Issue
Does the loading and unloading of rail wagons constitute 'rail transport' under paragraph 78A(1)(ab) of the Excise Act 1901 or paragraph 164(1)(ab) of the Customs Act 1901 for the purposes of the diesel fuel rebate scheme?
Decision
No. The loading and unloading of rail wagons does not constitute 'rail transport' under paragraph 78A(1)(ab) of the Excise Act or paragraph 164(1)(ab) of the Customs Act for the purposes of the diesel fuel rebate scheme.
Facts
Goods are stockpiled at point A to be transported via rail, to a stockpile at point B. Diesel fuel is used in various pieces of non-rail equipment to load and unload goods to and from rail wagons.
Reasons for Decision
Subsection 78A (1) of the Excise Act and subsection 164(1) of the Customs Act provide that: A rebate is, ... payable to a person who purchases diesel fuel for use by him: ... (ab) in rail transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise
Subsection 78A(7) of the Excise Act states that the term 'rail transport' takes the same meaning as that provided by the Customs Act. 'Rail transport' is defined in subsection 164(7) of the Customs Act as: rail transport includes light rail transport and transport by tram, but does not include any rail transport relating to forestry.
The Administrative Appeals Tribunal in Serco Australia Pty Ltd v. Commissioner of Taxation [2003] AATA 737 found at paragraph 56 that: ...rail transport in the sense that we understand it to be used in the Excise Act is the conveyance of passengers or freight by vehicles on a fixed rail system.
Even this further definition is not particularly helpful in determining whether activities such as loading and unloading of goods from rail wagons and ancillary activities that might occur at railway sidings, platforms or rail yards are included or excluded from the definition. That is, to determine whether these activities are part of the conveyance of passengers or freight by vehicles on a fixed rail system.
Under both the Customs Act and the Excise Act, diesel fuel rebate entitlements arise for diesel fuel purchased for use 'in rail transport'. The word 'in' restricts the availability of the rebate to activities that are 'in the process of' or 'during the course of' rail transport.
The meaning of 'in' in the context of the expression 'in mining operations' was discussed in Chief Executive Officer of Customs v. WMC Resources Ltd ( as agent for East Spar Alliance ) (1998) 1271 FCA [9 October 1998]. Nicholson J expressed the view that: The word 'in' as it appears in para (a) of the definition of 'mining operations' is to be understood in this context as 'inclusion within, or occurrence during the course of...': Macquarie Dictionary, p.887.
He then referred to the Full Federal Court decision in Chief Executive Officer of Customs v. Dyno Wesfarmers Limited (1997) 73 FCR 1, at page 5. In that case, the Court referred to the Shorter Oxford English Dictionary where the meaning of 'in' refers to 'in the process or act of'.
Having regard to those decisions, it can be concluded that diesel fuel rebate is available for diesel fuel purchased or imported for use in the process or act of, or during the course of 'rail transport'. That is, that the diesel fuel is used in activities that are part of the conveyance of passengers or freight by vehicles on a fixed rail system.
There is little direct authority in relation to whether the loading and unloading of goods from transport vehicles is so integral to transport as to be regarded as being an activity 'in transport'. What authority there is, in relation to the meaning of 'transport', is in the context of income tax or indirect taxes in other jurisdictions. See for example: Master Builders Association of Victoria v. Australian Building Construction Employees and Builders' Labourers' Federation (1981) 35 ALR 284 at pages 290-291; Quarry Tours Ltd , t/a Llechwedd Slate Caverns (1984) 2 BVC 205139; Customs and Excise Commissioners v. Blackpool Pleasure Beach Co (1974) 1 BVC 1 at page 3; Faulkner & Anor (1992) BVC 803; Narogauge Ltd (1997) BCC 2237; Riviera Nautic Pty Ltd v. Commissioner of Taxation [2002] AATA 657 ( Riviera Nautic ).
It is acknowledged that, apart from Riviera Nautic , the cases referred to above were decided in a different context and in relation to different provisions. However, in each case, as in the present case, the determination of the ordinary meaning of the word 'transport' was a key element in the decisions that were made. In the present case the ordinary meaning of the term 'transport' determines whether unloading and loading of goods from rail carriages or wagons constitutes 'rail transport'.
