Distribution Group Limited v Commissioner of Taxation

Introduction 1 The applicant has applied to the Court, by way of appeal, to set aside a decision of the respondent ("the Commissioner") disallowing the applicant's objection to an assessment of sales tax made by the Commissioner under Pt 10 Div 1 of the Sales Tax Assessment Act 1992(Cth) ("the Assessment Act"). The assessment was made in respect of a transaction involving the sale by the applicant of Category 5e Local Area Network cable which is solid‑core copper data communications cable ("LAN cable"). By virtue of s 24 of the Assessment Act, a transaction otherwise assessable to sales tax was not taxable if the goods, the subject of the transaction, were covered by an exemption item in Sch 1 to the Sales Tax (Exemptions and Classifications) Act 1992(Cth) ("the Exemption Act"). The applicant contended that the LAN cable is exempt from sales tax pursuant to Item 43(1) in Sch 1 to the Exemption Act. 2 Item 43 is in the following terms: "(1) The following goods, if they are of a kind ordinarily used as part of fixed electrical installations in consumers' premises: (a) electrical fittings (including electronically operated electrical fittings); (b) electrical accessories (including electronically operated electrical accessories); (c) electrical materials (including electrical conduit) (2) Subitem (1) does not cover: … (b) electronic equipment (other than electronically operated electrical fittings and accessories); (c) electrically operated appliances, apparatus and machines; … (m) flexible cables; … (3) … (4) This Item does not cover goods of a kind ordinarily used in the provision of telecommunications or audio visual services." 3 Although initially contested by the Commissioner, ultimately it was not in issue that the LAN cable constituted electrical materials of a kind ordinarily used as part of fixed electrical installations in consumers' premises within Item 43(1) and that it did not fall within Item 43(2)(b), (c) or (m). Item 43(3) is not relevant for present purposes. 4 The issue for the Court to determine is whether the LAN cable is excluded from the exemption in item 43(1). This requires an answer to the question whether the LAN cable is, within item 43(4), goods "of a kind ordinarily used in the provision of telecommunications or audio visual services" and therefore not excluded from the exemption in item 43(1). 5 On 30 July 1999 the applicant sold a quantity of LAN cable by wholesale for $329.21 ("the specified dealing"). On 1 October 1999 the applicant requested an assessment on the specified dealing under s 102 of the Assessment Act. On 15 December 1999 the Commissioner issued an assessment under s 102 of the Assessment Act for $72.43. On 14 February 2000 the applicant lodged a notice of objection against the assessment (amended by leave on 6 June 2001) which the Commissioner disallowed on 23 February 2001. On 20 April 2001 the applicant appealed against the Commissioner's decision.

The LAN cable 6 The LAN cable comprises eight single strand conductors of annealed copper, 0.5mm in diameter, insulated with a polyethylene or teflon substance. The conductors are arranged in pairs which are twisted together, giving four sets of twisted pairs. Each pair has a different twist length and the colour coding of the insulation is arranged to identify the individual conductor and the pair to which it belongs. The entire conductor assembly is sheathed with polyvinyl chloride. The overall diameter of the cable is approximately 5mm. 7 The cable is designed for, and is used in, local area network systems ("LAN") to facilitate data communications. A LAN is a network for linking computers together within a single organisation. In a typical LAN, computers and other applications, such as printers, will communicate with each other whether or not the network is connected to a public network. However, often a LAN is connected to a public network to access facilities such as the internet. LAN cable is designed for, and used in, structured cabling systems which were developed for computer communications within a network. Although structured cabling such as LAN cable can be used for telephone communications, the performance levels of LAN cables are not necessary for telephone communications, voice grade cable being adequate for these purposes. However where a LAN is established for a computer network, it may also be used for telephone communications to avoid duplicating cabling. 8 LAN cabling is installed within walls, partitions and ceilings as part of a building's fixed wiring infrastructure. LAN cable is not flexible; it provides an electrical connection between items of data equipment and a central point ("hub") and enables the conveying of electricity between items of equipment. The cable is installed within the structure of a building and terminates at a socket outlet. The socket is usually installed in a wall or other architectural fixture and is designed to accept a plug attached to a flexible lead. The socket is generally located at a work station close to the user's equipment. Most LAN systems have a hub from which the cables radiate throughout the building and terminate at socket outlets. 