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High Court tackles Qantas, free speech

The High Court will rule on Qantas’ extraordinary $34 million GST takings, and considers whether a law restricting preaching is unconstitutional.

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THE High Court will rule today on whether Qantas can keep an extraordinary $34 million it has collected in goods and services tax from customers who didn't show up in a landmark judgment that will help define the meaning of the word ''supply''.

The Tax Office says Qantas and its subsidiary Jetstar owe it $26.6 million in GST it collected on forfeited flights in the first eight years of the tax. It owes it a further $7.6 million in GST it collected on tickets for which customers never bothered to claim refunds.

Qantas says it can't owe the money because it didn't supply a flight, meaning it didn't supply a service. The Tax Office says the fact that Qantas kept the fares and persuaded its customers it had done enough to keep the fares meant it did supply a service of some kind.

Gina Lazanas, tax lawyer: 'It would be a windfall ... I could imagine a litigation funder getting involved.'

Gina Lazanas, tax lawyer: 'It would be a windfall ... I could imagine a litigation funder getting involved.' Photo: Getty Images

The Tax Office submission says the definitions of the words ''supply'' and ''consideration'' in the GST Act are deliberately broad - ''as wide as language can make them''.

Qantas barrister Roderick Cordara told the High Court in June that ''in the real world'' when customers put down the phone after speaking to travel agents and are asked what happened they say something like: ''I have just booked my flight to Melbourne.''

''They do not say: I have just made an agreement that Qantas will hold itself ready for a period, in case I turn up.''

But GST specialist Gina Lazanas from Balazs Lazanas & Welch says the Qantas position is complicated by its action in holding on to forfeited airfares as if it had fulfilled the terms of a contract.

Should Qantas win today - convincing the High Court it didn't provide a service - she says it could face a class action from customers wanting their money back.

''It would be a windfall to Qantas - it would have collected goods and services tax but not passed it on, on the ground that it did not supply a service,'' she told The Age.

''I could imagine a litigation funder getting involved.''

Hotels, tour operators and other businesses that sold and charged GST on non-refundable tickets would be watching with interest.

The government twice attempted to close what it fears might be loopholes regarding the payment of GST where the supply of services is in doubt, the most recent being draft legislation released in the past week. ''I think Qantas might be doing this for clarity,'' Ms Lazanas said.