Australia Pacific P/L v Building and Construction Industry Authority [2014] QMC 4

MAGISTRATES COURTS OF QUEENSLAND CITATION: Australia Pacific P/L v BCIA [2014] QMC 4 PARTIES: AUSTRALIA PACIFIC PTY LIMITED (ACN 001646 331) (appellant) and AUSTRALIA PACIFIC LNG (CSG) PTY LIMITED (ACN 099 577 769) and AUSTRALIA PACIFIC LNG (Moura) PTY LIMITED (ACN 064 989 813) and AUSTRALIA PACIFIC LNG CSG PROCESSING PTY LIMITED (ACN 109 043 487) and AUSTRALIA PACIFIC LNG GLADSTONE PIPELINE PTY LIMITED (ACN 144 653 921 and AUSTRALIA PACIFIC LNG CSG TRANSMISSIONS PTY LIMITED (ACN 138 156 466) and AUSTRALIA PACIFIC LNG CSG MARKETING PTY LIMITED (ACN 008 750 945) and AUSTRALIA PACIFIC LNG MARKETING PTY LIMITED (ACN 141 937 920) and AUSTRALIA PACIFIC LNG (SHARED FACILITIES) PTY LIMITED (ACN 141 941 595) and AUSTRALIA PACIFIC LNG PROCESSING PTY LIMITED (ACN 141 937 948) v BUILDING AND CONSTRUCTION INDUSTRY AUTHORITY (respondent) -- 1 of 17 -- 2 FILE NO/S: MAG-00196043/11(0) DIVISION: Magistrates Court PROCEEDING: Application pursuant to s 88(1)(b) of the Building and Construction Industry (Portable Long Service Leave) Act 1991 (Qld). ORIGINATING COURT: Magistrates Court at Brisbane DELIVERED ON: 24 February 2014 DELIVERED AT: Brisbane HEARING DATEs: 12 and 13 November 2013 DEPUTY CHIEF MAGISTRATE: Rinaudo O ORDER: Confirm issues 1, 2 and 3 and remit issue 4 for further consideration in accordance with this decision. CATCHWORDS: Building and Construction Industry, levies for training, long service leave and work health and safety, cost of building and construction work, directly or indirectly, extraterritorial application, GST included as direct or indirect cost, whether other conditions of approval are a cost of construction COUNSEL: For the Appellants: Mr P. J. Flannagan QC and Mr P.G. Bickford of Counsel For the Respondent: Mr P. L. O‘Shea QC and H. G. Lakis of Counsel SOLICITORS: For the Appellants: Clayton Utz, Lawyers For the Respondents: McCullough Robertson, Lawyers [1] This Application was brought before me for hearing pursuant to s 88(1)(b) of the Building and Construction Industry (Portable Long Service Leave) Act 1991 (Qld) (the Act). That section provides for an Application to an Industrial Magistrate if a party is dissatisfied with a decision of the Building and Construction Industry (Portable Long Service Leave) Authority (QLeave) the respondent. This Appeal is from a determination of the respondent made on 7 October 2011. [2] The Notice of Appeal dated 3 November 2011 sought orders as follows: (a) The decision made by the respondent on 7 October 2011 be set aside; (b) That the decision be substituted with a decision that: (i) Any price paid for goods manufactured outside Australia and acquired by or behalf of the appellants that are thereafter imported and incorporated into the appellant‘s upstream -- 2 of 17 -- 3 project or downstream project (as described in paragraphs 4(b)(i) and (ii) of the appellant‘s Notice of Appeal), is not a component of cost of building and construction work within the meaning, or for the purpose, of the Act (the first issue); (ii) Any amount paid on account of GST in respect of the supply by an Australian supplier of goods acquired by or on behalf of the appellants for the appellant‘s upstream project or downstream project, but which amount is then offset by an input tax credit, is not a component of cost of building and construction work within the meaning, or for the purpose, of the Act (the second issue); (iii) Any amount of GST liable to become payable to the Australian Taxation Office on the importation into Australia of goods acquired by or on behalf of the appellants for the appellants upstream project or downstream project, but which amount to deferred and offset by the corresponding input tax credit entitlement for the importation of those same goods, is not a component of costs of building and construction work within the meaning, or for the purposes, of the Act (the third issue); (iv) The price paid for works undertaken in compliance with project approval conditions that may be imposed by State and or Commonwealth authorities under regulatory decisions or approvals but which do not form part of the appellant‘s upstream project or downstream project is not a component of cost of building and construction work within the meaning, or for the purpose, of the Act (the fourth issue); and (v) The categories of costs described in subparagraphs 1-4 above are not notifiable or leviable under the Act; (c) The Appellant‘s costs of and incidental to this Appeal be paid by the respondent; and (d) Such further or other costs as the Court may deem necessary. [3] It was agreed between the parties that the Application before me would be by hearing de novo. I was provided with substantial material together with an outline of submissions from the appellant, the respondent and a reply to the appellant‘s submission. My powers pursuant to s 88(4) of the act are that I may - (a) Confirm the decision appealed against; or (b) Set aside the decision and substitute another decision; or (c) Set aside