9 Network providers of telecommunications and audio visual services, such as Telstra or Optus, do not use LAN cable in the provision and delivery of those services to the point at which the services are provided to buildings or structures. For example, Telstra does not use LAN cable in any part of its network in Australia up to what is called the network boundary point or public network interface, that is the point at a consumer's premises at which the responsibility of Telstra as a provider of telecommunications and audio visual services ends. The network boundary point or public network interface marks the boundary between the telecommunications carrier's network and the premises of the user. "Public network interface" is defined in par 3.1.35 of Australian/New Zealand Standard 3080:2000 entitled "Telecommunications installations - Integrated telecommunications cabling systems for commercial premises" as: "a point of demarcation between public and private network. In many cases the public network interface is the point of connection between the network provider's facilities and the customer premises cabling". 10 Structured cabling or generic cabling is a set of rules for cabling and the applications that are connected by it. The cable is connected at the transmitting and receiving end by a network interface card ("NIC") that transmits certain volts and current in accordance with protocols such as the voltage and current rules. Structured cabling enables computers within a network to communicate with each other by means of a NIC which converts computer data in the form of "bits" into an electrical signal in the form of a measure of frequency, megahertz ("mHz"), to be transmitted on the cable. At the receiving end the NIC converts voltage into megabits. The LAN cable is specified to 100mHz. Cabling recognises and transmits an electrical signal, that is, voltage and current, and does not recognise or carry data. 11 Generic cabling such as LAN cable enables many different types of applications or equipment to communicate such as standard telephones, digital telephones, video systems, security systems, thermostats, sensors and high‑speed computers within a LAN. However different applications require certain levels of cable performance and highly specialised applications require high performance cable. 12 Cabling such as the LAN cable transmits an electrical signal from one point ("the transmitter"), to another point ("the receiver"). An electrical signal comprises a voltage and a current. A voltage is created at the transmitter by a power source and is transmitted along the cable to the receiver. Changes in the voltage are detected by the receiver when the voltage and current are turned on or off. These on/off signals are translated by the NIC card into the computer language of "1" and "O". 13 The electrical signal which is transmitted on a LAN cable is a function of voltage, current and resistance. The use of what is called Balun theory or balanced transmissions allows the transmission of high frequency data along structured cabling such as LAN cable by enabling the fast transmission of voltages. Encoding systems are used which allow many "bits" of information to be represented by few changes in the voltage signal and this increases the speed and efficiency of transmission. 14 The LAN cable is designed for internal use only and does not have the protection systems necessary for an outdoor environment. It is generally installed as part of the fit‑out of commercial premises. LAN cable was created for computers, not for telephones, although, as I have noted, it can be used for telephone services. LAN cable would not be installed for telephone use alone or to provide electrical power to run other equipment.

Does LAN cable carry or transmit electrical current or electromagnetic energy? 15 There was initially an issue at the hearing as to whether LAN cable carried or transmitted electrical current or electromagnetic energy. Both parties led expert evidence on this issue. Ultimately the difference in the views of the experts was of little consequence. Mr Russell Julius, called on behalf of the applicant considered that electricity in the form of voltage and current, being AC current in the form of a flow of electrons, was transmitted or carried through LAN cable in a LAN network albeit as a vehicle for carrying "bits" to be encoded and decoded. Mr Branislav Tomasich, called on behalf of the Commissioner, considered that in LAN cable electromagnetic energy transmitted information by the flow of electrons, that is by means of voltage and current through the conductivity of the copper cable. He said that the rate or speed at which the electromagnetic energy moved through the communications cable is described as "current", which is DC current. The point Mr Tomasich was seeking to make was that electrical current for power is quite different in nature from the transmission of electromagnetic energy for telecommunications. That may be so, but in both cases electric current flows along the conductive wire or cable notwithstanding that LAN cable is not ordinarily used to provide electrical current for power. 16 As Mr Peter Collins, an expert called by the applicant, put it, the information transmitted along a LAN cable is transmitted by the flow of electric current and not by electromagnetic energy. He said that a LAN cable does not utilise electromagnetic energy to transmit information. Put shortly, when a LAN cable is used to transmit information, an electric current flows down the cable. Mr Tomasich ultimately agreed that electric current flows through a LAN cable, albeit that it sets up an electric field which is electromagnetic radiation and that the flow of electricity is not its prime purpose. Mr Julius and Mr Collins agreed that when current flows through a conductor, such as LAN cabling, an electric field is set up.

