Australia, June 16 -- New South Wales Land and Environment Court issued text of the following judgement May 16:

1. The five plaintiff companies are, or have been, miners and sellers of coal. They each hold one or more mining leases under the Mining Act 1992 (NSW). Under the Mining Act, holders of such leases have to render monthly returns and pay royalty to the Crown on publicly owned minerals recovered by the holder under the lease.

2. This application is brought under s 97 [1] of the Taxation Administration Act 1996 (NSW) (the TA Act) by the plaintiffs (the Plaintiffs or the Taxpayers) to review decisions of the first defendant (the Chief Commissioner) to disallow (in part) their objections to Mineral Royalty Assessment Notices issued by the Chief Commissioner on 2 November 2022 (the Assessment Notices). The objections were in part upheld by the Chief Commissioner remitting a portion of premium interest and penalties imposed on the Plaintiffs.

The Facts

3. The facts are not in dispute. What follows is derived from affidavit evidence from both parties (none of which was challenged) and documents in Court Books exceeding 5000 pages.

The Return Arrangement

4. The Plaintiffs are subsidiaries whose ultimate holding company is Whitehaven Coal Limited (Whitehaven Coal).

5. From 2007 until sometime in 2019, the Plaintiffs had an intra-group arrangement for selling coal and paying royalties (the Return Arrangement).

6. The first plaintiff, Whitehaven Coal Mining Limited (Whitehaven), held the mining licences for the Canyon Colliery, as well as the Rocglen and Tarrawonga mines. Whitehaven merits specific mention because of the internal corporate arrangements within the group, referred to more fully below.

7. Canyon, however, was no longer producing coal and was under care and maintenance. The other Plaintiffs operated active mines. They sold the coal they recovered almost exclusively to Whitehaven, which on sold it to arm's length buyers.

8. The price Whitehaven paid for the coal was often higher than that for which it sold it. Deductions available to it in the calculation of royalties resulted in "negative" royalty returns. Royalty returns were made on a group consolidated basis rather than an individual leaseholder basis, as required by the Mining Act. Whitehaven's negative returns from Canyon were offset against royalties owed to the Crown by the other Plaintiffs and owed by Whitehaven itself from the Rocglen and Tarrawonga mines, resulting in a reduction of royalties payable by all of them.

9. Royalty returns on this basis did not comply with the Mining Act. It is not suggested otherwise. Concepts of "negative" royalty returns and netting off such returns against positive ones of some other leaseholder or against royalties payable by the returner from some other mine are foreign to the Mining Act. Additionally, royalty returns are required to be made and paid on a monthly basis. The Return Arrangement worked on an annual basis.

10. At all times relevant to this dispute until 1 July 2015, the administration of the State's royalty system was under the aegis of the Department of Trade and Investment, Regional Infrastructure and Services, sometimes referred to colloquially as the Mining Department (the Department). However, with effect from 1 July 2015, administration of that system was moved to the Office of State Revenue (OSR).

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/196d1e10e46b5ad30a0b65d2)

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