On September 11, Mr. Brian Colin Fine provided Uber X services to Uber X riders or passenger. The question in issue in this proceeding is whether the service provided by Mr. Colin constituted supply taxi travel within for which the Uber drivers are required to be registered for GST purposes.
Since this case is being heard for the first time it is a case ‘at first instance’ and the legal issues arising out of the case may be: whether carrying on an enterprise that provide Uber X services to the Uber X riders shall constitute ‘supply taxi travel’ within the meaning of section 144-5(1) as defined under section 195-1 of the Goods and Services Act; whether Mr. Brian Colin Fine, being a UberX partner ‘supplied taxi travel’ on 11 September within the meaning of section 144-5(1) of the GST Act; whether the definition of ‘taxi travel’ under section 195-1 is to be interpreted as a composite phrase.
The enterprises whose turnover is less than $75000 are not required to register for GST. However, there is an exception to this rule stipulated under section 144-5 in Pt 4-5(1) of the Goods and Service Tax Act 1999 according to which the limousine and the taxi drivers are required to register for GST purposes irrespective of the stipulated turnover. The provision under section 144-5(1) of the Act states that any person who is carrying on an enterprise is required to register for GST purposes only if such enterprise supplies taxi travel.
The phrase ‘taxi travel’ is defined under section 195-1 of the GST Act as any travel which involves travelling the passengers for fares either by taxi or by limousine. If the services provided to the UberX passengers or Uber X Riders falls within the definition or meaning of the definition of ‘supply taxi travel’ under section 144-5 (1), the Uber X drivers or the Uber X partners are under statutory obligation to register themselves for GST purposes.
As per the contentions submitted by both the parties, it is observed that both the parties agreed on the relevant principles of statutory construction. The Court agreed with the contention submitted by the Commissioner that while considering a particular text, it is important to consider the context and the questions of context which should be dealt with in the first instance and not when it gives rise to ambiguity. In order to interpret the legal meaning of the Div 144 the court considered the Explanatory Memorandum to the Bill that introduced the Div 144 in the GST Act. The memorandum clearly explained that the exception created by the Div 144 with respect to taxis has given rise to several difficulties with respect to the fact that only few taxi drivers were being registered for GST purposes. This implied that unregistered taxi drivers are required to be registered for GST purposes.
The court further asserted that Div 144 was introduced with a view to resolve this problem and obligating every person who supplied ‘taxi travel’ to be registered for and remit GST. Under these circumstances, the court accepted the submission of the Commissioner relating to the construction of the concept of ‘taxi travel’ as defined under section 195-1 to be interpreted broadly.
The court has applied a non-technical and broad approach while interpreting the relevant provisions of the GST Act. The court observed that while interpreting the phrase ‘taxi travel’ it is important to consider the fact that the legislative provision in the GST Act directs any person who ‘supplies taxi travel’ to register for GST irrespective of the fact that they meet the requirement of registration. This emphasizes on the necessity to interpret the legislation in a common sense and in a practical manner with a view to avert any approach that is unduly technical and literal as was observed in Saga Holidays Ltd v Commissioner of Taxation [2005]. The court based its reasoning about applying a common approach on the judgment held in the Lansell House Pty Ltd v Commissioner of Taxation [2011].
The issue at the core of this proceeding is whether the definition of ‘taxi travel’ under section 195-1 is to be interpreted as a composite phrase. The relevant principles guiding interpretation of the composite phrase can be observed in the Sea Shepherd case, where Gordon J summarized that the function of the court is to interpret the language of the statute and not the individual words and the court must not pull apart a composite phrase within a provision instead select one meaning separate it from the context in which it appears and then reassemble the statutory provision. The court stated that it may be the phrase of ‘taxi travel’ under section 195-1 of the GST Act is itself a composite phrase but it is important to lay more emphasis on the specific legal definition of that phrase under section 195-1 which does not portray a composite expression. It is pertinent to interpret dictionary meanings of terms cautiously as was observed in the Sea Shepherd Australia Ltd v Federal Commissioner of Taxation [2013]. Interpretation of statutes can be done using the words of the provision in one hand and the dictionary meaning; however, it does not imply that in order to confirm the ordinary meaning of the words, reference should be made to dictionary meanings as was held in Provincial Insurance Australia Pty Ltd v Consolidated Wood Products Pty Ltd [1991].
On applying the principles of statutory interpretation, the court considered that the words under section 195-1 should be interpreted according to their ordinary meaning and not a specialized or trade meaning. The Commissioner’s submission that the ordinary meaning of the word ‘taxi’ is vehicle that is available to the public for hire and such vehicle shall transport the passengers at their destinations for fare which shall be calculated by a taximeter. The word ‘limousine’ has also been interpreted as per its ordinary meaning which is defined as a private luxurious motor vehicle that is available to provide transporting services to public at their destinations for the payment of a fare. In the proceeding, both the parties have agreed to the proposition that the term ‘hire car’ is an alternative word used for a ‘limousine’ as per its ordinary meaning. The fact that there is a glass division between the driver and the passengers cannot be considered as an essential feature of limousine, hence, cannot be given a separate meaning other than what is meant in the ordinary meaning.
