CITATION: Ambiance (Arncliffe) Pty Limited v Chief Commissioner of State Revenue [2002] NSWADT 206 DIVISION: Revenue Division APPLICANT PARTIES: Ambiance (Arncliffe) Pty Limited RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 026012 HEARING DATES: 06/09/02 SUBMISSIONS CLOSED: 10/11/2002 DATE OF DECISION: 10/18/2002 BEFORE: Block J - Judicial Member APPLICATION: Duties Act - dutiable value - GST MATTER FOR DECISION: Prncipal matter A New Tax System (Goods and Services Tax) Act 1999 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Duties Act 1997 Archibald Howie Pty Limited v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143 Controller of Stamps v Buckland [1959] VR 517 Carborundum Realty Pty Limited v RAIA Archicentre Pty Limited (No.2) (1993) 93 ATC 4418 Spencer v The Commonwealtj (1907) 5 CLR 418 JB Chandler Investment Co Limited v FC of T 93 ATC 5182 CASES CITED: Royal & Sun Alliance Insurance Australia Limited v Commissioner of State Revenue [2002] VSC 345 Roxborough v Rothmans of Pall Mall Australia (2001) 76 ALJR 203 Customs and Excise v Redrow Group Plc [1999] 2 ALL ER 13 FCT v Wade (1951) 84 CLR 105 Commissioner of Taxation v Ryan (2000) 201 CLR 109 Remuneration Planning Corporation Pty Limited v Federal Commissioner of Taxation (2001) 201 46 ATR 400 APPLICANT REPRESENTATION: A McInerney, barrister RESPONDENT I Mezgher, solicitor ORDERS: The decision under review is affirmed, and the application for refund is dismissed 1 The decision under review is the refusal (by letter dated 18 March 2002) by the Respondent of an application dated 24 October 2001 (treated by the Respondent as an objection) by the Applicant for a refund of duty. The nature of the application is set out clearly in clause 27 of the Applicant's written submissions dated 21 September 2002 ("Applicant's submissions") which reads as follows: "On 24 October 2001, Ambiance Arncliffe requested a refund of duty paid in respect to the Goods and Services Tax (GST) component of the purchase price, in the sum of $24,750 (ie $450,000 divided by 100 multiplied by $5.50 equals $24,750). The Commissioner advised, by letter dated 18 March 2002, that duty was payable in respect to the GST component under the contracts for sale, as that component formed part of the purchase price (as stipulated in the contract), and that Ambiance Arncliffe was liable for the duty paid, as provided by ss. 9 and 21(1) of the Duties Act 1997 (NSW) ("the Duties Act"). The Commissioner further advised that a refund under s. 31 of the Duties Act was not applicable as the consideration was not reduced prior to settlement, nor was the consideration reduced between the parties to the contract, Ambiance Arncliffe, West Day and Eclipse." 2 The main issue before the Tribunal is as to whether the Applicant is entitled to a refund of duty. There is a secondary issue which is referable to section 31 of the Duties Act and which can be disposed of summarily; the consideration was not altered prior to settlement, and section 31 of the Duties Act cannot in its terms apply. 3 The Tribunal had before it the material furnished by the Respondent under section 58 of the Administrative Decisions Tribunal Act,1997 affidavits ("the affidavits") by two witnesses, Mr. Dominic Morabito ("Morabito") (a solicitor, formerly in the employ of McCabe Terrill Lawyers, the Applicant's solicitors) and Mr. Edwin Bogatez ("Bogatez") (a director of the Applicant), written submissions by the parties, and also certain exhibits which I need not detail. The submissions consist of the Applicant's submissions and the Respondent's submissions in reply dated 4 October 2002 ("Respondent's submissions"). At the conclusion of the hearing of this matter, it was agreed that the parties' submissions would be put in writing. A time-table was arranged for the delivery of firstly the Applicant's submissions, secondly the Respondent's submissions, and thirdly if the Applicant so desired, written submissions in reply to the Respondent's submissions. On enquiry by the Tribunal's staff recently (the relevant time period allowed having then expired) the Applicant's solicitors advised that their client did not intend to file any further submissions. 4 At the hearing and in relation to the affidavits, Mr. Mezgher indicated that he would require the deponents for cross-examination. After an adjournment and discussion between the parties, cross-examination was dispensed with in consequence of an agreement between the parties as to amendments to and deletions from the affidavits; affidavits incorporating the agreed amendments and deletions were subsequently received. that it was intended to refer to 27 June 2001). Mr. McInerney said at the hearing that the Applicant would not seek to claim an estoppel based on any conversations between either of Morabito or Bogatez and Ms. Maria Magat. He said also that the Applicant would not take any point arising from the principles in Brown and Dunne in consequence of the Respondent's failure to cross-examine either of the witnesses. However conversations with Maria Magat were not the only relevant conversations; there are also references to a conversation between Morabito and an unknown assessor on either 17 or 18 May 2001. The Applicant's submissions make no mention of any claims based on the May 2001 conversation, and in relation to the principles of estoppel, rectification and unjust enrichment, and it is not clear to me whether the Applicant still seeks nevertheless to press any such claims. It is likely in the circumstances (and having regard to the Applicant's submissions, which focus specifically on its claim for a refund based on the assertion that the Applicant paid a severable part of the purchase consideration, in consideration of the mutual GST promises and the obligation on the part of the vendors to furnish tax invoices), that the Applicant has abandoned them; however (and if only for the sake of completeness) I will revert to these aspects later in these reasons. ( A clear statement of either reliance or abandonment in the Applicant's submissions would have been helpful) 5 The main question before the Tribunal (as the submissions indicate) relates to the interpretation of section 21 of the Duties Act, in the circumstances of this case, and in particular whether duty is payable on a portion of the purchase consideration equivalent to the Goods and Services Tax ("GST") which was paid in respect of the purchase consideration. The question then is one of interpretation of the contracts in relation (in particular) to section 21 of the Duties Act. 6 There is an issue of a preliminary nature, which can be disposed of at an early stage. The application for review was made by Ambiance International Pty Limited, ("International") an associate (and the nature of the association was not before me or relevant) of the Applicant. The Respondent consented to an amendment so as to substitute the Applicant. Moreover and ex facie the affidavits the correct name of the substituted Applicant is Ambiance (Arncliffe) Pty Limited. That company is referred to in the Applicant's submissions as Ambiance Arncliffe Pty Limited. I assume, having regard to the affidavits that the former name is correct, and this decision has been prepared accordingly. 