High Court of Australia McTiernan, Menzies, Gibbs, Stephen and Mason JJ. MG Kailis (1962) Pty Ltd v Western Australia [1974] HCA 10 ORDER Demurrer overruled with costs, not including the costs of the intervener. Cur. adv. vult. The following written judgments were delivered:— 1974, April 1 McTiernan J. This matter comes before the Full Court on a demurrer involving the determination of the constitutional validity of s. 35G of the Fisheries Act, 1905-1971 W.A.. The plaintiff seeks in the action a declaration that this section is ultra vires the legislature of the State because it is in conflict with s. 90 of the Constitution of the Commonwealth of Australia so far as that section relates to duties of excise. Section 35G is in Pt IIIB of the Act, the heading of which Part is "Processing Establishments". Section 35G is as follows: (1) The fees payable in respect of processor's licenses granted or renewed under this Part shall be assessed at a percentage of— (a) the value of fish caught; and (b) the moneys paid or payable for fish purchased, by or for the person operating, or causing or permitting to be operated on his behalf, a processing establishment, for processing on or in that establishment for purposes of sale. (2) Every person to whom a processor's license is granted, and every licensee of a processor's license that is renewed, shall pay to the Director as an annual fee for that license in respect of each year commencing on the first day of January a sum calculated on the gross amount of the value of fish caught, and the moneys paid or payable for fish purchased, for processing in the processing establishment during the period ending the thirtieth day of June next preceding the commencement of that year equal to such percentage, not exceeding one per centum, of that gross amount as the Governor by Order in Council determines and is authorised so to determine from time to time, and that person or licensee shall pay that sum in two moieties, the first of which shall be paid within thirty days after the license is granted, or as the case may be, renewed and the other within a period of six months thereafter. The material paragraphs of the statement of claim include the following: 6. The plaintiff has at all material times carried on, at each of Dongara and Leschenault in the State of Western Australia, the business of processing fish (within the meaning of the word "processing" as used in the said Act) for purposes of sale and of operating processing establishments for the purpose of such processing within the meaning of the said Act. 15. For some years prior to the 1st January 1972 the plaintiff was the holder of a processor's licence in respect of the said Dongara processing establishment. In respect of those years the plaintiff paid to the secondnamed defendant the licence fee determined pursuant to the provisions of s. 35G of the said Act. The said processor's licence was renewed in respect of the year commencing 1st January 1972 but the plaintiff has refused and continues to refuse to pay any licence fee in respect of the said year. The Leschenault processing establishment was acquired by the plaintiff in November 1971 and no licence fee became payable by the plaintiff in respect of that establishment until 1972. 1. The Governor of the State of Western Australia has by Order in Council determined that the percentage within s. 35G (2) of the said Act shall be three-quarters (¾) of one per centum for the year which commenced on the first day of January One thousand nine hundred and seventy-two. 2. On the basis of such determination and of the gross amount of the value of the fish caught by the plaintiff and the moneys paid or payable for fish purchased by the plaintiff for processing in the Dongara Processing Establishment during the relevant period, that is to say the twelve months ended the thirtieth day of June One thousand nine hundred and seventy-one, the secondnamed defendant claims that the licence fees payable by the plaintiff in respect of the said year commencing 1st January 1972 amount to $13,251.00 in respect of the Dongara Plant. 3. On the basis of such determination and of the amount of the value of the fish caught by the former operator of the Leschenault Processing Establishment and the moneys paid or payable for fish purchased by such former operator for processing in the Leschenault Processing Establishment during the relevant period, that is to say, the twelve months ended the thirtieth day of June One thousand nine hundred and seventy-one, the secondnamed defendant claims that the licence fees payable by the plaintiff in respect of the said calendar year amount to $6,261.00. 4. The secondnamed defendant has demanded that the plaintiff pay to the secondnamed defendant the said sum of $13,251.00 and $6,261.00 and it threatened to commence legal proceedings against the plaintiff and other action to enforce payment of the said sums. the plaintiff claims: 1. A declaration that s. 35G of the Fisheries Act, 1905-1971 of the State of Western Australia is invalid by reason of the fact that that Section purports to impose duties of excise contrary to the provisions of s. 90 of the Constitution of the Commonwealth of Australia. The defendants demurred as follows: The defendants (and each of them) demur to the whole of the statement of claim upon the grounds that it does not disclose a cause of action to which effect can be given by the Court, and that— 1. each of the provisions of the Fisheries Act, 1905-1971 is a law validly made by the Parliament of the State of Western Australia, and in particular s. 35G is validly enacted. 