Vanderstock v Victoria

HIGH COURT OF AUSTRALIA

KIEFEL CJ,
GAGELER, GORDON, EDELMAN, STEWARD, GLEESON AND JAGOT JJ

CHRISTOPHER VANDERSTOCK & ANOR  PLAINTIFFS

AND

THE STATE OF VICTORIA  DEFENDANT

Vanderstock v Victoria

[2023] HCA 30

Date of Hearing: 14, 15 & 16 February 2023

Date of Judgment: 18 October 2023

M61/2021

ORDER

The questions stated for the opinion of the Full Court in the amended special case filed on 6 September 2022 be answered as follows:

Question 1: Is s 7(1) of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) invalid on the basis that it imposes a duty of excise within the meaning of s 90 of the Constitution?

Answer:Yes.

Question 2:Who should pay the costs of the proceeding?

Answer:The defendant.

Representation

R Merkel KC and C L Lenehan SC with F I Gordon SC and T M Wood for the plaintiffs (instructed by Equity Generation Lawyers)

R J Orr KC, Solicitor-General for the State of Victoria, with S Zeleznikow and M R Salinger for the defendant (instructed by Victorian Government Solicitor)

S P Donaghue KC, Solicitor-General of the Commonwealth, and D F C Thomas SC with C G Winnett and M P A Maynard for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor)

M G Sexton SC, Solicitor-General for the State of New South Wales, with Z C Heger for the Attorney-General for the State of New South Wales, intervening (instructed by Crown Solicitor for New South Wales)

P J F Garrisson SC, Solicitor-General for the Australian Capital Territory, with H Younan SC for the Attorney-General for the Australian Capital Territory, intervening (instructed by Government Solicitor for the Australian Capital Territory)

J A Thomson SC, Solicitor-General for the State of Western Australia, with J D Berson for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor's Office (WA))

M J Wait SC, Solicitor-General for the State of South Australia, with J F Metzer for the Attorney-General for the State of South Australia, intervening (instructed by Crown Solicitor's Office (SA))

N Christrup SC, Solicitor-General for the Northern Territory, with L S Peattie for the Attorney-General for the Northern Territory, intervening (instructed by Solicitor for the Northern Territory)

S K Kay SC, Solicitor-General for the State of Tasmania, with E A Warner for the Attorney-General for the State of Tasmania, intervening (instructed by Solicitor-General for the State of Tasmania)

G J D del Villar KC, Solicitor-General of the State of Queensland, with F J Nagorcka and S E D Spottiswood for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld))

Australian Trucking Association appearing as amicus curiae, limited to its written submissions

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Vanderstock v Victoria

Constitutional law (Cth) – Duties of excise – Exclusive power of Commonwealth Parliament – Scope and operation of s 90 of Constitution – Where s 7(1) of Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) ("ZLEV Charge Act") purported to oblige registered operator of zero or low emissions vehicle ("ZLEV") to pay charge for use of ZLEV on "specified roads" ("ZLEV charge") – Where "specified roads" defined to include all roads in Victoria and elsewhere in Australia over which public has right of way – Where ZLEV charge a debt due by registered operator to Victoria – Where question of law stated for opinion of Full Court as to whether s 7(1) of ZLEV Charge Act invalid for imposing duty of excise within meaning of s 90 of Constitution – Whether ZLEV charge properly characterised as tax on goods – Whether definition of duty of excise stated in Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 and Ha v New South Wales (1997) 189 CLR 465 as tax on production, manufacture, sale or distribution of goods exhaustive or descriptive – Where application for leave to reopen Capital Duplicators [No 2] and Ha refused – Whether inland tax on goods imposed at stage of consumption answers description of duty of excise – Whether Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 should be reopened and overruled.

Words and phrases – "affect goods as articles of commerce", "articles of commerce", "close relation to goods", "commodities", "constitutional fact", "consumer", "consumption", "consumption tax", "criterion of liability", "dealing in goods", "direct tax", "distance-based charge", "distribution", "duty of customs", "duty of excise", "electric vehicle", "excise", "exclusive power", "imposts on goods", "incidence of tax", "indirect tax", "inland tax on goods", "manufacture", "markets in goods", "natural tendency", "point of consumption", "point of receipt by the consumer", "price of goods", "production", "sales tax", "stage of consumption", "stream of production and distribution", "tax on commodities", "tax on consumption", "tax on distribution", "tax on goods", "tax on manufacture", "tax on production", "tax on sale of goods", "tendency to depress demand for goods", "trading tax", "zero or low emissions vehicle".

Constitution, ss 51(ii), 51(iii), 53, 55, 86, 87, 88, 90, 92, 93, 109.

Road Safety Act 1986 (Vic), s 3.

Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic), ss 3, 6, 7, 8, 9, 10, 11, 15, 18, 19.

1. KIEFEL CJ, GAGELER AND GLEESON JJ. For the first time this century, there is need for the High Court to examine the scope and operation of s 90 of the Constitution insofar as that section provides for the power of the Commonwealth Parliament "to impose duties of customs and of excise" to be "exclusive" of the powers of the States and self-governing Territories.

2. The need arises in the context of a proceeding in the original jurisdiction of the Court challenging the validity of the central provision of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) ("the ZLEV Charge Act"). The impugned provision purports to oblige the registered operator of a zero or low emissions vehicle ("ZLEV") to "pay a charge" ("the ZLEV charge") for "use of the ZLEV" on "specified roads", an expression which will be seen to encompass all roads in Victoria and elsewhere in Australia over which the public has a right to pass. The ZLEV charge is determined annually at a prescribed rate for each kilometre travelled by the ZLEV on specified roads in a financial year. The ZLEV charge is a debt due by the registered operator to the State of Victoria.

3. By special case in the proceeding, the plaintiffs (individuals who are registered operators of ZLEVs) and the State of Victoria as defendant agreed in stating a single substantive question of law for the opinion of the Full Court: is the impugned provision of the ZLEV Charge Act invalid on the basis that it imposes a duty of excise within the meaning of s 90 of the Constitution?

4. On the hearing of the special case, the Attorney-General of the Commonwealth intervened in support of the plaintiffs to argue for an affirmative answer to the question. The plaintiffs have also been supported by the Australian Trucking Association, which sought and was granted leave to participate amicus curiae on the hearing of the special case limited to the filing of written submissions. The Attorneys-General of each other State and of the Australian Capital Territory and the Northern Territory intervened in support of Victoria to argue for a negative answer to the question.

5. When the Court last examined the scope and operation of s 90 of the Constitution, in Capital Duplicators Pty Ltd v Australian Capital Territory [No 2][1] and Ha v New South Wales[2], it held, in each case by a majority of four to three, that the constitutional reference to "duties of customs and of excise" exhausts the categories of "taxes on goods". The distinction between duties of customs and duties of excise it held to lie not in the place of manufacture or production of the goods that are taxed but in what is done with the goods which attracts their taxation. Duties of customs are "border taxes" on goods. They are imposed at the stage of importation or exportation. Duties of excise are "inland taxes" on goods. Taxes on goods imposed at the stage of sale or distribution accordingly answer the description of duties of excise, irrespective of where those goods have been produced or manufactured, just as taxes on goods imposed at the stage of manufacture or production answer the description of duties of excise.

   [1](1993) 178 CLR 561.

   [2](1997) 189 CLR 465.

6. Not considered in the reasons for judgment of the majority in Capital Duplicators [No 2] or Ha, and expressly left undecided in each of those cases, was the question whether a tax on goods imposed at the stage of consumption, by destruction or use, similarly answers the description of a duty of excise.

7. Standing in the way of an affirmative answer to that question then was, and still is, Dickenson's Arcade Pty Ltd v Tasmania[3]. There it had been held, by a majority of four to two, that a tax on goods imposed at the stage of consumption did not answer the description of an excise. The correctness of that holding in Dickenson's Arcade was touched on in argument in Capital Duplicators [No 2] but was not raised for decision by the legislation in issue in that case, leading the majority to say nothing about it and to record that consideration of taxes on the consumption of goods was unnecessary. The majority in Ha likewise recorded that consideration of taxes on the consumption of goods was unnecessary in that case.

   [3](1974) 130 CLR 177.

8. Leave to reopen Capital Duplicators [No 2] and Ha was sought by Victoria during the hearing of the special case to argue for the adoption of the view of the minority in each of those cases that duties of excise should be confined to taxes which discriminate against goods manufactured or produced in Australia. That leave was unanimously refused. Victoria advanced no consideration in support of the proposed argument which had not been advanced and fully taken into account in Capital Duplicators [No 2] and Ha. The differently constituted majorities in each of Capital Duplicators [No 2] and Ha adopted common reasoning which they expressed in each case in joint reasons for judgment. Those joint reasons for judgment, published four years apart, in aggregate encapsulated the shared views of six Justices of the Court. The prudential considerations repeatedly identified as appropriate to be considered on an application to reopen a decision of the Court[4] could not justify now taking the momentous step of unsettling the resultant constitutional doctrine. That is particularly so given that the doctrine bears centrally on Commonwealth-State financial relations, has not since been doubted in any decision of the Court, and has now been acted upon by Australian polities for more than 25 years[5]. Significant in that latter respect is that Capital Duplicators [No 2] and Ha furnished the stable foundation upon which Commonwealth, State and Territory revenue raising and sharing arrangements were entered into at the turn of this century in the form of the Goods and Services Tax ("GST") settlement as originally expressed in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations 1999. Those arrangements have endured. For the past 15 years, they have been expressed in the Intergovernmental Agreement on Federal Financial Relations 2008. They are currently implemented through the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (and related taxing and tax administration legislation) and through the Federal Financial Relations Act 2009 (Cth). They are not to be judicially disturbed.

   [4]See Wurridjal v The Commonwealth (2009) 237 CLR 309 at 350-353 [65]-[71].

   [5]Compare Victoria v The Commonwealth (1957) 99 CLR 575 at 601.

9. Treating Capital Duplicators [No 2] and Ha as having settled the proposition that duties of excise within the meaning of s 90 of the Constitution are inland taxes on goods – there being no dispute that the ZLEV charge is a tax – the ultimate question whether the ZLEV charge is properly characterised as a duty of excise within the meaning of s 90 can be addressed by reference to two questions: (1) Does the imposition of the ZLEV charge at the stage of consumption take it outside the scope of a duty of excise as a tax on goods? (2) If not, is the ZLEV charge properly characterised as a tax on goods?

