Commissioner of Taxation v Qantas Airways Limited
Qantas (and its subsidiaries, including Jetstar) provide domestic airline travel services. There are different classes of air travel with varying fare rules and conditions of carriage. Some prospective passengers who had booked a flight and made payment failed to take a flight. In accordance with the applicable conditions for these prospective passengers, some fares were forfeited while others were refundable on application within a stipulated period but no refund claim was made. The GST component of the fares for flights not taken was not refunded by Qantas to the prospective passengers.
Qantas sought a refund for GST that it claimed was incorrectly paid to the Commissioner in respect of unused fares in these circumstances. The Commissioner issued notices of assessment for which the net amount included the GST paid by Qantas in respect of the unused fares for the relevant tax periods.
The Administrative Appeals Tribunal affirmed the assessments. On appeal, the Full Federal Court held that what each customer pays for is carriage by air which is the essence and sole purpose of the transaction. The actual travel was the relevant supply and if it did not occur there was no taxable supply.
By special leave, the Commissioner appealed to the High Court.
For more information- please have a look at:-
http://law.ato.gov.au/atolaw/view.htm?docid=%22LIT/ICD/S47/2012/00001%22
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