Parke Davis Pty Ltd v Commissioner of Taxation & Anor [1996] FCA 764

CATCHWORDS SALES TAX - whether antiseptic mouthwash exempt from sales tax under Item 38 to Schedule 1 to the Sales Tax (Exemptions & Classifications) Act 1935 (Cth) - whether product is a "drug or medicine" - whether it is "used in the prevention, care or treatment of sickness or disease" - whether it is a toilet preparation or a good in the nature of a toilet preparation - meaning of "used in" Sales Tax (Exemptions & Classifications) Act 1935 (Cth) - Item 38 of Schedule 1 Therapeutic Goods Act 1989 (Cth) Bristol-Myers Co Pty Ltd v Commissioner of Taxation (1990) 23 FCR 126 Deputy Commissioner of Taxation v Stewart (1984) 154 CLR 385 Federal Broom Co Pty Ltd v Semlitch (1964) 110 CLR 626 Nicholas Kiwi Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (unreported, 18 July 1990) PARKE DAVIS PTY LTD v COMMISSIONER OF TAXATION & THE COMMONWEALTH OF AUSTRALIA No NG 161 of 1994 Davies J. 30 August 1996 Sydney

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG 161 of 1994 ) GENERAL DIVISION ) BETWEEN: PARKE DAVIS PTY LTD (ACN 000 761 302) Applicant AND: COMMISSIONER OF TAXATION First Respondent COMMONWEALTH OF AUSTRALIA Second Respondent Coram: Davies J. Date: 30 August 1996 Place: Sydney MINUTES OF ORDER THE COURT DECLARES THAT: 1. Listerine Antiseptic Mouthwash is exempt from sales tax under Item 38 of Schedule 1 to the Sales Tax (Exemptions & Classifications) Act 1935 (Cth). THE COURT ORDERS THAT: 2. The respondent pay the costs of the application. 3. Liberty to apply for any variation of the order as to costs be reserved. 4. Any motion for variation and supporting affidavit be filed and served within 21 days. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No NG 161 of 1994 ) GENERAL DIVISION ) BETWEEN: PARKE DAVIS PTY LTD (ACN 000 761 302) Applicant AND: COMMISSIONER OF TAXATION First Respondent COMMONWEALTH OF AUSTRALIA Second Respondent Coram: Davies J. Date: 30 August 1996 Place: Sydney REASONS FOR JUDGMENT These proceedings were commenced in the High Court of Australia and were remitted to this Court by order of Gaudron J on 17 March 1994. The applicant, Parke Davis Pty Ltd ("Parke Davis"), which is associated with the Warner-Lambert Co ("Warner-Lambert"), seeks a declaration that a product which it manufactures, "Listerine Antiseptic Mouthwash" ("Listerine"), is exempt from sales tax under Item 38 in Schedule 1 to the Sales Tax (Exemptions & Classifications) Act 1935 (Cth) ("the Exemption Act"). Item 38 reads:- "ITEM 38 Drugs and medicines (including patent and proprietary medicines) used in the prevention, cure or treatment of sickness or disease in human beings, and in the compounding or preparation of such drugs or medicines, but not including - (i) Drugs and preparations put up and sold for the purposes of photography; (ii) Toilet preparations and goods in the nature of toilet preparations, including soaps, cleansing creams, hair lotions, anti-dandruff foams, anti-dandruff shampoos, skin repair creams, skin repair lotions, tooth pastes, cosmetics, powders, pomades and perfumes; (iii) Dyes, naphthalene, carbonate of soda, caustic soda, sodium chloride, cloudy ammonia, alum, borax, glycerine, petroleum jelly, lead salts, zinc salts, citric acid, chromic acid, formic acid, hydrochloric acid, hydrofluoric acid, nitric acid, pyrogallic acid, stearic acid, sulphuric acid and tartaric acid; (iv) medicated confectionery; or (v) goods of the following kinds put up for sale as antiseptics, namely, sterilizing solutions, household disinfectants, combined sterilizing solutions and disinfectants, combined sterilizing solutions and antiseptics, combined disinfectants and antiseptics and combined sterilizing solutions, disinfectants and antiseptics." (emphasis added) Issues in the proceedings are whether Listerine is a drug or medicine, whether it is used in the prevention, care or treatment of sickness or disease in human beings and whether it is a toilet preparation or a good in the nature of a toilet preparation. Although Listerine is marketed as an antiseptic mouthwash, the respondents have not relied upon exclusion (v). Accordingly, I have not given that exclusion any consideration. A claim that Listerine was also exempt under Item 123 of Schedule 1 to the Exemption Act was not pursued. Listerine is listed in Martindales's Pharmacopoeia under the heading "Listerine Antiseptic". Its contents are shown as follows:-