NT1999/432 and Commissioner of Taxation

[2000] AATA 1081

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2000] AATA 1081

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No NT1999/432

TAXATION APPEALS DIVISION		)
Re		THE TAXPAYER

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal The Hon Mr RNJ Purvis, QC, Deputy President

Date8 December 2000

PlaceSydney

Decision The objection decision under review is set aside, the objection allowed and the matter remitted to the Respondent in order that the credit to which the Applicant is entitled may be calculated.  Liberty to apply is reserved. 

[Sgd]   RNJ PURVIS

Deputy President

CATCHWORDS

TAXATION – refund of sales tax paid on instruction manuals for motor vehicles – holding company - whether two assessable dealings - whether manuals sold with vehicles or given with vehicles – whether manual regarded as accessory – section 43 agreement – one inclusive invoiced price – price for which manuals could reasonably have been expected to have been sold if they had been sold separately

Sales Tax Assessment Act 1992

Sales Tax (Exemptions and Classifications) Act 1992

Federal Commissioner of Taxation v Myer Stores Ltd  98 ATC 4384

Colgate Palmolive Pty Ltd v Federal Commissioner of Taxation 99 ATC 42

Queensland independent Wholesalers Ltd v Federal Commissioner of Taxation 91 ATC 4492

REASONS FOR DECISION

The application

1. This is an application for review of an objection decision made by the Respondent on 17 June 1999. The objection decision disallowed the Applicant’s objection against a decision of 11 August 1998 to disallow a claim for a credit made by an application for refund of sales tax under date 29 September 1997. The type of goods involved were “instruction manuals”, the period in which the claimed entitlement arose being from 1 October 1994 to 30 September 1997. The claim of the Applicant was made pursuant to the provisions of section 51 of the Sales Tax Assessment Act 1992 (“the Act”).

2. In its reasons for decision lodged with the Tribunal pursuant to subsection 37 (1)(a) of the Administrative Appeals Tribunal Act 1975 the Respondent inter alia stated:

“1.  …under normal circumstances where instruction manuals, being printed matter covered by exemption Item 100 in Schedule 1 to the E&C Act [Sales Tax (Exemptions and Classification) Act], are sold with goods for one global amount, and those goods are subject to sales tax, then the value of the printed matter, (if any) may be apportioned by virtue of Section 95  of [the Act].

2.  Such apportionment could lead prima facie to the conclusion that sales tax had been overpaid on the goods to the extent that the manuals had been subject to tax when their value should have been apportioned and exemption allowed on that portion of the global value attributable to the manuals.

3.  The current dispute however involves a claim for refund in respect of manuals sold with motor vehicles on which sales tax had been accounted for during the relevant period using the motor vehicle industry Uniform Taxable Value (the “UTV”) of Retail List Price (Tax Exclusive) less 22.25%.

4.  The UTV is a value accepted by the Commissioner as establishing an all inclusive basis on which to satisfy a liability for sales tax in respect of assessable dealings involving passenger motor vehicles of less than 7.5 tonnes…

5.  The person in this case has claimed a credit in respect of sales made in the period 1 October 1994 to 30 September 1997.  During the whole of that period the person accounted for sales tax on the basis of the UTV.  On 1 July 1997 the person entered into a formal written agreement with the Commissioner under section 43 of the [Act] in respect of the UTV.

Pre - 1 July 1997

6.1  In the period 1 October 1994 to 30 June 1997, the person paid tax on the basis of the UTV…

6.2  That being the case, the person’s use of the UTV in calculating their liability for sales tax during the period1 October 1994 to 30 June 1997 appears to have been based on an administrative convenience sanctioned by the Commissioner through an arrangement or an understanding with the industry.  It is the view of the Commissioner that this practice or understanding has always been premised on the basis that it provides an all-inclusive means of accounting for sales tax liability for taxpayers in the motor vehicle industry.

6.3  As such, where sales tax has been accounted for on motor vehicles sold during the relevant period on the basis of the UTV, then prima facie no further tax is payable and nor is there any scope for claiming that tax has been overpaid.

