FC of T v BRAMBLES HOLDINGS LIMITED (NOW KNOWN AS BRAMBLES AUSTRALIA LIMITED)
Judges:Drummond J
Court:
Federal Court
Drummond J
This appeal and cross-appeal from a decision of the Administrative Appeals Tribunal [Case Z10,
92 ATC 153] constituted by Deputy President Gerber turns on whether the fitting of new and used truck bodies to new truck cab chassis involved, in the circumstances, the manufacture of goods so as to attract sales tax under the Sales Tax Assessment Act (No. 1) 1930 (Cth).
The facts before the Tribunal were not in dispute. In the period 1 August, 1983 to 30 June, 1986, Brambles assembled 15 garbage trucks, which it then used in its waste disposal operation, by attaching various types of bodies to new cab chassis. There are four body types. Front lift non-tipping and front lift tipping bodies fitted to cab chassis comprise vehicles which pick up standard industrial bins, lift the bin over the truck cabin and empty it into the body; they differ from each other in that the former utilises an hydraulic compaction device to push the waste towards the rear of the body for ejection through the body's rear door at the refuse tip while the latter is emptied at the tip by an hydraulically powered tipping mechanism. Rear lift non-tipping bodies are fitted to cab chassis and these vehicles pick up household garbage bins; their hydraulic emptying mechanism is similar to that of the front lift non-tipping bodies. Roll on roll off bodies mounted on cab chassis carry large industrial waste bins from the customer's premises to the tip; the full bins are dragged onto the body by various mechanisms; the bins are emptied at the tip by means of an hydraulic tipping mechanism incorporated in the body. Each of the four body types operates on a ``live drive'' system, that is, an hydraulic pump is mounted onto the cab chassis as part of the body-fitting operation; this pump, which runs the various hydraulic devices incorporated in the body, is driven by the cab chassis's engine. Because bodies have a longer working life than the chassis to which they are fitted, Brambles frequently fits used bodies onto new chassis. Of the 15 units completed during the relevant period, two involved the fitting of new bodies to new cab chassis purchased by Brambles; neither body had previously been fitted to any other cab chassis. A third involved the fitting of a body, which had been purchased second-hand by Brambles, to a new cab chassis; this body had not previously been fitted to any other chassis owned by Brambles. The remaining 12 involved the fitting of used bodies to new chassis; each of these bodies had, on at least one previous occasion, been fitted to another cab chassis by Brambles. A number of the 15 bodies in question were subsequently re-fitted to other cab chassis.
The assembly process was described by Mr. Stafford, an officer of Brambles. The fitting of each of the four body types to a cab chassis involves many steps; various modifications are required, which include the shortening of the length of the cab chassis, modifications of the air intake and exhaust systems, attachment of hydraulic valves so that the body can be powered from the chassis's engine; the body is bolted into place and body sway plates and guards are attached. The process takes Brambles' workshop staff a considerable time to complete; it ranges from 200-250 man hours, in the case of the fitting of a front lift non- tipping body, to 350-400 man hours, in the case of a roll on roll off body. The fitting process is the same, whether the bodies are new or used.
On 30 March, 1987 the Commissioner issued a notice of assessment of sales tax levying tax on the manufacture of each of the 15 units. On
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appeal by Brambles, the Tribunal held that, where Brambles, in order to assemble garbage collection trucks, on 13 occasions attached second-hand bodies to new cab chassis, it was not engaged in the manufacture of goods for the purposes of the Sales Tax Assessment Act (No. 1) 1930, irrespective of whether the bodies were obtained from Brambles' own vehicles or were purchased from a third person, and so was not liable to tax levied under that Act in respect of those vehicles. The Tribunal, however, held that on the two occasions when Brambles assembled the trucks from new bodies and new cab chassis purchased by it, it was engaged in the manufacture of vehicles and so was assessable to sales tax. The Commissioner appeals against the first ruling, while Brambles has cross- appealed against the second ruling.Brambles objects to the competency of the Commissioner's appeal on the ground that the appeal does not involve a question of law: see s. 44 the Administrative Appeals Tribunal Act 1975 (Cth). If this challenge is well-founded, Brambles accepts that its own cross-appeal is incompetent.
