Herbert Adams Pty Ltd v Federal Commissioner of Taxation
(1932) 47 CLR 222(1932) 2 ATD 31
(Judgment by: Dixon J)
Herbert Adams Pty Ltd
v Federal Commissioner of Taxation
Judges:
Rich J
Starke J
McTiernan J
Dixon JEvatt J
Subject References:
Taxation and revenue
Sales tax
Sponge cake
Pastry
Legislative References:
Sales Tax Assessment Act (No 1) 1930 (Cth) No 25 - s 20
Judgment date: 4 August 1932
Sydney
Judgment by:
Dixon J
Section 20 (h) of the Sales Tax Assessment Act (No. 1) 1930-1931 provides that sales tax shall not be payable under that Act upon the sale value of the goods specified in the First Schedule. Under the heading of goods manufactured in Australia that Schedule specifies "Pastry but not including cakes or biscuits." The phrase sounds odd because, according to present usage, the description "pastry" is not commonly applied either to cakes or biscuits. It appears, however, both from the evidence of witnesses and from trade manuals and text-books that among pastry-cooks the word "pastry" is used as a general expression describing most of the products of their art. Mann J., from whom this appeal comes, found on the evidence "that the word is quite commonly used in the trade in a much wider sense, usually along with a qualifying word such as `mixed' or `fancy,' to include all or nearly all classes of flour goods other than bread, commonly made and sold by pastry-cooks, confectioners, bakers or caterers."
The popular meaning of "pastry" appears to have been reached by a process of specialization, and perhaps the wider trade meaning is a survival. But, whether the usage is to be explained as a persistence of an older meaning or as an extension by trade custom of that now prevailing, the Legislature has expressed itself in a manner which amounts to a recognition, if not an adoption, of the trade meaning. Such a recognition might be expected, because the tax is levied by the various statutes upon persons who sell commodities in the common course of distribution, whether they manufacture or produce the goods they sell or acquire them by purchase. A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned. In Marquis Camden v Commissioners of Inland Revenue [F2] , at p. 650 Phillimore L.J. says: "In construing a modern statute, not dealing with the particular customs of a particular locality, or the practice of a particular trade, but of general application, evidence such as is sought to be adduced in this case is inadmissible"; that evidence being tendered to prove that among land agents an ordinary English expression possessed a special meaning and should be so understood in a statute of general application. But, whatever may be covered by the phrase "practice of a particular trade," it has been considered permissible in applying a customs tariff to resort to evidence to ascertain what according to mercantile understanding are the characteristics connoted by the descriptive names used in the items as well as to identify the articles of commerce which possess them. See Markell v Wollaston [F3] ; Chandler & Co v Collector of Customs [F4] ; Robertson v Salomon [F5] , at p. 996. In the case of the Schedule of exemptions to the Sales Tax Assessment Act it is only upon proof of the general meaning prevailing in the trade that an explanation appears of the use of the strange expression "pastry ... not including cakes or biscuits." In the present case the appellant, the taxpayer, contends that the preparation which pastry-cooks and consumers alike call "sponge" falls within this exemption. In the trade "sponge" is included under the head "Pastry." It is said that "pastry not including cakes" means "pastry except cakes," and that "sponge" is "pastry" and is not "cake." To my mind it is in this last step that the appellant's greatest difficulty lies. It cannot be doubted that in common speech pieces of sponge, with or without filling, icing or other addition, would be denominated "cakes." But again trade usage is relied upon. It appears that among pastry-cooks the word "cake" has obtained a specialized meaning, and is often applied to distinguish articles in which some form of fat is a substantial or basic ingredient from other things, such as sponge, which consumers might call cakes. To establish that the Schedule of exemptions has adopted this limited or restricted meaning is no easy undertaking. In the first place, there is nothing in the form of expression "pastry not including cakes or biscuits" to suggest an unusual signification of "cake" as there is in the case of "pastry." In the next place, it is always less difficult to show that a word has a wider meaning than it is to establish a specialized use. For an extension of meaning involves no abandonment of the use in respect of things to which it would in any case apply; but a uniformly restricted application among any class of persons is necessary in order to establish that it has among them a narrower meaning and that meaning only. In this case a consideration of the trade evidence and of the manuals and technical books has failed to satisfy me that among pastry-cooks the word "cake" is not used for the purpose of their trade as often as not in a sense which includes "sponge." I think that, whenever occasion arises to distinguish between articles such as "sponge" in which fat is not a substantial ingredient and other products, the word "cake" is used for the purpose in the specialized sense claimed, but, when there is no occasion for doing so, it is used in the trade in the generic sense of common speech and includes sponge. There is no sufficient reason for attaching to the word "cakes" in the Schedule a special sense which would exclude "sponge."
For these reasons I think the appeal should be dismissed.