CASE 37/93
Members:P Gerber DP
Tribunal:
Administrative Appeals Tribunal
Dr P Gerber (Deputy President)
The applicant is a wholesaler of divers' face masks. The issue before the Tribunal is whether such masks are exempt from Sales Tax by virtue of their inclusion in the exempting provision compendiously set out in Sub-item 120 of Schedule 1 of the Sales Tax (Exemptions and Classifications) Act (``the Act''). It is common ground that to be exempt, they have to be capable of being described as ``clothes for human wear'' as set out in the said Schedule.
2. Sub-item 120(1) of the First Schedule to the Sales Tax (Exemptions and Classifications) Act exempts from sales tax:
``Clothes for human wear, made of any material whatsoever (including cloth, glass fibre, leather... or plastic material) including-''
(this is followed by a number of goods specifically included for exemption, set out in alphabetical order, beginning with aprons and going on to jabots; puggarees; puttees; revers; `sanitary napkins; sanitary pads; sanitary towels; and articles used exclusively for purposes similar to the purpose for which these goods are used'; and ending up with waders).
3. In historic context, the applicant sold to a retailer of divers' equipment some four masks on 1 October 1991, described as ``Mermaid Junior Rubber'' for an amount of $36.81 (invoice No. 83189), to which an amount of $7.36 sales tax was added, being 20% of the sale value of the goods; (cf sec 4(d) of the Sales Tax Ratings Acts Nos 1-9 of 1930). It is common ground that the applicant has a liability to charge sales tax on this sale unless the masks in question are excluded from sales tax by the Act. It was common ground that if these items were subject to sales tax, the applicable rate was 20%. (Although divers' masks come in many different varieties, it is also common ground that the masks referred to in the invoice are, for purposes of sales tax, indistinguishable from other divers' masks sold
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by the taxpayer, and that the decision by the Tribunal on these four items will resolve the issue whether the face masks it sells are subject to sales tax.)4. The applicant objected to the inclusion in its assessment, dated 15 November 1991, of the amount of sales tax, and on 5 August 1992 the respondent disallowed the objection, deciding that the masks were not exempt under sub-item 120(1) in the First Schedule of the Act ``as they are not considered to be clothes within the meaning of the sub-item''. The assessment referred to was issued in response to a request for special assessment lodged in accordance with sec 10A(1) of the Sales Tax Assessment Act (No 6).
5. At the outset, it should be noted that this case is not one in which one can apply the ejusdem generis rule; in any event, no clear genus can be said to emerge. Thus, exempt clothes range from waders (waterproof boots reaching above the knees, used by anglers) to sanitary napkins and snoods (the latter being the distinctive hair-bands worn by young unmarried Scottish women).
6. The applicant relied on an earlier Taxation Ruling ST 2088, dated 2 October 1984 (``T3''), which it claims to have some difficulty in reconciling with the decision in the instant case-
``I 1092946 PROTECTlVE SPORTING
WEAR
HEAD WEAR
PADS
GUARDS, GLOVES
SALES TAX
(EXEMPTIONS AND
CLASSIFICATIONS) ACT
SUB-ITEM 120(1) FIRST
SCHEDULE
TITLE SALES TAX: PROTECTlVE
----- SPORTlNG WEAR
Facts
Sub-item 120(1) in the First Schedule to the Sales Tax (Exemptions and Classifications) Act exempts from sales tax clothing (other than goods covered by any item in the Second or Third Schedule) namely, clothes for human wear, made of any material whatsoever (including cloth, glass fibre, leather, rubber or plastic material) including, inter alia, gloves and mittens.
2. Articles of sporting clothing, such as football jumpers, cricket boots, sweat bands and swimming costumes, have been exempt for many years. Prior to the amendment made to sub-item 120(1) as a consequence of the August 1981 Budget, however, most articles of protective wear were specifically excluded from exemption, e.g. protective head wear, protective pads, guards, gloves or mittens of a kind used exclusively or primarily and principally for the purposes of sport or recreation.
