Blais v. M.N.R., [1985] 1 SCR 849

Blais v. M.N.R., [1985] 1 S.C.R. 849

Gérard Blais, in quality as Trustee of

St. Louis Textiles Limited, a Bankrupt     Appellant;

and

The Minister of National Revenue     Respondent.

File No.: 17824.

1985: May 24; 1985: June 13.

Present: Dickson C.J. and Estey, McIntyre, Chouinard, Lamer, Wilson and Le Dain JJ.

on appeal from the court of appeal for quebec

                   Taxation ‑‑ Excise tax ‑‑ Bankruptcy ‑‑ Whether liability to pay tax on goods under the Excise Tax Act, s. 27(1) , arises before goods are sold and is therefore a claim provable in bankruptcy under the Bankruptcy Act, s. 95(1) ‑‑ Whether a trustee in bankruptcy is liable under the Excise Tax Act, s. 27(3)  ‑‑ Excise Tax Act, R.S.C. 1970, c. E‑13, s. 27(1), (3) ‑‑ Bankruptcy Act, R.S.C. 1970, c. B‑3, s. 95(1).

Statutes and Regulations Cited

Bankruptcy Act, R.S.C. 1970, c. B‑3, s. 95(1).

Excise Tax Act, R.S.C. 1970, c. E‑13, s. 27(1), (3).

                   APPEAL from a judgment of the Quebec Court of Appeal, sub nom. Re St. Louis Textiles Limited; Minister of National Revenue v. Blais (1983), 48 C.B.R. (N.S.) 98, allowing the appeal from a judgment of the Superior Court. Appeal dismissed.

                   Allan R. Hilton, for the appellant.

                   Claude Joyal and Gaspard Côté, Q.C., for the respondent.

                   The following is the judgment delivered by

1.                The Court‑‑This is an appeal from the Court of Appeal for Quebec. The appellant is a trustee in bankruptcy who acquired the right to sell goods which had been purchased by the bankrupt company. He argues that the company incurred liability to pay tax on the goods under s. 27(1) of the Excise Tax Act, R.S.C. 1970, c. E‑13 at the time the goods were bought and that, therefore, the tax is a claim provable in proceedings under s. 95(1) of the Bankruptcy Act, R.S.C. 1970, c. B‑3.

2.                The Court of Appeal found the company had no obligation under s. 27(1)  of the Excise Tax Act  since it had not sold the goods to an unlicensed purchaser, nor retained them for its own use or rental to others, prior to becoming bankrupt. Accordingly, the tax was not a claim provable in bankruptcy under the Bankruptcy Act. The court concluded that the appellant was liable to pay tax under s. 27(3)  of the Excise Tax Act  upon his sale of the goods, and that he could deduct the amount so paid from the proceeds of sale as an expense of administration.

3.                We adopt the reasons of the Court of Appeal for Quebec and dismiss this appeal with costs.

                   Appeal dismissed with costs.

                   Solicitors for the appellant: Clarkson, Tétrault, Montréal.

                   Solicitors for the respondent: Côté, Ouellet & Demers, Montréal.