Jetmaster Fireplaces Pty Ltd v Commissioner of Taxation

[1989] FCA 206

Re: JETMASTER FIREPLACES PTY LIMITED
And: COMMISSIONER OF TAXATION
Nos. G237-G238 of 1988
FED No. 206
Sales Tax

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
NEW SOUTH WALES DISTRICT REGISTRY
Einfeld J.(1)

CATCHWORDS

Sales Tax - reference of decision to disallow objection to an assessment of sales tax in respect of certain fireplace components - whether items exempt - whether the components form part of a fixture - history of legislation and parliamentary intention - whether regard may be had to the actual use of the goods.

Sales Tax Assessment Act (No 1) 1930 (Cth) - ss 19, 20, 41(b)

Sales Tax Assessment Act (No 6) 1930 (Cth) - ss 5, 6

Sales Tax (Exemptions and Classifications) Act 1935 (Cth) - ss 6A, 6B(1), first schedule - items 82(A), 84(1),84(2), third schedule - items 1(jb), 2.

HEARING

SYDNEY

#DATE 10:5:1989

Counsel and Solicitors for Mr D H Bloom QC with Mr N G
the applicant Rein instructed by Mourice

Wermut & Co

Counsel and Solicitors for Mr N R Burns instructed by
the respondent the Australian Government

Solicitor

ORDER

Declare that the decisions of the respondent to disallow the applicant's objections to his assessments of sales tax:

(i) in respect of fireboxes and smoke gathers imported and sold by the applicant on 12 February 1987; and

(ii) in respect of stainless steel flues manufactured and sold by the applicant on 12 February 1987 were erroneous.

Order that the objections be allowed and the goods be exempt from sales tax.

The respondent to pay the applicant's costs.

Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

JUDGE1

The applicant, Jetmaster Fireplaces Pty Limited, requested the respondent, the Commissioner of Taxation, to refer his decisions on two objections with respect to sales tax assessment to this Court, pursuant to section 41(b) of the Sales Tax Assessment Act (No. 1) 1930. The decisions were:

(1) to disallow the applicant's objection to an assessment of sales tax in respect of its fireboxes and smoke gathers;

(2) to disallow the applicant's objection to an assessment of sales tax in respect of its stainless steel flues.

1. The applicant claims that these items are exempt from sales tax under the first schedule to the Sales Tax (Exemptions and Classifications) Act 1935. The respondent denies that they are exempt under the first schedule and claims that they fall within the third schedule and are therefore taxable.
   FACTS

2. As its name implies, the applicant company sells products for use in the construction of domestic fireplaces and also sells freestanding fireplaces. The applicant does not itself build or install fireplaces.

3. On 27 April 1987 the respondent notified the applicant of a liability to pay sales tax:
   

(1) in respect of fireboxes and smoke gathers imported by you and sold on 12 February 1987 as per invoices 0459, 0460, 0461; and

(2) in respect of stainless steel flues manufactured by you and sold on 12 February 1987 as per invoice number 0459.

1. On 29 June 1987 the applicant lodged notices of objection to these assessments. These were rejected on 31 July 1987, and on 19 August 1987 the request for referral was made. The components in issue are the Jetmaster New Universal 850 firebox; 850 round gather; 250 mm diameter flue, 700 Deep New Universal firebox; and 850 round gather old model.

2. The Jetmaster 850 and 700 fireboxes are fabricated from mild steel and serve the same function as a brick firebox. The fireboxes are painted with a red anti-corrosive paint, except for the visible flange and the interior of the firebox which are painted in a matt black finish. In the case of the flange, it is shotblasted before painting. The gather is also made of mild steel and painted with red anti-corrosive undercoat. Its function is to 'gather' or direct the smoke from the top of the firebox towards the flue. The applicant's gather replaces the brick gather which a properly constructed brick fireplace normally incorporates. The flue-pipe is made of stainless steel or in certain cases galvanised iron. It is cylindrical in shape and is sold in 900mm lengths. Its purpose is to create a draught sufficient to extract the smoke and discharge it to the outside atmosphere.
   THE LEGISLATION

3. The Sales Tax legislation comprises eleven Sales Tax Assessment Acts which impose the actual tax and set the applicable rates of tax according to where the relevant goods are to be found in the Exemptions and Classifications Act. The general policy of this legislation was described by Dixon J in Deputy Federal Commissioner of Taxation (SA) v Ellis & Clark Ltd (1934) 52 CLR 85 at 89 as follows:
   

