which to decide future cases. I would state the measure of applicability of each of the franchise cases in the same terms as those which Barwick C.J. used in H.C. Sleigh [7] describing the applicability of Dennis Hotels : The Court has now decided to maintain the decision of Dennis Hotels Pty. Ltd. v. Victoria, for what, upon its facts and relevant legislation, it decides. Consequently, legislation operating in indistinguishable terms will be supported as not imposing a duty of excise. This course does not commit the Court to accept the reasoning in that case. The result, as I think, tends to put a premium on drafting ingenuity and is a disregard of substance. Further, the practical distinction between a licence fee rated on the sale of a former period and such a fee rated on the sales of the licensed period, vis-à-vis the effect of the imposition of the fee upon the movement of goods into consumption, is difficult to see, particularly in the case of a continuing business operating over a period of years. That is not to say that Dennis Hotels itself is devoid of authority in relation to principle. It contains and illustrates the distinction which Kitto J. drew [8] between a tax on a step in production or distribution (which is an excise) and a tax which has "no closer connexion" with production or distribution than that it is exacted for the privilege of engaging in the process at all (which is not an excise). 1. (1977) 136 C.L.R., at p. 488. 2. (1960) 104 C.L.R., at pp. 560-561. Regarding Dennis Hotels in this way, Dickenson's Arcade and H.C. Sleigh must be seen simply as particular instances of taxes which had "no closer connexion". These cases must be seen as instances where the Court was not satisfied that the circumstances showed the licence fee to be a tax on a step in distributing a commodity taken in the business to which the licence related. A difference between the tax upheld in any of the franchise cases and the tax in another case, even a minor difference, may be critical when the test of "no closer connexion" is applied. When minor differences may be significant enough to distinguish the franchise cases, the applicability of those cases as governing precedents in later cases is narrowly confined. In the present case, there are several substantial features which lead me to distinguish the taxes imposed on the plaintiffs from the taxes considered in the franchise cases. The first is the nature of the licensing scheme. It does not purport to be regulatory. It is simply a scheme for the levying and recovery of a tax. Section 7(3) of the Act provides: The Commissioner shall issue a licence to an applicant where a fee has been paid which is, in the opinion of the Commissioner at the time at which the licence is issued, the fee required to be paid under this Act. There is no discretion to refuse a licence or to impose conditions on grounds related to the manner or place of conducting a licensed business. The liquor licensing scheme in Dennis Hotels, as Taylor J. pointed out, was more than a mechanism for raising revenue. The second distinguishing feature is the variable incidence of the tax on sellers in the chain of distribution. The licence fee for a wholesale or group wholesale licence under s. 10 of the Act is an amount of $50 plus a percentage of the value of tobacco sold in a relevant period in intrastate trade other than tobacco sold to other licensed wholesalers. If a retailer purchases his supplies from a licensed wholesaler, the retailer is exempt from a fee calculated as a like percentage of the value of tobacco sold by him in the relevant period. Both wholesalers' and retailers' fees are calculated on the value of tobacco sold in the relevant period other than tobacco sold to other licensed wholesalers (in the case of wholesalers) or purchased from licensed wholesalers (in the case of retailers). From the rate fixed in 1979 at 12 per cent of the value of tobacco sold in a relevant period, the tax has risen through 25 per cent (in 1983) to 30 per cent in relation to licences for periods commencing on or after 1 February 1988. The effect of the Act is that an ad valorem tax, now at the rate of 30 per cent of the value of tobacco, is exacted in the course of its passage in intrastate trade from manufacturer to consumer. It is a matter of indifference to the revenue whether the tax is paid as a fee for a licence to carry on one business or another provided it is paid in respect of one of the businesses which pass the tobacco along the intrastate chain of distribution. The purpose of separating the value of tobacco sold to or bought from wholesale licensees from the value of tobacco sold to or bought from others in calculating a licence fee for a business is not difficult to perceive, especially when sales might be made to or purchases made from both wholesale licensees and others. The purpose and effect of the Act is to impose a once-only tax on the tobacco in its movement along the intrastate chain of distribution from manufacturer to consumer and to collect that tax from the wholesaler. A fee for a licence to carry on a business in a chain of distribution when the fee is in substance a means of collecting a once-only tax appears to me to have a much closer connexion with a step in the distribution of a commodity than that it is exacted for the privilege of engaging in the business. Although Dennis Hotels and Dickenson's Arcade must be distinguished on this ground, it appears that the licence fee in H.C. Sleigh was a once-only tax. However, that feature did not attract attention in the majority judgments in that case. The third ground of distinction in the present case is the rate of the tax. It is one thing to treat a tax calculated at a modest rate on the value of commodities in which transactions took place in a previous period as a fee for a licence to continue to carry on the business in which those transactions took place; it is another thing to treat in that way a tax calculated as a large percentage of the value of the commodities in which such transactions took place. In the former case, a modest licence fee calculated by reference to past transactions may be merely a business overhead in carrying on a current business, as Taylor J. noted in Dennis Hotels [9] . In the latter case, a fee which must be paid as the price of continuing to carry on a business and which is calculated at a substantial rate on the value of a commodity in which transactions have taken place in the business is likely to enter immediately and precisely into the price charged for the commodity to the next buyer in the chain of distribution and wears the aspect of a tax on transactions in the commodity rather than a licence fee to carry on a business. It appears more clearly as a tax "upon goods". The higher the tax rate which a Dennis Hotels formula applies to the value of commodities, the greater the connexion between the tax and transactions which attract it. In my opinion, the ad valorem licence fee imposed by s. 10 of the Act is in substance a tax on tobacco sold in intrastate trade in Victoria. 1. (1960) 104 C.L.R., at p. 576. The features to which reference has been made show the tax in the present case is not substantially and indistinguishably the same as the tax upheld in any of the three franchise cases. In Dennis Hotels, the licensing scheme was truly regulatory, the tax was exacted in respect of only one class of business, and the modest rate of the tax (6 per cent) allowed the fee to be seen as merely a fee for a licence to carry on a retail licensed victualler's business. In Dickenson's Arcade, the licensing scheme was not truly regulatory but the tax was exacted in respect of only one class of business, and the modest rate of the tax allowed the fee to be seen as merely a fee for a licence. There was no occasion for a provision of the kind to be found in s. 10 of the Act to adjust the incidence of the tax between traders carrying on different businesses in the course of distribution of tobacco in order to ensure that the tax is imposed once only upon the goods. The ad valorem element of the tax was no more than 2½ per cent of the value of the tobacco sold in the relevant period and the licence authorized the carrying on of the business for twelve months. In H.C. Sleigh [10] , the licensing scheme may not have been truly regulatory, but the rate of tax was significantly lower than either 25 per cent or 30 per cent. Moreover, the licence period was significantly longer. The prescribed percentage of the value of the petroleum sold was fixed at first at 10 per cent and thereafter as prescribed. And the twelve-month period for the currency of the licence in H.C. Sleigh is, in comparison with the one-month licence period in the present case, a weightier indicium of the character of the licence fee as a business fee rather than a transaction tax. The means of collecting the tax in H.C. Sleigh was different from the means of collection in the present case, but I do not think the difference is material. There, a fee representing a proportion of the value of the petroleum sold in a previous period was exacted from the last licensed seller — ordinarily the retailer — but sales by licensees to other licensees earlier in the chain of distribution were exempt. In my opinion, the difference in the means of collecting the once-only tax makes no difference to the character of the tax. 1. (1977) 136 C.L.R. 475. In this case, the proximity of the relevant period to the licence period, the shortness of the licence period, the imposition of an ad valorem tax calculated at rates reaching 30 per cent on the value of tobacco sold which is to be borne only once in the course of distribution and the revenue raising and non-regulatory purpose of the scheme all tend to show that the tax is not merely a fee for a licence to carry on a business of selling tobacco but is in substance a tax upon the tobacco sold in the relevant period or to be sold in the licence period. It matters not whether one treats the tax as a tax on the tobacco sold in the relevant period or on the tobacco to be sold in the licence period. I would regard it as a tax on the tobacco sold in the relevant period, but that period is so proximate to the licence period that the value of the tobacco sold in the relevant period can fairly be viewed as a reliable forecast of the value of the tobacco to be sold in the licence period. The taxes considered in Dennis Hotels [11] , Dickenson's Arcade [12] and H.C. Sleigh are distinguishable. As those cases, narrowly confined, do not compel the conclusion that the tax imposed in the present case has no closer connexion with the tobacco sold in intrastate trade than that it is a fee for the privilege of continuing to engage in a business of selling tobacco, I would hold the licence fees, other than the fixed amounts prescribed by s. 10, to be duties of excise. A similar conclusion may have been reached in Evda Nominees [13] had it been argued that the tax impugned in that case was distinguishable from the tax upheld in Dickenson's Arcade, but it was conceded that the taxes were indistinguishable. Here, grounds of distinction have appeared and I therefore reach a conclusion different from the conclusion in Dickenson's Arcade. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1984) 154 C.L.R. 311. It is immaterial that the licence is a group wholesale licence and that one of the licensees did not carry on a business in which sales were made in the relevant periods. The circumstance that the members of a group must apply for a group licence (s. 7(1)(c)) does not mean that a tax which is a duty of excise because it is a tax on sales made by some members of the group ceases to be a duty of excise because other members of the group are liable to pay it. The questions posed in the case stated may now be answered, albeit not precisely in the form in which they appear. They must be answered in terms which distinguish between the fixed fee component of the fee for a group wholesale licence (which is not a duty of excise) and the variable, ad valorem, component of the fee (which is a duty of excise). I would answer the questions as follows: 1. The fees referred to in the statement of claim other than the fixed amounts prescribed by s. 10 of the Business Franchise (Tobacco) Act 1974 Vict. were exacted from the plaintiffs contrary to s. 90 of the Constitution. 2. Those parts of the several paragraphs of s. 10(1) of the Business Franchise (Tobacco) Act which commence with the words "together with" are invalid as being contrary to s. 90 of the Constitution. 