the decision and return the matter to the authority with directions the Industrial Magistrate considers appropriate. -- 3 of 17 -- 4 [4] I was also provided with a Statement of Agreed Facts filed by the appellants on 2 July 2013 and the affidavits of Mark Nicolas McCabe filed on 23 March 2012, 29 June 2012 and 19 March 2013. The Legislation [5] Section 66 of the Act imposes a building and construction industry training levy, a long service leave levy and a work health and safety levy. These levies are imposed on building and construction work. Section 3AA of the Act sets out a definition of building and construction industry as follows – ―(1) The building and construction industry is the industry of constructing, deconstructing, reconstructing, renovating, altering, demolishing, relocating, maintaining or repairing any of the following— (a) buildings; (b) spa pools and swimming pools; (c) roads, railways, airfields or other works for the passage of anything; (d) breakwaters, docks, jetties, piers or wharves; (e) works for solid waste disposal; (f) works for subdividing or developing land; (g) works for the improvement or alteration of a harbour, river or watercourse for navigation purposes; (h) works for the storage or supply of water or for flood mitigation; (i) works for the irrigation of land; (j) works for the conveyance, treatment or disposal of sewage or of the effluent from any premises; (k) works for extracting, refining, processing or treating materials or for producing or extracting products and by-products from materials; (l) works for conveying products, by-products or materials; (m) works for the drainage of land; (n) works for the storage of liquids, other than water, or gases; (o) works for the generation, supply or transmission of electric power; (p) works for telecommunication or for the transmission of radio or television; (q) bridges, viaducts, aqueducts or tunnels; (r) chimney stacks, cooling towers, drilling rigs, gas holders or silos; (s) pipe lines; (t) navigational lights, beacons or markers; (u) pile driving works; (v) sporting or recreational facilities; (w) earthworks, other than for farming; (x) fences, other than fences on farms; (y) structures, fixtures or other works not included in paragraphs (a) to (x), but not including earthworks for farming or fences on farms. (2) The building and construction industry also includes landclearing and site preparation, other than for farming. (3) The building and construction industry also includes the industry of, whether on or off site— (a) constructing a thing, other than ordinary stock for sale, -- 4 of 17 -- 5 in accordance with working drawings; or (b) deconstructing, reconstructing, renovating, altering, demolishing, relocating, maintaining or repairing a thing, other than ordinary stock for sale, constructed in accordance with working drawings. (4) The building and construction industry does not include the industry of performing maintenance or repairs of a minor nature to anything mentioned in subsection (1) or (3) for a person not substantially engaged in activity mentioned in subsection (1), (2) or (3).‖ [6] Section 73 of the Act provides as follows: “Meaning of cost of building and construction work (1) The cost of building and construction work is the total of all costs that relate to the work directly or indirectly. Examples of costs— costs of labour, materials, plant, equipment, design, project management, consultancy, prefabricated goods, commissioning, installation (2) Without limiting subsection (1), the total of all costs may be ascertained having regard to— (a) the contract price for the work; or (b) if the work is being done for someone other than the Commonwealth and involves more than 1 contract, the total of the contract prices. (3) Despite subsections (1) and (2), if there is no contract price or the authority is satisfied that the contract price, or the total of the contract prices, for carrying out the building and construction work does not accurately establish the total of all costs that relate to the work, the cost may be decided by the authority.‖ Facts [7] The agreed facts state that the first appellant has three shareholders being Origin Energy Limited, Conoco Philips Australia Pacific LNG Pty Ltd and Sinop Peck Australia Pacific LNG Pty Limited. [8] Each of the second to tenth appellants are wholly owned subsidiaries of the first appellant. The project involves development of coal seam gas (CSG) to liquefied natural gas (LNG) in Queensland. The project is made up of an upstream project and downstream project. Both projects are located in Queensland. The upstream project involved the development of gas fields and all associated works to connect various gas fields in Central Queensland to a LNG liquefaction, loading and export facility (LNG facility upstream project). The downstream project involves the construction of the LNG facility comprised of two or more ―LNG trains‖ and associated common infrastructure to laird point on Curtis Island near Gladstone (the downstream project). An LNG train comprises