6.4  In order to establish whether or not tax has been overpaid, we must examine the basis on which the tax was paid in the first place.  Section 16  in Division 1 of Part 3 of the [Act] sets out the General Rules for Taxing Assessable Dealings…

6.5  It is noted that the first step in the calculation of tax payable under the [Act] is to determine the taxable value under Division 3 of Part 3 of the [Act].

6.6  Division 3 deals with Taxable Value and section 34(1) in Sub-division A of that Part provides that the general rules for calculating taxable value are set out in Table 1.  In this case however the sales tax has not been paid on the relevant dealings on the basis of a Table 1 taxable value but instead has been paid on the basis on the basis of the UTV, which, as stated above, was not, during the period 1 October 1994 and 30 June 1997 a taxable value covered by a section 43 agreement but was the result of an administrative arrangement or practice.

6.7  Accordingly, if the person wishes to establish an overpayment of sales tax on assessable dealings involving motor vehicles, they must first establish the taxable value prescribed by section 34(1) and Table 1…

6.8  AD1b in Table 1 provides that the normal taxable value on a wholesale sale made by a person who is not the manufacturer of the goods, is the price (excluding sales tax) for which the goods are sold…

6.9  Having established [the] wholesale selling price, the person could then apportion the value of the manuals (if any) under section 95.  If the resulting tax payable on this basis was greater than the tax already paid on these taxable dealings, a credit would arise under section 51 and credit ground CR1 in Table 3.

6.10  It is emphasised however that the UTV cannot be used as a starting point for purposes of establishing an over-payment.

6.11  …The non-taxable margin of 22.25% is a negotiated percentage that was arrived at after consultation with the industry and this figure is intended to cover all elements of the List Price that are not subject to sales tax.

…

1 July 1997 to 30 September 1997

7.  In the period after 1 July 1997, the person was party to a formal section 43 agreement with the Commissioner concerning the UTV.  As such, the person has accounted for tax on the basis of a taxable value covered by Division 3.  As stated however, it is not accepted that tax has been over-paid in relation to manuals supplied with motor vehicles sold, as the UTV is considered to provide an all encompassing basis on which to account for tax.

7.1  Further, as stated above, the percentage reduction from List Price is intended to cover all elements of the list price that are not subject to sales tax and based on information supplied by members of the industry, the value attributable to owner’s instruction manuals is included in the non-taxable margin as calculated by them.  As such it is not accepted that sales tax has been over-paid on manuals supplied with motor vehicles.

Further submissions

…

8.1  It was argued… that there was nothing in the current UTV agreement which would preclude the application of section 95 to apportion the taxable value of dealings between the elements of such dealings, including manuals and that Clause 8 does not apply because it refers only to goods which are not parts of, or accessories to the vehicle.

…

8.4 …section 43(2) of the [Act] states clearly that the terms of the Section 43 agreement prevail over any other part of the Act with which the agreement is inconsistent. As such, the fact that the current section 43 agreement does not specifically refer to section 95 does not alter the fact that the agreement prevails over that section.

…”  (T2)

The matters at issue

3.      Resolution of the issues that arise for consideration in this application entail an examination as to whether:

(a)  sales tax has been over-paid on owner’s instruction manuals provided with new vehicles by the Applicant; 

(b) an entitlement exists for a credit of sales tax pursuant to CR1 Table 3 Schedule 1 of the Act in respect of the instruction manuals in question; and

(c) apportionment is appropriate between the cost of the instruction manuals and the cost of the motor vehicles under Section 95 of the Act for the period 1 October 1994 to 30 September 1997.

Implicit in these considerations is a discussion as to whether or not there were two assessable dealings, whether or not the amount paid by the Applicant was the amount it was legally obligated to pay and whether section 95 of the Act has application to a period when a Uniform Sales Value and/or a section 43 agreement was in place.

4.      The matter entails a decision as to whether the Applicant is entitled to a credit for sales tax over-paid during the period 1 October 1994 to 30 September 1997 in respect of motor vehicle instruction manuals sold by it by wholesale to its holding company.  This and whether any, and if so what part of, the sales tax paid by the Applicant related to the sale of the manuals as distinct from the sale of the motor vehicles.