3. The amendments to sub-item 120(1) omitted the excluding words. By this means it was intended that protective wear, formerly excluded from exemption, would become exempt from sales tax. Subsequent to the amendment it was decided in this office that baseball gloves, softball gloves and boxing gloves were not entitled to the exemption on the grounds that they were more in the nature of essential equipment for use in the relevant sports rather than items of clothing for human wear. This decision has now been reviewed and it has been decided that baseball gloves, softball gloves and boxing gloves qualify for exemption under sub-item 120(1) - they are not to be treated differently from cricket pads, gloves, etc.
Ruling
4. Articles of protective sporting wear which are clothes for human wear and exempt under sub-item 120(1), First Schedule, include-
- (a) Head wear and other protectors - baseball, softball, etc. protectors and masks; cyclists' helmets.
- (b) Protective pads, e.g. for cricket, baseball, hockey and ice hockey.
- (c) Protective gloves, e.g. cricket, golf, baseball, softball and boxing.
COMMISSIONER OF TAXATION"
-------------------------
2 October 1984
7. The applicant submitted that there is no relevant distinction between ``headwear and other protectors'' and divers' masks. For good measure, subsequent rulings have exempted such ``clothes'' as chest protectors used in archery as well as life jackets and life belts.
8. For the sake of completeness, I should mention that the intervention of the Commonwealth Ombudsman was sought ``to consider the logical inconsistency of ST 2088''.
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His intervention resulted in the Adelaide Office of the respondent being given the task of reviewing the ruling. According to Notice of Objection (``T14'') that Office concluded that scuba divers' masks were not so much ``clothes for human wear'' but:-``... more in the nature of sporting goods... Inconsistent decisions made in the past would be withdrawn.''
9. A further review was then sought from the Dandenong Office, which confirmed the earlier advice, viz that divers' masks were not ``clothes for human wear'' and thus subject to Sales Tax at the rate of 20%. The reasons given were:
``The removal of the exclusion from item 120(1) relative to protective wear did not have the effect of providing exemption, as this can only be done by introducing a new item in the Schedules.
The intention of Parliament does not have to be referred to as the exemption item is not unclear or ambiguous.
Goods previously ruled as `clothes' in sales tax rulings (notably ST2088) may properly be described as clothes, however not all goods worn and used in a sporting activity will qualify for exemption as clothes.
Other exemption items which cover goods which are worn indicate that not all goods worn are clothes.
Without evidence sufficient to reach a conclusion that goods are covered by an item in the Sales Tax (Exemptions and Classifications) Act, the goods must be ruled as taxable at the general rate.''
Sales Tax Rulings do not displace the terms of the sales tax legislation.
10. The applicant called Mr WKD MacDonald, a scuba diver instructor as well as a retailer of scuba diving gear, trainer and charter operator. For good measure, this gentleman is also President of (i) the Diving Industry of Australia, (ii) the Diving Industry Travel Association of Australia, Dive Victoria and the Charter Operators Group, Victoria. He has also other qualifications too numerous to mention. The witness was asked by Mr Bearman, the applicant's solicitor, whether the term ``clothes for human wear'' has any special meaning in the diving industry. He replied: ``Well, `clothes for wear' in the diving industry we call `divers dress', and that is practically everything a diver wears from the moment the diver steps in the water''.
11. The witness went on to explain that divers' masks had undergone vast changes over the years, from the round masks that were plain and merely functional, to some ``10,000 different models that are on the market... these days. If it doesn't match the rest of the gear, if it doesn't look good, they won't wear it. They have different ones for night, etc''.
12. It seems that scuba divers' masks are individually fitted. Mr MacDonald stated that ``out of the 65 different models that I sell in different colours, only one of them fits me, for instance. So they are designed by fit, and each mask is different''. He added that people only buy masks if they look good (``If it doesn't look good, they won't wear it and if it doesn't match their wetsuit, their fins, their scuba outfit, coloured tanks and everything else, that is the end of the sale. That is why people buy them'').
