Saugeen Indian Band v. Minister of National Revenue (Customs and Excise), (1989) 104 N.R. 201 (FCA)

• Judge: Heald, Stone and MacGuigan, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: December 07, 1989
• Jurisdiction: Canada (Federal)
• Citations: (1989), 104 N.R. 201 (FCA)

Saugeen Indian Band v. MNR (1989), 104 N.R. 201 (FCA)

MLB headnote and full text

The Saugeen Indian Band, as represented by its Chief Vernon Roote, and by its Councillors, Arnold Solomon, Roy Wesley, Oliver Kahgee Sr., Chester Ritchie, Mildred Ritchie, Harriet Kewaquom, Marie Mason and Franklin Shawbedees (appellant/plaintiff) v. Her Majesty the Queen (respondent/defendant)

(A-1227-88)

Indexed As: Saugeen Indian Band v. Minister of National Revenue (Customs and Excise)

Federal Court of Appeal

Heald, Stone and MacGuigan, JJ.A.

December 7, 1989.

Summary:

Section 27(1) of the Excise Tax Act imposed a federal sales tax on, inter alia, all goods produced or manufactured in Canada. The indirect tax was paid by the manufacturer, importer or licensed wholesaler and usually passed on to the consumer. An Indian band purchased goods for use on the reserve. The federal sales tax was paid by the manufacturer or licensed wholesaler and passed on to the Indian band. The Indian band brought an action for a refund of the taxes paid. The band claimed that s. 87 of the Indian Act exempted Indians and Indian bands from all incidence and burden of indirect taxation.

The Federal Court of Canada, Trial Division, in a decision reported in 24 F.T.R. 1, dismissed the action. The court held that s. 87 did not exempt Indians and Indian bands from the incidence of federal sales tax. Alternatively, the Trial Division held that if s. 87 did provide an exemption, the Indian band still had to overcome the hurdles of the legal basis for granting a refund and the applicable limitation period. The Indian band appealed.

The Federal Court of Appeal dismissed the appeal.

Constitutional Law - Topic 5770

Federal jurisdiction - Taxation - Direct tax and indirect tax distinguished - The Federal Court of Appeal referred to the distinction between a direct and indirect tax - See paragraphs 9 to 10.

Constitutional Law - Topic 6824

Provincial jurisdiction - Direct taxation within the province - Direct tax - What constitutes - Section 27 (1) of the Excise Tax Act imposed a federal sales tax on, inter alia, all goods produced or manufactured in Canada - The tax was paid by the manufacturer or licensed wholesaler and passed on to the consumer - An Indian band purchased goods for use on the reserve - The sales price included the cost of the sales tax passed on - The Federal Court of Appeal held that the tax was indirect, because what the Indians paid was not the tax as such, but commodity prices which included the tax - See paragraphs 7 to 19.

Indians, Inuit and Métis - Topic 4410

Treaties and proclamations - Interpretation - The Federal Court of Appeal referred to the general principle that Indian treaties and statutes should be liberally construed - The court held that this interpretation should be applied whenever the statutory language is reasonably open to a liberal construction, and not just when the statute is doubtful or ambiguous - See paragraphs 26 to 27.

Indians, Inuit and Métis - Topic 6505

Taxation - Indirect taxation - Section 27(1) of the Excise Tax Act imposed a federal "manufacturer's sales tax" - The indirect tax was paid by the manufacturer or licensed wholesaler and passed on to the consumer - An Indian band purchased goods for use on the reserve - The sales price included the cost of the sales tax passed on - The Federal Court of Appeal affirmed that s. 87 of the Indian Act did not exempt Indian bands from the incidence of the federal sales tax - The court affirmed that s. 27(1) did not impose a tax in respect of the personal property of an Indian band or a tax in respect of property situate on a reserve - The court affirmed that s. 87 related to Indians and Indian bands as taxpayers and was not intended to exempt them from all incidence and burden of indirect taxes.

Indians, Inuit and Métis - Topic 6510

Taxation - Exemptions - Personalty on reserve - [See Indians, Inuit and Métis - Topic 6505 above].

Sales and Service Taxes - Topic 3

Sales tax - Nature of - The Federal Court of Appeal held that sales taxes under the Excise Tax Act must be taken, not as taxes on property, but as taxes on business transactions, levied at the time of the transaction - See paragraph 24.

Cases Noticed:

Bank of Toronto v. Lambe (1887), 12 App. Cas. 575 (P.C.), refd to. [para. 9].

Canadian Pacific Railway Company v. The Attorney General for the Province of Saskatchewan, [1952] 2 S.C.R. 231; [1952] 4 D.L.R. 11, refd to. [para. 11].

Canadian Pacific Airlines Ltd. and Pacific Western Airlines Ltd. v. British Columbia, [1989] 1 S.C.R. 1161; 59 D.L.R.(4th) 161; 96 N.R. 1, refd to. [para. 11].

Dominion Distillery Products Co. Ltd. v. The King, [1938] S.C.R. 458, consd. [para. 13].

Delisle v. Shawinigan Water & Power Co., [1941] 4 D.L.R. 556 (Que. S.C.), consd. [para. 14].

Francis v. The Queen, [1956] S.C.R. 618, consd. [para. 15].

The Queen v. M. Geller Incorporated, [1963] S.C.R. 629, consd. [para. 16].

Price (Nfld.) Pulp and Paper Limited v. Minister of National Revenue, [1974] 2 F.C. 436; 5 N.R. 197 (C.A.), affd. [1977] 2 S.C.R. 36; 11 N.R. 376, consd. [para. 18].

R. v. Stevenson Construction Co. Ltd. (1978), 24 N.R. 390; 79 D.T.C. 5044, consd. [para. 21].

Nowegijick v. Minister of National Revenue et al., [1983] 1 S.C.R. 29; 46 N.R. 41; 144 D.L.R.(3d) 193, refd to. [para. 25].

Alberta Natural Gas Tax Reference, [1982] 1 S.C.R. 1004; 42 N.R. 361, refd to. [para. 25].

Brown v. R. in Right of British Columbia (1979), 20 B.C.L.R. 64 (B.C.C.A.), dist. [para. 28].

Statutes Noticed:

Constitution Act 1867, sect. 92(2) [para. 9].

Excise Tax Act, R.S.C. 1970, c. E-13, sect. 27(1) [para. 3]; sect. 44(1) [para. 23]; sect. 44(2) [paras. 21, 23].

Indian Act, R.S.C. 1970, c. I-6, sect. 83 [para. 1]; sect. 87 [paras. 1, 15].

Indian Act, R.S.C. 1985, c. I-5, sect. 87(1) [paras. 2, 28]; sect. 87(1)(b) [para. 25]; sect. 87(2) [paras. 2, 25, 28-29].

Counsel:

Maureen M. Gregory, for the applicant;

Dogan Akman, for the respondent.

Solicitors of Record:

Tweedy, Ross, Charlottetown, P.E.I., for the applicant;

John C. Tait, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard before Heald, Stone and MacGuigan, JJ.A., of the Federal Court of Appeal at Ottawa, Ontario on November 21 and 22, 1989. The decision of the Court of Appeal was delivered by MacGuigan, J.A., on December 7, 1989.