The hearing

5.      At the hearing of the application the Applicant was represented by Mr Stephen Gageler, Senior Counsel, the Respondent by Ms Jennifer Davies of counsel.

6. There was admitted into evidence the documents lodged by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.  The Applicant tendered the following written material:

Exhibit No.	Description	Date
A	Statement of Mr Liebman	10 October 2000
B	Statement of Mr Liebman	7 November 2000
C	Statement of Mr Whitefield	2 November 2000
D	Statement of Ms Ferranti	8 November 2000
E	Copy of letter from Assistant Commissioner	18 November 1985

The financial controller of the Applicant gave oral evidence and was cross-examined upon it.

factual situation

7.      The nature of the Applicant’s business and the manner in which it conducted its operations was explained to the Tribunal by Mr Liebman, the financial controller of the Applicant.  The Applicant and its holding company had entered into a bailment plan agreement with Ford Credit Australia Ltd (Ford Credit), which provided for a finance and bail arrangement said to be commonly used in the motor vehicle industry.

8.      Under the bailment plan the Applicant, or its holding company, would order or purchase motor vehicles from manufacturers or importers as agent for Ford Credit.  The Applicant or its holding company would hold the motor vehicles as bailee for Ford Credit and be entitled to sell the motor vehicles to retail customers on their own account.  Property in the motor vehicles would pass from Ford Credit to the Applicant or its holding company at the time of retail sale.

9.      During the period 1 October 1994 to 30 September 1997 the practice of Ford Credit, the Applicant and its holding company was that the holding company would order motor vehicles with instruction manuals from distributors on behalf of Ford Credit.  The motor vehicles were delivered to the Applicant with an invoice from the distributor or manufacturer for the wholesale price of the motor vehicle and “selling expenses”, the invoice indicating the amount of sales tax payable on the motor vehicle.  When the holding company secured a sale to a customer it would, upon receipt of moneys from the customer, or execution of a finance agreement by the customer, notify Ford Credit and transfer funds on behalf of the Applicant, equivalent to the wholesale price of the motor vehicle and the selling expenses.  Once the transfer of funds had occurred, the motor vehicles were treated as being sold by Ford credit to the Applicant and subsequently by the Applicant to its holding company.  The holding company issued an invoice for the sale of the motor vehicle to the customer.  Each month the Applicant remitted to the Respondent an amount equal to the sum of the sales tax amounts recorded for all motor vehicles sold during the previous month.

10.     As explained by the financial controller in his oral evidence before the Tribunal, when the vehicle was delivered to a customer an instruction manual was sometimes in the vehicle and sometimes provided at a later date.  However, a manual was always included with the sale of the vehicle.  It was the controller’s understanding, although he could not say so from his own knowledge, that the price of the instruction manual was included in the invoice value.  On occasions it was necessary to purchase manuals separately from a Ford publisher or from a manufacturer or distributor.

11.     Thus the sales from the distributor to Ford Credit, to the Applicant, and from the Applicant to its holding company, were each for the same wholesale price save that the sale from the Applicant to its holding company included sales tax.  The wholesale price was the price invoiced by the distributor.  The amount of sales tax payable was shown on the invoice and was calculated by multiplying the invoice price by the rate applicable to the wholesale sale of motor vehicles under relevant Schedules of the Sales Tax (Exemptions and Classifications) Act 1992.  It was an agreed fact at the hearing of the application that the instruction manuals were exempt from sales tax under item 100 of Schedule 2 of the Exemptions and Classifications Act. 

12.     The Applicant’s financial controller could not say how the recommended retail list price (RRLP) was calculated by the manufacturer or distributor.  The RRLP less 22.25 per cent, with figures representing “selling expenses” and “dealer advertising fund” together make up the amount that was paid to Ford Credit to discharge the liability of the Applicant. 