7 The facts in this matter (in respect of the main issue) fall within a narrow compass and in effect raise the question of whether, when a taxable supply for a composite price is made in accordance with a contract which records that it is a taxable supply, the consideration for the purposes of section 21 of the Duties Act, includes the GST payable by the vendor. 8 The Applicant claims (but not with complete accuracy) that the basic facts are set out in clauses 9 to 15 (inclusive) of the Applicant's submissions which read as follows: "9 On 10 January 2001, Ambiance Arncliffe Pty exchanged put and call option agreements with West Day Pty Ltd ("West Day") and Eclipse Engineering Sales Pty Ltd ("Eclipse"). Ambiance Arncliffe exercised the call options on 28 June 2001 for the purchase of adjoining properties at numbers 30 and 32 Guess Avenue, Arncliffe. The breakdown of the purchase price for the properties is set out below: No 30 Guess Avenue $3,198,195 (including 290,745 payable in respect to GST); No 32 Guess Avenue $1,751,805 (including $159,255 payable in respect to GST); Total $4,950,000 (including $450,000 allowed by the parties in respect to any liability to pay GST). 10 On 28 June 2001, Ambiance Arncliffe, as purchaser (as trustee for the Arncliffe Trust), executed a contract for sale with Eclipse, as vendor, in respect to property described as 32 Guess Avenue, Arncliffe (otherwise described as Folio 1/802148). The contract provided that the 'Price' for that sale was $1,751,805 (Price as defined on the front page of the contract). The contract further provided "note: subject to clause 13, the price includes Goods and Services Tax (if any) payable by the vendor". Under the heading "GST Information" on page 2 of the contract, the contract provided that the sale was a 'taxable supply', for the purposes of clause 13 of the contract. 11 Clause 13.9 of the contract provided that: "If this contract says this sale is a taxable supply and does not say the margin scheme applies to the property, the vendor must pay the purchaser on completion an amount of 1-11th of the price if 13.9.1 this sale is not a taxable supply; or 13.9.2 the margin scheme applies to the property." 12 Clause 13.10 of the contract provided that on completion the vendor must give the purchaser a tax invoice for any taxable supply by the vendor by or under this contract. 13 On 28 June 2001, Ambiance Arncliffe, as purchaser (as trustee for the Arncliffe Trust), executed a contract for sale with West Day, as vendor, in respect to property described as 30 Guess Avenue, Arncliffe in the state of New South Wales (otherwise described as Folio 2/802148). The contract provided that the 'Price' for that sale was $3,198,195 ('Price' as defined on the front page of the contract). In the respects discussed in paragraphs 10, 11 and 12 above, the contract with West Day, was in the same form as the contract between Ambiance Arncliffe and Eclipse. 14 The contracts for sale in respect to each property was stamped at the Sydney office of State Revenue on 11 July 2001 in respect to a total sale price of $4,950,000. A total amount of $250,758 was paid by Ambiance Arncliffe on account of stamp duty. The contracts for the sale of the properties were completed on 11 July 2001." 9 The Tribunal notes in relation to clause 9 of the Applicant's submissions that it does not in all respects correctly record what occurred. According to the Morabito affidavit it was International which entered into the Put and Call Option Agreements (collectively the "Options") and not the Applicant. The Applicant became the purchaser at a later stage pursuant to the nomination notices referred to in clause 8 of the Morabito affidavit. In respect of each Option, put and call options were granted and pursuant to which inter alia International was entitled to require the vendor to enter into a contract of sale in the form in which it was in fact executed. Each Option permitted International to nominate another person to exercise its call option, and the Applicant was for this purpose nominated by International. Moreover and insofar as clause 9 of the Applicant's submissions would suggest that any GST amount was separately specified, this is not so. 10 Section 21 of the Duties Act provides: "21 (1) The 'dutiable value' of dutiable property that is subject to a dutiable transaction is the greater of: (a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration of the value of a non-monetary consideration), and (b) the unencumbered value of the dutiable property. (2) The 'dutiable value' of the dutiable property transferred by way of foreclosure is the unencumbered value of the dutiable property and not the value of the debt secured by the mortgaged property. (3) The 'dutiable value' of a business asset to which section 28 applies is to be determined in accordance with that section. (4) The 'dutiable value' of a partnership interest referred to section 29 is to be determined in accordance with that section." 