ODDBINS PTY LTD v LIQUOR ADMINISTRATION BOARD OF NSW SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY JA 4 April 1996, 4 April 1996 [1996] NSWCA 409 TAXATION — State turnover taxes — Liquor Act — wholesale and retail licences- statutory provisions for avoidance of double taxation — retail licensee not complying with the statutory provisions — double taxation payable. The premises at 104 Parramatta Road, Camperdown, the central store of the Oddbins chain, were covered by a retail licence and a wholesale licence issued under s18(3)(a) and s18(3)(c) of the Liquor Act 1982 respectively. Since both licences were held in respect of the same premises, the wholesale licence fee was fixed under s80 (2)(c)(ii). The retail licence attracted a fee based on stock "delivered upon or purchased for" the licensed premises under s80(3). Rather than adopting the scheme provided for by the legislation of acquiring stock under the wholesale licence and then appropriating it to the retail licence as needed, Oddbins acquired stock under the retail licence and then at a later date transferred it to the wholesale licence when it needed to transfer stock to another store holding a retail licence. The Liquor Administration Board assessed additional licence fees of $56,815 for the years 1988-90 in respect of stock the subject of those transfers and the assessment was upheld at first instance. HELD, dismissing the appeal: (1) The double taxation effect was the result of the appellant not utilising the legislative scheme provided, (2) The Board's power to re-assess licence fees under s83 did not authorise it to modify the basis of taxation prescribed in s80, (3) The relevant liquor had been "delivered upon or purchased for" the premises the subject of the retail licence and the amounts in question were payable. Handley JA This is an appeal by Oddbins Pty Ltd from a decision of Mr Justice Newman who heard proceedings by way of judicial review commenced by the appellant against the Liquor Administration Board. In those proceedings the appellant challenged an assessment by the Board under the Liquor Act which required the plaintiff to pay an amount of $56,815 as additional licence fees for the years 1988, 1989 and 1989/1990. Mr Justice Newman upheld the assessment and this appeal has been brought from that decision. At all material times a Mr Coelho was the holder of what I will call a wholesale licence and also a retail licence under the Liquor Act in respect of premises at 104 Parramatta Road, Camperdown. The wholesale licence was issued under s18(3)(c) of the Liquor Act and was in terms a licence to sell liquor to persons authorised to sell liquor. The licence which I have described as a retail licence was an off-licence issued pursuant to s18(3)(a) of the Act and was in terms a licence to sell liquor by retail. Since both licences were held in respect of the same premises the only licence fee payable in respect of the wholesale licence was a fixed fee of $1,000 payable under s80(2)(c)(ii). There is no dispute but that this fee was properly payable by the licensee. The retail licence attracted licence fee under s80(2)(d) calculated at ten per cent of the applicable amount prescribed by s80(3). This section, so far as relevant, provided the applicable amount so prescribed is: 2 UNREPORTED JUDGMENTS "(a) in the case of... an off-licence to sell liquor by retail - the amount paid or payable by or on behalf of the licensee for all liquor that, during the assessment period for the licence fee. was delivered upon or purchased for: (i) the licensed premises...". The licence fee is payable by the licensee and nobody else. The actual licensee, Mr Coelho, was not a party to the proceedings in the Supreme Court and is not a party to this appeal. Although, under the Act, the licence fee is payable by the licensee and not by the owner of the business, the owner has brought these proceedings. It is clearly interested in the questions and ultimately bears the burden of the tax imposed on the licensee. No point has ever been taken by the Crown based on the non- joinder of the licensee. In the circumstances the Court indicated that it would hear the appeal as presently constituted without requiring the joinder of the licensee. S84 requires a licensee to maintain appropriate records of his liquor purchases and report these to the Board. The records maintained by the licensee in respect of the Camperdown premises during the period covered by the assessment recorded that all liquor delivered to those premises had been delivered to and purchased for the retail business under the retail license. The licensee, and for that matter the appellant, was not required to purchase all liquor for these premises for the retail business under the retail licence. The licensee and the appellant could have arranged for some or all of those purchases to be made under the wholesale license and for the wholesale business. However, this was not done. The problem in the present case has arisen because the appellant and the licensee for their own reasons failed to make any use of the wholesale licence held for the premises when acquiring stock later used for the wholesale business. As I have said all the