Murray Irrigation Ltd v Commissioner of Taxation
[1999] FCA 526
•30 APRIL 1999
FEDERAL COURT OF AUSTRALIA
Murray Irrigation Ltd v Commissioner of Taxation [1999] FCA 526
SALES TAX – Exemptions – Appeal from Taxation Commissioner disallowing objection to two taxation decisions - whether the distribution and supply of water to farmers for irrigation for agricultural purposes is a business of carrying on agricultural activities – whether irrigation is an operation “connected with the cultivation of the soil”
WORDS AND PHRASES – “agriculture” - “agricultural industry” - “connected with”
Taxation Administration Act 1953 (Cth) s 14ZZ
Sales Tax Assessment Act 1992 (Cth) s 51(1), 78, 80(1), 80(1)(a)
Sales Tax (Exemptions and Classifications) Act 1992 (Cth) s 3(2), Sch 1 Items 2 and 3Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 - cited
District Council of Coober Pedy v Collector of Customs (1993) 42 FCR 127 - cited
Commissioner of Taxation (Cth) v Broken Hill Pty Co Ltd (1969) 120 CLR 240 – cited
Cowell Electric Supply Company Ltd v Collector of Customs (1995) 127 ALR 257 – considered
Proserpine Co-operative Sugar Milling Association v Deputy Commissioner of Taxation (1996) 34 ATR 129 – considered
Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 – considered
Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 – cited
Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1 - consideredMURRAY IRRIGATION LIMITED v COMMISSIONER OF TAXATION
VG 345 OF 1998
VG 566 OF 1998JUDGE: MERKEL J
DATE: 30 APRIL 1999
PLACE: MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 345 OF 1998
VG 566 OF 1998
BETWEEN:
MURRAY IRRIGATION LIMITED
ApplicantAND:
COMMISSIONER OF TAXATION FOR THE COMMONWEALTH
RespondentJUDGE:
MERKEL J
DATE OF ORDER:
30 APRIL 1999
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1. The objection decision of the respondent dated 19 May 1998 (Objection Reference Number MPO70885) be varied by the respondent by allowing the objection.
2. The decision of the respondent made under s 80(1)(a) of the Sales Tax Assessment Act 1992 (Cth) to cancel the applicant’s registration be set aside.
3. The objection decision of the respondent dated 8 September 1998 (Objection Reference Number 06982MPO) be varied by the respondent by:
(a)allowing the objection;
(b)granting the applicant a sales tax credit under s 51 of the Sales Tax Assessment Act 1992 (Cth) in the sum of $5,352.20.
4. The respondent pay the applicant’s taxed costs of and incidental to each of the appeals herein.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG345 OF 1998
VG 566 OF 1998
BETWEEN:
MURRAY IRRIGATION LIMITED
ApplicantAND:
COMMISSIONER OF TAXATION FOR THE COMMONWEALTH
RespondentJUDGE:
MERKEL J
DATE:
30 APRIL 1999
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction
Each proceeding before the Court involves an appeal pursuant to s 14ZZ of the TaxationAdministration Act 1953 (Cth) by the applicant (“Murray Irrigation”) against an appealable objection decision of the respondent (“the Commissioner”) disallowing an objection to a taxation decision made under the Sales TaxAssessment Act 1992 (Cth) (“the Assessment Act”).
In the first appeal (VG 345) the taxation decision was a decision of the Commissioner to disallow the objection of Murray Irrigation to the cancellation of its registration under s 80(1)(a) of the Assessment Act. The question in that appeal is whether, for the purposes of obtaining sales tax registration, the business of Murray Irrigation of supplying and distributing water through its irrigation system to farmers in Riverina area of New South Wales, more particularly known as the Murray Valley, to irrigate their farms is a business of carrying on agricultural activities.
In the second appeal (VG 566) the taxation decision was a decision of the Commissioner to disallow the objection of Murray Irrigation to the rejection of its application for a sales tax credit under s 51(1) of the Assessment Act in respect of the sales tax paid by it on the purchase of a four wheel drive vehicle. The question in that appeal is whether Murray Irrigation is entitled to a sales tax credit for the tax paid by it on the purchase of the vehicle by reason that it was to be used by it “mainly in carrying out activities in agricultural industry”.