13. It was part of the applicant's argument that these masks had become items of fashion, and hence ``clothes''. Indeed, Mr MacDonald deposed that the sale to people who acquire them solely to use them under water was ``negligible'' and that men were the worst offenders. Nowadays, masks are expected to colour match the rest of the diver's gear, i.e. knife, fins, wet suit, boots, snorkel, the buoyancy compensating device, the scuba tank, the regulator, the gauges and computers. Indeed, in Japan, one particular model of mask comes in 15 different shades of pink. Some even have the diver's optical prescriptions built into them. He added that he had an optical lens mask himself (``I wear it down the pier, back to the car, or else I am a danger to everyone'').
14. The witness was cross-examined at length about the function of these masks. However, as the respondent called a physicist from Melbourne University - Dr Ann Roberts - with a post-doctoral fellowship from Cornell University, who is also a specialist in optics, it is with no disrespect to Mr MacDonald that I turn straight to this witness, who gave a very detailed explanation of just what occurs visually when a diver opens his/her eyes underwater with and without the aid of a mask, and what a mask does to assist underwater vision. The witness provided a useful diagram (Exhibit ``D'', appended as Appendix ``A'').
15. Dealing with vision in general, Dr Roberts deposed that the three basic
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components of the eyeball (which enable a person to see an object) are the cornea, the lens and the retina. The cornea of the eye is its surface, the lens is behind the cornea, whilst the retina is at the back of the eye. She explained that light reflected from an object is ``bent'' by the cornea, and then again by the lens, so that it focuses at a point on the retina to give a picture of the object viewed (this is similar to the process of camera which presents the photographer with a clear view of the object to be photographed in the view finder). It appears that approximately 80% of the focusing is performed by the cornea and 20% by the lens. The degree to which light is ``bent'' or focused by the cornea depends in turn upon the refractive index of the medium through which the light passes before striking the cornea, compared with the refractive index of the cornea. Thus, the refractive index of water (1.333) is different from that of air but similar to that of the cornea (1.336), with the result that light is not bent as much when it passes through the cornea. In effect, because there is so little change between the refractive indices of water and the cornea, it is as if the cornea is not there. There is no change in the degree to which the light is bent by the lens. Consequentially, when a person opens his/her eyes under water without mask, the image is not focused sharply on the retina and his/her vision is blurred.16. When dealing with the function these masks (of whatever colour), the witness stated that their essential feature is found in the space they provide between the water and the cornea. Thus, light hits the flat glass, is then bent a little (because of the difference between the refractive indices of water and glass), hits the back of the glass, and is bent back to a greater degree. It is then bent first by the cornea and then by the lens to focus on the retina. Since the water is not in contact with the cornea, light is able to be bent by the cornea as if it has only ever passed through air. The image therefore is fully bent, or focused, on the retina, so that it is clear rather than blurred.
17. If I can summarise the technical evidence, wearing a mask keeps the water off the eyes, so the diver has air immediately outside the eyes, hence the abrupt change in refractive index. An underwater face mask thus functions not unlike spectacles, i.e. it ``compensates'' for vision which, unaided, would otherwise be blurred.
18. Mr Bearman, who appeared for the applicant, submitted that clothes serve three purposes: warmth, fashion and modesty.
19. I was subjected to the usual dictionary definitions of ``clothes'', none of which can assist me in reaching a satisfactory conclusion. Thus, the Macquarie Dictionary defines ``clothes'' as ``garments for the body; articles of dress; wearing apparel''. The OED is hardly more helpful for present purposes - ``covering for the person; wearing apparel; dress, raiment, vesture''.
