Jack Cewe Ltd. v. Canada
T-3390-90
Wetston J.
8/1/99
20 pp.
Appeal from assessment of federal sales tax (FST) regarding supply-and-install contracts performed by plaintiff where materials supplied by plaintiff's customers-Plaintiff licensed manufacturer of asphaltic concrete-In some cases plaintiff supplying all of materials, other times customer supplying liquid asphalt, before plaintiff manufacturing, supplying, installing asphalt-Customer paying all-inclusive price for supply, installation of asphalt-In 1985 asphalt becoming subject to FST when sold, used by manufacturer or producer-Defendant issuing Excise Communiqué 110/T1 stating Fair Market Value (FMV) as determined in accordance with Memorandum ET 207, s. 3(c) one method for determining value for tax-In August 1985 defendant informing plaintiff tax may be calculated at 6% on value of $12 per metric tonne on sales of asphalt where liquid asphalt supplied by customer-In April 1986 defendant confirming understanding plaintiff using Determined Value of $12 per tonne as value for tax-Plaintiff using Determined Value Method when calculating FST on asphalt between November 1985, December 1986-In 1987 plaintiff informing defendant would be computing, remitting FST on asphalt production on FMV method in accordance with ET 207, s. 3(c)-Subsequently claiming refund of tax, representing difference between tax remitted as calculated by Determined Value Method and liability arising pursuant to FMV Method-Defendant allowing refund-In 1988 defendant issuing Excise Communiqué 110-2/T1 stating where customer supplying some of material relative to supply-and-install contract, manufacturer not permitted to use valuation method provided by ET 207 (FMV)-Informing plaintiff no provision for retroactive adjustments of value for tax used prior to issuance of Communiqué-Reassessing defendant for refund paid in error with respect to supply-and-install contracts performed by plaintiff where materials supplied by plaintiff's customers-Whether plaintiff permitted to use FMV method for valuing asphalt for purposes of Act for relevant period, when oil supplied by customer-Communiqués administrative policies, not issued pursuant to Minister's discretionary power under Excise Tax Act, s. 28(1)(d)-Merely concessions made by Minister to resolve inequities in Act-ET 207 based upon s. 28(1)(d), issued on Minister's discretion to provide guidance to industry as to method to calculate tax when no sale price-As sale price herein, s. 27 applying to determine tax liability-If no sale price, alternative accounting methods provided in Minister's discretion in ET 207-Plaintiff's tax liability determined by Act-Cannot be contracted out of-S. 26 defining sale price of contract for purpose of taxing pursuant to s. 27 as ultimate price paid by customer, including deductions within provisions of Act-Not necessary for taxpayer to go beyond Act to determine how supply-and-install contract should be taxed-Taxpayer could rely on administrative concession, but must be consistent in use of method selected-Plaintiff submitting if oil supplied to manufacturer, cost of oil to manufacturer zero; zero value to be included in calculating FMV under ET 207-Zero not cost contemplated therein-Furthermore bulletin referring to aggregate of cost of "all" materials used, not aggregate of cost of "some" materials used-Plaintiff contending sale price not on supply-and-install contract, but rather supply-and-install contract including asphalt, so that tax must be paid upon asphalt-Contending Minister issuing various communiqués to establish sale price since not flowing clearly, directly from s. 26(3)-S. 26 applying to supply-and-install contract as discussed in communiqués, reflecting understanding asphalt mixture subject to sales tax-Retroactivity plaintiff complaining of caused by plaintiff's actions in changing from one method of accounting to another-Communiqués clearly indicating taxpayer must use method consistently, i.e. for period of not less than one year-Had plaintiff followed that requirement, no retroactivity would have resulted-Communiqués not applied unfairly or in arbitrary manner-Defendant not estopped from changing method of valuation of asphalt in respect of 1985, 1986 taxation years-As tax liability determined under Act, irrelevant to this taxpayer how other taxpayers treated in similar situations-Minister not bound by representations made by authorized officials within Department even if contrary to statutory provisions-Statute prevailing over any such representations-As no overpayment, no refund required-Appeal dismissed-Excise Tax Act, R.S.C., 1985, c. E-15, ss. 26 (as am. by R.S.C., 1985 (2nd Supp.), c. 1, s. 188), 27 (as am. by R.S.C., 1985 (2nd Supp.), c. 7, s. 11; c. 42, s. 3), 28(1)(d).