3. Sections 7 and 10 are not invalid in so far as they apply to a person in the position of any of the plaintiffs except as stated in the answer to question 2. Dawson J. Section 90 of the Constitution provides: On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive. It has been pointed out repeatedly in the cases that, standing on its own, the phrase "duties of excise" has no definite meaning. It can be, and has been, used to describe all or any of a miscellany of taxes which exhibit no common feature save that they are taxes. As a matter of history, whether a tax was an excise duty was not a question of substance but was a question of the manner in which it was collected: whether the tax was collected through the Excise Office or not. However, the phrase "duties of excise" was used in s. 90 upon the clear assumption that it is capable of being given a precise meaning. It has never been questioned that in speaking of duties of excise, s. 90 is referring to a limited category of taxes. It is therefore essential to the construction of the section that those limits be identified. It is only then that it can be determined whether a particular tax imposed by a State falls within or without the area of taxation from which it is excluded by the section. If the expression "duties of excise" of itself offers no assistance, then guidance is to be sought from its context and the circumstances in which it came to be used. A recent example of the way in which the historical background of a constitutional provision may assist in its interpretation is to be found in Cole v. Whitfield [14] , where it was said that reference to history may be made, not in an attempt to determine the subjective intention of the founding fathers, "but for the purpose of identifying the contemporary meaning of language used, the subject to which that language was directed and the nature and objectives of the movement towards federation from which the compact of the Constitution finally emerged" [15] . Moreover, the history which is examined in Cole v. Whitfield is illuminating not only with respect to s. 92, but also with respect to s. 90, for it makes it plain that s. 90 was born of a concern to establish a common external tariff for the new Commonwealth as a concomitant of freedom of trade and commerce amongst the States in the sense of freedom from discrimination of a protectionist kind. The States were, in effect, to be joined together in a customs union in which there was to be a correlation between duties of customs and of excise. Clearly a common tariff in the form of uniform customs duties could be undermined by the imposition, State by State, of differing duties of excise upon locally produced goods. And for similar reasons, with certain limited exceptions, it was necessary to place within the exclusive province of the Commonwealth bounties on the production or export of goods. Thus it was that the twin objectives of a common tariff and interstate freedom of trade were to be served by ss. 90 and 92 operating in conjunction. 1. (1988) 165 C.L.R. 360, at pp. 385-393. 2. (1988) 165 C.L.R., at p. 385. Consistently with this, the context of s. 90 suggests that the meaning of the words "duties of excise" is confined to a tax upon goods produced or manufactured in a State. "Duties of excise" are also referred to in ss. 55, 86 and 93 of the Constitution but it is only s. 93 which contains express words that are helpful. That section, which deals with the return to the States of the proceeds of a uniform tariff for a limited period after its establishment, provides that "the duties of excise paid on goods produced or manufactured in a State and afterwards passing into another State for consumption, shall be taken to have been collected not in the former but in the latter State". If in s. 90 the words "duties of excise" were intended to have a wider meaning — in particular, if they were intended to extend beyond duties upon the production or manufacture of goods to duties upon their distribution — the use of the restricted expression in s. 93 would be by way of exception which it would be impossible to explain. Having regard to these matters, it is hardly surprising that the first decision of this Court upon s. 90 gave a confined meaning to the words "duties of excise". Peterswald v. Bartley [16] determined that brewers' licence fees charged under New South Wales legislation were not excise duties within the meaning of s. 90. After referring to the tendency in England to refer to all kinds of inland revenue which came under the control of the Commissioners for Inland Revenue as excise duties, Griffith C.J., who delivered the judgment of the Court, continued [17] : Bearing in mind that the Constitution was framed in Australia by Australians, and for the use of the Australian people, and that the word "excise" had a distinct meaning in the popular mind, and that there were in the States many laws in force dealing with the subject, and that when used in the Constitution it is used in connection with the words "on goods produced or manufactured in the States," the conclusion is almost inevitable that, whenever it is used, it is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax. In subsequent cases the departure from this definition of an excise duty for the purposes of s. 90 has been all but complete. 1. (1904) 1 C.L.R. 497. 2. (1904) 1 C.L.R., at p. 509. No longer can it be said upon the authorities that an excise duty must be imposed in relation to the quantity or value of goods. The first case in which this requirement was rejected was Matthews v. Chicory Marketing Board (Vict.) [18] in which a levy upon producers of chicory of £1 for every half acre of land planted was held to be an excise duty. In the categorical words of Dixon J. [19] : there is no ground for restricting the application of the word [excise] to duties calculated directly on the quantity or value of goods. A definition which makes quantity and value the only basis of taxation which would satisfy the notion of "excise" has no foundation either in history, economic or fiscal principle, nor in any accepted specialization. The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted is a tax directly affecting commodities. Dixon J. went on to point out that in that case the basis adopted for the levy in fact had a natural, although not a necessary, relation to the quantity of the commodity produced. The total abandonment of such a requirement is to be seen in Hematite Petroleum Pty. Ltd. v. Victoria [20] where a pipeline operation fee of a fixed amount, regardless of the quantity of hydrocarbons carried in the pipeline, was held to be an excise duty. 1. (1938) 60 C.L.R. 263. 2. (1938) 60 C.L.R., at pp. 302-303. 3. (1983) 151 C.L.R. 599. Nor is an excise duty any longer restricted to a tax on the production or manufacture of goods. In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [21] , Higgins J. was the first to envisage this extension of the concept. He said: excise duty means a duty on the manufacture, production, &c., in the country itself; and it matters not whether the duty is imposed at the moment of actual sale or not, or sale and delivery, or consumption. A similar view was expressed by Dixon J. in Matthews v. Chicory Marketing Board (Vict.) [22] . Stopping short of consumption, the Court gave its approval of this extended notion inParton v. Milk Board (Vict.) [23] where a levy upon dairymen, who were the distributors of milk, was held to constitute an excise duty. The justification for the extension was explained by Dixon J. [24] , when he observed that a "tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production". The same could, of course, be said about a tax upon consumption but, somewhat inexplicably, Dixon J. deferred to a decision of the Privy Council in Atlantic Smoke Shops Ltd. v. Conlon [25] . That case was concerned with s. 92 of the British North America Act 1867 Imp. (now renamed the Constitution Act 1867) which gives to the Canadian Provinces exclusive power to make laws in relation to "direct taxation within the province" and so requires a distinction to be made between direct and indirect taxation. There was no necessary reason why an excise duty within the meaning of the Commonwealth Constitution should only be an indirect tax, but it was accepted that it should be so, thus excluding a consumption tax, which is a direct tax, from the concept of a duty of excise. 1. (1926) 38 C.L.R. 408, at p. 435. 2. (1938) 60 C.L.R., at p. 292. 3. (1949) 80 C.L.R. 229. 4. (1949) 80 C.L.R., at p. 260. 5. [1943] A.C. 550. The high-water mark in those cases which extend the conception of an excise duty beyond production or manufacture is to be found in Western Australia v. Chamberlain Industries Pty. Ltd. [26] where it was held that stamp duties, imposed upon receipts for payments made pursuant to the sale of goods at any stage from manufacture to consumption, were excise duties. 1. (1970) 121 C.L.R. 1. These departures from the meaning given in Peterswald v. Bartley to an excise duty for the purposes of s. 90 brought with them a number of problems, some of which have proved to be wellnigh insuperable. In the first place, it is no longer possible to draw an analogy or to discern a correlation between customs duties and excise duties. Customs duties are imposed upon goods in relation to quantity or value. They are imposed upon the importation or (less commonly) the export of goods and not upon subsequent dealings in the goods. If excise duties had been confined to taxes upon the production or manufacture of goods and not extended to their subsequent distribution, the correlation between customs duties and excise duties in seeking to ensure the preservation of a common tariff would have been maintained. After importation or production the concern was to protect goods, whatever their origin, from discriminatory policies within Australia and this was to be achieved by means of s. 92 and, in the case of the Commonwealth, by forbidding discriminatory taxation (s. 51(ii)) or preferential laws of trade, commerce or revenue (s. 99). Upon such a view, production or manufacture is necessarily confined to production or manufacture within a State. The early abandonment of that view brought in its wake the problem, which is still unresolved, whether excise duties within the meaning of s. 90 are confined to locally manufactured goods or extend to all goods wherever produced. As early as the Commonwealth Oil Refineries Case, Rich J. [27] thought that they were not confined to goods of home manufacture and, as late as Gosford Meats Pty. Ltd. v. New South Wales [28] Mason and Deane JJ. expressed the view, that a duty of excise is a tax upon internally produced or manufactured goods. 1. (1926) 38 C.L.R., at p. 437. 2. (1985) 155 C.L.R. 368, at p. 383. There have been various attempts to provide some firm foundation for the view of s. 90 which has come to prevail in the cases. In Parton Dixon J. was the first to develop the notion that the object of s. 90 was to secure for the Commonwealth national control over taxes upon goods. He said [29] : In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action. Similar views have been expressed by Barwick C.J. in Chamberlain Industries [30] and Dickenson's Arcade Pty. Ltd. v. Tasmania [31] , and by Mason J. in Dickenson's Arcade [32] , M.G. Kailis (1962) Pty. Ltd. v. Western Australia [33] , and Hematite Petroleum [34] . But such views are in the end the result of an assumption for which there is no constitutional basis. 1. (1949) 80 C.L.R., at p. 260. 2. (1970) 121 C.L.R., at p. 17. 3. (1974) 130 C.L.R. 177, at p. 185. 4. (1974) 130 C.L.R., at p. 238. 5. (1974) 130 C.L.R. 245, at p. 265. 6. (1983) 151 C.L.R., at p. 631. In Dennis Hotels Pty. Ltd. v. Victoria [35] Menzies J. observed: The guidance of the Constitution itself is, however, that a duty of customs is a duty charged at the point of importation and a duty of excise is one paid on the production or manufacture of goods, and that a tax upon some dealing with goods which is neither upon importation into Australia nor upon the production or manufacture of goods in Australia, is neither a duty of customs nor a duty of excise. I cannot find in the Constitution any indication that duties of customs and of excise were grouped together as a comprehensive description of any taxation in respect of goods so as to exclude the States altogether from that field. The import, export, and production of goods seem to me to constitute such a cohesive subject matter that considerations of policy as well as of revenue might well be thought to warrant a grant of exclusive taxing power to the Commonwealth with regard thereto without going further to extend that grant to cover taxation in respect of all dealings in goods. See also Parton [36] , per McTiernan J.; Dickenson's Arcade [37] , per Menzies J.; M.G. Kailis [38] , per McTiernan J.; Gosford Meats [39] , per Wilson J. And as Gibbs C.J. pointed out in Hematite Petroleum [40] , if s. 90 were intended to effect national control over the economy it hardly goes far enough to achieve its object. There are many other taxes, such as payroll tax, or legislative measures, such as the imposition of quotas, by which a State can decisively influence production or manufacture. 1. (1960) 104 C.L.R. 529, at pp. 582-583. 2. (1949) 80 C.L.R., at pp. 264-265. 3. (1974) 130 C.L.R., at pp. 212-213. 4. (1974) 130 C.L.R., at pp. 251-252. 5. (1985) 155 C.L.R., at p. 402. 6. (1983) 151 C.L.R., at p. 617. Support for an ever-widening notion of an excise duty has from time to time been sought in the distinction between direct and indirect taxation. Perhaps the reference to a direct or personal tax in the definition of an excise duty given by Griffith C.J. in Peterswald v. Bartley [41] was though to afford some justification for this but as Fullagar J. pointed out in Dennis Hotels [42] , the reference was not to add anything by way of definition but merely to give an example, by way of contradistinction, of something which would not be a duty of excise. Nevertheless the use of the distinction was given impetus by those decisions of the Privy Council, of which Atlantic Smoke Shops Ltd. v. Conlon [43] was one, which of necessity distinguished between direct and indirect taxes in the setting of Canadian constitutional law. As I have said, there is nothing in our Constitution which requires such a distinction to be drawn. 1. (1904) 1 C.L.R. 497. 2. (1960) 104 C.L.R., at p. 553. 