Is a LAN system connected by LAN cabling a "fixed electrical installation" for the purposes of item 43(1)? 17 There was also an issue between the experts as to whether a LAN system connected by LAN cabling was a fixed electrical installation. Mr Tomasich and Mr Roger Miller, also called by the Commissioner, took the view that it was not such an installation because there were other options for connecting a LAN system otherwise than by LAN cabling. They pointed to wireless and optical fibre LAN systems. Mr Miller regarded a LAN system as primarily a communications system. The distinction drawn by Mr Tomasich and Mr Miller missed the point. A LAN system may comprise differing methods of connection and internal communication. But, insofar as it is connected by LAN cabling through which passes electric current, it is correctly described as a fixed electrical installation. This was the view taken by Mr Collins. The experts agreed that there were a number of installations which could appropriately be described as electrical installations. They referred to electric power installations, and electric telecommunications installations and other installations powered by electricity such as lifts and fire detection. They are all properly described as electrical installations and so is a LAN system incorporating a communications system when it has electric current passing through the LAN cabling connecting the LAN network. 18 Mr Miller did not consider LAN cable to be part of an electrical installation in the building because its object is to provide communications, not electricity to the building's occupants. That may be so, but I do not consider that "a fixed electrical installation" for the purposes of item 43(1) is limited to installations which provide electricity to consumers. I consider that the expression has a more expanded meaning and covers installations which are electrical in their nature, that is installations, which use electricity as a means of achieving the purpose of the installation. 19 After the evidence had concluded, and at the commencement of final addresses, the Commissioner, through his counsel, said that in the light of the expert evidence given in the proceeding he conceded that the LAN cable constituted electrical materials of a kind ordinarily used as part of fixed electrical installations in consumers' premises, within the meaning of item 43(1). It was also common ground between the parties that LAN cable was not used within the networks of telecommunications providers and it was not put in issue that the LAN cable was not ordinarily used in the provision of audio visual services.

Is LAN cable "ordinarily used in the provision of telecommunications … services" for the purposes of item 43(4)? 20 The issue for determination was crystallised into the meaning of "ordinarily used in the provision of telecommunications … services". 21 The applicant placed particular emphasis on the word "in" in the expression "in the provision of telecommunications … services" and submitted that "in" meant that the goods were used by the person or entity that was providing telecommunications services to the recipient of the services. 22 The Commissioner submitted that in its ordinary meaning the expression "ordinarily used in the provision of" applied to the entire process of providing such services, regardless of the identity of the provider. The Commissioner submitted that the process of providing telecommunication services begins in the network of a telecommunications provider, such as Telstra, and ends when the user of the relevant service makes use of it. It followed, submitted the Commissioner, that the LAN cable was a necessary part of that process of providing telecommunication services and that without the cable no‑one in a building or premises which were connected to a telecommunications network, such as Telstra, could make use of such services. 23 The Commissioner was critical of the applicant's submission which he said depended, in substance, upon inserting after the word "used" in item 43(4) the words "by a provider of telecommunications or audio visual services" and that there was no warrant for the Court adding any such words of limitation. The Commissioner submitted that there was no occasion for recourse to any extrinsic materials as the language of item 43(4) was plain and unambiguous. In this respect the Commissioner referred to the observation of Beaumont J, a member of the Full Court of the Federal Court, in Barry R Liggins Pty Ltd v Comptroller‑General of Customs (1991) 32 FCR 112 at 120: "…although it may be permissible to refer to extrinsic material where the statute is ambiguous, it does not follow that the extrinsic material can be used to contradict the meaning of the language of an Act of Parliament, that meaning being taken from its proper statutory context." 24 It must be remembered, however, that in the context of construing sales tax legislation, the general rules as to the construction of revenue statutes have given rise to the principle that classifications of goods attracting exemptions or beneficial rates of taxation should be liberally construed unless the text or context requires a narrow construction: Dietheln Manufacturing Pty Ltd v Federal Commissioner of Taxation (1993) 44 FCR 450 at 457, 464; GKN Australia Ltd v Federal Commissioner of Taxation (1994) 28 ATR 321 at 323; Telstra Corporation Ltd v Federal Commissioner of Taxation (1996) 68 FCR 566 at 569 ("the Telstra case"). 