13. During the period 1 October 1994 to 30 June 1997 the wholesale price for the motor vehicles was an amount equal to the retail list price excluding sales price less 22.5%. This price was in accordance with an administrative arrangement between the Respondent and the motor vehicle industry known as the “Uniform Taxable Value” arrangement. During the period 1 July 1997 to 30 September 1997 the wholesale price for the motor vehicles was an amount equal to the retail list price excluding sales tax less 22.25 per cent. This price was in accordance with an agreement with the Respondent under section 43 of the Act to which the Applicant was a party by virtue of the Applicant executing an “authority to sign form”, authorising the Motor Trades Association of Australia to sign the agreement on its behalf.

14. So far as here relevant the section 43 agreement provided:

“…

RECITALS

(A) The parties desire to enter  into an agreement in order to continue a longstanding arrangement that has existed between the Commissioner and Motor Vehicle Industry bodies regarding the taxable value of new motor vehicles for the purpose of calculating the sales tax payable on new motor vehicles.

…

(C) The non-taxable component contained in this agreement has been arrived at after negotiations with the industry bodies.  The practice of applying a non-taxable component has been accepted and adopted for some years by members of the industry in calculating sales tax on taxable dealings.

…

THE TERMS OF THE AGREEMENT ARE AS FOLLOWS:

…

3.  The terms of this agreement replace the taxable value provisions of the STAA in so far as they relate to the calculation of the taxable value of new motor vehicles. 

4.  (a)  all parties to this agreement shall calculate the taxable value of new motor vehicles in all assessable dealings in accordance with the terms of this agreement and, in particular, in accordance with clause 7.

…

7.  Subject to the exceptions (a), (b), (c) and (d) to this clause, the taxable value of new motor vehicles [the Applicant submitted that “new motor vehicles” by implication includes instruction manuals] which are sold by a manufacturer/importer, wholesale finance company or dealer wholesale company will, in all assessable dealings, be the list price less a non-taxable component of 22.25%.  This is referred to as the clause 7 value.

…

8.  Where a new motor vehicle is sold with goods that are not parts of or accessories to the vehicle, (golf clubs, TVs or watches etc), sales tax on those goods must be borne at the time of purchase or importation of the goods and no further liability for sales tax will arise in relation to such goods.

…”  (T23)

15. It is the contention of the Applicant that clause 8 of the Section 43 agreement makes clear that the reference to the “new motor vehicles” was intended to cover goods sold with a new motor vehicle that are parts of or accessories to the vehicle. Instruction manuals, it was said, are accessories.

16.     According to the Applicant’s financial controller, in relation to all motor vehicles sold during the relevant period by the Applicant to its holding company, other than for Ford Mondeo and Ford Transit, the Applicant delivered an instruction manual in the glove box or boot of the motor vehicle.  In relation to the above mentioned Mondeo and Transit the instruction manuals were forwarded to the holding company separately by the supplier but at the same time as the vehicles themselves were dispatched.  It was the belief of the financial controller that the value of accessories such as the instruction manuals were sold by wholesale with the motor vehicles and included in the wholesale price. 

17.     During the relevant period the Applicant calculated its sales tax liability in relation to the motor vehicles sold to its holding company using the wholesale price as the taxable value. 

The relevant legislation and contentions of the parties

18. As relevant to this application the Act provides:

“Section 5  GENERAL DEFINITIONS

5  In this Act, unless he contrary intention appears:

…

”taxable dealing’ means an assessable dealing that happened on or after the first taxing day and for which no exemption is available under Division 2 of Part 3;

…

Section 16 GENERAL RULES FOR TAXING ASSESSABLE DEALINGS

16(1) [Assessable dealings listed in Table 1] Table 1 sets out all the assessable dealings that can be subject to sales tax.

16(2) [Assessable dealing where no exemption applies] If the time of an assessable dealing (as specified in column 4 of the Table) is on or after the first taxing day, and no exemption applies under Division 2 of this Part, then:

(a) the dealing is a taxable dealing;

(b) the person specified in column 3 is the person liable to the tax;

…

16(3) [Calculation of amount of tax] To calculate the amount of the tax:

(a) determine the taxable value of the dealing under Division 3 of this Part;

(b) deduct any exempt part of the taxable value that applies under Division 4 of this Part;

(c) multiply the result by the rate that applies under the Exemptions and Classifications Act.