3. [1943] A.C. 550. In classical terms the difference between a direct tax and an indirect tax is that "a direct tax is one that is demanded from the very person who it is intended or desired should pay it. An indirect tax is that which is demanded from one person in the expectation and with the intention that he shall indemnify himself at the expense of another": Attorney-General (Manitoba) v. Attorney-General (Canada) [44] . This distinction was, it appears, originally developed for the administrative classification of taxes but it fails completely as a test of any validity in economic terms. It is now not widely used by economists for the plain fact is that all taxes have a tendency to be passed on where they can be and whether they can or cannot is largely dependent upon market forces and other considerations which have nothing to do with the nature of the tax itself. See, e.g., Arndt, Judicial Review under Section 90 of the Constitution: An Economist's View, Australian Law Journal vol. 25 (1952), p. 667; New South Wales Tax Task Force, Tax Reform and N.S.W. Economic Development: Review of the State Tax System, August 1988, pp. 75-76; Due and Friedlaender, Government Finance: Economics of the Public Sector, 7th ed. (1981), Ch. 14 . 1. [1925] A.C. 561, at p. 566. Moreover, the attempt to observe the distinction between direct and indirect taxes in an Australian context has led to curious and illogical results. It is said that an excise duty remains at bottom a tax upon production or manufacture and that taxes upon distribution or sale are included within the concept of an excise duty only because of their ultimate effect upon production or manufacture. See Anderson's Pty. Ltd. v. Victoria [45] . Upon this basis, in the Commonwealth Oil Refineries Case [46] , and in Matthews v. Chicory Marketing Board (Vict.) [47] , Higgins J. and Dixon J. respectively were prepared to extend the meaning of an excise duty beyond a tax upon distribution or sale to a tax upon consumption. But in Parton [48] Dixon J., as I have said, departed from this view because a tax upon consumption is a direct tax and Rich and Williams JJ. [49] , expressed the nature of an excise in these words: It must be imposed so as to be a method of taxing the production or manufacture of goods, but the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer. 1. (1964) 111 C.L.R. 353, at p. 374. 2. (1926) 38 C.L.R., at p. 435. 3. (1938) 60 C.L.R., at p. 304. 4. (1949) 80 C.L.R. 229. 5. (1949) 80 C.L.R., at p. 252. In Dennis Hotels [50] , Fullagar J. recognized that the distinction between direct and indirect taxes and the use of Canadian precedents were inappropriate as an aid to the interpretation of s. 90 "which was adopted in a quite different setting and employs much more specific terminology". He thought, in accordance with the definition given in Peterswald v. Bartley [51] , that an excise duty within the meaning of s. 90 did not extend beyond a tax upon the production or manufacture of goods [52] . Subsequent cases did not proceed upon this view and in Gosford Meats [53] , I remarked that it was no longer tenable. Upon the authorities that was, and remains, so. Fullagar J. was in a minority in Dennis Hotels and his reasoning has not subsequently found favour. That is not to say that it does not have much to commend it and, should there ever be a review of the scope of s. 90 similar to that undertaken with respect to s. 92 in Cole v. Whitfield [54] , his view must command serious attention. 1. (1960) 104 C.L.R., at pp. 553-554. 2. (1904) 1 C.L.R. 497. 3. (1960) 104 C.L.R., at p. 555. 4. (1985) 155 C.L.R., at p. 414. 5. (1988) 165 C.L.R. 360. But I must deal with the authorities as they stand. Indeed, in this case leave was refused to reconsider the correctness of the actual decisions in Dennis Hotels, Dickenson's Arcade [55] and H.C. Sleigh Ltd. v. South Australia [56] . I do not think that I would be expressing myself too loosely if I were to say that these cases establish that a licence or franchise fee, exacted for the privilege of carrying on a business of selling goods, will not, even though a tax, constitute an excise duty where it is calculated by reference to the value of sales or purchases during a period preceding the period of the licence. Whilst there is no clear majority for any one view in Dennis Hotels, that is the decision upon which the two subsequent cases depend. The difficulty in finding a ratio in Dennis Hotels itself is alleviated by the unanimous decision in Bolton v. Madsen [57] which adopted the reasoning of Kitto J. in Dennis Hotels, thus establishing the principle for which that case and the cases which follow it must be taken to be authority. Kitto J.'s formulation of principle appears in Dennis Hotels [58] , and is as follows: a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. Notwithstanding that Bolton v. Madsen, which, as I observed in Gosford Meats has never been overruled, unequivocally held that it is the criterion of liability that determines whether or not a tax is a duty of excise, there have been various criticisms of that test, at all events as an exclusive determinant. See Anderson's Pty. Ltd. v. Victoria [59] ; Chamberlain Industries [60] ; Dickenson's Arcade [61] ; H.C. Sleigh [62] ; Logan Downs Pty. Ltd. v. Queensland [63] ; Hematite Petroleum [64] . 1. (1974) 130 C.L.R. 177. 2. (1977) 136 C.L.R. 475. 3. (1963) 110 C.L.R. 264. 4. (1960) 104 C.L.R., at p. 559. 5. (1964) 111 C.L.R., at pp. 365-366. 6. (1970) 121 C.L.R., at p. 15. 7. (1974) 130 C.L.R., at p. 241. 8. (1977) 136 C.L.R., at p. 499. 9. (1977) 137 C.L.R. 59, at p. 76. 10. (1983) 151 C.L.R., at pp. 629, 664-665. The essence of the criticism of the criterion of liability as the touchstone is that it ignores substance in favour of form. But that is a criticism that only has force if it is possible to identify the substance which ought to prevail. See Cardozo, Law and Literature, Law and Literature and Other Essays and Addresses (1931), pp. 4-6; Hall (ed.), Selected Writings of Benjamin Nathan Cardozo: The Choice of Tycho Brahe (1947), pp. 339-340. Upon the current state of the authorities, that, as I have endeavoured to show, is not possible. An excise duty is not confined to a tax upon production or manufacture. It need not be calculated by reference to the quantity or value of the goods involved. It must, it seems, be an indirect tax, although the only limitation which that imposes is to prevent it being a tax upon consumption. It must be a tax upon goods but to say that is merely to restate the problem for it means that there must be a relationship between the tax and goods and the critics of the test laid down by Bolton v. Madsen have failed to identify what that relationship must be, save that the tax must have some ultimate effect upon production or manufacture. These were the considerations which led Murphy J. to ask in Logan Downs [65] : If taxes are to be treated as duties of excise because they indirectly add to costs of production or manufacture of goods, are taxes on industrial land and payroll taxes to be treated as duties of excise? And it was the same consideration which led me in Gosford Meats [66] to remark: To depart from the test adopted in Bolton v. Madsen would be to become lost in the wilderness once again or to accept an ever-widening conception of an excise duty which, extended to its logical limits, would subsume all taxes, the ultimate result of which, however indirect, could be shown to affect the production or manufacture of goods. 1. (1977) 137 C.L.R., at p. 84. 2. (1985) 155 C.L.R., at p. 416. Perhaps the basic error was to depart from the limited conception of an excise duty which the Court laid down in Peterswald v. Bartley. To have regard, as the Court did there, to the constitutional purpose which the context of s. 90 reveals and to the restricted objectives to which s. 90 gives expression would make it possible to speak sensibly of duties of excise as a matter of substance. But as the authorities stand at the moment it is not possible to do so and the application of the test laid down in Bolton v. Madsen represents the only available method of imposing some practical limit upon the reach of the section. If form is emphasized by so doing, then it is not at the expense of substance for the cases which currently prevail fail to provide the substance which would serve as an alternative test. The cases have not identified the nature of duties of excise by reference to constitutional purpose or historical background and this inevitably has placed significance upon the form in which excise duties are imposed as the only real point of distinction between them and other taxes. See H.C. Sleigh [67] , per Stephen J. After all, excise duties did not traditionally differ in substance from other taxes and could be described by that name only by reason of the manner in which they were imposed. 1. (1977) 136 C.L.R., at p. 497. The nature of the businesses carried out by the plaintiffs and of the franchise fee imposed upon them by the Business Franchise (Tobacco) Act 1974 Vict. is examined in detail in the reasons for judgment of the Chief Justice and Deane J. I need not repeat that examination here. It is sufficient to say that as a group the plaintiffs were engaged in tobacco wholesaling within the meaning of the Act. They were, therefore, required to hold a monthly licence under the Act and during the relevant months did in fact hold a group wholesale tobacco merchant's licence. The monthly fee payable for the licence was a relatively small flat amount together with a percentage of the value of the tobacco sold by the group (other than to another licensed wholesaler) during the last preceding month but one. As I have said, it is proper, following Bolton v. Madsen, to regard Dennis Hotels as involving the application of the test there set out by Kitto J. That is to say, the criterion of liability for the licence fee (other than a temporary victualler's licence) in Dennis Hotels was something other than the taking of a step in the process of passing goods down to the consumer; it was the carrying on of a particular kind of business. Upon any view, the reason for this can only have been because the quantum of the fee was based upon the value of the goods purchased for the licensed premises during a period which preceded the period of the licence. Dickenson's Arcade and H.C. Sleigh are necessarily based upon the same process of reasoning. I do not see any point of distinction in the present case which, in the face of those three decisions, would justify any different result. It is true that the period selected for the calculation of the fee in the present case is shorter and in closer proximity to the period of the licence than in the previous cases. And obviously the shorter the period over which the sales or purchases upon which the fee is calculated take place and the closer it is to the period of the licence the greater the possibility that it might properly be regarded as a tax upon a step in the distribution of the relevant goods. However, that could only be because it would then be possible to discern a necessary relationship between sales or purchases during the preceding period and sales during the period of the licence. Obviously it may be arguable in particular cases whether such a relationship has been established, but I do not think it is possible in the present case. It remains only to add some observations concerning the position of one of the plaintiffs, Philip Morris Ltd., which includes in its business the manufacture of tobacco products which it sells by wholesale. In Dickenson's Arcade [68] and in M.G. Kailis [69] , Mason J. expressed the view that the principle which lies behind the decision in Dennis Hotels should not be regarded as authoritative in relation to the prescription of fees for licences to manufacture or produce goods. On the authorities I am myself unable to discern any basis for such a distinction. Since the justification for the extension of duties of excise to include taxes upon distribution as well as taxes upon production or manufacture is the effect which taxes upon distribution will have upon production or manufacture, it does not seem possible to me to draw any logical distinction between licence fees for the privilege of engaging in the different activities. Were the notion of an excise duty to be confined to that of a tax upon the process of manufacture or production as suggested by the constitutional and historical setting of s. 90, then a different conclusion may be required. In any event, it is evident that the licence fees in question are directed to the carrying on of the activities of wholesalers and they may be regarded as having been imposed upon Philip Morris Ltd. in its capacity as a wholesaler, its activities as a producer or manufacturer being merely coincidental. Cf. H.C. Sleigh [70] , per Mason J. 1. (1974) 130 C.L.R., at p. 240. 2. (1974) 130 C.L.R., at p. 265. 