10. The answers to those questions will be seen to be: (1) no; and (2) yes. To the extent that Dickenson's Arcade stands in the way of the first of those answers, it is to be reopened and overruled. The proposition that a tax on goods imposed at the stage of consumption of those goods cannot answer the description of a duty of excise is an anomalous and unsustainable exception to the understanding of the scope and operation of s 90 of the Constitution adopted in Capital Duplicators [No 2] and Ha.

11. From the second of those answers, it follows that the substantive question of law stated for the opinion of the Full Court in the special case is to be answered in the affirmative: the provision of the ZLEV Charge Act which purports to impose the ZLEV charge is invalid on the basis that it imposes a duty of excise within the meaning of s 90 of the Constitution.

12. The passage of time since Capital Duplicators [No 2] and Ha makes it appropriate to commence the exposition of the reasons for those conclusions by recalling the historical context in which Capital Duplicators [No 2] and Ha came to be decided and examining in some detail what was said by the majorities in those cases about the scope and operation of s 90 of the Constitution. That will provide the foundation for an examination of the question left undecided in those cases as to the proper characterisation of a tax on goods imposed at the stage of consumption and as to the status of Dickenson's Arcade.

13. Precisely what is encompassed within the conception of an excise as a tax on goods can then be recapitulated before turning to the ZLEV Charge Act and finally to the characterisation of the ZLEV charge as a tax on goods.

    The historical context

    The illusion of etymological certainty   

14. Needing to be recorded at the outset is the inconvenient and somewhat irritating reality that the word "excise" had no certain connotation or core meaning at the time of its adoption and enactment in the Constitution. "No absolute is to be discovered in a search for the meaning of 'duty of excise'; no ultimate truth lies concealed in the phrase 'duty of excise', there awaiting recognition by the judicial fossicker"[6].

    [6]Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 230.

15. The famously acerbic definition by Dr Samuel Johnson of an excise as a "hateful tax levied upon commodities"[7] reflected usage typical during the late eighteenth century. So too did the fuller description by Sir William Blackstone of an excise as "an inland imposition, paid sometimes upon the consumption of the commodity, or frequently upon the retail sale, which is the last stage before the consumption"[8]. Writing during that period, Adam Smith explained[9]:

    "Consumable commodities, whether necessaries or luxuries, may be taxed in two different ways. The consumer may either pay an annual sum on account of his using or consuming goods of a certain kind; or the goods may be taxed while they remain in the hands of the dealer, and before they are delivered to the consumer. The consumable goods which last a considerable time before they are consumed altogether, are most properly taxed in the one way. Those of which the consumption is either immediate or more speedy, in the other. The coach-tax and plate-tax are examples of the former method of imposing: The greater part of the other duties of excise and customs, of the latter."

    [7]Johnson, A Dictionary of the English Language (1755), "excise".

    [8]Blackstone, Commentaries on the Laws of England (1765), bk 1 at 308.

    [9]Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), vol 2, bk 5 at 490-491. The coach tax and the plate tax were also given as examples of duties of excise in Blackstone, Commentaries on the Laws of England (1765), bk 1 at 310.

16. However, that usage was to be overtaken in England during the nineteenth century by a usage which attributed the label of an excise to any of a miscellany of fees and charges which came to be administered by the Excise Commissioners[10].

    [10]Wollaston et al, Report upon the Financial Proposals of the Bill to Constitute the Commonwealth of Australia (1897) at 10.

17. An illusion of etymological certainty was fleetingly provided by supposing the English word to have had a Latin root which signified an amount "cut out" of the price[11], only to be debunked by the revelation upon the publication of the Oxford English Dictionary that the word appeared to have entered the English language through Middle Dutch, where it seemed to have derived from a different Latin root meaning nothing more precise than "to tax"[12]. Victoria's argument on the special case that "it is inherent in the etymological meaning of excise that the cost can be 'deducted' or 'excised' at the point of sale" would return to pursuing what was long ago revealed to be a chimera.

    [11]See Palgrave (ed), Dictionary of Political Economy (1894), vol 1 at 786-787, "excise".

    [12]See A New English Dictionary (which became the Oxford English Dictionary) (1897), vol 3, pt II at 379, "excise". See also The Encyclopaedia Britannica, 11th ed (1910), vol 10 at 58, "excise".

    Pre-federation history

18. As was observed in Ha[13], pre-federation history sheds some light on the purpose of the inclusion of the reference to duties of excise in s 90 but little light on its intended meaning. Together with the principle that "trade and intercourse between the Federated Colonies ... shall be absolutely free", the principle that "the power and authority to impose Customs duties shall be exclusively lodged in the Federal Government and Parliament" was one of four principles proposed by Sir Henry Parkes and adopted by the National Australasian Convention in 1891 "in order to establish and secure an enduring foundation for the structure of a federal government"[14]. The draft of what was to become s 90 which emerged from the 1891 Convention referred to the Commonwealth Parliament having "the sole power and authority ... to impose Customs duties, and duties of Excise upon goods for the time being the subject of Customs duties, and to grant bounties upon the production or export of goods"[15]. The record of the proceedings of the 1891 Convention does little to illuminate the thinking behind the inclusion of those references to excise and bounties beyond revealing a consensus that, like duties of customs, duties of excise and bounties should be uniform throughout the Commonwealth and for that reason ought to be together within the exclusive province of the Commonwealth Parliament[16].

    [13] (1997) 189 CLR 465 at 493-494.

    [14]Official Report of the National Australasian Convention Debates (Sydney), 4 March 1891 at 23.

    [15]"Draft of a Bill as adopted by the National Australasian Convention", April 1891 at 16, reproduced in Williams, The Australian Constitution: A Documentary History (2005) at 452.

    [16]Official Report of the National Australasian Convention Debates (Sydney), 13 March 1891 at 346-349.

19. "That the exclusive power to impose and collect duties of Customs and Excise, and to give bounties, shall be vested in the Federal Parliament" was one of five "principal conditions" proposed by Edmund Barton and adopted by the National Australasian Convention in Adelaide in 1897 as the principles subject to which the "Federal Government", "in order to enlarge the powers of self-government of the people of Australasia", was to "exercise authority throughout the Federated Colonies"[17]. Consistently with the generality of that principle as then adopted, the draft of what was to become s 90 which emerged from the Adelaide Convention provided for the Commonwealth Parliament to "have the sole power and authority ... to impose customs duties, to impose duties of excise, and to grant bounties upon the production or export of goods"[18]. The 1897 draft differed from the 1891 draft in no longer confining the duties of excise which the Commonwealth Parliament was to have exclusive power to impose to those on goods for the time being the subject of duties of customs. When proposing deletion of the words which had that confining effect in the 1891 draft, Sir George Turner explained that "[i]f we leave these words in we limit the power of the Federal Government, but if we strike them out we enlarge their power"[19].

    [17]Official Report of the National Australasian Convention Debates (Adelaide), 23 March 1897 at 17; Official Report of the National Australasian Convention Debates (Adelaide), 31 March 1897 at 395.

    [18]"Draft Constitution of the Commonwealth of Australia as framed and approved by the Australasian Federal Convention, at Adelaide, in March and April, 1897, and amended at the adjourned Session of that Convention held at Sydney in September, 1897", Sydney, December 1897 at 21, reproduced in Williams, The Australian Constitution: A Documentary History (2005) at 785.

    [19]Official Report of the National Australasian Convention Debates (Adelaide), 19 April 1897 at 835-836.

20. Chapter IV of the 1897 draft, including the draft of what was to become s 90, was the subject of a report to the Victorian Government in 1897 by a committee chaired by Dr Wollaston, who was then Secretary for Trade and Customs for Victoria and who would later become the first Comptroller-General of Customs of the Commonwealth. The authors of the report confessed to finding "some difficulty in determining what 'excise' includes" and opined that "the meaning is not sufficiently certain to allow of the word standing without a definition". The definition they recommended was that "Excise shall mean the duty chargeable on the manufacture and production of commodities"[20]. The report was drawn to the attention of the Australasian Federal Convention on its resumption in Sydney later in 1897 by Isaac Isaacs. The report engendered some discussion, but the discussion was inconclusive, and the recommendation was not taken up[21]. The significance of the report for present purposes is twofold: its content confirms the uncertainty as to the connotation of "excise" that existed at the time of the drafting and enactment of the Constitution; the failure to adopt its recommendation highlights the failure of the Constitution to provide a textual resolution of that uncertainty.

    [20]Wollaston et al, Report upon the Financial Proposals of the Bill to Constitute the Commonwealth of Australia (1897) at 10.

    [21]Official Record of the Debates of the Australasian Federal Convention (Sydney), 22 September 1897 at 1065.

21. The final form of s 90, referring to "the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods" becoming "exclusive" upon the imposition of uniform duties of customs, involved no change of substance from the 1897 draft. The changes in wording were the product of technical drafting changes made during the final session of the Australasian Federal Convention in Melbourne in 1898[22].

    [22]"Bill as proposed to be further amended by the Drafting Committee", Melbourne, March 1898 at 23, reproduced in Williams, The Australian Constitution: A Documentary History (2005) at 1103.

    Contemporary constitutional references

22. References to duties of excise were at that time to be found both in the Constitution of the United States and in the British North America Act 1867 (Imp). Neither reference was in a context completely analogous to s 90.

23. The reference in the Constitution of the United States was in the context of the conferral of power on the Congress to "lay and collect Taxes, Duties, Imposts and Excises" subject to the limitation that "all Duties, Imposts and Excises shall be uniform throughout the United States"[23] and to the further limitation that "[n]o Tax or Duty shall be laid on Articles exported from any State"[24]. Following the description by Blackstone[25], the Supreme Court of the United States had said of the reference in that context that "[e]xcise is defined to be an inland imposition, sometimes upon the consumption of the commodity, and sometimes upon the retail sale; sometimes upon the manufacturer, and sometimes upon the vendor"[26]. Consistently with that definition, the description by Smith[27] had earlier been applied by the Supreme Court[28] to hold that a coach tax[29] was a duty of excise and was therefore within congressional power subject only to the requirement that it be uniform throughout the United States. That earlier decision was affirmed by the Supreme Court in 1895[30]. The discussion at the Australasian Federal Convention in Sydney in 1897, of which mention has been made[31], revealed recognition by Isaac Isaacs and Edmund Barton that decisions of the Supreme Court of the United States would be relevant to the interpretation of the word "excise" in the Constitution but cannot be taken to indicate awareness on the part of either of them of the Supreme Court's earlier adoption of Blackstone and Smith.

