FB DUVALL LTD & ORS V COMMISSIONER OF INLAND REVENUE HC AK CIV-2009-404-1193

FB DUVALL LTD & ORS V COMMISSIONER OF INLAND REVENUE HC AK CIV-2009-404-1193 15 December 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2009-404-1193UNDER The Judicature Amendment Act 1972BETWEEN FB DUVALL LIMITED & ORSPlaintiffsAND COMMISSIONER OF INLANDREVENUEDefendantHearing: 2 November 2011Counsel: SRG Judd for the PlaintiffsM J Ruffin for the DefendantJudgment: 15 December 2011RESERVED JUDGMENT OF ELLIS JThis judgment was delivered by me on 15 December 2011At 3 pm, pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors: Crown Solicitors, PO Box 2213, Auckland 1140Ladbrooks Solicitors, PO Box 37633, AucklandCounsel: M J Ruffin, PO Box 1662, Auckland 1140SRG Judd, PO Box 3320, Auckland 1140[1] The plaintiffs are all companies involved in the template income tax avoidance scheme devised by Mr J G Russell. They seek judicial review of theCommissioner's refusal to accept late objections from them in relation to GSTassessments made in the early 1990s. There is a further, separate, cause of action about delays by the Commissioner in making reconstruction adjustments that are consequential on his tax avoidance assessments issued to other Russell entities under s 99(4) of the Income Tax Act 1976 ("the Act"). However, the principal focus of the proceeding and of the hearing before me was on the GST matter.[2] The background to the GST aspect of the application for review is set out in my earlier judgment dated 19 October 2011.1 In that judgment I granted interim orders to one of the plaintiffs, Managed Hotel Limited, pending the resolution of these substantive review proceedings. The background has also recently been summarised in FB Duvall v Commissioner of Inland Revenue where Allan J struckout all of the plaintiffs' other causes of action in the proceedings.2 For convenience, however, I briefly set it out again below.[3] The plaintiff companies have all been issued with assessments by the Commissioner in relation to GST. Those assessments were based on returns that were initially filed by Mr Russell on behalf of those companies and required the companies to pay output tax on fees that had been received by them for administration or management services that (Mr Russell said) had been provided to other companies involved in the template scheme.3 Input tax credits were also claimed in relation to expenses incurred in the course of the plaintiff companies'taxable activity. I was advised that the net position was that each of the plaintiff companies paid more GST than they received back.[4] The current issue arises as a result of the long-standing litigation involving one of the plaintiff companies, FB Duvall Limited (Duvall). Mr Russell says that Duvall is in a materially identical position for tax purposes to the other plaintiff1 Managed Hotels Ltd v Commissioner of Inland Revenue HC Auckland CIV-2008-404-8432,19 October 2011.2 FB Duvall Ltd v Commissioner of Inland Revenue (2010) 24 NZTC 24,053 (HC).3 The plaintiffs are all "parent" companies in terms of the Russell template.companies. That is of course consistent with the "template" nature of the Russellscheme and it is not my understanding that the Commissioner disputes that.[5] Following the Commissioner's initial investigation into the scheme, reassessments were issued to a large number of the companies involved in it on the basis that the scheme was a tax avoidance arrangement that was void against the Commissioner for income tax purposes under s 99 of the Act. At the heart of thosereassessments was the Commissioner's view that no administration or management services were provided by those companies in the position of the plaintiffs and that the fee paid to those companies for those services was merely a tax avoidance device for moving profits between participants in the scheme. Although the relevant taxpayers objected to these reassessments the Courts at all levels have consistently found that no services were performed in return for the administration fee and haveupheld the Commissioner's position. By way of example only, I refer to the following passage from Baragwanath J's judgment in Miller v Commissioner of Inland Revenue:4Mr Ruffin contended that the administration charge was simply a device tosiphon the company's surplus out of the company so that there would be noassessable income to the company. I agree....It is perfectly clear that the charge was fixed so as to increase the overheads to $960,441 which would match the gross profit of a similar figure and reduce it to a nil profit/loss....There is no conclusion available except that the administration fee waspayable in exchange for the use of Mr Russell's template, not for gainingassessable income but for avoiding tax.