Judiciary Act 1903

The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

For the purposes of subsection (1), a Court exercising federal jurisdiction in a proceeding is taken to be exercising federal jurisdiction in:

if the laws of a State or Territory apply to a part of the proceeding because of subsection 68C(5)—that State or Territory; or

if paragraph (a) does not apply:

if the proceeding is transferred or remitted—the State or Territory to which the proceeding is transferred or remitted; and

otherwise—the State or Territory in which the proceeding is commenced;

A provision of this Act does not prevent a law of a State or Territory covered by subsection (3) from binding a court under this section in connection with a suit relating to the recovery of an amount paid in connection with a tax that a law of a State or Territory invalidly purported to impose.

This subsection covers a law of a State or Territory that would be applicable to the suit if it did not involve federal jurisdiction, including, for example, a law doing any of the following:

limiting the period for bringing the suit to recover the amount;

requiring prior notice to be given to the person against whom the suit is brought;

barring the suit on the grounds that the person bringing the suit has charged someone else for the amount.

For the purposes of subsection (2), some examples of an amount paid in connection with a tax are as follows:

an amount paid as the tax;

an amount of penalty for failure to pay the tax on time;

an amount of penalty for failure to pay enough of the tax;

an amount that is paid to a taxpayer by a customer of the taxpayer and is directly referable to the taxpayer’s liability to the tax in connection with the taxpayer’s dealings with the customer.