Section 90 of the Constitution of Australia

Section 90 of the Constitution of Australia prohibits the States from imposing customs duties and of excise. The section bars the States from imposing any tax that would be considered to be of a customs or excise nature. While customs duties are easy to determine, the status of excise, as summarized in Ha v New South Wales, is that it consists of "taxes on the production, manufacture, sale or distribution of goods, whether of foreign or domestic origin." This effectively means that States are unable to impose sales taxes.

Whether a State tax is of an excise nature or not has been the subject of numerous cases in the High Court of Australia, and it has had difficulty in reaching a clear majority opinion as to how "excise" should be interpreted in specific circumstances. It has been described as "one of the significant failures of the High Court."

On the imposition of uniform duties of customs all laws of the several States imposing duties of customs or of excise, or offering bounties on the production or export of goods, shall cease to have effect, but any grant of or agreement for any such bounty lawfully made by or under the authority of the Government of any State shall be taken to be good if made before the thirtieth day of June, One thousand eight hundred and ninety eight, and not otherwise.

Starting with Peterswald v Bartley (1904), it was initially held that "excise" is an indirect tax, and is accordingly based on the definition given by John Stuart Mill:

Taxes are either direct or indirect. A direct tax is one which is demanded from the very persons who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another; such are the excise or customs.

However, since Dennis Hotels Pty Ltd v Victoria, it has been held that indirectness is neither a necessary nor sufficient quality for such a tax.

Since the High Court's ruling in Parton v Milk Board, subsequently endorsed unanimously in Bolton v Madsen,excise duties in the Australian context are generally agreed to apply in several situations:

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