25 The applicant submitted that the legislative history of item 43(4) was an important factor bearing upon its interpretation. Item 43(4) was inserted into the Exemption Act by the Taxation Laws Amendment Act (No 3) 1997 (Cth) which followed the decision of the Full Court of the Federal Court in the Telstra case. The Full Court held that the phrase "fixed electrical installation", in what was then item 90C (the predecessor to item 43 and in materially the same terms), did not have any trade or technical meaning. The Full Court held that a main distribution frame and other telephone equipment used in a telephone exchange was "electrical" and exempt under item 90C. The consequence was that Telstra Ltd, a telecommunications provider, was entitled to an exemption from sales tax in respect of equipment used in its telephone exchanges. 26 It appears from the Explanatory Memorandum to the Taxation Laws Amendment Bill (No 3) 1997 (Cth) that item 43(4) was introduced in response to the Telstra case. The Bill relevantly provided: "'Background to the legislation 12.4 The Full Federal Court in Telstra Corporation Ltd v FC of T 1996 ATC 4805 held that certain items of equipment used in its telephone exchanges were not subject to sales tax under the former Item 90C of the Sales Tax (Exemptions and Classifications) Act 1935 (current Item 43 of Schedule 1 to the E & C Act). 12.5 Item 43 provides a sales tax exemption for certain electrical fittings, accessories and materials. 12.6 The Court decided that the words of the Item do not have any trade or technical meaning so that telephonic equipment, provided it can carry or store electricity, can be considered electrical equipment. Therefore the equipment, provided it is used as part of, or in connection with, 'fixed electrical installations' in consumers' premises can be exempt from sales tax. 12.7 The Government considers that this decision has the potential to erode the wholesale sales tax base by exempting goods that are effectively key elements of a telecommunication provider's business inputs when its outputs are not taxable. 12.8 In line with its stated policy of preventing erosion of the sales tax base, the Government announced, through Treasurer's Press Release No. 109 on 7 November 1996, that it would amend Item 43 to exclude from its coverage goods used in the provision of telecommunication and audio visual services. Explanation of the amendments 12.9 The proposed amendment inserts a new subsection (4) in Item 43 to specifically exclude from the exemption provided by that item, goods which are of a kind ordinarily used in the provision of telecommunication or audio visual services. The exemption will qualify all of Item 43. [Item 1]" 27 In the second reading speech on the Bill the Minister said: "The full Federal Court in Telstra Corporation Ltd v FCT held that certain items used in Telstra's telephone exchanges were exempt from sales tax as electrical fittings. The government considers that this decision goes beyond the intended coverage of the exemption for electrical fittings and therefore poses a threat to the existing coverage of the wholesale sales tax system." 28 The Commissioner submitted that the decision in the Telstra case may be accepted as having been the trigger for the amendment to item 43, and the insertion of subpar (4) in it, but that the language which the Parliament had chosen for the amendment was not such as to demonstrate that Parliament intended the amendment to be limited to responding to that decision. 29 Although LAN cable is not used by providers of telecommunications services, such as Telstra and Optus, in their own networks, the question still remains whether it can be said that LAN cable is, nevertheless, ordinarily used in the provision of telecommunications services. 30 The applicant submitted that to use the LAN cable within a single organisation or a single building to link computers is not using the cable in the provision of telecommunications services in that the organisation using the LAN cable to link its computers is not providing telecommunications services to itself or to anyone else. 31 I consider that there is merit in this submission. It is not necessary for the applicant's submission that after the words "used", the words "by a provider of telecommunications or audio visual services" be inserted in order to achieve the result for which the applicant contended. 32 The words used in item 43(4) have plain English meanings and are not technical terms. The word "provision", which is defined in the Macquarie Dictionary 3rd ed (1997) as meaning, inter alia, "the providing or supplying of something, as of food or other necessities" contains within it the notion that some person or entity is making the provision of, or is providing, the goods or services. The use of the word "services" supports this construction, namely that there is to be found within the terms used the fact that some person or entity is providing or, put more loosely, making available, the goods or services. As noted earlier, it was common ground that LAN cable is not used within the networks of telecommunications providers such as Telstra or Optus. 