The answer to each question depends upon the meaning to be given to the definition of “agriculture” in s 3(2) of the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) (“the Exemptions Act”).
Background
Murray Irrigation is a statutory corporation which supplies and distributes water for the purposes of irrigation by a dedicated water management canal and channel distribution system to its farmer shareholders who conduct approximately 3,600 farms in the Murray Valley.
The first appeal relates to a decision, on 28 February 1997, by the Commissioner to cancel Murray Irrigation’s registration under the Assessment Act pursuant to s 80(1)(a) of that Act. Section 80(1)(a) empowers the Commissioner to cancel a person’s registration if the person “no longer satisfies any registration ground”. The ground of cancellation relied upon by the Commissioner was that Murray Irrigation’s business and activities did not involve agricultural activities. On 2 May 1997, pursuant to s 80(3) of the Assessment Act, Murray Irrigation lodged a Notice of Objection to the decision to cancel its registration. Murray Irrigation has appealed to the Court against the decision of the Commissioner on 19 May 1998 disallowing the objection of Murray Irrigation.
The second appeal arose out of the application, on 20 October 1997, by Murray Irrigation to the Commissioner for a private ruling that it was entitled to an exemption from sales tax under Item 3 of the Exemptions Act in respect of the purchase of four wheel drive vehicles. On 17 November 1997 the Commissioner informed Murray Irrigation of his decision that the applicant was not entitled to the exemption it sought. On 16 December 1997, Murray Irrigation purchased a four-wheel drive vehicle for $32,054 which included $5,352.20 sales tax. On 12 January 1998, Murray Irrigation sought, pursuant to s 51 of the Assessment Act, a credit for the sales tax paid by it in respect of the vehicle. The credit was sought on the basis that the vehicle was acquired for use “mainly in carrying out activities in agricultural industry” and was therefore entitled to an exemption from sales tax under Item 3 in Schedule 1 of the Exemptions Act. In its application for a credit, Murray Irrigation claimed that the vehicle was to be used in the inspection of channels and the supervision of irrigation works. On 8 September the Commissioner disallowed the objection. Murray Irrigation has appealed against the decision to disallow the objection.
The central issue in each appeal is whether the activities of Murray Irrigation fell within the definition of “agriculture” in s 3(2) of the Exemptions Act and, more particularly, whether those activities were “operations connected with the cultivation of the soil”.
The Activities of Murray Irrigation
The facts were not in dispute. Historically, irrigation activities in the Murray Valley were conducted by a statutory authority which granted specific water entitlements to farmers in the region.
On 17 February 1995, as part of the privatization of water supply, Murray Irrigation was incorporated pursuant to the Irrigation Corporations Act 1994 (NSW) for the purpose of operating the water supply and irrigation system in the Murray Valley. On 3 March 1995 the members of Murray Irrigation acquired shareholdings on the basis of, and in proportion to, their pre-privatization water entitlements.
Clause 5 of the Memorandum of Association provides:
“The Company is a non-profit organisation the objective of which is to:-
(a) supply water at the least cost to its members; and(b) establish and maintain prudent reserves for the ongoing viability of the business, as provided in the Articles.”
The Articles of Association limit membership to persons who are landholders within the Murray Irrigation Area and who have entered into Water Supply Contracts with the corporation (Article 6.1). Each water supply contract obliges Murray Irrigation to make an annual allocation of water available to the member for a use permitted by a Land and Water Management Plan applicable to the member’s landholding (Clause 2.1). It also obliges the member to take a supply of water and to apply all that water to the permitted use (Clause 2.3). A Land and Water Management Plan addresses land use and planning issues to ensure ongoing agricultural productivity and environmental sustainability for the relevant geographic area.
Murray Irrigation, which is classified as a Class 2 Irrigation Corporation, holds two licences; an Irrigation Corporation Licence under s 50 and an Operating Licence under s 39. In addition, Murray Irrigation has a Pollution Control licence from the Environmental Protection Authority. This licence permits a certain level of pollution but imposes obligations on Murray Irrigation to prevent drainage and to monitor the quality of water flows that drain back into the rivers in order to protect the inland waterways.
Evidence was given at the hearing by Mr George Warne, the General Manager of Murray Irrigation. He explained that Murray Irrigation supplies water to its members by means of a canal and channel distribution system located mostly on the land of farmers in the region. Water is gravity fed from three off-take points from the Murray and Edward Rivers and taken through the irrigation system established by Murray Irrigation to the farms of individual members.
