CASE 43/93

Members:
BH Pascoe M

Tribunal:
Administrative Appeals Tribunal

Decision date: 8 October 1993

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BH Pascoe (Member)

This application is for the review of the decision of the Commissioner of Taxation made on 23 April 1992 to disallow objections against a refund decision and sixteen assessments of Sales Tax. The application for a refund of sales tax covered the period from 1 October 1987 to 30 September 1990 and the sixteen assessments covered the sixteen months from 1 October 1990 to 31 January 1992 and were issued pursuant to the provisions of Section 25AA of the Sales Tax Assessment Act (No. 1) 1930, as amended (``Assessment Act'').

2. In the objections to the refund decision and the assessments the applicant claimed that various items sold were exempt from sales tax under Item 82A(1), 84(1), 84(2) and/or 86(1) of the First Schedule of the Sales Tax (Exemptions and Classifications) Act 1935, as amended (``Exemptions and Classifications Act'').

3. The applicant manufactures and sells component parts for retail shop display shelving. Sales are made to several large national retail chains, individual retail stores and shop fitters. The components, when assembled, construct either free standing aisle shelving units referred to as ``island gondolas'', free standing shelving units which rest against a wall (sometimes attached to the wall by bolts) referred to as ``wall gondolas'' and shelving which is affixed or attached to a wall. The applicant supplies component parts as ordered which are then assembled in the store either by employees of the customer, employees of a shopfitter or the customer. The applicant does not provide assembly or construction. The applicant supplies components for three different shelving systems, the difference being primarily in the size and strength of the assembled unit. Some of the components are common to each system and some are dimensionally different. System A is designed for small to medium sized retail stores. System B is designed specifically for supermarkets and System C is a heavy duty display system for wider spacing and heavier loads.

4. The specific categories of components for which exemption was claimed are:

• 1. Aluminium Bottom Channel. This is a length of extruded aluminium channel which is cut to required lengths from 3.5 metre lengths purchased from Alcan.
• 2. Aluminium ``H'' Channel. Also a length of extruded aluminium channel cut to required lengths from 3.5 metre lengths purchased from Alcan. It is for use as an intermediate support for infill and pegboard panels. When cut to length a hole is punched in it so that it may be hung for the purpose of painting or powder coating.
• 3. Top Channel. Similar in description to Item 2 and is used to hold infill and pegboard panels across the top of the panel.
• 4. Side Channel. Similar in description to Item 2 and is notched at both ends for attachment to the upright posts.
• 5. Blade Joiner. Cut to size from sheet galvabond steel and punched at both ends. It is used as the horizontal joiner between two vertical posts.
• 6. Single Slot Steel Channel. Steel channel purchased in specific dimensions and

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  designed for the purpose of being fixed to a wall by screws. The channel is slotted to take brackets, punched for screw holes and powder coated or painted by the applicant.
• 7. Double Slot Steel Channel. Similar to Item 6 but is a double channel length designed to be affixed to a wall by screws.
• 8. Bracket. Pressed from sheet steel in the required shape and painted or plated. One end of the bracket fits into the slots in either steel channel or posts and is for the purpose of supporting shelves or other display attachments.
• 9. Post. Steel tubing cut to length and slotted. It has a right angled tube welded on one end. It can be double sided, that is, with slots on two opposite sides of the tubing, in which case two right angled tubes are welded onto one end. The right angled tube has a steel channel welded to it. It is designed for support of free standing display units but may be attached to a wall with a tie back clamp.
• 10. Shelf. Made from flat sheet steel which is pressed and formed. Edges are turned over and some shelves have a piece of channel spot welded to them for additional strength.
• 11. Back Rail with Lugs. This is made from flat steel bar cut to length. The bracket lugs are pressed from steel sheet. The bracket lugs are slipped over the end of the bar which is then deformed at each end to stop the lugs falling off. On some occasions the bracket lugs are welded in fixed positions on the bar or the end of the bar is left undeformed so that the lugs can be removed. It is designed to join two steel channels or posts with the lugs inserted into the slots in the channel or post.
• 12. End Foot. Made from slotted square steel tubing in which two channels which have been punched and spot welded are inserted and welded. The combined materials are then plated.
• 13. Frame. Made from two pieces of slotted rectangular steel tubing which are welded to square steel tubing top and bottom. A nut is welded on and the frame is plated. Some frames have pegboard inserted into them prior to delivery.
• 14. Extension Frame. A three sided frame made from slotted and unslotted rectangular steel tubing. The slotted steel tubing has, at one end, two pieces of channel inserted and welded into it. A nut is welded inside each end of the unslotted tubing and a hole is punched through the unslotted tubing. The frame is plated.
• 15. Spacer Tube. Made from rectangular slotted steel tubing cut to size.
• 16. Centre Foot. Made from unslotted rectangular tubing with spot welded channel welded at right angle to it and plated.