the gas liquefaction and purification facilities that are used to cool the gas to condense it into liquid form for storage in a tank until shipped. Capacity on one LNG train is estimated at 4.5 million cubic tonnes of LNG per annum. -- 5 of 17 -- 6 [9] During 2011 discussions took place with respect to the process and method of calculation of the levies under the Act and the regulation in respect of the work to be undertaken by the appellants. [10] On 28 July 2011 the first appellant on its behalf and on behalf of the other appellants in accordance with s 67 of the Act estimated the cost of the upstream and downstream building and construction work. Each of the second to tenth appellants, are involved in the ownership and/or delivery of various aspects of the Australia Pacific LNG project (APLNG project). On 28 July 2011 the first appellant made its final investment decision to proceed with drilling activities in the construction of upstream wells etc (part of the upstream projects) and one LNG train and associated infrastructure (part of the downstream project) (FID1). [11] On 4 July 2012 the first appellant made its final investment decision to proceed with the construction of the second LNG train and associated infrastructure (FID2). [12] Section 66 of the Act imposes the following levies on building and construction work – “Imposition of levies The following levies are imposed on building and construction work— (a) building and construction industry training levy; (b) long service leave levy; (c) work health and safety levy.‖ [13] Section 72 of the Act provides a regulation may prescribe the amount imposed to the levies as percentages of the cost of building and construction work. The current rate of each of the levies as a percentage of the cost of building and construction work is prescribed in s 7 of the regulation to be – (a) Building and construction industry training levy—0.1%; and (b) Long service leave levy—0.3%; and (c) Work health and safety levy—0.125%. [14] The applicant on 28 July 2011 estimated the cost for the FID1 component and APLNG project to be as follows: (a) Upstream project $5,610,473,507 and (b) Downstream project $5,914,209,899. [15] For the purposes of assessing levies the respondent based the estimate of building and construction work for the upstream project at $8,055,848,808 which was the applicant‘s estimate plus conditions required by EIS of $329,983,626, off-shore costs of $1,004,710,845 and own employee costs of $554,106,208 and GST in the sum of $660,640,736 and for the downstream project the respondent estimated cost for the purposes of assessing levies at $8,229,435,017 which included the -- 6 of 17 -- 7 respondent‘s estimate together with amount for conditions required by EIS of $85,114,109; off-shore costs of $2,190,054,023 and own employee costs of $170,035,812 and amount for GST of $534,806,897 representing the GST component of the relevant costs. As a result the respondent assessed the first applicant as liable to pay levies under the Act in the sum $42,266,956 in respect of the upstream project and $43,178,284 in respect of the downstream project. Hence the issues can be summarised succinctly as follows. Issues for consideration First Issue – the imported goods decision. [16] The applicant seeks to have excluded the amounts paid to acquire overseas goods manufactured outside Australia and then imported into Australia for incorporation into the appellant‘s Queensland project. Issue Two [17] The applicant seeks that any amount paid for GST in connection with the supply of goods or services in Australia for the projects which amount is then offset by an input tax credit is not a component of the cost of building and construction work within the meaning for the purposes of the Act. Issue Three [18] The appellant seeks that any GST liability that arises in respect of the importation of goods to Australia but which is later satisfied by an offset of input tax credit, does not constitute a cost leviable under the Act. Issue Four [19] The applicant seeks to have removed from the leviable cost of the projects any work required to be undertaken in order to comply with conditions of approval imposed by State or Commonwealth on the basis that such work is not building and construction work for the projects. Discussion of Issue One [20] Appellant‘s submission – “(v) Conclusion as to the First Issue 96. By seeking to include costs incurred by the Appellants under supply contracts with foreign suppliers for materials manufactured outside Australia and delivered to the Appellants outside of Australia, the Respondent is impermissibly seeking to apply the Act extraterritorially. 