Thomson Australian Holdings Pty. Ltd. & Ors v. Federal Commissioner of Taxation

Judges:
Davies J

Court:
Federal Court

Judgment date: Judgment handed down 23 November 1988.

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Davies J.

These actions have been remitted from the High Court of Australia. In each proceeding, the issue is whether certain publications are exempt from sales tax by virtue of falling within sec. 5(1) of, and item 51(1)(c) of the First Schedule to, the Sales Tax (Exemptions and Classifications) Act 1935 (Cth). That item exempts ``Books, pamphlets, periodicals, magazines and printed music'', not including ``catalogues or price-lists''. The subject publications are conceded to be books or periodicals. In each case the issue is whether they are catalogues or price lists.

In each proceeding, affidavit evidence has been adduced on behalf of the applicants describing circumstances of the trade in which the publications circulate and the use made of the publications by persons who operate in the trade. Mr D.G. Hill Q.C., with whom Mr A.H. Slater appeared for the respondent, objected to

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this evidence, contending the words ``catalogue'' and ``price-list'' are ordinary words of the English language and that the publications had to be judged according to what they were, not the use to which particular persons might put them. As these objections were taken on many occasions throughout the hearing, I should explain my reasons for rejecting them.

I agree with Mr Hill's view that the task of the Court is to determine the essential character of the goods, what essentially the goods are, not some characteristic that the goods might have. Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part.

Thus, when considering whether a document was exempt from sales tax by virtue of being a newspaper and therefore within item 54 of Sch. 1, Stephen J. said in
Rotary Offset Press Pty. Ltd. v. D.F.C. of T. 72 ATC 4212 at p. 4213; (1972) 46 A.L.J.R. 609 at p. 609:

``It seems to me that the test properly is one of popular usage and... the matter is entirely a question of fact to be decided upon an inspection of the document guided by common knowledge.''

But that is not to say that evidence as to the nature of the trade in which a publication circulates or as to the function which the publication serves in that trade may not be relevant and useful. In
Downland Publications Ltd. v. D.F.C. of T. 83 ATC 4137 at p. 4139, Gibbs C.J. indicated that the classification must be based ``in part on impression'' but his Honour did not indicate that evidence of the part which the publication there in question, ``Best Bets'', served in the sporting world was irrelevant. Rather, his Honour referred both to the content of the publication and to the main purpose which the publication fulfilled. His Honour referred to the fact that ``Best Bets'' was in many, if not most cases, not used at sporting events but served those persons throughout Australia who placed bets on those events, whether at a T.A.B. or in other ways.

Evidence which clarifies the manner in which a publication circulates and the use to which it is put, that is to say its function or purpose, is undoubtedly of assistance in determining what the essential character of the publication is. The evidence adduced on behalf of the applicants tends to assist the identification of the subject publications by explaining circumstances of the trade in which the publications circulate and by emphasising aspects of the use for which the publications have potential. Of course, the use which a particular person makes of the publications is not of itself a relevant matter. But evidence of persons in the trade of the manner in which they commonly use a publication may assist to clarify the nature of the publication itself.

In a matter involving the classification or identification of goods, it may be difficult to rule finally upon relevance and materiality at an early point in a case and a court or a tribunal may well prefer to receive too much information rather than too little. In matters of this type, it is rare that the reception of evidence prejudices a hearing.

What is crucial is not the reception of evidence but the use to which it is put. In
Collector of Customs (Qld) v. Times Consultants Pty. Limited (unreported, delivered 27 November 1986) I held that the use made by the Administrative Appeals Tribunal of the evidence before it indicated an error of law in its approach to the determination of the essential character of the goods there under consideration. That finding was upheld by Morling and Wilcox JJ. in
Times Consultants Pty. Ltd. v. Collector of Customs (Qld) (1987) 76 A.L.R. 313. At p. 327, their Honours said:

``... we have come to the conclusion that the primary judge was correct in his analysis of the majority's reasons. That analysis demonstrates that the majority arrived at their decision that the magazine gave to the goods their essential character by having regard to such matters as the reason the goods were put up in sets, the manufacturer's purposes in taking that course, and the likely reactions of purchasers. His Honour was correct in his view that the majority misdirected themselves by turning their attention away from the goods themselves and deciding the question posed for their consideration by reference to such matters.''

The point being made was similar to that made by Gibbs J. in
D.F.C. of T. v. Rotary Offset Press Pty. Ltd. 71 ATC 4170 at p. 4175; (1971) 45 A.L.J.R. 518 at p. 522 when his Honour

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``The subjective purpose of those responsible for the publication is not [to] the test''

In the present proceedings, the evidence objected to does not go to subjective intention or to idiosyncratic use but serves to identify characteristics of the publications and the purpose or purposes which they serve.

The first publication in question is Thomson's Liquor Guide which is published once a month and distributed amongst the liquor trade, particularly amongst retailers of liquor. Most of the publication is taken up with a list of the spirits, wine and other alcoholic beverages sold by distributors, who are either importers of the liquor or the producers thereof, with particulars of the size of the bottles, of the distributor's wholesale price per dozen and, in many cases, of the distributor's recommended retail price. The list of the liquor seems to be comprehensive but not complete and details of vintages are not given for many of the wines.

The liquor guide commences with instructions as to use. Then there are 18 pages of ready reckoner showing what the retail price per case or bottle should be having regard to the cost of purchase per case or bottle and to various percentages of gross profit ranging from 10% to 50%. The ready reckoner lists the original buying prices per case, such prices including sales tax, from these it calculates an in-store cost per bottle including licence fee and then it calculates the sales price depending upon what percentage of gross profits is sought.

