CASE 57/95

Members:
BH Pascoe SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 10 November 1995

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BH Pascoe (Senior Member)

This is an application for review of a decision of the respondent dated 21 February 1995 to disallow an objection lodged by the applicant against an assessment of sales tax.

2. By letter of 18 July 1994 the applicant sought from the respondent a ruling that imported loose sheets on which images of postage stamps were printed were exempt from sales tax. Photocopies of two such sheets were attached to the letter. The respondent formed the view that the sheets were ``leaflets'' and exempt under Item 100 of Schedule 1 of the Sales Tax (Exemptions and Classifications) Act 1992 (``the Act''). The applicant was so advised by letter of 20 July 1994. On 22 July 1994 an officer of the Australian Customs Service sought confirmation from the

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respondent that the particular goods were exempt and provided a photocopy of one page from the bundle of sheets. Following this, the respondent considered that, as the sheets contained perforations on one side for insertion into albums or binders, they should be regarded as pages and taxable at 21% under Item 1 of Schedule 4 of the Act. The applicant was advised of this amended decision by letter of 22 July 1994. The applicant lodged an objection against the customs assessment notice.

3. At the hearing the applicant was unrepresented and the respondent was represented by an officer of the Australian Taxation Office. The applicant gave evidence that he was now retired and had been engaged in a hobby of stamp collecting. He was primarily interested in stamps issued by 22 countries. For the past 40 years he had imported from Germany these particular printed loose sheets which showed facsimiles of the stamps issued by each of the countries in which he was interested in a year. Until 1991 he ordered the sheets each year and they were posted to him. In order to reduce costs he abstained from ordering for three years and ordered the three years in one order in 1994. The 200 sheets, approximately, which were sent in satisfaction of his order were the subject of the assessment of sales tax. Not unexpectedly, the applicant was concerned at the imposition of sales tax of $111.50 on sheets of paper which he had been receiving for 40 years without any such imposition and at the rapid change of mind by the respondent.

4. The scheme of the Act as it applied at the relevant time was that goods, including imported goods, were liable to sales tax at 21% under Item 1 of Schedule 4 unless exempt under Schedule 1 or taxable at another rate under Schedules 2, 3, 5, 6 or 7. Item 100 of Schedule 1 is the first item in Chapter 10 of the Schedule headed ``Books, printed matter, paper etc.'' and states:

``ITEM 100:

• (1) Books, pamphlets, leaflets, periodicals, magazines or printed music.
• (2) This Item does not cover:
  • (a) advertising matter (including matter that is published in order to advertise any business or products of the publisher or of the person or persons for whom the matter is published or is to be published);
  • (b) programs (including schedules, syllabuses or guides), or souvenirs, of entertainments, amusements, exhibitions, competitions or sporting events;
  • (c) the following books:
    • (i) books of account;
    • (ii) books of receipts, cheques, deposit slips, bank withdrawal forms, tickets, dockets, labels or order forms;
    • (iii) books of blotting paper;
    • (iv) books of sheets (whether or not blank) for writing notes, letters, exercises or accounts, or for record purposes;
    • (v) books of sheets for sketching, drawing, colouring or painting (not including children's books containing printed illustrations for copying or colouring or both);
    • (vi) albums;
    • (vii) books of samples, menus or calendars;
    • (viii) booklets of printed matter conveying greetings or sympathy;
    • (ix) diaries;
    • (x) other stationery in book form;
  • (d) the following matter (including associated reports) of any trading or other concern that is carried on for the profit of individuals:
    • (i) memoranda of association or articles of association;
    • (ii) balance sheets or statements of accounts;
    • (iii) prospectuses;
  • (e) catalogues or price lists;
  • (f) books covered by subitem 10(3) of Schedule 2.''

5. The applicant provided an example of the particular sheets in dispute. The sheets are larger than A4 size, some 310mm by 275mm in size. The left hand margin has holes punched some 19mm apart down the length of the page. Printed on the page is the name of a country, a year and facsimiles of various stamps of that country. It is clear that the sheets are designed for easy insertion into a binder. The applicant

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stated that he does not put the sheets into an album or binder but stores them loose in boxes. He explained that the sheets were known in the trade as yearly supplements showing stamps issued by various countries. They could be used for attaching an actual stamp over the facsimile or simply for reference purposes.

6. It was submitted by the applicant that the particular goods were exempt under Item 100 and not excluded by Item 100(2), particularly 100(2)(c)(vi), albums, or 100(2)(e), catalogues or price lists. For the respondent it was submitted that the goods were not pamphlets or leaflets and not covered by Item 100(1). The view had been taken in any event that loose leaf replacement pages take the character of the pages replaced and that these goods were replacement or additional pages for insertion into an album or a catalogue and excluded by Item 100(2).

7. Given the scheme of the Act the first question to be asked is whether the relevant goods are ``books, pamphlets, leaflets, periodicals, magazines or printed music''. Only if the goods can be said to be included in this description is it then necessary to consider the exclusions under 100(2). If the goods cannot be said to be included in the description then, unless covered by another Item in Schedule 1 or subject to a different rate of tax under Schedules 2, 3, 5, 6 or 7, they are subject to sales tax under Schedule 4.

