The Reliance Carpet case, being heard in the High Court from today, is testing whether GST is payable on a deposit forfeited in an aborted property deal.

In a rebuke for the Taxation Office, the Federal Court found GST could not be charged on a deposit which had been surrendered in a property deal that failed to proceed.

The Tax Commissioner is appealing.

Tax experts say the principles of the case might apply more broadly to cancellation fees, late fees, break fees and the like - and refunds could be in order.

PricewaterhouseCoopers partner, Kevin O'Rourke, says it is an important case.

"It's a bit like income tax, where you have to determine what is income," he said.

"Under the GST you have to determine what is a supply, because without supply there is no GST."

Mr O'Rourke says even if the Tax Commissioner loses in the High Court, the Government might act retrospectively to tighten up the legislation and protect its tax base.

"It wouldn't be the first time where revenue was considered to be at risk by the Tax Office - where the Government has stepped in and put in place retrospective legislation, effectively to deny those refunds," he said.