    [23]Article I, §8, cl 1 of the Constitution of the United States.

    [24]Article I, §9, cl 5 of the Constitution of the United States.

    [25]See [15] above.

    [26]Pacific Insurance Company v Soule (1868) 74 US 433 at 445. See also Patton v Brady, Executrix (1902) 184 US 608 at 617-618.

    [27]See [15] above.

    [28]Hylton v United States (1796) 3 US 171 at 180-181.

    [29]Levied by an Act of 5 June 1794 (1 Stat 373) annually at a rate of between one and ten dollars on each carriage "kept by or for any person, for his or her own use, or to be let out to hire, or for the conveying of passengers". See Jensen, "The Apportionment of 'Direct Taxes': Are Consumption Taxes Constitutional?" (1997) 97 Columbia Law Review 2334 at 2351.

    [30]Pollock v Farmers' Loan and Trust Company (1895) 158 US 601 at 627. Insofar as it held that a tax on income derived from personal property contravened the distinct requirement of Art I, §9, cl 4 of the Constitution of the United States that "[n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken", the holding in Pollock was overturned by ratification in 1913 of the 16th Amendment to the Constitution of the United States, which provides that "[t]he Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration". See National Federation of Independent Business v Sebelius, Secretary of Health and Human Services (2012) 567 US 519 at 571.

    [31]See [20] above.

24. The reference in the British North America Act appeared in an intricate context and, in the subsequent judicial interpretation of s 90, the deference appropriate to be afforded to the interpretation of that reference by the Privy Council would become problematic. Within the framework of the Parliament of Canada having "exclusive legislative authority" over "matters" which included "[t]he regulation of trade and commerce" and "[t]he raising of money by any mode or system of taxation"[32] and of each Provincial Legislature having authority to legislate within its Province in relation to "[d]irect taxation within the province, in order to the raising of a revenue for provincial purposes"[33], the British North America Act made transitional provision that "[t]he Customs and Excise laws of each province shall, subject to the provisions of this Act, continue in force until altered by the Parliament of Canada"[34].

    [32]Section 91(2) and (3) of the British North America Act 1867 (Imp).

    [33]Section 92(2) of the British North America Act 1867 (Imp).

    [34]Section 122 of the British North America Act 1867 (Imp).

25. That being the language and structure of the British North America Act, it was unsurprising that the Privy Council would end up adopting an interpretation of the Provincial legislative power which drew on John Stuart Mill's distinction between "direct" and "indirect" taxation[35] and would come to see customs and excise each as a species of "indirect" taxation ordinarily outside the scope of the Provincial legislative power over "direct" taxation[36].

    [35]Mill, Principles of Political Economy (1848), bk 5, ch 3, quoted in Bank of Toronto v Lambe (1887) 12 App Cas 575 at 582. See also Canadian Industrial Gas & Oil Ltd v Government of Saskatchewan [1978] 2 SCR 545 at 581-582; Minister of Finance of New Brunswick v Simpson-Sears Ltd [1982] 1 SCR 144 at 161.

    [36]See Bank of Toronto v Lambe (1887) 12 App Cas 575 at 582; Attorney-General for Manitoba v Attorney-General for Canada [1925] AC 561 at 566; City of Halifax v Estate of J P Fairbanks [1928] AC 117 at 125; Lower Mainland Dairy Products Sales Adjustment Committee v Crystal Dairy Ltd [1933] AC 168 at 176; Attorney-General for British Columbia v Kingcome Navigation Co [1934] AC 45 at 59; Atlantic Smoke Shops Ltd v Conlon [1943] AC 550 at 565.

26. For so long as appeals would lie from the High Court to the Privy Council (albeit only with the leave of the High Court on questions concerning the "limits inter se" of the constitutional powers of the Commonwealth and the States[37]), it was hardly surprising that the High Court would show deference in its interpretation of "excise" in s 90 to the view of the Privy Council as to the meaning of the same word in the Canadian constitutional setting. With hindsight, however, it can be seen to have been inevitable that the complexities and uncertainties introduced by borrowing from the interpretation given to the word in that different constitutional context would be such as to lead more than one member of the High Court to lament that Mill's distinction between direct and indirect taxation was ever allowed to influence Australian constitutional analysis[38]. As will be seen, it would be an apparent misunderstanding of what had been said by the Privy Council as to the meaning of "excise" in the Canadian constitutional setting that would be the source of the notion taken up in Dickenson's Arcade that a tax on goods imposed at the stage of consumption did not answer the description of an excise in s 90.

    [37]Section 74 of the Constitution. See Dennis Hotels Pty Ltd v Victoria (1961) 104 CLR 621; [1962] AC 25; Whitehouse v Queensland (1961) 104 CLR 635; Western Australia v Hamersley Iron Pty Ltd [No 2] (1969) 120 CLR 74.

    [38]See Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529 at 553-554; Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 222-223; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 429, 435, 470-471.

    The early understanding

27. The question "what are duties of excise?" was addressed by John Quick and Robert Garran in annotations to s 90 in their contemporaneously published commentaries on the Constitution. They wrote[39]:

    "The fundamental conception of the term is that of a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco, and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth. It was never intended to take from the States those miscellaneous sources of revenue, improperly designated as 'excise licenses' in British legislation."

    [39]Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) at 837.

28. In the first case to be decided on the meaning of "duties of excise" in s 90 of the Constitution, Peterswald v Bartley[40], Quick and Garran's explanation was quoted and applied to reject the widest of the potential meanings – that based on nineteenth century English practice. The holding in that case was that a flat fee for a periodic licence to produce goods (beer) did not answer the constitutional description. The correctness of that holding has never been doubted. To say in 1904 what an excise was not, was not difficult. To say at that time exactly what an excise was, was challenging, although the magnitude of the challenge was not then apparent.

    [40](1904) 1 CLR 497.

29. Noting that the Constitution "was framed in Australia by Australians, and for the use of the Australian people", that "there were in the States many laws in force dealing with the subject" of excise, and that the word is used in s 93 of the Constitution in connection with the words "on goods produced or manufactured in" the States, Griffith CJ opined in Peterswald that "the conclusion is almost inevitable that, whenever it is used, it is intended to mean a duty analogous to a customs duty imposed upon goods either in relation to quantity or value when produced or manufactured, and not in the sense of a direct tax or personal tax"[41].

    [41](1904) 1 CLR 497 at 509.

30. Treated as an explanation of the State taxes which existed and answered the description of duties of excise at the time of federation and when Peterswald was decided, the Peterswald formulation (based as it was on the explanation in the Quick and Garran commentary) was undoubtedly correct[42]. Treated as the criterion by which to determine whether all State taxes that might thereafter be enacted would answer the description of duties of excise, the formulation would in time be found wanting. The formulation would be overtaken a quarter of a century later under the pressure of grappling with the application of s 90 to increasingly innovative forms of State taxation.

    [42]See Mills, Taxation in Australia (1925) at 138, 157, 183.

    Commonwealth Oil Refineries and John Fairfax

31. The notion that a duty of excise is confined to a tax on goods imposed at the point of production or manufacture did not survive The Commonwealth and Commonwealth Oil Refineries Ltd v South Australia[43] and John Fairfax & Sons Ltd and Smith's Newspapers Ltd v New South Wales[44]. In each of those cases, an ad valorem State tax on the sale of goods produced in the State (motor spirit and newspapers respectively) was held invalid as a duty of excise. In Commonwealth Oil Refineries, one member of the Court appears also to have been prepared to hold that an ad valorem State tax on the "use" of goods (motor spirit) purchased or obtained outside the State was invalid as either a duty of customs or a duty of excise.

    [43](1926) 38 CLR 408.

    [44](1927) 39 CLR 139.

32. The range of views as to the meaning of excise by that time in play can be illustrated by contrasting the approaches of Higgins J and Rich J, each of whom was party to the decisions in Commonwealth Oil Refineries and John Fairfax holding that a tax on the sale of goods produced in a State was invalid as a duty of excise. Higgins J saw no need to "decide the outside boundary of the denotation of the term"[45]. He saw it as enough to accept that "whatever else the term may include, it certainly includes a duty paid on goods 'produced or manufactured in a State'"[46] and, looking to substance over form, to accept that "it matters not whether the duty is imposed at the moment of actual sale or not, or sale and delivery, or consumption"[47]. His Honour's preference for substance over form appears also to have underlain his conclusion in Commonwealth Oil Refineries that not just the tax on the sale of goods produced in the State but also the tax on the use of goods purchased or obtained outside the State was invalid as "duties of customs and excise"[48].

    [45](1927) 39 CLR 139 at 144.

    [46](1927) 39 CLR 139 at 144-145.

    [47](1926) 38 CLR 408 at 435.

    [48](1926) 38 CLR 408 at 435.

33. To Rich J, the characterisation of a tax on the sale of goods produced in the State as a duty of excise was more straightforward. Drawing explicitly on the language of Blackstone, he said that the term "excise" encompassed "duties upon goods collected in respect of use, consumption or sale", and that that was so irrespective of the place of manufacture or production of those goods[49]. In his opinion, the Constitution "gives exclusive power to the Commonwealth over all indirect taxation imposed immediately upon or in respect of goods, and does so by compressing every variety thereof under the term 'customs and excise'"[50]. The constitutional scheme, as he saw it, was that "[o]ne authority should exercise the complementary powers of customs, excise and bounties without hindrance, limitation, conflict or danger of overlapping from the exercise of a concurrent power by another authority vested in the States"[51].

    [49](1926) 38 CLR 408 at 437. See also (1927) 39 CLR 139 at 146-147.

    [50](1926) 38 CLR 408 at 437.

    [51](1926) 38 CLR 408 at 437.

    Matthews

34. The notion that a duty of excise is confined to a tax in relation to the quantity or value of goods did not survive Matthews v Chicory Marketing Board (Vict)[52]. There it was held by a majority of three to two that a State tax imposed on a producer of goods (chicory) by reference to the area of land planted for the purpose of the production of those goods constituted an excise. The separate reasons for judgment of Dixon J, as a member of the majority, were to become influential in later cases.

    [52](1938) 60 CLR 263.

