Date: 20010214
Docket: 2000-1348-GST-I
BETWEEN:
RÉJEAN TREMBLAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Lamarre, J.T.C.C.
[1]
This is an appeal from an assessment made by the Minister of
National Revenue ("Minister") under Part IX of the
Excise Tax Act ("Act"). The appellant,
who is not a registrant for the purposes of the Act, had a
residential complex built for himself in Hull, in the province of
Quebec, into which, adjacent to the building, he incorporated a
hoistway to accommodate a wheelchair lift. The appellant did not
pay the goods and services tax (GST) when he acquired the
wheelchair lift since it is a zero-rated supply under
section 14 of Part II of Schedule VI to the
Act. This wheelchair lift, which was purchased in
Ottawa, Ontario, was installed in the hoistway, which was
built at the same time as the residential complex, by various
trades in accordance with the instructions of the wheelchair
lift's supplier. That supplier did not take charge of the
construction because, according to the appellant, it was not
certified to do so in the province of Quebec.
[2]
The Minister states in the Reply to the Notice of Appeal that the
appellant paid GST at the time of acquisition of the various
taxable supplies of goods and services, including the hoistway,
which were used or consumed to build the residential complex. The
appellant subsequently applied to the Minister under
section 261 of the Act for a GST rebate of $704.82,
which he considers that he paid for the construction of the
hoistway incorporated into the residential complex. The Minister
refuses to pay a rebate of this amount of $704.82 for two
reasons:
(1)
the construction of the hoistway is not a zero-rated supply under
the Act and, consequently, no rebate is available for the
GST paid; and
(2)
the amount of the GST rebate sought by the appellant was
estimated, and not determined on the basis of actual supplies of
goods and services acquired specifically for the construction of
the hoistway in issue.
[3]
In the appellant's view, the construction of the hoistway is
a zero-rated supply in the same way as the wheelchair lift. The
appellant contends that, in designating the wheelchair lift as a
zero-rated good, Parliament intended to ensure that GST was not
paid on a good which a disabled person could use to move from one
floor to another in a wheelchair. For the wheelchair lift to be
operational, a structure must necessarily be built in accordance
with the supplier's specifications to ensure that the lift is
usable. The appellant contends that, without that structure,
which is the hoistway, the wheelchair lift is of no use since it
cannot be used to move a disabled person from one floor to
another. The two are indissociable.
[4]
The appellant also contends that, according to the
Dictionnaire de la comptabilité of the Canadian
Institute of Chartered Accountants, acquisition cost is the
[TRANSLATION] "purchase price of a good plus all other costs
([including the costs] of installation) which it is necessary to
incur before the entity can use the good". The appellant
maintains that the total cost of the wheelchair lift is the cost
of the "platform lift", on which he paid no GST, plus
the cost to build the hoistway, estimated at $10,068.80, on which
he paid $704.82 in GST. He claims a rebate of this last
amount.
[5]
Concerning the estimated cost of construction of the hoistway,
the appellant contends that this was the most accurate and
impartial way for him to determine the cost of the hoistway. As
the business of the wheelchair lift's supplier was in Ottawa
(since, according to the appellant, Savaria, the company
supplying these lifts had no representative in the Hull-Gatineau
area in the province of Quebec), it was prohibited by law from
supplying the full lift installation service in a new house being
built in Quebec. The appellant therefore asked a building
contractor to submit a bid stating the estimated construction
cost of a hoistway since the hoistway construction costs were
mixed in with the construction costs of the residential complex
as a whole.
Analysis
[6]
This appeal concerns the application of the provisions on
zero-rated supplies, that is, subsection 123(1) of the
Act and sections 14, 32 and 34 of Part II of
Schedule VI to the Act. These provisions read as
follows:
123. (1) Definitions – In section 121, this Part
and Schedules V to X,
"zero–rated supply" means a supply
included in Schedule VI.
SCHEDULE VI – ZERO-RATED SUPPLIES
PART II – Medical and Assistive Devices
14. Chair for disabled, commode chair or similar aid to
locomotion – A supply of a chair, commode chair,
walker, wheelchair lift or similar aid to locomotion, with or
without wheels, including motive power and wheel assemblies
therefor, that is specially designed for use by an individual
with a disability.
. . .
32. Part, accessory or attachment specially designed for a
property described in Part II – A supply of a
part, accessory or attachment that is specially designed for a
property described in this Part.
. . .
34. Services of installing, restoring, repairing or
modifying a property described in sections 2 to 32
– A supply of a service (other than a service the supply of
which is included in any provision of Part II of Schedule V
except section 9 of that Part and a service related to the
provision of a surgical or dental service that is performed for
cosmetic purposes and not for medical or reconstructive purposes)
of installing, maintaining, restoring, repairing or modifying a
property described in any of sections 2 to 32 and 38 to 40 of
this Part, or any part for such a property where the part is
supplied in conjunction with the service.
