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The Federal Court (Jessup J) has ordered that a writ of mandamus issue directing the Commissioner to comply with s 35-5 of the GST Act and s 8AAZLF of the Taxation Administration Act 1953 (the TAA) by forthwith paying (refunding) to the taxpayer the net amount notified to the Commissioner in the applicant’s GST return for each of the tax periods January, February, March, April and May 2011.

The Commissioner had refused to make the refund to the taxpayer on the ground that he suspected that when the facts were investigated and the true position revealed, it would be shown that the taxpayer did not in fact make the creditable acquisitions which it claimed to have made, and that its claims for refunds in respect of the period January- May 2011 would be shown to be fraudulent. The Commissioner had instituted an investigation into the taxpayer's affairs, which he estimated would be concluded by the end of November 2011.

Rather than directly attacking the taxpayer's application on the grounds of fraud, the Commissioner sought to argue that the provisions of the GST Act and of the TAA, under which the taxpayer was prima facie entitled to refunds, are subject to an implied proviso that the obligation to make those refunds need not be complied with instantly, but must be complied with within a reasonable period of the Commissioner having received the applicant’s returns.

This submission was rejected by the Court. Jessup J said, at para 29:

"...I reach the conclusion that, to the extent that s 35-5 of the GST Act implicitly contemplates that the payment for which it provides should be made within a reasonable period, that period is only such as would facilitate the making of the payment as a matter of administration. It would not encompass the time taken to undertake an investigation of the accuracy of the returns themselves. It follows that, as at the date of these reasons, the Commissioner has failed to perform the duty which is cast upon him by s 35-5 of the GST Act and s 8AAZLF of the Administration Act."

The Court also refused to defer the operation of the order until 1 December 2011, in order to allow the Commisoner's investigation to proceed to a conclusion.

Multiflex Pty Ltd v FCT [2011] FCA 1112 (Federal Court, Jessup J, 30 September 2011).


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