[6] It was following the receipt of the first Taxation Review Authority ("TRA")decisions in relation to the income tax assessments that Mr Russell, on behalf of Duvall, began to assert that the Commissioner should take a consistent approach in relation to the GST assessments. Essentially what Mr Russell said was that if the4 Miller v Commissioner of Inland Revenue (1997) 18 NZTC 13,219 (HC) at 13,235. Similarly theCourt of Appeal in FB Duvall Ltd v Commissioner of Inland Revenue (2000) 19 NZTC 15,658 notedat (15,662) that in that litigation Baragwanath J had "held that no services were supplied by Duvall inreturn for the administration charges."Commissioner was contending in an income tax context that no services had been provided by the plaintiff companies, then it necessarily followed that no services had been provided by those companies and they had therefore wrongly been charged and paid output tax in relation to the fees they had received in that respect.[7] The Commissioner did not initially accept this contention. Duvall filed an objection in the TRA as a result of which Judge Willy upheld the Commissioner'sposition, apparently on the principal basis that, even though the objector was not supplying any administration services, another entity involved in the arrangementwas providing such services as the objector's agent.5 That there was some small pleasure taken by the Authority in seeing the Russell company being hoist by the petard of its previous (inconsistent) arguments is also evident from the judgment.6Duvall then appealed from that decision.[8] While the TRA case was on foot the Commissioner's investigation into theRussell template scheme was continuing. As a result of that investigation and prior to the hearing of Duvall's appeal in the High Court, the Commissioner formed the view that in fact no services had been provided by Duvall for GST purposes and that Duvall had no taxable activity, and no output tax was payable. The Commissioner therefore determined that he should concede the appeal.[9] In the High Court, Baragwanath J was of the view that this concession permitted or required the Court to look afresh at the matter. In doing so he held that the Court was able to reassess Duvall, taking into account what he considered to be the logical corollary of the Commissioner's concession, namely that Duvall was notentitled to claim any input tax credits either. "Zero" assessments were then issued bythe Commissioner which adjusted both the output and input tax accordingly.5 As far as I am aware, that is not an argument that has been made by any of the parties before orsince.6 Case Q34 (1993) 15 NZTC 5,159 (TRA).[10] Baragwanath J's decision7 was, however, subsequently overturned by the Court of Appeal on the grounds that, although it was open to the Commissioner to concede the appeal, his reasons for doing so could not be interrogated by the Court.8More particularly, the Court of Appeal held that in litigation involving an objection to an assessment, the Commissioner was not entitled to ask the Court to depart from (reverse) the legal and/or factual position that underlay that assessment, which in this case was that Duvall was engaged in a taxable activity. The Court said:9For these brief reasons we conclude that the appeal must be allowed, with the result that the orders made in the High Court in the judgment of 9 October 1997 and in subsequent judgments beyond the bare allowance by consent of the appeal against the decision of the TRA, are quashed. In lieu it is ordered that the GST assessments referred to in the case stated by the Commissioner to the TRA be amended by deleting the amounts shown as payable by way of output tax in respect of administration fees for supplies made by Duvall to subsidiary companies. We understand from discussion with counsel that in that result the Commissioner will recognise the input tax credits and make appropriate refunds without further order. It will then be for the Commissioner to determine whether he is able to make further assessments in respect of the input tax credits, notwithstanding the prima facie time bar, and, if so, whether he should do so.