REASONS
FOR JUDGMENT
D’Auray J.
I. INTRODUCTION
[1]
The appellant Jayco, Inc. (“Jayco”) appeals from
notices of assessment issued by the Minister of National Revenue (“Minister”),
which assessed Jayco for GST/HST owing under the Excise Tax Act[1]
(the “ETA”) on sales of recreational vehicles (“RVs”) and of parts
shipped from the United States to Canadian dealers from April 1, 2007 to
December 31, 2009.
[2]
As a result of the assessments, Jayco was assessed
$14,178,034.81 composed of the uncollected GST/HST on sales of the RVs and the
freight transportation service and the uncollected provincial component of the
HST with respect to the parts. An additional $589,149.38 in interest was
assessed against Jayco. Jayco subsequently remitted $50,000 plus interest on
that amount with respect to certain itemized adjustments contained in the
assessment which it no longer disputed. As a result, the total amount under
dispute in this appeal is $14,717,184.19.
[3]
Jayco’s argues that the RVs and the parts “were
delivered or made available outside Canada” pursuant to paragraph 142(2)(a) of
the ETA. Therefore, it did not have to collect and remit the GST/HST on
the RVs. In addition, since the parts were not taxable supplies having also
been delivered outside Canada, Jayco did not have to collect the provincial
component of the HST on them.
[4]
The respondent argues that the RVs and the parts were
“delivered or made available in Canada” pursuant to paragraph 142(1)(a) of the ETA.
Accordingly, Jayco should have collected and remitted the GST/HST on the RVs
and on the parts.
[5]
For the following reasons, I have decided that the RVs
were delivered or made available outside Canada, at Jayco business’ premises in
the USA, therefore the RVs do not constitute taxable supplies.
[6]
For the parts, I have decided that the parts were
delivered or made available in Canada, therefore the parts do constitute
taxable supplies.
II. FACTS
A. RVs
[7]
Jayco called three witnesses:
-
Mr. John Wolf, an executive vice president and
the chief financial officer of Jayco. Mr. Wolf works at Jayco’s Head Office in
Middlebury, Indiana;
-
Mr. Dale Wesley Howe, the sole shareholder and
president of Traveland Leisure Vehicles Inc. (“Traveland Vehicles”), a RV
Dealership in Langley, British Columbia and a Jayco authorized dealer since
1995;
-
Mr. Paul D. Borghesani, a lawyer and member of
the Indiana State bar. Mr. Borghesani testified as an expert witness on the law
of Sale of Goods in Indiana.
[8]
The respondent called one witness: Ms. Janice Cohoe.
She is a large file auditor with the Canada Revenue Agency (“CRA”) and the
auditor in charge of Jayco’s audit. She is a Certified Professional Accountant.
[9]
Jayco is incorporated pursuant to the laws of the State
of Indiana. Its Head Office and principal place of business are in Middlebury,
Indiana. It has an additional manufacturing facility in Idaho, USA.
[10]
Jayco’s business consists of manufacturing and selling
various models of RVs and parts to dealers located throughout the USA and
Canada.
[11]
During the periods under appeal, most of Jayco’s sales
were made to dealers located in the USA.
[12]
During the periods under appeal, Jayco was registered
for GST/HST purposes.
[13]
To become an authorized dealer, Jayco required an
applicant to complete a “Dealer Application Form”[2] and be approved by
it.
[14]
Once approved, the dealer had to enter into a
“Dealership Sales and Service Agreement”[3]
with Jayco.
[15]
Once the Dealership Sales and Service Agreement was
executed by Jayco and the dealer, the latter became an authorized dealer of
Jayco. The dealer was then able to sell RVs and parts manufactured by Jayco to
its customers.
[16]
The Dealership Sales and Service Agreement was governed
by the law of the State of Indiana.
[17]
Authorized dealers ordered RVs from Jayco using its
“Price Sheet and Order Form” (the “Order Form”).[4]
[18]
The Order Form allowed the dealer to choose one of two
options for shipment of the RV, namely the “Dealer pick up” option (“DPU”) or
the “Other Transportation” option (“OT”).
[19]
Under the DPU method of shipping, the dealer was
responsible for picking up the RV at one of Jayco’s business locations in the
USA or for arranging the delivery of the RV by a common carrier.
[20]
Under the OT method of shipping, Jayco arranged to have
a common carrier transport the RV from the USA to the dealer whether in the USA
or in Canada.
[21]
On the Order Form, the selling price for the RV was in
US dollars and the price of the RV did not include freight transportation
charges.
