Federal Commissioner of Taxation v Silverton Tramway Co Ltd

(1953) 88 CLR 559
27 ALJ 580
10 ATD 295

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(Judgment by: Taylor J)

Between: Federal Commissioner of Taxation
And: Silverton Tramway Co Ltd

Court:

Judges: Dixon CJ
Webb J

Taylor J

Subject References:
Taxation and revenue
Sales tax
Exemption
Goods for use by public transport authority
Trading company conducting public transport serice for private profit

Legislative References:
Sales Tax (Exemptions and Classifications) Act 1935 - Section 5; First Schedule; Div XI; Item 77

Hearing date: 29 September 1953; 30 September 1953
Judgment date: 25 November 1953

Melbourne

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Judgment by:
Taylor J

The question which is raised by the case stated is whether the defendant company was, on 5th October 1951, a "public transport authority" within the meaning of Item 77 of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1951. If this question should be answered in the negative then, it is agreed, judgment should be entered for the plaintiff for the sum of PD17,214 14s. 2d., whilst if the question should be answered in the affirmative then judgment is to be entered for the company.

The First Schedule to the Act contains a series of lists of goods which, by s. 5 of the Act, are exempted from the operation of various specified Sales Tax Acts. Division I of the schedule deals with specified items of agricultural machinery, implements, equipment and materials. Exemption under this division depends upon goods conforming to a specified character and this is true of a number of the divisions in the schedule. A perusal of the schedule indicates that specified exemptions apply in respect of such things as mining machinery and equipment, drugs medicines and surgical goods, book printed matter and paper, and scientific and religious goods and works of art. Division XI, however, in which Item 77 is to be found purports to relate to "Goods for use by Governments, Representatives of Governments, and Public Bodies" and the exemptions which are effected by the joint operation of s. 5 and the items specified in this division are not, in general, exemptions of any specified class or classes of goods but, in the main, of goods acquired for use by persons, bodies or authorities of specified character or characters. Item 77, which is the twenty-fifth item in the division, is in the following terms: "Goods for use (whether as goods or in some other form) by public transport authorities exclusively in, or exclusively in connection with, the establishment, conduct or maintenance of transport services".

It is common ground that the company is not a public authority in the sense that it is publicly managed and controlled but this circumstance, according to the contentions of the defendant company, is of no consequence. For the company it is maintained that the strictly grammatical meaning of the relevant words do not require the existence of that characteristic in an "authority" in order that it should answer the description "public transport authority", and, further, that it is sufficient if the company may properly be described as an "authority" and if, in fact, it provides a service which may be characterized as "public transport". The company is a company limited by shares and incorporated under the provisions of the Companies Act 1890 (Vict.) and it was formed to take over the undertaking of an earlier company of the same name. That company operated and the present company operates and conducts what is referred to in the case stated as the Silverton railway. This railway provides a service from the western boundary of the State of New South Wales to Broken Hill via Silverton in that State and the defendant company has owned and operated it since the year 1894. The earlier company enjoyed certain rights, powers, authorities and privileges which had been accorded to certain specified persons by the Silverton Tramway Act of 1886, a private Act of the Parliament of New South Wales. Likewise the earlier company was subjected to certain liabilities and obligations imposed upon those persons by that Act. By virtue of s. 54 of the Act these rights, powers and privileges, liabilities and obligations were assignable by such specified persons and at all material times the defendant company has been the assignee and transferee thereof.

There is no doubt that the service for passengers and goods which the company provides by means of its railway is a service to the public, and, equally, there is no doubt that members of the public have a statutory right to use it. Section 5 of the Act provides that the said "tramway" shall be open to the public use upon payment of certain specified tolls or charges and further provides that no differential charges shall be made but that the charges shall be equal to all persons using the said "tramway". The Act made extensive provision to enable the railway to be constructed and for this purpose conferred a power to purchase land by agreement and also to acquire it by a form of compulsory acquisition. Perhaps it may be said the Act conferred such powers upon specified persons and their assigns as were necessary to enable the railway to be constructed and operated. Particular reference was, however, made to s. 27 by which authority was given to make by-laws for regulating the conduct of the officers and servants employed on or in connection with the railway, for the protection of the railway, for regulating the mode by and the speed at which carriages using the railway should be moved or propelled and for preserving the free course of the railway and preventing any obstruction thereto and generally for regulating travelling upon or use of the railway. It is the circumstance that the company is authorized by statute to exercise this and other functions that has led the defendant company to claim that it is an "authority" but I must confess that I am not at all sure what this expression, standing by itself, connotes.

If it merely means that the company has derived authority from the Parliament of New South Wales to do certain things, including the making of by-laws, I thoroughly agree. But to designate it, for this reason, by the bare term "authority" seems to me to be completely artificial for the statutory powers with which it is invested have been conferred, merely to enable it, effectively, to conduct its business and are not determinative of its real character or composition; it is essentially a company formed for the purpose of conducting and in fact conducting a business enterprise for its own profit. Moreover, in my opinion, the expression "public transport authority" is a composite expression and does not intend to refer to a company, such as this, constituted with share capital and operated for profit under the management and control of directors appointed by its shareholders. I think the observations of Rich J. in Renmark Hotel Inc. v Federal Commissioner of Taxation ^[F1] are peculiarly apposite to a consideration of this case. Speaking of the expression "public authority" in s. 23 (d) of the Income Tax Assessment Act 1936-1947 he said: "The characteristics of a public authority seem to be that it should carry on some undertaking of a public nature for the benefit of the community or of some section or geographical division of the community and that it should have some governmental authority to do so. In s. 23 (d) it is made clear that it must be constituted under a State Act. Coercive powers over the individual are given to many governmental authorities which could be called public authorities, but it is not an essential part of a conception of a public authority that it should have coercive powers, whether of an administrative or a legislative character. It may, however, be an essential characteristic of the conception that it should have exceptional powers or authority, for instance a tramway board or trust has the exceptional authority of taking its trams down a public street. A water authority may lay its water mains, a lighting authority may do the like. Some exceptional powers of doing what an ordinary private individual may not do are generally found in any body which we would describe as a public authority. The words 'public utility' have a wider significance, embracing public utilities carried on for profit by private enterprise. No-one would describe as a public authority an electric lighting company which had obtained statutory powers but possessed a share capital issued to shareholders and which carried on for profit, but we might call it a public utility". ^[F2]

Notwithstanding the fact that his Honour was considering the meaning of the expression "public authority" and not the expression "public transport authority" the italicized passage is, I think, apposite to the circumstances of this case.

But even if the proper view should be to regard the word "public" as merely qualifying the word "transport" the result would, in my opinion, be the same for, as I have already said, it would be quite erroneous to designate as an "authority" a company which, though invested with some statutory powers and providing a public utility, is operated under the general control of and for the benefit of its shareholders.

In the circumstances I am of the opinion that the question should be answered in the negative and judgment entered accordingly.