On 3 September 2009, Duoedge Pty Ltd sold a residential property to Mr Simon Leong for a price specified in the contract as ‘$916,000 GST inclusive’.

Although Duoedge had provided a tax invoice to OCMC, it did not remit any GST collected on the sale. OCMC, in its business activity statement had claimed an input credit for GST paid on the purchase. This was, however, disallowed by the Tax Office as the acquisition of residential property is not a creditable acquisition under the A New Tax System (Good and Services Tax) Act 1999 (Cth).

OCMC subsequently sought a refund from Duoedge who, after initially denying the validity of the ruling, did not refund the GST.

In the Magistrates Court it was found that the contract contained an implied term entitling Mr Leong and OCMC to a refund of the GST amount if GST was not applicable. An order for rectification of the contract and payment of the GST component to OCMC was made.

On appeal Justice Dixon concluded that it was not open to the Magistrate to find that there was an implied term of the contract. In his Honour’s view, the language of the contract used in respect of GST had a plain meaning; that the risk lay with the vendor. The construction was neither uncertain, nor ambiguous. Accordingly, a term could not be implied into the contract stating that the GST sum of $83, 272.72 is refundable to the purchaser if the transaction does not involve a taxable supply. The Magistrate’s orders were set aside and the appeal allowed with costs.

Whilst the implication of a term may assist a party in enforcing their rights, it will not be possible where there is no ambiguity or uncertainty in the contract.