Federal Commissioner of Taxation v F H Faulding and Co Ltd
(1950) 83 CLR 5949 ATD 201
[1950] ALR 862
(Judgment by: Webb J)
Between: Federal Commissioner of Taxation
And: F H Faulding and Co Ltd
Judges:
Latham CJ
Webb JFullagar J
Subject References:
Sales tax (Cth)
Judgment date: 2 November 1950
Judgment by:
Webb J
The cordials in question are labelled "Lemon Cordial" and "Raspberry Balm Cordial". The proportion of Australian fruit juice in the lemon cordial is 29 per cent by volume and 26.4 per cent by weight. In the raspberry cordial the proportion is 13.4 per cent by volume and 11.44 per cent by weight. It is not contested that both commodities are cordials within the ordinary meaning of the term and as defined by the Food and Drug Regulations of the States. (at p597)
Item 36(3) of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1948 provides for the exemption from sales tax of:-
- (1)
- essences, concentrates and cordials, consisting wholly or principally of the juices of Australian fruits; and
- (2)
- non-alcoholic beverages consisting wholly of such fruits. (at p597)
It is not claimed that either cordial is of the nature of an essence, concentrate, extract, or residue of Australian fruit juice. (at p597)
If the two cordials are suitable for consumption undiluted they are beverages. But to gain exemption from sales tax beverages must consist wholly of fruit juice. Unless the language of item 36(3) requires it, we should not impute inconsistency to the legislature by holding that any cordial which happens to be a beverage is also exempt. But if the cordial is not suitable for consumption undiluted this would be due to the presence of an ingredient other than the fruit juice, and it is unlikely that the legislature attached the exemption to such a circumstance. (at p598)
The context in which "cordial" appears suggests that to be exempt a cordial must be something in the nature of an extract or residue of Australian fruit juice, something made from a larger quantity of that juice. The context appears to warrant that conclusion, which also avoids imputing inconsistency or absurdity to the legislature. If this is the proper construction of item 36(3) it may be that the word "principally" does not impose a test of weight or volume, but a test of order of importance, as Rich J. thought. There would be some reason for giving exemption to cordials in the nature of extracts or residues, as being the products of larger quantities of juice, although in making them it may be necessary to include materials of greater weight or volume than the juice content. (at p598)
But there may be no cordial in the nature of an extract or residue of Australian fruit juice. If so, the legislature is not to be taken to provide exemption from sales tax for something that does not exist. However, if there is no such cordial I can see no sound reason for holding that the word "principally" imposes a test of order of importance, and not of weight or volume. If "essence" and "concentrate" appeared alone in the provision and not with "cordial", "principally" might be taken to refer to "the chief thing concerned"; but the phrase "consisting wholly or principally of the juice of Australian fruit" is also predicated of "cordial", and inconsistency must not readily be imputed to the legislature in dealing with cordials of the kind in question here, on the one hand, and beverages on the other. As "principally" in that phrase cannot have two different meanings, a choice must be made. As its primary meanings include "chiefly" and "mainly", and, as quantity is twice indicated by the use of the word "wholly" and, further, as inconsistency should not, as already stated, be imputed to the legislature unless that is unavoidable, I think quantity - weight or volume - should be taken to be the only test provided by item 36(3). There might be greater difficulty in coming to this conclusion if the exemption were of things which "wholly or as to a principal part thereof" consisted of Australian fruit juices. (at p598)
In my opinion then these two cordials are not within item 36(3). (at p598)
I would allow the appeal. (at p598)