3. (1977) 136 C.L.R., at p. 500. In my view the questions in the stated case should be answered in the negative. Toohey and Gaudron JJ. The first plaintiff, Philip Morris Ltd., manufactures tobacco products in Victoria. Additionally, it imports tobacco products from overseas. Some of the products so manufactured and imported are sold in Victoria to the second plaintiff, Statewide Tobacco Services Ltd., and some are sold to wholesale and retail vendors in other Australian States and Territories. The second plaintiff also purchases tobacco products from other Australian manufacturers and distributors. The first and second plaintiffs and the third plaintiff, G.P.M. Cigarette Distributors (Australia) Ltd., constitute a group of wholesale tobacco merchants pursuant to s. 2A of the Business Franchise (Tobacco) Act 1974 Vict. ("the Act"), although the third plaintiff has not sold or distributed tobacco products since November 1983. As a group the plaintiffs are engaged in Victoria in tobacco wholesaling as defined in s. 2(1) of the Act and in the course thereof they sell tobacco products manufactured and imported by the first plaintiff and tobacco products purchased from other Australian manufacturers and distributors. The Act requires that persons who sell tobacco products, either by wholesale or by retail, be licensed under the Act: s. 6. A person selling by wholesale must either hold a wholesale tobacco merchant's licence or be a member of a group holding a group wholesale tobacco merchant's licence: s. 6(1). Only a person who is not a member of a group of wholesale tobacco merchants may apply for a wholesale tobacco merchant's licence: s. 7(1)(b). A wholesale licence is in force for not more than one calendar month: s. 9(1). At the relevant time the fee payable for a wholesale licence was $50.00 together with an amount of 25 per cent of the value of tobacco sold intrastate (other than tobacco sold to a person or group holding a wholesale licence) during the month preceding the month prior to the licence period: s. 10(1)(a) and (b), s. 2(6a)(a). Provision is made in s. 10(4) and (5) for the assessment of a licence fee in the case where a wholesale tobacco merchant or a group of wholesale tobacco merchants was not carrying on the business of tobacco wholesaling in the month by reference to which the ad valorem component of the licence fee is calculated. The retail licence fees are calculated in a similar manner, save that tobacco purchased intrastate from the holder of a wholesale licence is excluded from the calculation: s. 10(1)(c) and (d). The plaintiffs have at all relevant times held a group wholesale tobacco merchant's licence. They now challenge the licence fees imposed by s. 10(1)(b) of the Act, arguing that the fees imposed are duties of excise. By case stated pursuant to s. 18 of the Judiciary Act 1903 Cth the following questions are submitted for determination: A. Were the fees [paid by way of licence fee] in so far as they were paid by (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, invalid as being exacted contrary to the provisions of s. 90 of the Constitution? B. Is the Act invalid in so far as it applies to a person in the position of (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? C. Are ss. 7 and 10 of the Act invalid in so far as they apply to a person in the position of (i) the first plaintiff, (ii) the second plaintiff, (iii) the third plaintiff, as being contrary to the provisions of s. 90 of the Constitution? It is not in dispute that a licence fee made payable by the Act is a tax in that it is "a compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered": Matthews v. Chicory Marketing Board (Vict.) [71] , per Latham C.J. See also Air Caledonie International v. The Commonwealth [72] . The critical consideration is whether it is also a duty of excise. 1. (1938) 60 C.L.R. 263, at p. 276. 2. (1988) 165 C.L.R. 462. By s. 90 of the Constitution the power to impose duties of customs and of excise and to grant bounties on the production or export of goods is made exclusive to the Commonwealth Parliament. By s. 91 an exception is made as to certain bounties which may be granted by a State. The power made exclusive to the Commonwealth by s. 90 is subject to important restrictions as to the manner of its exercise. Customs duties must be uniform: Constitution, s. 88. Bounties must be uniform throughout the Commonwealth: s. 51(iii). Laws as to taxation must not discriminate between States or parts of States: s. 51(ii). Revenue laws must not give preference to one State or any part thereof over another State or any part thereof: s. 99. By making the power to levy duties of excise exclusive to the Commonwealth s. 90 denies that power to the States. Judicial exposition of the power denied to the States by s. 90 has favoured the identification of a duty of excise as a tax upon goods produced or manufactured in Australia. The expression "tax upon goods" refers to the relationship between taxpayer and goods which constitutes an impost a duty of excise. See, e.g., Hematite Petroleum Pty. Ltd. v. Victoria [73] , per Mason J.; Gosford Meats Pty. Ltd. v. New South Wales [74] , per Dawson J. The identification of that relationship is crucial to the ascertainment of the scope of the prohibition on State duties of excise in s. 90. 1. (1983) 151 C.L.R. 599, at p. 628. 2. (1985) 155 C.L.R. 368, at p. 412. There has not been complete unanimity in the view that the goods which may attract a duty of excise prohibited by s. 90 are goods produced or manufactured in Australia. For example, in Matthews [75] Dixon J. expressed the view that the question "[w]hether the limitation of the word "excise" in the Constitution to duties upon commodities produced or manufactured within Australia is justified [was] a question open for future decision". The same view was earlier expressed by Rich J. in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [76] , and in Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. [77] . See also Dennis Hotels Pty. Ltd. v. Victoria [78] , per Windeyer J.; Western Australia v. Chamberlain Industries Pty. Ltd. [79] , per Barwick C.J. In Dennis Hotels [80] Menzies J. said, and we think correctly, that that view was contrary to explicit pronouncements in Peterswald v. Bartley [81] and in Commonwealth Oil Refineries. It may here be noted that, although the temporary victualler's licence fee held to constitute an excise in Dennis Hotels was calculated by reference to goods produced in Australia and goods imported into Australia, McTiernan J. [82] and Menzies J. [83] rested their decisions as to the total invalidity of the fee on the non-severability of the relevant statutory provision and Dixon C.J. [84] and Windeyer J. [85] each adopted an analysis which made it unnecessary to decide whether goods produced overseas could be the subject of the prohibition on State duties of excise contained in s. 90. More recently, Murphy J. in H.C. Sleigh Ltd. v. South Australia [86] , in Logan Downs Pty. Ltd. v. Queensland [87] , in Hematite [88] , and in Gosford Meats [89] , expressed the view that the duties of excise forbidden to a State by s. 90 are limited to taxes on goods produced or manufactured in that State. 1. (1938) 60 C.L.R., at p. 299. 2. (1926) 38 C.L.R. 408, at p. 437. 3. (1937) 56 C.L.R. 390, at p. 403. 4. (1960) 104 C.L.R. 529, at pp. 598-599. 5. (1970) 121 C.L.R. 1, at pp. 12-13. 6. (1960) 104 C.L.R., at p. 590. 7. (1904) 1 C.L.R. 497. 8. (1960) 104 C.L.R., at p. 550. 9. (1960) 104 C.L.R., at p. 591. 10. (1960) 104 C.L.R., at p. 540. 11. (1960) 104 C.L.R., at p. 598. 12. (1977) 136 C.L.R. 475, at pp. 526-527. 13. (1977) 137 C.L.R. 59, at p. 84. 14. (1983) 151 C.L.R., at p. 638. 15. (1985) 155 C.L.R., at pp. 387-389. Identification of the goods which may attract a duty of excise prohibited by s. 90 is not unrelated to identification of the connexion between taxpayer and goods necessary to constitute an impost a prohibited duty of excise. If the relevant goods include both goods produced or manufactured in Australia and goods produced or manufactured overseas then the significance of a reference to production or manufacture lies only in its serving to restrict the concept of duties of excise to articles of commerce. In that event the relevant connexion might well be constituted by any relationship affecting the goods as articles of commerce. On the other hand, if the relevant goods are goods produced or manufactured in Australia, there is no self-evident reason why the relevant connexion should extend beyond a relationship affecting those goods as items of Australian production or manufacture. Similarly, if the goods are to be identified as those produced or manufactured in the taxing State, there is no self-evident reason why the relevant connexion should extend beyond a relationship affecting them as items of State production or manufacture. There is much to be said for the view that the text of the Constitution favours the identification of goods which are the subject of duties of excise forbidden to a State by s. 90 as goods produced or manufactured in that State. Other provisions of the Constitution, notably s. 92 and the provisions earlier identified as confining the manner of exercise of the power made exclusive to the Commonwealth by s. 90, are the primary means by which the States are put on equal trade terms one with the other in a single Australian economic zone. Within that context, s. 90 seems designed (subject to the exception relating to bounties in s. 91) to secure to the Commonwealth the power to effectuate economic policy with respect to Australian imports and exports. In a sense that power is a power over commodities, but it is a power with a purpose. All that is necessary to secure that purpose and to perfect the power is to deny to each State the power to levy duties of customs on goods entering that State from overseas, the power to levy duties of excise on goods produced or manufactured in that State and the power to grant bounties on goods produced or manufactured in that State. Leaving aside bounties (which, in any event, are hardly likely to be granted by a State on goods produced or manufactured in another State) that formulation corresponds with the formulation adopted in s. 93 of the Constitution. The significance of s. 93 to the construction of s. 90 was remarked upon by Menzies J. in Dennis Hotels [90] although his Honour did not link the prohibition as it affects a State to goods produced or manufactured in that State. 1. (1960) 104 C.L.R., at p. 582. Whatever might be said in favour of construing s. 90 (so far as it contains a prohibition on State duties of excise) as directed to each State in respect of the goods produced or manufactured in that State, the overwhelming weight of authority favours the identification of the relevant goods caught up in the prohibition as goods produced or manufactured in Australia. That identification is necessary to support the decision in Victoria v. I.A.C. (Wholesale) Pty. Ltd. [91] for the tax there held to be an excise was stamp duty required to be paid by a wholesaler of motor vehicles upon the receipt by it in Victoria of money in respect of the sale by it of new motor vehicles manufactured in Australia. It may be that the decision in Dennis Hotels (so far as it concerned the temporary victualler's licence) also determines the issue, although Windeyer J. [92] concluded that that licence fee was invalid on the basis that it attached to goods produced in Victoria and that that impost could not be made valid by coupling it with an impost that was otherwise valid. Accordingly, we approach the questions in the stated case on the basis that the goods caught by the prohibition on State duties of excise in s. 90 are goods produced or manufactured in Australia. 1. (1970) 121 C.L.R. 1, at p. 43ff. 2. (1960) 104 C.L.R., at p. 598. The cases require the conclusion that an impost may be a duty of excise notwithstanding that it is imposed by reference to some dealing with goods after completion of production or manufacture. See Parton v. Milk Board (Vict.) [1] ; Dennis Hotels, so far as it related to the temporary victualler's licence; Chamberlain Industries and I.A.C. One view relevant to duties imposed by reference to dealings subsequent to production or manufacture is that exemplified by the statement of Dixon J. in Parton [2] that s. 90 "was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action. A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production". See also Anderson's Pty. Ltd. v. Victoria [3] , per Barwick C.J. On this view it is difficult to see any basis for distinction between taxes imposed during the course of production or manufacture and those imposed at any subsequent point, including the point of consumption. See Dickenson's Arcade Pty. Ltd. v. Tasmania [4] , per Gibbs J. Yet the authorities have stopped short of identifying a tax imposed by reference to consumption as a duty of excise: Dickenson's Arcade. And the decision in Gosford Meats shows (and, notwithstanding the view of Menzies J. in M.G. Kailis (1962) Pty. Ltd. v. Western Australia [5] , it is possible that the decision in that case also shows) that a licence fee calculated by reference to product handled in a period prior to the licence period and imposed on a producer or manufacturer may be different from a licence fee similarly calculated and imposed upon a vendor in the position of one or other of the vendors considered in Dennis Hotels, Dickenson's Arcade and H.C. Sleigh. 1. (1949) 80 C.L.R. 229. 2. (1949) 80 C.L.R., at p. 260. 3. (1964) 111 C.L.R. 353, at p. 365. 4. (1974) 130 C.L.R. 177, at p. 218. 5. (1974) 130 C.L.R. 245. The decisions in Dennis Hotels, Dickenson's Arcade and H.C. Sleigh, the authority of which was affirmed in Evda Nominees Pty. Ltd. v. Victoria [6] and again in this case by the Court's refusal to grant leave to argue the correctness of those decisions, can, in our opinion, be viewed in one of two ways. They can be seen as a denial of the correctness of the wide view of imposts prohibited by s. 90 as exemplified in the statement of Dixon J. in Parton . Alternatively, they can be seen as constituting an anomalous exception of judicial creation to the constitutional prohibition contained in s. 90. 