2. none of the provisions of the Act imposes or purports to impose a duty of excise contrary to s. 90 of the Constitution of the Commonwealth of Australia. Briefly stated, the material question is whether by reason of the enactment of sub-s. (2) of s. 35G, the licence fee for a processor's licence is not an excise duty as contemplated by s. 90 of the Constitution, since the amount of the fee is not quantified according to the gross amount of value of fish caught or the moneys paid or payable for the fish purchased for the year in which the licence is granted and the fee is charged. Rather, under s. 35G (2), the fee is calculated on the gross amount of the value of fish caught and the moneys paid or payable for fish purchased for processing during the period ending the thirtieth day of June next preceding the commencement of the year for which the licence is granted and the fee is charged. In my opinion the licence fee so calculated is an excise duty and is covered by s. 90 of the Constitution. To be an excise duty, it is not essential that the impost in question be directly and quantitatively related to the goods to which it will ultimately attach. Dixon J. (as he then was) in considering the connotation of the word "excise" in Matthews v. Chicory Marketing Board (Vict.) [1] said: "although, as it is used in the Commonwealth Constitution, it describes a tax on or connected with commodities, there 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. 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. continued [1] : "If the word "excise" received a meaning which confined its application to taxes the relation of which to the commodity concerned was of some narrow and strictly defined nature, as, for instance, by an arithmetical relation to quantity, it would not only miss the principle contained in the use of the word "excise", but it would expose the constitutional provision made by s. 90 to evasion by easy subterfuges and the adoption of unreal distinctions. 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." This accords with the views of Isaacs J. as expressed in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia [2] : "The prohibitions of ss. 90 and 92 of the Constitution may be transgressed not merely by a direct and avowed contravention. They are transgressed also by a statute—whatever its ultimate purpose may be, and however its provisions are disguised by verbiage or characterization, or by numerous and varied operations lengthening the connective chain, or by otherwise paying titular homage to the supreme law of the Constitution—if it operates in the end by its own force so as to do substantially the same thing as a direct contravention would do, either in attaining a forbidden result or in using forbidden means. The relevant constitutional prohibitions include both means and results. It is no justification for using forbidden means that permissible results are sought, nor for securing forbidden results that lawful means are employed." 1. (1938) 60 C.L.R. 263, at pp. 302-303. 2. (1938) 60 C.L.R., at p. 304. 3. (1926) 38 C.L.R. 408, at p. 423. As I have indicated recently in Dickenson's Arcade Pty. Ltd. v. Tasmania [3] and earlier in Parton v. Milk Board (Vict.) [4] : the object of s. 90 is a "uniform fiscal policy for the Commonwealth". 1. Ante, at p. 196. 2. (1949) 80 C.L.R. 229, at p. 265. The Fisheries Act, 1905-1971 W.A. prescribes fees which have the characteristics of an excise and which offend this object. Accordingly, in my opinion, s. 35G of the Act is invalid. I would overrule the demurrer. Menzies J. The plaintiff company carries on the business of processing fish at two plants in Western Australia—one at Dongara, the other at Leschenault. It buys the fish which it processes. For some years prior to 1st January 1972 the plaintiff was the holder of a processor's licence issued under the Fisheries Act W.A. in respect of the Dongara plant. This licence was renewed in respect of the year commencing 1st January 1972 but the plaintiff has refused to pay any licence fee in respect of that year. The Leschenault plant was acquired by the plaintiff in November 1971. No licence fee became payable by the plaintiff in respect of that establishment until 1972. The fee fixed for the year 1972 was three-quarters of one percent. On this basis the fee payable by the plaintiff for the Dongara plant was $13,251 and the fee payable for the Leschenault plant was $6,261. The plaintiff refuses to pay these fees contending that the section by which they are imposed—s. 35G of the Fisheries Act—is invalid because it is a law imposing duties of excise contrary to s. 90 of the Constitution. Section 35G is in these terms: 20g. (1) The fees payable in respect of processor's licenses granted or renewed under this Part shall be assessed at a percentage of— (a) the value of fish caught; and (b) the moneys paid or payable for fish purchased, by or for the person operating, or causing or permitting to be operated on his behalf, a processing establishment, for processing on or in that establishment for purposes of sale. (2) Every person to whom a processor's license is granted, and every licensee of a processor's license that is renewed, shall pay to the Director as an annual fee for that license in respect of each year commencing on the first day of January a sum calculated on the gross amount of the value of fish caught, and the moneys paid or payable for fish purchased, for processing in the processing establishment during the period ending the thirtieth day of June next preceding the commencement of that year equal to such percentage, not exceeding one per centum, of that gross amount as the Governor by Order in Council determines and is authorised so to determine from time to time, and that person or licensee shall pay that sum in two moieties, the first of which shall be paid within thirty days after the license is granted, or as the case may be, renewed and the other within a period of six months thereafter. It must be read with ss. 35B and 35I (2). These are as follows: 20b. On and after the first day of January, nineteen hundred and sixty-six a person shall not operate, or cause or permit to be operated on his behalf, any processing establishment unless he is the holder of a processor's license granted and in force under this Act in respect of that processing establishment. 