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The AAT has held that GST is payable by Qantas Airways in circumstances where a passenger books and pays for airline travel, but subsequently cancels the booking or does not turn up for the flight and does not receive a refund. Specifically, the AAT held that there is a supply within the meaning of paras (e) and (g) of s 9-10 of the GST Act. Alternatively, there is a supply within the meaning of para (b).

Supply is defined in s 9-10 of the GST Act as follows:

"(1) A supply is any form of supply whatsoever.

(2) Without limiting subsection (1), supply includes any of these:
(b) a supply of services;
(e) a creation, grant, transfer, assignment or surrender of any right;
(g) an entry into, or release from, an obligation..."

The AAT said, at paras 14-15:

"14. We can see no reason why, in the present case, the arrangements made with passengers do not fall within both s 9-10(2)(e) and (g). We do not understand Qantas to have argued that there was no contract. Such an argument, would, of course, impact on the asserted right of Qantas to claim cancellation fees and, in some cases, the forfeiture of the whole fare. Nor do we understand Qantas to have argued that there was no “right” or “obligation” within s 9-10.

15. In approaching the question of whether there was a supply by referring to s 9-10(2) (e) and (g) we have acted consistently with the approach taken by the High Court in FCT v Reliance Carpet Co Pty Ltd [2008] HCA 22; (2008) 236 CLR 342 at 346, 347 and 355. We make this observation because neither party in the proceedings before us placed emphasis on s 9-10(2)(e) or (g)."

Qantas Airways Limited and FCT [2010] AATA 977 (AAT; Justice Downes P and Frost SM; 6 December 2010).


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