In
Lombardo v FC of T 79 ATC 4542 at 4545-6, Bowen CJ held that a decision involves a question of law where:
``... a particular set of facts had of necessity to be within or without the statute;''
After citing this passage, Hill J, in
FC of T v Cooper 91 ATC 4396 at 4409, said:
``There is a long line of authority that a question of law will be involved in any case where the facts are not in dispute and the only question is whether the case necessarily falls within or outside the statute... The rationale for this view is particularly apparent in a case where, only one conclusion being open on the facts, the Board arrives at a different conclusion. Since the facts were not in dispute, it follows that the Board must have applied some wrong principle of law, albeit that it has not stated the principle upon which it has relied.''
This explains why the Commissioner has framed his appeal in the way he has: he alleges the Tribunal was in error in making the decision of concern to him because the Tribunal ``was obliged, of necessity, to hold that the fitting of sundry used waste disposal unit bodies onto sundry new unit truck chassis constituted a `manufacture' of goods namely, waste disposal vehicles, by the respondent in terms of s. 3(1) of the Sales Tax Assessment Act (No. 1) 1930 (as amended)''.
The relevant provisions of the Sales Tax Assessment Act (No. 1) 1930 provide:
``3(1)... `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... as, in the opinion of the Commissioner, it is customary or reasonably practicable for users or consumers of those articles or substances to undertake;...
17(1) Subject to, and in accordance with, the provisions of this Act, the sales tax imposed by the Sales Tax Act (No. 1) 1930 shall be levied and paid upon the sale value of goods manufactured in Australia by a taxpayer and... applied to his own use.
18(3) For the purposes of this Act, the sale value of goods manufactured by any person and applied to his own use shall be-
- (a)...
- (b) in any other case - the amount for which the manufacturer could reasonably be expected to purchase identical goods from another manufacturer if the other manufacturer had, in the ordinary course of his business, manufactured the identical goods for sale and had sold them to the first-mentioned manufacturer by wholesale:
Provided that in any case where the Commissioner is satisfied with respect to all the goods used in... any goods (being goods to which this sub-section applies) manufactured by the taxpayer, that sales tax has been paid in respect of the goods so used..., the sale value of the manufactured goods shall... be the amount of the wages actually paid in respect of the manufacture of the manufactured goods increased by 20% of that amount.''
The definition of the word ``manufacture'' in s. 3(1) of the Act is not exhaustive. When the word ``includes'' is used in a definition section, it is generally used to enlarge the meaning of the word it defines. So far as its meaning is not
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defined in the relevant statute, it must be given its ordinary meaning. In applying the word ``manufacture'' in the sense it bears in ordinary English speech to the facts of the particular case in order to determine whether goods are assessable to sales tax, it has long been accepted that one is required to ask whether that which is made is a different thing from that out of which it is made.FC of T v Jax Tyres Pty. Limited 85 ATC 4001 at 4004-4005; (1984) 5 F.C.R. 257 at 261;
Commonwealth of Aust & Anor v Genex Corp Pty. Ltd. & Ors Kodak (Aust) Pty Ltd v Commonwealth of Aust & Anor 92 ATC 4764 at 4768; (1992) 176 C.L.R. 277 at 289.
``Production'', which is included in the definition of ``manufacture'' in s. 3(1) of the Act, ``is a word of wide import; but it still involves the element of producing something different from the materials from which it was made''. Jax Tyres, supra, at ATC 4004; F.C.R. 261. It was not suggested that this expression was of any relevance to the present case. Paragraph (b) of the definition of ``manufacture'' in s. 3(1) ``applies only where there is a mere combination of parts or ingredients'': Jax Tyres, supra, at ATC 4005; F.C.R. 261. Given, among other things, the nature of the modifications involved when bodies are fitted to chassis, paragraph (b) of the definition could not apply to the activities here in question: the parties did not suggest otherwise.
The question for the Tribunal, correctly identified by it, was thus whether the fitting operations in question fell within the ordinary English meaning of the word ``manufacture''.
While the question whether facts fully found fall within the terms of a statutory enactment properly construed is generally a question of law, this principle is qualified where a statute uses words according to their ordinary meaning and the question is whether the facts as found fall within those words. If different conclusions as to whether the facts fall within the words of the statute according to their ordinary meaning are reasonably open, which of those different conclusions is the correct one is itself a question of fact.
Collector of Customs v Pozzolanic Enterprises Pty. Ltd. (1993) 115 A.L.R. 1 at 9-10;
Liebert Corporation Australia Pty. Ltd. v Collector of Customs (unreported, Full Court, 1 November, 1993); FC of T v Cooper, supra, at 4409.