…

Section 24  EXEMPTION IF EXEMPTION ITEM IS UNCONDITIONALLY SATISFIED

24  An assessable dealing is not taxable if:

(a) the goods are covered by an exemption Item that is in force at the time of the dealing; and

(b) all the requirements of that Item have been met before the time of the dealing.

…

Section 34  HOW TO WORK OUT THE TAXABLE VALUE OF A TAXABLE DEALING

34(1) [Location of general rules] The general rules for calculating the taxable value are set out in Table 1.

…

Section 43  AGREEMENT BETWEEN TAXPAYER AND COMMISSIONER REGARDING CALCULATION OF TAXABLE VALUE

43(1)  [Commissioner may enter into agreement] The Commissioner may enter into an agreement with a taxpayer about calculating the taxable values of particular taxable dealings.

43(2) [Agreement to prevail] So far as the agreement is inconsistent with this Act the agreement prevails.

…

Section 51  CREDIT ENTITLEMENTS

51(1) [Entitlement to credit] Tables 3 and 3A set out the situations in which a claimant is entitled to a credit.

…

Section 95  APPORTIONMENT OF GLOBAL AMOUNTS

95(1)  [Calculating price of goods sold]  If there is a need to know the price for which particular goods were sold, but the parties have not allocated a particular amount to those goods, the price for which those goods were sold is (for the purposes of the sales tax law) the price for which the goods could reasonably be expected to have been sold if they had been sold separately.

...”

Table 1 of Schedule 1 to the Act details “Assessable dealings” amongst which as here relevant are AD1b and AD11b. AD1b as referable to Australian goods describes the assessable dealing as the “wholesale sale by a person who is not the manufacturer of the goods” and the normal taxable value as “the price (excluding sales tax) for which the goods were sold”. So far as imported goods are concerned item AD11b describes the assessable dealing as the “wholesale sale by any person” and the normal taxable value as “the price (excluding sales tax) for which the goods were sold”. The relevant motor vehicles were as to some of them Australian goods and as to some imported goods. Table 3 of Schedule 1 relates to “Credit grounds” and in item CR1 referable to tax overpaid details the ground as “claimant has paid an amount as tax that was not legally payable” and the amount of credit as “the amount overpaid, to the extent that the claimant has not passed it on”.

19. The Sales Tax (Exemptions and Classifications) Act 1992 in Part 3 “Rules for Interpreting Schedule 1” provides that:

“…

4(2)  [Effects of Schedule 1]  In broad terms, Schedule 1 has the following effects (through the Assessment Act):

(a) If all the requirements of an exemption item are satisfied at or before the time of an assessable dealing, the dealing is not taxable.

…”

20.     It is maintained on behalf of the Applicant that the situation as it presents itself in this application is one where there is a need for the apportionment of global amounts, that is, apportionment between the price for which the motor vehicles per se were sold and the price for which the manuals were sold.  The situation is aligned with that referred to in FederalCommissioner of Taxation v Myer Stores Ltd 98 ATC 4384 where at 4390 it was said:

“it is obviously a truism as a matter of general law and accepted by the sales tax legislation that a purchaser may purchase for a single price more than one item of goods. Where more than one item of goods is sold for a global price and the goods are subject to the same rate of sales tax there will never be a need to distinguish between the prices paid for each item of goods. However, if there is a sale of more than one item of goods and either different rates of sales tax are payable on each item, or no sales tax is payable on one item and sales tax at a rate is payable on the other then section 95 of the Act permits an apportionment of the price among the goods in accordance with the price at which each could reasonably have been sold separately.”

21.     It is thus maintained on behalf of the Applicant that there has been a sale of more than one item of goods, namely the vehicle and the brochure, and that “different rates of sales tax are payable on each item”, indeed as to the latter “no sales tax is payable”.  Accordingly it is said that an apportionment of the price among the goods in accordance with the price at which each could reasonably have been sold separately is required. 