The various items listed are made and supplied in various sizes and dimensions. Produced in evidence at the hearing were examples of each of these items for which exemption is claimed by the applicant.

5. The managing director of the applicant company gave evidence of the use of the various components listed, the display units which result from the assembly of the components, the buyers of the components and the basis of selling the components.

6. The relevant items in the Exemptions and Classifications Act under which exemption is claimed read:

``ITEM 82A(1) Piping or tubing of a kind used exclusively, or primarily and principally, in the construction or repair of, and wrought into, or attached to, so as to form part of, buildings, fixtures, structures or other works, but not including piping or tubing being-

• (a) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
• (b) piping or tubing of a kind used as duct work or channelling in forced draught ventilating or air conditioning systems;
• (c) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
• (d) piping or tubing of a kind used for slides or water slides;
• (e) piping or tubing of a kind used in or in connection with beer drawing plant;
• (f) rubber hose or rubber tubing or any hose or tubing of a kind used principally for any of the purposes for which rubber hose or rubber tubing is ordinarily used; or

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• (g) goods covered by Item 12 in the Third Schedule.
• ...

ITEM 84(1) Metal building materials (including girders, rods, bars, wire, sheets, mesh, lathing and fabricated units composed of any of those goods, and attachments for such units) for use in the construction or repair of, and to be wrought into, or attached to, so as to form part of, buildings or other fixtures, but not including-

• (a) liners for, components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
• (b) channelling used for slides or water slides;
• (c) piping or tubing;
• (d) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
• (e) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
• (f) goods covered by item 12, 14 or 14A in the Third Schedule.

(2) Builders' hardware (not including electrical fittings, accessories or equipment, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems, or fittings, accessories or attachments for, components of, or goods designed to form part of, such duct work or channelling, or goods covered by Item 12, 14 or 14A in the Third Schedule), being goods of a kind used in the construction or repair of, and wrought into or attached to so as to form part of, buildings or other fixtures, including-

• Bolts, brackets, brads
• Catches, ceiling ties, clips, clouts, corrugated fasteners
• Decking spikes, door bells, door handles, door knockers, door sheaves and tracks, door stops and stoppers, door and cupboard catches, door and gate springs, drawer pulls, dryvins
• Flush rings
• Gate loops
• Hasps, hinges, hooks, hooks and eyes, house numbers
• Knobs
• Latches, letter boxes, letter plates, locks, locksets and keys therefor, loxins
• Metal frames for the support of wash basins
• Nails, name plates, nuts
• Padbolts, panel pins
• Rivets
• Staples, screws, scruins
• Washers
• ...

ITEM 86(1) Metal materials, namely, ingots, blooms, billets, slabs, bars, rods, plate, sheet (corrugated, flat or perforated), strip, circles, angles (including perforated angles), channel (including perforated channel), wire, mesh and rolled or extruded sections, made wholly of metal other than precious metal, whether or not covered with paint or a similar protective coating, but not including-

• (a) materials insulated for electrical purposes;
• (b) liners for, components of, or goods designed to form part of, swimming pools or spa baths, including panels and sheeting;
• (c) channelling used for slides or water slides;
• (d) piping or tubing;
• (e) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;
• (f) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or
• (g) goods covered by item 12 in the Third Schedule.''

7. It is appropriate to deal with Items 82A(1), 84(1) and 84(2) separately from Item 86(1). The first three refer to the particular goods and the use of those goods whereas Item 86(1) refers to the identity of the goods themselves. A commonality of the first three items is the requirement that the goods be for use, or goods of a kind used, in the construction or repair of buildings or other fixtures and wrought into, or

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to be wrought into, or attached, so as to form part of, buildings or other fixtures. Much of the argument during the hearing was directed to whether the units assembled from components supplied by the applicant constituted fixtures.

