Federal Commissioner of Taxation v Riley

The Federal Commissioner of Taxation brought an action against Sidney Riley, a photographer, seeking to recover sales tax allegedly owed under the Sales Tax Assessment Act 1930-1935. The dispute centred on whether photographs produced and supplied by Mr. Riley to his clients in the course of his business constituted "goods manufactured in Australia" for the purposes of the Act. The matter was brought before the High Court of Australia by way of a special case stated by the parties.

The High Court was required to determine two principal questions: first, whether the photographs produced by the defendant were "goods manufactured in Australia" within the meaning of the Sales Tax Assessment Act (No. 1) 1930-1935; and second, if the answer to the first question was affirmative, whether sales tax was payable on so much of the cost to the client as was attributable to the tinting or colouring of the photographs.

A majority of the High Court, comprising Rich, Starke, Dixon, and McTiernan JJ., held that the photographs were indeed "goods manufactured in Australia" within the meaning of the Act. Their Honours reasoned that the definition of "manufacture" in the Act included "production" and was broadly framed to encompass operations conducted to bring tangible things into existence for sale. They found that the organised business of a portrait photographer, involving a series of commercial processes aimed at producing an article to be bought for profit, fell within this definition, notwithstanding the individualised nature of the product and any aesthetic considerations. The Court also determined that the distinction between tinted and untinted photographs for tax purposes was not sustainable, and therefore sales tax was payable on the full value, including tinting. Evatt J. dissented, viewing the photographer's work primarily as a personal artistic service rather than the manufacture of goods.

The Court answered both questions in the affirmative. Pursuant to the agreement of the parties, judgment was entered for the plaintiff, the Federal Commissioner of Taxation, for £7 15s. 9d., together with costs.