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16 Nov 1111 Commissioner's appeal in GST mandamus case dismissed - Multiflex

The Full Federal Court (Stone, Edmonds and Logan JJ) has dismissed the Commissioner's appeal against the decision of Jessup J in Multiflex Pty Ltd v FCT [2011] FCA 1112 (30 September 2011). In that case, Jessup J 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 taxpayer’s GST return for each of the tax periods January, February, March, April and May 2011.

The Commissioner has refused to make the refund to the taxpayer on the ground that he suspects that when the facts are investigated and the true position revealed, it will be shown that the taxpayer did not in fact make the creditable acquisitions which it claims to have made, and that its claims for refunds in respect of the period January- May 2011 will be shown to be fraudulent. The Commissioner 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 taxpayer's returns.

The Full Federal Court said, at para 40:

"It may readily be accepted that the imperative language of s 35-5 of the GST Act as to the making of a refund is at least attended with the implication that the refund must be made within a time which is reasonable in the circumstances. However, those circumstances must attend what is necessary to discharge the duty concerned, which is to make the refund, not to undertake an investigation which may or may not result in the raising of a GST assessment by the Commissioner. The trial judge was correct to reject any such wider implication as to what were circumstances relevant to the ascertainment of a reasonable time. The system of taxation for which the GST Act, read with the TAA, provides envisages that, depending upon the calculation of the net amount which the entity makes it will either pay that net amount to the Commissioner within the time fixed by the GST Act or, as the case may be, receive a refund from the Commissioner within a time fixed by what is reasonably necessary to make that refund..."

In the Court's view: "If that be a defect in the scheme of taxation, the defect is one for Parliament to address."

The Commissioner's appeal was dismissed: FCT v Multiflex Pty Ltd [2011] FCAFC 142 (Full Federal Court; Stone, Edmonds and Logan JJ; 11 November 2011).


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