Federal Commissioner of Taxation v Commonwealth Quarries (Footscray) Pty Ltd

The Federal Commissioner of Taxation appealed to the High Court of Australia against a determination of a board of review concerning the calculation of sales tax. The dispute involved Commonwealth Quarries (Footscray) Pty Ltd, a quarrymaster that sold goods and included an amount for sales tax in its customer charges. The core issue was how to determine the "sale value" of these goods for the purposes of the Sales Tax Assessment Act (No. 1) 1930-1935, specifically regarding deductions for sales tax.

The legal question before the Full Court was whether, when ascertaining the sale value of goods under section 18 of the Act, the amount to be deducted from the price charged to customers was the amount of sales tax actually included in that price, or the amount that should have been paid as sales tax according to the Act. This distinction was crucial because the company had calculated the sales tax component based only on the ex-quarry price, excluding cartage costs, which the Commissioner argued was an incorrect deduction.

The High Court, in answering the case stated, reasoned that section 18(5) of the Act, which stipulated that the sale value should not include any amount payable in respect of sales tax, was intended to prevent the imposition of sales tax on sales tax itself. The Court held that the term "payable" in section 18(5) referred to the amount legally due under the Act, not merely the amount the taxpayer might have erroneously included in their price. Therefore, the deduction should be based on the amount of sales tax properly payable on the actual sale value as determined by the Act, rather than the amount the taxpayer had calculated and charged.

The Court concluded that the amount to be deducted pursuant to section 18(5) was the amount that *should have been paid* by the respondent for sales tax on the sale value of the goods, as assessed under the Act. The case was remitted to the Chief Justice for determination, with costs of the case to be costs in the appeal.