97. The range of costs incurred by the Appellants in making offshore purchases do not constitute "costs of building and construction work" in Queensland and are therefore not subject to the imposition of the levies under the Act. -- 7 of 17 -- 8 98. Where the Appellants source materials, such as plant and equipment, from an overseas supplier and the supplier's obligation is to supply the materials to the Appellants with title passing to the Appellants outside of Australia, the cost to the Appellants of acquiring those materials is not a cost of building and construction work under the Act. No "work" is being performed by the supplier in Queensland. The mere fact that the materials will ultimately be incorporated into the Project, by installation by a third party does not render the manufacture and supply of goods overseas, "building and construction work" for the purposes of the Act 99. The Appellants accept that if a contractor is engaged to install materials then the cost of the installation work would be assessable; but such cost would not include the cost of the materials separately procured by the Appellants. 100. The Appellants also accept that if a contractor is engaged to procure and install materials, then the cost of procuring the goods and the installation work would, on the authority of the BHP case, be assessable. 101. However, with respect to the Upstream Project, the Appellants have separately sourced from overseas suppliers relevant plant and equipment for importation. The Appellants have then entered into (or will enter into) a number of contracts with contractors to install the various items of plant and equipment. One such contract that has been entered into by the Fifth Appellant (Main Pipelines Contract) requires the contractors to install, amongst other things, line-pipe and induction bends, large bore, ball valves and actuators, monolithic insulating joints and fittings and flanges sourced by the Appellants from overseas. 102. As such, the Appellants submit that only those costs incurred by them in contracting with the contractors to install the materials in Queensland are costs of building and construction work to which the levies under the Act are applicable.‖ [21] Respondent‘s submission – ―4. Summary of Submissions Summarising the first issue - the Imported Goods Decision 4.1 The Appellants' first ground is that the amounts paid by the Appellants to acquire overseas goods manufactured outside Australia and then imported into Australia for incorporation into the Appellants' Queensland projects do not form part of the cost of building and construction work for the purposes of the Levy Act, contending that to do so would require express or implied provisions in the Levy Act permitting extraterritorial operation. 4.2 This is not the case: -- 8 of 17 -- 9 (a) As discussed above, levies are imposed on "building and construction work". In the present case, levies are imposed on the building of the Upstream Project and the building of the Downstream Project. To identify the work by reference to major constituents of those projects, levies are imposed on the construction of the gas transmission pipeline and the construction of the LNG Facility. (b) All of that building and construction work is taking place in Queensland. It is that building and construction work which attracts the imposition of the levies. Consistently with authority, there is no question of extra-territorial operation. 4.3 Alternatively, if the Appellants are correct in contending that the valid imposition of levy on goods acquired overseas does require an extraterritorial operation of the Levy Act: (a) the Appellants' contentions in relation to the limited extraterritorial scope of the operation of the Levy Act relies on old and superseded authorities; (b) more recent imperial and Commonwealth legislation and more recent High Court authorities, confirm that the imposition of levy on those contracts is a valid exercise of extraterritorial power: (i) being made for the peace, welfare, and good government of the State of Queensland, (ii) selecting a sufficient connection or relation with the State; and (iii) imposing the liability by reference to that connection; (c) the Appellants' contentions ignore the full extent of the Queensland Parliament's legislative power and extraterritorial scope, that is confirmed by section 9(1) of the Acts Interpretation Act; (d) Any extraterritorial operation of the Levy Act is valid.‖ Discussion and decision on First issue: [22] Both Senior Counsel in their written and oral submissions went into great detail about the underlying legislative meaning. Both considered cases about buth the meaning of the words of the Act and also the use of extrinsic evidence. I do not propose to review all of that analysis here. Suffice to say that I have had regard to both submissions in detail and considered the relevant cases and extrinsic material. In short cumpas the issue is whether the words of the Act should be interpreted as having a narrow non extra territorial meaning such that work contacted for completed and delivered outside of Queensland is leviable or not, or that the Act is sufficiently broad in its meaning to capture such works as part of the construction of the Appellants in Queensland. [23] In so far as the interpretation of the Act is concerned I favour the meaning ascribed by the Respondent. If one takes as a starting point the decision of de Jersey P in -- 9 of 17 -- 10 