8. Counsel for both parties referred the Tribunal to several Court decisions in support of the opposing views. For the applicant, Mr B. Shaw Q.C. submitted that the gondolas are installed in supermarkets so that the building may be used as a supermarket and are intended to stay there for so long as the building continues to have that use. It was argued that, in order to move them, you have to destroy them. The size and weight of the units means that they are not readily moved. The wall units are generally attached to the walls by screws and the island units are simply held in place by their own weight. By virtue of their size and weight, their essential character is providing the setting in which the relevant business is carried on and, with the indefinite period of life of a unit, it was said that the units assembled from the various components constitute fixtures.

9. The submission of Mr G. Davies, for the Commissioner, was that the assembled units or gondolas are not designed to be fixtures. The gondolas are designed to meet the needs of both small and large retailers and whether or not they can ever become fixtures depends upon the use to which they are put by the retailers. The gondolas are designed for flexibility and their size can range from small to very large. Whilst, in many instances, the gondola is attached to building walls, the method of attachment is by screws merely for the purpose of providing stability for the shelving unit. It was argued that any removal of the gondolas does not involve destruction. The gondola is designed to be readily dismantled and reassembled in another place. Mr Davies used as an analogy the bar table in the hearing room. Being some four metres long with the top in two pieces, attached to metal legs by screws, it could not be removed from the hearing room without being dismantled. However, it was unlikely that anybody would seek to argue that the table was a fixture. Whilst the Commissioner accepted that it may be possible in certain circumstances for a gondola to be a fixture, it was argued that the evidence was insufficient in this case to demonstrate those circumstances.

10. A useful summary of the principles to be applied in determining whether an item should be regarded as a chattel or as fixture can be found in the judgment of Kaye J. in
Belgrave Nominees Pty. Ltd. and Others v. Barlin-Scott Airconditioning (Aust.) Pty. Ltd. (1984) V.R. 947. In this case it was necessary to consider whether air conditioning plant, including a chiller, installed on the roof of a building constituted fixtures. His Honour said (at p. 950):

``In
Australian Provincial Assurance Co. Ltd. v. Coroneo (1938) 38 S.R. (N.S.W.) 700, at pp. 712-13, Jordan C.J., with whom Davidson and Nicholas JJ. concurred, expressed the principles and test to be applied as follows: `A fixture is a thing once a chattel which has become in law land through having been fixed to land. The question whether a chattel has become a fixture depends upon whether it has been fixed to land, and if so for what purpose. If a chattel is actually fixed to land to any extent, by any means other than its own weight, then prima facie it is a fixture; and the burden of proof is upon anyone who asserts that it is not: if it is not otherwise fixed but is kept in position by its own weight, then prima facie it is not a fixture; and the burden of proof is on anyone who asserts that it is: Holland v. Hodgson. The test of whether a chattel which has been to some extent fixed to land is a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period: Holland v. Hodgson, or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose:
Vaudeville Electric Cinema Ltd. v. Muriset [[1923] 2 Ch. 74, at p. 87]. In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed:
Holland v. Hodgson; Reynolds v. Ashby & Son [[1904] A.C. 466];
Colledge v. H.C. Curlett Construction Co. Ltd. [[1932] N.Z.L.R. 1060];
Benger v. Quartermain [[1934] N.Z.L.R. s. 13]. If it is proved to have been fixed merely for a temporary purpose it is not a fixture: Holland v. Hodgson; Vaudeville Electric Cinema Ltd. v. Muriset. The intention of the person fixing it must be gathered from the purpose for which and the time during which use in

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the fixed position is contemplated:
Hobson v. Gorringe [[1897] 1 Ch. 182];
Pukuweka Sawmills Ltd. v. Winger [[1917] N.Z.L.R. 81]. If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended:
Holland v. Hodgson; Spyer v. Phillipson [[1931] 2 Ch. 183 at pp. 209-10]. On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts.'