After a member has ordered the particular quantity of water required for a specified crop, Murray Irrigation regulates the quantity of water that is to flow onto the member’s land through a device called a Dethridge wheel.
Usually, in excess of 90% of the water supplied by Murray Irrigation is used for rice crops and pasture on its member’s farms. Save for minor domestic and town supply usage of water, the remaining water is used for horticulture, stock and cereal crop production. Once the water enters upon the farm of a member it is gravity fed through the paddocks to irrigate the soil to enable its cultivation for the farmer’s crops or pasture. After water is supplied and distributed through Murray Irrigation’s channel system to the Dethridge wheel, Murray Irrigation has a limited, but continuing, role in supervising water usage on the farm to ensure that farmers fulfil their obligations under their respective licences.
Murray Irrigation is required to ensure the efficient usage of water on the farms to protect the balance in the water table, to prevent salination in the soil and to prevent chemically contaminated water draining off the land back into the river system. In particular, Murray Irrigation monitors water usage intended for ‘ponded’ crops, such as rice, due to the potentially damaging effects such water can have on the water table if incorrect farming techniques are employed.
In relation to pollution control, Murray Irrigation performs a number of activities designed to control the drainage flowing back into the waterways from a member’s land. The company owns and operates drainage channels, the largest of which contains a sensing station that measures the flow, salinity, turbidity and water temperature of water draining off the farms. The stations are situated upstream of where the water meets the natural waterway, so the quality of the water can be monitored. Murray Irrigation takes weekly samples from the channels to check that farm chemicals are not re-entering the natural waterway. Mr Warne explained that Murray Irrigation is able to close down sections of the drain and zero in on particular farmers who may be polluting the waterways. Murray Irrigation has the authority, pursuant to its licence, to enter upon farms and investigate the chemicals being used on the farm.
Other activities undertaken by Murray Irrigation to encourage water use efficiencies include assisting its members to redesign farm layouts to maximise the efficient carriage and usage of water. The programs provide incentives to members, through a series of rebates, to carry out approved plans. Conversely, farmers who use water irresponsibly, in breach of licence conditions, may have water supply withheld.
In substance, as water is a finite resource, its efficient and effective usage by farmers is necessary to ensure continuity of the supply required to irrigate their farms. Consequently, Murray Irrigation and its members have a mutual interest in ensuring an efficient and sustainable usage of water throughout the Murray Valley.
The irrigation system and activities of Murray Irrigation are part of a dedicated infrastructure for the supply of water for agricultural use by farmers. The canals, channels and activities of Murray Irrigation are integrated with the farming activities of its members. Those activities relate to the quantity of water entering upon the farms for immediate agricultural use and the quality of the water draining off the farms to ensure appropriate productivity and environmental outcomes in the long term. In summary, the water supplied and distributed by Murray Irrigation is essential for the cultivation of the soil of each of its farmer members.
The Legislative Scheme
Section 78 of the Assessment Act entitles a person to registration if, in the course of a business, the person does the things that would satisfy the requirements of an exemption Item. The first appeal involves exemption Item 2 in Sch 1 of the Exemptions Act. Item 2 relates to:
“(1)Goods for use by a person (‘the exemption user’) mainly in carrying out one or more of the following activities in the course of a primary production business:
(a) a primary production activity;
(b)an activity that is ancillary (as defined by section 10) to one or more activities covered by paragraph (a);
(c)an activity that is ancillary (as defined by section 10) to one or more activities covered in paragraph (b).”
Sub-para (4) of Item 2 provides
“(4) In this item:
‘primary production activity’ means agriculture, forestry, fishing (including fish farming) or pearling;
‘primary production business’ means a business of carrying on primary production activities.”“Mainly” is defined in s 3(2) of the Exemptions Act to mean “to the extent of more than 50%”. “Agriculture” is defined in s 3(2) as including:
“(a)viticulture, horticulture, pasturage, apiculture, poultry farming and dairy farming;
(b)other operations connected with the cultivation of the soil, the gathering in of crops and the rearing of livestock.” (Emphasis added)
The outcome of the first appeal depends on whether Murray Irrigation carries on the business of conducting “operations connected with the cultivation of the soil” within the meaning of those words in s 3(2).
