Gull to fight excise tax ruling

HAMISH RUTHERFORD
Last updated 11:48 05/02/2013

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Discount fuel retailer Gull is to continue its $20 million battle over excise tax to the Supreme Court.

Managing director Dave Bodger said the company had filed papers with New Zealand's highest court, appealing a Court of Appeal decision from December, which found its addition of butane to petrol ''manufacturing''.

The decision would mean Gull would have to pay the full petrol rate of excise on all of its sales volume.

Customs New Zealand has alleged the company has been unfairly exploiting the lower excise rate by paying the lower butane rate, which is believed to have been up to 5 per cent of the total volume.

The government agency was alerted to Gull's butane additions in 2010 when BP New Zealand applied to see whether it could do the same.

The High Court found in Gull's favour earlier last year, but the decision was overturning in the Court of Appeal, opening the way for Customs to demand more than $20m in unpaid excise and penalties.

Bodger said Gull had dropped a claim of ''legitimate expectation'', under which it had argued that correspondence with Customs showed it was aware of its butane addition back in 2002.

But the Australian-owned company would appeal the decision on the grounds of fairness.

''If you look at what the courts have said, [it is that] 'you've never hid it [butane]'. From 2010 when the phone went [from Customs alleging] 'you're blending butane', we said, 'yeah, of course we are','' Bodger said.

''Going back all the way to day dot is [a] substantial and eye-watering  figure. That's the key for us and why we want to go forward.''

Back in 2010, Gull had attempted to engage with Customs in an attempt to settle the dispute, however Bodger acknowledged that Customs had limited scope to strike a deal.

''If I can put my hat on as a tax payer, rather than working for Gull, you want bounds around what the police can do, what the army can do, what Customs can do, etcetera. From what we see they don't have a lot of flexibility around these matters.''

Bodger repeated his warning that he believed that if the decision was to go against Gull, it would have wider implications for the industry as a whole.

During the course of its investigations into Gull, Customs' attention was drawn to the issue of so-called ''slops'', mixtures of fuel which are an inevitable result of operations, which are said to be mixed mainly into petrol.It is alleged - and Customs is investigating - that this process also exploits a lower excise rate on a small proportion of petrol sold.

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If Gull's adding butane to fuel was deemed manufacturing, and accordingly was paying too low a rate of excise, Bodger said there were processes ''that are happening all around the country with other businesses, involved in the industry, going back before 2002-03'' on a similar scale. (an earlier version of this story incorrectly said going back on a much larger scale)

Bodger declined to say what Gull would do if its bid to the Supreme Court was unsuccessful, but he was adamant that it would not see the company exit its New Zealand operations.

''The current decision in no way affects our ability to operate in New Zealand. We are fortunate in that respect.''

It would be able to continue as a discounter - Gull's main marketing point is that it is typically several cents a litre cheaper than its rivals - even if the advantage created by butane was closed.

''We're always focused on our overheads,'' Bodger said.

- Stuff

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