Case: Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450
Outcome: cited
The first part of the submission was common ground, at least as a matter of words. See Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 at 472, Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 at 559 and Clean Investments Pty Ltd v Commissioner of Taxation [2001] FCA 80 ; (2001) 105 FCR 248 at [91] . However the parties differed as to what was entailed in the single composite question, and in particular as to the second part of Cascade's submission. 37 At least implicitly Cascade characterises the meaning I prefer as a narrow construction. It relies on cases which it says establishes that the classification of goods attracting exemptions (eg for sales tax purposes) should be liberally construed unless the text or context requires a narrow construction: Diethelm at 464; Telstra at 569; IGY Manufacturing Pty Ltd v Commissioner of Taxation (1999) 42 ATR 544 at [14]. In Diethelm at 464 French J said: "Classifications of goods attracting exemptions or beneficial rates should be liberally construed unless the text or context requires a narrow construction." 38 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".