1. (1984) 154 C.L.R. 311. There is much to be said for the view that Dennis Hotels should be regarded as an anomalous exception to the concept of excise duties. In the first place, there is no reason common to the majority judgments and accordingly, save to the extent that its authority may have been extended by the decisions in Dickenson's Arcade and H.C. Sleigh in which it was followed, it is authority only for what it actually decided. Secondly, the decision that the licence fee calculated by reference to past sales was not a duty of excise whereas the licence fee calculated by reference to sales during the licence period was a duty of excise involves a distinction, which, to say the least, is an odd distinction to be found in a constitutional setting. The unsatisfactoriness of that distinction has often been observed. See Dickenson's Arcade [7] , per Barwick C.J., and [1] , per Mason J.; H.C. Sleigh [2] , per Barwick C.J., and [3] , per Murphy J.; Hematite [4] , per Mason J., and [5] , per Murphy J.; Gosford Meats [6] , per Gibbs C.J., and [7] per Murphy J. Cf. H.C. Sleigh [8] , per Stephen J. Finally, if, as Kitto J. observed in Anderson's [9] , a duty of excise is a tax "directly related to goods (i.e. goods originating in Australia), imposed at some step in their production or distribution before they reach the hands of consumers", it is difficult to reconcile the decision in Gosford Meats that a licence fee imposed on a producer or manufacturer and calculated by reference to product handled in a period prior to the licence period constituted a duty of excise with the decisions in Dennis Hotels, Dickenson's Arcade and H.C. Sleigh that a licence fee similarly calculated but imposed on a retailer or a vendor in the position of the plaintiff in H.C. Sleigh did not. On the basis of these considerations the plaintiffs argue that the authority of Dennis Hotels should be strictly confined. 1. (1974) 130 C.L.R., at p. 189. 2. (1974) 130 C.L.R., at p. 240. 3. (1977) 136 C.L.R., at p. 488. 4. (1977) 136 C.L.R., at p. 527. 5. (1983) 151 C.L.R., at pp. 630-631. 6. (1983) 151 C.L.R., at p. 639. 7. (1985) 155 C.L.R., at p. 378. 8. (1985) 155 C.L.R., at pp. 388-389. 9. (1977) 136 C.L.R., at p. 497. 10. (1964) 111 C.L.R., at p. 373. As against the above approach, the authorities do indicate identifiable limits to the concept of a duty of excise. Thus it has been said that "a tax which has no closer connexion with production or distribution than that it is exacted for the privilege of engaging in the process at all" is not a duty of excise: Dennis Hotels [10] , per Kitto J. See also M.G. Kailis [11] , per Stephen J.; Hematite [12] , per Mason J., and [13] , per Brennan J.; Gosford Meats [14] , per Gibbs C.J., [15] , per Brennan J., and [16] , per Dawson J. Additionally, a number of judgments in the cases concerned with taxes imposed by reference to some dealing with goods after the completion of production or manufacture have proceeded on the basis, consistent with the decisions in Bolton v. Madsen [17] and Browns Transport Pty. Ltd. v. Kropp [18] , that there is a distinction between "those taxes affecting sale or distribution which constitute an excise [and] those which do not": Hematite [19] , per Mason J. See, e.g., Dennis Hotels [20] , per Kitto J., [21] , per Taylor J., and [22] , per Menzies J.; Chamberlain Industries [23] , per Windeyer J., [24] , per Walsh J.; Dickenson's Arcade [25] , per Gibbs J. 1. (1960) 104 C.L.R., at p. 560. 2. (1974) 130 C.L.R., at p. 261. 3. (1983) 151 C.L.R., at pp. 633-634. 4. (1983) 151 C.L.R., at pp. 655-656. 5. (1985) 155 C.L.R., at p. 378. 6. (1985) 155 C.L.R., at p. 404. 7. (1985) 155 C.L.R., at pp. 413-414. 8. (1963) 110 C.L.R. 264. 9. (1958) 100 C.L.R. 117. 10. (1983) 151 C.L.R., at p. 629. 11. (1960) 104 C.L.R., at pp. 559-560. 12. (1960) 104 C.L.R., at p. 573. 13. (1960) 104 C.L.R., at pp. 582, 591. 14. (1970) 121 C.L.R., at p. 28. 15. (1970) 121 C.L.R., at pp. 41-42. 16. (1974) 130 C.L.R., at p. 226. In Matthews [26] Dixon J. said that for a tax to constitute a duty of excise it "must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce". Later, in Parton [27] his Honour retreated from that statement so far as it referred to consumption. In that statement, the reference to "articles of commerce" must now, we think, be read as a reference to articles of commerce produced or manufactured in Australia. Certainly, no decision treats articles of commerce manufactured or produced overseas as goods which may be the subject of duties of excise prohibited by s. 90. And in Gosford Meats [28] Mason and Deane JJ. confined a duty of excise to "a tax upon internally produced or manufactured goods". Subject to those two qualifications the statement by Dixon J. in Matthews , in our view, identifies the relationship between taxpayer and goods which is both necessary and sufficient to constitute a tax a duty of excise, that being a relationship affecting goods in their character as goods produced or manufactured in Australia. That view accords with the statement of Kitto J. in Anderson's [29] that "a duty of excise is, at bottom, a burden upon home production or manufacture". 1. (1938) 60 C.L.R., at p. 304. 2. (1949) 80 C.L.R., at p. 261. 3. (1985) 155 C.L.R., at p. 383. 4. (1964) 111 C.L.R., at p. 374. In the Australian Law Journal, vol. 57 (1983) 599, at p. 600, the learned editor drew attention to an opinion given by Alfred Deakin, as Attorney-General of the Commonwealth, in 1901 in which it was said "excise is a duty upon goods manufactured or produced within a country. It is the product that is taxed — not the process of production". See Opinions of Attorneys-General of the Commonwealth of Australia, Vol. 1: 1901-14 (1981), p. 32. Nevertheless, in Anderson's [30] Barwick C.J. adopted the substance of the statement by Kitto J., which received indorsement in Bolton v. Madsen [31] , that "the essence of a duty of excise is that it is a tax upon the taking of a step in a process of bringing goods into existence or to a consumable state, or of passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer" [32] . That statement was adopted by Barwick C.J. as "the description of the nature of a duty of excise within the meaning of s. 90". Perhaps it is because that statement is descriptive rather than definitive that Brennan J. said in Hematite [33] that "[i]n principle, it is sufficient to establish that a tax is a duty of excise if it is a tax, however calculated, upon a step in the process of production, manufacture or distribution" (emphasis added). 1. (1964) 111 C.L.R., at p. 364. 2. (1963) 110 C.L.R. 264, at p. 273. 3. (1960) 104 C.L.R., at p. 559. 4. (1983) 151 C.L.R., at p. 657. If the statement that a duty of excise is a tax on a step in the process of production, manufacture or distribution of relevantly affected goods is descriptive of what is sufficient to constitute a tax a duty of excise rather than definitive of such a duty, the fact that a tax is a tax on a step in that process is nevertheless decisive of the character of the tax as a duty of excise. But, on that basis, the fact that an impost is not a tax on a step in that process is not decisive of the contrary proposition. It is that distinction which, in our view, supplies the explanation for the seemingly different treatment of a licence fee, calculated by reference to product handled in a period prior to the licence period, imposed on a manufacturer or producer (as in Gosford Meats) and a fee imposed on a retailer (as in Dennis Hotels and Dickenson's Arcade) or a vendor in the position of the plaintiff in H.C. Sleigh. Such a fee, although imposed on a producer, manufacturer or distributor, is not a tax on a step in production, manufacture or distribution. So much is, we think, implicit in a number of the majority judgments in Gosford Meats where the licence fee there considered was described in quite different terms. Mason and Deane JJ. [34] described that fee as being "payable by a producer by reason of an essential step in his production process" (emphasis added). Murphy J. [35] described the fee as one which "necessarily discriminates against production of goods in the State and is therefore an excise" and Brennan J. [36] said it was "a tax payable by a producer of goods and calculated by reference to steps in the production of goods taken in a preceding period". But notwithstanding that the fee in Gosford Meats was not a tax on a step in the process of production, it had a sufficiently close connexion with production to constitute it a duty of excise. That connexion, in our view, was that it affected goods as subjects of Australian production. Conversely, what is to be discerned from Dennis Hotels, Dickenson's Arcade and H.C. Sleigh is that the licence fees calculated by reference to goods handled in a period prior to the licence period considered in those cases did not affect the goods as subjects of Australian production or manufacture. 1. (1985) 155 C.L.R., at p. 385. 2. (1985) 155 C.L.R., at p. 389. 3. (1985) 155 C.L.R., at p. 410. On the view that we take of the decisions in Dennis Hotels, Dickenson's Arcade and H.C. Sleigh the question whether, in the present case, the Act imposes a duty of excise is to be answered by ascertaining whether the tax affects tobacco products as subjects of Australian manufacture. Just as the question whether a tax is a tax on a step in production, manufacture or distribution is to be answered by considering a range of factors (Anderson's [37] , per Barwick C.J.; Hematite [38] , per Mason J., and [39] , per Deane J.), so too the question whether a tax affects goods as subjects of Australian production or manufacture must be answered by considering a number of factors. 1. (1964) 111 C.L.R., at p. 365. 2. (1983) 151 C.L.R., at p. 629. 3. (1983) 151 C.L.R., at p. 669. Neither the scheme nor the operation of the Act suggests that the licensing system thereby established has any purpose other than the collection of revenue. In particular, the system cannot be viewed as being, in substance, a method of regulating the sale of tobacco products. And there is nothing in the Act to suggest that the "privilege" of selling tobacco is not, as a general rule, available to all who are prepared to pay the licence fees. By reason of these considerations the licensing system may be thought to be distinguishable from that held not to involve a duty of excise in Dennis Hotels. However, an impost does not cease to be a duty of excise simply because it bears a particular feature which enables it to be characterized in terms of that feature. Similarly, an impost is not a duty of excise simply because it lacks some feature which would enable it to be readily characterized in other terms. Of course, the presence or absence of such a feature may be a factor to be taken into account, along with other relevant factors, in determining whether or not the impost affects goods in their character as subjects of Australian production or manufacture. However, the fact that the scheme cannot be seen either as regulatory in nature or as a means by which a genuine privilege is conferred cannot be decisive of the question. The tax imposed by the Act certainly affects tobacco products manufactured in Australia. However, the stated case reveals that tobacco products manufactured overseas are also sold by the plaintiffs in Victoria and these products are affected by the Act in precisely the same way as Australian products, for the value of imported products sold in the period by reference to which the licence fee is calculated is taken into account and subjected to the same percentage calculation as for the Australian products. Moreover, because the tax is imposed when the manufacturing process is complete, it leaves the direct cost of manufacture unburdened, although, of necessity, it affects the selling price of all tobacco products sold in Victoria. These factors suggest that the tax affects tobacco products in their character as articles of commerce rather than in their character as goods manufactured in Australia. The one feature of the tax which suggests a burden on Australian manufacture is that a manufacturer in the position of the first plaintiff who, either alone or as a member of a group, sells its products by wholesale in Victoria is burdened by the tax unless it sells those products to a person holding a wholesale tobacco merchant's licence or a member of a group holding a group wholesale tobacco merchant's licence. However, the circumstance which attracts the tax is neither the manufacturing of the product nor any step in that process; rather, it is the circumstance that the product is sold in Victoria by the manufacturer as wholesaler to a person who does not hold a wholesale licence. The tax leaves the manufacturer unaffected in relation to the products otherwise sold, including those products committed to interstate and overseas commerce. This, in our view, serves to emphasize that, to the extent that the tax affects tobacco products manufactured in Australia, it does so only in their character as articles of commerce in Victoria and not in their character as articles of commerce produced or manufactured in Australia. The questions in the stated case should be answered "No". McHugh J. The question in this case stated by Dawson J. is whether the Business Franchise (Tobacco) Act 1974 Vict. ("the Act") which requires a tobacco wholesaler to hold a monthly licence and pay a fee calculated by reference to his sales of tobacco in the month but one preceding the licence period imposes a duty of excise on the plaintiffs or one or more of them contrary to s. 90 of the Constitution. Central to that question is the further question whether in its application to the plaintiffs any substantial difference exists between the Act and the three enactments which were held not to impose duties of excise in Dennis Hotels Pty. Ltd. v. Victoria [40] , Dickenson's Arcade Pty. Ltd. v. Tasmania [41] and H.C. Sleigh Ltd. v. South Australia [42] ("the franchise cases"). In those cases, the Court held that no duties of excise were levied on a hotelier, a tobacconist and a petrol seller by legislation which prohibited them from carrying on business except upon payment of a licence fee quantified by reference to the amount of sales made in a previous period of business. 