The outcome of the second appeal depends upon whether the vehicle purchased by Murray Irrigation falls within Item 3 which provides exemption, inter alia, for four wheel drive vehicles for use by a person
“mainly in carrying out activities in agricultural industry.”
There was no real dispute that if the activities of Murray Irrigation were in “agricultural industry” then the vehicle would fall within the exemption as its use was primarily for the inspection, repair and maintenance of the irrigation system. “Agricultural” in the expression “agricultural industry” takes its meaning from the defined word “agriculture” (see s 18A of the Acts Interpretation Act 1901 (Cth)) and “industry” refers to the multitude of processes and activities that would be accepted as falling within the popular general description of the industry constituted by the activities specified in s 3(2) (see R v Drake-Brockman; Ex Parte National Oil Pty Ltd (1943) 68 CLR 51 at 59 per Starke J).
If Murray Irrigation’s contentions that it conducts an “agricultural” business, by reason of the definition of “agriculture” in s 3(2), are accepted then it must follow that it is also entitled to succeed on the second appeal.
Does Murray Irrigation conduct an agricultural business?
The issue to be determined is one of construction. The generally accepted meaning of “agriculture” involves the cultivation of land: see The Macquarie Dictionary. Section 3(2) of the Exemptions Act defines “agriculture” as including a number of specific agricultural activities and, inter alia, “other operations connected with the cultivation of the soil”. Thus, activities “connected with” the cultivation of the soil appear to fall within the inclusive definition of “agriculture” in s 3(2).
The use of the words “connected with” is significant. Such words have been accepted as being “wide and imprecise” but as designating a “relation between things one of which is bound up with, or involved, in another”: see Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 274-275. Where the degree of connection required is not express, the “spectrum of circumstances” can extend from cases where the connection is direct to those where the connection is remote or trivial: see District Council of Coober Pedy v Collector of Customs (1993) 42 FCR 127 at 140 per Hill J. Subject to the specific context, generally the connection must be “sufficient”: see Commissioner of Taxation (Cth) v Broken Hill Pty Co Ltd (1969) 120 CLR 240 at 277, Cliffs Robe River Iron at 274-275 and Cowell Electric Supply Company Ltd v Collector of Customs (1995) 127 ALR 257 at 267.
While the question of degree is one of fact, and the connection need not always be direct, there must still exist a connection which is real and substantial rather than remote: see Coober Pedy at 140-141 per Hill J and Cowell Electric Supply Company at 266 per Hill J.
Although the cases cited above, apart from Broken Hill Pty Ltd, relate to the use of substantially the same words in cases concerning claims for the diesel fuel rebate under the Customs Act 1901 (Cth) and the Excise Act 1901 (Cth), I can see no reason for applying a different approach to the use of those words in the definition of “agriculture” in the Exemptions Act. In Proserpine Co-operative Sugar Milling Association v Deputy Commissioner of Taxation (1996) 34 ATR 129 at 133 Kiefel J similarly drew upon those cases to assist her in construing the words “connected with” in the definition of “agriculture” in s 3(2) for the purpose of determining a claim in respect of Item 3 of Sch 1 of the Exemptions Act.
As explained above, the irrigation infrastructure and activities of Murray Irrigation are both dedicated to and integrated with the soil cultivation activities of the farmers who are members of Murray Irrigation. Plainly, the operations of Murray Irrigation have a real, substantial and direct connection with the cultivation of the soil of the farmers who are its members.
Of course Murray Irrigation is not, itself, involved in the cultivation of land and therefore its activities may not be understood as constituting “agricultural” activities within the ordinary and natural meaning of that word. However, the issue arising is whether the reference in s 3(2) to “other operations connected with the cultivation of the soil”, expands the definition beyond the activities that would ordinarily fall within “agriculture” in its ordinary and natural meaning.