The court considered that the inclusion of the word ‘limousine’ in the definition of ‘taxi travel’ under section 195-1 suggests that the Parliament differentiated a taxi from a limousine with respect to the transporting services provided to the passengers for payment of fare. However, the level of difference suggested by the applicant under the ‘essential characteristics’ shall not be taken into consideration. In the common parlance, the fundamental difference between a taxi and a limousine is that the latter is a large luxury care but ultimately provides transport services to passengers for fare.
The court further asserted it is taken into consideration that on 11 September 2015, Mr. Fine was supplying taxi travel within the meaning of the definition under section 144-5(1) and 195-1 of the Goods and Services Act while he was operating as an Uber drivers or Uber X Partners. The court based its reasoning on the ground that when he was supplying the transporting services to the passengers for fares without any taximeter installed in it shall not be considered as an important part of the ordinary meaning of the word ‘taxi’. This ground is supported by the definition provided in the dictionary which states that although a taximeter installed in a taxi but the installation of the device is not an essential part of the ordinary meaning of the word ‘taxi’.
The applicant’s contention that taxi and UberX service is different based on the essential characteristics has not been taken into consideration by the court as those characteristics failed to meet the characteristics that is associated with the common usage of the word ‘taxi’. The court based this reasoning on the reasons given by Sundberg J in the Lansell’s case which stated that the court must construe any ordinary English word applying its ordinary meaning as used in common sense instead of applying technical approach. Further, the type of car that was used by Mr. Fine on 11 September was a ‘taxi’ within the ordinary meaning of the word and the Honda Civic vehicle that was used by him cannot be considered as supplying service travel by limousine. The other matters that support this conclusion include firstly, the common usage of the words used under section 195-1 to ordinary people including the limousine and taxi drivers.
Secondly, the court does not accept the fact that the ‘regulatory concept’ of the term ‘taxi’ described by Dr. Abelson overlaps with the ordinary meaning of the word ‘taxi’ as the term has been defined generally rather than in the regulatory concept provided by Dr. Abelson. Thirdly, the court did not consider the contention made by the applicant relating to the construction of the phrase ‘taxi travel’ defined under section 144-5 of the GST Act to be influenced by the ‘regulatory concept’ of taxis. This is because the applicant has failed to provide any material evidence to support his claim that the Commonwealth Parliament has been influenced while enacting the Div 144 by a public policy debate relating to regulation of taxi industry and transport operations like those engrossed in the Uber X services.
Lastly, the court has taken into consideration the submission made by the Commissioner with respect to the mischief that has been identified in the Explanatory Memorandum for incorporating Div 144 in the GST Act.
The mischief identified requires a broad interpretation of the relevant provisions and while interpreting the provisions broadly and taking the other matters into consideration, the court asserted that the interpretation of the word ‘taxi’ in its ordinary meaning is sufficiently broad to include the Uber X service provided by Mr. Fine on 11 September.
The applicant submitted before the court the nature of services that is provided by Uber X Partners to Uber X Riders. The court asserted that merely because of the software technology that is used in providing the Uber X service was unknown to the Parliament while incorporating Div 144 into Pt 4-5 of the GST Act, hence it shall not be used as a determining factor of whether the services provided on 11 September was within the meaning of the definition of the word ‘taxi’. While explaining the distinction between the ordinary meaning and technical meaning to be used to interpret the relevant statutory provision, the court referred to Afga-Gevaert at 399 to explain ‘presumption’ with respect to trade meaning in revenue statutes.
The reference was made to emphasize on the fact that a mere presumption shall not refute the possibility of the words used in a revenue statute to be comprehended as per its ordinary meaning. Further, the court referred to the Saga Holidays case where it was determined whether holiday package tours were ‘taxable supplies’ within the meaning of section 9-5 of the GST Act. The court adopted this approach while explaining why a non-technical or a broad approach should be adopted while interpreting the relevant provisions of the GST Act.
The court based its decision on the above discussed reasoning and ordered that the amended originating application made on 22 September 2015 should be dismissed and the applicant has been ordered to pay costs to the Commissioner. The court further held that a declaratory order should be made stating that the Uber X service that was supplied by Mr. Fine on 11 September 2015 falls within the meaning of the term supply ‘taxi travel’ defined under section 144-5(1) (as defined in section 195-1) of the GST Act 1999 (Cth).
Reference List
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Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6; 190 FCR 354.
McBride, Meredith. “Indirect Tax: Innovation, Energy, and E-Commerce.” Int’l Tax Rev. 26 (2015): 19.
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