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12 Sep 2005
Appeal Status

No tenable cause of action

2005 case note - disputant's notice of claim struck out as it disclosed no tenable course of action - interlocutory application, supply, GST Invoices.

TRA No 147/04, Decision No 13/2005

Goods and Services Tax Act


The Disputant's Notice of Claim was struck out as it disclosed no tenable course of action.


This was an application by the Commissioner to have the Disputant's Notice of Claim struck out or in the alternative for summary judgment against the Disputants.

The Disputants (14 in total) had each entered into an agreement for the purchase of an apartment in respect of which they claimed GST input credits on the deposit paid in the GST period ended 31 December 2001.

Prior to claiming the input credit the contracts for the purchase of the apartments were cancelled.

The Disputants never held a tax invoice in respect of the GST input credits claimed.

The Commissioner refused to invoke section 24(6) of the GST Act to determine that tax invoices were not required on the inputs claimed.  This decision was never challenged by the Disputants in a Notice of Proposed Adjustment.

In October 2004 the Commissioner issued notices of assessment to each of the Disputants disallowing the input credits claimed.

On 16 December 2004 the Disputants filed a Notice of Claim challenging those assessments, on the following grounds.

  1. There was no valid assessment
  2. The supplies the subject of the proceedings had not been cancelled
  3. The Commissioner had failed to require the vendor to produce tax invoices
  4. The Commissioner has "tacitly or implicitly agreed with the vendor that it need not produce a tax invoice...."
  5. The Commissioner and the Authority have the power to waive the requirement for the production of a tax invoice
  6. Section 25 of the GST Act does not apply.


His Honour decided to grant the Commissioner's strike-out application.  In doing so His Honour decided it was unnecessary and would be unhelpful to deal with what he called the Commissioner's novel application for summary judgment.

In considering the strike-out application His Honour rejected the submission of the Disputants that a Notice of Claim can only be struck out for "procedural reasons".  His Honour noted that this was not supported by authority and was contrary to many cases in which Notices of Claim had been struck out where there had been no tenable cause of action or were otherwise vexatious or frivolous.

In granting the strike-out application His Honour stated it was plain that the contracts were cancelled before the Disputants made their input claims and that from the time of cancellation the Disputants were not entitled to any input credit.  His Honour went on to state that had an input credit been paid the purchaser would have been required to immediately refund it to the Commissioner pursuant to section 25 of the GST Act.

In regards to the Disputants submission that there had been no lawful assessments issued by the Commissioner His Honour stated that such a submission was simply contrary to the facts.

His Honour then dealt with the Disputants submission that the Commissioner's refusal to invoke section 24(6) (to not require a tax invoice) validated the cause of action.  His Honour rejected this proposition and accepted that on the facts of this case (where the input credit would have been immediately refundable) the Commissioner's decision not to invoke section 24(6) was the correct one.

His Honour concluded that the Commissioner had demonstrated that the Disputants had no tenable cause of action and because the Notice of Claim was not capable of amendment it would therefore be struck out.