Canada v. BASF Coatings & Inks Canada Ltd.
T-1092-93
Rouleau J.
6/4/98
7 pp.
Appeal from Canadian International Trade Tribunal decision-BASF selling automotive solvents, thinners, reducers-Relying on jobbers to distribute products-Jobbers purchasing products from BASF, reselling them to end users-To encourage competitiveness among certain specialty purchasers called "Special Market Purchasers", BASF suggesting jobbers grant discounts-If granting discount jobbers entitled to apply to BASF for reduction of selling price previously paid-BASF then reducing amount of taxable sales by amount of subsidy, thereby reducing tax liability-Minister disallowing price reductions-Tribunal allowing BASF's appeal, holding adjustments directly related to determination of actual amount received on sale of products eventually purchased by specialty market purchasers-Excise Tax Act, s. 50 providing sales tax calculated when goods delivered to purchaser or when property in goods passes, whichever earlier-Accordingly, sale of commodity from manufacturer to first purchaser in distribution chain and "sale price" paid on transaction determining tax exigible-Title in goods passing from BASF to jobber when goods received by jobber-This transaction giving rise to BASF's tax liability, forming basis for calculation of amount of tax owing-Subsidies paid by BASF to jobbers promotional expenditures, unrelated to sale price between BASF, jobbers-Special Markets Program devised to break into new markets-Subsidies paid to jobbers incentive designed to encourage jobbers to participate in program-No basis in law for BASF to retroactively reduce sale price, resulting tax liability-Excise Tax Act, R.S.C., 1985, c. E-15, s. 50 (as am. by R.S.C., 1985 (2nd Supp.), c. 42, s. 4).