Deputy Federal Commissioner of Taxation (Queensland) v Stronach
55 CLR 3051960 - 0617A - HCA
(Decision by: Dixon J)
Deputy Federal Commissioner of Taxation (Queensland)
v Stronach
Judges:
Starke J
Dixon JMcTiernan J
Subject References:
Taxation and revenue
Sales tax
Primary products
Mining operations
Alteration of form or condition of goods
Process and treatment
Legislative References:
Sales Tax Assessment Act (No 1) 1930 (Cth) No 25 - ss 3; ss 17; ss 20(1)(d)
Judgment date: 17 June 1936
Brisbane
Decision by:
Dixon J
DIXON J. I agree the defendant is liable for sales tax on the goods mentioned in the special case. The commissioner's claim for sales tax is limited to the period after s. 3, sub-s. 4, came into operation and before the amendment made by s. 6 of the Financial Relief Act 1934.
The first question is whether the articles in respect of which sales tax is claimed are "goods" and are the subject of "manufacture" within the definition of that word contained in s. 3. The articles consisted of freestone and granite in blocks, which, for the most part, were supplied by a contractor to a building owner in fulfilment of a contract for the erection of a building. In my opinion, in the condition in which they were supplied, the blocks of freestone and granite were commodities and, therefore, fell within the definition of "goods." They were obtained by means amounting to production and, therefore, fell within the definition of "manufacture." Under s. 3, sub-s. 4, a person shall be deemed to have sold goods if, in the performance of any contract under which he has received, or is entitled to receive, valuable consideration, he supplies goods the property in which (whether as goods or in some other form) passes, under the terms of the contract, to some other person. The property in the blocks of stone would pass under a building contract at the time they became fixtures, unless the contract contained special conditions under which the property passed to the building owner at an earlier time. Thus it may be taken that, at the time when they were attached to the freehold and became fixtures, there was a sale.
The taxpayer relies on the exemption contained in s. 20 (1) (g) (i). That exemption is confined to goods being primary products which are derived directly from operations carried on in Australia in mining. It is said that the operation of winning freestone and granite was an operation in mining. The exemption is further restricted by the requirement that the primary products must not have been subject to any process or treatment resulting in an alteration of the form, nature or condition of the goods. Whether the freestone and granite were won by operations in mining or not, I think that, before the property in the stone passed to the building owner and was thus deemed to be sold and after it came into such a condition as to be a commodity, it was subject to a process or treatment resulting in an alteration of its form or condition. The special case shows that freestone was obtained by cutting from open face quarries by means of drilling machines. When blocks were removed from the quarry they were taken to a stonemason's yard and were classified for colour and size and were sawn into sizes suitable for use in the construction of buildings. At that stage, if not before, they became "goods." The blocks of stone were then placed upon the stonemason's bench and, in the majority of cases, worked by the stonemason by means of hammers and chisels into the correct sizes and shapes for setting in positions in the building, that is, the particular building in course of erection. The blocks were then further treated by planing one side, which was then polished by an abrasive stone worked by hand. I think that this subsequent work deprives them of any benefit of the exemption claimed. The granite blocks were similarly treated and disposed of. It too is disqualified from the exemption claimed. The special case, however, does not use terms in describing the treatment of granite and freestone in the yard which completely cover all stone for which exemption is sought. It says that the freestone and granite "in the majority of cases" were worked as I have described. It is, therefore, possible that what I have said does not cover the whole of the goods in question in the case. It may be that in the case of a portion of the freestone and granite the exemption might apply if the operations by which it was obtained come within the description of "mining." But, in my opinion, it cannot be correctly said that the stone was won by "operations in mining." The expression "mining" is a familiar source of difficulty both in England and here. In its primary meaning the word applies to subterranean working. The minerals sought by subterranean working would, no doubt, be highly prized. But it was natural to extend the application of the word "mining" in two directions. If the operations were subterranean, the word was applied to them although the minerals were of no great value. On the other hand, where precious metals or minerals usually won by subterranean working were obtained by excavation which did not include subterranean working, it was natural to describe those operations as mining. In Lord Provost and Magistrates of Glasgow v Farie [F3] Lord Watson says that, although the original meaning of "mine" might be restricted to subterranean excavation it appeared to him to be beyond question that for a very long period that has ceased to be its exclusive meaning and that the word has been used in ordinary language to signify, either the mineral substances which are excavated or mined, or the excavations whether subterranean or not from which metallic ores and fossil substances are dug out.
In Australian Slate Quarries Ltd v Federal Commissioner of Taxation [F4] the court's answer to the question submitted was, in effect, that open workings for the purpose of winning slate might according to circumstances amount to "mining." It appears to me that the decision does not preclude us from saying that the open workings for the purpose of winning freestone and granite are not mining. On the present special case we are the judges of law and fact, and so far as it is a question of fact, I should feel no hesitation in saying that the winning of the freestone and granite by the workings described is not within the ordinary meaning of mining. The fact is that slate seems to be won at some places by an operation which is one of mining because partly or wholly subterranean. It is easier, therefore, to draw the conclusion that winning slate from an open cut is mining. But winning building stone from ordinary quarries does not, I think, fall within the description "mining." The claim to exemption fails.