11 The Applicant submits that the view for which it contends accords with the relevant definition of "consideration" contained in the A New Tax System (Goods and Services Tax) Act 1999 ("the GST legislation") which reads as follows: "(1) Consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. (2) It does not matter whether the payment, act or forbearance was voluntary, or whether it was by the * recipient of the supply. (2A) It does not matter: (a) whether the payment, act or forbearance was in compliance with an order of a court, or of a tribunal or other body that has the power to make orders; or (b) whether the payment, act or forbearance was in compliance with a settlement relating to proceedings before a court, or before a tribunal or other body that has the power to make orders. (2B) For the avoidance of doubt, the fact that the supplier is an entity of which the * recipient of the supply is a member, or that the supplier is an entity that only makes supplies to its members, does not prevent the payment, act or forbearance from being consideration. (3) However: (a) if a right or option to acquire a thing is granted, then: (i) the consideration for the supply of the thing on the exercise of the right or option is limited to any additional consideration provided either for the supply or in connection with the exercise of the right or option; or (ii) if there is no such additional consideration- there is no consideration for the supply; and (b) making a gift to a non-profit body is not the provision of consideration; and (c) a payment made by a * government related entity to another government related entity is not the provision of consideration if the payment is specifically covered by an appropriation under an * Australian law." 12 I include two further sections of the GST legislation. Section 29.70 provides that in respect of a taxable supply the purchaser is entitled as of right to require a tax invoice. Section 75.30 provides that a tax invoice is not required where the margin scheme applies. Those two sections read: "29.70 Tax invoices (1) A tax invoice for a * taxable supply: (a) must be issued by the supplier, unless it is a * recipient created tax invoice (in which case it must be issued by the * recipient); and (b) must set out the * ABN of the entity that issues it; and (c) must set out the * price for the supply; and (d) must contain such other information as the regulations specify; and (e) must be in the * approved form. However, the Commissioner may treat as a tax invoice a particular document that is not a tax invoice. (2) The supplier of a * taxable supply must, within 28 days after the * recipient of the supply requests it, give to the recipient a * tax invoice for the supply, unless it is a * recipient created tax invoice. (3) A recipient created tax invoice is a * tax invoice belonging to a class of tax invoices that the Commissioner has determined in writing may be issued by the * recipient of a * taxable supply." "75.30 Tax invoices not required for supplies of real property under the margin scheme (1) You are not required to issue a * tax invoice for a * taxable supply that you make that is solely a supply of * real property under the * margin scheme. (2) This section has effect despite section 29- 70 (which is about the requirement to issue tax invoices)." 13 The two sale contracts are in similar terms. In each case the contract provides that the sale is a taxable supply and goes on to refer to clauses 13; clauses 13.9 and 13.10 of each contract have been quoted previously in this decision. Any reference in this decision to the "contract" refers to either or both of the contracts. 14 The Applicant's submissions contain detailed arguments as to whether the term "consideration" should be construed in accordance with the law of conveyancing or the law of contract. There are references to a number of decided cases and including Archibald Howie Pty Limited v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143, Controller of Stamps v Buckland [1959] VR 517 and Carborundum Realty Pty Limited v RAIA Archicentre Pty Limited (No. 2) (1993) 93 ATC 4418. I do not need to deal with these submissions in particular because the Applicant states categorically that in this present case the result is the same. 15 The Applicant has cited the test referred to in Spencer's case (referred to below); the last sentence of clause 50 of the Applicant's submissions reads as follows: "Section 21(1)(b) is focused on the assessment of value by reference to an hypothetical sale which is determined by reference to the opinion of a valuer as the price which a willing purchaser would have had to pay a vendor, not unwilling, but not anxious, to sell ( Spencer v The Commonwealth (1907) 5 CLR 418). " 16 I have no reason to doubt that the sale was made between parties at arms length and so that in respect of each contract the price paid would accord with the test set out in Spencer's case. The Applicant stated in the Applicant's submissions that: "The value of the properties agreed between the parties was arrived at by the operation of forces of supply and demand in the property market, and reflected the negotiated agreement between the parties whereas the component of the "Price" payable in respect to GST was imposed externally by government. That part of the Price was an amount paid in respect to mutual promises made between the purchaser and sellers in respect to GST and the tax invoice, and was not an amount paid in respect of the value of the properties." 17 Whenever parties at arms length negotiate with each other at arms length, each party will (in the nature of things) take into account relevant considerations of concern to it. The vendor will have regard to the fact that if the sale is a taxable supply it will have to pay GST; similarly it may have to pay agents' selling commission and other selling expenses. There may be relevant tax considerations and depending on whether the vendor holds the property as trading stock, or if the capital gains tax regime applies, the extent (if any) to which a discount (in respect of any relevant capital gain) or indexation is relevant. The purchaser in turn may take into account the extent to which it is entitled to an input credit, which in turn will depend (inter alia) on whether it is registered and whether it makes input taxed supplies. The parties will bargain with each other with these considerations in mind but at the end of the day the composite price agreed will accord with the Spencer test. It may be trite so say so, but it is clear that while GST will be a relevant consideration, the market will determine what can be obtained and whether the vendor must absorb the GST or is able to recover it in the purchase price. In a falling market the vendor may have to accept less regardless of GST considerations. 