Whether the intention of the party fixing the chattel was to make it a permanent accession to the freehold is to be inferred from the matters and circumstances including the following: the nature of the chattel; the relation and situation of the party making the annexation vis-à-vis the owner of the freehold or the person in possession; the mode of annexation; and the purpose for which the chattel was fixed;
Reid v. Shaw (1906) 3 C.L.R. 656, at p. 667, per Griffiths C.J.''

Another excursion through the law reports in an endeavour to find consistent principles was taken by Ipp J. in
Eon Metals NL v Commissioner of State Taxation (WA) 91 ATC 4841, where it was necessary to ascertain whether certain items of mining plant and equipment were chattels or fixtures. His Honour summarised the results of the search at p. 4844-6:

``The law reports contain innumerable decisions dealing with the principles to be applied in determining whether chattels have become part of realty. Earlier decisions, particularly, reflect views that frequently conflict and it is difficult to determine consistent threads.

The foundation of the modern approach to the question is the judgment of the Court of Exchequer Chamber in
Holland v Hodgson (1872) LR 7 CP 328. Blackburn J, in delivering the judgment of the Court, said at 334-335:

`There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances as indicating the intention, viz, the degree of annexation and the object of the annexation.'

In more recent times the authorities have been extensively reviewed by Mahoney JA in
NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) (2) BPR 9241. He pointed out (at 9246) that several of the rules expressed in the cases have not been applied rigidly. He said that it was now accepted that:

`a chattel may become part of realty notwithstanding that it is not, in any formal sense, annexed to it but rests on it merely by its own weight:
Reid v Smith (1906) 3 CLR 656 at 668, 669, 679. Even if a chattel is physically annexed to the realty, it may yet remain, at all times, personalty:
Attorney-General of the Commonwealth v RT Company Pty Ltd (1957) 97 CLR 146 at 156-157;
Anthony v Commonwealth (1973) 47 ALJR 83 at 89E;
Australian Provincial Assurance Company Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712.'

His Honour also stated that he found difficulty in `accepting that the matter can be tested simply by reference to whether the annexation to the realty is intended to be temporary or otherwise'. He said at 9244:

`I doubt that such a view is consistent with, eg,
Attorney-General of the Commonwealth v RT Company Pty Ltd (No 2) (1956-57) 97 CLR at 156-7; cf
Kay's Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429 at 433-4; or
Anthony v Commonwealth (1973) 47 ALJR at 89. Both Fullagar and Walsh J held that the items there in question were not part of the realty, notwithstanding that they had obviously been annexed for a purpose which, at least within the meaning of the term in
Holland v Hodgson (1872) LR 7 CP 328 at 336, was not a temporary purpose.'

Mahoney JA considered (at 9244) that the actual or subjective intention of the parties and, a fortiori, of one of them is not

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conclusive as to the status of the item concerned, but nevertheless their intention is relevant. He explained the rule in relation to intention as follows:

`Whatever be the correct formulation of the fact to be proved in such dispute, it is not whether the owner of the chattel or any other person subjectively intended that it should or should not become part of the realty. Therefore a statement of the intention as to that particular matter is not a statement tending, as such, to prove the fact to be proved. But that intention, as such, is not necessarily irrelevant. Whether the question of whether chattels have become part of the realty is a question of fact... or a conclusion of law, various matters have been seen as of assistance in the final determination of it. The period of time for which the chattel was to be in position, the degree of its annexation to the land, what was to be done with it, and the function to be served by its annexation, are all matters which have been seen to be relevant for this purpose.'

Glass JA pointed out at 9246 that the ultimate question is whether a chattel has become part of the realty to which it is attached. That question is to be determined having regard to all circumstances which include the purpose of annexation and the mode of annexation. Although both of these factors are relevant neither is conclusive.

It is plain that while regard should be had to all relevant circumstances, no particular factor necessarily has primacy and every case depends on its own facts. Nevertheless there does appear to be a trend towards attaching particular significance to the intention with which the item is placed upon land. In
Palumberi v Palumberi (1986) NSW ConvR ¶55-287 Kearney J, after canvassing the relevant cases, said at 56,672:

`It would seem from the perusal of these and other authorities in the field that there has been a perceptible decline in the comparative importance of the degree or mode of annexation, with a tendency to greater emphasis being placed upon the purpose or object of annexation, or putting it another way, the intention with which the item is placed upon land. This shift has involved a greater reliance upon the individual surrounding circumstances of the case in question as distinct from any attempt to seek to apply some simple rules or some automatic solution... No standard solution is to be derived from (the decided) cases which upon ultimate analysis, are found to turn upon their individual facts.'