BHP Coal Pty Ltd V Building and Construction Industrial (Portable Long Service Leave) Authority1. Subsequently the Act was amened. It appears clear that the intention of the legislature was to ensure that the total of ―all costs that relate to work directly or indirectly‖ are included in the levy pool (sect 73(1)). I prefer the argument of the respondent on this issue. Clearly the legislature was intending to ―I adopt the reasoning of Senior Counsel for the Respondent about the use of extrinsic evidence to assist in this interpretation. [24] In particular, I accept that the intention was the, ―implementation of the legislative purpose of and ―equitable and efficient system of portability of long service leave‖2 by maintaining a minimal levy (by reference to percentage) across the broadest base (covering the total costs of work, without exclusions), and with low administrative cost.‖ [25] Whilst I might be argued that the Act is for the benefit of Queensland workers building Queensland construction projects, and no Queensland workers wee involved in the construction of the overseas components of the projects, this is in my view an oversimplification and does not properly give due weight to the meaning and intent of the Act3. [26] To the extent that he Act purports to apply extraterritorially then it is validly doing so. If the goods which the Appellants sourced from overseas were simply sourced for sale here in Queensland then their argument would in my view have some validity. However, that is not what occurred here. The overseas acquired goods were incorporated in the projects being constructed here in Queensland and must therefore be ―costs that relate directly or indirectly to the work. The clear intention of the legislature in introducing s 73(1) was to expand the type of costs caught by the phrase ‗cost of building and construction work‖ ―.4 This issue must in my view fall for the respondent. I accept the submission by the respondent on this issue. Discussion of Issue Two [27] Appellant‘s submission – “Second Issue - GST on domestic supplies (xi) Conclusion as to the Second Issue 159. The term "cost" as it is employed in s73 of the Act with respect to the "cost of building and construction work" must be construed as meaning the actual cost to the person for whom the building and construction work is carried out. 160. With respect to amounts of GST paid by the Appellants in respect of the supply to them of goods or services in Australia, there is no actual cost to the Appellants as any GST paid is offset by the receipt of an input tax credit 1 (Unreported, Queensland Industrial Court; de Jersey P, 9 February 1998) 2 Para 3.16 of Respondents submission, (See the preamble to the Levy Act…) 3 Para 65 of Applicants submission. 4 Para 3.3(a) of respondents submission. -- 10 of 17 -- 11 to the same value. As such, no amounts of such GST are recorded by the Appellants as costs to them. 161. Hence, GST, where it is offset by an input tax credit, is not a component of the cost of building and construction work within the meaning, or for the purposes of, the Act.‖ [28] Respondent‘s submission – “Summarising the second issue - the Domestic GST Decision 4.4 The Appellants' second ground of appeal is that, to the extent the levies are imposed on a contract price that includes an amount equivalent to the GST that a supplier is liable to pay in respect of the supply of goods or services in Australia that Is then offset by an input tax credit, this does not constitute a "cost" to the Appellants. 4.5 When the Appellants pay the contract price for goods and services, they are never liable to pay an amount "on account of GST‖ (as the Appellants contend) in respect of acquisitions that they make for their Queensland projects. The Appellants simply pay the "contract price" for those goods and services 4.6 The GST arising on goods and services supplied for the projects by third party suppliers is always a tax liability for that supplier, and not for any Appellant. It is not possible to say what steps are taken by the third party supplier in order to satisfy that GST liability So far as a supplier ensures that the contract price obtained from an Appellant includes an amount sufficient to cover that supplier's GST liability, the amount will always be a part of the total contract price that is liable to levy in terms of section 73 of the Levy Act. 4.7 The scheme of the GST legislation is that input tax credits (where available) operate as a credit only against the Appellant's own GST liability, or confer entitlement to a payment from the Federal Commissioner of Taxation Input tax credits will never have a discounting or offsetting effect on the "contract price" that is paid to a domestic supplier of goods and services. 