22.     At 4395 in Myer Stores (supra) it was said:

“The sale in the present case included the manuals.  Where a sale of goods takes place for a single price but the sale includes different categories of goods in respect of which sales tax is levied at different rates the general principle is that price is apportioned.  Section 95(1) of the Assessment Act provides that “if there is a need to know the price for which particular goods are sold”, but the parties have not allocated a particular amount to the goods the price for which the goods were sold is, for the purposes of the sales tax law, the price for which they could reasonably have expected to have been sold if they had been sold separately.”

23. The Respondent does not take issue with the above as being a relevant statement of the applicable law. Rather it is maintained on behalf of the Respondent that by reason of the agreements entered into in both periods, that is the uniform value taxable arrangement and the section 43 agreement that there is here a composite sale and not a global sale, the former including the manuals. That is, it is maintained, that there is only one assessable dealing. Alternatively, if there be two assessable dealings, then the tax paid was that referable to the sale of the vehicle, there not being any evidence of there having been a sale of a manual. If a car is bought the purchaser obtains a manual free of charge.

24.     At 4399 of Myer Stores (supra), the nexus between “ancillary items” and “other products”, is further explained, when the court said:

“Where a manufactured product is sold with ancillary items ordinarily the dealing will be taxed by reference to the overall price.  If the ancillary items are taxed at a different rate from the main product section 95 of the Assessment Act provides for apportionment.  Apportionment also applies where the ancillary items like the manuals included with the manufactured products in the present case are exempt from tax.  In other words the legislation ensures that items sold with other products but which are “ancillary” to those products will be subjected to sales tax at the appropriate rates.”

25.     There is no issue raised by the Respondent as to the brochures being ancillary to the motor vehicle product.  It is maintained, however, that the arrangement and the agreement took into account or implicitly included a non-taxable percentage, the balance then remaining being the amount on which sales tax was to be calculated.  Accordingly the various statements of principle above quoted in Myer Stores (supra) in it are distinguishable on the facts of the present application.

Discussion of Contentions and decision

26. The Applicant claims a credit in respect of the period during which there was in existence a uniform taxable value arrangement in that the Applicant sold instruction manuals with motor vehicles to its holding company at the one inclusive invoiced price. This involved two assessable dealings under Table 1 of Schedule 1 whereby the wholesale sale of the motor vehicle was a taxable dealing under section 16(2) of the Act and the wholesale sale of the instruction manual was not a taxable dealing under Section 16(2) because it was exempt. It is contended that the amount of tax the Applicant was obliged to pay on the sale of the motor vehicle pursuant to section 16(3) read with items AD1b and AD11b was the price excluding sales tax at which the motor vehicle was sold and it was not obliged to pay sales tax on the price at which the instruction manual was sold. Consequently section 95 was enlivened, the Applicant being required to deduct from the one inclusive invoiced price, the price for which the manual could reasonably have been expected to have been sold, if sold separately. This deduction had not been made and consequently the Applicant paid more sales tax than it was legally obliged to pay.

27.      It is thus maintained on behalf of the Applicant that the uniform taxable value arrangement is not relevant to the circumstances of this matter.  Items AD1b and AD11b look to the “price (excluding sales tax) for which the goods were sold”, that is, it is said, the price actually paid.  The amount for which goods are sold is a question of fact, the same usually but not invariably being the contractual purchase price arrived at between buyer and seller (see Colgate Palmolive Pty Ltd v Federal Commissioner of Taxation 99 ATC 4289 at 4290; Queensland independent Wholesalers Ltd v Federal Commissioner of Taxation 91 ATC 4492). Thus the uniform taxable value arrangement prescribed how an invoice price was to be ascertained, the invoice price being however the price actually paid for both the motor vehicle and the instruction manual.

28. As earlier indicated, the Respondent contends that the wholesale price was not determined by reference to components but to a formula agreed with the Respondent as the basis on which sales tax was to be calculated. Indeed the formula agreed on included a non-taxable percentage and the balance then remaining was the amount on which sales tax was to be calculated. Thus it is said in respect of the first relevant period section 95 does not arise. Further, it has not been even shown, the Respondent maintains, that the price for which the vehicle was sold included a manual.

