Rebates of excise tax were not limited to provinces

Tax - Other Federal Taxes - Federal Excise Tax

Plaintiff sold fuel to province of New Brunswick, paying federal excise tax. Plaintiff’s application for refunds of excise tax under s. 68.19 of Excise Tax Act, which reflected federal and provincial governments’ immunity to taxation by allowing rebates of tax, was initially allowed. CRA reassessed this first rebate claim to disallow it on erroneous belief that there was reciprocal taxation agreement between New Brunswick and federal government and plaintiff’s objection was held in abeyance pending determination of this action. Plaintiff’s applications for rebate relating to fuel sold during two subsequent periods were also denied. Plaintiff appealed Minister’s decisions on second and third rebate applications by bringing action against Crown. Appeal allowed. Minister had conceded that there was no reciprocal taxation agreement in place but defended action on alternative bases that only provinces could claim rebates or that province would be entitled to rebate as party bearing ultimate burden of tax. Textual, contextual and purposive analysis of 68.19 of Act indicated that, contrary to Minister’s argument, rebates were not limited to provinces as rebates could be provided to parties that were “importer, transferee, manufacturer, producer, wholesaler, jobber or other dealer”. Parliament clearly and expressly set out its intent in s. 68.19(1) of Act and then carved out exception for circumstances where there was reciprocal taxation agreement that did not exist here. Plaintiff established that it did not charge amount equal to federal excise tax to province, rebutting Minister’s assumption to that effect to support its conclusion that province was ultimate consumer. Minister did not present any additional evidence that would support its determination that burden of tax was passed on to province and its decision to deny refund, plaintiff must succeed in its action.

Highlands Fuel Delivery G.P. v. Canada (2019), 2019 CarswellNat 4800, 2019 FC 1163, Shirzad Ahmed J. (F.C.).

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