Bath v Alston Holdings Pty Ltd
Encyclopedia
Bath v Alston Holdings Pty Ltd (1988) 165 CLR
411 is a High Court of Australia
case that discusses the application of the freedom of interstate trade, as specified in section 92 of the Australian Constitution
. This case followed the unanimous decision of Cole v Whitfield
regarding the interpretation of section 92 as about free trade as opposed to individual rights.
) imposed a licensing scheme for the sale of tobacco
. For retailers, the fee was composed of a flat fee and an amount equal to 25% of the value of the tobacco sold in the previous twelve months. The Act also made for the provision of wholesalers, and tobacco bought by retailers from Victorian wholesalers would not be taken into account for the assessment of the retailer fee. This was ostensibly to avoid double-taxing the tobacco sold.
The defendant, Alston Holdings Pty Ltd, was a tobacco retailer in Victoria, who imported tobacco from Queensland for sale in Victoria, but did so without a licence. The defendant sought to challenge the Act on section 92 grounds.
soothed the confused waters with regards to section 92 of the Constitution. However, this decision, which came only weeks later, brought with it a split bench, but as suggested in Castlemaine Tooheys Ltd v South Australia
(1990) 169 CLR 436, "The difference ... flowed more from disagreement about the appropriate perspective from which the particular legislative provisions should be viewed than from any disagreement about principle." (per Mason CJ, Brennan, Deane, Dawson and Toohey JJ).
The majority in this case found that the retail fee in this case breached section 92 in being protectionist and discriminatory. The judges viewed the retail fee in isolation, and discounted the existence of the fee on wholesalers. It was possible that other states could impose a retail fee of their own; if the interstate fee was higher, this would only serve to compound the problem, while if it were lower, this additional fee would protect Victorian wholesalers from more competitive interstate wholesalers. Even if this tax were imposed in the pursuit of economic equalisation, the most it would do is to "provide some local justification for the imposition of a protectionist tax in respect of interstate goods at the later retail stage of distribution" (per majority).
The judges emphasised that a tax upon retailers, in order to be consistent with section 92, must apply equally to interstate and local goods sold. Thus, the question to be asked is whether the tax is imposed "on all transactions of the relevant kind without differentiation based on the source or destination of the goods", and if the tax refers to a particular market, the material factor is the effect of the tax on transactions in that particular market.
The minority in this case felt that while it was discriminatory, it was not protectionist in nature and that the arguments presented above only had a "superficial plausibility". The scheme was viewed as structured as it is for convenience of collection of the fee, as there were fewer wholesalers than retailers. The minority noted that if the Act were structured such that the collections occurred wholly at the retail level, the economic impact would be identical - the only difference being that the tax would be more difficult to collect.
Commonwealth Law Reports
The Commonwealth Law Reports are the authorised reports of decisions of the High Court of Australia. The CLR are published by the Lawbook Company, a division of Thomson Reuters...
411 is a High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
case that discusses the application of the freedom of interstate trade, as specified in section 92 of the Australian Constitution
Constitution of Australia
The Constitution of Australia is the supreme law under which the Australian Commonwealth Government operates. It consists of several documents. The most important is the Constitution of the Commonwealth of Australia...
. This case followed the unanimous decision of Cole v Whitfield
Cole v Whitfield
Cole v Whitfield 165 CLR 360; [1988] HCA 18 was a landmark High Court of Australia decision where the Court overruled the long-held notion that the words "absolutely free" in Section 92 of the Australian Constitution protected a personal individual right of freedom in interstate trade. It was...
regarding the interpretation of section 92 as about free trade as opposed to individual rights.
Background
The Business Franchise (Tobacco) Act 1974 (VicVictoria (Australia)
Victoria is the second most populous state in Australia. Geographically the smallest mainland state, Victoria is bordered by New South Wales, South Australia, and Tasmania on Boundary Islet to the north, west and south respectively....
) imposed a licensing scheme for the sale of tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
. For retailers, the fee was composed of a flat fee and an amount equal to 25% of the value of the tobacco sold in the previous twelve months. The Act also made for the provision of wholesalers, and tobacco bought by retailers from Victorian wholesalers would not be taken into account for the assessment of the retailer fee. This was ostensibly to avoid double-taxing the tobacco sold.
The defendant, Alston Holdings Pty Ltd, was a tobacco retailer in Victoria, who imported tobacco from Queensland for sale in Victoria, but did so without a licence. The defendant sought to challenge the Act on section 92 grounds.
Decision
The unanimous decision in Cole v WhitfieldCole v Whitfield
Cole v Whitfield 165 CLR 360; [1988] HCA 18 was a landmark High Court of Australia decision where the Court overruled the long-held notion that the words "absolutely free" in Section 92 of the Australian Constitution protected a personal individual right of freedom in interstate trade. It was...
soothed the confused waters with regards to section 92 of the Constitution. However, this decision, which came only weeks later, brought with it a split bench, but as suggested in Castlemaine Tooheys Ltd v South Australia
Castlemaine Tooheys Ltd v South Australia
Castlemaine Tooheys Ltd v South Australia 169 CLR 436 is a High Court of Australia case that deals with whether a particular Act of South Australia contravenes section 92 of the Australian Constitution, which is about the freedom of interstate trade....
(1990) 169 CLR 436, "The difference ... flowed more from disagreement about the appropriate perspective from which the particular legislative provisions should be viewed than from any disagreement about principle." (per Mason CJ, Brennan, Deane, Dawson and Toohey JJ).
The majority in this case found that the retail fee in this case breached section 92 in being protectionist and discriminatory. The judges viewed the retail fee in isolation, and discounted the existence of the fee on wholesalers. It was possible that other states could impose a retail fee of their own; if the interstate fee was higher, this would only serve to compound the problem, while if it were lower, this additional fee would protect Victorian wholesalers from more competitive interstate wholesalers. Even if this tax were imposed in the pursuit of economic equalisation, the most it would do is to "provide some local justification for the imposition of a protectionist tax in respect of interstate goods at the later retail stage of distribution" (per majority).
The judges emphasised that a tax upon retailers, in order to be consistent with section 92, must apply equally to interstate and local goods sold. Thus, the question to be asked is whether the tax is imposed "on all transactions of the relevant kind without differentiation based on the source or destination of the goods", and if the tax refers to a particular market, the material factor is the effect of the tax on transactions in that particular market.
The minority in this case felt that while it was discriminatory, it was not protectionist in nature and that the arguments presented above only had a "superficial plausibility". The scheme was viewed as structured as it is for convenience of collection of the fee, as there were fewer wholesalers than retailers. The minority noted that if the Act were structured such that the collections occurred wholly at the retail level, the economic impact would be identical - the only difference being that the tax would be more difficult to collect.