Case: Totalizator Agency Board v Commissioner of Taxation (1996) 69 FCR 311
Outcome: considered
Totalizator Agency Board v Commissioner of Taxation (1996) 69 FCR 311 concerned a sales tax exemption (item 126) for "goods for use by ... an authority that is completely controlled by an Australian government ...". After referring to the passage from Diethelm set out at [37], and a line of cases French J "may well [have] had in mind", Hill J, with whom Tamberlin and Sundberg JJ agreed, said at 322-323: "Not all of the cases referred to can necessarily be taken as endorsing the proposition.... But be that as it may, the passages cited all stand for the following unexceptionable proposition. Where Parliament has enacted legislation to encourage a particular activity, for example legislation which gives particular concessions to the mining industry, the legislation must be construed so as to promote Parliament's purpose and not so as to detract from that purpose. Some items contained in Schedule 1 to the Exemptions and Classifications Act may fall within this rule in that the government has granted exemptions from sales tax in the course of seeking to encourage a specific industry.... But it can hardly be said that an item such as Item 126 is there to encourage any particular activity so that a construction should be given to it consonant with its purpose to promote that activity. Item 126 merely confers exemptions upon a particular kind of body, namely an Australian government or a statutory authority meeting certain tests. Parliament's purpose was to exempt from sales tax goods for use by these bodies. But Parliament's purpose is promoted by construing the exemption item in accordance with its ordinary meaning, not by seeking to give it a particular meaning favourable to the government or authority referred to in it. In my view, there is no general principle of construction that requires items in the Exemptions and Classifications Act to be given a benevolent interpretation in favour of persons or bodies referred to in the Schedule. Rather, each of the items is to be given its ordinary meaning in accordance with ordinary principles of interpretation, save where it is clear that the purpose of the government providing an exemption was to afford encouragement to a particular industry or activity." His Honour then referred to a passage in Diethelm at 457, in which French J "recognised the significance of the purpose of the relevant exempting item in applying this principle". 39 Cascade contends that unlike the exemption in Totalizator , item 13 is not directed at a particular body or person, but provides an exemption from GST to particular beverages which are marketed principally as food for infants. It should therefore be implied that item 13 is intended to protect those products, so that the liberal construction principle should apply. 40 The reason for the qualified exemption of food from GST is well known, and was common ground. It was the political compromise reached in order that the GST scheme might become law. The distinction drawn in Totalizator between an exemption directed at a particular person or body and one that encourages a particular activity is applicable here. It is true, as Cascade says, that item 13 is not directed at a particular person or body. But nor is it concerned to encourage any particular activity. It is not intended to encourage the production of beverages or ingredients of any kind. It was the result of a political deal that gave partial exemption to food. In the case of the beverage component of food, the result was that the beverage or an ingredient therefore would be exempt if it was of a kind marketed principally as food for infants or invalids. In accordance with Totalizator , there is no occasion to approach the meaning of "infant" or "invalids" in any manner other than by according the words their ordinary meaning. 41 Cascade pointed out that item 68 of Sch 1 to the Sales Tax (Exemptions and Classifications) Act 1992 exempted food for human consumption. Beverages were excluded from the exemption except for, amongst others: "(b) ... (i) beverages of a kind marketed principally as food for infants or invalids; ... (c) goods of a kind marketed principally as ingredients for beverages covered by paragraph (b)." 42 Cascade also relied on the exemption in item 149 of, inter alia, "booster seats ... designed for use exclusively for carrying infants". In this connection it drew attention to Victorian Sales Tax Office Ruling No 2543: "We had some doubts whether the booster seats are designed for use in carrying infants or older children but in view of the broad dictionary meaning of infant eg children under seven years of age, this condition is considered to be satisfied."