In the Matter of The Totalisator Administration Board of Queensland

Judges:
McPherson J

Court:
Supreme Court of Queensland

Judgment date: Judgment handed down 16 December 1988.

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McPherson J.

This is a sequel to a judgment which I gave on 9 March 1988 [reported at 88 ATC 4178] holding that there was jurisdiction in this Court to entertain an application by the Totalisator Administration Board of Queensland (``T.A.B.'') for declaratory relief concerning its liability for sales tax under the Sales Tax Assessment Act (No. 1) 1930 (``the Act''). The question now to be determined is whether there is such a liability to pay sales tax in respect of material printed by the Board.

The Board is a body corporate constituted or continued by the Racing and Betting Act 1980-1983. By sec. 189(2)(a) its primary function is to control, supervise, regulate and promote investment on its ``totalisators'', meaning a scheme or system by which investments are accepted and aggregated, and dividends are calculated, declared and paid on a proportional basis dependent on the result of any race or races in accordance with a prescribed formula (sec. 5). The races involved cover galloping horses, harness racing and greyhound racing taking place in Queensland and elsewhere in Australia.

There is no dispute about the relevant facts. The T.A.B. owns a printery which is located at its headquarters in Brisbane. The printery employs one qualified printer and another permanent employee, together with some 10 casual employees. Material printed there falls broadly into three categories, which in the evidence before me have been helpfully classified as ``A'', ``B'' and ``C''. Category ``A'' comprises material used exclusively for administrative purposes in the Brisbane head office, such as stickers, business cards, petty cash vouchers, cash slips, report on audit, memorandum paper, racing fixtures calendar, staff roster, news release, planning chart, report sheet, repair form, record labels, employment application form, etc. Category ``B'' consists of material provided to T.A.B. cash offices, which are staffed either by T.A.B. employees or by independent ``agents'', and which is used exclusively for internal administrative purposes of those offices. A random selection is head office address sticker, self-addressed envelope, pay packet, message pad, fire precautions, casual time sheet, suspense account, bank account reconciliation, instruction sheet, language of racing booklet, general message form, weekly return, and various other forms of returns. Category ``C'' consists of material produced for display in the public areas of T.A.B. cash offices for the use or information

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of ``investors''. It includes account cards, betting cards, posters, form guides, race lists, scratchings, information sheets, race times sheets, calendars, dividends cards, logo, etc. At one time in the past the T.A.B. did, for a period of some months, make a small charge for form guides at the T.A.B. head office. This was done to discourage the overuse by customers of galloping horse form guides; but the practice of making a charge for them was soon abandoned as being uneconomic.

Section 17 of the Act provides that the sales tax imposed by the Sales Tax Assessment Act (No. 1) 1930 shall be levied and paid on the value of goods manufactured in Australia by a taxpayer and, so far as material here, applied to his own use. Section 17(2) provides:

``(2) The reference in subsection (1) to goods manufactured in Australia by a taxpayer and applied to his own use shall be read as a reference -

• (a) to goods manufactured in Australia by a manufacturer in the course of carrying on a business and applied to his own use, whether for the purposes of that business or for any other purpose and whether or not the goods are of a class manufactured by the manufacturer for sale; and
• (b)...''

In his helpful submission Mr Bennett Q.C. pointed out there are six elements in this provision: (a) goods; (b) manufactured; (c) in Australia; (d) by a manufacturer; (e) in the course of carrying on a business; and (f) applied to his own use. The definition of ``goods'' in sec. 3 of the Act includes ``commodities''. By reference to ordinary dictionary meanings of the word commodity (S.O.E. ``a thing of use or advantage to mankind'', I am persuaded to view printed matter of the kind in question here as amounting to ``commodities'' and therefore ``goods'' within the meaning of sec. 17(2)(a). There can, I think, be no doubt that the manufacture (if any) took place in Australia and in the course of the carrying on by the T.A.B. of a business; and that the goods were and are applied to its own use:
D.F.C. of T. v. Taubmans (N.S.W.) Pty. Ltd. (1966) 115 C.L.R. 570. The principal questions for decision are whether under the Act the goods were ``manufactured'', and more particularly whether the T.A.B. is a ``manufacturer''. ``Manufacture'' is defined in sec. 3(1) of the Act to include three forms of activity enumerated in para. (a), (b) and (c), of which the first is ``production''. The word used in sec. 17(2)(d) is ``manufactured'' which it is expressly provided in sec. 3(1) has a meaning corresponding to that of ``manufacture''. The triple form definition of ``manufacture'' is inclusive and not exhaustive: see
Cohns Industries Pty. Ltd. v. D.F.C. of T. 79 ATC 4243. In any event, I see no difficulty in regarding the preparation and printing on paper of the T.A.B. matter referred to as involving its ``production''. The question is whether the T.A.B. is a ``manufacturer''.

Section 3(1) contains a lengthy definition of ``manufacturer'' of which it is necessary to reproduce only the following portion:

``Manufacturer means a person who engages, whether exclusively or not, in the manufacture of goods and includes a printer...''