4.8 There can be no wider expression than "relates to, directly or indirectly". Any amount included in the contract price on account of a supplier's liability for GST clearly falls for assessment in terms of that expression in the Levy Act. 4.9 The opportunity to claim an input tax credit arises after supply, and is conferred by operation of the taxing legislation. The input tax credits have no impact on the amount of the contract price that is paid, and consequently no impact on the amount that is liable to levy. Such input tax credits are no different from the subsequent tax deductions for business expenses or capital depreciation that will also accrue to the Appellants as a consequence of payments made for goods and services that are -- 11 of 17 -- 12 incorporated into the projects - and those tax deductions have no bearing on the determination of the leviable contract price. 4.10 The Respondent's approach is supported by authority to the effect that "grossed up" payments inclusive of a tax do not alter the characterisation of those payments - here, as leviable "contract price". 4.11 The Respondent is also supported by authority to the effect that the GST component of a payment paid to a supplier comprises a relevant "cost", even where the recipient may be entitled to an input tax credit. 4.12 The Appellants' contentions suffer from a further error. The Appellants incorrectly approach the imposition of levy as if it is a collective liability and, although they purport to invoke the input tax credit provisions of the GST Act, they improperly ignore the overriding operation of the GST grouping provisions that specifically deny those credits to the Second to Tenth Appellants (inclusive). 4.13 The evidence here is that: (a) under the various contracts, different individual Appellants are the persons for whom different items of work are to be done; and (b) the individual persons for whom the work is to be done also pay the contract price for that work. 4.14 The scheme of the GST grouping provisions is that input tax credits are only available to the First Appellant. Consequently, the Appellants' contention on this ground is unsustainable for the Second to Tenth Appellants (inclusive) because, although they will pay the full GST inclusive contract price for the work that is to be done for them, the GST grouping provisions specifically exclude those Appellants from the benefit of any input tax credits attributable to acquisitions made by them. 4.15 Despite the GST grouping provisions making all the group's input tax credits on creditable acquisitions available to the First Appellant alone, the implications for the First Appellant remains as outlined in the Respondent's primary argument on this issue (which applies to all the Appellants, irrespective of the grouping provisions).‖ Discussion and Decision on second issue [29] Again I agree with the submission of the respondent on this issue. Whilst it would appear that taxing the GST tax is inappropriate, the Act makes no distinction of the type of cost. All costs are included. The cost to the applicants of the building and construction of the projects is inclusive of GST. What input tax credits they are entitled to recover are immaterial to the cost. It is contended that all GSt is recovered and dealt with by the Appellants in a particular way according to their respective agreements, but in my view this does not diminish the provisions of the Act to levy the cost including costs directly and indirectly. [30] Accordingly I find for the respondent on this issue. -- 12 of 17 -- 13 Discussion of Issue Three [31] Appellant‘s submission – “Third Issue - GST on offshore supplies (vi) Conclusion as to the Third Issue 183. As discussed above with respect to the Second Issue, the term "cost" as it is employed in s73 of the Act must be construed as meaning the actual cost to the person for whom the building and construction work is carried out. 184. With respect to goods to be imported by the Appellants for the Upstream Project or the Downstream Project, no actual payment of amounts of GST is made by them due to their participation in the GST deferral scheme and the availability of input tax credits that offset any notional GST liability. 185. Therefore, the Appellants submit that any amount of GST liable to become payable on the importation into Australia of goods for the Upstream Project or the Downstream Project, but which is never actually paid by the Appellants as payment is deferred and totally offset by a corresponding input tax credit entitlement, is not part of the cost of building and construction work within the meaning, or for the purposes, of the Act.