20i. (2) The fee payable by the licensee of a processor's license under this Part is a debt due to Her Majesty and may be sued for and recovered, and the obligation to make the returns under this Part may be enforced, in any court of competent jurisdiction, by the Minister suing in his corporate name. The fees, I think, are taxes. They are payable by the holder of a licence to do what may properly be called taking a step in the production of consumable goods, i.e. making fish which it has purchased ready for sale and consumption. The plaintiff is engaged in manufacturing. If the tax is imposed upon the processing of fish it is unquestionably a duty of excise. The sections are defended by the argument that the tax is not upon the processing of fish. This argument was prefaced by a review of the Act to show that it is a legislative scheme controlling an industry and that the moneys received as fees are necessarily committed to the development of the industry. This preface can be accepted but once it is recognized that the fees are taxes the bare question is whether they are duties of excise as defined by decisions of this Court. The most authoritative of these decisions is now Bolton v. Madsen [1] , and I proceed on the footing of what was said in that decision viz., [2] 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. 1. (1963) 110 C.L.R. 264. 2. (1963) 110 C.L.R., at p. 271. Section 35G (1), if it stood by itself, would unquestionably impose a duty of excise. The fees made payable are to be assessed at a percentage of the price of fish bought for processing. The argument of the Solicitor-General was, however, that s. 35G (1) must be read with s. 35G (2) which shows that the fees are not assessed on current purchases of fish for processing but on purchases of fish purchased for processing at the plant during an earlier period. So it was contended that this section falls within the authority of Dennis Hotels Pty. Ltd. v. Victoria [1] . 1. (1960) 104 C.L.R. 529. I cannot accept this argument. I am, of course, greatly influenced by the terms of s. 35G (1) itself, but I do not rest my decision entirely upon the language of that subsection. It is to be noted further that s. 35J (2) requires the applicant for a new processor's licence to furnish the Minister with particulars to enable him to estimate "the probable extent of the annual catches and purchases of fish for processing" at the processing establishment. Furthermore, the fee is not the price of a licence. A licensee may become entitled to a licence and receive a licence without the payment of a fee—see ss. 35C (2) and (2b) and (2c). There is in s. 35I (3) the limitation that a licence shall not be renewed unless the fees due at the date of the application are paid but the fees there referred to are past fees. What may be described as current fees are payable in two moieties "the first of which shall be paid within thirty days after the licence is granted, or as the case may be, renewed and the other within a period of six months thereafter"—see s. 35G (2). In the circumstances to which I have referred, the fee can hardly be described as the price of a licence to carry on a business. Upon the whole I have come to the conclusion that this case is distinguishable from Dennis Hotels Pty. Ltd. v. Victoria [1] , where a victualler's licence fee was, I think, properly regarded as a tax upon persons for a franchise to carry on business, the amount of which was merely calculated by reference to past purchases. I regard the tax imposed by s. 35G as one upon the processing of fish caught or purchased for that purpose. 1. (1960) 104 C.L.R. 529. Accordingly, in my opinion, s. 35G does impose a duty of excise and is accordingly invalid. I would therefore overrule the demurrer. Gibbs J. This is a demurrer to a statement of claim by which the plaintiff, which carries on in the State of Western Australia the business of processing fish, seeks a declaration that s. 35G of the Fisheries Act, 1905-1971 W.A. ("the Act") purports to impose duties of excise contrary to s. 90 of the Constitution and is invalid. The Act deals generally with the regulation of fishing and fisheries but the section whose validity is challenged appears in Pt IIIB—"Processing Establishments"—which was inserted in the Act in 1965. The provisions of that Part, so far as it is relevant to refer to them, are as follows. A "processing establishment" is defined to include "any land, jetty, premises, vehicle, boat, or other place whatever on or in which the processing" (which includes "cutting up, breaking up, filleting, preparing, packing, freezing, canning, preserving or otherwise treating in any manner whatever") "of fish" (which means and includes "all or any of the varieties of marine or fresh water fishes and crustacea or marine animal life"—s. 3 (1)) "is carried out for the purposes of sale; but does not include premises, or the part of premises, in which fish are sold by retail to the public or in which meals are served to the public" (s. 35A). It is an offence for any person to operate, or cause or permit to be operated on his behalf, any processing establishment unless he is the holder of a processor's licence granted and in force under the Act in respect of that processing establishment (s. 35B). The manner in which application is to be made for a processor's licence, the power of the Director of Fisheries ("the Director") to