stock was acquired under the retail licence and initially for the retail business. In practice what happened was that a substantial quantity of the stock purchased for the licensed premises at Camperdown under the retail licence was later appropriated by the licensee and the appellant to the wholesale business and the wholesale licence. Had this stock been acquired initially through the wholesale licence and for the wholesale business no licence fee would have been attracted on the purchase or delivery of that stock to the premises. In those circumstances liability under the retail licence for payment of licence fee would only have accrued as and when stock was appropriated or delivered from the wholesale business to the retail business. Although the Act permits and, indeed it might be said, encourages licensees who hold both a wholesale and a retail licence in respect of the same premises to conduct their business in this way the appellant and its licensee chose, for other reasons, not to take advantage of this facility. As a result they have incurred a greater licence fee than would have been incurred had they arranged their business affairs in the manner I have indicated. Nevertheless, the fact that the business transactions conducted under these licences could have been conducted on a different basis which would have attracted a reduced licence fee does not, in my opinion, entitle the appellant to have the fee assessed on any such basis. The Act imposes the licence fee on the holder of the retail licence based upon moneys paid or payable for liquor delivered upon or purchased for the licensed premises. URJODDBINS PTY LTD v LIQUOR ADMINISTRATION BOARD OF NSW (Powell JA) 3 The evidence which indicates that the liquor the subject of the additional assessment was so delivered or purchased by the holder of the retail licence is contained in the records kept by the licensee pursuant to the Act in the Liquor Purchased Register. In these circumstances Mr Whealy QC, who appeared for the appellant, was constrained to concede that the licence fee, the subject of the Board's assessment, had indeed become payable in respect of the relevant liquor, although that liquor was later appropriated to the wholesale business and sold and delivered to other retailers. Because this occurred the liquor in question bore the retail licence fee, not only when it was delivered to the Camperdown premises, but also when it was delivered under the wholesale licence to the holder of another retail licence resulting in double taxation of the same liquor. It must be said that this is not a result which the Act requires in cases such as this and had full and proper use been made of the wholesale licence in respect of these premises double taxation would have been avoided. However, the Act applies to actual and not hypothetical or notional transactions, and in the events that happened the way in which the appellant and its licensee arranged their business at these premises resulted in the additional licence fee as assessed becoming payable. S81 of the Act allows certain amounts, described as authorised deductions, to be deducted from the gross licence fee prima facie payable under s80(3)(a)(i) by the holder of a retail licence in order to arrive at a nett amount upon which the tax will actually be paid. However, it has been common ground that none of the authorised deductions apply in the present case. In particular, there is no authorised deduction available to the holder of a retail licence who sells or delivers retail stock to either a wholesaler or another licensed retailer except in an emergency as provided for in s81(1)(b). There is no suggestion that these deliveries by the holder of the licence to the holder of the wholesale licence took place in an emergency. As I have said it has been conceded that none of the authorised deductions in s81 are available to the appellant or the licensee in the present case. The re-assessment which has been challenged was made pursuant to s83. Under s83 the Board is authorised to re-assess licence fees, but it has no power to modify the basis of taxation prescribed in s80, or to adopt any other basis of taxation. In these circumstances I have concluded that the amounts in question were properly payable by the licensee under s80(3)(a)(i) in respect of liquor delivered upon or purchased for the licensed premises under the retail licence. There is no legal basis by which the Court can give effect to the method of business adopted by the licensee and the appellant to avoid the double taxation which has been incurred. There being no alternative statutory basis for assessment and no available authorised deduction I conclude that the assessment was authorised and there is no legal basis upon which this Court is authorised to interfere. I would therefore propose that the appeal be dismissed with costs. Meagher JA I agree. Powell JA I also agree. HANDLEY JA: The order of the Court is the appeal be dismissed with costs. Counsel for the Appellant: A G Whealy QC/P Johnson 4 UNREPORTED JUDGMENTS Solicitors for the Appellant: Gwynne Thompson Counsel for the Respondent: K M Mason QC/M S Willmott Solicitors for the Respondent: I V Knight, Crown Solicitor