Deputy Federal Commissioner of Taxation v. Cohn's Industries Pty. Ltd.

Murray J

Supreme Court of Victoria

Judgment date: Judgment handed down 26 May 1978.

Murray J.: In this case the plaintiff sues the defendant for an amount of $155,536.57 which amount is composed of sales tax alleged to be due by the defendant, including certain penalties imposed.

The plaintiff has sought to prove his case by the tender of a certificate under sec. 10 of the Sales Tax Procedure Act and the defendant takes no point on either the amount involved or this mode of proof. The defence relied on by the defendant depends entirely on the proper construction of the definition of the word ``manufacture'' as it appears in sec. 3 Sales Tax Assessment Act (No. 1). The definition as it there appears reads as follows:

```Manufacture' includes -

(a) production;

(b) the combination of parts or ingredients whereby an article or substance is formed which is commercially distinct from those parts or ingredients, except such combination (not being a combination whereby concrete, cement mortar, lime mortar or any similar preparation of a kind used in the construction, repair or maintenance of buildings or other structures is formed, or whereby any other prescribed article or substance is formed) as, in the opinion of the Commissioner, it is customary or reasonably practicable for users or consumers of those articles or substances to undertake; and

(c) any treatment applied to foodstuffs as a process in the preparation of the foodstuffs for human consumption,''

The defendant, in an elaborate argument advanced, if I may say so, most persuasively by Dr. Pannam on its behalf, has submitted that the definition of ``manufacture'' as it appears in para. (b) should be taken as exhaustive and that therefore that when one comes to a process which involves the combination of parts or ingredients whereby an article or substance is formed which is commercially distinct from those parts or ingredients, one can look no further than the terms of the paragraph. This is a proposition which, right from the beginning of this case, I have found difficult to accept and I still find it difficult to accept. The ordinary effect of the word ``includes'' is not exclusive or exhaustive. This is not a matter of any particular legal interpretation, it is a matter of ordinary plain English. It is true that from time to time the word is used in statutes and is occasionally held as meaning ``includes and means''. The problem (if it be a problem) is referred to in the decision of the Privy Council in
Dilworth v. Commr. of Stamps (1899) A.C. 99. At p. 105 Lord Watson, delivering the advice of their Lordships, said this:

``Section 2 is beyond all question an interpretation clause, and must have been intended by the legislature to be taken into account in construing the expression `charitable demise or bequest' as it occurs in

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sec. 3. It is not said in terms that charitable bequest shall mean one or other of the things which are enumerated but it shall include them. The word `include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of a statute. And when it is so used, these words or phrases must be construed as comprehending not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include.

But the word `include' is susceptible of another construction which may become imperative if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to `mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions.''

Looking at the definition of ``manufacture'' as it appears in the Act presently under consideration, I am quite unable to see anything which should lead me to the view that the word ``includes'' is intended to be, insofar as it is followed by para. (b) exhaustive. It seems to me that para. (a), (b) and (c) of the definition can all be fairly read as intended to extend the ordinary meaning of the term ``manufacture''. Having regard to the evidence of the processes which take place in the defendant's factories, it was conceded by Dr. Pannam and indeed by Mr. Curtis, that those processes would ordinarily come within the ordinary everyday meaning of the word ``manufacture''. I agree with that concession. It follows that the whole of the defendant's argument must rest upon my accepting the proposition that the definition, when it deals with the combination of parts or ingredients, is restrictive and exhaustive and therefore that whenever one comes to a process which in ordinary parlance is clearly a manufacturing process, if one finds that it is also a process whereby parts or the ingredients are mixed or combined so as to form a commercially distinct substance, one is then limited to the words used in para. (b). Such an interpretation would, in my view, give rise to endless difficulty because in perhaps the majority of manufacturing processes, a combination of parts or ingredients is involved, and it would therefore mean that every process would need to be examined to see whether, in addition to the mere combination of parts or ingredients, some other process is involved which would be sufficient, as a matter of construction, to take the process out of the words used in para. (b).

It seems to me a much more reasonable and likely explanation of the insertion of the para. (b) of the definition, is that the legislature intended to include within the ambit of the term ``manufacture'' processes which might arguably not otherwise be ordinarily included, namely processes in which nothing is done but a simple admixture of parts or ingredients. One can conceive of processes whereby two or more parts or ingredients are mixed and no more takes place, and in such cases some serious and credible argument could be raised that such processes would not ordinarily be comprehended by the word ``manufacture''.

I am inclined to agree with the view urged by Mr. Charles that the exception or exemption placed into para. (b), was to enable the Commissioner to prevent a floodgate from arising by reason of the very wide and general language employed in the affirmative part of para. (b).

Under these circumstances, it appears to me that the defendant's argument fails at the outset, because Dr. Pannam conceded, as he was forced to concede, that unless I could be persuaded to treat para. (b) of the definition as exhaustive, the rest of his argument necessarily failed. Despite his valiant attempts. Dr. Pannam has left me unconvinced of this, and accordingly there must be judgment for the plaintiff for the amount claimed.

Mr. Charles, are you seeking interest?

Mr. Charles: Yes I do seek interest your Honour.

His Honour: What is the usual order?

Mr. Charles: I note your Honour, in the last paragraph, which is para. 10 of the amended statement of claim, it appears that the defendant has already been charged additional tax for late payment, calculated from 4th June to 8th August. Accordingly, your Honour, I ask for interest at, I think it is 8%, from 8th August.

His Honour: To the date of judgment?

Mr. Charles: Yes your Honour.

His Honour: Yes.

I order that - have you anything to say to that Dr. Pannam?

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Dr. Pannam: No your Honour, sec. 78 appears to cover the situation.

His Honour: I order that the defendant pay interest at the rate of 8% from 8th August, 1974 to the date of judgment.

I order that the defendant pay the plaintiff's costs, including...

Mr. Charles: I think there are some reserved costs your Honour.

His Honour: Yes. Including any reserved costs, and the costs of transcript.

Mr. Charles: I am indebted to your Honour. I understand that it is not necessary to ask for refreshers or anything of that kind?

His Honour: No I do not think so.

I should say that I am conscious that by giving judgment on the spot, the terms of my reasons obviously suffer, but having regard to the view that I had formed, it appeared to me that it would be in the parties' interests for me to deal with the matter forthwith. Under those circumstances, I have not felt it necessary to go into the rest of the argument. If an appeal is taken, these other arguments will remain open and so will yours, Mr. Charles, to uphold the decision if I am proved wrong on the ground that I have chosen. I am conscious of the defects in the reasons that I have given, in point of view of language, but it seemed to me, having regard to the fact that my mind was clear on the point, that the parties would be better served if I gave my decision.

Courts of Appeal occasionally agree with my conclusions, less often with my reasons.


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