A number of factors support the contention of Murray Irrigation that an expanded definition was intended by the legislature. First, as with the diesel fuel rebate provisions, the exemptions provided for under sales tax legislation reflect a legislative policy of encouraging certain forms of operations and should not be given a narrow application: see Cliffs Robe River Iron at 274-275 and Telstra Corporation Ltd v Commissioner of Taxation (1996) 68 FCR 566 at 569-570 per Heerey J. In another sales tax case, Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 at 457 French J said:
“As a general proposition the taxpayer claiming the benefit of an exemption from the imposition of a tax has the burden of proving the facts necessary to fall within that exemption: Cuming Smith & Co Pty Ltd v Melbourne Harbour Trust Commissioners (1905) 2 CLR 735 at 742; Jackett v Deputy Federal Commissioner of Taxation [1932] SASR 405 at 407. On the other hand an exemption which exists for the purpose of encouraging, rewarding or protecting some class of activity is not to be given a narrow application. The liberal construction of provisions of Customs and Excise legislation allowing regates on duties and excise payable in respect of fuel used in mining operations is one application of that general proposition: Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275.”
Secondly, the use of substantially the same words in a similar context in s 164(7) of the Customs Act 1901 (Cth), prior to its amendment in 1995, was accepted as resulting in an expanded definition of “mining operations” and “agriculture” for the purposes of the diesel fuel rebate provisions: see Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 at 268 and 275; District Council of Coober Pedy at 137-139 and Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1 at 5.
Cowell Electric Supply Company, a diesel fuel rebate decision, is analogous to the present case. It concerned a claim for a rebate for diesel fuel used for the generation of power at power stations in country areas. The power was used, inter alia, by farmers for primary production purposes. The Full Court concluded that the rebate was payable in respect of fuel used to generate electricity consumed for agricultural purposes. Although the definitions of “primary production” and “agriculture” were not the same as in the Exemptions Act, the distinction is not significant for the purposes of considering the significance of a definition that includes “operations connected with” agricultural operations within the definition of “agriculture”. Section 164(1) provided for a diesel fuel rebate for fuel used in “primary production” which was defined as meaning relevantly, “agriculture”. Section 164(7) defined “agriculture” as meaning a number of operations specified in s 164(7)(a), (b), (c), (d) and (e) including “the cultivation of the soil” (s 167(a)). Section 167(f) provided for the definition of “agriculture” to extend to other operations “connected with” any of the specified operations. Although the generation of electricity for use in agriculture was not an agricultural activity, the members of the Full Court concluded that it was an operation “in connection” with the agricultural operations specified in s 164(7)(a), (b), (c), (d) and (e). Accordingly, the case was held to be one where apportionment was appropriate to determine the rebate allowable for fuel purchased for generating power for agricultural operations.
Ultimately, counsel for the Commissioner in this case accepted, quite properly in my view, that if she could not distinguish the diesel fuel rebate cases then the appeals must succeed.
The respondent’s contentions
The Commissioner’s main point of distinction was that, unlike s 164(7) of the Customs Act 1901 (Cth), s 3(2) of the Exemptions Act did not provide for an expanded definition of “mining” or “agriculture”. It was contended that the operations connected with the cultivation of soil, referred to in sub-para (b) of the definition of “agriculture” in s 3(2), were confined to “other” operations connected with the cultivation of the soil in the course of the activities specified in sub-para (a) or other activities of a like kind. Thus, so it was said, the operations described in sub-para (b) were explanatory of, but no wider in scope than, those described in sub-para (a) or any other activities that fell within the ordinary and natural meaning of “agriculture”. In substance it was argued that sub-para (b) was not intended to extend the definition of “agriculture” beyond the core agricultural activities specified in sub-para (a) or any other agricultural activities of a like kind.
Counsel for Murray Irrigation contended that sub-para (b) extended the definition of “agriculture” to operations which were not types of farming or agriculture but to operations that were “connected with” types of farming or agriculture.
The Commissioner’s submission, which is essentially an application of the ejusdem generis rule, requires sub-para (b) to be read down to be limited to the types of “agriculture” referred to in sub-para (a). Reading down the provision in the manner sought is not consistent with the liberal principles of construction applicable to legislation, such as the Exemptions Act, which is intended to confer a benefit on taxpayers.
More importantly, the submission of the Commissioner fails to have due regard to the significance of the use and width of the words “other operations connected with the cultivation of the soil” in s 3(2). It is to be observed that sub-para (a) is not confined to “agriculture” involving soil cultivation (for example, it includes apiculture and poultry farming).
