High Court of Australia MURPHY J McKay v Commissioner of Taxation (Cth) Murphy J The appellant, Mr McKay, a photographer specializing in children's portraits, has appealed against a decision of the Commonwealth Taxation Board of Review No 2 confirming a decision of the Commissioner of Taxation. The Commissioner had disallowed Mr McKay's objection against assessment of the sale value of goods he had manufactured and sold in December 1970. During that month, he photographed children at baby shows, developed negatives and made contact proofs which he showed to the parents. Then, only on the parents' orders, he prepared and supplied them with framed 12 inch x 10 inch prints and two cabinet-size mounted prints. For some years, Mr McKay has disputed with the Commissioner any liability to pay sales tax on the basis that he is not a seller of any goods but that he creates and disposes of intellectual property and the fact that this appears in a material form such as film or paper is unimportant. Mr McKay made a sales tax return for December 1970 showing "Total gross sales $612", but in the description of the goods, he set out "Photographs, negatives, prints, frames — nil". The Commissioner was not satisfied with the return and, pursuant to s 25(2A) of the Sales Tax Assessment Act (No 1) 1930-1960, caused an assessment to be made of the amount upon which, in his judgment, sales tax should be levied. The assessment was "in respect of goods manufactured and sold" and was in these terms: Total sale value (as per Schedule attached) $244.80 Total amount of tax payable thereon at 27 ½% 67.32 Less tax provisionally paid Nil Amount of tax now payable 67.32 Total amount due $67.32 The Schedule to this notice of assessment was expressed as Sales of photographs covered by Item 39 in the Second Schedule of the Sales Tax (Exemptions and Classifications) Act 1935-1970 which were manufactured and sold during the month of December 1970 $612.00 Less 60% in accordance with Sales Tax Regulation 26(b) 367.20 $244.80 The Board of Review confirmed the Commissioner's assessment. An appeal from the Board of Review only lies if the decision involved a question of law (see s 42(6)), and the Commissioner conceded that it did. The notice of appeal to this court stated that a number of constitutional and other grounds were involved, but they were very broad and not very clear. Mr McKay conducted his own case and was obviously very distressed. Apart from some documents, his was the only evidence in the case. His evidence was that he had supplied prints (including framed ones) to patrons in December 1970, but had not sold or leased them; that the only transaction was the grant or assignment of a licence to use the copyright in the photographs which he continued to own; and there was no transfer of ownership, or general property or other property in them, and that he had received fees for the licence from the patrons, but no other moneys. Counsel for the Commissioner conceded that, if the only transaction had been a mere copyright licence transaction, it would not be sales taxable. Mr McKay had stated that he had not sold photographs to any one in December 1970. However, when he was asked in cross-examination: "At least you would be able to say $612 could be the amount you received from patrons in the month of December 1970 for photographs delivered to these patrons", he answered: "It could be." Mr McKay was also cross-examined about the arrangements for supplying the prints and frames. He certainly handed over prints (some of which were framed) made at his patrons' order. When questioned about what a patron could do with the print (for example, keep, deface, lose or destroy it), he answered that anything could be settled between the owner of copyright and the licensee. He expressed indifference about the legal relationship regarding the prints supplied and seemed to resent any question about his method of conducting business, as if it were an invasion of privacy. When pressed to answer questions, many of his answers were not responsive. Mr McKay's evidence, although truthful, is not reliable. I will not deal with his contention that his transactions (being of copyright only and not goods) were outside the scope of the Sales Tax Assessment Act (No 1) 1930-1960 because the requisite factual basis is absent. On the whole of the evidence, I am not satisfied that Mr McKay's only transactions in December 1970 were of grants of copyright licence. I will not deal with the many other questions of law contained in the notice of appeal, some of which Mr McKay argued, except to state that they were without substance. As Mr McKay has not established that the Commissioner's assessment in respect of December 1970 is excessive, I dismiss the appeal. No order for costs.