Because of some apprehension as to the possible effect of sec.55 of the Constitution on its validity, if the sales tax legislation were enacted in one assessment Act and one taxing Act, it was passed in the form of nine separate machinery statutes and nine separate taxing Acts. They constitute, however, a single legislative scheme to the complete operation of which all are necessary, and they should be construed together. Moreover, the legislation depends in a remarkable degree upon the regulations made under the power which it confers on the Executive. Without the regulations, not only is it unworkable, but the expression of legislative policy is so inadequate as almost to be unintelligible. Although the tax levied by the enactments is called a sales tax, it is not a tax upon all sales of commodities. It is a tax levied upon one only of the transactions which commonly take place in respect of goods before they reach the consumer after they are imported into or produced in Australia. It appears that it was not intended that the retail price of goods should be increased by the incorporation in it of more than one amount of tax. The general policy of the legislation is to levy this tax upon the last sale of the goods by wholesale, that is upon the sale to the retailer by the last wholesaler.

1. These comments were approved by the High Court in Brayson Motors Pty Ltd (in liquidation) v The Commissioner of Taxation for the Commonwealth of Australia (1984) 156 CLR 651. Gibbs CJ, Mason, Wilson, Deane and Dawson JJ stated at 657:
   

Dixon J's detailed explanation of the underlying legislative policy and the means adopted in the Sales Tax Acts and the Regulations to effect it was, like the actual decision in Ellis & Clark Ltd, subjected to some contemporary ministerial criticism. It has, however, been accepted both by the Parliament and in this Court as the authoritative starting point for understanding the interrelation between the various Acts and Regulations which constitute the sales tax legislation . . . . . . . . .

1. The Sales Tax Assessment Act (No. 1) 1930 imposes liability for tax upon the manufacturer of goods manufactured in Australia. Section 19 provides:
   

19. Sales tax shall be paid by the manufacturer of goods manufactured in Australia and -

(a) sold by the manufacturer to an unregistered person or to a registered person who has not quoted his certificate in respect of the sale;

(b) treated by the manufacturer as stock for sale by retail;

or

(c) applied by the manufacturer to his own use.

1. Section 20 provides for exemptions as follows:
   

20. Notwithstanding anything contained in section 19, sales tax shall not be payable under this Act by the person specified in that section upon the sale value of goods the sale value of which is, by virtue of the Sales Tax (Exemptions and Classifications) Act 1935-1973, exempt from sales tax under this Act.

1. There are equivalent sections (ss 5(1) and 6) in the Sales Tax Assessment Act (No. 6) 1930 which imposes sales tax on the importer of goods into Australia. All these provisions are then taken up by section 5 of the Exemptions and Classifications Act, subsection (1) of which provides:
   

(1) Notwithstanding anything contained in any Sales Tax Assessment Act, sales tax shall not, subject to this section, be payable upon the sale value of any goods covered by any item or sub-item in the first column of the First Schedule, under any Act specified in the second column of that Schedule opposite that item or sub-item.

1. Apart from the first schedule, schedules to the Exemptions and Classifications Act list items which are subject to sales tax. Section 6B(1) of that Act states:
   

The goods specified in a schedule other than the first schedule are so specified for the purposes of the Acts imposing Sales Tax upon goods as specified.

1. The combined effect of these enactments (not taking into account as yet the effect of the third schedule) appears to be that if an item falls within section 19 or 5 of Assessment Acts Nos. 1 & 6 respectively, it is nevertheless exempt if it falls within the first schedule of the Exemptions and Classifications Act.

2. The applicant relies specifically on items 82(A), 84(1) and (2) of the first schedule. Item 82A exempts:
   

(1) Piping or tubing of a kind used exclusively, or primarily and principally, in the construction or repair of, and wrought into, or attached to, so as to form part of, buildings, fixtures, structures or other works, but not including piping or tubing being -

(a) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;

(b) piping or tubing of a kind used as duct work or channelling in forced draught ventilating or air conditioning systems;

(c) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;

. . . . . . . . . . . . . .