As regards intention, while subjective intention may be relevant, it is objective intention that is of paramount significance. As Mahoney JA pointed out in NH Dunn Pty Ltd v LM Ericsson Pty Ltd (at 9244-9245) the ultimate fact to be proved is the objective intention that ought to be imputed or presumed from the circumstances of the case.''

11. The argument for the applicant was presented on the basis that all units or gondolas constructed from components supplied by the applicant became fixtures when so constructed. From a study of the applicant's own advertising material, catalogues and price lists presented in evidence, this proposition is difficult to accept. The basic system A unit would appear to result in an assembled shelving unit which could range from some 900mm in length, 300mm in depth and 1420mm in height to progressively larger units up to 40 metres in length. However, all units are assembled from standard sized modules and length is provided by the joining of an appropriate number of modules. Much of the emphasis in the advertising material is on flexibility of the system to provide for future changes in the retailer's product range, upgrading of display layout and rearrangement for seasonal and promotional displays. Given the wide range of sizes, the design which provides for ease of assembly and disassembly and the emphasis on flexibility, it is not possible, in my view, to accept that the units or gondolas constitute fixtures in the generality of cases. In relation to free standing or island gondolas, they are kept in position by their own weight (particularly when filled with goods) and, considering the principles enunciated in Holland v Hodgson (supra), they prima facie are not fixtures and I do not consider that the applicant, who asserts that they are, has satisfied the required burden of proof. Equally I am not satisfied that, in the generality of cases, wall gondolas or wall shelving units, even

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where screwed to a wall, are so fixed with the intention that they will remain in position permanently or for an indefinite or substantial period. The method of attachment is such as to allow easy removal with the minimum of damage to the wall.

12. That is not to say that the units may not in any circumstances be fixtures, but no evidence was provided by the applicant to allow any finding in relation to the relevant circumstances where this would be so. Even if such evidence were provided a question would still arise as to whether all of the components for which exemption is claimed are ``wrought into, or attached to, so as to form part of fixtures''. Items such as brackets and shelves are designed to be held in place by inserting the brackets into slots in the upright channel or post and resting the shelves on the brackets. The applicant sells a variety of types of brackets, arms, shelves, baskets, etc to allow flexibility in display and storage. Each of these is designed for easy removal and movement within the overall system. There is clearly an intention to allow retailers to readily vary the distance between shelves to allow variation in height of particular goods to be placed on shelves. Even if the fixed components were to be regarded as fixtures it is difficult for these readily removable and interchangeable components to be so regarded.

13. Much was made by the applicant of the decision of Lockhart J. in the case of
Feltex Commercial Interiors Pty. Limited trading as Co Design v. FC of T 90 ATC 4925 (``Co Design case''). Here the Court was required to consider the claim for exemption from sales tax on the supply and installation of ducted panelling and related accessories in commercial premises. They were to constitute the office partitioning in the Sydney head office of Coles Myer Ltd. Although a substantial part of the claim was under Item 83 of the Exemptions and Classifications Act, which relates to plaster products, goods having structural uses similar to those of plaster or plaster products and boards, sheets and linings, this item similarly requires the goods to be wrought into or attached to so as to form part of buildings or other fixtures. His Honour found that the particular goods in this case satisfied that requirement. However there are, in my view, significant differences between the items considered in that case and those for consideration here. In the Co Design case (supra) the partitioning was ducted allowing cabling to be led from the ceiling through power posts, led along the ducted partitions to the point where outlets were required. A proportion of the panels had fitted to their base steel-fixing brackets which were fixed to the concrete floor of the premises by means of two industry standard dynabolts. Although it was accepted that the partitioning could be removed, it was noted that the brackets often ``freeze'' in place on the cement floor after a period of time and become extremely difficult to remove. It was held that the panels in question were fixed with the intention that they should remain in position either permanently or for an indefinite or substantial period and, as a question of fact in the particular case, were ``wrought into or attached so as to form part of the building''. On the other hand, the components with which we are concerned here are designed to be assembled into units which are easily assembled and disassembled, moved within the relevant premises or to other premises and, even where attached to walls, easily removed or altered. In my view these items are more akin to the bottle racks and cabinets considered by Jenkinson J. in
Precision Measures Limited v FC of T 92 ATC 4099.