35. Taking the view that Commonwealth Oil Refineries and John Fairfax left "open for future decision" the question whether confinement of the constitutional conception of an excise to goods produced or manufactured in Australia is justified[53], Dixon J commenced his reasoning in Matthews by demonstrating that the word itself had "never possessed, whether in popular, political or economic usage, any certain connotation and has never received any exact application"[54]. It followed that "[a] definition which makes quantity and value the only basis of taxation which would satisfy the notion of 'excise' has no foundation either in history, economic or fiscal principle, nor in any accepted specialization"[55].

    [53](1938) 60 CLR 263 at 299-300.

    [54](1938) 60 CLR 263 at 293.

    [55](1938) 60 CLR 263 at 303.

36. "The basal conception of an excise in the primary sense which the framers of the Constitution are regarded as having adopted", Dixon J said in Matthews, "is a tax directly affecting commodities"[56]. In a carefully crafted passage, which would often afterwards be quoted and applied, Dixon J continued[57]:

    "If the word 'excise' received a meaning which confined its application to taxes the relation of which to the commodity concerned was of some narrow and strictly defined nature, as, for instance, by an arithmetical relation to quantity, it would not only miss the principle contained in the use of the word 'excise,' but it would expose the constitutional provision made by sec 90 to evasion by easy subterfuges and the adoption of unreal distinctions. To be an excise the tax must be levied 'upon goods,' but those apparently simple words permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce. But if the substantial effect is to impose a levy in respect of the commodity the fact that the basis of assessment is not strictly that of quantity or value will not prevent the tax falling within the description, duties of excise."

    [56](1938) 60 CLR 263 at 303.

    [57](1938) 60 CLR 263 at 304.

    Parton

37. The reasoning of Dixon J in Matthews was revisited by him and reinforced, but in a material respect qualified, in Parton v Milk Board (Vict)[58]. There it was held, again by a majority of three to two, that an ad valorem State tax payable by the vendor on the retail sale or distribution of goods produced in the State (milk) constituted a duty of excise. Again, the separate reasons for judgment of Dixon J, as a member of the majority, were to become influential in later cases. Appreciation of those reasons is enhanced by contrasting them with those of Rich and Williams JJ, who, writing jointly, were also in the majority. 

    [58](1949) 80 CLR 229.

38. Despite Rich J having taken the view in Commonwealth Oil Refineries that a tax on goods in respect of use, consumption or sale of those goods answered the description of a duty of excise irrespective of the place of manufacture or production of those goods[59], Rich and Williams JJ in Parton were prepared to accept that a duty of excise "must be imposed so as to be a method of taxing the production or manufacture of goods"[60]. Like Higgins J in those earlier cases, however, they were prepared to look beyond the legal form of the taxing law to consider its practical operation. They took and acted on the view that "the production or manufacture of an article will be taxed whenever a tax is imposed in respect of some dealing with the article by way of sale or distribution at any stage of its existence, provided that it is expected and intended that the taxpayer will not bear the ultimate incidence of the tax himself but will indemnify himself by passing it on to the purchaser or consumer"[61].

    [59] (1926) 38 CLR 408 at 437.

    [60](1949) 80 CLR 229 at 252.

    [61](1949) 80 CLR 229 at 252.

39. In contrast with Rich and Williams JJ, and consistently with the approach he had taken in Matthews, Dixon J in Parton did not limit the constitutional conception of a duty of excise by reference to the manufacture or production of goods. To the contrary, he characterised the tax in issue in Parton as a "tax upon goods"[62], borrowing from a description in the Privy Council[63] to refer to it as a "trading tax ... more concerned with the commodity in respect of which the taxation is imposed than with the particular person from whom the tax is exacted". Dixon J said that "[o]nly if the conception of what is an excise is limited by the condition that the tax must be levied on the manufacturer" could he "see any escape from the conclusion" that the tax was an excise[64].

    [62](1949) 80 CLR 229 at 259.

    [63]Attorney-General for British Columbia v Kingcome Navigation Co [1934] AC 45 at 59.

    [64](1949) 80 CLR 229 at 259-260.

40. Dixon J said that he could not accept the existence of any such limitation. The reason, as he explained it, was that[65]:

    "In making the power of the Parliament of the Commonwealth to impose duties of customs and of excise exclusive it may be assumed that it was intended to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action. A tax upon a commodity at any point in the course of distribution before it reaches the consumer produces the same effect as a tax upon its manufacture or production. If the exclusive power of the Commonwealth with respect to excise did not go past manufacture and production it would with respect to many commodities have only a formal significance."

    [65](1949) 80 CLR 229 at 260.

41. What Dixon J referred to in Parton as an assumption about the intention underlying the exclusivity given by s 90 to the Commonwealth Parliament with respect to imposition of duties of customs and of excise, he would later refer to as "its manifest object in confiding to the hands of the Federal Parliament the power to deal with the taxation of commodities entering or produced within Australia as a matter of essential economic policy"[66]. He would also later explain that "[d]uties of excise and of customs are denied to the States simply because of their effect on commodities" and would repeat the essential point he had made in Matthews that "[w]hether a tax is a duty of excise must be considered by reference to its relation to the commodity as an article of commerce"[67].

    [66]Whitehouse v Queensland (1960) 104 CLR 609 at 618.

    [67]Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529 at 547.

42. Notwithstanding his identification of that broad constitutional purpose, Dixon J in Parton qualified his earlier explanation of the nature of a duty of excise in Matthews in light of the intervening decision of the Privy Council in Atlantic Smoke Shops Ltd v Conlon[68]. The Privy Council's decision, he said, made it "probably a safe inference" that "a tax on consumers or upon consumption cannot be an excise", with the consequence that[69]:

    "This decision perhaps makes it necessary to that extent now to modify the statement: 'that so far there is no direct decision inconsistent with the view that a tax on commodities may be an excise although it is levied not upon or in connection with production, manufacture or treatment of goods or the preparation of goods for sale or for consumption, but upon sale, use or consumption and is imposed independently of the place of production'. The modification is with respect to consumption."

    [68][1943] AC 550.

    [69](1949) 80 CLR 229 at 261 (footnote omitted).

43. The qualification to the explanation of the nature of a duty of excise by Dixon J in Matthews, so introduced by him in Parton in deference to Atlantic Smoke Shops, was eventually to provide the foundation for the holding of the majority in Dickenson's Arcade that a tax on goods imposed at the stage of consumption did not answer the description of an excise. The appropriateness of the Parton qualification and the correctness of that holding in Dickenson's Arcade will be examined separately in due course.

    The rise and decline of Bolton v Madsen

44. What needs to be noted at this point in the historical narrative is the way Dixon J's statement of principle in Matthews, as qualified in Parton, was taken up and applied from the middle of the twentieth century to address a range of increasingly creative forms of State taxation. Two principal categories of State taxes were initially in issue: those framed as fees for periodic licences to engage in the commercial transportation of goods, and those framed as fees for periodic licences to engage in the wholesale or retail sale of tobacco or alcohol calculated by reference to sales of those goods during past periods.

45. Taxes framed as fees for periodic licences to engage in the commercial transportation of goods were held not to be taxes on the goods transported, and therefore not to constitute duties of excise, in Hughes and Vale Pty Ltd v New South Wales[70] and in Browns Transport Pty Ltd v Kropp[71]. Of the tax in issue in Hughes and Vale, Dixon CJ said it was "enough to say that the tonnage rate is not a tax directly affecting commodities" given that the amount of the tax was "calculated on the combined weight of the vehicle and weight of the load it is capable of carrying and is payable in respect of the employment of the vehicle upon a journey independently of the weight or quantity of the commodities carried"[72].

    [70](1953) 87 CLR 49.

    [71](1958) 100 CLR 117.

    [72](1953) 87 CLR 49 at 75.

46. The tax in Browns Transport was differently structured. Its amount was fixed by reference to the gross revenue derived from the licensed service. Reaching the conclusion that the tax was not a duty of excise, the Court, presided over by Dixon CJ, unanimously adhered to the broad substantive approach which his Honour had articulated in Matthews. In particular, the Court said with reference to Matthews[73]:

    "If an exaction is to be classed as a duty of excise, it must, of course, be a tax. Its essential distinguishing feature is that it is a tax imposed 'upon' or 'in respect of' or 'in relation to' goods ... It would perhaps be going too far to say that it is an essential element of a duty of excise that it should be an 'indirect' tax. But a duty of excise will generally be an indirect tax, and, if a tax appears on its face to possess that character it will generally be because it is a tax upon goods rather than a tax upon persons."

    Applying that approach to the licensing fee in issue, it said[74]:

    "While the licensing fee would no doubt normally enter, like any other outgoing, into the calculation of fares and freights to be charged, this does not mean that it is expected to be 'passed on' as such. But it is unnecessary to consider this matter, because whether it is expected to be 'passed on' or not, it is very clear, in our opinion, that the tax is not a tax 'upon' goods, or 'in respect of' goods, or 'in relation to' goods."

    [73](1958) 100 CLR 117 at 129.

    [74](1958) 100 CLR 117 at 129.

47. Taxes framed as fees for periodic licences to engage in the retail sale of alcohol were subsequently considered in Dennis Hotels Pty Ltd v Victoria[75]. There, the main fee in issue was calculated as a percentage of the amount paid for alcohol purchased by the licensee in a previous period. The fee was held by a majority of four to three not to amount to a duty of excise. Dixon CJ was in dissent. Of the reasoning of the members of the Court who comprised the majority, the most influential would turn out to be that of Kitto J. His Honour drew from what Dixon J had said in Matthews, as qualified by him in Parton and as applied in Hughes and Vale and Browns Transport, the proposition that "a tax is not a duty of excise unless the criterion of liability is the taking of a step in a process of bringing goods into existence or to a consumable state, or passing them down the line which reaches from the earliest stage in production to the point of receipt by the consumer"[76]. Dennis Hotels was immediately followed in Whitehouse v Queensland[77].

    [75](1960) 104 CLR 529.

    [76](1960) 104 CLR 529 at 559.

    [77](1960) 104 CLR 609.

48. The formulation by Kitto J in Dennis Hotels was not long afterwards taken up and applied in unanimous reasons for judgment of Dixon CJ and five other members of the Court in Bolton v Madsen[78] in holding a fee for a periodic licence to engage in commercial transportation, calculated as an amount per ton per mile on the registered carrying capacity of the transport vehicle over the total distance carried, not to be a duty of excise.