grant such an application and the fees payable in respect of licences are dealt with by ss. 35C, 35G and 35J, whose provisions are important enough to quote in full: 20c. (1) Every application for a processor's license to be renewed in respect of a processing establishment shall be made in the prescribed form to the Director and the applicant shall furnish and deliver with his application a return in writing signed by the applicant, or by a person authorised by him in that behalf, setting forth— (a) the quantities of the various species of fish caught by or for the applicant, or purchased by him, for processing on or in the processing establishment; (b) the value of each of the various species of fish so caught for processing and the gross value of the total quantity of fish so caught; and (c) the amounts paid or payable for each of the various species of fish so purchased and the gross amount paid or payable for the total quantity of fish so purchased, during the period of twelve months ending the thirtieth day of June next preceding the commencement of the year in respect of which or part of which the applicant requires a processor's license to be granted or renewed, the first of which periods of twelve months shall be the period ended on the thirtieth day of June, nineteen hundred and sixty-five in respect of the licensing year commencing on the first day of January, nineteen hundred and sixty-six. (2) The Director shall consider each application for the renewal of a processor's license and where he is satisfied that the processing establishment the subject of the application is constructed, equipped and operated in a hygienic manner and in conformity with the provisions of this Act and the regulations he shall, subject to such conditions and restrictions as he thinks fit, grant the application, and where he is not so satisfied he shall refuse the application and, by notice in writing, advise the applicant of the grounds of his refusal. (2a) Where a person proposes to construct or establish a processing establishment on any land, jetty, premises, vehicle, boat or other place not the subject of a processor's license, he may apply to the Director for a permit to establish thereon a processing establishment, and shall— (a) set out in, or include with, his application the location of, and the plans, specifications and equipment of, the proposed processing establishment; and (b) furnish such other information with respect to his application, as the Director requires for the purpose of carrying out his functions under subsection (2b) of this section. (2b) Where the Director has received an application for a permit duly made under subsection (2a) of this section, and he is satisfied that— (a) if constructed or established in the manner specified by the applicant, the proposed processing establishment would be constructed, equipped and capable of being operated in an efficient and hygienic manner, and in conformity with the provisions of this Act and the regulations; and (b) having regard to the number of processing establishments or proposed processing establishments in respect of which licenses or permits under this section are then in force, and to the sizes and natures of those establishments and proposed establishments, it is in the better interests of the fishing industry that the proposed processing establishment be constructed or erected, and a license under this section granted therefor, he shall grant the application and issue a permit to establish the proposed processing establishment subject to such conditions and restrictions as are specified in the permit and cause notice of his decision to issue the permit to be advertised in the manner prescribed, and where he is not so satisfied he shall refuse the application and, by notice in writing, advise the applicant of the grounds of his refusal. (2c) Where— (a) the Director has granted a person a permit to establish a processing establishment; and (b) the person has constructed or established a processing establishment in the manner specified in his application for the permit, and in accordance with the conditions and restrictions, if any, specified in the permit, the Director shall, upon application made by the person in the prescribed form for a processor's license in respect of that processing establishment, grant the application subject to such conditions and restrictions as he thinks fit. (3) A processor's license granted under this section shall, unless sooner cancelled, expire on the thirty-first day of December next following the date of its commencement, but may on application to the Director in writing signed by the licensee, or by a person authorised by him in that behalf, be renewed from time to time until the next following thirty-first day of December. (4) Every processor's license granted under this section shall be and be deemed to be subject to a condition that the holder of that license shall not purchase fish for processing in the processing establishment the subject of that license from any person other than the holder of a processor's license under this Part or the holder of a professional fisherman's license under the regulations. 