[11] The net result of these orders, as far as Duvall was concerned, was that the Commissioner was, as a result of his concession of the appeal, obliged to reassess and refund the output tax paid for the GST periods at issue in the litigation. Because of the length of time that had elapsed since the original assessments and because the amount of output tax exceeded the input tax, it was not open to the Commissioner subsequently to issue fresh assessments that disallowed the input tax credits. To have done so would (perversely and technically) have involved increasing Duvall'sGST liability for the relevant periods in breach of the statutory time bar. 107 Or, more accurately, "decisions", as there were seven interim judgments issued by Baragwanath J inrelation to the Duvall appeal, including for present purposes FB Duvall Ltd v Commissioner of InlandRevenue (1997) 18 NZTC 13,470, FB Duvall Ltd v Commissioner of Inland Revenue (1999) 19 NZTC 15,039 and FB Duvall Ltd v Commissioner of Inland Revenue (No 3) (1999) 19 NZTC 15,515.8 FB Duvall Ltd v Commissioner of Inland Revenue (2000) 19 NZTC 15,658.9 At [28].10 The time bar (formerly in s 31 of the Goods and Services Tax Act 1985 and now contained in s108A of the Tax Administration Act 1994) provided that the Commissioner may not amend anassessment so as to increase the amount assessed if 4 years have passed from the end of the relevanttaxable period.[12] Mr Russell's present position is simply that the Commissioner is obliged to take the same approach to the GST assessments issued to other Russell companies that are in the same position as Duvall, namely the plaintiffs in this application. Mr Russell takes that position not only on the basis that the Commissioner has a statutory duty to treat taxpayers fairly11 but also because the Commissioner must necessarily (given his concession in Duvall) consider that that is the correct tax position. The Commissioner has the statutory power to amend assessments at any time (subject to compliance with any relevant procedural requirements, including the time bar) to ensure their correctness.12[13] Importantly, however, Mr Judd for Mr Russell accepted before me that the Commissioner would likely be able to make appropriate adjustments of input tax in the reassessments that Mr Russell seeks. In my view he was right to make that concession. That is because the time bar issue that arose as a consequence of the way in which the Court of Appeal framed its orders in Duvall will not arise if the Commissioner deals with the output and input tax issues at the same time. That is because if those two matters are set off against each other the overall amount of the assessments would be decreased, rather than increased.[14] Turning now to the first specific ground for review. There is no dispute that, even in 1993, Mr Russell was well out of time for objecting to the assessments.13The Commissioner has, however, quite properly regarded Mr Russell'scorrespondence on the matter as constituting requests that he accept a late objection under what was at the relevant time s 33(2) of the Goods and Services Tax Act 1985. But the Commissioner has refused to accede to the requests and declined to revisit his earlier (original) assessments. Again, as recorded in my earlier judgment, the only reasons that have historically been given for this refusal were:(a) the lateness of Mr Russell's requests; and11 Tax Administration Act 1994, s 6.12 This power was previously contained in s 27 of the Goods and Services Tax Act 1985, but is now ins 113 of the Tax Administration Act 1994.13 The reason for the initial delay is, however, obvious; it was not until the Commissioner had takenthe position that the template transactions were tax avoidance arrangements that were void for incometax purposes, that the matters now at issue arose.(b) the need to await the conclusion of the Duvall litigation.14[15] As I noted in my earlier judgment, there was no evidence before me at that time as to the Commissioner's position on the merits of Mr Russell's proposedobjection(s). In that judgment I said:[13] ... I note that in an affidavit dated 23 March 2009 Mr Strang suggeststhat the Commissioner "stands by" his original assessments (which werebased on Mr Russell's returns). But in light of his position in the Duvalllitigation it seems to me to be improbable that the Commissioner considers that MHL was providing services or engaging in a taxable activity. But that is a matter that will no doubt be clarified in due course. What appears to me to be a possible scenario, however, is that the Commissioner faces something of a conundrum, in that:(a) he does not consider that the present assessments (i.e. the assessments that form the basis of the statutory demand) are correct; but(b) he is unwilling or unable to reassess in the way sought by Mr Russell because either:(i) he is prevented by the time bar from issuing reassessments that also require repayment by MHL of the input tax refunds it has received; or(ii) (in the event that any input tax received by MHL is less than the output tax paid) he does not wish to pay a refund to MHL.[14] If I am wrong in those assumptions that can no doubt be rectified by the filing of further evidence.