    [78](1963) 110 CLR 264 at 273.

49. The Bolton v Madsen formulation, as Brennan J would point out in Philip Morris Ltd v Commissioner of Business Franchises (Vict)[79], "divided into two propositions: one, that a tax on the taking of a step of the stated kind is a duty of excise; the second, that, to ascertain the character of a statutory impost, one looks exclusively to the statutory criterion of liability". The first proposition would continue to attract general assent, at least as a non-exhaustive description of the stages at which taxes on goods would amount to duties of excise, and for that reason would come to be seen as a "rock in the sea of uncertain principle"[80]. The second proposition would not.

    [79](1989) 167 CLR 399 at 444.

    [80](1989) 167 CLR 399 at 445.

50. The "criterion of liability" approach to the application of s 90 mirrored the "criterion of operation" approach which, at the time Bolton v Madsen was decided, prevailed in the application of s 92. Unfortunately, the criterion of liability approach suffered the same defects as those which resulted in the abandonment of the criterion of operation approach in Cole v Whitfield[81]. Each held out the false hope of legal certainty. The practical consequences of each were obscurity[82] and the emboldening of legislative obfuscation. But it took some time for those defects to become apparent.

    [81](1988) 165 CLR 360 at 384, 401-402.

    [82]See Palmer v Western Australia (2021) 272 CLR 505 at 554-555 [147]-[149].

51. The Bolton v Madsen formulation was in the meantime applied in Dickenson's Arcade to a legislative scheme modelled on that upheld in Dennis Hotels to hold that a periodic retail licence fee calculated as a percentage of the licensee's turnover of tobacco in a previous period did not constitute a duty of excise. The combined outcomes in Dennis Hotels and in Dickenson's Arcade spawned over the next three decades a narrow but increasingly fiscally significant category of so-called "franchise cases"[83] in which taxes framed as fees for holding licences to sell goods in wholesale or retail contexts, calculated by reference to licensees' sales or purchases during previous periods, were accepted not to amount to duties of excise[84].

    [83]See Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 582.

    [84]See H C Sleigh Ltd v South Australia (1977) 136 CLR 475; Evda Nominees Pty Ltd v Victoria (1984) 154 CLR 311; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399; Coastace Pty Ltd v New South Wales (1989) 167 CLR 503.

52. Outside that category of franchise cases, the criterion of liability approach was in practice either expressly rejected or tacitly ignored by majorities in a series of cases in which State taxes levied in different ways at different stages in the production, distribution or sale of goods were held to be duties of excise. Those cases notably included Swift Australian Co (Pty) Ltd v Boyd Parkinson[85], M G Kailis (1962) Pty Ltd v Western Australia[86] and Gosford Meats Pty Ltd v New South Wales[87] (in each of which a tax imposed on a producer of goods framed as a periodic fee calculated by reference to production in a previous period was held to be a duty of excise), Western Australia v Chamberlain Industries Pty Ltd; Victoria v IAC (Wholesale) Pty Ltd[88] and Western Australia v Hamersley Iron Pty Ltd [No 1][89] (in each of which stamp duties calculated by reference to the purchase price of goods were held to be duties of excise) and Hematite Petroleum Pty Ltd v Victoria[90] (in which a tax framed as a large lump-sum fee for the holding of a licence to operate hydrocarbon pipelines was held to be a duty of excise).

    [85](1962) 108 CLR 189.

    [86](1974) 130 CLR 245.

    [87](1985) 155 CLR 368.

    [88](1970) 121 CLR 1.

    [89](1969) 120 CLR 42.

    [90](1983) 151 CLR 599.

    A proliferation of approaches

53. As the cases multiplied, discernibly different approaches became apparent. The differences were such that it was apparent by the time Capital Duplicators [No 2] came to be decided that there was simply "no judicial consensus as to the meaning or application of the expression 'duties of excise' in s 90"[91]. At the risk of oversimplification, and thereby of being taken to suggest that clearer and more consistent lines of demarcation existed than were in fact observable in practice, three broadly competing judicial approaches vied for acceptance.

    [91]See Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 582.

54. Predominating other than in the franchise cases was the approach of those – prominently, Barwick CJ[92], Mason J[93] and Deane J[94] – who maintained that the purpose of s 90 was that identified by Dixon J in Parton and who accordingly favoured the broad substantive approach to the determination of whether a tax constituted a duty of excise articulated by Dixon J in Matthews. The predominance of that approach was exemplified by the majority outcomes in Chamberlain Industries and in Hematite Petroleum.

    [92]See Western Australia v Chamberlain Industries Pty Ltd (1970) 121 CLR 1 at 12-17.

    [93]See Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 631-632; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 426.

    [94]See Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 660-662; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 426.

55. By contrast, there were those – in particular, Fullagar J[95], Murphy J[96], Dawson J[97] and Toohey and Gaudron JJ[98] – who saw the purpose of the section as more narrowly confined to safeguarding Commonwealth tariff policy, and who would have confined its reference to excise accordingly to taxes which fell selectively on goods produced or manufactured in a State (or in Australia). Theirs was always a minority view and would remain the view of the minority comprising Dawson, Toohey and Gaudron JJ in each of Capital Duplicators [No 2][99] and Ha[100].

    [95]See Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529 at 554-555.

    [96]See H C Sleigh Ltd v South Australia (1977) 136 CLR 475 at 527; Logan Downs Pty Ltd v Queensland (1977) 137 CLR 59 at 84-85; Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 638; Gosford Meats Pty Ltd v New South Wales (1985) 155 CLR 368 at 387-388.

    [97]See Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 617. But see earlier Gosford Meats Pty Ltd v New South Wales (1985) 155 CLR 368 at 411-412; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 469-474.

    [98]See Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 478-480; Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 630-631.

    [99]Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 609, 617-618 (Dawson J), 627-628, 631 (Toohey and Gaudron JJ).

    [100]Ha v New South Wales (1997) 189 CLR 465 at 506-507, 512, 514 (Dawson, Toohey and Gaudron JJ).

56. Then there were those – including Gibbs CJ[101], Stephen J[102] and Jacobs J[103] – who either eschewed (as futile) or abandoned (as elusive) any quest to identify a meaningful constitutional purpose, and who were in varying degrees concerned about the practical effect of the prevailing view on the ability of States to raise revenue in an economically rational manner. These Justices sought to achieve a measure of consistency in the application of s 90 through close adherence to precedent, and in so doing were prepared to adhere to a version of the criterion of liability approach even as that approach became increasingly strained.

    [101]See Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 616-618.

    [102]See Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 229-230; H C Sleigh Ltd v South Australia (1977) 136 CLR 475 at 497.

    [103]See H C Sleigh Ltd v South Australia (1977) 136 CLR 475 at 522-524.

57. Adding to the complexities attributable to those unresolved differences in judicial approach was another complication. The question whether the constitutional conception of an excise is confined to goods produced or manufactured in Australia remaining open[104], echoes of the approach of Rich and Williams JJ in Parton were from time to time heard in some explanations of how a tax on the sale or distribution of goods could be said to be a duty of excise. These explanations started with the notion that the basal conception of an excise was that of a tax which burdens the production or manufacture of goods. They went on to identify the reason why a tax on the sale or distribution of goods could amount to an excise as lying in the tendency of the tax to enter the price of the goods so as to decrease demand and in that way to have a commercial impact on their manufacture or production. A propensity to engage in explanations of that sort was apparent amongst some who maintained that the purpose of s 90 was as had been identified by Dixon J in Parton and who accordingly adhered to the Matthews methodology[105], just as it was apparent amongst some who were otherwise committed to the criterion of liability approach[106].

    [104]See Dennis Hotels Pty Ltd v Victoria (1960) 104 CLR 529 at 540, 598; Western Australia v Chamberlain Industries Pty Ltd (1970) 121 CLR 1 at 12-13; Philip Morris Ltd v Commissioner of Business Franchises (Vict) (1989) 167 CLR 399 at 469.

    [105]See Western Australia v Hamersley Iron Pty Ltd [No 1] (1969) 120 CLR 42 at 55-56; Western Australia v Chamberlain Industries Pty Ltd (1970) 121 CLR 1 at 12-13; Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 633-634; Gosford Meats Pty Ltd v New South Wales (1985) 155 CLR 368 at 383.

    [106]See Anderson's Pty Ltd v Victoria (1964) 111 CLR 353 at 374; Dickenson's Arcade Pty Ltd v Tasmania (1974) 130 CLR 177 at 218, 223; Gosford Meats Pty Ltd v New South Wales (1985) 155 CLR 368 at 411-413.

    The resolution

58. Such was the multiplicity of judicial approaches and such was the complexity of constitutional doctrine when, in the aftermath of having revisited the case law on s 92 in Cole v Whitfield and in Bath v Alston Holdings Pty Ltd[107], the Court was called on to reconsider the case law on s 90 in Capital Duplicators [No 2], and then again in Ha in the context of reconsidering and affirming Capital Duplicators [No 2] and reappraising and ultimately departing from the trajectory of the franchise cases.

    [107](1988) 165 CLR 411.

59. For present purposes, what is important to recognise is that the denouement ultimately arrived at through the majority decisions in Capital Duplicators [No 2] and Ha entailed: (1) definitive resolution, in the affirmative, of the previously unresolved question of whether an inland tax on imported goods amounted to a duty of excise; (2) with that resolution, rejection of the approach of Rich and Williams JJ in Parton of confining a duty of excise to a tax on production or manufacture; (3) unequivocal acceptance of the constitutional purpose identified by Dixon J in Parton; and (4) with that acceptance, unequivocal commitment to the broad substantive approach to the determination of whether a tax is a duty of excise articulated by Dixon J in Matthews.

    The purpose and scope of s 90

60. Capital Duplicators [No 2] and Ha need to be read with Capital Duplicators Pty Ltd v Australian Capital Territory ("Capital Duplicators [No 1]")[108].

    [108](1992) 177 CLR 248.

61. Capital Duplicators [No 1] held that the exclusivity of the legislative powers of the Commonwealth Parliament to which s 90 refers is exclusivity of authority to legislate with respect to customs, excise and bounties for the whole of the geographic area of Australia, including such territory as might be surrendered by a State under s 111 so as to "become subject to the exclusive jurisdiction of the Commonwealth". The Commonwealth Parliament itself was held to lack capacity to deny that exclusivity by conferring power incompatible with it on the legislature of a self-governing Territory by a law enacted under s 122 "for the government" of that Territory[109].