18 In respect of each contract a price (and being a composite price) was specified. In each case the contract provided that the sale constituted a taxable supply for the purposes of clause 13. Each contract contained a note reading: "note: subject to clause 13 the price includes Goods and Services Tax (if any) payable by the vendor." Under clause 13 the vendor would have been obliged to pay to the Applicant an amount equal to one eleventh of the price if the supply was not a taxable supply; similarly the vendor would have had to pay the same amount to the Applicant if despite the fact that the contract did not state that the margin scheme applied it did in fact apply to the relevant property. 19 GST was plainly a relevant consideration so far as the Applicant was concerned; so much is clear from the affidavits. The Morabito affidavit states that Bogatez was concerned as to "whether he would be liable to pay GST on the transactions" Clause 5 indicates that Morabito advised that the supply was a taxable supply. Neither affidavit makes mention of the Applicant being registered which would be a precondition for the grant to the Applicant of input credits based on the tax invoices Yet this must have been an important consideration having regard to the numerous references contained in the Applicant's submissions to the importance of the Applicant obtaining tax invoices. 20 In this case each contract made it clear that it related to a taxable supply. On that basis the vendor was liable for the GST. However the Applicant required tax invoices to enable it to claim input credits (and not refunds). The significance of the note read with clause 13.9 of each contract is simply that firstly if the contract says that it is a taxable supply but it is not, then a payment (equal to one eleventh of the price) is due by the vendor to the Applicant and secondly that if the contract does not specify that the margin scheme applies (and it does not) then if nevertheless it does, the same payment will be due. The Applicant would not have been entitled to that payment by reason of the fact that it (the Applicant) was not registered. If the Applicant had not received input credits (because for example its registration had ceased) the sale would still have constituted a taxable supply, and there would have been no right to the payment set out in clause 13.9 of each contract. This in the view of the Tribunal is the correct interpretation of each contract. To contend, as does the Applicant that it was entered into on the basis that the Applicant paid a part of the price (equal to the GST) in respect of the mutual promises referable to GST and for the tax invoice is not tenable. Apart from any other considerations the Applicant did not need clause 13.10 in order to obtain a tax invoice; it was entitled to a tax invoice as a matter of law. It is conceivable that the Applicant might not have agreed to pay the price specified if it did not consider that it would obtain the input credit but this is pure speculation and in any event not to the point. The Applicant considered that it would obtain the input credits (and did so) but it would not have had any recourse against the vendors for one eleventh of the price if it did not receive input credits for any reason other than those specified in clause 13.9 of the contract; the sale was nonetheless a taxable supply. 21 As a matter of construction of the contract it is clear that there is not a distinct part of the price "imposed externally by government" and that the transaction was that set out in the contract. I refer in this context to JB Chandler Investment Co Limited v FC of T 93 ATC 5182 at p5189 where Hill J said: In considering the entire context in which the payment was made and that context included the relationship between the firm and its service company, I expressed the view that the character of the payment in the hands of the recipient as income was not to be determined by focussing upon the words of the letter of the payer to the exclusion of all surrounding circumstances. My judgment in this respect was agreed to by the other members of the court, Lockhart and Gummow JJ. But to accept that the circumstances in which a payment is made will be relevant to a determination of the character of that payment in the hands of a recipient is not to say that surrounding circumstances can be used to contradict the words of an agreement reached between parties bargaining at arm's length as to what the consideration for a particular payment is to be, except in a case (and the present is not such a case) where it is claimed that the agreement is a sham and does not represent the true intention of the parties to it. The present is a case where negotiations between arm's length parties resulted in an agreement being reached between them, couched in language that was the subject of hard bargaining. That language clearly represented the intention of the parties to the agreement." (Emphasis added) 22 The affidavits and the Applicant's submissions contain an error which is in my view of a fundamental nature. There are a number of references in them to the receipt by the Applicant of a refund of GST. The Applicant's submissions specify that the refund was received in accordance with tax invoices supplied by the vendors under the contracts. In fact of course the Applicant did not receive a refund at all. The tax invoices entitled the Applicant (because it was registered) to input credits equivalent to the GST paid by the vendors. The Applicant became entitled in consequence to include those input credits in its GST return for the relevant statutory period. Its entitlement to a payment and the amount of that payment would necessarily be linked to taxable supplies made by it during that period. The fact that the Applicant received in respect of its return an equivalent payment arises simply from the fact that in that period and in the result it made no taxable supplies and was entitled to no other input credits. The Respondent contends that the Applicant's claim is premised on the proposition that it received a refund; as I have said, it did not receive a refund; it received by contrast a payment referable to the balance between tax on its taxable supplies and the input credits to which it was entitled. If the amount had been nil because it had made taxable supplies resulting in tax of $450000 the Applicant would have received no payment at all. It is in my view (and as the Respondent contends) not logical to found a claim which depends on the financial circumstances of the Applicant itself. 