[7]
The issue is whether the supplies of goods and services that were
used or consumed to build the hoistway are zero-rated supplies
within the meaning of subsection 123(1) of the Act
because of the application of the above-quoted sections 32
and 34 of Part II of Schedule VI. More specifically,
can it be said:
(1)
that the parts, accessories or attachments acquired by the
appellant for the construction of the hoistway are parts,
accessories or attachments specially designed for the wheelchair
lift; and
(2)
that the services acquired by the appellant for the construction
of the hoistway are services of installing the wheelchair
lift?
[8]
The Act does not define the terms "parts"
["pièces"] and "accessories" or
"attachments" ["accessoires"].
However, the French words "pièce" and
"accessoire" are defined in the Grand
Dictionnaire Encyclopédique Larousse as follows:
[TRANSLATION]
PIÈCE
1. Each of the elements which, when assembled, form a
constructed thing.
. . .
2. Each of the elements of a set, whole or series.
ACCESSOIRE
2. Thing, instrument or device intended to complement a
principal element or assist in the operation of a device in the
various circumstances of its use.
The same terms are defined in Le Robert Dictionnaire de la
langue française as follows:
[TRANSLATION]
PIÈCE
1. Separate portion . . . of a whole.
2. Archaic Piece, portion (of a whole, of a
substance).
ACCESSOIRE
3. a (1611).Constituting a necessary or useful
complement for the convenient use of an object.
[9]
In Androck v. M.N.R. (1987), 74 N.R. 255, the Federal
Court of Appeal considered the meaning of the word
"parts" in the context of the application of the
Customs Tariff, at page 4:
. . . Moreover, while we think it both unnecessary and
undesirable to define the word "parts" in such a way
that it might apply in any factual context, we are of the opinion
that the goods in issue, to be classified as parts, must be
related to the entity with which they will be used to form a
necessary and integral part thereof and not simply as an optional
accessory, as here.
[10] In
Canadian Airlines International Ltd. v. British Columbia,
[1995] B.C.J. No. 2779 (Q.L.), the British Columbia Supreme
Court stated the following in paragraph 8:
. . . the ordinary meaning of "parts" is very
different from the meaning of "tools". While I do not
believe that it is absolutely essential that an item be
incorporated in a physical way into something to make it
susceptible of the definition of "part", yet it
seems to me that inherent in the idea of a thing being a part of
something is the concept that it be used in the operation or the
utilization of the thing in question. For instance, if one
asked the average individual to define what a part is, I suppose
a common response might be that it is a portion of the whole.
[Emphasis added.]
[11] It is
clear in the instant case that the hoistway is absolutely
necessary to the use of the wheelchair lift. Without the
hoistway, the lift cannot operate. I therefore consider it clear
that the hoistway is an accessory essential to the use of the
lift. It is also clear that the hoistway was specially designed
for the wheelchair lift and has no other use in the residential
complex in which it was built.
[12] However,
the Minister contends that the purchase invoice for the
wheelchair lift, on which the appellant paid no GST, already
included installation. He therefore concludes that the services
supplied by the various trades to add the hoistway to the
residential complex cannot be considered as zero-rated supplies
of services for the installation of the lift.
[13] The
appellant explained in his testimony that the wheelchair
lift's supplier could not build the hoistway because it was
prohibited from doing so by the Régie du bâtiment.
However, he said that the hoistway was installed in accordance
with the specifications given by the supplier.
[14] It is
clear in my mind that the lift could not be installed until after
the hoistway was installed. As the supplier could not install the
hoistway, the appellant had to ask the men who were already
building his residential complex to do so. Those who built the
hoistway nevertheless contributed to the installation of the lift
in accordance with the standards indicated by the supplier.
[15] In
Interior Mediquip Ltd. v. Canada, [1994] T.C.J.
No. 1160 (Q.L.), Judge Beaubier of this Court held that
the supply of a service to convert a motor vehicle in order to
permit access to it by means of a wheelchair ramp (a zero-rated
good) was also a zero-rated supply. Judge Beaubier found
that the supply of the various components of the motor vehicle
conversion service constituted a supply of accessories specially
designed for the wheelchair ramp within the meaning of
section 32 of Part II of Schedule VI to the
Act. Judge Beaubier added the following in
paragraph 12:
In some measure it may also constitute a supply of a service
of installing or a supply of parts in conjunction with the
installation of the wheelchair ramp.
[16] In the
same way as the conversion of a motor vehicle to permit the
installation of a zero-rated good constituted a zero-rated supply
of services, I find that the supplies of services and parts,
accessories or attachments used to build the hoistway permitted
the installation of a zero-rated good (the wheelchair lift) and
that these supplies therefore constituted zero-rated supplies
within the meaning of the Act.
