Federal Commissioner of Taxation v Riley
50 CLR 69(Judgment by: Rich J, Dixon J, McTiernan J)
Between: Federal Commissioner of Taxation - Plaintiff
And: Riley - Defendant
Judges:
Rich J
Dixon J
McTiernan JStarke J
Evatt J
Judgment date: 20 June 1935
Sydney
Judgment by:
Rich J
Dixon J
McTiernan J
This is a special case stated by the parties in an action brought by the Commissioner of Taxation to recover sales tax from a photographer conducting a portrait studio.
The course of business is elaborately stated in the special case, which gives prominence to the part played by the individual consideration and treatment of the client, the arranging of the pose, setting and lighting, and the operations in the studio and retouching room. The business side of the transaction is more briefly dealt with. It is said that when the client comes to be photographed he may then order a certain number of photographs, or he may decide to view the proofs before ordering any; but it is usual to obtain a deposit from the client before taking his photograph. Before the photographs are delivered to him payment is made or arranged.
Under the Sales Tax Assessment Act (No.1) 1930-1935 , sales' tax is levied and paid, upon the sale value of goods manufactured in Australia by a taxpayer and sold by him or treated by him as stock for sale by retail or applied to his own use (sec. 17).
The special case raises no question as to the sale or sale value the photographs, and this, no doubt, accounts for the economy of statement in reference to the terms upon which the clients' requirements are supplied. That the transaction is a sale is not, and doubtless could not, be disputed. What is in question is whether photographs are goods manufactured in Australia.
By the statutory definition, manufacture includes production. This description is very wide. It appears to cover all operations conducted for the purpose of bringing tangible things into existence for sale. But there are many vocations and pursuits in the exercise of which physical things incidentally come into existence, and become the property of the client or customer, although the essential character of the work is the performance of skilled services and not the supply things. A conveyancer who makes a will and hands it over to the testator, a writer who composes an article for a journal and sendS in the typescript, a shorthand writer who transcribes his notes and supplies a transcript are examples. The last was dealt with by this Court in Rau's Case. [F1] To such cases the language of sec. 17 is inapplicable; one or other of the elements is lacking that are required to satisfy the description sale value of goods manufactured, or produced and sold by the taxpayer, or treated as stock for sale by retail or applied to his own use.
In the present case, it is the element of "manufacture" or "production" which the taxpayer says is not present. The argument in support of his contention is, in effect, that the photographer is employed to exercise his art to obtain a portrait possessing the qualities that are demanded by the taste it is his purpose to consult, and that the end of his labours is not the production of so many material objects regarded as vendible articles. The contention is open to the observation that it does not strictly adhere to the question in the special case, which assumes the sale of the photographs as goods, and inquires, are they produced or manufactured? But it is right, perhaps, that the taxpayer should not be tied down to that question as one isolated from the remainder of sec. 17. In any case, we think the contention cannot prevail. The end of the organized business of a portrait photographer is to produce as many copies of a picture as his customer will buy, and to sell them to him with a view to profit. It differs from many other productive arts in the fact that its products must be designed in each case for one individual, and in its attempt to secure some aesthetic value. But it is a process practised commercially to produce an article which will be bought. A tailor must attempt to fit his individual customer and the manufacturer of ornaments might claim that his designs had an aesthetic purpose.
In our opinion the first question in the case stated should be answered: Yes.
The second question seeks to distinguish tinting and colouring when that is practised, a distinction we are not prepared to admit. It also should be answered: Yes.
We think the order should be:- Questions in the special case answered: Yes. Pursuant to the agreement of the parties, enter judgment in the action for the plaintiff for £ 7 15s. 9d. with costs.