23 A recent judgment by Byrne J in the Victorian Supreme Court in Royal & Sun Alliance Insurance Australia Limited v Commissioner of State Revenue [2002] VSC 345 (and which has I understand been appealed) was referred to at some length by the parties and is clearly one which deserves careful consideration. His Honour was there concerned with insurance premiums where the premium element and the GST thereon were separately stated. His Honour in a lengthy judgment referred to and relied on the judgment of the High Court in Roxborough v Rothmans of Pall Mall Australia (2001) 76 ALJR 203. Clauses 55 to 62 (inclusive) of the judgment by Byrne J are repeated in this decision as follows: "55. I was referred also to a recent decision of the High Court in Roxborough v Rothmans of Pall Mall Australia Ltd . This was a claim in restitution brought by tobacco retailers against a wholesaler from whom they had purchased tobacco products. The sales took place at a time when a licence fee had been imposed by the Commonwealth upon both wholesalers and retailers of tobacco products. Like the stamp duty in the present case, this licence fee, payable in a given month, was calculated by reference to the amount of sales in the preceding month. Unlike the present case, the liability to pay the licence fee was imposed on both the wholesaler and the retailer. It had, however, only to be paid once and this was usually by the wholesaler. Like the present case, the wholesaler specified in its sales invoices the licence fee component as a separate item and the retailer paid the aggregate amount. In 1997 the High Court determined that the licence fee legislation was unconstitutional as it was a duty of excise and the fees were refunded by the Commonwealth to the wholesalers. The purchasing retailers then sought to recover in restitution the payments in respect of licence fees which they had paid. This claim was resisted on grounds including that the price for the products was a composite figure and that, since there had been no total failure of consideration for the payment, it was not recoverable. (Emphasis added) 56. The High Court determined this point in favour of the retailers since the licence fee component of the purchase price was distinct and severable from the remainder of the consideration. Following the determination that the licence fee was unconstitutional, there was a failure of consideration with respect to this severable part of the consideration. For my purposes, the interest of this case lies in the readiness of the court to sever a component of the sale price and to treat the funds represented by this component as earmarked for the payment of the licence fee whether it had then become payable by the wholesaler or not. Gleeson CJ, Gaudron and Hayne JJ expressed themselves this way: "[13] The amounts paid by the [retailers] to the [wholesaler] in respect of the tax represented a distinct part of the consideration for the tobacco products purchased by the [retailers]. They were treated by both parties to each relevant contract as separate from the wholesale price of the goods sold, that price constituting the value by reference to which the amount of the tax was determined. And the tax, being a tax on goods, was of such a nature that it was not intended to be borne ultimately by either the [retailers] or the [wholesaler]. The tax increased the exchange value of the tobacco products in the hands of the retailers, but the initial value by reference to which the minister's determination as to the basis of the tax operated was a wholesale price exclusive of the tax component. While the wholesale price, exclusive of the tax, was arrived at by the operation of forces of supply and demand in the market for tobacco products, and reflected the negotiated agreement of the parties, the tax was imposed externally by government." And later at [17]: "[17] In a contract for the sale of goods, the total amount which the buyer is required to pay to the seller may be expressed as one indivisible sum, even though it is possible to identify components which were taken into account by the parties in arriving at a final agreed figure. The final figure itself may have been the result of negotiation, making it impossible to relate a cost component to any particular part of that figure. Or there may be other factors which prevent even a notional apportionment. But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration. Here, the buyers, the retailers, were required to bear, as a component of the total cost to them of the tobacco products, a part of the licence fees which the seller, the wholesaler, was expected to incur at a future time, and which was referable to the products being sold. It was in the common interests of the parties that the fees, when so incurred, would be paid to the revenue authorities by the seller, and it was the common intention of the parties (and the revenue authorities) that the cost of the goods would include the fees. In the events that happened, the anticipated licence fees were not incurred by the seller. The state of affairs, which was within the contemplation of the parties as the basis of their dealings, concerning tax liability, altered. And it did so in circumstances which permitted, and required, severance of part of the total amount paid for the goods." 