20g. (1) The fees payable in respect of processor's licenses granted or renewed under this Part shall be assessed at a percentage of— (a) the value of fish caught; and (b) the moneys paid or payable for fish purchased, by or for the person operating, or causing or permitting to be operated on his behalf, a processing establishment, for processing on or in that establishment for purposes of sale. (2) Every person to whom a processor's license is granted, and every licensee of a processor's license that is renewed, shall pay to the Director as an annual fee for that license in respect of each year commencing on the first day of January a sum calculated on the gross amount of the value of fish caught, and the moneys paid or payable for fish purchased, for processing in the processing establishment during the period ending the thirtieth day of June next preceding the commencement of that year equal to such percentage, not exceeding one per centum, of that gross amount as the Governor by Order in Council determines and is authorised so to determine from time to time, and that person or licensee shall pay that sum in two moieties, the first of which shall be paid within thirty days after the license is granted, or as the case may be, renewed and the other within a period of six months thereafter. 20j. (1) Where under the provisions of this Part fees payable in respect of any processor's license are required to be assessed, and— (a) no information is produced to the Director, or the information produced is insufficient to enable him to determine the gross value of fish caught, or the gross amount paid or payable for the quantity of fish purchased for processing on or in the processing establishment; or (b) there is no previous period of twelve months, or information in respect of a period of twelve months cannot be produced, the Minister shall fix the amount of any such fee as he thinks reasonable and the amount so fixed shall be final and conclusive. (2) Every applicant for the grant of a new processor's license shall at the time of application furnish to the Director all particulars available to enable the Minister to estimate the probable extent of the annual catches and purchases of fish for processing on or in the processing establishment for which a processor's license is sought. The percentage determined by the Governor by Order in Council for the purposes of s. 35G (2) of the Act at the relevant time was three-quarters of one per cent. Provision is made for the suspension or cancellation of a licence for breaches of condition or for failure to pay the licence fee (s. 35F) and for an appeal against decisions of the Minister or Director except under s. 35J (s. 35K). All fees in respect of licences received by the Director must, together with certain other moneys, be paid to an account called the "Fisheries Research and Development Fund", which is administered by the Minister (s. 35L (1) and (2)). Section 35L (3) provides: The moneys in the Fund may be used and applied by the Minister in such manner and in such proportion as the Minister thinks fit for all or any of the following purposes— (a) scientific, technological or economic research in relation to fisheries; (b) investigation, exploration and development of fisheries; (c) the provision of extension services related to fisheries; and (d) assisting— (i) the fishing industry; and (ii) any body, whether incorporate or not, whose objects include assistance to, or promotion of, the fishing industry, and not otherwise. If a licence is to have effect during only portion of a year a proportionate amount of the annual fee only is to be payable (s. 35H). The Minister may waive payment of the whole or part of a licence fee "in any case where special circumstances exist which in his opinion warrant his so doing" (s. 35O). My views on the effect of s. 90 of the Constitution, so far as they are relevant to this case, are fully expressed in a judgment which I have recently prepared in Dickenson's Arcade Pty. Ltd. v. Tasmania [1] and I need not restate them. 1. Ante, at pp. 213-228. In the present case the licensing system was not mere machinery for the collection of a fee. It had the important purpose of maintaining proper standards in the industry of processing fish. That, however, is in my opinion immaterial. The licence fees collected were not paid into Consolidated Revenue but into a fund created for certain useful purposes connected with the fishing industry, but the fees were nevertheless taxes; it is impossible to regard them as fees for services. The sole question is whether the fees were taxes directly related to goods (that is, fish), imposed at some step in their production or distribution before they reached the hands of consumers. The processing of fish—in other words, putting the fish into a marketable state—was clearly a step in production within the meaning of this rule. The question then is, did the Act tax the processing of the fish? If s. 35G (1) stood alone this question would perhaps be answered in the affirmative. That subsection indicates that the tax is imposed by reference to the value of the fish caught and purchased for processing and if nothing more appeared it might be implied, although it is not expressed, that what is meant is the value of the fish caught and purchased during the period covered by the licence. However, in my opinion the provisions of s. 35G (2) make it clear that the licence fee is to be assessed by finding the appropriate percentage of the value of fish caught and purchased for processing during a period before that in respect of which the licence is granted. The provisions of s. 35G (1) and 35G (2) are not inconsistent; sub-s. (1) leaves it to sub-s. (2) to specify that the sum of which a percentage is to be taken to arrive at the amount of the fee is the gross amount of the value of fish caught, and the moneys paid or payable for fish purchased, for processing during the year ending on 30th June next preceding the commencement of the year in respect of which the licence is granted. To construe s. 35G as imposing a fee in respect of fish caught and purchased for processing under the licence would be to give no effect to the provisions of s. 35G (2). The provisions of s. 35J (1) (b) further show that it is the previous period of twelve months with which the Minister is concerned in fixing a fee. Whatever the purpose of s. 35J (2) in requiring the applicant to furnish an estimate of the probable extent of annual catches and purchases of fish for processing, that section does not alter the plain meaning of s. 35G (2). In any case it may be observed that a provision indistinguishable in effect from s. 35J (2) appeared as s. 21 (1) of the Licensing Act 1958 Vic., which was the subject of the decision in Dennis Hotels Pty. Ltd. v. Victoria [1] . 