33 However, can it be said that the person or entity which sets up, maintains or uses the LAN network in a building, which is connected to a telecommunications service provided by a telecommunications network provider, is providing telecommunications services? In my opinion, the answer is in the negative. That person or entity is not providing telecommunications services itself, rather it is connecting into a telecommunications network whereby the network or operator provides the telecommunications services to the proprietor or operator of the LAN network in the relevant premises or building. I do not accept that the expression "the provision of telecommunications … services" applies to the entire process of communication or connection between the initial provider of the services, such as the networker provider, and the ultimate consumer using a computer as part of a LAN network. That "provision" ends at the point at which the delivery system of the provider of the services terminates, namely at the network boundary point or public network interface. Although the telecommunication services may be reticulated along and through the LAN network, it does not follow that the proprietor or operator of the LAN network is providing the telecommunications services which have been delivered by the network provider to the network boundary point. 34 Put shortly, using the LAN cable to link computers for the purposes of transmitting information, albeit information provided initially by means of an entity or organisation which provides telecommunications services, is not providing telecommunications services itself. The proprietor or operator of the LAN network may be providing a means of connection between the network provider of the telecommunications services and the users of the LAN network, but that proprietor or operator is not, by means of the LAN network, providing telecommunications services itself. Rather it acts as a conduit for the provision of those services by the network provider such as Telstra or Optus. As the applicant submitted, an organisation using LAN cable to link its computers does not provide telecommunications audio visual services to itself or to its staff or to anyone else. 35 The use of the word "in", in the expression "in the provision of telecommunications … services", shows that the expression contemplates that the telecommunications services are being provided by some entity which "provides" the services or makes them available. The expression contemplates that the goods are ordinarily used by that entity rather than by an entity which is a conduit, such as the proprietor or operator of the LAN network, for the passage of the services from the provider of the services to their ultimate consumer. 36 I consider that the extrinsic material to which I have referred supports the proposition that item 43(4) relates to goods of a kind ordinarily used by those entities or organisations who provide telecommunications or audio visual services. In this context I am not resorting to the extrinsic material to demonstrate that there is an ambiguity and to displace the plain meaning of the words in item 43(4). Rather, I am using the extrinsic material to confirm that the meaning I have given to item 43(4) is the ordinary meaning conveyed by item 43(4) taking into account its context in the schedule and the purpose or object underlying item 43 and the mischief its insertion was intended to remedy: see s 15AB(1)(a) of the Acts Interpretation Act 1901 (Cth). To the extent to which it may be said that there is some doubt or ambiguity as to the meaning of the words used in item 43(4), I am using the extrinsic material to determine the meaning of item 43(4): see s 15AB(1)(b) of the Acts Interpretation Act 1901. 37 A number of authorities on statutory interpretation support the proposition that the context of a statutory provision or amendment may be considered in the first instance and not only at some later stage when, after construing an expression, an ambiguity is thought to arise. The scope of the context of a statutory provision may include the existing state of the law and the mischief which the statute was intended to remedy. 38 Contextual ambiguity is no longer required as a precondition to reference to extrinsic material to establish the mischief the legislation was enacted to remedy. Independently of s 15AB of the Acts Interpretation Act 1901 (Cth), the common law allows courts to consider extrinsic material to ascertain the mischief which a statute was intended to cure. 39 In CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 the majority of the High Court, Brennan CJ, Dawson, Toohey and Gummow JJ, said at 408: "It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy." 40 These principles were restated in Fox v Commissioner for Superannuation (No 2) (1999) 88 FCR 416. At 419‑420 Black CJ said: "It was once thought that a statutory provision was to be interpreted literally unless its terms disclosed an ambiguity of meaning, in which case regard could be had to its context in order to discern the intention behind the provision's enactment and thereby resolve the ambiguity. This, however, is contrary to the modern approach to statutory interpretation described by Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 at 408: [the passage above is then cited]. It follows that context must be considered at the beginning of any inquiry into the meaning of a statute, regardless of the apparent clarity of the literal terms of the relevant provision itself … Where a conflict exists between the constructions of a provision revealed by two principles of interpretation - here, by a literal reading and a purposive reading - a court 'must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention', remembering always the mischief that the provision was enacted to address: see Waugh v Kippen (1986) 160 CLR 156 at 164 per Gibbs CJ, Mason, Wilson and Dawson JJ." (see also Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99, 109). 