Davies Coop & Co Ltd v Commissioner of Taxation (Cth) [1948] HCA 50

High Court of Australia Starke J. Latham C.J. Rich, Dixon, McTiernan and Williams JJ. Davies Coop & Co Ltd v Commissioner of Taxation (Cth)

ORDER Appeal allowed with costs. Judgment set aside and in lieu thereof judgment for defendant with costs.

Cur. adv. vult.

1947, Nov. 17 Starke J . delivered the following written judgment:—

This action is brought by the Commissioner of Taxation to recover £608 1s. 10d. sales tax upon the sale value of certain cones and tubes purchased by the defendant in Australia or imported by the defendant into Australia, and in respect of which the defendant had quoted its certificate. The goods, it was alleged, were applied by the defendant to its own use or were sold to persons who it was proved quoted their certificates in respect of each purchase.

The plaintiff launched his case by a certificate of the Deputy Commissioner of Taxation certifying in accordance with the Sales Tax Procedure Act 1934-1940 that the sum claimed was due.

The cones and tubes are used in connection with weaving and knitting operations. Yarn is wound by the defendant upon the cones and tubes. And, so wound, some of the cones and tubes are placed in the defendant's weaving or knitting machines, the yarn drawn off and used in its operations of weaving and knitting. The remaining cones and tubes upon which yarn is wound are sold together to other weavers, knitters or manufacturers. The cost of the cones and tubes is calculated and included in the charge to the purchaser. The cones and tubes can only be used three or four times when they become distorted or worn out.

The plaintiff contends that all the cones and tubes were applied by the defendant to its own use. They were so applied, it was said, when they were put to their primary purpose, namely, winding yarn upon them. Those that were used by the defendant in its own weaving and knitting operations were doubtless so applied but those upon which yarn was wound by the defendant and sold to other weavers and knitters and manufacturers, were not, I think, so applied. The expression "applied to his own use" in the Sales Tax Act points to some use of the goods by the taxpayer himself and not to the use by some other manufacturer or person of those goods unaltered in form and condition, but prepared for use by that other manufacturer or person in weaving and knitting operations as by winding yarn around them.