1. (1960) 104 C.L.R. 529. I hold that upon the proper construction of the Act the licence fee was calculated by reference to the value of fish acquired for processing during a period previous to that covered by the licence. On the authority of Dennis Hotels Pty. Ltd. v. Victoria [1] the fee was not a tax on the goods acquired for processing or on the processing itself and was not an excise. The demurrer should accordingly be allowed. 1. (1960) 104 C.L.R. 529. Stephen J. Part IIIB of the Fisheries Act 1905-1971 W.A., first introduced into that legislation in 1965, establishes a system for the licensing of fish processing establishments in that State. It contemplates the setting of standards relating to the construction, equipment and efficient and hygienic operation of such premises; it also ensures that a licensed processor's purchases of fish shall be made only from licensed professional fishermen or from other licensed processors. A fund is established, the Fisheries Research and Development Fund, to be applied by the responsible Minister exclusively in fisheries research and development, assistance to the fishing industry and similar purposes. The principal source of the Fund is fees payable in respect of processors' licences. This legislation has provoked constitutional challenge by the plaintiff, a fish processor, which claims that the fees payable in respect of these licences are in the nature of an excise and consequently fall foul of s. 90 of the Constitution. If these licence fees are properly to be characterized as taxes directly related to goods and imposed at some step in their production then the plaintiff's challenge should succeed—Bolton v. Madsen [1] . Two elements of the case which the plaintiff must establish may be dealt with at the outset; it is conceded that the processing of fish by the plaintiff is, of course, a process of manufacture or production; it is also conceded that the licence fees in this case are in the nature of a tax; they conform to the now well established description of a tax discussed by Dixon J. in Parton v. Milk Board (Vict.) [2] . The remaining question is, then, whether this tax is of the requisite kind, that is to say a tax directly related to goods, a tax imposed upon goods at some stage in their passage from production to ultimate consumption. 1. (1963) 110 C.L.R., at p. 271. 2. (1949) 80 C.L.R., at pp. 258-259. In my reasons for judgment in Dickenson's Arcade Pty. Ltd. v. Tasmania [3] I have referred to that which appears to me on the authorities to be the proper approach to such a question, an inquiry whether what renders the taxpayer liable to the tax is the taking of a step in the production of goods or in their passage down the line of distribution from production to consumption. 1. Ante, at pp. 228-237. This inquiry is to be directed to identifying the distinguishing quality possessed by the taxpayer which is fixed upon by the legislation as attracting the incidence of this tax; if it be its participation in the processing of quantities of fish that is fixed upon then the tax will be an excise because it may then be said to be a tax upon goods although of course imposed upon and payable by an individual, as must be all taxes, whether or not directly related to goods: Anderson's Pty. Ltd. v. Victoria, per Menzies J. [1] . If it is not that activity which attracts the liability to tax, it matters not how the tax be then described, whether as a condition of a right to carry on a business or in some other fashion, it will not be a duty of excise. 1. (1964) 111 C.L.R., at p. 377. The occasion of this tax is a successful application for the grant of a processor's licence or for the renewal of such an existing licence; without the holding of such a licence a fish processing establishment cannot be conducted. However, as Kitto J. pointed out in Dennis Hotels Pty. Ltd. v. Victoria [2] , it is not enough that a tax is exacted for the privilege of engaging in the process of producing or distributing goods. In the present case this circumstance does no more than set the scene for, and determine the surroundings in which, the inquiry as to the character of the tax is to be made. It is the tax itself and its incidence that must be examined. 1. (1960) 104 C.L.R., at p. 560. The most significant feature of the tax for present purposes is its mode of assessment which is principally governed by s. 35G of the Act, although ss. 35C and 35J are also relevant. These sections appear in full in other judgments. The terms of s. 35G are curious, its two subsections are ill-matched and sub-s. (2) might well stand on its own; sub-s. (1), although anticipating much of the contents of sub-s. (2), adds to what the latter contains only a reference to the processing of fish being "for purposes of sale". Had sub-s. (1) stood alone there would I think be substance in the contention that the tax imposed by the Act was a duty of excise; licence fees would then have been assessable at a percentage of the value of fish caught or bought by the processor for processing at his processing establishment and, assuming that the legislation also contained some provision for determining the applicable percentage and relating it to fish caught or bought during the term of the annual licence, the fees could then be seen to be squarely based upon the value of fish acquired by the processor for processing. However, in