Mr Boat Pty. Ltd. & Anor v. Federal Commissioner of Taxation.

Judges:
Lee J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 29 September 1986.

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Lee J.

In these proceedings the plaintiffs are seeking a declaration that certain goods, namely, a boat known as the ``Spirit of Manly'' is exempt from sales tax, being within the terms of the exemption set out in Item 119(1A) in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (as amended).

Item 119(1A) to the extent relevant to these proceedings, exempts from sales tax:

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``Ships and other vessels licensed to carry not less than 12 adult passengers and to be used exclusively or principally -

• (a) by the relevant owner or relevant owners;
• (b) in the course of a business carried on by the relevant owner or relevant owners, being a business having as its object, or as one of its objects, the providing, for the public, of transport of passengers for reward on sight-seeing tours; and
• (c) for the purpose of providing, for the public, transport of passengers for reward on regular and scheduled sight-seeing tours.''

The evidence in the case shows that the second named plaintiff is in the course of purchasing a boat known as the ``Spirit of Manly'' from the first plaintiff which the second plaintiff intends to use in the carrying on of the business of transporting paying passengers from the Manly wharf around a circuit in Manly Cove and back to the wharf. The price which will be charged, it is said, is $3 per head. The evidence is that the service or business will be conducted during the hours of 8 a.m. to 6 p.m. during daylight saving months and for the remainder of the year from 10 a.m. to 4 p.m.

The craft which will carry the passengers is one which it is anticipated will be licensed by the Maritime Services Board to carry more than 12 persons and it will be operated by a qualified coxswain.

A diagram of the craft has been tendered and is marked exhibit A, the craft being an open highly-powered vessel 7 metres in length but quite commodious and able to be operated at low speed or very high speeds. The craft will comply in all respects with the requirements of the Maritime Services Board with regard to the safety of passengers and the equipment necessary to ensure that safety.

The evidence discloses that there will be no timetable for each day establishing or making known the departure times of the craft, departure times being dependent upon passengers as they arrive and the other conditions which might affect availability of the craft, such as the need to refuel. There will, however, be a notice-board put up on the wharf indicating that the craft is there for these trips and advertising the price.

The craft will leave the west side of the Manly ferry wharf, proceed up to Fairlight Cove and then go across Manly Cove to a line drawn between Dobroyd Point and Cannae Point. It will proceed on to Store Beach and stop there and an explanation will be given by the operator of the craft of the quarantine station and its significance and passengers may take photographs. It will go further on into Little Manly Bay to the site of the artillery battery and the Australian Police College and will then go back on to the main channel to Cannae Point where, particularly on the weekends, passengers will be able to admire the eighteen footers and other craft that come on to the harbour in the afternoons. The craft will then return to the wharf. The trip is estimated to take between five and seven minutes.

The question which arises is whether that craft, being used for those purposes and in the fashion that I have indicated, is within the exemption set out in Item 119(1A). It may be mentioned that sec. 119(1) and 119(1AA) also deal with the exemption of certain ships and other vessels but it is unnecessary to set those out because, in my view, they do not throw any real light on the problem that falls for solution in the present case.

There are really two substantial questions to be considered, although an unfavourable answer to either of them will mean that the boat is not within the exemption.

The first matter for consideration is whether the trips contemplated come within the expression in para. (c) of Item 119(1A) ``on regular and scheduled sight-seeing tours''.

The second question is whether the trips contemplated fall within the expression, ``transport of passengers for reward on sight-seeing tours'' within para (b) of the item.

As I have said, the evidence discloses that the craft will have no scheduled, using that word in the ordinary sense, times of departure for the carriage of passengers but will leave as and when required. It has been put by counsel for the plaintiff that, notwithstanding the absence of any timetable, the conditions of the paragraph under consideration are satisfied. There can be no doubt in my mind that the fact

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that the trips will take place each day of the week is some indication of the fact that there will be regular trips but it is difficult to see how the expression ``scheduled sight-seeing tours'' can be encompassed by the evidence which has been given in this case. The evidence in the case, as a matter of ordinary English demonstrates, in my view, that such trips as there will be will be unscheduled trips.

The word ``schedule'' has a number of meanings but its meaning is to be understood in the context in which it appears. It finds itself in this particular item which is plainly dealing with the carriage of passengers for reward on a vessel or craft and the expression ``regular and scheduled tours'' in my view, contemplates that there will be a timetable in the sense that daily operation of the service and the times of departure of the craft are fixed in advance and can be ascertained either from enquiry or from a notice which would be called a timetable. In my view, it is not possible to stretch the words ``scheduled tours'' to comprehend what is contemplated in the present case.

So far as the second question, namely whether the activities contemplated constitute ``sight-seeing tours'', again I have great difficulty in applying those words in their natural meaning to the business activity intended to be undertaken. The very fact that the trip is so short, namely five to seven minutes, is essentially inconsistent with the general notion of a sight-seeing tour. The Item 119(1A) requires that the craft ``be used exclusively or principally'' for sight-seeing and the inference is clearly open from the evidence that what is being done in the conduct of this business is to provide interested members of the public with a joy-ride, if you like, or a trip round Manly Cove in a high powered boat. The fact that there is a stop at Store Beach seems to me to do nothing to disguise the real nature of the activity which is, if I may descend to the vernacular, ``principally or exclusively'' a spin around the bay in a speedboat.

The dictionary definitions of ``sight-seeing'' and ``tours'' have been placed before me but I do not think it is necessary to have regard to them. The words are words of common use and they are well understood, particularly in relation to areas where many holiday-makers congregate, as occurs at Manly.