1. (1960) 104 C.L.R. 529. 2. (1974) 130 C.L.R. 177. 3. (1977) 136 C.L.R. 475. The relevant facts and the provisions of the Act are set out in the reasons for judgment of Mason C.J. and Deane J. I need not repeat them. At the commencement of the argument Mr. Charles Q.C., for the plaintiffs, sought leave to challenge the correctness of the decisions in the franchise cases. He was supported by the Solicitor-General for South Australia. However, the Solicitors-General for the Commonwealth and the other States opposed the Court reconsidering these decisions. In Evda Nominees Pty. Ltd. v. Victoria [43] , the Court refused to reconsider the correctness of the decisions in the franchise cases. A significant reason for doing so was that "the States have organized their financial affairs in reliance on them" [44] . In the present case the Court by majority again refused to reconsider the correctness of the decisions in the franchise cases. That the States may have organized their finances on the basis of these decisions is a powerful reason for refusing to overrule them. But that does not mean that legislation purporting to be based on the franchise cases should be upheld simply because there is a similarity between that legislation and the legislation considered in those cases. If the legislation in question is substantially different in its operation and effect, it must stand or fall in accordance with the current doctrine of this Court concerning the meaning of s. 90: cf. Gosford Meats Pty. Ltd. v. New South Wales [45] . 1. (1984) 154 C.L.R. 311. 2. (1984) 154 C.L.R., at p. 316. 3. (1985) 155 C.L.R. 368, at p. 385. Mr. Charles submitted that the exaction of the licence fees in the present case constituted the levying of excises and that the franchise cases were distinguishable from the present case. He contended that those parts of the licence fees, which are calculated by reference to the past sales of tobacco products by the first plaintiff, are excises within the meaning of s. 90 because the fees constitute taxes upon the sales by a manufacturer of its goods and are distinguishable from the fees imposed on the sellers in the franchise cases. He further submitted that, although the second plaintiff is not a manufacturer, nevertheless the terms of the Act are so fundamentally different from the legislation considered in the franchise cases that the decisions in those cases are not in point. In support of his submissions Mr. Charles contended that s. 10 was an attempt to tax the sale of tobacco products based on an estimate of what would be sold during the month of the licence period. Alternatively, he contended that, when sales are made, they give rise to a contingent liability to pay tax when the licence is renewed. In either case he submitted that the Act imposes a duty of excise on the plaintiffs. The Solicitor-General for the Commonwealth intervened in the argument to support the proposition that s. 10 imposes a duty of excise. The Solicitor-General for Victoria responded that s. 10 of the Act does no more than exact a licence fee from the plaintiffs for carrying on the business of tobacco wholesaling and that the franchise cases established that such a licence fee is not a duty of excise within the meaning of s. 90 of the Constitution. His argument was supported by counsel intervening on behalf of the other States. No attempt was made by counsel for the parties or the interveners to challenge the correctness of any decision in or the ratio decidendi of any case except the franchise cases. Accordingly, it is against this background of the issues presented by the parties that the present case must be decided, no matter how tempting it may be to think that the overall state of authorities in this Court and the consequences for State revenues of an expanding notion of excise require a reconsideration of the whole law on excise as it has emerged since the landmark decision in Parton v. Milk Board (Vict.) [46] . 1. (1949) 80 C.L.R. 229. The term "excise" has no certain connotation: Matthews v. Chicory Marketing Board (Vict.) [47] . But until the decision of this Court in Parton , the cases on s. 90 of the Constitution had proceeded upon the basis that an excise was a tax imposed upon a person by reason of and by reference to his production or manufacture of goods whether the tax was levied at the point of production, manufacture or sale: see Peterswald v. Bartley [48] ; The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [49] ; John Fairfax & Sons Ltd. and Smith's Newspapers Ltd. v. New South Wales [50] ; Matthews [51] . In Parton , however, a majority of this Court (Rich, Dixon and Williams JJ., Latham C.J. and McTiernan J. dissenting) held that a levy imposed upon the sale or distribution of milk by a dairyman, who was not a producer or manufacturer, was nevertheless an excise within the meaning of s. 90. Dixon J. said [52] : Only if the conception of what is an excise is limited by the condition that the tax must be levied on the manufacturer, that is to say upon the goods while they are still in his hands, can I see any escape from the conclusion that the levy of the contribution is an excise. I cannot adopt the view that this is an essential feature of the conception. 1. (1938) 60 C.L.R. 263, at p. 293. 2. (1904) 1 C.L.R. 497, at p. 509. 3. (1926) 38 C.L.R. 408, at pp. 419-420, 426, 430, 436, 439. 4. (1927) 39 C.L.R. 139, at pp. 142, 143, 144-145, 147. 5. (1938) 60 C.L.R., at pp. 281, 284, 286. 6. (1949) 80 C.L.R., at pp. 259-260. Since the decision in Parton , all judges of the Court except Fullagar and Murphy JJ. have accepted that for the purposes of s. 90 of the Constitution a duty of excise is a tax directly related to goods imposed at some step in their production or distribution before they reach the consumer: Parton [53] ;Hematite Petroleum Pty. Ltd. v. Victoria [54] . In Dennis Hotels [55] Fullagar J. stated that for the purpose of s. 90 "what characterizes a duty of excise is that the taxpayer is taxed by reason of, and by reference to, his production or manufacture of goods". In a series of cases, Murphy J. maintained the unique view that what s. 90 prohibited was any "discriminatory tax on the production of goods within [a] State": Gosford Meats [56] ; Logan Downs Pty. Ltd. v. Queensland [57] ; H.C. Sleigh [58] ; Hematite Petroleum [59] . But such was the influence of the Parton formulation that in Gosford Meats the approach of Fullagar J., which echoed the original doctrine of the Court, was described by Brennan J. as "unorthodox" [60] and by Dawson J. as "no longer tenable" [61] . 1. (1949) 80 C.L.R., at p. 260. 2. (1983) 151 C.L.R. 599, at pp. 615, 619. 3. (1960) 104 C.L.R., at p. 555. 4. (1985) 155 C.L.R., at p. 387. 5. (1977) 137 C.L.R. 59, at p. 84. 6. (1977) 136 C.L.R., at p. 527. 7. (1983) 151 C.L.R., at p. 638. 8. (1985) 155 C.L.R., at p. 409. 9. (1985) 155 C.L.R., at p. 414. Since the decision in Parton , the Court has held that the payment of a temporary licence fee by a hotel licensee who was not a brewer (Dennis Hotels) and the payment of receipts duty tax by a wholesaler who was not a producer or manufacturer of goods (Victoria v. I.A.C. (Wholesale) Pty. Ltd. [62] ) imposed duties of excise. These two decisions, as well as the decision in Parton , are direct authority for the proposition that for the purposes of s. 90 a tax upon a sale of goods is an excise even though the seller is not a producer or manufacturer. 1. (1970) 121 C.L.R. 1. Two considerations combined to undermine the earlier view that for the purpose of s. 90 an excise was a tax upon production or manufacture and did not include a tax upon mere sale or distribution. The first was the assumption that s. 90 "was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action": Parton [63] , per Dixon J.; cf. Hematite Petroleum [64] , per Mason J. The second was the assertion that a tax upon a commodity at any point in the course of its distribution reduces demand for it and has the same effect as a tax upon production or manufacture: Parton [65] ; Hematite Petroleum [64] . 1. (1949) 80 C.L.R., at p. 260. 2. (1983) 151 C.L.R., at p. 632. 3. (1949) 80 C.L.R., at p. 260. 4. (1983) 151 C.L.R., at p. 632. Any extension of the scope of an excise duty inevitably affects the distribution of public revenue within the Australian federation since it narrows the revenue base of the States and reduces their financial autonomy. But the potential of the decision in Parton to affect the finances of the States was checked at first by the proposition that it was the "criterion of liability" which determined whether or not a tax was a duty of excise: cf. Western Australia v. Hamersley Iron Pty. Ltd. [No. 1] [67] , per Menzies J. In Bolton v. Madsen [68] , a unanimous court of six Justices said that: it is the criterion of liability that determines whether or not a tax is a duty of excise. The tax is a duty of excise only when it is imposed directly upon goods or, to put the same thing in another way, when it directly affects goods, and to establish no more than that its imposition has increased the cost of putting goods upon the market by a calculable amount falls short of establishing the directness of relation between the tax and the goods that is the essential characteristic of a duty of excise. 1. (1969) 120 C.L.R. 42, at p. 65. 2. (1963) 110 C.L.R. 264, at p. 271. In Bolton , the Court held that no duty of excise was levied upon the owner of wool by legislation that required him to have a permit to carry the wool by road and to pay a fee of "3d. per ton per mile on the registered carrying capacity of the vehicle over total distance carried" [69] . 1. (1963) 110 C.L.R., at p. 270. Since, directly and indirectly, the criterion of liability formula played a part in the decisions in the franchise cases, it is necessary to examine to what extent, if at all, it still determines whether or not a tax is a duty of excise. The application of the criterion of liability formula played a crucial role in the conclusion of Kitto J. in Dennis Hotels that no duty of excise was levied by an Act which required a licensee to pay an annual fee calculated at the rate of 6 per cent of the cost of liquor purchased for sale on the premises in the 12-month period ending 30 June in the preceding year. His Honour said [70] : What is insisted upon may, I think, be expressed by saying that a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer. It was because his Honour thought [71] that the licence fee was exacted "only in respect of the business generally, and not in respect of any particular act done in the course of the business" that he concluded that it was not a tax upon goods and, therefore, not a duty of excise. Although the criterion of liability formula was not mentioned by Taylor and Menzies JJ. in their judgments in that case, their conclusion that the fee was not an excise was also influenced by the form of the legislation. 1. (1960) 104 C.L.R., at p. 559. 2. (1960) 104 C.L.R., at p. 563. Fullagar J., the other member of the majority in Dennis Hotels, held [72] that the Act did not levy a duty of excise because it did not fall upon any producer or manufacturer and did not in any way affect production or manufacture. 1. (1960) 104 C.L.R., at p. 558. The criterion of liability formula was also the basis of the decision in Anderson's Pty. Ltd. v. Victoria [73] where the Court held that legislation which imposed stamp duty, payable by the vendor, on hire purchase and credit purchase agreements fixed at the rate of 2 per cent of the "purchase price" of the goods did not levy a duty of excise. The "purchase price" was defined to mean the total amount payable under the agreement less the deposit or other consideration or for interest, insurance or other charge. 1. (1964) 111 C.L.R. 353. However, in no subsequent case has the criterion of liability formula constituted the ratio decidendi. Indeed, it is difficult to see how the criterion of liability formula can now be said to represent the law. The formula as expounded in Bolton is inconsistent with the decisions in Western Australia v. Chamberlain Industries Pty. Ltd. [74] ; I.A.C. (Wholesale) [74] ; Logan Downs [75] ; Hematite Petroleum [76] and Gosford Meats [77] . 1. (1970) 121 C.L.R. 1. 2. (1970) 121 C.L.R. 1. 3. (1977) 137 C.L.R. 59. 4. (1983) 151 C.L.R. 599. 