[22]
Once an order was accepted by Jayco, it would send an
Acknowledgement Order Number Form to the dealer.[5]
If the dealer had indicated a method of shipment on the Order Form, it was
mentioned in the Acknowledgement Number Order Form. The Acknowledgment Number
Order Form contained the same information regardless of whether the DPU or the
OT option had been chosen.
[23]
Dealers paid for the RVs with financing obtained from
inventory financing companies. To facilitate financing for the dealers, Jayco
entered into agreements, referred to as manufacturer’s financing agreements
(“MFA”)[6],
with inventory financing companies, including Transamerica Financing
Corporation and GE Commercial Distribution Finance Corporation.
[24]
Prior to the completion of an RV, Jayco would send a
notice to the dealer’s inventory financing company to seek approval and
confirmation that the financing company would pay Jayco, on behalf of the
dealer, for the RV.[7]
[25]
If the inventory financing company approved Jayco’s
request, it would issue an approval number to Jayco confirming that it would
advance funds to Jayco as payment for the RV upon the issuance of an invoice by
Jayco to the financing company. The approval number of the financing company
had to be on the invoice.[8]
[26]
Jayco Enterprise Transportation Inc. (“JET”) was a
freight transportation company and a wholly-owned subsidiary of Jayco. Mr. Wolf
testified that once the RV was manufactured and if the OT option had been
chosen, the RV was transferred to JET’s OT lot for shipping purposes. On the
other hand, if the DPU method of shipping was chosen by the dealer, once
manufactured the RV was transferred to the DPU lot. JET leased the OT lot from
Jayco.
[27]
According to Mr. Wolf, only employees of JET had access
to the DPU and the OT lots.
[28]
JET’s primary role was to act as the common carrier of
first instance for Jayco in arranging the shipment of products released to it
by Jayco to dealers throughout the USA and Canada. Mr. Wolf testified that at
times, JET hired other common carriers to transport Jayco’s products. JET also
provided freight transportation services to third parties.
[29]
Therefore, once a dealer’s inventory financing company
confirmed that it would pay for an RV and the manufacturing of the RV was
completed and it was ready for shipment, regardless of the shipping option
chosen by the dealer, DPU or OT, Jayco would:
a) prepare and
issue an invoice to the inventory financing company of the dealer;[9]
b) move
the RV either directly from its production line or from its finishing goods
inventory lot, to the DPU lot or the OT lot, both under the supervision of JET,
for shipping purposes;
c) notify
the dealer that the RV was ready for shipment by sending electronically a
“Dealer Ready to Ship Advisory”.[10]
On this form, Jayco wrote “that the above unit(s) are now ready to ship. They
have been released for shipment”.
[30]
With respect to the invoices prepared and issued to a
dealer’s inventory financing company:
a) regardless
of whether the DPU or the OT option had been chosen by a Canadian dealer, the
invoices were “BILLED TO” the dealer’s inventory financing company and under
“SHIPPED TO” the destination address indicated was the address of the dealer in
Canada;
b) if
the dealer chose the DPU method of shipping, the invoice issued by Jayco for
the RV was the sale price of the RV in US dollars;
c) if
the dealer chose the OT option of shipping, the invoice issued by Jayco for the
RV included the sale price of the RV in US dollars and the freight transportation
service costs also in US dollars. These latter costs were indicated separately
from the price of the RV.
[31]
Mr. Wolf described the transportation charge on several
occasions as “pass-through” fees, which he said were intended purely to offset
the expenses to Jayco. He characterized Jayco’s approach as follows:[11]
Our company had always taken the position
that our primary or core business was the manufacture and sale of recreational
vehicles and parts. We were not in the business of making money on freight. It
was simply convenience to our dealers. It was simpler for us administratively
just do to straight pass through.
[32]
Mr. Wolf testified that it was Jayco that determined
the cost of the freight transportation service, since at the time of the
invoice it did not know exactly how much JET would be charging Jayco. He stated
that there were essentially three elements to the freight transportation
charge: a base shipping charge (the “destination charge”), a fuel surcharge,
and a Canadian Surcharge.
[33]
Mr. Wolf explained that the base destination
charge was based on mileage and each zone had a fixed rate. The fuel surcharge
was based on the national diesel fuel average price as reported on the eia.gov
website on a weekly basis. The Canadian Surcharge was a rate per mile
negotiated by JET and the drivers. In addition, drivers were paid their out of
pocket expenses.
[34]
Mr. Wolf stated that Jayco attempted to recover from
the dealers all the freight costs that it paid to JET. That said, this was not
always possible on individual sales. Therefore, Jayco could only attempt to
achieve a pass-through system on a company-wide basis. Mr. Wolf testified that
Jayco did not make a profit on the freight transportation service. He indicated
that the reason why the freight transportation service was on the Jayco invoice
and not on a JET invoice was to allow the dealer to finance these costs via the
dealer’s inventory financing company. The freight costs were high and this was
a way of assisting the dealers.