[17] The
respondent then argues that the appellant may not obtain a rebate
of a payment of tax made in error since he cannot produce the
original receipts to prove that tax was paid. The Minister relies
on section 223 of the Act, which reads as
follows:
223. (1) Disclosure of tax – Every
registrant who makes a taxable supply to a recipient shall
(a) where an invoice or receipt is issued to, or an
agreement in writing is entered into with, the recipient in
respect of the supply, indicate in the invoice, receipt or
agreement either
(i) the total tax payable in respect of the supply in a manner
that clearly indicates the amount of that total, or
(ii) the total of the rates at which tax is payable in respect of
the supply and, where the invoice, receipt or agreement relates
to supplies in respect of which tax is payable and supplies in
respect of which no tax is payable, the supplies to which tax at
those rates applies; and
(b) in any other case, indicate in prescribed manner
that the amount paid or payable by the recipient includes the tax
payable in respect of the supply.
(2) Particulars – A person who makes a
taxable supply to another person shall, on the request of the
other person, forthwith furnish to the other person in writing
such particulars of the supply as may be required for the
purposes of the Part to substantiate a claim by the other person
for an input tax credit or rebate in respect of the supply.
[18] The
Minister also refers to the Regulations Prescribing the
Information that a Registrant is to Obtain Before Filing a Return
in which an Input Tax Credit is Claimed (SOR/91-45)
("Regulations"), more specifically to that part
of the Regulations (section 3) respecting the
information required to claim an input tax credit that is
prescribed for the purposes of paragraph 169(4)(a) of
the Act.
[19]
Section 223 sets out the basic requirements that registrants
must meet when they make taxable supplies.
Paragraph 169(4)(a) and the Regulations set
out the requirements that a registrant must meet to obtain an
input tax credit. These provisions and the Regulations
impose no particular obligation on the recipient of a supply such
as the appellant in the instant case.
[20] The
appellant applied for a rebate of a payment made in error under
section 261, which reads as follows:
261. (1) Rebate of payment made in error – Where
a person has paid an amount
(a) as or on account of, or
that was taken into account as,
tax, net tax, penalty, interest or other obligation under this
Part in circumstances where the amount was not payable or
remittable by the person, whether the amount was paid by mistake
or otherwise, the Minister shall, subject to subsections (2) and
(3), pay a rebate of that amount to the person.
[21]
Subsection 262(1) further provides as follows:
262. (1) Form and filing of application – An
application for a rebate under this Division (other than section
253) shall be made in prescribed form containing prescribed
information and shall be filed with the Minister in prescribed
manner.
[22] According
to subsection 262(1), the Minister has discretion as to the
information he may require. However, no regulations have been
made with respect to subsections 261(1) and (2) of the
Act, although the instructions on filing an application
appended to form GST 189E – General Application for
Rebate of Goods and Services Tax (GST) – state that the
original receipts for all purchases must be submitted with the
application. This requirement enables the taxpayer to prove that
tax was in fact paid. In the instant case, the appellant did not
attach an original receipt for the construction of the hoistway
to his rebate application or file any receipt with the Court
specifically itemizing the cost of that supply. At trial,
however, he did produce a copy of a bid from Tribec Construction
Générale (note 5 of Exhibit A-1)
giving an estimate of the cost of the additions to the
residential complex for construction of the hoistway. The
appellant also had in his possession all the receipts from the
various trades that worked on construction of the building
showing that he had paid GST. Furthermore, the Minister himself
admitted in paragraph 28(d) of the Reply to the Notice of
Appeal that the appellant had paid GST when he acquired the
various taxable supplies of goods and services used or consumed
in order to build the residential complex, including the
hoistway.
[23] The
Minister is now in no position to argue through his counsel that
no proof of payment of tax was provided to him. The requirement
that original receipts be filed for all purchases appears to have
been met by the appellant before the trial. Even if the appellant
had not met the requirement before the trial, I consider it to be
a mere administrative requirement of a directory rather than
imperative nature[1] whose purpose is to enable the Minister to obtain
proof that tax has been paid. In any case, the Minister actually
admitted in the Reply to the Notice of Appeal that tax had been
paid on all the supplies used to build the residential complex,
including the hoistway. In my view, the failure to file receipts
specifically concerning construction of the hoistway itself is
not fatal to the appellant's case in so far as the Court is
satisfied that tax was paid.
[24] I
consider the procedure the appellant used in the circumstances,
namely providing an estimate of the acquisition cost of the
hoistway, to be valid in view of the fact that he could not
accurately establish the specific costs associated with the
hoistway itself from the invoices he had in hand.
[25] I
therefore find that the appellant produced sufficient evidence to
show that he was entitled to a rebate of the payment of $704.82
which he believes he made in error at the time of construction of
the hoistway used to install the wheelchair lift.
[26] The
appeal is accordingly allowed with costs.
Signed at Ottawa, Canada, this 14th day of February 2001.
"Lucie Lamarre"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 4th day of May
2001.
Stephen Balogh, Revisor
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