Canada v. BASF Coatings & Inks Canada Ltd.
A-281-98
Desjardins J.A.
2/7/98
9 pp.
Appeal from Trial Division decision ([1998] F.C.J. No. 446 (T.D.) (QL)) appellant not permitted to deduct from "sale price" in Excise Tax Act, ss. 42, 50, adjustment payments to jobbers selling appellant's goods to specialty purchasers at discount price-Appellant selling automotive solvents, thinners, various reducers-Relying on network of independent jobbers to distribute products-Jobbers entitled to abatement of sale price for products sold by them to specialty purchasers called "Special Market Purchasers"-Purchasers bought in larger quantities, paid less for products than appellant's primary purchasers such as body shops-"Specialty Market Program" designed for protection of jobbers-After credit granted to jobber, appellant reduced taxable sales by amount equal to subsidy, thereby reducing tax liability-MNR refusing to allow sale price reductions given to jobbers, assessing appellant for full sales price-Canadian International Trade Tribunal ruling in favour of taxpayer-Trial Judge reversing Tribunal's decision-Plain, ordinary reading of charging art. 50(1)(a) suggesting Parliament intended to impose tax on "sale price"of goods sold-Phrase "sale price" not by necessary implication excluding calculation of price reduction, if reduction later given on "sale price"-Art. 50(1)(a) relating to point in time when "sales tax" "payable", not when "calculated"-At time when property passed between appellant and jobbers, both bound by valid contract by which rebate, subsidy on sale price owed-Only element left actual calculation-Reduction in price therefore implicit at time property passed-Adjustment payments not paid to jobbers to promote, reward participation in appellant's Specialty Market Purchasers program-Jobbers not given "bonus", incentive, commission for number of sales to Specialty Market Purchasers-Subsidy awarded more in nature of credit meant to enable jobbers to compete effectively in sales to Specialty Market Purchasers expecting to buy at lower price than that paid by ordinary retail customers-Necessary for appellant to charge jobbers full listed prices and then reduce price once final sale made-Appeal allowed-Excise Tax Act, R.S.C., 1985, c. E-15, ss. 42 (as am. by R.S.C., 1985 (1st Supp.), c. 15, s. 16; R.S.C., 1985 (2nd Supp.), c. 7, s. 13), 50(1)(a).