57. Gummow J also rejected the submission put on behalf of the wholesaler that under the sale contract the purchasing retailers undertook to pay the whole amount stipulated in the invoice for the sale of the tobacco products including the licence fee component: "[56] The better conclusion from the evidence is that, in the contracts made during the dispute period, each [retailer] agreed to pay both the invoiced price of the goods and the licence fee component in exchange for the supply of the goods, but the payment of the licence fee component was the subject of a further term. This was that, if the [retailer] remained in business and renewed its licence for the periods beginning respectively 28 August and 28 September, Rothmans then would so act that the [retailer] would not, under (1)(c) and (3) of, bear the ad valorem components of its renewed licence for those periods. The term ordinarily would be performed by Rothmans paying for the renewal of its licence for those further periods the equivalent amount to that received and identified as `tobacco licence fee'. [57] That is not to maintain that Rothmans failed to acquire ownership in specie of the funds it was paid; nor does it mean that Rothmans was obliged to earmark and keep those funds separate or otherwise treat them as if they were impressed with trusts in favour of the [retailers]. Nor, given what, it will appear, is the adequacy of the legal remedy available to the [retailers], is there any occasion to consider whether, and, if so, when and on what terms, there arose in their favour a constructive trust of the species discerned by Judge Learned Hand in his dissenting judgment in 123 East Fifty-Fourth Street Inc v United States , and to which Mason CJ gave qualified acceptance in observations made in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd. " 58. Kirby J was prepared to assume that a constructive trust might be imposed on the wholesaler in these circumstances but dissented from the majority on the basis that the retailers who seek equity must themselves be prepared to do equity by passing on to their customers the benefit of the restored licence fee. Callinan J did not need to consider this point. 59. Reference in these judgments is made to the judgment of Mason CJ in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd, a case where the insurer sought the recovery of stamp duty overpaid under a mistaken view of the. His Honour, after considering the American cases, concluded as follows: "I would accept so much of Judge Learned Hand's analysis in 123 East Fifth-Fourth Street as leads to the conclusion that the restaurant owner was a constructive trustee of the amount of the tax received from its patrons if the owner charged the separate amount of the tax to its patrons. The tax so received was received by the owner as a fiduciary on the footing that it would apply the money in payment of the tax. If that purpose failed or could not be effected because the tax was not payable then the owner held the moneys for the benefit of the patrons who paid the moneys. The same result would ensue if the owner recovered payments from the revenue authority made as and for tax which was not payable. And, in my view, the patrons who paid the tax to the owner would have a right of recovery, as Judge Learned Hand makes clear, against the revenue authority so long as it retained the payments which it was not entitled to retain." 60. These are, of course, cases dealing with restitution and associated principles. Nevertheless, the reasoning in them clearly contemplates the possibility that, where the contractual documents so provide, the consideration for a sale or, as in this case, the provision of services, may be dissected so as to identify a tax component and that this may be so notwithstanding that this component is not, in fact or as a matter of law or by any accounting procedure, segregated in the hands of the recipient from its working capital or passed on to the taxing authority in specie. It is but a small step for the recipient to argue that the premium, the consideration received from the insured for the insurance cover, did not include this component. 61. Counsel for Royal invited me to take this step. They pointed to the fact that the Full Court of the Federal Court was prepared to do so in an analogous context in Commissioner of Taxation v Century Yuasa Batteries Pty Ltd. As I read and re-read these cases to which I have referred, it appeared to me that they do point strongly in this direction. 62. Nevertheless, the question which I have to consider is essentially one of the construction of s. 98(1) and its application to the facts of this case. Guided by the cases to which I have referred, I conclude that the separate designation of the GST component of the amount payable by the insured for the insurance cover has the consequence that this component, when paid, is not part of the gross premiums received by the insurer. This conclusion reflects the terms of the contract between Royal and its insureds insofar as this is disclosed in the renewal advices. It reflects the intent of the which is directed to the imposing of duty on the value of insurance business carried on by the taxpayer. It is consistent with the spirit of the since 1958 which has shrunk from imposing duty upon duty. Finally, and most importantly, it is not inconsistent with the terminology of s. 98(1) which came into existence when no GST was contemplated." (The Tribunal notes, with respect to his Honour, and in relation to clause 60 of his judgment that it is not sure that it is "but a small step"). 24 Reference was made by Byrne J and also by the High Court to a dissenting judgment by Learned Hand J in a case involving 123 East Fifty-Fouth Street Inc from which the following extract is quoted; "In 123 East Fifty-Fourth Street Inc v United States285, a restaurant owner had collected taxes (subsequently held not to be payable) from its patrons and paid the amount so collected to the revenue authority. The case was between the restaurant owner and the revenue authority. Learned Hand J (in dissent) said 286: "I shall assume that, when the plaintiff charged its guests with the amount of the tax for which it supposed itself liable, it added the amount as a separate item and described it as a tax which it must pay, and which it was apparently collecting from the guests in order to pay it to the Treasury. If the plaintiff wishes to dispute this, I should allow it to do so, because I regard the distinction as crucial whether it made the charge in that form, or merely included in the bills rendered the amount of the supposed tax without saying anything about it. If it said nothing, I should agree with my brothers that the guests had no legally recognizable interest in the money collected, which gave them any claim to it superior to the plaintiff's; and in that case some statute would be necessary to deprive the plaintiff of its right to recover. On the other hand, if the plaintiff collected the money under what the guests must have understood to be a statement that it was obliged to pay it as a tax, and that it meant to do so, the money was charged with a constructive trust certainly so long as it remained in the plaintiff's hands. For example, if, before the plaintiff had paid it, the Treasury had declared that the tax was not due, the plaintiff could not have successfully resisted the guests' demand that it be turned back to them, the very purpose for which they had paid it having then become incapable of execution." 