Norton Harvesters Pty Ltd v Commissioner of Taxation (Cth)

High Court of Australia Menzies, Gibbs and Stephen JJ Norton Harvesters Pty Ltd v Commissioner of Taxation (Cth)

Menzies, Gibbs and Stephen JJ

The judgment of the Court was delivered by Menzies J: this appeal from a decision of Samuels J denying the appellant taxpayer a deduction claimed under s 62AA of the Income Tax Assessment Act 1936-1970 (Cth) raises what seems to us to be a short point.

For the purpose of this case the Commissioner has conceded that frozen or canned peas are goods manufactured by the company which we will call Edgells, thus narrowing the issue here to whether the manufacturing operations involved began when the vines bearing peas, having been cut and put into windrows, were picked up in the fields by the taxpayer or whether those operations began after the peas to be canned or frozen had been separated from the pods in which they had grown. In either event, the conception of a manufacturing operation, especially in relation to frozen peas, may seem somewhat artificial. With this, however, we are not concerned.

Samuels J held that the manufacturing operations did not begin until there were peas ready to be canned or frozen. With this conclusion we agree. An operation such as that carried on by the taxpayer, with its vining plant, that is, picking up cut vines from windrows, separating the peas from the vines and pods so that they would be delivered to Edgells were, without doubt, necessary if there were to be canned or frozen peas. But they were preliminary to any manufacturing operations and were not part of them, notwithstanding that canning or freezing had to be done within a short time from the cutting of the pea vines in the fields.

The learned judge found support for his conclusion in the decision of Kitto J in Moreton Central Sugar Mill Co Ltd v F C of T (1967) 116 CLR 151; 10 AITR 420. Counsel for the appellant contended that in doing so his Honour was mistaken. We think not. If the carrying of cut sugar cane to mills for immediate crushing were not part of the operation of sugar-making, so obtaining peas for canning or freezing was not part of the manufacturing operation involved in turning them into manufactured goods, that is, either canned or frozen peas.