[16] Further evidence was indeed filed in the form of a new affidavit from Mr Strang annexing nine substantial volumes of correspondence between the Commissioner and Mr Russell in relation to the various plaintiff companies. Mr Strang's affidavit referred to various items of correspondence prior to the14 In my earlier judgment I quoted from a letter written by the Commissioner in late 1999 which stated:The Commissioner has not made any determination in respect of the amended GST returns to which you refer.I suspect that it may be possible to address the matter on the completion of the FB Duvall Ltd litigation.There are other similar letters including the one quoted by Priestley J in Commissioner of Inland Revenue v FB Duvall Ltd (2005) 22 NZTC 19,142 (HC) at [11]. The original of this letter appears subsequently to have been misplaced.concession made by the Commissioner in the High Court Duvall proceedings15 but then stated:A more fundamental reason for not accepting objections based on amended returns is that the Commissioner does not consider it to be appropriate in order to ensure the correctness of the assessments based on returns which the amended returns seek to amend.Duvall was in a special position after the decision in case Q34 was delivered. As I have mentioned in paragraph 12.3 of this affidavit an investigation wasconducted by a senior investigating accountant Mr O'Dea who found thatthere were no taxable activities of a genuine nature conducted by Duvall and consequently the Commissioner instructed that the appeal from the decision in case Q34 should be conceded for that reason.16I should also point out that in August 1996 a decision was made to reassess the parent companies on the basis of sham. These assessments were subsequently withdrawn by the Commissioner and the parent companies were restored to the "as returned position". The withdrawal of track Cassessments caused the Commissioner to reconsider the position of Duvall because of uncertainty as to whether the decision to assess under track C had influenced the finding that Duvall had no genuine taxable activities.This resulted in a decision to treat the assessments made on the basis of returns filed by the plaintiffs and assessed by the Commissioner [as] appropriate at least until it became apparent that the taxable activity had ceased.[17] I have to say that I find these passages from Mr Strang's affidavit somewhatmystifying. What he seemed to be suggesting was that as a result of the Commissioner withdrawing income tax assessments (issued to other Russell entities) that were based on the contention that the template transactions were shams the Commissioner had reconsidered whether his concession in the High Court was correct. Why this is mystifying is because the Commissioner nonetheless continues to regard the transactions as (income) tax avoidance arrangements and (accordingly) has always been of the view that the administration fee served no purpose other than as a cog in the avoidance "machine".[18] It was quite plain that any possible relationship between the Track C income tax assessments and the Commissioner's refusal to consider late GST objections was news to Mr Russell. Such a relationship could not have been a factor in the15 In my view the Commissioner's position prior to the concession is largely irrelevant to the matterbefore me.16 At para 12.3 of Mr Strang's affidavit does no more than reiterate the fact of the investigation.Commissioner's earlier refusals (because they preceded the Track C assessments). For that reason I asked Mr Ruffin to show me any documentary evidence that:(a) the Commissioner had reconsidered the matter and made a fresh decision on that basis; and (if so) that(b) that decision had been advised at any stage to Mr Russell.[19] In response Mr Ruffin took me to a chain of more recent correspondence between Mr Russell and Inland Revenue. The critical letters appear to be those dated 19 November 2008 and 3 March 2009 from Inland Revenue to Mr Russell and the letter dated 5 February 2009 from Mr Russell to the Department.[20] In the 19 November 2008 letter, Inland Revenue said:Your points regarding the relationship of track C to GST have already been replied to in my earlier letter dated 25 September 2008. ... In summary, the purported link between track C and GST is not accepted by the Commissioner and the two matters are considered to be quite separate.(emphasis added)[21] Thus in 2008 the Commissioner was taking a position that was diametrically opposed to that hinted at by Mr Strang.