25 Clause 17 of the Roxborough judgment is particularly significant. The High Court considered that the price will be one indivisible sum even though it is possible to identify components taken into account in arriving at an agreed figure. On any basis however it is not possible in this case to conclude that there been an alteration in circumstances which resulted in a failure of a severable part of the consideration. Byrne J in Royal concluded that the separate designation of the GST was significant and so much so that it did not form part of the gross premiums received. 26 It is in my view important to remember that in each of Roxborough and Royal and Sun the relevant consideration was expressed in such manner as to reflect the tax or duty separately. And Learned Hand made the same assumption in his dissenting judgment 123 East Fifty-Fourth Street. Moreover and apart from any other considerations, the tax was in each case specifically passed on. In this case, and ex facie the contracts, it was not; nor was it expressed separately and the Applicant did not agree to pay the GST. The fact that it agreed to a price, in circumstances where it considered that it could take into account the fact that it would be entitled to a corresponding input credit does not alter this fundamental fact. Accordingly the judgments to which I have referred (Roxborough, Royal and Sun and East Fifty-fourth Street are on the facts in this matter distinguishable. 27 In Royal and Sun, Byrne J said that the (Victorian) Stamp Act had shrunk from imposing duty on duty. The Applicant contends that to charge duty in these circumstances amounts to just that. My view is that it does not. Duty is often charged on what is on analysis a tax component included in the cost which underlies the consideration. Assume that A sells machinery to B where the machinery was imported and the purchase consideration attracts duty (for whatever reason). The price charged might include excise because the cost to A includes excise. Until comparatively recently the price charged might have included a component for sales tax. A seller who seeks to make a profit must take into account in his cost all relevant components of it, and including taxes or excise borne by him. There is nothing in either the Duties Act or the GST legislation to the contrary. I note also for what it is worth, that the term "consideration" is defined in the GST legislation in very wide terms. In any event and as the Respondent contends there is no principle of law which prevents the payment of a "tax on a tax" 28 In this case each contract provides for a composite price and there is no reason to suppose (as I have indicated) that the parties intended anything else. As set out previously the Applicant under each contract paid a price which the vendor was prepared to accept, knowing that it (the vendor) would have to pay GST on the price. The Applicant may (as I have indicated) have taken into account the fact that it expected to recoup a part of the price by way of input credit. But it does not follow, by any means, that I should imply into each contract provisions which it does not contain. In particular and at the risk of labouring the point, each contract provides for a composite price, under a supply described as a taxable supply. I do not think that clause 13 of each contract, which deals in general terms with various possibilities as regards GST, can or should be read and dissected in the manner for which the Applicant contends. In respect of each contract the purchase price was the consideration for the purposes of section 21 of the Duties Act. 29 I might perhaps usefully refer (although only in passing) to a comparatively recent UK VAT decision in the House of Lords in Customs and Excise v Redrow Group Plc [1999] 2 ALL ER 13, where Lord Millett said that "……. there could be no question of deducting input tax unless Redrow has incurred a liability to pay it as part of the consideration payable ………. for a supply of goods and services." This decision is of marginal relevance only; it indicates though that the House of Lords considered that the consideration (under the UK legislation) included the liability to pay VAT. 30 In clause 4 above I noted that I would revert to the remaining questions arising from the provisions of that clause and in particular in respect of the telephone conversation between Morabito and the unknown assessor in May 2001. I note in the first instance that there is a difference of a fundamental nature between the two affidavits. Clause 3 of the Bogatez affidavit reads: "On or about 10 January 2001, Mr Morabito contacted me by telephone and advised that he had just spoken with an officer at the Office of State Revenue in relation to obtaining a stamp duty refund following the refund of the Goods & Services Tax ("GST") on a commercial property. Mr Morabito informed me that the Office of State Revenue would refund the stamp duty payment". 31 However clauses 4, 5 and 6 of the Morabito affidavit read as follows: "4. In early May 2001 the director of AI, Mr Edwin Bogatez contacted me by telephone and instructed me that he intended to exercise the options to purchase both properties. I recall at that time having discussions with Mr Bogatez regarding GST. In particular Mr Bogatez had requested legal advice as to whether he would be liable to pay GST on the transactions. 5. On or about 16 May 2001 I contacted Mr Bogatez by telephone and advised him that in our opinion that GST would be payable in respect to this transaction because being a commercial property it involved a taxable supply and the sale could not be categorised as "a going concern". I recall shortly after this conversation that Mr Bogatez telephoned me and requested advice as to whether the fact that he would be liable for additional GST on the purchase price which would mean that he would be required to pay additional stamp duty. I recall at the time that I said to Mr Bogatez that I would make enquiries with the Stamp Duties Office regarding this issue. 