(2) Fittings (and parts therefor) for goods covered by sub-item (1), including taps, cocks, valves, faucets, inspection boxes and doors, clear outs, floor wastes, grates, gullies, traps, syphonic connections, pipe heads, shoes, stop blocks, meters and meter covers, hydrants and hydrant covers, hydrant pit frames and covers, value covers, value pit frames and covers, and air value frames and covers . . . . . . . . . .

1. Item 84 exempts:
   

(1) Metal building materials (including girders, rods, bars, wire, sheets, mesh, lathing and fabricated units composed of any of those goods, and attachments for such units) for use in the construction or repair of and to be wrought into, or attached to, so as to form part of, buildings or other fixtures, but not including - . . . . . . . . . . . . . . .

(c) piping or tubing;

(d) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems;

(e) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems.

(2) Builders' hardware (not including electrical fittings, accessories or equipment, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems, or fittings, accessories or attachments for, components of, or goods designed to form part of, such duct work or channelling, . . . . .), being goods of a kind used in the construction or repair of, and wrought into or attached to so as to form part of, buildings or other fixtures, . . . . . . . . . . . . . . .

1. The applicant further relies in the alternative on section 6A of the Exemptions and Classifications Act. This states:
   

6A. (1) Notwithstanding anything contained in any Sales Tax Assessment Act, sales tax shall not be payable upon so much of the sale value under any Sales Tax Assessment Act of any pre-fabricated building or prefabricated building section which is made of timber, metal, fibro-cement or any other materials or combinations of materials as exceeds the amount which, in the opinion of the Commissioner, would have been the sale value of the taxable goods (if any) incorporated in the building or section if the transaction, act or operation in relation to the sale value of the building or section had been a transaction, act or operation in relation to those taxable goods only.

(2) In this section - "pre-fabricated building section" does not include prefabricated duct work or pre-fabricated channelling, being duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; "taxable goods", in relation to a pre-fabricated building or pre-fabricated building section, means goods that, if sold separately, would not be covered by any item in the First Schedule, and, in a case where there are incorporated in the building or building section goods (in this definition referred to as the "relevant goods"), being -

(a) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or

(b) fittings, accessories or attachments for duct work or channelling of a kind used in forced draught ventilating or air conditioning systems, includes the relevant goods.

1. The respondent argued that the goods were taxable under items 1 and 2 of the third schedule. These include:
   

1. Goods (not being goods covered by an item in the Second Schedule, goods of a kind used exclusively or principally in sport or games or goods designed for use exclusively or principally in, or in connection with, swimming pools or spa baths) of a kind ordinarily used for household purposes, namely:-

. . . . . . . . . . . . .

(jb) fire grates and fireplaces;

. . . . . . . . . . . . .

2. Parts, fittings and accessories for goods covered by item 1, but not including

(a) duct work or channelling of a kind used in forced draught ventilating or air conditioning systems; or

(b) fittings, accessories or attachments for, components of, or goods designed to form part of, duct work or channelling of a kind used in forced draught ventilating or air conditioning systems . . .

. . . . . . . . . . . . .

1. The applicant argued that they were not within this schedule and that in any event the effect of section 5 of the Exemptions and Classifications Act is that it suffices for exemption that the goods fall within the first schedule.
   THE APPLICANT'S SUBMISSIONS
   1. Interpretation of the Legislation

2. The applicant argued that in considering whether a particular item falls within an exemption, the Court should read the legislation in favour of the taxpayer: FCT v Nimrod Theatres (1984) 57 ALR 703; FCT v Jax Tyres (1984) 58 ALR 183; FCT v Kentucky Fried Chicken (1988) 88 ATC 4363; Hygienic Lily v DFCT (1987) 71 ALR 441; FCT v John Fairfax Pty Limited (1988) 88 ATC 5033.

3. The applicant also cited the following passage from Federal Commissioner of Taxation v Top of the Cross (1981) 37 ALR 623 at 633 where Bowen CJ and Ellicott J stated:
   

The general purpose of taxation legislation is to raise revenue. This enactment in s 62A is directed to relieving particular taxpayers from the burden of taxation. Its purpose is not to raise revenue but rather to encourage taxpayers to enter into such franchise arrangements with the governments or authorities mentioned and to incur expenditure upon an undertaking which will inure ultimately for the benefit of the particular government or authority. We mention these general considerations because, as will appear from the discussion which follows, there are some ambiguities in the section. In choosing between possible interpretations, a construction which will promote the purpose or object underlying the Act is to be preferred: Acts Interpretation Act 1901, s 15AA.