[22] Then the letter went on to deal with Mr Russell's (effective) request that the Commissioner accept a late objection in the following way:As to FB Duvall, the Commissioner is of the view that the success of that company was not on the substantive merits of the position advanced by the company but due to a procedural error by the Commissioner when he attempted to alter the grounds upon which he relied. Certainly the Court of Appeal was of this view when it acknowledged that it was open to the Commissioner to reopen the input tax credit matters if he thought proper ...In the Commissioner's opinion the merits of the position take by FB Duvall have never been conclusively determined by any court, other than the TRA, and those cases offer no guidance in that area. You make the point that you do not understand how a factual matter can give differing results under GST as opposed to the income tax regime. Primarily this is possible due to the differing nature of GST when compared to income tax. Both are governed by differing legislation which will affect the way that legislation applies to the same set of facts. In addition, GST is a tax on supply whereas incometax is, as the name, says tax on income, meaning different taxation concepts apply and which may result in differing tax consequences.[23] The first proposition recorded here — that the Commissioner's concession inthe High Court was a "procedural error" — does not in my view accord with the reality of the matter. While it seems clear that both the Commissioner and the High Court were procedurally mistaken as to the ambit of the High Court's powers, thatmistake had nothing to do with the merits of the underlying concession. To suggest otherwise is merely cute. And while, as a result of the Court of Appeal's orders, the Commissioner was unable to reassess Duvall's input tax (in relation to the taxperiods before the Court), there is nothing in the Court of Appeal's judgment thatsuggests that it is not open to the Commissioner to reassess Duvall (for other tax periods) or other parent companies (for all tax periods) in a way that took account simultaneously of both output and input tax matters. As I have said, because the output tax paid by those companies was greater than the input tax refunded, there would not have been any time bar issue provided the Commissioner reassessed both at the same time.[24] The second proposition in the excerpt above — that there is a qualitative difference between GST and income tax — is of course true but begs the critical question. That question is whether or not the Commissioner, having determined for income tax purposes that no services are supplied in return for the payment for the administration fee, can nonetheless assess for GST on the basis that the fee is paid in return for a supply of services.[25] Mr Ruffin submitted that such a stance was not contradictory because there was a contractual obligation to make the payment and the existence of that obligationwas sufficient to found a GST "supply". He referred me to the High Court's decisionin Rotorua Regional Airport Ltd v Commissioner of Inland Revenue17 in support. But in my view that decision supports the opposite conclusion. As Mallon J said in that judgment:[50] In assessing the competing positions I start with the established propositions as to the scope of s 8(1) ... :17 Rotorua Regional Airport Ltd v Commissioner of Inland Revenue (2010) 24 NZTC 23,979 (HC).a) GST is levied in respect of "supplies". It is therefore a tax ontransactions rather than receipts or turnover.b) GST is charged on the supply of a good or service. Whilst services are broadly defined to mean anything which is not goods or money, tobe a service there must be a "thing" to be within the statutory word of "anything".c) Although the consideration need not be paid by the recipient of the services, there must be a nexus between the consideration on which the GST impost will arise and the supply of goods or services.d) The nomenclature used by the parties is not decisive. Nor are the economic or other consequences. What is crucial is the ascertainment of the legal rights and duties which are actually created by the transaction into which the parties entered.[51] Applying these principles, it is necessary to look at the legal arrangement between RRAL and departing passengers to determine if consideration is paid for the supply of something. The use of the terms"ticket" and "purchase" is not determinative of the actual legal nature of thetransaction. Similarly, as RRAL accepts, there is nothing magic in the term"levy" because some statutory charges will in fact be for the supply of something....[54] The legal nature of the relationship is that airport authorities are authorised by statute to charge users of its airport. Departing passengers are users of the airport. They use the airport to gain access to their plane. The facilities for this are supplied by RRAL. Passengers are required to pay the development levy. If they do not, RRAL can deny them passage to the plane.They can do this because the passengers are on RRAL's premises. Thepayment of the levy therefore enables departing passengers to access the plane. There is a nexus (or reciprocation) between the payment and theservice. It is consideration "in respect of" or "in response to" the supply ofservices. RRAL having received that consideration for its services can apply it, via the Council, to fund improvements.