Société des alcools du Québec v. Ministre du Revenu national (Douanes et Accise), (2002) 300 N.R. 232 (FCA)

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Court of Appeal (Canada)
• Judge: Desjardins, Décary and Noël, JJ.A.
• Citation: (2002), 300 N.R. 232 (FCA),2002 FCA 69
• Date: 17 January 2002

Soc. des alcools v. MNR (2002), 300 N.R. 232 (FCA)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

....................

Temp. Cite: [2002] N.R. TBEd. MR.030

Sa Majesté la Reine (appelante) v. Société des Alcools du Québec (intimée)

(A-571-00; 2002 FCA 69; 2002 CAF 69)

Indexed As: Société des alcools du Québec v. Ministre du Revenu national (Douanes et Accise)

Federal Court of Appeal

Desjardins, Décary and Noël, JJ.A.

February 22, 2002.

Summary:

Prior to April 1990, the Excise Tax Act provided for a 19% sales tax on alcoholic beverages. In April 1990, Parliament adopted a new type of sales tax, the Goods and Services Tax. Transitional provisions were adopted authorizing a rebate of the old sales tax on inventories of goods held on January 1, 1991. The Société des alcools du Québec filed two such rebate claims. The amounts claimed corresponded essentially to the 19% paid on its inventory of alcoholic beverages. The Minister of National Revenue disallowed a portion of the rebates claimed. The Minis­ter claimed that in accordance with ss. 3(h) and 4(a)(iii) of the Federal Sales Tax Inven­tory Rebate Regulations, enacted under the authority of s. 120(5) of the Excise Tax Act, the Société des alcools was only entitled to a rebate totalling 8.1% of the value of the goods in inventory. The Société des alcools du Québec appealed, arguing that the Regu­lations were ultra vires the powers con­ferred by s. 120(5) of the Act.

The Federal Court of Canada, Trial Divi­sion, in a decision reported 184 F.T.R. 107, held that the Société des alcools was entitled to a further rebate. The court held that in the Société des alcools' unique situ­ation the 8.1% rebate factor provided for in s. 3(h) of the Regulations was ultra vires the powers conferred by s. 120(5) of the Act in that it did not comply with the purpose of the section in question. However, since the section was intra vires in most cases, the court declined to rule that it was invalid. The Crown appealed.

The Federal Court of Appeal dismissed the appeal.

Sales and Service Taxes - Topic 948

Sales tax - Refunds - Calculation of refund - Prior to April 1990, the Excise Tax Act provided for a 19% sales tax on alcoholic beverages - In April 1990, Par­liament adopted a new type of sales tax, the Goods and Services Tax - Transitional provisions provided for a rebate of the old sales tax on certain inventory - In particu­lar, s. 120(5) of the Act provided that rebates would be determined by a pre­scribed method using prescribed tax factors - The prescribed method was set out in the Fed­eral Sales Tax Inventory Rebate Regula­tions - Pursuant to ss. 3(h) and 4(a)(iii) an 8.1% rebate was applicable to inventories of alcoholic beverages - The Société des alcools du Québec argued that the Regula­tions were ultra vires - The motions judge held that in the Société des alcools' unique situation, the 8.1% rebate factor provided by s. 3(h) of the Regulations was ultra vires the powers conferred by s. 120(5) of the Act in that it did not comply with the purpose of the section in question - The Crown appealed - The Federal Court of Appeal dismissed the appeal.

Statutes - Topic 5367

Operation and effect - Delegated legisla­tion - Regulations - Validity of - Ultra vires - Whether purpose authorized by empowering statute - [See Sales and Ser­vice Taxes - Topic 948 ].

Cases Noticed:

Canada v. St. Lawrence Cruise Lines Inc., [1997] 3 F.C. 899; 215 N.R. 278 (F.C.A.), refd to. [para. 31].

R. v. CKOY Ltd., [1979] 1 S.C.R. 2; 24 N.R. 254; 43 C.C.C.(2d) 1; 90 D.L.R.(3d) 1, refd to. [para. 33].

Pacific Pilotage Authority v. Alaska Trainship Corp., Pacific Maritime Agencies Ltd. and Ship S.S. Alaska, [1981] 1 S.C.R. 261; 35 N.R. 271, refd to. [para. 33].

Canada (Attorney General) v. Silk, [1983] 1 S.C.R. 335; 47 N.R. 57, refd to. [para. 33].

British Columbia Ferry Corp. et al. v. Minister of National Revenue, [2001] 4 F.C. 3; 271 N.R. 345 (F.C.A.), refd to. [para. 48].

Canada v. Carling Export Brewing and Malting Co., [1931] A.C. 435 (P.C.), refd to. [para. 63].

Irving Oil Ltd. et al. v. New Brunswick (Provincial Secretary), [1980] 1 S.C.R. 787; 31 N.R. 291; 29 N.B.R.(2d) 529; 66 A.P.R. 529, refd to. [para. 64].

Statutes Noticed:

Excise Tax Act, R.S.C. 1985, c. E-15, sect. 2 [para. 6]; sect. 120(3)(a), sect. 120(5) [para. 5].

Excise Tax Act Regulations (Can.), Feder­al Sales Tax Inventory Rebate Regula­tions, SOR/91-52, sect. 3, sect. 3(h) [para. 7]; sect. 4 [para. 8].

Federal Sales Tax Inventory Rebate Regu­lations - see Excise Tax Act Regulations (Can.).

Counsel:

Jacques Savary, for the appellant;

Claude Desaulniers, for the respondent.

Solicitors of Record:

Morris Rosenberg, Deputy Attorney General of Canada, Ottawa, Ontario, for the appellant;

McCarthy Tétrault s.r.l., Montréal, Québec, for the respondent.

This appeal was heard at Montréal, Québec, on January 17, 2002, before Desjardins, Décary, and Noël, JJ.A., of the Federal Court of Appeal. The following decision was delivered for the court on February 22, 2002, by Noël, J.A.