Montgomery,
J:—This
is
an
application
to
this
court
by
way
of
trial
provided
for
under
subsection
2
of
section
20
of
The
Retail
Sales
Tax
Act,
RSO
1970,
c
415,
and
amendments
thereto.
There
is
also
provision
for
the
court
to
hear
viva
voce
evidence
on
the
appeal,
and
that
was
done
in
this
case.
The
Minister
of
Revenue
levied
sales
tax
in
the
amount
of
$32,265.31
against
the
appellant
with
respect
to
a
piece
of
equipment
which
forms
part
of
the
appellant’s
production
line
in
the
manufacture
of
lumber
from
logs.
The
equipment
in
question
is
a
lumber
sorting
system.
I
must
add
that
there
was
also
an
interest
factor
paid
by
the
appellant
on
the
tax
assessed
in
the
amount
of
$473.99.
The
appellant
filed
the
appropriate
notice
of
objection
to
the
tax
levied
and
thus
found
himself
before
this
court.
The
appellant
describes
the
bundling
and
sorting
machine
as
an
automatic
lumber
sorting
and
stacking
machine,
and
contends
that
it
is
exempt
from
retail
sales
tax
pursuant
to
the
provisions
of
paragraph
38(a)
of
subsection
(1)
of
section
5
of
The
Retail
Sales
Tax
Act,
as
amended
by
The
Retail
Sales
Tax
Amendment
Act,
1976,
c
82,
subsection
3(1),
which
reads
as
follows:
the
manufacture
or
production
of
tangible
personal
property,
the
development
by
such
manufacturer
or
producer
of
goods
for
his
manufacture
or
production,
or
the
development
by
such
manufacturer
or
producer
of
manufacturing
or
production
processes
for
his
own
use;
The
appellant
says
the
automatic
lumber
sorting
and
stacking
machine
is
equipment
purchased
for
the
use
of
a
manufacturer,
or
for
the
use
of
a
producer,
and
was
used
directly
in
the
manufacture
and
production
of
tangible
personal
property,
namely
the
production
of
lumber.
The
viva
voce
evidence
explained
in
some
considerable
detail
the
entire
process
of
turning
logs
in
their
native
state,
as
they
come
out
of
the
bush,
into
kiln
dried
lumber
which
is
in
packages
ready
to
be
placed
on
freight
cars
or
otherwise
transported.
A
detailed
explanation
of
the
process
was
given.
I
am
satisfied
on
the
viva
voce
evidence
before
me
that
the
lumber
sorting
and
stacking
equipment
was
a
part
of
the
production
line,
and
that
the
latter
was
a
continuous
line.
I
am
not
persuaded
by
the
argument
of
the
respondent
that
this
equipment
can
in
any
way
be
construed
as
material
handling
equipment
as
defined
in
subsection
13(2)
of
Regulation
784,
which
reads
as
follows:
Subject
to
subsections
3
and
4,
the
following
types
or
classes
of
machinery
or
equipment
are
excluded
from
the
exemption
conferred
by
paragraph
38(a)
of
subsection
1
of
section
5
of
the
Act
in
respect
of
the
sale
of
such
machinery
or
equipment
after
the
7th
day
of
August,
1977.
(t)
machinery
or
equipment
to
which
clause
(a)
of
paragraph
38(a)
of
subsection
1
of
section
5
of
the
Act
applies
and
that
does
not,
by
its
specific
function,
alter
the
goods
in
process.
It
seems
to
me
that
the
entire
thrust
of
the
argument
of
the
respondent
is
to
suggest
that
nothing
is
done
to
the
product,
the
end
product,
as
a
result
of
the
piece
of
equipment
upon
which
tax
has
been
assessed
by
the
Minister.
I
cannot
agree.
I
am
of
the
view
that
this
piece
of
equipment
is
an
essential
part
of
the
manufacturing
of
turning
logs
into
finished
lumber.
I
therefore
find
that
the
appeal
should
succeed,
that
the
amount
of
tax
levied,
together
with
the
interest
levied
thereon,
shall
be
remitted
to
the
appellant,
and
further
that
the
appellant
shall
have
interest
upon
the
sums
paid
from
September,
1,1978,
to
August
1,1980,
at
a
9%
rate,
and
thereafter
until
payment
at
a
12%
rate.
These
rates
of
interest
are
prescribed
in
subsection
20(2)
of
the
Act.
Costs,
gentlemen?
Mr
Adamcyk:
My
friend,
I
believe,
has
asked
for
costs
in
this
case.
I
would
suggest
party
and
party
cost.
Mr
Pirie:
That
is
agreeable,
my
lord.
His
Lordship:
Cost
to
follow
the
event
on
a
party
and
party
basis.
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