    [109](1992) 177 CLR 248 at 279, 290.

62. The plurality in Capital Duplicators [No 1] tied that holding about the nature of the exclusivity to which s 90 refers to the nature of the Australia-wide "free trade area", creation of which Cole v Whitfield had shown to be "one of the objectives of ... federation"[110]. Explaining why it was "a mistake to regard s 90 as doing no more than allocating the legislative powers to which it refers as between the Commonwealth and the States", the plurality said of s 90 that "[i]t confined to the Parliament the power to impose duties of customs and excise and to grant bounties as a necessary part of the constitutional mechanism for achieving an essential objective of the federal compact: the creation and maintenance of a free trade area throughout the Commonwealth and uniformity in duties of customs and excise and in bounties"[111].

    [110](1992) 177 CLR 248 at 274.

    [111](1992) 177 CLR 248 at 277-278.

63. The plurality in Capital Duplicators [No 1][112] endorsed the following earlier observations of Deane J in Hematite Petroleum[113]:

    "[T]he provision of s 90 of the Constitution that the power of the Commonwealth Parliament to impose duties of excise shall be exclusive cannot properly be seen as part of a merely arbitrary division of legislative powers between the Commonwealth and the States. To the contrary, that provision – or some other means of ensuring uniformity of excise duties throughout Australia – was a necessary ingredient of any acceptable scheme for achieving the abolition of internal customs barriers which was an essential objective of the Federation and for ensuring that the people of the Commonwealth were guaranteed equality as regards the customs and excise duties which they were required to bear and the bounties which they were entitled to receive."

    [112](1992) 177 CLR 248 at 278.

    [113](1983) 151 CLR 599 at 661-662.

64. The plurality in Capital Duplicators [No 1] noted that "[d]uties of excise are taxes which are likely to be borne by the consumer" such that "[w]herever they be imposed, they are likely to be borne where the goods are acquired for consumption". "If s 90 is to play its part in achieving the 'essential objective' of abolishing internal customs barriers and in guaranteeing equality as regards the customs and excise duties which the people of the Commonwealth are to bear", the plurality said, "it must be construed as restricting to the Parliament the sole legislative power to impose duties of customs and excise and to grant bounties on the production or export of goods"[114].

    [114](1992) 177 CLR 248 at 278.

65. Understood against the background of Capital Duplicators [No 1], the overlapping majorities in Capital Duplicators [No 2] and Ha can be seen to have justified the "high constitutional purpose"[115] identified by Dixon J in Parton (and the concomitant methodological inquiry articulated by Dixon J in Matthews) by reference to the centrality of s 90 to the operation of three interlocking and complementary groups of constitutional provisions. The provisions combined, as would be put in Betfair Pty Ltd v Western Australia[116] with reference to Ha, to facilitate "[t]he creation and fostering of national markets [which] would further the plan of the Constitution for the creation of a new federal nation and would be expressive of national unity".

    [115](1993) 178 CLR 561 at 586.

    [116](2008) 234 CLR 418 at 452 [12].

66. The first of those three groups of constitutional provisions comprises s 86, s 88, s 90 itself, and s 92. Section 86 operated automatically at federation to pass the collection and control of duties of customs and excise, and the control of the payment of bounties, to the Executive Government of the Commonwealth. Its immediate implementation was facilitated by provision within s 69 to the effect that "the departments of customs and of excise in each State shall become transferred to the Commonwealth on its establishment". Section 88 required the Commonwealth Parliament to impose "[u]niform duties of customs" within two years of federation. That event, which in fact occurred with the commencement of the Customs Act 1901 (Cth) in 1901[117], triggered the complementary operation of ss 90 and 92, which were from then on each to have enduring and unqualified operation.

    [117]Customs Act 1901 (Cth), s 2; Commonwealth of Australia Gazette, No 50, 3 October 1901 at 165.

67. As authoritatively interpreted in Cole v Whitfield, s 92 relevantly operates to prohibit State border taxes on goods and to prohibit State inland taxes which would discriminate against imported goods to the benefit of local producers or sellers[118]. However, s 92 standing alone would do nothing to counter distortions in the flow of interstate trade in goods which could arise from different States imposing different levels of taxation on the same goods. Worse than that, Bath v Alston Holdings Pty Ltd illustrates that s 92 would operate as an impediment to a State attempting to counter such a distortion. There, s 92 was held to prevent a State from imposing an "equalizing" tax upon its retailers in respect of their purchases of products from lower-taxed wholesalers in other States[119].

    [118](1988) 165 CLR 360 at 391, 393, 395.

    [119](1988) 165 CLR 411 at 427.

68. The second of the three groups of constitutional provisions comprises s 51(ii) and (iii) and s 99. Section 51(ii) empowers the Commonwealth Parliament to make laws with respect to "taxation". Section 51(iii) empowers the Commonwealth Parliament to make laws with respect to "bounties on the production or export of goods". Each is expressly qualified: a Commonwealth law imposing taxation is "not to discriminate between States or parts of States", and such bounties as might be conferred by or under a Commonwealth law "shall be uniform throughout the Commonwealth". Overlapping in its operation with those qualifications, s 99 provides that "[t]he Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof". Prohibited by each, in different ways, is geographic discrimination in the incidence of Commonwealth taxation within the territory of Australia.

69. The power conferred on the Commonwealth Parliament by s 51(ii) to make laws with respect to taxation has also been recognised to be subject to an inherent limitation. The limitation is inherent in the nature of the power as a power with respect to Commonwealth taxation: it "has never been, and, consistently with the federal character of the Constitution could not be, construed as a power over the whole subject of taxation throughout Australia, whatever parliament or other authority imposed taxation"[120]. The significance of that inherent limitation, as Professor Leslie Zines pointed out[121], appears on occasion to have been overlooked in dicta which have assumed unfettered capacity on the part of the Commonwealth Parliament to enact laws which would operate through s 109 to invalidate State laws which might frustrate Commonwealth policy concerning the taxation of goods[122].

    [120]Victoria v The Commonwealth (1957) 99 CLR 575 at 614.

    [121]Zines, The High Court and the Constitution, 5th ed (2008) at 479-481.

    [122]eg Hematite Petroleum Pty Ltd v Victoria (1983) 151 CLR 599 at 617, 631, 637.

70. The third group of constitutional provisions comprises ss 53 and 55. Section 53 is "a procedural provision governing the intra-mural activities" of the Commonwealth Parliament[123]. Relevantly, it restricts the Senate from initiating or amending, but not from rejecting, proposed laws "imposing taxation". Section 55 is designed to protect the Senate from possible abuses of that restriction in s 53. It relevantly provides that "[l]aws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only". The purpose of the section so providing is to "prevent the House of Representatives from sending to the Senate a single Bill containing a large number of unrelated taxing laws with the consequence that the Senate, being unable to amend the Bill, could reject the taxing provisions of which it did not approve only by also rejecting those of which it approved"[124].

    [123]Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) (2004) 220 CLR 388 at 409 [41], quoting Western Australia v The Commonwealth (1995) 183 CLR 373 at 482.

    [124]Mutual Pools & Staff Pty Ltd v Federal Commissioner of Taxation (1992) 173 CLR 450 at 456.

71. The majority in Capital Duplicators [No 2], comprising Mason CJ, Brennan, Deane and McHugh JJ, explained how a proper understanding of the relationship between the first two of those groups of constitutional provisions supports the constitutional purpose of s 90 identified by Dixon J in Parton. The majority said[125]:

    "[Sections] 90 and 92, taken together with the safeguards against Commonwealth discrimination in s 51(ii) and (iii) and s 88, created a Commonwealth economic union, not an association of States each with its own separate economy. Section 92 of the Constitution ensured that the domestic market of each State be opened equally to goods from interstate and goods of local production or manufacture, but that would not have been sufficient by itself to create a Commonwealth economic union. Differential taxes on goods, if permitted, could have distorted local markets within the Commonwealth. That possibility was averted by ss 51(ii) and (iii), 86, 88, 90 and 92 of the Constitution which created a single legislative authority to impose taxes on goods and to grant bounties and required those powers to be exercised uniformly. ... The purpose is not difficult to detect. It was to ensure that differential taxes on goods and differential bonuses on the production or export of goods should not divert trade or distort competition. Of course, trade and competition are affected by a variety of factors but the imposition of a tax on goods is a particular way by which a government may attract or discourage trade and distort competition."

    [125]Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 585 (footnotes omitted).

72. That reasoning led the majority to approve the statement of the constitutional purpose of s 90 made by Dixon J in Parton and then to amplify what Dixon J had added in Parton about the similarity in effect of a tax on manufacture or production and a tax on distribution by emphasising the similarity of their effects on purchasers. The majority then put it that "[a] tax on distribution, like a tax on production or manufacture, has a natural tendency to be passed on to purchasers down the line of distribution and thus to increase the price of, and to depress the demand for, the goods on which the tax is imposed"[126].

    [126]Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 586.

73. The majority in Capital Duplicators [No 2] went on to explain acceptance of the constitutional purpose of s 90 as identified by Dixon J in Parton to be the main reason for rejecting the view of the minority that a tax which imposes a duty indifferently on imported goods and locally produced or manufactured goods falls outside the scope of the section. The majority expressed its conclusion as follows[127]:

    "Adhering to that view of the purpose of s 90, the term 'duties of customs and of excise' in s 90 must be construed as exhausting the categories of taxes on goods. That leaves the question whether a tax on goods should be classified as a duty of customs to the extent to which it applies to imported goods and a duty of excise to the extent to which it applies to goods of local production or manufacture. Some support can be found for this distinction. However, once it is accepted that duties of excise are not limited to duties on production or manufacture, we think that it should be accepted that the preferable view is to regard the distinction between duties of customs and duties of excise as dependent on the step which attracts the tax: importation or exportation in the case of customs duties; production, manufacture, sale or distribution – inland taxes – in the case of excise duties. It is unnecessary in this case to consider taxes on the consumption of goods."

    [127]Capital Duplicators Pty Ltd v Australian Capital Territory [No 2] (1993) 178 CLR 561 at 590 (footnotes omitted).