If the ruling the subject of the Commissioner's appeal was one which was open to the Tribunal on the evidence it accepted, then the challenge to the competency of the appeal must succeed. It would not matter in that case if I were to think that the Tribunal had reached a wrong conclusion. It is only if, on the facts before the Tribunal, it was bound to come to the decision contended for by the Commissioner that the Tribunal's decision would throw up a question of law which it would be open to this Court to review.
The Commissioner contended that this was an all or nothing case in the sense that the Tribunal had to find that the process of assembling bodies and chassis was or was not manufacture, irrespective of whether the components were new or second hand; it was also submitted that the Tribunal having found that the assembly of a new body and chassis into a truck was manufacture, of necessity it had to find that the mounting of a second hand body on a new chassis was also manufacture. Brambles, understandably, disputes that it is an all or nothing case. I do not accept this proposition: the question for this Court is whether the different views taken by the Tribunal about the two processes were each open to it.
New chassis and new bodies
Prior to commencing the fitting process, Brambles in each of these cases had only a new chassis and a new body. After the fitting process was completed, it had a garbage truck capable of performing the functions of waste collection at pick-up points, the transport of the waste to refuse tips and the unloading of it at those tips. The Tribunal held that, in both these cases, the activity of fitting the new body to the new chassis involved the manufacture of a garbage truck that did not exist before that process was carried out.
Whether or not the body and chassis remained separate entities after completion of the fitting process is a question of fact. There is ample evidence upon which the Tribunal was entitled to reach its conclusion that, after attachment, the new body and the new chassis became a new entity, viz., an operational garbage truck. This evidence includes the evidence of what was involved in fitting the bodies to the chassis, how the attachment was made and the evidence that it was only after the fitting of body to chassis and the connecting of
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the hydraulic equipment in the body to the pump on the chassis that Brambles in the two cases now of concern ended up with an operational garbage truck. It also includes the evidence that the result of all this activity, in each of these cases, was the addition of a new unit to its fleet of garbage trucks.Counsel for Brambles submitted that the attachment of the body to the cab chassis did not create a new entity because the body and chassis thereafter continued to exist as two discrete items of property. There was evidence from Brambles' accountant, not challenged, that both before and after trucks were assembled in the manner described by Mr. Stafford, the cab chassis and the bodies were in all 15 cases treated as separate assets in Brambles' books. It is clear that the Tribunal did not regard this evidence as warranting the finding for which Brambles contended. It was not bound to do so. The question for the Tribunal was whether the process engaged in by Brambles in assembling garbage trucks involved the manufacture of those trucks within the ordinary meaning of the word ``manufacture''. That Brambles chose to treat the chassis and the body as separate assets for accounting purposes cannot be of any relevance to the determination of this question, at least in the absence of evidence explaining how Brambles took up in its books not only the costs of acquisition of the chassis and bodies, but also how it dealt with the quite extensive costs it incurred in its workshop in working on each of the body and the chassis in the course of assembling the two components into a truck. Even if such evidence had been put before the Tribunal, I think that it could have been of marginal relevance only to the question which the Tribunal had to answer.
Brambles also relied on
Ready Mixed Concrete (Vic.) Pty. Ltd. v FC of T 69 ATC 4038 and
Pioneer Concrete (NSW) Pty. Limited v FC of T 86 ATC 4435. In these cases cement transit mixers mounted on truck chassis were considered by the Court to be units of property functionally separate from and independent of the trucks on which they were mounted in the course of giving its answers to questions different from that posed here. The mixers were mechanically quite different from the bodies here in question; the latter, unlike the mixers, were incapable of performing any function until attached, by the complicated process to which I have referred, to the truck chassis. Both cases are decisions on their own facts and provide no answer to the question whether each of the two bodies now in question should have been found by the Tribunal to retain an identity separate from the garbage truck of which each formed part.
Brambles' cross-appeal must be dismissed since it was open to the Tribunal to find, as it did, that the attachment of a new body to a new chassis involved the creation of a new garbage truck and therefore amounted to the ``manufacture of goods'' for the purposes of the Act.
New chassis and old bodies previously used on Brambles' vehicles
The Commissioner submitted that, given the Tribunal's finding that the attachment of a new body to a new chassis created a new entity, it was inconsistent for the Tribunal to find as it did that when Brambles attached one of its old bodies to a new chassis that did not involve ``manufacture''. The Commissioner referred to the facts that the old bodies, standing alone, are of as little use as new bodies and that the procedure involved in attaching bodies to chassis is the same, regardless of whether the bodies are new or used.