‖ [32] Respondent‘s submission – “Summarising the third issue - the Imports GST Decision 4.16 The Appellants' third ground of appeal is that any GST liability that arises in respect of the importation of goods in Australia, but which is later satisfied by an offset of input tax credits, does not constitute a leviable cost. 4.17 The legislative scheme for GST differs for taxable importations (where the importer is liable and not the overseas supplier), but GST on imports is one of the costs under section 73 of the Levy Act for the following reasons: (a) GST arises as a liability (and hence as a cost) immediately upon entry of imported goods for home consumption in Australia; (b) contrary to the scheme of the legislation affecting domestic supplies, that liability is incurred as a cost by the Appellant that imports the goods; (c) there can be no wider expression than "relate to directly or Indirectly‖, so that the cost, in the form of a liability for GST arising upon entry of items for home consumption, is part of the cost of building and construction work within the meaning of section 73 of the Levy Act, (d) the Appellants incorrectly approach the imposition of levy as if it is a collective liability, when in fact it is only the entity for whom the work is to be done that is liable in terms of s74 of the Levy Act; -- 13 of 17 -- 14 (e) the evidence here is that different individual Appellants are the principal persons for whom work is to be done under the various contracts; (f) a liability for GST is thereby incurred upon every taxable importation and, once incurred, is immediately attributable as a cost of building and construction work for the relevant Appellant, regardless of the manner by which that liability might later be satisfied; and (g) the existence of a GST deferral scheme does not alter that consequence – by necessary implication, the "deferral" of a payment date confirms the existence of the liability as a pre-existing cost requiring satisfaction. 4.18 It is also necessary to have regard to the GST grouping provisions: (a) GST arises as a liability (and hence a cost) immediately upon entry of imported goods for home consumption in Australia; (b) by operation of the GST grouping provisions, the First Appellant is made liable for all of the GST on taxable importations made by all of the Appellants; (c) also by operation of the GST grouping provisions, only the First Appellant as representative member of the GST group is entitled to the input tax credits on the taxable importations made by the entire GST group; (d) the GST liability on taxable importations is a cost that relates directly or indirectly to each relevant Appellant's building and construction work, and accordingly is a cost within the meaning of s 73 of the Levy Act; (e) once qualifying costs are identified, there is no requirement that all of those costs must necessarily be paid by the person for whom the work is done. The levy is imposed on building and construction work, quantified by reference to the total of all costs that directly or indirectly relate to the work, and the levy must be paid by the person for whom the work is done. (f) the deferral scheme works slightly differently because of the grouping provisions, because it is the First Appellant which is entitled to all of the input tax credits on taxable importations made by all of the Appellants, and the First Appellant may subsequently utilise those input tax credits to satisfy its own pre-existing GST liability, where that liability arises not only from the group's taxable importations for the Queensland projects, but also from its own taxable supplies; -- 14 of 17 -- 15 (g) as previously, the existence of the GST deferral scheme for payment of GST does not alter the consequence that a liability for GST is incurred upon every taxable importation and, once incurred, is immediately attributable as a cost of the building and construction work for the relevant Appellant for whom the work is done - because, by necessary implication, the "deferral" of a payment date confirms the existence of the liability as a pre-existing cost requiring satisfaction. 4.19 So far as the grouping provisions concern the First Appellant: (a) by operation of the GST grouping provisions, the First Appellant as representative member of the GST group will be liable for all of the GST on all of the taxable importations made by the entire GST group; (b) also by operation of the GST grouping provisions, it is only the First Appellant as representative member of the GST group (and not the Second to Tenth Appellants, inclusive) that is entitled to all of the input tax credits on all of the taxable importations made by the entire GST group; (c) the First Appellant may subsequently utilise input tax credits to satisfy its own pre-existing GST liability, where that liability arises not only from the group's taxable importations for the Queensland projects, but also from its own taxable supplies; (d) although the First Appellant may subsequently utilise input tax credits to satisfy that pre-existing GST liability, this does not exclude the GST from the group's taxable importations for the Queensland projects as having arisen as a leviable cost that relates directly or indirectly to the First Appellant's building and construction work; (e) despite the GST grouping provisions making all the group's input tax credits on creditable importations available to the First Appellant alone, the implications for the First Appellant remains as outlined in paragraph 4.17 above. 