5. (1985) 155 C.L.R. 368. In Chamberlain Industries and in I.A.C. (Wholesale), the Court held that legislation imposing duties on receipts of payments in respect of sales were duties of excise within the meaning of s. 90. In Logan Downs, a statutory majority of the Court held that a duty of excise was levied by legislation which empowered the Minister to make and levy annual assessments, at rates fixed by him, on an owner of cattle, horses, sheep and swine. Mason J. said [78] that a tax on the ownership of livestock kept for their product was a tax on the meat, milk, wool and other commodities which they produced. In Hematite Petroleum, the Court held that a duty of excise was levied by legislation, which prohibited the use of a pipeline conveying hydrocarbons, without the grant of a licence upon which a fee of $10 million was payable. In Gosford Meats, the Court held that legislation requiring payment of an abattoir licence fee, which was calculated by reference to an amount for each animal slaughtered during a preceding period, was a tax upon the process of producing vendible meat products and a duty of excise within s. 90. The decisions in these cases are quite inconsistent with the criterion of liability determining whether a tax is a duty of excise. In each of them the legislation selected as the criterion of liability a fact, event or thing which was not itself a step in the process of bringing the goods into existence or passing them down the line from the earliest stage in production to the point of receipt by the consumer. Yet in each case the tax was held to be a duty of excise because in substance, although not in form, it imposed a burden on such a step. 1. (1977) 137 C.L.R., at p. 78. In my opinion the criterion of liability does not determine whether or not a tax is an excise. In determining whether a tax is imposed on some step in the production or distribution of goods before they reach the consumer, consideration of many factors besides the "criterion of liability" is necessary. As Barwick C.J. pointed out in Anderson's [79] : The "indirectness" of the tax, its immediate entry into the cost of the goods, the proximity of the transaction it taxes to the manufacture or production or movement of the goods into consumption, the form and content of the legislation imposing the tax — all these are included in the relevant considerations. But in the end what must be decided is that the tax is in substance a tax upon the relevant step. That being the central question in a controversy as to the nature of the tax, it will not, in my opinion, necessarily be resolved by the form of the tax or by identifying what according to that form the legislature has made the criterion of its imposition, however important in any particular case those matters may be. Regard must be had to the substance of the operation of the statute: Dickenson's Arcade [80] ; Hematite Petroleum [81] . Moreover, it is not essential that there should be a proportionate relationship between the tax and the value or quantity of the goods: cf. Hematite Petroleum [82] , per Brennan J. Hence, what purports to be a licence fee may in substance be a tax upon goods: Peterswald [83] ; Hematite Petroleum. However, a licence fee is not a duty of excise if in substance it is an exaction for the right to carry on a business generally and not an exaction in respect of a particular act done in the course of the business: Dennis Hotels [84] , per Kitto J.; Hematite Petroleum [85] , per Mason J. 1. (1964) 111 C.L.R., at pp. 365-366. 2. (1974) 130 C.L.R., at p. 186. 3. (1983) 151 C.L.R., at p. 663. 4. (1983) 151 C.L.R., at p. 657. 5. (1904) 1 C.L.R., at p. 509. 6. (1960) 104 C.L.R., at p. 563. 7. (1983) 151 C.L.R., at pp. 633-634. For ease of expression I shall refer to the current effect of the Act on the sales of the plaintiffs, but what follows applies equally to the past effect of the Act on the sales of the plaintiffs in so far as they are the subject of the present proceedings and irrespective of whether the tax was 25 per cent or 30 per cent. Upon the facts in the case stated, I think that s. 10 imposes a duty of excise on Philip Morris Ltd. ("P.M.L.") unless the legislation is indistinguishable from that considered in the franchise cases. I think that s. 10 imposes a duty of excise because it imposes a tax of 30 per cent on the estimated value of tobacco which P.M.L., as manufacturer, sells in any month for which it holds its licence. Quantification of a licence fee by reference to events in a past period of business will not prevent that fee from being characterized as a duty of excise: Gosford Meats. The fee for the month in the present case is calculated by reference to the sales for the last preceding month but one. The close proximity between the two periods shows that the purpose of the legislation is to tax the sale of tobacco by reference to the estimated value of what will be sold. If the fee were calculated by reference to the likely or projected sales for that month, the fee would be an excise: cf. Matthews . The Act does not, of course, select the likely or projected sales for the licence month as the criterion of liability. But by selecting the sales in the preceding month but one, it selects a period which, according to the ordinary course of business, is likely to give as accurate a guide to the likely sales during the month of the licence as can be practically achieved. The fee bears, therefore, "a natural, although not a necessary relation to the quantity of the commodity" sold during the month of the licence: cf. Matthews [86] . The relationship between the fee and the quantity of tobacco sold is even more direct than the relationships between the fees and the quantities of commodities produced in Hematite Petroleum and Logan Downs and which were held to be excises. Moreover, the calculation of the fee by reference to a percentage of actual sales in the preceding month but one, the size of the percentage, and the recurrent nature of the fee as a monthly outgoing lead to the conclusion that what is admitted to be a tax of 30 per cent was intended to be passed down the line to the consumer as part of the price of tobacco products sold by the licensee during the month of the licence. Demand for tobacco products seems to be relatively inelastic (i.e. relatively irresponsive to price change): see New South Wales Tax Task Force, Tax Reform and N.S.W. Economic Development: Review of the State Tax System, August 1988, p. 81. It is almost inevitable, therefore, that the incidence of the monthly licence fee will be shifted to the consumer. But whether or not the whole of the tax is passed onto the consumer, it is enough, according to the theory of this Court's decisions on excise, that the tax from its nature has "a tendency to enter into the price obtained": Parton [87] . Most of the monthly fee paid by P.M.L. is a direct tax on the sales made by a local manufacturer of its products (the balance is paid in respect of the sale of products which it does not manufacture). A tax payable by the producer of goods upon the first sale of goods produced by him is an excise: the Commonwealth Oil Refineries Case; John Fairfax & Sons. 1. (1938) 60 C.L.R., at p. 303. 2. (1949) 80 C.L.R., at p. 259. The fee cannot be characterized as the right to carry on a business. The terms of s. 10 operate to ensure that the fee is paid once only. If P.M.L. sold its products only to wholesalers during the relevant month, it would be under no obligation to pay the 30 per cent fee. Likewise, a retailer who has purchased tobacco in the course of intrastate trade from the holder of a wholesale tobacco merchant's licence or a group wholesale tobacco merchant's licence is under no liability to pay any fee other than the nominal fixed fee. This feature of the legislation makes it clear that the fee is not a price for carrying on the business. Its purpose is to ensure that, in the ordinary course of distribution, tobacco products will be taxed but once before they reach the consumer. Moreover, the selection of a period of one month for the duration of the licence tells heavily against the notion that the fee is an exaction for the price of carrying on the business. Annual licences for engaging in business, sporting and social activities are common enough. But, outside the field of revenue statutes dealing with business franchise licences, monthly licences are not common, if indeed they exist at all. P.M.L. is a producer of tobacco, and s. 10 operates to impose a tax on the sale of its tobacco products during the month in respect of which it is required to have a licence. Section 10, therefore, prima facie imposes an excise on the tobacco products manufactured by P.M.L. and sold by it by wholesale. In truth, the fee is a sales tax. The decisions in Parton and I.A.C. (Wholesale) and so much of the decision in Dennis Hotels as related to the temporary licensing fee also require the prima facie conclusion that so much of the licence fee as is calculated by reference to the sale by P.M.L. of products which it does not manufacture (approximately 1.55 per cent of its sales) is a duty of excise on those sales. For the same reason, the licence fee payable by the second plaintiff is also prima facie a duty of excise. In principle, therefore, I would conclude that the licence fee which the Act imposes on the plaintiffs is an excise unless the decisions in the franchise cases require, as a matter of authority, a contrary conclusion. Accordingly, I turn to the question whether there is any principle in those cases which governs the present case or whether, alternatively, the effect of the legislation in those cases is sufficiently comparable to the present Act to make the decisions in those cases applicable to the present case. In Dennis Hotels [88] , a bare majority of the Court (Fullagar, Kitto, Taylor and Menzies JJ., Dixon C.J., McTiernan and Windeyer JJ. dissenting) held that the Licensing Act 1958 Vict. did not impose a duty of excise in requiring payment of an annual licence fee of 6 per cent on the gross amount paid or payable for all liquor purchased for the premises during the twelve-month period ended on the last day of June preceding the date of the application for the licence. No common thread can be found in the reasoning of the majority Justices. Fullagar J. [89] held that there was no excise because the fee "does not fall upon any producer or manufacturer, and it does not in any way affect production or manufacture". Kitto J. [90] said that the exaction was "only in respect of the business generally, and not in respect of any particular act done in the course of the business". His Honour said [91] that, although the figures for past transactions might not provide in every case or perhaps in any case an accurate indication of future business, nevertheless "in so far as they are a guide to the probable volume of business in the near future they are a guide to the relative values, as between different businesses in the same class, of the advantages which licences will confer". Taylor J. recognized that a system of licensing might frequently be adopted as a convenient aid to the administration of excise laws and the collection of excise duties. But his Honour thought that that was not the part played by this licensing system. His Honour said [92] that: the issue of licences under that Act is, as already appears, a traditionally accepted method of regulating a trade which the public interest demands shall be subject to strict supervision. In other words the requirement that liquor shall not be sold or disposed of without a licence appears as a substantive provision and not merely as an adjunct to a revenue statute. But this very requirement necessarily means that partial monopolies will be enjoyed by licensees and that licensed premises will, as such, achieve an enhanced value. Menzies J. [1] said that the fees in question were "imposed as part of the State's detailed control of the liquor trade which is effected by the Act". His Honour pointed out that it was part of the statutory scheme that there should be a licensing fund to be applied towards the carrying out of the provisions of the Act including the payment of compensation to owners and occupiers of licensed premises deprived of licences under the Act and that it was into that fund that all licence fees were to be paid. Menzies J. [2] concluded the licence fee was "a tax upon a licensed victualler as the price for his franchise to carry on a business, the most important element of which is to sell liquor from the licensed premises independently of whether the liquor is produced in Australia or abroad, or partly in Australia and partly abroad". 1. (1960) 104 C.L.R. 529. 2. (1960) 104 C.L.R., at p. 558. 3. (1960) 104 C.L.R., at p. 563. 4. (1960) 104 C.L.R., at p. 566. 5. (1960) 104 C.L.R., at p. 576. 6. (1960) 104 C.L.R., at p. 579. 7. (1960) 104 C.L.R., at p. 591. The reasoning of the majority judges in Dennis Hotels is so divergent that the decision is an authority only for the proposition that the Licensing Act did not impose a duty of excise on a licensee: see Dickenson's Arcade [3] , per Barwick C.J. I am unable to agree with the statement of Gibbs J. in Dickenson's Arcade [4] that Dennis Hotels "is authority for the proposition that legislation which provides for the grant of a licence to sell goods, on payment of a licence fee, the quantum of which is based on the value of the goods purchased for the premises in a previous year, does not impose a tax directly related to the goods". His Honour in my opinion incorrectly rejected the submission in that case that the decision in Dennis Hotels "should not be regarded as a binding authority because the reasons of Fullagar J. cannot be regarded as fully acceptable and the other members of the Court were equally divided in opinion". With respect, only the reasoning of Kitto, Taylor and Menzies JJ. in Dennis Hotels arguably supports the proposition for which Gibbs J. said that Dennis Hotels is an authority. Since the reasons for decision of Fullagar J. were different from those of the other judges in the majority, the case is an authority only for what it decided in respect of the legislation there under examination. That is to say, the Licensing Act in requiring the payment of an annual fee did not impose a duty of excise. Dennis Hotels is not an authority for any wider proposition. Ironically, the correct approach to a case like Dennis Hotels was expounded by Gibbs J. in H.C. Sleigh [5] , when he said that since the reasoning of the majority of the Court in M.G. Kailis (1962) Pty. Ltd. v. Western Australia [6] had no common basis "the authority of that case would appear to be limited to the very question it decided, i.e. that s. 35G is invalid". See also the remarks of Gibbs C.J. in Gosford Meats [7] , where he said that M.G. Kailis [1] was "of no value as an authority". 