my view the inelegance of drafting involved in s. 35G is no more than that; the two sub-sections must necessarily be read together since sub-s. (1) has no effective operation on its own and, when read together with sub-s. (2), although largely repetitive, is not in conflict with it. So interpreted it clearly emerges that licence fees are to be assessed on a basis unrelated to the value of fish processed during the period of the annual licence. Instead they are to be assessed having regard to the value of fish acquired for processing during a relatively remote period in the past, the twelve months period ending six months before the beginning of the term of the licence. In this respect this legislation resembles that found in Pt III of the Tasmanian Tobacco Act 1972, the subject of examination in Dickenson's Arcade Pty. Ltd. v. Tasmania [1] and for the reasons stated in my judgment in that case I am of the opinion that such a basis for the assessment of licence fees does not give to those fees the character of a duty of excise. 1. Ante, at p. 177. When a licence fee is required to be calculated on the basis of the intake of fish during a past period the proportion of total licence fee attributable to the value of a particular intake of fish into the processing establishment cannot then enter into the cost to the consumer of the processed fish product and this well-recognized characteristic of a duty of excise, described by Kitto J. in Anderson's Pty. Ltd. v. Victoria [2] , as the expectation or intention that the burden of the tax should be passed on to the ultimate consumer, will be absent in any relevant sense; when, in addition, the licence fee is made payable otherwise that at the end of the year for which the annual licence is issued and no provision for subsequent adjustment exists a further obstacle to any precise passing on of the burden of the fee in the form of an appropriately increased sale price arises. 1. (1964) 111 C.L.R., at p. 374. The passing on of tax attributable in any sense to particular processed fish is thus inhibited in two respects. The processor cannot, during a year's trading, know precisely what his total volume of production for that year will be so that he will not know how many units of fish products will be available over which to apportion the burden of the total licence fee; more importantly, any tax burden which he may seek to recoup by casting it upon the purchasers of the current year's production as part of its price is not measured by the value of the fish which goes into that production but rather by the value of the fish used in production during the financial year ended six months before the start of the current calendar year. If, in the meanwhile, his intake of fish, and hence, no doubt, his production, has increased in volume the licence fee he passes on will be at a lower rate than 0.75 per cent of the value of the fish content of the current year's production, that being the rate of tax applied under the legislation to the value of fish intake. The converse will be the case if his intake of fish and his volume of production has diminished as compared with the preceding financial year. The consequence is, in my view, that, although past intake of fish into the processing establishment will determine the amount of the current licence fee, it cannot be said that this basis of assessment results in the fee being a tax on fish taken into the establishment or on processed fish product. There is an absence of any relationship between particular fish or processed fish product and any part of the licence fee paid in respect of the period when that fish or processed fish product is dealt with by the processor. This deprives the basis of assessment which s. 35G calls for of the significance it would otherwise have in the characterization of the licence fee. I reach this conclusion notwithstanding the terms of s. 35J (2), providing for the assessment of licence fees in the case of new applicants for licences. Such an applicant is to supply the Minister with information to enable him to estimate "the probable extent of the annual catches and purchases of fish for processing" at the processing establishment and the Minister will then, pursuant to s. 35J (1), fix the amount of such licence fee as he thinks reasonable. Even if the estimate contemplated is of the value of the intake of fish by the new processor at his establishment in its first year of operation this is clearly enough only to be resorted to when no information exists concerning any earlier period of operation of the establishment—see s. 35J (1) (b)—and is no more than an interim measure, as were the similar provisions of s. 21 (1) of the Victorian Licensing Act 1958 under consideration in Dennis Hotels Pty. Ltd. v. Victoria [1] . Indeed the terms of s. 35J (1) emphasize that it is the value of fish acquired during a past period and not during the period of the licence which the legislation regards as relevant in the determination of the amount of licence fees; in this respect s. 53J in no way departs from the concept embodied in s. 35G. 1. (1960) 104 C.L.R. 529. Apart from the basis for assessment of licence fees there is no other feature of the present legislation which can arguably be said to give to those fees the character of a duty of excise. In my view, and on the authority of Dennis Hotels Pty. Ltd. v. Victoria [1] , they are not such a duty. 1. (1960) 104 C.L.R. 529. I would allow the demurrer. Mason J. The relevant facts and the provisions of the Fisheries Act 1905-1971 W.A. are set out in the reasons for judgment prepared by Gibbs J. and I need not repeat them. The issue for decision is whether the licence fee payable for a processor's licence under s. 35G is a duty of excise within the meaning of s. 90 of the