The Secretary to the Treasury has forwarded me the following minute for advice:

Tylors (Water and Sanitary) Ltd, Sydney, drew a promissory note for £120 in favour of the Small Arms Ammunition Factory, Footscray. The note was payable at the Bank of Australasia, Pitt Street, Sydney.

2. When the promissory note became due, it was lodged with the Commonwealth Bank, Melbourne, for collection through its Sydney office from the Bank of Australasia, Sydney. The Commonwealth Bank, Melbourne, however, paid 6s Victorian stamp duty on the promissory note, and this amount has been debited in the Bank's books against the 'Defence Department Exchange Account' for ultimate recovery from the Treasury.
3. I recommend that the Secretary, Attorney-General's Department, be asked to advise on the following points:

1. Is State stamp duty payable on the instrument referred to?
2. If State stamp duty is payable, should the amount thereof be paid by Tylors Ltd or by the Commonwealth?

Section 45 of the Victorian Stamps Act of 1915 provides that every person into whose hands any promissory note comes in Victoria before it is stamped shall, before he presents for payment or endorses, transfers or in any manner negotiates or pays such note, affix thereto a proper adhesive stamp of sufficient amount and cancel the stamp so affixed.

The Small Arms Ammunition Factory, as an institution of the Commonwealth, is not liable to pay State taxation and therefore was not bound to observe the above provision.

The Commonwealth Bank in its dealings with the note was the agent of the Factory and entitled to the same exemption.

As the Bank appears to have paid the duty under a mistake of law it should bear the loss itself and not debit the amount to the Commonwealth.

I answer the questions submitted as follows:

1. Victorian stamp duty is not payable.
2. See answer to (a).

[Vol. 18, p.73]