74. In a footnote to the penultimate sentence of that expression of conclusion, the majority in Capital Duplicators [No 2] observed that the meaning so attributed to "excise" accorded with the view of Rich J in Commonwealth Oil Refineries and John Fairfax, adding with reference to Matthews, Parton and Dennis Hotels that it was "perhaps the preferred view of Dixon J"[128].

    [128](1993) 178 CLR 561 at 590, footnote 40.

75. The differently constituted majority in Ha, comprising Brennan CJ, McHugh, Gummow and Kirby JJ, revisited and endorsed the conclusion and reasoning of the majority in Capital Duplicators [No 2], including both its acceptance of the constitutional purpose of s 90 identified by Dixon J in Parton and its recognition of the consequences of that acceptance for the respective meanings of "customs" and "excise"[129].

    [129]Ha v New South Wales (1997) 189 CLR 465 at 488-490.

76. The majority in Ha also referred to three considerations supporting the conclusion in Capital Duplicators [No 2] which had not been specifically addressed by the majority in that case. First, they explained how the meanings attributed to the words in s 90 involved no inconsistency with the language and structure of s 93 (which together with s 95 made transitional provision for the sharing of revenue from the collection by the Commonwealth of duties of customs and excise during the first five years of federation)[130]. Second, they drew attention to the consistency of the constitutional purpose identified by Dixon J in Parton with the purpose of enlarging the powers of self-government of the people of Australia identified during the National Australasian Convention in Adelaide in 1897 as the reason for requiring the Commonwealth Parliament to have the sole power and authority to impose duties of customs and of excise and to grant bounties upon the production or export of goods[131].

    [130](1997) 189 CLR 465 at 491-493.

    [131](1997) 189 CLR 465 at 495-496.

77. Third, the majority in Ha explained how the meanings attributed to "customs" and "excise" in Capital Duplicators [No 2] best fit the use of the same words in s 55. The essential point made was that, for s 55 to operate, a tax on goods must be capable of being determined to be, or not to be, a duty of customs or a duty of excise at the time of enactment of the law which imposes it. The operation of the section therefore cannot depend on the provenance of the goods on which the incidence of the tax might later be shown in fact to fall[132].

    [132](1997) 189 CLR 465 at 496-497.

78. Echoing the language in which the conclusion of the majority in Capital Duplicators [No 2] had been cast, the majority in Ha, having explained the conclusion to "accord with the Parton doctrine", said[133]:

    "Therefore we reaffirm that duties of excise are taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin. Duties of excise are inland taxes in contradistinction from duties of customs which are taxes on the importation of goods. Both are taxes on goods, that is to say, they are taxes on some step taken in dealing with goods. In this case, as in Capital Duplicators Case [No 2], it is unnecessary to consider whether a tax on the consumption of goods would be classified as a duty of excise."

    [133](1997) 189 CLR 465 at 499-500 (footnote omitted).

79. Much energy was expended during argument on the special case parsing the terms in which the conclusions in Capital Duplicators [No 2] and Ha were expressed. The following things are clear. The conclusion in Ha was intended to be an unqualified reaffirmation of the conclusion in Capital Duplicators [No 2]. Each conclusion stated a duty of excise to be an "inland tax on goods". Each eschewed the description of a duty of excise as an "indirect tax" on goods. Each eschewed the description of a duty of excise as a "trading tax". Each specifically reserved for consideration on another occasion whether a tax on the consumption of goods could be classified as a duty of excise. That reservation means that the reference in each to duties of excise being taxes on the production, manufacture, sale or distribution of goods must be taken to be descriptive and not exhaustive: the description was of dealings in goods which had in the past been targeted for State duties which had in the past been held to have been duties of excise. The reservation also means that such acknowledgement as was given by the majorities in Capital Duplicators [No 2][134] and Ha[135] to the continuing utility of the Bolton v Madsen formulation insofar as it described a duty of excise as a tax on "the taking of a step" in a process which ended at the point of receipt of goods by the consumer cannot be taken to have been an adoption of the Bolton v Madsen formulation as if it were a definition.

    [134](1993) 178 CLR 561 at 583.

    [135](1997) 189 CLR 465 at 490.

80. Most importantly, the conclusions in Capital Duplicators [No 2] and Ha were founded squarely on acceptance of the constitutional purpose of s 90 being that identified by Dixon J in Parton. That purpose, restated in light of Capital Duplicators [No 1], is to give the Commonwealth Parliament exclusive control of the taxation of goods so as to ensure that the execution of whatever policy the Commonwealth Parliament might choose to implement through the enactment of uniform laws of trade, commerce or taxation could not be hampered or defeated by State or Territory taxation of goods.  

81. The question put to one side by the majorities in Capital Duplicators [No 2] and Ha for consideration on another occasion now squarely arises and must now be determined.

    Taxes on consumption

    A recapitulation

82. Turning now to address the question whether a tax on goods at the stage of consumption should continue to be regarded as outside the constitutional conception of excise, and in so doing to address the status of Dickenson's Arcade, it is appropriate to recall and elaborate on four matters in the historical narrative.

83. The first matter assumes contemporary significance having regard to the observation of the majority in Capital Duplicators [No 2] that the meaning of the constitutional term adopted there and later in Ha accorded with the view of Rich J in Commonwealth Oil Refineries and John Fairfax[136]. It is to be recalled that the view of Rich J, as he then expressed it, was that duties of excise encompassed "duties upon goods collected in respect of use, consumption or sale"[137]. His added expression of opinion that the Constitution "gives exclusive power to the Commonwealth over all indirect taxation imposed immediately upon or in respect of goods" appears to have been an outworking of that broad conception rather than a confinement of it. 

    [136]See [74] above.

    [137]See [33] above.

931. In the present case, the fact is that the ZLEV charge is a tax on the use of ZLEVs. The tax falls on the person who owns or manages the ZLEV. It is calculated by reference to the use of the ZLEV. There are no intervening factors in play by which the ZLEV charge is distanced or separated from the registered operator using or authorising another to use the ZLEV for the purpose for which it must have been acquired if the ZLEV is registered, being its use on specified roads.

932. For these reasons, Victoria's first pathway – that the ZLEV charge is a tax on the activity of driving a ZLEV on specified roads and not a tax on ZLEVs – cannot be accepted. The ZLEV charge is a tax on ZLEVs.

     The second pathway – whether Dickenson's Arcade should be re‑opened

933. As foreshadowed, the first (but not the only) problem for Victoria is that the reasoning in Dickenson's Arcade is more nuanced than Victoria would allow. As noted, in Dickenson's Arcade: (a) Barwick CJ accepted only that "a tax upon the act of consuming goods, completely divorced from the manner or time of their acquisition by purchase, must now be regarded as outside the scope of s 90"[1947] and distinguished a tax on consumption from a tax on entry into consumption[1948]; (b) McTiernan J did not accept the exclusion of a consumption tax from an excise[1949]; (c) Menzies J accepted that an apparent tax on consumption might, in substance, be a tax on retail sale and purchase and thus an excise[1950]; (d) Gibbs J thought the question whether a tax on consumption could be an excise had not been decided, but concluded it could not[1951]; (e) Stephen J considered a tax on consumption was outside the scope of s 90[1952]; and (f) Mason J accepted that the weight of authority demanded that a tax on the consumption of goods not be regarded as an excise but considered this exclusion of marginal significance, as a "tax on consumption which is not also a tax on sale of goods is a phenomenon infrequently encountered"[1953].

     [1947]Dickenson's Arcade (1974) 130 CLR 177 at 186.

     [1948]Dickenson's Arcade (1974) 130 CLR 177 at 186, 193.

     [1949]Dickenson's Arcade (1974) 130 CLR 177 at 196.

     [1950]Dickenson's Arcade (1974) 130 CLR 177 at 209.

     [1951]Dickenson's Arcade (1974) 130 CLR 177 at 217‑222.

     [1952]Dickenson's Arcade (1974) 130 CLR 177 at 229.

     [1953]Dickenson's Arcade (1974) 130 CLR 177 at 239.

934. Further, even if Dickenson's Arcade is not re‑opened, it cannot now be authority for the proposition that a tax the criterion of liability for which is the consumption of a good can never be an excise. That proposition is irreconcilable with the demotion of the criterion of liability from an exclusive methodological determinant to one factor only in the overall evaluation of the question whether a tax is a tax on goods. Accordingly, Dickenson's Arcade is, at best, authority for the proposition only that a tax which, in substance, is a tax on the consumption of goods is not an excise. But that proposition itself cannot fit within the contemporary framework for the operation of s 90 authoritatively established in Capital Duplicators [No 2] and Ha.

935. The ratio of Dickenson's Arcade, to the extent it excludes taxes on the consumption of goods from s 90, could hardly be described as having been based on the careful working out of principle in a series of significant cases. Quite the contrary. It is sufficient to say that the evolution of legal thought about s 90, at least until Capital Duplicators [No 2], is marked by the appearance of certainty and clarity at one time, but the subsequent exposure by new factual circumstances of incoherence, inconstancy, and instability. Dixon J's comprehensive review of the law in Matthews and associated conclusion that to be an excise a tax "must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce"[1954] represented the culmination of coherent concept. Yet the subsequent narrowing in Parton to exclude taxes on consumption based on Atlantic Smoke Shops reintroduced conceptual equivocation. This may explain why Dixon J in Parton expressed the narrowed concept in qualified, not absolute, language ("[i]t is probably a safe inference ... [that] perhaps makes it necessary ... to modify the statement"[1955]). The narrowed concept emerged without apparent (or at least exposed) analysis of the different constitutional context under consideration in Atlantic Smoke Shops[1956]. Dixon J did not reconcile the narrowed concept with the required focus on the "substantial effect" of the tax being "to impose a levy in respect of the commodity" as an article of commerce[1957]. Nor did he reconcile the narrowed concept with the constitutional purpose of s 90 "to give the Parliament a real control of the taxation of commodities and to ensure that the execution of whatever policy it adopted should not be hampered or defeated by State action", which was not to be reduced by drafting expedients and ingenuity to "a formal significance"[1958].

     [1954]Matthews (1938) 60 CLR 263 at 304.

     [1955]Parton (1949) 80 CLR 229 at 261.

     [1956]The province had power in respect of "direct taxation within the province": Atlantic Smoke Shops [1943] AC 550 at 560.

     [1957]Matthews (1938) 60 CLR 263 at 304.

     [1958]Parton (1949) 80 CLR 229 at 260.