8. It is clear that the relevant sheets are not books or magazines and, although issued at intervals are not ``periodicals''. The New Shorter Oxford Dictionary, 1993 Edition, defines pamphlet as ``a group of several printed or written pages fewer than would make a book, fastened together without a hard cover and issued as a single or periodical work''. Leaflet is defined as ``a small sheet of paper or a sheet folded into two or more leaves but not stitched containing printed matter (often advertisements) usually distributed free of charge''. In my view each individual sheet is a leaflet. Each consists of a single sheet of paper containing printed matter. The fact that it is also punched with a row of holes on one side to facilitate storage in a binder if required does not change its character sufficiently to remove it from being a leaflet.

9. The next consideration is whether the sheets are leaflets which are excluded by Item 100(2). The respondent argued that they were loose leaf sheets for insertion into an album and, therefore, were themselves an album. Again the New Shorter Oxford Dictionary defines album as ``a blank book for the insertion of stamps, photographs, etc.''. On the evidence I find that these sheets are not pages for insertion into an album. The other category of exclusion in 100(2)(e) is ``catalogues or price lists''. A catalogue is defined by the New Shorter Oxford Dictionary as ``a list, register or complete enumeration; now spec. one systematically or methodically arranged often with brief particulars or descriptions aiding identification, etc.''. The sheets in question here show, primarily in the form of facsimiles, stamps issued by a particular country in a year. They are a register methodically arranged with particulars to aid identification. If bound in a book there would be little doubt that the book would be described correctly as a catalogue. The fact that each item here is an individual sheet, whether or not intended to be inserted with others in a binder, does not mean that each individual sheet is not itself a catalogue of the stamps issued by a country in a particular year.

10. In the course of considering the evidence and submissions, it was recognised that neither party had addressed the question of whether, if the goods in question were catalogues, they were covered by Item 105 of Schedule 1. This item exempts ``Imported trade catalogues, but not including catalogues imported for sale or distribution''. The parties were asked to provide written submissions on this question.

11. The respondent submitted that the relevant goods were not catalogues. It was argued that the basic nature of the goods is loose sheets with stamps printed on them. The essential character is that they are used to hold stamps or can be used as a collection of prints of stamps. It was said that popular usage and knowledge of the goods in the stamp dealing community are that they are not ``catalogues'' but are ``loose leaf album pages''. The respondent argued further that, even if the goods are ``catalogues'', they are not ``trade catalogues'' which were said to be ``a publication describing the goods for sale by a particular business or a particular section of a business and issued to prospective purchasers of those goods for the purpose of stimulating sales''. The submission from the applicant was of no material assistance in that it reiterated to a large degree the applicant's view that the goods

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were exempt under Item 100 and proposed consideration of exemption under Item 106.

12. In the case of
FC of T v Thomson Australian Holdings Pty Ltd & Ors 89 ATC 4696, the Full Federal Court was required to consider the classification of two publications, Thomson's Liquor Guide and Glass's Dealers Guide. The Commissioner submitted that the publications were ``catalogues or price lists''. Bowen C.J. and Burchett J. decided that they were not and considered that, having regard to the essential character rather than only particular aspects of the publication, each one would be described as a guide and not as a catalogue or price list. Whilst accepting that the word ``catalogue'', standing alone, is capable of a wide range of applications, Burchett J. considered that where there are more precise words such as menu, calendar, program, schedule, etc. such ``lists'' would not be called ``catalogues''. Here no other word has suggested itself as being descriptive of the subject goods other than the description ``loose leaf album pages'' put by the respondent. I am not persuaded that the relevant sheets can be properly described as pages for an album. Their essential character is simply a pictorial record of stamps issued. While some collectors may choose to attach actual stamps over the appropriate facsimile I do not find that the essential character is that of an album but is more appropriately that of a catalogue.

13. The sheets were clearly imported by the applicant and were for his own use and not for sale or distribution. They were produced for commercial sale by a supplier engaged in the trade of supplying its customers with information on postage stamps issued by countries of the world. The use of the words ``trade catalogues'' in Item 105 would appear to exclude the application of this item to non- commercial catalogues but, in my view, do embrace the particular goods in dispute here. I find that the goods are exempt under Item 105 of Schedule 1 of the Act.

14. Section 14ZZK of the Taxation Administration Act 1953 limits an applicant to the grounds stated in the objection to which the reviewable decision relates unless the Tribunal orders otherwise. The objection in this case did not refer to Item 105. In seeking the views of the parties as to the possible exercise of the discretion to allow this additional ground the respondent advised that no objection would be made to the exercise of the discretion but proposed that both parties be given the opportunity to present evidence by witnesses and to make further submissions. I am conscious that the applicant in this case is elderly, unrepresented and not well versed in the mysteries of the Act. I am also conscious that the amount involved is $111.50 and the decision in this case on its particular facts is unlikely to have wide ramifications. Consequently I allow the grounds of objection to be extended to include Item 105 and do not believe that further evidence, submissions and resulting costs to the parties and the Tribunal are justified.

15. The decision under review should be set aside and the relevant goods are exempt under Item 105 of Schedule 1 of the Act.