I cannot accept the limitation suggested by the respondent. In my view the reasoning that has led the Court to regard the words “connected with” as expanding the ordinary and natural meaning of “mining operations” and “agriculture” in s 164(7) of the Customs Act 1901 (Cth) is applicable to s 3(2). In particular, as was said by the Full Court in Dyno Wesfarmers (at 5), the use of the words “connected with” in respect of mining operations is a “wider extension” of the meaning that might otherwise be given to “mining operations”. For example, the diesel fuel rebate now given to operations “in” mining was regarded by the Full Court as narrower then the previous rebate given to operations “connected with” mining. If the legislature did not intend an extended meaning to be derived from sub-para (b) it was appropriate to confine the sub-paragraph relevantly, to operations “in” agriculture or “in” cultivating the soil.
Counsel for the Commissioner also relied upon a detailed examination of the sales tax legislation prior to its amendment in 1992 and the Explanatory Memorandum in relation to the 1992 amendments. She contended that although the amendments to the Exemptions Act were a simplification measure, which changed the test for exemption from a “use of goods” test to a test that is “activity based”, the Explanatory Memorandum made it clear that the changes were not intended to change the “scope” of the exemption. Thus, it was submitted that I should not construe the amendments so as to extend the scope of the exemption to enable registration by a person who is not a primary producer.
There are several problems with this submission. First, it is primarily based on a construction of the Exemptions Act prior to, rather than since, its amendment. Secondly, the Explanatory Memorandum does not support the Commissioner’s argument as his counsel suggests. In particular, although the construction contended for by Murray Irrigation might grant registration to persons who were not entitled to it previously it does not follow that to do so is to expand “the scope” of the activities entitled to exemption from sales tax. Thus, if the irrigation activities presently carried out by Murray Irrigation had been carried out prior to the amending legislation by the farmers themselves for their own benefit, they would probably have been entitled to exemption under the definition of “agriculture” in cl 1(1) of the First Schedule of the Exemptions Act prior to its amendment. Thus, in that sense, the scope of the activities that may attract exemption have not been expanded although the scope of the persons entitled to exemption might have been.
In any event, I agree with the submission of counsel for Murray Irrigation that the amendments were extensive, substantial and plainly went beyond matters of drafting. In those circumstances, in my view, it is fallacious to approach the amendments in the manner sought by the Commissioner.
The Commissioner also made reference to s 10(d)(xvi) of the Exemption Act which refers to the supply of water as an ancillary activity to an activity falling within the definition of “agriculture”. Whilst that may be so in some cases, the supply of water as an ancillary activity can only occur if it is not an agricultural activity that is, a “higher-level” activity of the exemption user. Thus s 10(d) (xvi) cannot advance the case put by the Commissioner in a situation where the supply of water is held to be an “agricultural” activity.
Finally, it was submitted by the Commissioner that an exemption user, and therefore registration, is confined to persons whose business is that of carrying out activities in the course of the user’s primary production business. Accordingly, so it was said, as Murray Irrigation does not carry on a primary production business it cannot be an exemption user. The submission is entirely circular. If Murray Irrigation’s activities fall within the definition of “agriculture” in s 3(2) of the Exemptions Act then it will be conducting a primary production business by reason of the definitions of “primary production activity” and “primary production business” in Item 2.
Conclusion
For the above reasons I have concluded that the supply and distribution of water by Murray Irrigation in the Murray Valley is an operation “connected with the cultivation of the soil” within the meaning of those words in s 3(2) of the Exemptions Act. It follows that the operation is a primary production activity in the course of the primary production business of Murray Irrigation. Accordingly, Murray Irrigation continued to satisfy the ground for its registration when that registration was cancelled by the Commissioner under s 80(1)(a) of the Assessment Act.
As I have concluded that Murray Irrigation’s operations were agricultural activities it must follow that both appeals should be allowed.
Accordingly, for the above reasons:
· each of the objections of Murray Irrigation ought to have been allowed by the Commissioner;
· the applicant is entitled to the relief sought in its application in each matter.
As the applicant has succeeded on each appeal it is entitled to its taxed costs of the appeals.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.
Associate:
Dated: 30 April 1999
Counsel for the Applicant:
Mr S Gageler
Solicitor for the Applicant:
Anderson Legal
Counsel for the Respondent:
Ms J Davies
Solicitor for the Respondent:
Australian Government Solicitor
Date of Hearing:
30 and 31 March 1999
Date of Judgment:
30 April 1999
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