[26] In the present case, the Commissioner's position in the income tax litigationand the Court decisions all make it clear that, even if there is a contractual obligation to pay,18 no service is in fact "supplied" by the parent company in return for theadministration fee.19 Money is being moved around for income tax purposes. That is all.18 Assuming, for the sake of argument, that the contracts are not, in any event, void for want ofconsideration.19 While Baragwanath J in Miller (supra) said that the fee was payable "in exchange for the use of MrRussell's template" that was not a "supply" that was made by the parent company. And it has neverbeen suggested that the sale of a tax avoidance product might constitute the relevant taxable supply.[27] The letter of 19 November 2008 went on to reiterate that there was no relationship between the sham allegation made in the income tax context and the GST issue. It says:Indeed, this was the Commissioner's position before the TRA in FB Duvall(where he relied upon the existence of taxable supplies) as highlighted in my letter dated 25 September 2008 ... It is to be recalled he was successful on this basis before the TRA.It is not accepted, as you assert ... that " ... all parties now agree that the administration charged does not attract output tax in the GST regime".[28] In his response in February 2009, Mr Russell rather provocatively made the point that given that no attempt had ever been made to reassess the input tax, it could be assumed that the Commissioner had no issue with it and merely thought that the output tax should be refunded, in accordance with the concession. He said that whether or not the administration charge was taxable was essentially a factual matter to which differences between the income tax and GST regimes was irrelevant. Then he asked:Do I understand from the penultimate paragraph under 5 in your letter that the Commissioner now claims that there is output tax on the administration charge? It is true that he took that position before the TRA in the Duvall case but it was his own idea to reverse that position for the High Court. The reason he reversed his position was because after commencing the objection process for Duvall he came up with track C, which was a further change of mind from the track B assessment process and he could not then continue to claim in Duvall that there was output tax payable when he was alleging sham in the track C assessment process.If, as you say, it is not now accepted that all parties agree that the administration charge does not attract output tax in the GST regime thenwould you please state precisely what the Commissioner's now position is inrespect of the administration charge for both the Goods and Services Tax regime and the income tax regime.[29] Inland Revenue responded by reiterating the Commissioner's position that:(a) there was no link between the Track C (sham) income tax assessments and the GST treatment of the administration fee; and(b) the FB Duvall litigation turned upon a "unique procedural fact" rather than any statement of "general principle";(c) the fact that the administration fee had formed part of an arrangement that was void for income tax purposes did not "automatically" dictatethe GST position.[30] I have already expressed my views as to the invalidity of the latter two points. The first point is, again, contrary to the position that Mr Strang appears now to take in his affidavit.[31] Ultimately Mr Ruffin could point me to no correspondence in which Mr Russell was told about what must have been a subsequent about face by the Commissioner or indeed to any document in which this fundamental change in position was recorded, analysed or explained. That lacuna confirms my view that the Commissioner does not in fact consider that the "as returned" positions, or the decision in Q34, are correct. Rather, as Mr Ruffin effectively conceded, he has not reassessed the plaintiffs' liability for output tax in accordance with his concession (notwithstanding that it was rightly made) because he appears to be concerned that he is not now able to reassess the input tax side of the equation.20 I have already recorded my view (which was accepted by Mr Judd) that the Commissioner is both able and entitled to do so, provided he does so in a way that does not fall foul of the time bar.