14. Item 82A(1) refers to piping or tubing of a kind used exclusively, or primarily and principally, in the construction or repair of buildings, fixtures, structures or other works. For the applicant it was submitted that the components numbered 9, 12, 13, 14, 15 and 16 came within this item being ``steel tubing''. The respondent argued that the ordinary meaning of the words ``piping or tubing'' was limited to items for the purpose of conveying gas, electricity or liquid. In my view, the item cannot be limited to that proposed by the respondent. It is clear that a section of rectangular steel tubing, even slotted and punched, is tubing within the meaning of the item. However, once welded to other pieces of tubing or channel as in each of the abovementioned components, it ceases to answer the description of tubing, simpliciter. Perhaps, component 15 could answer the description. However, for exemption, the component must then satisfy the additional wording of Item 82A(1) that it is tubing ``of a kind used exclusively, or primarily and principally, in the construction or repair of...

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buildings, fixtures, structures or other works''. Counsel for the applicant sought comfort in the wider context of this item which adds the words ``structures or other works'' to the phrase used in other Items, ``buildings or other fixtures''. The case of
R. v Rose and Another (1965) QWN 35 was quoted as authority for the view that the words ``structure or other works'' add significantly to the limitation of ``buildings''. This case concerned a criminal charge of breaking and entering a caravan. Gibbs J. said (at p. 43):

``This caravan was undoubtedly for the time being kept by the occupier for the residence of himself. The question is whether it is a structure. The word `structure' in its most natural and ordinary meaning is a building, but the word is capable of having the wider meaning of anything constructed out of material parts, and in that sense undoubtedly would include a machine and a caravan. Since the section of the Code uses the expression `building or structure' it must be concluded that the use of the word `structure' was intended to add something to the meaning of the section, and if it were construed simply to mean `building' it would add nothing. It seems to me therefore that the use of the words `or structure' has an enlarging effect and it includes material constructions which do not come within the description of buildings. Therefore it seems to me that it is proper to accept the pleas because the caravan was a dwelling-house within the meaning of the definition.''

It was then submitted that there was little doubt that a gondola was a structure. It seems to me that this is stretching the meaning of the word to its extreme. Given the context in which Gibbs J. was making his decision where the Queensland Criminal Code defined ``dwelling house'' to include ``any building or structure'' and the question was whether a caravan was a ``dwelling house'', it is not unreasonable to doubt whether he would have included a 900mm × 300mm × 1420mm free standing shelf unit as a ``structure''. In the context of the item in which the phrase ``structures or other works'' is used in Item 82A(1) it is easy to envisage bridges, wheat silos, carports, etc as structures, but somewhat difficult to include such a shelf unit, particularly when the relevant item is within the overall heading of ``Building Materials''. Given my views on the ultimate definition of the units of which the tubing is a component part, I am unable to see that the components made from tubing can satisfy the requirements of this Item.

15. Item 84(1) refers to ``metal building materials for use in the construction or repair of buildings or other fixtures''. Again, given my views that the ultimate assembled units are rarely, if ever, fixtures it cannot be accepted that the components here are ``for use in the construction of buildings or other fixtures''. It is possible that, on occasions, they are so used but are, nevertheless, not ``for use'' in such construction. Equally it is difficult to regard the component, although made out of metal, as being ``building materials'' which connotes their normal use in the construction of buildings.

16. Item 84(2) provides similar difficulties. This Item refers to ``Builders' hardware, being goods of a kind used in the construction or repair of buildings or other fixtures''. In the case of
Magna Stic Magnetic Signs Pty Limited and Another v FC of T 91 ATC 4216; (1991) 28 FCR 39, Beaumont and O'Loughlin JJ. said (at ATC p. 4223; FCR p. 49):

``Thus, in ordinary speech, `Builders' hardware' denotes the building materials, metal ware, tools and locks used by persons who contract for the construction of buildings and who supervise the workmen who build them.''