41 It is apparent from the Explanatory Memorandum and the Second Reading Speech that sub‑item(4) of item 43 was inserted into the legislation for the purpose of overcoming the effect of the Telstra case. This was recognised by Emmett J in Optus Vision Pty Ltd v Commissioner of Taxation [2001] ATC 4,248 at 4,250. Emmett J, referring to sub‑item(4) of item 43, said: "That amendment was made in consequence of the decision of the Full Court in Telstra Corporation Ltd v The Commissioner of Taxation (1996) 68 FCR 566 ('the Telstra case'). In his speech on the second reading of the Bill for the Amendment Act, the Parliamentary Secretary to the Treasurer said that the Government considered that that decision 'goes beyond the intended coverage of the exemption for electrical fittings' contained in Item 43 and, therefore, posed a threat to the existing coverage of the wholesale sales tax system." 42 The Commissioner also submitted that the use of the words "in consumers' premises" in subpar (1) of item 43 demonstrated that subpar (4) of item 43 must cover or include the provision of telecommunications or audio visual services by a consumer or person connecting into a network telecommunications service by way of a LAN network. The Commissioner submitted that this phrase made it clear that item 43(4) was not limited to providers of network telecommunications or audio visual services such as Telstra or Optus. The submission went this way: · Item 43(1) creates an exemption for goods of a particular kind which are used in consumers' premises, that is inside consumers' premises. · Item 43(4) provides an exception to what is covered by, or included, in item 43(1). That is, it is excluding from the exemption something used in consumers' premises, that is it is excluding something on the consumers' side of the network boundary point. · Accordingly, item 43(4) must be referring to services provided in consumers' premises, that is on the consumers' side of the network boundary point. · It follows that item 43(4) is referring to services provided by the entity responsible for providing the continuum of the telecommunications or audio visual services on the consumers' side of the network boundary point. · The result is that the LAN cable is ordinarily used in the provision of that continuum. · If item 43(4) is not construed as referring to the provision of telecommunications or audio visual services on the consumers' side of the network boundary point, then there is no room for any operation for item 43(4) and it has no substantive operative effect because item 43(4) would purport to take out of item 43(1) something which is not contained in, or covered by, item 43(1). 43 There is a flaw or fallacy in this chain of reasoning. There is room for item 43(4) to have some operation even if item 43(4) is construed as referring to or covering goods ordinarily used by providers of network telecommunications or audio visual services outside consumers' premises, that is to say on the opposite side of the network boundary point to that side of the network boundary point which services the inside of the premises or building which is the recipient of the services. 44 Item 43(1) covers or refers to goods of a kind ordinarily used as part of fixed electrical installations in consumers' premises. It does not cover or refer to goods used only in consumers' premises. Similarly item 43(4) covers or refers to goods of a kind ordinarily used in the provision of telecommunications or audio visual services. It does not cover or refer to goods of a kind used only in the provision of such services. Thus, there can be goods of a kind ordinarily used as part of fixed electrical installations in consumers' premises but which are also ordinarily used outside consumers' premises in the provision of telecommunications or audio visual services to consumers' premises. In such circumstances there is still room for item 43(4) to have an effect and operation. 45 As a matter of construction of item 43 goods falling within item 43(1) can still fall within item 43(4) even though they are ordinarily used in the provision of telecommunications or audio visual services outside consumers' premises or, for that matter, wherever they are used. 46 I am therefore satisfied that the LAN cable does not fall within item 43(4).

Conclusion 47 The consequence is that the appeal will be allowed, the decision of the Commissioner disallowing the applicant's objection to the assessment of sales tax made by the Commissioner in respect of the LAN cable should be set aside as should the assessment. The Commissioner should pay the applicant's costs of the application.

I certify that the preceding forty‑seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg J.

Counsel for the Applicant: Mr J W de Wijn QC & Ms F J Alpins

Counsel for the Respondent: Mr C M Maxwell QC & Mr P G Sest

Solicitor for the Respondent: Australian Government Solicitor