29. The claim made by the Applicant referable to the period when the section 43 agreement was in operation is put on a similar ground to that applicable to the earlier arrangement. The one inclusive invoice price for the motor vehicle and the manual corresponded with the taxable value referred to in clause 7 of the agreement. It was maintained that there are two relevant limitations on the operation of section 43, one that it is limited to an agreement “about calculating the taxable values of particular taxable dealings” and secondly that an agreement within its scope prevails only so far as it is inconsistent with the Act. If it is consistent with the Act it has no relevant effect. The definition of “taxable dealing” in section 5 of the Act relates to “an assessable dealing…for which no exemption is available…” It is said that an agreement under section 43 is effective only to the extent that it is about the taxable value of an assessable dealing that is not exempt. Thus a section 43 agreement cannot take effect in circumstances where consideration is given to an assessable dealing that is exempt. Thus the Respondent cannot by agreement effect whether or not a particular assessable dealing is exempt and cannot by agreement affect the value of any assessable dealing that is exempt.

30. The Respondent on the other hand maintains that there is only one assessable dealing, the Applicant having failed to show that the manual was a component on which sales tax had been paid. Thus the section 43 agreement has relevance, it being referable to the taxable assessable dealing. The agreement sets a taxable value for motor vehicles and by its terms prevents the Applicant from relying on section 95. It is, by its very terms, inconsistent with Section 95. The agreement affects the taxable value of a motor vehicle and does not purport to refer to an assessable dealing that is exempt.

31. The latter, surely however, is a matter of fact. If the Tribunal is satisfied that the item sold under the rubric of motor vehicle falls within the purport and intent of section 95 then the submissions made in this regard on behalf of the Applicant are apposite. That is, if there be two assessable dealings, the one to the motor vehicle and the other to the manual, then section 43 could not relate to the manual assessable dealing as it is exempt.

32. The section 43 agreement is said to be more than an agreement “about calculating the taxable values of particular taxable dealings” and is an agreement about calculating the taxable values of particular assessable dealings. Clause 7 of the agreement, as earlier indicated, provides that the taxable value of the motor vehicles sold “in all assessable dealings” is to be the list price less the non-taxable component of 22.25 per cent. The clause does not make mention of the assessable dealing represented by the sale of a vehicle alone. Consequently, apportionment of the global taxable value of the list price less the percentage, so as to exclude so much of the global amount as relates to the taxable value (being exempt) attributed to the assessable dealing constituted by the sale of the instruction manual is to be allowed. Clause 7 of the section 43 agreement provides for a combined taxable value of list price less the percentage for the two assessable dealings constituted by the sale of the motor vehicle and the other sale of the instruction manual.

33.      On the basis of the whole of the material placed before it, the Tribunal is satisfied that there were two assessable dealings in which the Applicant and its holding company were involved, one the sale of the motor vehicle, the other the sale of the manual.  The Tribunal finds that manuals were sold with vehicles and not given away with vehicles, this being implicit in the manual being regarded as an accessory within the meaning of the agreement. 

34. The Tribunal is further satisfied that the Applicant was required to deduct from the one inclusive invoiced price, the price for which the manuals could reasonably have been expected to have been sold if they had been sold separately within the meaning of section 95 of the Act so as to arrive at the price for the sale of the motor vehicle only, the price on which the sales tax was payable. The Applicant is entitled to a credit consequent on an apportionment under section 95.

35.      The Tribunal is not able to ascertain the price for which the relevant manuals could have been sold, if sold separate from the motor vehicles.  The evidence before the Tribunal is that of replacement value and not the price for which the items could have been sold by a manufacturer.  The matter is to be referred back to the Respondent and the Applicant in order that the price for which the manuals could have been sold may be ascertained.

36.      Accordingly the objection decision under review is set aside, the objection allowed and the matter remitted to the Respondent in order that the credit to which the Applicant is entitled may be calculated.  Liberty to apply is reserved.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of:

Deputy President RNJ PURVIS, QC.

Signed:         .....................................................................................
  Associate

Date/s of Hearing  10 November 2000
Date of Decision  8 December 2000
Counsel for the Applicant         Mr S Gageler, SC
Counsel for the Respondent     Ms J Davies