Adams v Rau

The applicant, the Deputy Commissioner of Taxation, sought orders to review decisions of a Court of Petty Sessions which had dismissed informations laid against the respondents, Harriet May Rau and Arthur Rau, trading as "A. & M. Rau". The informations alleged that the respondents, carrying on business as professional shorthand writers and typists, had failed to register and provide security as required by the Sales Tax Assessment Act (No. 1) 1930-1931, on the basis that they were manufacturers within the meaning of the Act.

The legal issues before the High Court were whether the respondents, in their business of reporting judicial proceedings and other meetings and supplying transcripts, were engaged in the "manufacture or production of goods or commodities" as defined by the Sales Tax Assessment Act (No. 1) 1930-1931. Specifically, the Court had to determine if the transcripts produced by the respondents constituted "goods" or "commodities" and if their creation amounted to "manufacture" or "production" for the purposes of the Act.

The Court held that the respondents were not engaged in the manufacture or production of goods or commodities within the meaning of the Sales Tax Assessment Act. The Court reasoned that the primary function of the respondents was to provide a skilled service by recording and transcribing proceedings. While a transcript was a new entity and capable of sale, it was brought into existence as part of a service rendered in a skilled vocation, rather than as a commodity for sale in the ordinary sense. The Court emphasised that the natural and ordinary meaning of the terms should be applied, and that the ambit of a taxing Act should not be enlarged by implication. The Court also noted that the work of a shorthand writer was not accurately described as the manufacture or production of transcripts, drawing analogies to medical practitioners providing X-rays or artists creating etchings for clients.

Consequently, the applications for orders nisi to review were refused, and the applicant was ordered to pay the respondents' costs.