[32] For these reasons I consider that the plaintiffs' judicial review application in relation to the late GST objections must succeed. It is well-established that the merits of a proposed objection must be considered unless the explanation for the lateness is so inadequate as to render that unnecessary.21[33] While in the present case I accept that the very considerable length of time that has elapsed since the making of the assessments in question, the explanation for20 The use of the word "equation" is not intended to imply that it necessarily follows that denial ofinput tax credits is the necessary consequence of refunding the output tax. Some investigation by theCommissioner of the basis for the input tax credits may be required. However as I understood it MrRussell agreed with me that the simplest course would, in the first instance, be to deny the input taxcredits in their entirety (on the basis that there was in all likelihood no relevant taxable activity) whichwould mean that the onus would fall on Mr Russell to satisfy him to the contrary.21 Commissioner of Inland Revenue v Wilson (1996) NZTC 12,512 (CA) at 12,521; Lawton vCommissioner of Inland Revenue [2003] 2 NZLR 48 (CA) at [29].the delay cannot fairly be regarded as inadequate. In particular, I would think it highly relevant that:(a) Mr Russell first raised the issue of the proposed objections 15 years ago;(b) The merits of the proposed objections were linked with the outcome of the ongoing Duvall litigation and it was the Commissioner who suggested that any decision on the late objections should await the conclusion of that litigation;(c) Since that time (i.e. since the conclusion of the Duvall litigation) Mr Russell has repeatedly and consistently renewed his request.[34] If it is concluded that the explanation for the delay is adequate, the above narrative clearly shows that either:(a) the Commissioner has failed to turn his mind to the merits of the proposed objection; or(b) to the extent that he has done so, his assessment of the merits is seriously flawed. In that respect I consider:(i) It is not possible to conclude that administration services were supplied by the parent companies for GST purposes in the faceof the Commissioner's position (which has been endorsed bythe Courts) in the income tax cases. I agree with Mr Russell that the issue is largely one of fact, not law, and that any differences between the GST and income tax regimes are therefore immaterial.(ii) The Commissioner's stance in the Duvall litigation cannot properly be distinguished or minimised by reference to"procedural error". It is the substance of that concession notthe unforeseen procedural consequences of it that is relevant here.(iii) The withdrawal of the Track C (sham) income tax assessments does not constitute a valid basis for revisiting the substance of the concession given that the Commissioner continues to regard the Russell template as void for income tax purposes and the administration fee as merely a profit transfer mechanism. Moreover the suggestion that the Commissioner has revisited the matter on that basis flies in the face of his repeated and vehement assertions to the contrary that have been made to Mr Russell.(iv) There is no evidence of any other analysis by the Commissioner that might justify revisiting the merits of the concession and, in my view, nor could there be.[35] I am further fortified in my view that this aspect of the plaintiffs' applicationfor review should succeed by the decision of this Court in Dunphy v Commissioner of Inland Revenue.22 The central facts and issues in that case were not dissimilar to the present and Chisholm J reached the same conclusion.[36] As far as the other aspect of the review application is concerned, Mr Ruffin for the Commissioner accepts that he (the Commissioner) is obliged to issue the consequential s 99(4) reassessments. There appear to have been resourcing issues that have prevented the Commissioner from attending to this in a timely manner and I appreciate that Mr Russell and his companies present particular difficulties for him in that respect. It is beyond the power of this Court to direct the Commissioner to do anything about that and nor would I in any event do so.[37] I do not consider that it is necessary for me formally to order the Commissioner to do what he already accepts he is obliged by law to do although I reserve leave to Mr Russell to bring the matter back before the Court if progress is22 Dunphy v Commissioner of Inland Revenue (2010) 24 NZTC 24,205 (HC).not made. And to the extent making such progress is dependent on the co-operation of Mr Russell I trust it will be forthcoming.[38] Accordingly and in formal terms:(a) I order that the Commissioner is to reconsider his decision to refuse to accept late GST objections from the plaintiff companies, in light of what I have said in this judgment.(b) No order is made in relation to the s 99(4) matter but, as I have said, leave is reserved to the plaintiffs in that respect.[39] The plaintiffs have succeeded in their review and are entitled to costs on a 2B basis. In the unlikely event that the parties cannot agree, memoranda may be filed.______________________________Rebecca Ellis J