The Commissioner's case focused solely on the end product - the garbage truck - and the process - the attachment of the body to the chassis. The Commissioner ignored the possibility that there may be different initial points of comparison for the determination of whether a different thing has emerged from the process said to be ``manufacture''. Brambles argued that in each of these 12 cases it had a garbage truck before removal of the old body from the old chassis and still had a garbage truck after the attachment of that body to the new chassis. All that had occurred, it was said, was the replacement of a worn part of the truck. It is evident that this argument was accepted by the Tribunal.
I am not here required to decide whether a different thing is created when the owner of a truck removes the body from a worn chassis and then attaches it to a new chassis. The only question for my determination is whether it was open to the Tribunal to find, on the evidence before it, that in each of these 12 cases Brambles had a garbage truck that was distinct from its component parts and that the procedure of fitting the used body to a new chassis did not involve the creation of something different.
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If the evidence in any of these cases showed that Brambles had removed the used body from a worn out chassis and stored it away so long in time before it fitted that same body to the new chassis that it would not be factually accurate to say that Brambles started with a garbage truck and ended up with a renovated or repaired garbage truck, then the Tribunal's decision could not stand. The Commissioner, however, did not contend that such a view should be taken of the evidence and a perusal of the evidence before me does not lead me to the conclusion that it was open to the Tribunal to come only to that view. But unless the facts establish some such situations as this, whether or not the replacement of the chassis of a garbage truck is merely a repair or renovation as opposed to the creation of a new truck is, to a considerable extent, a matter of degree and impression. In my opinion, the evidence is such that it was open to the Tribunal to form the view which it did, viz., that in each of these 12 cases Brambles started with a garbage truck and ended up with a renovated garbage truck. It is not inconsistent with the Tribunal's finding made in the two cases involving the fitting of new bodies to new chassis that a garbage truck is a single entity, distinct from the body and chassis which were joined to form the truck, to hold that the replacement of the chassis of an existing garbage truck does not involve the creation of a new truck. This being so, the question that arises with respect to these 12 matters is one of fact only.
There being no question of law, Brambles' objection to the competency of the Commissioner's appeal in respect of the fitting of those 12 old bodies which were formerly owned by Brambles to new cab chassis must be upheld.
The attachment of the old body purchased by Brambles to a new chassis
In effect, the Tribunal found that Brambles did not manufacture anything by fitting this body to a new chassis because, at some time prior to Brambles' acquiring this body second hand, it had formed part of a garbage truck that belonged to an unidentified prior owner and that Brambles' activities, in fitting body to chassis, for that reason did not bring into existence anything new. The Tribunal's finding that the body, at some time before it was purchased by Brambles, had once formed part of a garbage truck owned by another was I think irrelevant to the task the Tribunal had to perform here. What Brambles here acquired for the first time was an item of property that took the form of a second hand body. Brambles did not acquire a garbage truck of which the body in question was a component and which truck could be regarded as continuing in existence after renovation by removal of a worn out chassis and replacement with a new chassis. The facts as found by the Tribunal concerning Brambles' dealings with this body necessarily required a finding that the garbage truck Brambles ended up with was a different thing from the second hand body and the new chassis out of which it was made.
The Commissioner's appeal must be allowed insofar as it relates to the assessment of this exercise to sales tax.
I will therefore dismiss the Commissioner's appeal insofar as it relates to the 12 units made up of old bodies previously fitted to Brambles' vehicles and allow its appeal, insofar as it relates to the body that Brambles purchased second hand and which had not previously been fitted to one of its own vehicles. Brambles' cross-appeal will be dismissed.
Brambles' objection to the competency of the Commissioner's appeal, to the extent that it has succeeded, requires the determination of exactly the same issue that is raised by the Commissioner's appeal. The Commissioner asserted that the decision of fact to which the Tribunal here came was one which of necessity it was bound to decide differently; the effect of Brambles' objection to competency was merely to dispute that assertion. Although the Commissioner has had some success on its appeal, the extent of its success is such that, in my opinion, the proper order is that Brambles should have its costs of the Commissioner's appeal while Brambles must pay the Commissioner's costs of its cross-appeal.
THE COURT ORDERS THAT:
1. The appeal is allowed in respect of the appellant's assessment that relates to the respondent's Job No. QB50, but is otherwise dismissed.
2. The cross-appeal is dismissed.
3. The appellant pay to the respondent the costs of the appeal.
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4. The respondent pay to the appellant the costs of the cross-appeal.
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