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23 Jun 11 Outward duty free sales – Decision Impact Statement on Sogo

On 22 June 2011 the ATO released a Decision Impact Statement on the decision of the Full Court of the Federal Court in Sogo Duty Free Pty Ltd v FCT [2011] FCAFC 36; 2011 ATC 20-249; 191 FCR 50. The case concerned whether the applicant (Sogo) had sold cigarettes to relevant travellers for export or whether the cigarettes had been sold domestically or, alternatively, were deemed to have been entered for home consumption. The Commissioner had assessed Sogo to understatements of income tax, understatements of GST and duty imposed under s 60 of the Excise Act 1901 (Cth) on the basis that the cigarette sales had not been made to the crew members of ships travelling overseas but had been sold domestically and in breach of the requirements of the GST Regulations and the applicant’s relevant licences.

On appeal, the only remaining issue concerned Sogo’s liability to duty payable pursuant to s 60 of the Excise Act. The Full Court held that, although the enquiry as to whether goods have been kept safely for the purposes of s 60 of the Excise Act may overlap with, and is logically anterior to, the enquiry as to whether the requirements of s 61D have been met, it did not follow that s 60 was incapable of extending to the same circumstances which enliven the provisions of s 61D of the Excise Act.

In the view of the ATO, the Court has reinforced principles previously articulated in case law. The decision is consistent with the Commissioner’s submission that s 60 of the Excise Act operates independent of any other provision of that Act for the collateral protection of the revenue and is a separate and collateral liability to excise duty.