1. This approach was endorsed by Hunt J in Penrith Rugby League Club Ltd v Commissioner of Land Tax (NSW) (1983) 83 ATC 4709 at 4714:
   

The intention of sec. 10(1)(g)(iii) is clearly enough not to raise revenue, rather it is to relieve certain community groups from the burden of land tax upon the land used and occupied by them. Such an exemption should not be construed narrowly: FC of T v Top of the Cross Pty Ltd (1981) 81 ATC 4563 at 4571.

1. The applicant further argued that it is necessary to look at the intended use of the goods in order to classify them. In FCT v Kentucky Fried Chicken (above), Hope JA stated at 4373:
   

The assumption which I have made in dealing with the second question does not accord with the facts and that gives rise to the third question. In fact only part of the goods purchased by Kentucky from one or other of the other defendants will be used or dealt with in a way which will give rise to the exemption from sales tax. Moreover, at the time when sales tax would otherwise attach, it is not possible, because of the way in which Kentucky uses and deals with the goods, to identify the particular goods which at that time when sales tax (is imposed) would satisfy the conditions giving rise to exemption. Is it possible to deal with this problem by reference to the statistically established proportions of the goods which are likely to be used and dealt with by Kentucky in a way which will attract exemption, or is it permissible to have regard, retrospectively, to the actual way in which the goods are used and dealt with by Kentucky for this purpose?

He continued:

Again reg. 14(2) which I have earlier described . . . would seem to be appropriate for a case such as this. That subregulation provides a scheme which enables liability for or exemption from sales tax to be worked out in the light of what actually happens to the goods.

1. The First Schedule

1. The applicant argued that:
   

(1) The goods are exempt because they fall within one or all of items 82A, 84(1) and 84(2).

(2) These provisions exempt the goods whether or not they are goods to which the third schedule applies.

(3) If the goods do not fall within the first schedule, they are goods which attract section 6A of the Exemptions and Classifications Act. The result would be that the respective sale values in the assessment were excessive. The question would then arise as to what taxable goods were incorporated in the assessment and what were their respective sale values.

1. A common feature of items 82A, 84(1) and 84(2) is the requirement that the goods be "wrought into or attached so as to form part of buildings or other fixtures" and much evidence was brought by the applicant as to the method of installation of these components to establish this requirement. It was said that these products are by their nature and appearance designed, fabricated and finished in such a way as to be used in conjunction with other materials such as bricks, sand and cement, and that when wrought together into a building structure they will form a fireplace. Evidence was also given (supported by photographs) to the effect that when Jetmaster products are used in a house under construction, the distributors are usually asked to assemble the firebox, gather and flue into their final position as soon as the footings have been laid and before commencing construction of the wall in which the fireplace is located. The wall is then constructed around the firebox, gather and flue. If the wall has been completed before the firebox, gather and flue are assembled and placed in the right position, it would be necessary to demolish part of the existing brickwork and floors to include them in the final structure. Once the fireplace is so constructed, it is said to be no different to a traditional brick fireplace forming an integral part of the building. Witnesses made the point that it would be unsafe to use the components without having them bricked in. The applicant's instructions also do not envisage any other type of installation than one enclosed in brick. Plans were produced showing that in certain cases it is necessary to obtain council approval for the fireplaces to ensure that they comply with Part 25 of Ordinance 70.

1. Assuming, in the light of this evidence, that these goods are "wrought into or attached so to form part of buildings or other fixtures", questions remain in the case of item 82A, whether the flue-pipe is piping or tubing; and in relation to items 84(1) and (2), whether the components are metal building materials or builders' hardware. With regard to 84(1), the applicant submitted that metal building material is just a sheet of metal as it comes off the press. 84(1) includes not only "girders, rods, bars, wire, sheets, mesh and lathing", but also "fabricated units composed of any of those goods, and attachments for such units". The applicant submits that the firebox, flue and gather are fabricated units composed of metal. Alternatively, the applicant submitted that the firebox, gather and flue are builders' hardware within 84(2), these being ordinary words within which these items easily fit.