Davies J, considered that:

``To fall within the description, goods must have a sufficient association with builders and with the construction and repair of buildings and fixtures to gain the character of builders' hardware used in that activity.''

No evidence was provided in this hearing of this application of the description ``Builders' hardware'' to the relevant components but the managing director of the applicant did state that ``From enquiries I have made, 99 to 100 per cent of all steel tubing of the sizes used by the company is produced for the purpose and use of the shop fitting trade and the manufacture of shop fitting components''. He also gave evidence that some major customers employed their own specialised staff to assemble the units and these staff members would be members of the Builders Workers Industrial Union. However, he also agreed that a proprietor of a small retail shop could assemble the

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components with minimal mechanical skills and some possible advice from one of the applicant's salesmen. I am unable to be satisfied that these components satisfy the definition of ``Builders' hardware''. Even if they did satisfy that definition they do not appear to satisfy the requirement of being ``goods of a kind used in the construction or repair of buildings or other fixtures''.

17. There remains the claim for exemption under Item 86(1). For the applicant, it was argued that components 1 to 8, 10 and 11 are included under this item. Components 1, 2, 3 and 4 are said to be simply lengths of extruded aluminium channel. Components 6 and 7 are lengths of rolled steel channel. Components 5, 8, 10 and 11 are sheet or bar steel cut or pressed to the required shape or size but, it is argued, retain their identity as ``sheet'' or ``bars''. For the Commissioner it was submitted that this item is limited to metal in a form in which it may be used to fabricate a product and, hence, a product which is made out of metal is not a ``metal material''. Evidence was given by a lecturer in Metallurgy at Ballarat University College who took the view that ``materials'' are the substances from which articles are fabricated and that the components under consideration in this case could be properly described as components made from metal materials. No other evidence was provided as to the generally understood meaning of these words within the building or any other trade. Whilst Mr Davies provided a variety of dictionary definitions they, with respect, have not provided any great assistance to the Tribunal. Unfortunately, neither party could provide a reference to any prior Court or Tribunal decision on this question other than the decision of Lockhart J. in the Co Design case. The reference here was very brief when the learned Judge was considering the question of the aluminium power posts. Unfortunately, there is no precise description of these power posts and the consideration under Item 86 was limited to one short paragraph which stated (at p. 4935):

``In my opinion the power posts are metal materials being extruded sections made wholly out of metal within the meaning of the item and qualify for the exemption.''

However, as Lockhart J. also accepted the argument that the power posts fell within Item 84(1) it may well have been considered unnecessary to elaborate the reasons for exemption under Item 86(1).

18. It is clear that Item 86(1) extends to more than simple raw materials from which other products may be manufactured. By including in the Item ``sheet (corrugated flat or perforated) strip, circles, angles (including perforated angles), channel (including perforated channel), wire, mesh and rolled or extruded sections, made wholly of metal other than precious metal, whether or not covered with paint or similar protective coating'' it is clear that the exemption extends to more than simple unfabricated metal. Although it may be thought that the power posts in the Co Design case could have been tubing, which is specifically excluded from Item 86(1), Lockhart J. referred to them as ``extruded sections'' which are clearly included in the Item. I have no difficulty in finding that components 1, 2, 3 and 4 are aluminium extruded sections within the meaning of Item 86(1) and qualify for the exemption. Similarly, components 6 and 7 being simply lengths of steel perforated channel must qualify for the exemption. Difficulty comes with the remaining components for which exemption is claimed under this Item. Component 8, a bracket, is a clear example of the difficulty. The applicant says that it is simply a piece of sheet steel which happens to be pressed into a particular shape. The Commissioner says that it is a bracket and no ordinary person when looking at it would describe it as ``a piece of sheet steel'' in preference to ``a bracket''. Clearly, there is a point where a process or fabrication changes a metal material, simpliciter, to a recognizable product with its own separate identity. In the example of the bar table referred to earlier, the legs are metal. However, no person, whether within the building trade or from the legal profession, would describe them otherwise than as ``legs for the table''. The ``man in the street'' or, even, ``the man on the Clapham omnibus'', who are regularly credited with remarkable common sense, are unlikely to describe functional items made out of metal as ``metal materials''.