The T.A.B. is not a printer. Its business is to provide a betting or ``investment'' service and not to manufacture printed material. It is true that in the course of carrying on the business of providing a betting service, it prints material and it does so for the purpose of that business; but that, I think, does not make it a ``printer'' within the meaning either of that definition or otherwise. Section 18A of the Acts Interpretation Act 1901 provides that, where a word is given a particular meaning, other parts of speech and grammatical forms of that word have corresponding meanings. From this it was said to follow that the verb ``manufactures'' includes the word ``prints''. But I do not consider that to be a legitimate process of interpretation. The word ``manufacture'' is separately and specifically defined in sec. 3(1). It includes ``production'' but not ``printing''. It would not be correct to hold that because a printer is a ``manufacturer'', the verb ``manufacture'' means ``print''. A printer is by definition a ``manufacturer'', but he ``manufactures'' not merely because he prints but because what he does is ``production'', which is a defined form of ``manufacture''.

The question remains whether by the production of goods in the form of printed matter the T.A.B. becomes a manufacturer. The fact that the definition of ``manufacturer''

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ATC 5028

expressly includes a printer may be thought to suggest that, without express inclusion, a doubt might have existed whether or not a printer was a manufacturer as defined to mean ``a person who engages, whether exclusively or not, in the manufacture of goods...''. According to what was said in
Adams v. Rau (1931) 46 C.L.R. 572 at p. 578, the definition should ``receive an operation according to the natural and ordinary meaning of its terms, neither widened nor narrowed by inferences sought to be drawn from special provisions, exclusions and exemptions. After all, it is a taxing Act...''. In that case, their Honours thought it ``a misuse of English to describe a shorthand writer's employment as the manufacture and production of transcripts'' (ibid., at p. 579). Contrast
F.C. of T. v. Riley (1935) 53 C.L.R. 69, concerning photographs. The principle that the statutory defining words are to be given their ordinary and natural meaning was applied in
F.C. of T. v. Nimrod Theatre Company Ltd. 84 ATC 4310 at p. 4314; (1984) 1 N.S.W.L.R. 188 at p. 193, by Hunt J., and, on appeal, by the Federal Court: see 85 ATC 4092 at pp. 4095-4096; (1985) 5 F.C.R. 269 at pp. 272 and 274, per Fox J.; at ATC p. 4103; F.C.R. p. 283 per McGregor J., with both of whom Wilcox J. agreed. In that case it was held that making stage props and scenery for a theatre play did not amount to manufacture or production of goods. Fox J. considered (85 ATC 4092 at p. 4094; 5 F.C.R. 269 at p. 271) that a person ``who manufactures goods on an isolated occasion and applies the goods to his own use is not within the provision in question, nor is one who does so sporadically, or even repetitively unless he can fairly be described as a `manufacturer'''. McGregor J. decided (85 ATC 4092 at pp. 4102-4103; 5 F.C.R. 269 at p. 282) that sec. 17 of the Act required sales tax to be levied on and paid by ``persons engaged in the business of manufacturing, and not entities who are engaged in a different business... but as part of such occupation produces goods for its own use in that occupation''.

In my opinion, the T.A.B. cannot fairly be described as a ``manufacturer''. The fact that it prints material or produces printed matter does not, according to the ordinary and natural meaning of that term, make the T.A.B. a manufacturer any more than it would a restaurateur who types or prints his own daily menus. Even if (as is unquestionably the case here) the T.A.B., in its occupation as a provider of betting services, produces printed material for its own use, it is not an entity engaged in the business of manufacturing.

On the authority of Nimrod, the T.A.B. is therefore not liable to pay sales tax under sec. 17 of the Act. For the Commissioner, however, Mr Bennett Q.C. submitted that the decision was distinguishable on several grounds. He submitted that a degree of professional or artistic skill was involved in the production of the stage props in that case; that the activities there served an ephemeral purpose, and were not, as in the case of the T.A.B., a continuous process followed by the consumption by use of the products; that in Nimrod only the taxpayer used the goods, whereas here some of the printed material was used by T.A.B. agents; and that here no concession was made, as in Nimrod, that the taxpayer was not in the business of manufacturing goods. In the final analysis, he submitted that the Nimrod case was wrongly decided and should not be followed.

I do not think that, in a matter like this, I should decline to follow a decision of the Full Court of the Federal Court even if I believed it to be wrongly decided. The factual differences between that case and this cannot be denied; but they do not affect the ratio of the decision as disclosed by the reasons of Fox and McGregor JJ. to which I have referred. It follows in my opinion that the T.A.B. is not a ``manufacturer'' and consequently that it is not within sec. 17 of the Act liable to pay sales tax on the value of the printed matter produced by it and applied to its own use.

The originating summons by which these proceedings were initiated seeks a declaration that the applicant T.A.B. ``is not now and has not at any time since February, 1982 been liable to pay sales tax under the Act upon the material printed by the applicant''. I consider that a declaration in those terms should be made. On behalf of the applicant Mr Hampson Q.C. did not press for more. In the course of Mr Bennett's submissions reference was made to the question whether, having for a period in the past paid amounts of sales tax on the printed material produced by it, the applicant is entitled to recover those payments at all and to do so otherwise than by means of the procedure provided in the Act and cognate legislation. Reference was made to
Werrin v. The

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Commonwealth (1937-1938) 59 C.L.R. 150;
Mason v. New South Wales (1958-1959) 102 C.L.R. 108;
Maskell v. Horner (1915) 3 K.B. 106. In the end, however, the question whether the applicant is entitled to recover past payments is one that does not arise before me now, and I would not be justified in attempting to decide it. The fact that the applicant may for other reasons not succeed in obtaining a refund of money paid in the past does not mean that the declaration that is sought will be deprived of all utility.

There will be a declaration in terms of para. (a) of the summons.