There are then 69 pages setting out details of liquor as mentioned above, the distributor's price per dozen and the distributor's recommended retail price. There is then a section which identifies new listings for the month. Finally, there is a list of the names and addresses of suppliers and a list of wholesalers and their licence numbers.

Evidence was given that the liquor guide was sold by subscription only, the subscribers consisting mainly of liquor wholesalers and retailers, licensed clubs and hotels. Evidence was also given that wholesalers and retailers do not generally purchase liquor at the wholesale prices stated in the guide but are able to use the prices stated as a basis from which to bargain or as a basis on which to found a discount. Evidence was also given that, in New South Wales, retailers purchase 70-75% of their stock from three leading wholesalers rather than from the distributors mentioned in the guide. Presumably, these wholesalers purchase in bulk and negotiate their own prices. It follows that, though the wholesale price per dozen is an actual price fixed by the distributor, it is not the actual price at which wholesalers or retailers would expect to buy their stock.

The other publications are Glass's Dealers Guides. For example, Exhibit OGP1 is Glass's Dealers Guide to passenger vehicle values for the years 1976-1988. Others of the dealers guides give values for commercial vehicles, motorcycles and so on. These dealers guides appear to contain a fairly comprehensive list of vehicles first sold in Australia in and from 1976. Many of the vehicles are given identifying features, e.g. ``fog lights and spoiler'' or ``on board computer''. The used value for each vehicle is stated, a value being given for the trade price and another for the retail price, values differing as between automatic and manual transmission models. In many cases, additional values are given for optional extras.

In the case of both Thomson's Liquor Guide and Glass's Dealers Guides, there is evidence before the Court that some persons use the guides for information - in the case of the liquor guide as to distributors and in the case of the dealers guides as to identification of vehicles - rather than as an aid to price or value.

The Macquarie Dictionary defines a ``price-list'' as ``a list of articles for sale, with prices''. The dictionary defines ``price'' as ``1. the sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale''.

Glass's Dealers Guides are clearly not price lists. The dealers guides are a guide to valuation. They do not concern themselves with actual prices, though the values stated are based upon prices prevailing in the trade. A price list is a list of the prices at which specified goods are offered for sale. Glass's Dealers Guides do not offer any goods for sale or place a price on any specified goods. They simply indicate what the publishers understand to be the prevailing level of prices for the goods as described, in good condition.

In the case of Thomson's Liquor Guide, the guide does list the distributors' wholesale price

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per dozen for the liquor as described. However, the guide does not offer any goods for sale and is not a list of the prices at which distributors in fact offer goods for sale. I think that, like Glass's Dealers Guides, this publication is a guide to value, a guide to the prices which retailers should pay for their stock and a guide to the prices at which they should sell their stock to the ultimate consumers. Thomson's Liquor Guide is, therefore, a guide to values, not a price list.

The next issue is whether the guides are catalogues. The Shorter Oxford English Dictionary describes a catalogue as ``a list or enumeration systematically arranged in alphabetical or other order, often with the addition of brief particulars''. The Macquarie Dictionary gives these meanings:

``1. a list, usu. in alphabetical order, with brief notes on the names, articles, etc., listed. 2. a record of the books and other resources of a library or a collection, indicated on cards, or, occasionally, in book form. 3. any list or register. 4. a list of stock for sale issued by a vendor to potential purchasers.''

A catalogue may be an inventory, as of the books and publications in a library. There is in evidence the 1986 Specialised Catalogue of United States Stamps, which lists stamps issued in the United States and associated areas, gives details thereof and a statement of current value. There is in evidence the Australian Stamp Catalogue which deals in like manner with stamps from Australia and surrounding areas. There is in evidence a catalogue of books and of a music collection which were put up for sale by an auctioneer on a particular date in 1987. There is a catalogue of all the music works which were offered for sale by a particular music store in Sydney. There is another publication of the type commonly known as a sales catalogue, namely a brochure with pictures describing goods for sale by a particular vendor at a particular time.

An essential feature of all these catalogues is the listing and description of the goods set out therein. This listing either draws attention to the items mentioned or assists their identification or reference to them.

Thomson's Liquor Guide and Glass's Dealers Guides are guides to the value of goods. The listing of goods therein is incidental to this end, just as a telephone directory lists names and addresses of telephone subscribers as an incidental function of setting out telephone numbers. The essential character of both Thomson's Liquor Guide and Glass's Dealers Guides is that they are guides to value. Advice on values cannot be given unless the goods are described. But the essential character of the publications is not that they are a catalogue of goods but that they assist in the valuing and pricing of goods.

Glass's Dealers Guides are more like a catalogue than is Thomson's Liquor Guide. However, notwithstanding that the dealers guides are of assistance in model identification, the listing of the goods is subservient to the overall purpose of the guides which is to advise on the value of goods. The guides do not describe themselves as catalogues, but as guides. That is their appropriate description.

The distinction between the subject publications and a price list or catalogue is well demonstrated by Exhibit AGH8 to the affidavit of Alan Gordon Hardcastle, sworn 18 July 1988. That is a publication put out by one particular liquor distributor. The publication is described as a wines and spirits price order catalogue. The publication lists and advertises the liquor which the particular distributor deals in, sets out the prices thereof, gives details of quantity discounts and specifies delivery costs. That document is a price list. It is also a catalogue because it gives details of the goods which the particular distributor offers for sale. The subject publications do not have this character.

For these reasons, I accept the submissions put by Mr T. Simos Q.C., with whom Mr R.J. Weber appeared for the applicants. The applicants are entitled to the declarations sought. The respondent should pay the costs of the proceedings.