6. On or about 17 or 18 May 2001 I telephoned the Stamp Duty Information Line and spoke to an assessor. I explained to the assessor on the telephone the situation that a commercial property was being purchased and that GST would be paid on the purchase price of $4.5M. I requested advice as to whether (a) Stamp duty in calculated on the GST inclusive price; and (b) Whether one could claim a refund of stamp duty once a GST refund had been received from the Australian Tax Office I recall that the assessor on the telephone was unable to answer my question initially and after placing me on hold for a number of minutes returned to the telephone and said words to the following effect: "Yes stamp duty is on the GST inclusive amount and you are able to claim a refund once a refund of GST has occurred. You should file a request once the refund has been obtained". Unfortunately, I did not note the assessor's name at the time I spoke on the telephone." 32 The fundamental difference is that according to Morabito, he first spoke to an unknown assessor in the Respondent's office (in May 2001) after the Options had been entered into whereas Bogatez states that the relevant advice was obtained in point of time prior to the Options being entered into, and that they were entered into in reliance on that advice. It is after all Morabito and not Bogatez who spoke to the unknown assessor. To the extent relevant, I think that I should prefer the evidence of Morabito (who had the conversation with the unknown assessor) from which it is clear that the Options were entered into in point of time prior to the alleged advice. It follows on this basis that the Options could not have been entered into in reliance on it. (I note that I have assumed that a reference in the Morabito affidavit to 27 June 2002 is purely a typographical error and that the intended date reference is 27 June 2001). It may be thought that it is odd that a solicitor asked to give advice on a legal matter, should do so on the strength of a conversation with an unknown assessor who was, having regard to manner in which the conversation evolved, probably junior. There is of course nothing wrong with seeking advice from the Respondent's staff but in such event the solicitor would surely ensure that he was dealing with someone senior (and qualified) and who was known to him, and would in any event have checked that advice for its accuracy. 33 As I have said the fact that the Applicant has not dealt with any of estoppel, restitution and unjust enrichment in its submissions leads me infer that any claim under any of these concepts is not being pursued. It is my view in the first instance that any claim founded on an estoppel because of the conversation in May 2001 must fail because that conversation could not have been relied upon by the Applicant. 34 The Respondent (as indicated by the Respondent's submissions) is as unclear as I am as to whether the Applicant still relies on an estoppel claim. Apart from any other considerations (and even apart from those set out in clause 33) I agree with the contentions of the Respondent that no conduct of the Respondent could operate as an estoppel against the operation of the Duties Act; FCT v Wade (1951) 84 CLR 105 at 117 per Kitto J; Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 124; Remuneration Planning Corporation Pty Limited v Federal Commissioner of Taxation (2001) 201 46 ATR 400 at 405. As the Respondent says in clause 18 of the Respondent's submissions: "Estoppel in not available to release a party from an obligation to obey a statute or from an obligation to pay tax at a particular rate" 35 The Respondent and I are also unclear as to whether the Applicant has abandoned any claim based on the principles of restitution and unjust enrichment. I include clauses 21 and 22 of the Respondent's submissions (with which I agree) as follows: " 21 In this regard, the Applicant must demonstrate that there has been a mistake of fact or law, improper pressure, a statutory right to reimbursement, some agreement to refund in the event of excessive payment or illegality of the impost: Mason & Carter at para [2002], [2020]. A "causative mistake" needs to be demonstrated: Lamesa Holdings BV v Commissioner of Taxation (1999) 92 FCR 210 at 231, 236. This probably still represents the law in Australia. The evidence adduced does not, in any way, show that the payment of ad valorem duty on a contract for the sale of land (in circumstances where the purchaser has obtained a GST credit) amounts to a mistake of fact or a mistake of law or any other form of "illegality" - eg. ultra vires levying of duty or constitutional invalidity. There is no statutory right to reimbursement in such circumstances under the Act or any other piece of legislation. The Applicant has failed to establish any "illegality"of the impost or any "excessiveness" of the payment. 2. Even under the law in England, where the law of restitution recognizes a prima facie right of recovery based solely on the payment of money pursuant to an ultra vires demand by a public authority without the need to establish the elements referred to above (Woolwich Equitable Building Society v IRC [1993] AC 70), the Applicant would not succeed as, once again, there is no "ultra vires" demand. The Respondent, at all times, acted within power and in accordance with lawful authority conferred by the Act." 36 I emphasize that I have dealt with questions of estoppel, rectification and unjust enrichment for the sake of completeness and because they were originally raised by the Applicant. The fact that the Applicant did not mention any of them in the Applicant's submissions leads me (as I have said)to infer that these claims have been abandoned, and indeed there is no legal basis for them. Apart from the legal aspects, I would not be inclined to accept them as a matter of fact (and having regard to all of the evidence before me) on the basis only of the telephone conversation with the unknown assessor in May 2001. 37 Accordingly and for these reasons the decision under review is affirmed, and the application for a refund is dismissed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.