20. Without going into the long history of clothes, it seems that some time in the Dreamtime, when terra was still nullius and man (and womankind) nomadic, roaming the earth in search of food and shelter, someone somewhere - probably during the ice-age - discovered that bearskins, if wrapped round the body, could keep it warm. Alas, in time, bears became unfashionable, and in no time mink was ``in'' and bears were ``out''. AND THEN CAME FAITH, and with it MODESTY. The latter demanded that all parts vaguely connected with reproduction were ``private'', and had to be shielded from the public gaze. Soon, beliefs became fragmented and some of the fundamentalists insisted on a greater ``cover- up''. This, in turn, led to the inclusion in sub- item 120(1) of such accoutrement as veils, scarves, turbans, snoods and shawls. (Although not strictly proved in evidence, history records that when missionaries exported their particular faith to the Noble Savage, it was the loin cloth, i.e. ``clothes for human wear'', rather than the writings of the prophets and divines, that cured cannibals of their less attractive habits. It is only in recent times that some concession has been made to climate, comfort and appearance - tennis dresses have become shorter, and briefs thinner and more revealing - except for barristers' briefs, which have become thicker and more opaque.) With the advent of optics came spectacles, which were always round and plain. The evidence suggests that face masks, too, were always black and smelt of rubber. Now, I am told, masks come in exotic sizes, colours, shapes and synthetics. Be that as it may, I have concluded that ``fashion'' alone cannot dictate what constitutes ``clothes for human wear''. Articles that keep one neither warm nor modest do not pass the test of ``clothes''. Hence neither glasses nor masks become ``clothes'' because famous couturiers
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sell their own ``creations'' and some people buy numerous pairs in different colours and designs just to be seen in the latest haute couture.21. Mr Bearman has said all that could possibly be said and said it eloquently and well. However, in the end, I cannot bring myself to extend the definition of ``clothes'' - whatever meaning it may have in the divers' trade - to include what is, when all is said and done, nothing but special glasses worn by divers under water to enable them to see more clearly.
22. The items included in the Schedule have satisfied me that had Parliament intended, in the listed exemptions items, to include articles used peculiarly as visual aids in underwater sport, it would have said so. None of the items listed (save baby bags and sanitary napkins and articles ejusdem generis with such items), however eccentric some may appear if worn on the bus to Clapham, offend the description ``clothes for human wear''. Glasses - whether worn above or below the Plimsoll line - do so offend, as do the other items of equipment ``worn'' by divers, such as knives, oxygen tanks and snorkels. The Crown conceded that a diver's wetsuit satisfied the description ``clothes for human wear'' because it keeps the diver dry and warm. That is an attribute that cannot apply to face masks.
23. For the sake of completeness, I should add I do not find sufficient ambiguity in the schedule to have recourse to the Second Reading Speech which preceded the 1981 Amendment Bill, introducing the removal of the specific exclusion of certain protective sporting wear. (``The Government has also decided to exempt protective clothing of a kind used for sport or recreation, such as helmets, guards, gloves and mittens.'') However, if I am wrong in this, having concluded that these masks cannot, without distortion of language, be described as ``protective clothing'' on the evidence as to their function, I am in any event satisfied that even with the assistance of the Treasurer's Second Reading Speech, these masks cannot be said to have been intended to be included in the exemption. If Parliament had such an intent, it would have been easy to give expression to it. It is not the function of this Tribunal to fill the gaps. Lord Justice Denning once observed:
``We sit here to find out the intention of Parliament and of Ministers and carry it out, and we do this better by filling the gaps and making sense of the enactment than by opening it up to destructive analysis.''
Magor and St Mellons Rural District Council v Newport Corporation [1949] 2 KB 481, 498-9
On appeal [1952] AC 189 at 191, Lord Simonds had some difficulties with that view of statutory construction:
``The duty of the court is to interpret the words that the legislature has used; those words may be ambiguous, but even if they are, the power and duty of the court to travel outside them on a voyage of discovery are strictly limited.''
His Lordship referred to the view of the distinguished Lord Justice (as Denning LJ was at that time) that ``what the legislature has not written, the court must write'' as ``a naked usurpation of the legislative function under the thin disguise of interpretation''. (at p 191)
24. I am satisfied that to shove these masks into a clothes basket would be to legislate rather than to interpret. It follows that the objection decision must be affirmed.
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