There are two potentially contradictory notions here. One is the by-law that doesn’t require you to install sound insulation, the other is a general prohibition on creating noise that disturbs your neighbours.
Clearly kitchens and bathrooms were exempted in the original by-laws because they are ‘wet’ areas that would have some sort of waterproofing under them and were unlikely to have carpet on top.
These by-laws were written long before people started putting hard floors down on a concrete slab and were designed to prevent people having to lay down carpet where it really doesn’t belong.
So are you quoting the actual by-law for your building or standard by-law 14 for pre-1996 buildings (although they may be the same)?
But what strikes me is, if this is costing you money, how much would it cost just to put underlay down? You could be waiting months if you pursue this through NCAT and that’s what you will have to do if you try to force the strata committee’s hand.
Forget the principle and look at the cost. And if your by-laws are the same as the standard by-laws, have a think about By-law 1:
An owner or occupier of a lot must not create any noise on the parcel likely to interfere with the peaceful enjoyment of the owner or occupier of another lot …