Case: State Electricity Commission of Victoria v Commissioner of Taxation [1999] FCA 1329 ; (1999) 96 FCR 22
Outcome: cited
The definition of Manufacture-related activity , to the extent of pars (a), (b) and (c) as substantially extracted above, was described in the joint judgment of Heerey and Merkel JJ (with whom Carr J agreed other than to an extent not here material) in State Electricity Commission of Victoria v Commissioner of Taxation [1999] FCA 1329 ; (1999) 96 FCR 22 at 29, at [24], as follows: 'Paragraphs (a), (b) and (c) of Item 18(5) of the Exemptions Act deal with a continuum. The common feature is the application of a process or treatment. Paragraph (a) is concerned with the processing of raw materials prior to the stage of manufacture, whether the processor is or is not to be the manufacturer. Paragraph (b) is concerned with the actual process of manufacture. Again the processor can be the manufacturer or someone else. Paragraph (c) is concerned with a post-manufacture stage. But the person who is to market or use the goods has to be the manufacturer. Importantly, the paragraph contains an implicit assumption that bringing goods into a marketable form or condition need not necessarily form part of the process of manufacture of such goods.' 13 The Commissioner recorded that Chapter 2 ( Glossary of Terms ) of the Explanatory Memorandum to the STEC Act employed the term business inputs , though the Commissioner acknowledged that such a term did not appear in that legislation, and pointed out that the Explanatory Memorandum contained the following: 'Road vehicles of a kind ordinarily used for the transport of persons or the transport or delivery of goods or other property will be excluded from the exemptions for goods for use in mining, primary production, manufacturing, printing and other businesses, unless they are for use exclusively in the exemption user's premises or in going between adjacent premises.' So much was said by the Commissioner to be reflected in the abovementioned Item 2 headed Primary production activities [R] , appearing in Sub-Chapter 1.1 in turn headed Mining and primary production , and also in Item 18 headed Manufacture-related activities [R] , appearing in Sub-Chapter 1.2 in turn headed Manufacturing and industrial etc . Lindsay drew attention to the exclusion provisions of subItem (3) appearing in the context of Item 18, in so far as the same is picked up by reference in Item 36 headed Subcontractors appearing in Sub-Chapter 1.5 headed Miscellaneous . I will return shortly to the critical operation of Item 36 in relation to the circumstances postulated by Lindsay as allegedly produced of the operation of Item 36 critically (and solely) in its favour. 14 It will have been noticed that each of the headings to Items 2 and 18 bore the insignia [R] at all material times, in relation to which s 9 of the STEC Act stipulated as follows: '9 Certain exemption Items available only to registered persons Goods are not covered by an exemption Item marked [R] unless the exemption user is a registered person at the time specified in the Table in section 5.' Lindsay was not a registered person at any material time, being a matter upon which the Commissioner placed reliance, but as I have already foreshadowed, Lindsay's case at least on the appeal was confined to the operation of Item 36 upon the footing of its inclusion of reference relevantly and specifically to Item 18, and upon the further basis that unlike Item 18, the heading to Item 36 was not prefixed [R]. It was that critical circumstance of legislative drafting which Lindsay contended to have been overlooked or misunderstood by the Tribunal. 59 The Commissioner sought assistance also from State Electricity Commission , from which I have cited earlier the passage at [24] of the reasons for decision thereof concerning the operation generally of paras (a), (b) and (c) of Item 18(5). In that case, the Electricity Commissioner as taxpayer used transformers in its business to convert voltage and current so that it could be generated for domestic or industrial consumption, and it sought declaratory relief to the effect that a manufacture-related activity was involved by its use of transformers thus to apply a process or treatment within the scope of the subject subItem 18(5) expression. A Full Federal Court (Heerey Carr and Merkel JJ) held that neither of pars (a), (b) or (c) of subItem 18(5) applied in favour of the Commission. In relation to par (c), being that the subject of particular focus in the present dispute, all members of the Full Court agreed that electricity and electrical power constituted goods within Item 18(5)(c). At 30, at [28], of the reasons for joint judgment of Heerey and Merkel JJ, the following further appears: 'In the context of the Exemptions Act, and in particular Item 18, the tangible "goods" brought into existence for sale in the present case is electrical energy. Energy is a function of power over time. That is the "Commodit[y] of commerce"... which is bought and sold. The commodity is electrical energy, rather than electric current having a particular voltage. On this view, a change in current or voltage does not result in the manufacture or production of a different commodity or different goods.' Those circumstances are materially removed from the circumstances of this present litigation. 60 The perishable goods in the form of foodstuffs here involved are to be apparently marketed by or on behalf of a manufacturer of the goods , each of them being a primary producer or manufacturer of the goods , or in relation to whom the goods are wholesaler's-materials goods within the s 3 definition of that expression , or otherwise are within the par (c)(iii) description of qualifying goods within in turn the s 3 definition of that further expression. Lindsay submitted that in the present context therefore, a 'process or treatment to goods' , which has the purpose of bringing goods into and keeping goods in a marketable or usable condition, within the purport of subItem 18(5)(c), need not involve a change in the form, nature or condition of the goods the subject of scrutiny. Lindsay contended rather that it is enough that some action is applied to the goods which results in preserving their marketability or usability in the hands of the manufacturer of the goods, and additionally as here its transportation consignee Lindsay.