4.20 So far as the grouping provisions concern the Second to Tenth Appellants, any one of these Appellants cannot avoid the imposition of levies under the Levy Act simply by procuring that the cost of building and construction work that is being done for them (including the GST on taxable importations) is incurred and satisfied by an associate of that Appellant As noted above: (a) there is no requirement that all of those costs must be paid by the person for whom the work is done; (b) the levy is imposed on building and construction work, quantified by reference to the total of all costs that directly or indirectly relate -- 15 of 17 -- 16 to the work, and the levy must be paid by the person for whom the work is done, regardless of who pays for the costs of the work, and (c) here, the work is always being done for the relevant principal Appellant, even if some of the cost for the work may be a liability of an associated party - the First Appellant, under the GST grouping provisions - and even if that liability is satisfied by a tax credit entitlement or by a payment made by the First Appellant.‖ Discussion and Decision on third issue: [33] For the reasons already stated I agree with the respondent‘s position on this issue. Given the view I have taken with respect to the GST payable domestically and the view on the cost of overseas goods it follows that the levy is payable on this GST as well, irrespective of how the group treat it amongst themselves. ―The levy is imposed on building and construction work, quantified by reference to the total of all costs that directly or indirectly relate to the work, and the levy must be paid by the person for whom the work is done, regardless of who pays for the costs of the work;‖5 [34] Accordingly, once again levies are payable under this head. Discussion of Issue Four [35] Appellant‘s submission – “Fourth Issue: Costs arising from compliance with conditions of approvals (iv) Conclusion as to the Fourth Issue 200. The costs associated with the Appellants complying with conditions imposed by the State and Commonwealth are not directly or indirectly related to the Appellants' Project works. Further, to the extent that any works involve works that are assessable under the Act, such works should be separately notified to QLeave and levies paid by the person for whom the work is to be done.‖ [36] Respondent‘s submission – “Summarising the fourth issue - the Approvals Decision 4.21 The Appellants' fourth ground of appeal is that any work required to be undertaken by the Appellants in order to comply with conditions of approval imposed on the Appellants' projects by the State or Commonwealth are not building and construction works of the projects. 4.22 The Appellants contend that the cost of the works required by each of the approvals do not relate to the building and construction work. 5 Para 4.20(b) of the respondent‘s submission. -- 16 of 17 -- 17 4.23 The correct position is that the costs of complying with some of the conditions of approval are "costs that relate to the work directly or indirectly‖, and the costs of complying with others of the conditions of approval are not. The Respondent relies on its submissions above as to the breadth of what is covered by "relate to the work directly or indirectly". 4.24 The Appellants have not provided the detail necessary to take the issue any further. Rather, they contend that the costs of complying with all of the conditions of the approval are not leviable. That is demonstrably wrong. The ground of appeal must be rejected. Discussion and decision on fourth issue: [37] Both parties agree that some of the costs associated with the applicants complying with conditions imposed by State and Federal Governments are not assessable. I agree with the submissions made by the Applicants and the Respondent on this issue. [38] In the appellants reply submission they include a detailed list of the costs referred to under this issue. They identify in that list the costs which they say are not directly or indirectly referable to the construction costs. [39] I particularly note costs paid to local authorities for works to be undertaken by that authority including roads, and for which a levy may be paid by the local authority, costs of items which could not possible be costs of the project such as social infrastructure costs. [40] The issue is how there items are identified and assessed. [41] If the cost of complying with a condition of approval is one which the Appellants do not need to do as a cost directly or indirectly to build the project either upstream or downstream, such as the examples provided above then the levy should not be imposed on those costs. The authority should reassess these items in consultation with the Appellant‘s. All agreed cost should be removed from the assessment. If there is any item which is still in dispute then the parties may apply for decision from the court. Order [42] Accordingly I order as follows: The Determination made by the Respondent on 7 October 2011 is confirmed as to Issues 1, 2 and 3, and remitted for further consideration as to issue 4 in accordance with this decision, and the published reasons for this decision are expressly incorporated as an integral part of this order and of the record of proceedings in this court. -- 17 of 17 --