“A mosque is our barracks, the domes our helmets, minarets our bayonets and the faithful are our soldiers."
The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth.Section 116 has four limbs. The first three limbs prohibit the Commonwealth from making certain laws: laws "for establishing any religion"; laws "for imposing any religious observance"; and laws "for prohibiting the free exercise of any religion". The fourth limb proscribes the imposition of religious tests to qualify for any Commonwealth office or public trust.
The first limb is of relevance to halal. In Attorney-General (Vic); Ex Rel Black v Commonwealth ("DOGS case")  HCA 2; (1981) 146 CLR 559 (2 February 1981) the High Court found that Section 116 did not encompass laws that benefit religions generally; it only proscribed laws that established a particular religion.
Islam is a particular religion. Halal certification is the process by which Islam establishes itself. In Quick and Garran (1995) . The Annotated Constitution of the Australian Commonwealth. Sydney: Legal Books. ISBN 1-86316-071-X establishment means "the erection and recognition of a State Church, or the concession of special favours, titles, and advantages to one church which are denied to others."
Allowing halal to continue could be construed as conceding special favours, titles and advantages to Islam.
It would seem that there are 2 possible legal principles affronted by halal. The first is described by the French banning of the burqa. The second is described by S.116.
21 May 2015