Constitution. There is a preliminary question of construction relating to ss. 35G and 35J. The provisions of the two sections should be read together. When they are so read I do not find any inconsistency in the operation of the particular subsections. Section 35G (1) provides that licence fees are to be assessed at a percentage of the value of fish caught and the moneys paid for fish purchased. However, it does not specify the period which is to be taken for the purpose of making the assessment. It is part of the purpose of s. 35G (2) to identify the relevant period; this it does by specifying the period of twelve months ended on 30th June immediately preceding the year commencing on 1st January for which the licence is to run. Although the sub-section is expressed to apply to the grant, as well as the renewal, of licences it is evident that it is capable of applying only to the grant or renewal of licences in respect of processing establishments which were in operation in that antecedent period. It is the function of s. 35 (1) (b) to make provision for the situation where there is no previous period of twelve months or information in respect of such a period cannot be produced. It is then for the Minister to fix the amount of the licence fee as he thinks reasonable. This again is the Minister's function when no information is produced to the Director or the information is insufficient to enable him to determine the gross value of fish caught or the gross amount paid or payable for fish purchased for processing in the establishment (s. 35J (1) (a)). Special provision is made by s. 35J (2) for the submission by an applicant for a new processor's licence of all particulars available to enable the Minister to estimate the probable extent of the annual catches and purchases of fish for processing in the establishment. A consideration of these provisions makes it clear that, subject to s. 35J (1) (a), in the case where the processing establishment was in operation in the antecedent period of twelve months mentioned in s. 35G (1) the licence fee is to be assessed by reference to fish caught and fish purchased for processing in that period. It is equally clear that where that situation does not obtain it is the function of the Minister to fix the amount of the fee under s. 35J (1). In fixing the amount of the fee he will have regard to his estimate of the probable extent of the annual catches and purchases of fish for processing in the establishment. When the Minister so fixes the amount of the fee it necessarily reflects an estimate of the quantity of fish to be processed in the establishment in a period of twelve months. It is impossible to escape the conclusion that this period of twelve months is not the period referred to in s. 35G (2) but a future period which may well coincide with the term of the licence. It is an estimate to be based on information supplied by the applicant; in the nature of things, the information will be directed to the proposed production in the establishment once it commences to operate, that is, under the licence. It is evident then that the licence fees are assessed by reference to the quantity of materials processed in the establishment in a period before the commencement of the licence or, in some circumstances which include the case of a new processing establishment, by reference to an estimate of the quantity of materials to be processed in a future period which may coincide with the period of the licence. The distinction between the two methods of assessing the licence fee, despite the decision in Dennis Hotels Pty. Ltd. v. Victoria [1] , does not seem to me to be of importance. That decision, as I have said in Dickenson's Arcade Pty. Ltd. v. Tasmania [2] , should not be regarded as authoritative in relation to the prescription of fees for licences to manufacture or produce goods. 1. (1960) 104 C.L.R. 529. 2. Ante, at p. 240. To hold that Dennis Hotels [1] 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. 1. (1960) 104 C.L.R. 529. 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.) [3] , or, as McTiernan J. expressed it in the same case [4] , 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. When attention is given to the fee prescribed by the Fisheries Act for a processor's licence, it seems to me that it has the characteristics of an excise. First, it is a tax; it is not merely a fee charged for a service provided. Secondly, it is a tax levied at the point of production—processing is prohibited without the benefit of a licence (s. 35B). It is a tax upon the goods in that it is calculated by reference to the quantity of materials used in the production process. It is a tax which in the normal course of events will be added to the price of the goods and ultimately paid by the consumer or retail buyer. It is therefore a tax which directly affects the price of goods and has an impact upon the consumption, and the consequent demand for the production, of goods on which the tax is imposed. An endeavour was made to defend the validity of the licence on the ground that the licence was part of a licensing system the purpose of which was to regulate the processing of fish. True it is that under s. 35L processor's licence fees are paid into a special account in the Treasury styled the "Fisheries Research and Development Fund", and that moneys standing to the credit of the Fund may be applied only for purposes connected with the protection and advancement of the fishing industry and of fisheries. However, the licence fees are clearly a tax, and in my opinion the purpose for which they are imposed cannot deprive them of their character as an excise. In my opinion the demurrer should be overruled and there should be a declaration that s. 35G of the Fisheries Act 1905-1971 W.A. is invalid.