2. The applicant further argues that the effect of section 6A of the Exemptions and Classifications Act is that if it was found that any or all of the goods taken together were capable of forming a pre-fabricated building section made of metal as embraced by that section, then so much of what goes into that pre-fabricated section would be exempt. In the applicant's submission, the firebox, gather and flue are properly so comprised.
   3. The Third Schedule
   

3. Assuming therefore that the goods do fall within one or more of the specific exempting provisions, it is then necessary to consider the effect of the third schedule, item 1 of which relevantly imposes tax on "goods . . . . . of a kind ordinarily used for household purposes, namely . . . . . . (jb) fire grates and fireplaces". Item 2 then further imposes tax on "parts, fittings and accessories for goods covered by item 1 . . . . . . . . .".

4. The applicant's argument here is two-pronged. Firstly it submits that item 1(jb) applies only to freestanding, not inbuilt, fireplaces and that item 2 relates to parts for freestanding fireplaces only. The applicant relies for this proposition on the history of the section.

5. Item 1(jb) was inserted by Act No. 145 of 1985. This Act also removed item 90B from the first schedule. Item 90B exempted:
   

(1) Cooking stoves and ranges of a kind used exclusively or primarily and principally for domestic purposes, but not including portable stoves, portable roasters, portable cookers or portable ranges.

(2) Firegrates and fireplaces of a kind exclusively or primarily and principally installed as fixtures in houses.

(3) Parts for goods covered by this item . . . . . . . .

1. The effect of this change was that certain fireplaces moved out of the exemption area and into the taxing area. The applicant argues that only freestanding fireplaces then became subject to sales tax. That this was the intention of the legislature, the applicant says, is evident from statements made by the Treasurer at the time, which are found in an official Government booklet entitled "Reform of the Australian Taxation System". The applicant referred in particular to the following passage at page 51:
   

Most major household appliances including furniture, refrigerators, freezers, washing machines, clothes dryers, and vacuum cleaners are presently subject to a 7.5 per cent WST rate, which will be increased to 10 per cent under the rate class rationalisation proposals. Certain household appliances or similar items are currently exempt. In order to remove these anomalies and spread the indirect tax burden more evenly across commodities, the following items will be taxed at 10 per cent.

. Non-oil-burning domestic space heating appliances, fire grates and fireplaces. Oil-burning domestic space heaters are currently taxable at 7.5 per cent (now to be 10 per cent) while brick and similar inbuilt fireplaces which form an integral part of a building will remain exempt.

. All domestic cooking stoves, ovens (including microwave ovens), ranges and grillers. Portable stoves, including camping stoves, portable grillers and toasters are currently taxable at 7.5 per cent (now to be 10 per cent) while commercial-type stoves and microwave ovens will continue to be taxable at 20 per cent.

. Domestic water heating systems (electric, gas, solar, etc) and water softening, filtering, desalting and sterilising equipment. (Commercial type water heating systems are already taxable at 20 per cent.)

. Oven and freezer bags are currently subject to a 20 per cent rate while other wrapping materials (eg aluminium foil, plastic wraps), bags and fastening materials marked exclusively or principally for household use are exempt. A consistent treatment is to be provided by taxing all these items at 10 per cent.

1. These expressions, the applicant submitted, show that the removal of 90B and the insertion of 1(jb) leave exempt brick and similar inbuilt fireplaces which form an integral part of a building. This construction was said to be supported by the policy of the Act in that, on its proper construction, the legislation exempts items forming part of the structure of a home. As each of the other items referred to in item 1 of the third schedule are freestanding, the Act should be interpreted as applying only to those fireplaces which are capable of being the subject of a distinct contract for the sale of goods, hence freestanding. Perhaps a better way of expressing this argument would be that only those fireplaces which could be sold separately to the house itself are intended to be taxed.

2. As to item 2, the applicant argued that the "parts, fittings and accessories" referred to are specifically limited to those goods covered by item 1 and therefore to parts for freestanding fireplaces. Evidence was given by experts and the manufacturer that the components in question could not be used with a freestanding fireplace.