19. Component 10, a shelf, is, in my view, a clear example of a component fabricated out of a metal material. The sheet steel is cut, reshaped and, in some instances, a piece of channel is welded to the underside for additional strength. I take the view that it is a ``shelf'' made from

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``metal materials'' but is not then ``metal materials''. The applicant sought to support his submission by reference to the exclusions listed under Item 86(1). Many of these may well be seen as fabricated products such as ``fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems''. As stated by Brooking J. in
Neville Smith Timber Industries Pty. Ltd. v Alen (1991) 2 V.R. 1 at p. 8:

``Where a statutory provision is ambiguous recourse may be had to an exception in determining its scope. So it may be said that when one finds an exception contained in a section the natural presumption is that but for the exception the section would have included the subject matter of the exception. As against this, it must be recognised that exceptions and provisos may be inserted from an abundance of caution and that the scope of the section on its proper interpretation may be such as to render them unnecessary: see
Re Bank of London & National Provincial Insurance Association (1871) 6 Ch. App. 421, at p. 426, per Lord Hatherley L.C.;
Fryer v. Morland (1876) 3 Ch. D. 675, at pp. 685-6, per Sir George Jessel M.R.;
Mullins v. Treasurer of Surrey (1880) 5 Q.B.D. 170, at p. 173, per Lush J.;
Commissioners for Special Purposes of the Income Tax v. Pemsel (1891) A.C. 531, at pp. 573-4, per Lord Herschell and, at p. 589, per Lord Macnaghten;
West Derby Union v. Metropolitan Life Assurance Society [1897] A.C. 647, at p. 653, per Lord Watson and, at pp. 655-6, per Lord Herschell and
McLaughlin v. Westgarth (1906) 22 T.L.R. 594, at p. 595.''

Notwithstanding the contrary views on the meaning of ``metal materials'' taken by the parties, the provision is difficult to regard as ambiguous. In my view, the exclusions listed under the item were inserted from an abundance of caution. Identical wording is used for many of the exclusions under other Items such as 82(1), 82A(1), 83(2), 83(3) and 84(1) and were all inserted at the same time by Act No. 63 of 1983. I am not convinced that consideration of the exclusions in Item 86(1) assists in resolving the issue before the Tribunal here.

20. I am of the view that components 5, 8, 10 and 11 are not exempt under Item 86(1). Each of these is a component fabricated from metal materials but each has an identity and description beyond that contemplated by words of the Item. It is very clear, in my view, that components such as that numbered 12, an end foot, which is fabricated from several pieces of material cannot be then considered as satisfying the description ``metal material''. Whilst component 5, a blade joiner, and component 8, a bracket, may consist of one single material and it may be tempting to accept the applicant's argument that they remain pieces of sheet steel and, therefore, metal materials, I am, on balance, of the view that once formed into the precise shape from a sheet of steel they acquire a specific identity and description which no longer allows them to be included as ``metal materials''. Items 10, a shelf, and 11, back rail with legs, are, in my view, specific items fabricated from metal but, given the degree of reshaping and the regular combination with other materials, no longer satisfy the description ``metal materials''.

21. Consequently, I find that the following components are exempt under Item 86(1) of the First Schedule of the Exemptions and Classifications Act:

• 1. Aluminium Bottom Channel
• 2. Aluminium ``H'' Channel
• 3. Top Channel
• 4. Side Channel
• 6. Single Slot Steel Channel
• 7. Double Slot Steel Channel

The remaining components for which exemption is claimed do not qualify for exemption under any of the Items of the First Schedule of the Act to which the Tribunal was directed.

22. Whilst recognizing that a decision which accepts exemption for some components only out of a variety of components which, when assembled, produce a retail shop display unit may be seen as anomalous, that is an unfortunate result of the way in which the Exemptions and Classifications Act is drafted. Nobody has ever said that the results of the application of this Act must be sensible and logical.

23. The Tribunal sets aside the decision under review and in substitution therefor allows

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the applicant's objection to the extent that six components being extruded aluminium channel or steel channel are exempt from sales tax under Item 86(1) of the First Schedule of the Sales Tax (Exemptions and Classifications) Act 1935.