The Minister of Public Works of the State of New South Wales has purchased six hundred casks of cement in bond and asks for delivery of the cement free of duty.

The State Attorney-General has given an opinion that under section 114 of the Constitution no customs duties can be charged on goods the property in which has passed to the State before the duty has been paid.

Section 114 of the Constitution provides that the Commonwealth shall not 'impose any tax on property of any kind belonging to a State'.

The Minister for Trade and Customs forwards the case for my opinion, with the following minute:

I take it that this does not come within the exemptions in the tariff (i.e., Articles imported by and for the use of . . . any State Government). I suppose it is intended to raise the question of the meaning of section 114 of the Constitution. But apart from the general question of the effect of this section, would it extend to require, on purchases by the State of goods in bond then dutiable, the free delivery of such goods on account of change in ownership? The sooner all questions under section 114 are decided the better.

I am of opinion:

1. That the goods are not within the exemptions in the Tariff.⁽¹⁾
2. That even assuming that section 114 applies to duties on imports, it can only apply in respect of such imports as are the property of the State at the time of importation. Goods placed in bond are already imported and have become subject to duty at the moment of importation (Attorney-General v. Ansted 12 M. & W. 520). These goods were not imported by the State, and were not property of the State at the time of importation.

Section 153 of the Customs Act 1901 makes the duty a charge on the goods. The charge, having attached to the goods on importation, is not released by the purchase of the goods by the State. If a State could claim free delivery of dutiable goods in bond it could with equal reason claim a refund of the duty on duty-paid goods purchased by it in the open market.

[Vol. 1, p. 329]

(1) Enacted as the Customs Tariff 1902.