Case law supports the conclusion that transport does not include ancillary activities, such as loading or unloading goods from a ship, train or other means of transport.
In BPH Equipment Ltd (1996) BVC 2696 ( BPH Equipment ), the issue was whether the letting on hire of cranes to a Dutch company amounted to 'the letting on hire of goods other than means of transport'. The Tribunal found that it was not a means of transport. The Tribunal commented: Prima facie this [means of transport] is an ordinary English phrase and concerns the movement of persons or things from one place to another. See for example the definition of 'transport' in the Shorter Oxford English Dictionary, 3rd edition, the primary meaning of which is given as: 'to carry, convey, or remove from one person or place to another; to convey across' and 'transportation' as: 'The action or process of transporting; conveyance (of things or persons) from one place to another'. A means of transport on this basis would be understood normally as being something which is used to transport goods or persons from one place to another. To describe a crane as a means of transport is somewhat surprising since the purpose of a crane is to lift items and place them in position rather than to carry them from one place to another. In the ordinary way the lifting of an item on a construction site, for example, the unloading from a lorry and placing on the ground I would consider would not normally be regarded as transportation as the item is already at its destination and is remaining on site. It is only moved as part of the process of placing it in its final position after it has been brought to site. ... I am persuaded by the argument that 'transport' involves movement from one place to another. ...
In Riviera Nautic , the Administrative Appeals Tribunal was dealing with the question of whether diesel fuel was purchased for use in marine transport. In relation to the meaning of 'in marine transport' counsel for the Commissioner submitted that 'the fact that the rebate is payable to a person who purchases diesel fuel for use by the person 'in marine transport', focuses attention on the fact that 'the activity that is relevant is propulsion, because that (is) what transport is'. Senior Member Dwyer agreed with the Commissioner's submission stating: 'There is no dispute about that proposition.' The use of the word 'conveyance' in the definition of 'rail transport' in the Serco decision reinforces that this is the view of the Tribunal.
In relation to the operations that are conducted at a railway siding, the decision of the Supreme Court of Victoria in Biga Nominees Pty Ltd v. FC of T 91 ATC 4342; 88 ATC 4270 ( Biga Nominees ) is instructive. In that case, the plaintiff set up business in Sydney as a container forwarder and receiver and sought declarations as to its liability to pay sales tax upon a forklift vehicle it used in its freight business. The plaintiff's argument was that the forklift was used exclusively in connection with the operation or maintenance by it of a railway. In the course of his judgment, Southwell J commented: ... I have not seen any authority which persuades me that the plaintiff should be regarded as 'operating a railway'. In their context, I think those words refer to a railway enterprise or business; there are many of the happenings, activities and elements of an ordinary railway enterprise which are not to be found in the plaintiff's enterprise; it has no locomotive, no wagons, no stations, no signals, no points or switches, it maintains no railway equipment or plant (save for cleaning the rail area), it employs no engine drivers, no shunters (as that word is generally understood), no guards, no signalmen, it tows no wagons, but merely pushes them for a few yards, it does not transport goods on its sidings, but merely loads and unloads them, and no engine under its control or direction transports them. ... An analogy might be seen in the operation of a loading bay of a road haulier; if a subsidiary company 'operated' the loading bay, where some trailers without prime movers were left for loading or unloading, and a tractor was used to park the trailers, it could scarcely be said that the subsidiary operated a road transport business, albeit that the parent did so, and the subsidiary's activities would be regarded as having been performed 'in connection with' the road transport business.
In relation to the question of whether the plaintiff provided a service for transport of goods, his Honour commented: In dealing with the absence of the usual happenings and activities of a railway, I have said that the plaintiff does not transport goods on the siding. Again I think the analogy of the road haulier's loading bay is apt. If one examines what occurs on the siding, it may readily be seen that the facilities thereof are used 'in connection with' the transport of goods. But do they provide a service for the transport of goods?
BPH Equipment, Riviera Nautic and Biga Nominees point to the conclusion that the lifting of an item, for example the loading and unloading from a lorry, or loading and unloading activities at a railway siding, are not in transport. Whilst it might be said that the activities are 'in connection with' they are not in transport.
Activities that are 'in connection with' rail transport are not 'in rail transport' and therefore do not give rise to an entitlement to diesel fuel rebate.