3. The applicant's second argument is that in any event, the effect of section 5 of the Exemptions and Classifications Act is that goods are exempt if they fall within one of the specific exempting provisions of the first schedule, whether or not they are also covered by the third schedule. The applicant also manufactures freestanding fireplaces which it does not dispute are taxable under item 1(jb) of the third schedule.
   THE RESPONDENT'S SUBMISSIONS

4. The respondent submits that the components are covered by items 1(jb) and item 2 of the third schedule. He denies that the matters in issue here are goods whose sale value is exempt from sales tax by virtue of section 5 of the Exemptions and Classifications Act and denies that the goods are covered by any one or more of items 82A, 84(1) and 84(2) of the first schedule. The respondent argued that the provisions in the first schedule should not be read in isolation as was implied by the applicant but should rather be read in the context of substantial legislative change. How such an approach differs from that advocated by the applicant or leads to the result sought by the respondent was not made clear.

5. The respondent said that under the former item 90B which existed until 1985, it was not necessary to consider whether fireplaces were metal building materials or not, because they were exempt if of a kind "primarily and principally installed as fixtures in houses". That wording was then removed and was replaced by the words "fire grates and fireplaces" alone. This change, the respondent claims, has to do with the broadening of the tax base to catch certain items to do with a household which were once exempt.

6. This proposition, the respondent submits, is also supported by the explanatory memorandum to the amending Act which shows that it was the intention of the legislature to bring the sales tax treatment of all such goods into line. The relevant parts of the Explanatory Memorandum are as follows:
   

(Page 1) This Bill will amend the Sales Tax (Exemptions and Classifications) Act 1935 -

to broaden the wholesale sales tax base by subjecting to tax certain goods that are presently exempt. The major goods to be brought within the tax base are biscuits, ice-creams and similar goods and snack foods. Other inclusions are non-oil burning domestic space heaters, domestic cooking stoves, fire grates, fireplaces, domestic water heating systems and domestic wrapping materials; (Pages 7-8) Additional exempt goods to become taxable Schedule 2, Schedule clauses 2, 3, 14-15, 17-27, 30, 32, 34-35, 43-44, 46 and 47)

Item 1 of the Third Schedule to the Exemptions and Classifications Act specifies goods of a kind that are ordinarily used for household purposes. Goods covered by this item include furniture, crockery, cutlery, refrigerators, washing machines, portable cooking and heating appliances, vacuum cleaners and so on. There is, however, a number of other similar goods that are specifically exempt from sales tax by reason of their inclusion in the First Schedule to the Exemptions and Classifications Act. Examples of these goods are domestic stoves, ranges, fire grates, fireplaces (and parts for these goods) and domestic water heating treatment appliances and equipment (and parts for these goods). This Bill will bring the sales tax treatment of all these goods into line by including them in the Third Schedule to the Exemptions and Classifications Act. The effect of this change, when read with the proposed changes to the rate structure of the WST (see later notes), will be to generally tax household goods at the one rate - 10%. (Page 28) Schedule clause 22: Item 90B Clause 22 of this Schedule will omit item 90B from the First Schedule to the Principal Act. That item presently exempts domestic stoves, ranges, fire grates and fireplaces and parts for those goods. A complementary amendment is proposed by Clause 43 (see notes on that clause) to item 1 in the Third Schedule to include in that item goods presently covered by item 90B. Taken together, the practical effect of the amendments proposed by this clause and clause 43 will be that goods such as domestic grillers, stoves, ranges and ovens (including microwave ovens) and fire grates, fireplaces and parts therefor will become taxable at the 10% rate.

1. As these statements virtually repeat the clauses themselves, I must confess to not deriving much assistance from this document in the present context.

2. The respondent further submits that in determining whether the components are taxable or exempt, it is not permissible for the Court to look to the actual use of the goods. No authority was cited for this proposition, nor was there any objection to the evidence led by the applicant on this very issue. I should have thought the proposition of doubtful validity. The respondent also referred to the insertion of 1(ga) which taxes space heaters. There was no dispute that the components in issue are not a space heater or parts thereof.

3. The respondent's denial that the goods fall within items 82A, 84(1) or 84(2) of the first schedule was based on the following grounds:
   

(1) The goods have a clear identity as fireplaces and are so described in the applicant's own advertising. In my opinion, this factor cannot determine the question one way or the other. The advertisement referred to also says that it will increase the retail value of the home indicating that it thereby adds to the home in a structural sense and is therefore presumably a fixture.

(2) The goods do not form a necessary part of the structure of a building or fixture. No evidence was brought to contradict the applicant's evidence on this aspect.