1. (1974) 130 C.L.R., at p. 188. 2. (1974) 130 C.L.R., at p. 226. 3. (1977) 136 C.L.R., at p. 493. 4. (1974) 130 C.L.R. 245. 5. (1985) 155 C.L.R., at p. 379. 6. (1974) 130 C.L.R. 177. In Dickenson's Arcade [1] however, the decision in Dennis Hotels was influential, if not decisive, in this Court's conclusion that Pt III of the Tobacco Act 1972 Tas. did not impose a duty of excise on the retail sale of tobacco. In Dickenson's Arcade the licence fee was calculated by reference to the average monthly value of tobacco "handled" at the premises over the period of twelve months ending six months before the commencement of the annual period in respect of which the licence was granted. The effect of Pt III was that the maximum fee payable was 2.5 per cent of the value of the tobacco handled in the relevant assessment period where the value was not less than $7,200.00. Barwick C.J. [2] , although doubting the correctness of the reasoning and the decision in Dennis Hotels, thought that the "statutory and factual situation in this case is so substantially similar to and not distinguishable from the statutory and factual situation" in that case that he should follow that decision. Mason J. [3] said that he also was unable to discern any difference between the two pieces of legislation. Menzies J. [4] concluded that the licence fee was a personal tax "for a franchise to sell tobacco in Tasmania". His Honour thought that Dennis Hotels was an authority "against treating the tax as a duty of excise" [5] . Gibbs J. [6] was of the opinion that Kitto J. was correct in Dennis Hotels in stating that the licence fee was an exaction "only in respect of the business generally, and not in respect of any particular act done in the course of the business". His Honour went on to conclude [7] that the reasoning for which Dennis Hotels was authority led to the conclusion that the fee was not a tax on any purchase or sale of tobacco. I have already pointed out, however, that Dennis Hotels is only an authority for the proposition that the Licensing Act did not impose a duty of excise. Stephen J. [8] said that it was clear that current dealings in tobacco played no part in determining the amount of the licence fee and that, quite apart from authority, he would not regard the fee as demonstrating that what was being taxed was the taking of a step in dealing with particular quantities of tobacco. His Honour thought that the view he took of the "significance of the basis upon which licence fees are to be calculated" was supported by Dennis Hotels. McTiernan J. dissented. 1. (1974) 130 C.L.R. 177. 2. (1974) 130 C.L.R., at p. 189. 3. (1974) 130 C.L.R., at pp. 243-244. 4. (1974) 130 C.L.R., at p. 213. 5. (1974) 130 C.L.R., at p. 211. 6. (1974) 130 C.L.R., at p. 255. 7. (1974) 130 C.L.R., at p. 227. 8. (1974) 130 C.L.R., at p. 236. Again, I do not think that it is possible to hold that Dickenson's Arcade is an authority for any general principle. The most that can be said about Dickenson's Arcade as an authority is that the reasons of three of the six judges — Menzies, Gibbs and Stephen JJ. — support the proposition that the nature of the fee imposed by the legislation in that case was not one directly related to goods. But that proposition adds nothing to what is to be derived from the actual decision in the case, namely that upon the legislation in that case no duty of excise was imposed. Finally, I turn to consider H.C. Sleigh [9] where the plaintiff alleged that the Business Franchise (Petroleum) Act 1974 S.A., which made it unlawful to carry on the business of selling petroleum products on and from 24 March 1975 unless a person was a holder of a licence, imposed a duty of excise. During the currency of the Act there were two licence periods. The first commenced on 24 March 1975 and ended on 23 September 1975. The second commenced on 24 September 1975 and ended on 23 December 1975. The fee payable for a licence comprised a fixed sum of money and a further amount which with one exception was "the prescribed percentage of the value of the quantity of petroleum products sold by the applicant during the relevant period reduced by the quantity of any petroleum products non-accountable in respect of that period". The relevant period for the first licence period was the financial year ending 30 June 1974 and for the second licence period the financial year ending 30 June 1975. Barwick C.J. [10] held that the case was governed by the decision in Dickenson's Arcade. Gibbs J. [11] was also of the opinion that the case was governed by Dickenson's Arcade. His Honour said [11] that the Act did not "impose a tax on goods, because the fee for a licence to carry on the business of selling petroleum products is quantified by reference to the value of the quantity of petroleum products sold during a period preceding that in respect of which the licence is granted". Stephen J. [12] also held that the legislation in all relevant respects was indistinguishable from that considered in Dickenson's Arcade. He also rejected the notion that there was anything artificial in distinguishing between current and past sales. Mason J. [13] said there was nothing to distinguish the licence fee from that which was dealt with in Dickenson's Arcade. His Honour said that although "some attempt was made to suggest that the plaintiff was engaged in manufacturing operations in that it included one or more additives in the petroleum products which it obtained from refiners, the prohibition is against carrying on the business of selling petroleum products without a licence, that is against selling, not against manufacturing". Murphy J. [14] was of the opinion that the licence fees imposed no excise because "duties of excise for the purposes of Ch. IV of the Constitution are taxes on goods produced or manufactured in the State". Jacobs J. dissented. 1. (1977) 136 C.L.R. 475. 2. (1977) 136 C.L.R., at p. 488. 3. (1977) 136 C.L.R., at p. 491. 4. (1977) 136 C.L.R., at p. 491. 5. (1977) 136 C.L.R., at p. 496. 6. (1977) 136 C.L.R., at p. 503. 7. (1977) 136 C.L.R., at p. 526. Again I think that H.C. Sleigh is only an authority for the proposition that legislation of the kind there involved does not impose a duty of excise. That is the precise effect of the reasoning of Barwick C.J. and Mason J. Murphy J. decided the case on the basis that excise duties are limited to taxes on production or manufacture. Only the judgments of Gibbs and Stephen JJ. are capable of supporting a wider proposition. It was also suggested in argument that H.C. Sleigh expressly decided that legislation requiring a producer to pay a licence fee is not an excise when the fee is calculated by reference to past sales of the producer. I cannot accept that submission. As I have pointed out, I do not think that H.C. Sleigh decided anything more than that the legislation in that case did not impose a duty of excise. It is true that in H.C. Sleigh the plaintiff sought to allege that it was a producer and fell within the authority of the decision in M.G. Kailis where a levy upon a producer was held to be an excise. But I think that the judgments in H.C. Sleigh show that the Court treated the plaintiff as a seller only and not as a producer who was a seller. Accordingly, I do not think that the decision can be taken as assimilating the position of a producer who is required to pay a licence fee quantified by reference to past sales with that of a retailer. Moreover, it would be astonishing if Mason J. was intending, sub silentio, to overrule the distinction which he made in M.G. Kailis between the position of a manufacturer or producer and a seller of goods. Indeed, in H.C. Sleigh, his Honour expressly referred to M.G. Kailis and pointed out [15] that "although I accepted Dennis Hotels as an authoritative decision in relation to a licence fee having similar characteristics, I did not regard the majority judgments as expressing a principle that would necessarily govern all cases, in particular cases where a licence similarly calculated was imposed on the manufacture or production of goods". No doubt it is true that in M.G. Kailis the licence fee was calculated by reference to a step in production or manufacture and not by reference to the sales of the producer. But it would be absurd to suppose that there is any constitutional difference between the licence fee of a producer quantified by reference to a step in production (say the value of goods produced) and the licence fee of a producer quantified by reference to his sales. In Gosford Meats [16] , Mason and Deane JJ. said that, although Dennis Hotels had been allowed to stand as an authoritative decision on its own facts, "it would fly in the face of both principle and authority to accept it as establishing a general proposition that can be applied to a tax made payable, in the form of a licence fee, by a manufacturer or producer of goods". The same comment can be made in respect of H.C. Sleigh. 1. (1977) 136 C.L.R., at p. 500. 2. (1985) 155 C.L.R., at p. 385. In my opinion the decisions in the franchise cases do not require the conclusion that no duty of excise is levied by legislation which prohibits a manufacturer from selling his products except upon payment of a licence fee quantified by reference to his sales in a past period of business. In so far as the Act prohibits P.M.L. from selling the tobacco products which it manufactures except upon payment of a licence fee, the Act is an invalid attempt to levy a duty of excise on it. Moreover, there is in my opinion a substantial difference between the legislation in the present case and the legislation considered in the franchise cases. That difference is more than one of degree. It reinforces the conclusion that the franchise cases are not authority for the proposition that fees levied upon P.M.L. in respect of the sale of products manufactured by it are not duties of excise. But more importantly, it leads to the conclusion that the decisions in the franchise cases do not require a finding that the fees calculated by reference to the sales by P.M.L. and the second plaintiff of products which they do not manufacture are not duties of excise. In Dennis Hotels and in Dickenson's Arcade the licences were annual licences calculated by reference to annual periods which expired six months before the commencement of the licence periods. In H.C. Sleigh the first licence was for a six-month period and the second licence was for a three-month period which coincided with the termination of the legislation. In the case of the first licence period, the licence fee was calculated by reference to an annual period which ended nine months before the licensed period commenced. In respect of the second licensed period, the licence fee was calculated by reference to an annual period which ended three months before the second licence commenced. In these three cases the length of the licence period, the smallness of the fee, and the length of time between the commencement of the licence period and the end of the period by which the licence fee was calculated gave rise to a respectable, if not necessarily correct, argument that the licence fees were for the privilege of carrying on the business. By way of contrast in the present case, the licences are monthly licences. They are calculated by reference to the sales for a one-month period in the immediately preceding month but one from the period for which the licence is granted. The proportion of the fee to sales in the present case is much higher than in the franchise cases. The fee is more likely to be passed on to the consumer than the fees in the franchise cases. The proximity of the calculation period to the licence period, the shortness of the duration of each period, the size of the tax, and the indication that it is to be collected but once in the chain of distribution overwhelmingly indicate that what is being directly taxed by s. 10 is the step of selling tobacco in the course of the business. The licence fee in the present case, therefore, is not an exaction for the privilege of carrying on a business but a tax on the sale of tobacco. The legislation and the decisions in the franchise cases furnish no reason, analogy or authority for reaching a different conclusion. If there is no constitutional difference between the licence and calculation periods in the present case and those in the franchise cases, it is difficult to see how there would be any constitutional difference if the licence was for a weekly or daily period quantified by reference to sales in the immediate preceding week or day but one. I doubt that the franchise cases were correctly decided. But they should be followed in the circumstances and for the reasons to which I earlier referred. That does not mean, however, that the Court should hold that legislation, which imposes a higher rate of tax or selects quite different licence and calculation periods from those involved in the franchise cases, does not levy a duty of excise. In my opinion the Act imposed and imposes duties of excise on the plaintiffs. I would answer the questions submitted in the case stated: 1. Yes, except for the fixed amounts prescribed by s. 10 of the Business Franchise (Tobacco) Act 1974 Vict.. 2. Yes, but only as to those parts of the several paragraphs of s. 10(1) of the Business Franchise (Tobacco) Act 1974 Vict. which commence with the words "together with". 3. Sections 7 and 10 are invalid in so far as they apply to a person in the position of the plaintiff to the extent stated in the answer to question 2.