Deputy Federal Commissioner of Taxation (Queensland) v Stronach

55 CLR 305
1960 - 0617A - HCA

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(Decision by: Starke J)

Deputy Federal Commissioner of Taxation (Queensland)
v Stronach

Court:

Judges:
Starke JDixon J
McTiernan 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)

Hearing date: BRISBANE 17 June 1936;
Judgment date: 17 June 1936

Brisbane

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Decision by:
Starke J

The following judgments were delivered:

STARKE J. This is a special case stated by the parties pursuant to Order XXXII., rule 1, of the rules of this court. The defendant is a master builder and contractor who excavates freestone and granite from quarries. He works up this freestone and granite into building materials, some of which he uses in building and some of which he sells, in Australia. The question is whether the freestone and granite are subject to sales tax under the Sales Tax Assessment Act 1930-1935. The tax is imposed upon the sale value of goods manufactured in Australia and sold by the manufacturer or applied to his own use (Act, s. 17). "Goods" includes commodities, and "manufacture" includes production (Act, s. 3). There seems to be no doubt that the defendant produced goods or commodities within the meaning of the Act which prima facie fall within the description of its subject matter. In s. 20, however, there is a provision that sales tax shall not be payable upon the sale value of "goods, being primary products which are derived directly from operations carried on in Australia in-(i) mining." The taxpayer claims exemption under this provision, and relies upon the case of Australian Slate Quarries Ltd v Federal Commissioner of Taxation ^[F1] . There the facts disclosed that the taxpayer was obtaining slate from workings, in Australia, and using it for various commercial purposes, and the question asked on the facts was whether the court was at liberty to hold that the taxpayer was carrying on mining operations within the meaning of the Income Tax Assessment Act. The court answered the question in the affirmative. But all the case means is that there was matter before the learned trial judge which warranted him considering whether in fact mining operations were being carried on; his determination depending upon the character of the material, the methods of work, to some extent the signification of "mining" in the various mining Acts, and many other factors. When the case went back to him he found as a fact that the taxpayer was carrying on mining operations. It is useless, I think, to attempt an explanation of a case decided on the facts. I should have found the other way, and, in my opinion, the Slate Quarries Case ^[F2] was wrongly decided on the facts. But a finding of fact is certainly not binding on this court in any other case, and there is no compulsion on me to say that extracting freestone and granite from the earth is a mining operation. I do not think it is or can be called a mining operation.

Moreover, there is a further limitation. The section provides that goods are exempt from sales tax which are primary products derived directly from mining "and which have not been subject to any process or treatment resulting in an alteration of the form, nature or condition of the goods." That provision appears to me to exempt mining products as they come from the ground and not such products after they have been worked up into some other than their natural form and condition. In the present case, the freestone and granite were, in a greater or less degree, worked up into building materials. They do not exist in the form or condition in which they come from the ground.

I am of opinion, therefore, that the freestone and granite excavated and worked by the defendant are not exempt from sales tax, because they were not derived directly from operations in mining, and were subject to a process or treatment resulting in an alteration of the form, nature or condition of the goods.

I should add that the exemption in the First Schedule, "Stone" etc, inserted by the Financial Relief Act 1934, came into operation after the material dates in this case.