(3) Unlike girders, steel frames, window frames and the like, the goods can be added after a building has been constructed in the sense that they do not support or brace the structure itself. This does not appear to be entirely relevant given the wording of the specific exemption provisions, and the evidence that they should be inserted at the beginning of construction or early in the construction process. Further, girders, window frames etc. can also be added or changed after a building has been constructed.

(4) The applicant is not a builder or a supplier of building materials but a manufacturer of fireplaces and parts thereof. I cannot see how the legislation renders this a relevant consideration.

(5) Items 82A and 84 of the first schedule are to be read as excluding fireplaces and parts of fireplaces (if the items would otherwise include such goods) because

(a) there is express reference to fireplaces and parts thereof in the third schedule and such express reference requires the goods to be excluded from the more generally expressed exempting provisions. The respondent conceded in the course of argument that this submission is affected by section 5 of the Exemptions and Classifications Act which stands in the way of saying that item 1 of the third schedule is a specific provision, that for example item 84 is a general provision, and that therefore the specific provision should prevail.

(b) It is necessary to prefer the construction which promotes the purpose or object of the Act: s 15AA Acts Interpretation Act, and that purpose is to tax fireplaces and parts thereof at the rate applicable to the third schedule. As I see it, this argument is circuitous and puts "the cart before the horse". The question for determination is whether the goods involved in the subject assessments are comprised within the terms of the third schedule at all.

(c) The history of the legislation (omission of item 90B; addition of item 1(jb); Explanatory Memorandum) discloses an intention to remove the exemption previously attaching to all firegrates and fireplaces and to tax them under the third schedule. This is one of the critical questions to which I shall return shortly.

1. The respondent finally submitted that if section 6A of the Exemptions and Classifications Act applied, the following issues would arise:
   

(a) whether the goods are a pre-fabricated building section made of metal or other materials within the meaning of the section;

(b) if so, whether any taxable goods within the meaning of the section were incorporated in the goods;

(c) if so, what would have been the sale value of the taxable goods if the transaction, act or operation in relation to the building section had been a transaction, act or operation in relation to the taxable goods only;

(d) by what amount, if any, does the sale value, within the meaning of the section, of the pre-fabricated building section exceed the sale value of the taxable goods calculated in accordance with (c) above.

1. In the view which I have taken of the questions of fact and law raised here, it is not necessary to determine these issues in this case.
   CONCLUSIONS

2. This is not a simple interpretation task. It seems clear that the legislative change in 1985 was intended to take into the taxation net a number of previously exempt household and domestic goods. On the other hand, it particularly left as exempt, goods which were actually part of the structure or fixed elements of homes. There can be little doubt that the older style built-in brick fireplaces would be so regarded while removable added fireplaces are in the taxable category.

3. The question as to whether the applicant's goods, not being expressly singled out for specific mention, are of one type or the other comes down, therefore, to an issue of fact which must be determined on the evidence, virtually all of which was presented by the applicant. I have carefully reviewed this oral and written material. I note that the only affidavit presented by the respondent described the applicant's product as "essentially a functional necessity as an alternative to a traditionally inbuilt fireplace." I have also given attention to the actual goods in question which were marked as exhibits.

4. It is clear to me that these goods have no 'being' in themselves. They are and are intended to be an irremovable part of a house. Some might regard them as the type of inessential or 'luxury' item which ordinarily might expect to be taxed. On the other hand, these goods, though in essence no doubt intended by their manufacturers to be a more efficient heat conveyor than their more traditional counterparts, are really no different to that clearly exempt house fixture.

5. Looked at from a different standpoint closely allied to the purposes of the relevant legislation, there is no evidence as to which might cost more to include in a new house construction, partly no doubt because some traditional fireplaces can be very large, ornate and no doubt expensive inclusions. There is thus no basis for concluding that if the applicant's goods are exempt, it would result in a manifestly unjust reading of the relevant provisions, or be contradictory to the apparent intent of the relevant changes in taxation policy to which the legislation gives expression.

6. I uphold the applicant's argument that the relevant goods are exempt from sales tax under the first schedule to the Exemptions and Classifications Act. I am satisfied that the flue-pipe falls within item 82A, and that the firebox and gather fall within item 84(1). I uphold the submission that these components are not taxable under the third schedule of that Act.