936. Subsequent decisions did not improve matters. Kitto J advanced the now‑discarded criterion of liability test in Dennis Hotels to determine if the law imposed a tax on steps in respect of goods from production to the point of receipt by the consumer[1959]. That test was unanimously adopted in Bolton v Madsen[1960]. But no further analysis of the cut‑off point, receipt by the consumer, is apparent. Bolton v Madsen also did not last. In Hematite, its conceptual limits and lack of fitness for constitutional purpose were exposed[1961]. By the time Philip Morris was decided, it could be said that "a long line of cases has made it abundantly clear that the Bolton formula, at least when applied in this way, no longer commands the acceptance of the Court"[1962].

     [1959]Dennis Hotels (1960) 104 CLR 529 at 559.

     [1960](1963) 110 CLR 264 at 273.

     [1961]Hematite (1983) 151 CLR 599 at 630‑631, 633, 655, 665.

     [1962]Philip Morris (1989) 167 CLR 399 at 432.

937. Accordingly, there is not a carefully worked out principle apparent excluding from the constitutional concept of a tax on goods a tax on the consumer of the goods. Instead, by the time of Capital Duplicators[No 2] the majority in that case could expressly state that "there is no judicial consensus as to the meaning or application of the expression 'duties of excise' in s 90"[1963]. That lack of consensus extended to the true nature of the exclusion of taxes on the consumption of goods from the scope of s 90, as is apparent from the divergent views expressed in Dickenson's Arcade and the divergent explanations for that decision proposed in Philip Morris[1964]. In this context, the majority's conclusion in Capital Duplicators[No 2] that "the term 'duties of customs and of excise' in s 90 must be construed as exhausting the categories of taxes on goods"[1965], thereby enabling an effective national economic union[1966], with the associated express deferral of consideration of the status of taxes on consumption[1967], repeated in Ha[1968], is significant. It represents an important signpost flagging the anomalous status of taxes on consumption being excluded from the concept of taxes on goods by reason of a mere definitional, rather than analytical, exercise.

     [1963]Capital Duplicators [No 2] (1993) 178 CLR 561 at 582.

     [1964]Capital Duplicators [No 2] (1993) 178 CLR 561 at 592‑593.

     [1965]Capital Duplicators [No 2] (1993) 178 CLR 561 at 590.

     [1966]Capital Duplicators [No 2] (1993) 178 CLR 561 at 585.

     [1967]Capital Duplicators [No 2] (1993) 178 CLR 561 at 590.

     [1968](1997) 189 CLR 465 at 499‑500.

938. It is also significant that the Court's previous consistent refusals to overrule Dennis Hotels and Dickenson's Arcade concerned their foundation on the expansive view of s 90 consistently with Parton, from which regulatory schemes imposing an impost on a person for the grant of authority to carry out an activity were an exception only because they could not be characterised as a tax on goods at all[1969]. In Ha, the circumstances of the case required the majority to determine the "limits of the protection offered by the franchise cases so as to accord with the Parton doctrine"[1970]. The majority rejected the proposition that tobacco and alcohol formed some special class of goods excluded from s 90 given their inherent susceptibility to regulation[1971]. They said[1972]:

     "The maintenance of constitutional principle evokes a declaration that the Dennis Hotels formula cannot support what is, on any realistic view of form and of 'substantial result', a revenue‑raising inland tax on goods. The States and Territories have far overreached their entitlement to exact what might properly be characterised as fees for licences to carry on businesses. The imposts which the Act purports to levy are manifestly duties of excise on the tobacco sold during the relevant periods. The challenged provisions of the Act are beyond power."

     [1969]See, eg, Capital Duplicators [No 2] (1993) 178 CLR 561 at 580‑582, 584, 591‑593.

     [1970]Ha (1997) 189 CLR 465 at 499.

     [1971]Ha (1997) 189 CLR 465 at 501.

     [1972]Ha (1997) 189 CLR 465 at 503 (citation omitted).

939. By analogy, in the present case, the very fact that Victoria has imposed the ZLEV charge indicates that correction of the error introduced in Parton, and repeated in Dickenson's Arcade, to the effect that taxes on the consumption of goods can never be an excise, is now necessary and timely. No State or Territory has identified any statute enacted in reliance on the exclusion of taxes on consumption from s 90 other than the ZLEV Charge Act itself and equivalent legislation, either not yet operative or repealed, in some other States[1973]. At most, Victoria identified some State levies that might (or might not) be invalidated. This is insufficient. It does not demonstrate any reliance on the relevant reasoning in Dickenson's Arcade. Further, and unlike the circumstances in Ha, there is no evidentiary basis from which it may be inferred that this conclusion would have "serious implications for the revenues of the States and Territories"[1974]. When deciding whether to re‑consider and overrule a case a relevant criterion is the nature and extent of the disruption to the status quo, not the mere confining of future possibilities.

     [1973]eg, Electric Vehicles (Revenue Arrangements) Act 2021 (NSW); Motor Vehicles (Electric Vehicle Levy) Amendment Act 2021 (SA), repealed by Motor Vehicles (Electric Vehicle Levy) Amendment Repeal Act 2023 (SA).

     [1974]Ha (1997) 189 CLR 465 at 503.

940. For these reasons, Dickenson's Arcade should be re‑opened.

     The third pathway – whether Dickenson's Arcade should be affirmed

941. Victoria's third pathway to validity of the ZLEV charge – that, insofar as it is authority for the proposition that a tax on consumption cannot be an excise, Dickenson's Arcade should be affirmed – must be rejected.

942. Consistently with the conclusions above, the matters Victoria proposed in support of this pathway to validity of the ZLEV charge are unpersuasive.

943. In summary, and contrary to Victoria's arguments, there is no sound rationale for the assertion that a tax on goods in the hands of the consumer is, for that reason alone, not a tax on goods as articles of commerce. As explained, once it is accepted that an excise involves a tax on a step taken in dealing with goods as articles of commerce[1975], the fact that a tax is imposed on consumption by the consumer cannot justify the exclusion of such a tax from the scope of s 90. It is not that every tax involving any burden on the passing of a good into the hands of the consumer is necessarily a tax on the good and an excise. Many taxes may impose a burden on a good but not be a tax on the good and therefore not an excise. That is the question of characterisation which must be determined principally but not exclusively by reference to the "close relation" between the tax and the good (that is, the tax being in respect of a step in the life cycle of the good) and, all other things being equal, the tendency of the tax being such as to affect the good as an article of commerce (that is, to affect the good in terms of the interrelated aspects of supply, demand, and price)[1976]. The point is that a tax on consumption is not necessarily excluded from being a tax on a good and thus an excise merely because the temporal criterion of liability arises after sale and the legal criterion of liability falls on the consumer by reference to use. Those exclusions suffer from the formalism firmly rejected in the context of all contemporary constitutional discourse[1977].

     [1975]Ha (1997) 189 CLR 465 at 497, 499.

     [1976]Matthews (1938) 60 CLR 263 at 304.

     [1977]Ha (1997) 189 CLR 465 at 498 and the cases cited in fn 124.

944. This also explains why Victoria's calling in aid payroll and similar taxes is unhelpful. As noted, many taxes may burden (and thus affect the supply and price of, or demand for) a good but not be a tax on the good. They may not be a tax on the good because, in their legal and practical operation, the relationship between the person who is liable to pay the tax and the good is insufficiently close to enable the tax to be characterised as a tax on the good. The question of characterisation of the tax being one of substance rather than form, the label attached to the tax cannot be determinative. Equally, however, the tendency of the tax to distort the supply and price of, or demand for, the good is a principal factor in the overall evaluation required.

945. Further, Victoria's proposition that a tax on consumption cannot have the same economic effect as a tax on the production, manufacture, sale, or distribution of goods assumes without any apparent justification that a tax on consumption can never burden the production, manufacture, sale, or distribution of goods. The logic of this assumption has been consistently doubted for good reason, as discussed above. In the case of ZLEVs, it is also irreconcilable with the context in which the ZLEV Charge Act was enacted. In any event, as discussed, s 90 does not operate by reference to economic effect demonstrated by economic analysis of a market or markets as they might exist at one point in time, but by legal characterisation based principally but not exclusively on the closeness of the relationship between the tax and the goods and the general tendency of the tax to affect the relations of supply, demand, and price for the goods. Underlying s 90 is the assumption that the vesting of exclusive power in the Commonwealth in respect of duties of customs and of excise and to grant bounties on the production or export of goods is the best way to ensure the intended economic union fostered by Ch IV.

946. As explained above, Victoria's reliance on s 93(i) of the Constitution as supporting its case is also misplaced.

947. Victoria's proposition that it is inherent in the etymological meaning of "excise" that it can be deducted or excised at the point of sale is effectively debunked in the judgment of Kiefel CJ, Gageler and Gleeson JJ[1978]. No more need be said.

     [1978]Reasons of Kiefel CJ, Gageler and Gleeson JJ at [14]‑[17].

948. For these reasons, Dickenson's Arcade should be overruled.

949. From this it will also be apparent that I agree with Kiefel CJ, Gageler and Gleeson JJ that, by reason of s 90, "any tax on ZLEVs or any other goods – whether imposed at the stage of their importation into Australia or production or manufacture in Australia or at any subsequent stage in their distribution, sale, ownership, control, use, resale, reuse or destruction in Australia or export from Australia – can be imposed only by uniform national legislation"[1979]. In this case, the ZLEV charge is a tax, not a fee for service. It is not a licence or permit fee for an activity properly the subject of a regulatory scheme. Rather, the ZLEV charge is a tax on the use of ZLEVs. The relationship or connection between the legal and practical operation of the tax (the ZLEV charge) and the use of the goods (ZLEVs) is close – indeed, it is direct and immediate. Further, as explained, the ZLEV charge affects ZLEVs as articles of commerce. The ZLEV charge, accordingly, is an excise.

     [1979]Reasons of Kiefel CJ, Gageler and Gleeson JJ at [197].

     The fourth pathway – re-considering Capital Duplicators [No 2] and Ha

950. Victoria's fourth and final pathway cannot be taken, for the reasons already given.

     Conclusion

951. The substantive question, is s 7(1) of the ZLEV Charge Act invalid on the basis that it imposes a duty of excise within the meaning of s 90 of the Constitution, should be answered "yes". Victoria should pay the costs of the proceeding.