[35]
Mr. Wolf also testified that the dealers remained free
to provide additional instructions to Jayco regarding the transportation
arrangements. He described the range of these instructions as follows:[12]
There would be situations where - not
related to this type of product series, but on some of our smaller trailers
that we produce, should a dealer order, for example, our fold-down camping
trailer series, it’s possible that we can deliver up to six of those units on a
single, we call them “decker”, which is a trailer, much like automobiles are
delivered. So, if a dealer places an order, obviously it reduces the shipping
cost per unit, if we’re able to consolidate loads like that. We also produce
other small travel trailers, some only 12 - 14 feet long. There are two other
ways those might be shipped to our dealer. One method is what we call “Low
boys”, where we have a long, flatbed trailer, that depending on the length of
the trailer that the dealer has ordered, we can ship two or three. So that the
dealer can request multiple orders be shipped in that method. They could also
suggest in the event they had an immediate need for a trailer that could have
been delivered with another unit or two on a lowboy, if they need it
immediately they could request it be shipped what we call “single pull” or by a
pickup truck. So, and then the third and final option, there were a few
carriers that had a truck with a shorter flatbed with a hitch on the back. So
essentially a dealer could request, in that case up to two units delivered at
the same time. One on the flatbed, the other one towed.
[36]
Mr. Wolf also testified that Jayco was acting on behalf
of the Canadian dealer when arranging the delivery of an RV. He testified that
once the RV was turned over to the common carrier, the ownership of the RV was
transferred to the owner.
[37]
Mr. Howe, the Canadian dealer, confirmed the testimony
of Mr. Wolf. He stated that in arranging delivery with JET, Jayco was acting
on behalf of his dealership, Traveland Vehicles. He also stated that Traveland
Vehicles became the owner of the RV at the time it was turned over to JET,
since at that time Traveland Vehicles became liable to pay for the RV. He also
stated that he was the importer of record for the RV.
[38]
For Canada customs purposes, each RV that was shipped
to Canada was accompanied by an original certificate of origin,[13] a
Canada Customs invoice,[14] a copy of the original invoice,[15] a Jayco
ready-to-ship-advice[16] and a bill of lading,[17] regardless of whether the DPU option or the OT option of shipping
had been chosen by the dealer.
[39]
The certificate of origin that accompanied the RV was
always dated on or before the date the RV was picked up by the common carrier
for shipment to the dealer.
[40]
The ready-to-ship-advice was prepared by Jayco when the
RV was transferred to the carrier to be shipped to Canada. It was signed by the
carrier’s driver at the time the carrier took possession of the RV. The point
of dispatch on the ready-to-ship-advice was USA.
[41]
Mr. Wolf also reviewed a sample Canada Customs Invoice.[18]
Under the Conditions of Sale and Term of payments, it was indicated “USA”.
[42]
For Mr. Wolf, these were all indications that the
delivery of the RV took place at the business premises of Jayco in the USA.
[43]
Since the Canadian dealers acted as importer on record,
they paid the GST on the importation of the RV to Canada Customs at the time of
importation into Canada.
[44]
Mr. Wolf was asked whether Jayco had any discussions
with its Canadian authorized dealers regarding the time and place of legal
delivery on sales of RVs. Mr. Wolf confirmed that, during the period in issue,
no such discussions had occurred.[19]
Mr. Wolf stated that the same method was followed for USA shipments and
Canadian shipments. Once the RV was transferred to JET’s OT lot, the dealer
became the owner of the RV and if damages occurred during the transportation,
the dealer had to deal with the common carrier and not Jayco.
[45]
Mr. Wolfe stated that Jayco did not collect the GST/HST
on the RVs sold to Canadian dealers during the period under litigation,
regardless of the shipment option used, namely DPU or OT.
[46]
The Minister did not assess Jayco with respect to the
supply of RVs made using the DPU method of shipping. The Minister’s position is
that the RVs purchased by Canadian dealers and shipped using the DPU method
were delivered outside of Canada and did not constitute taxable supplies. In
issue, therefore, are only the supply of RVs made by Jayco where the OT method
of shipping was used by the Canadian dealers.
B. Parts
[47]
According to paragraphs 20s) and t) of the Reply to
Notice of Appeal, the Minister, in assessing Jayco on the sales of parts,
relied upon the following assumptions of fact:
s) In
the period of April 1, 2007 through December 31, 2009, Jayco did not collect the
GST/HST in respect of the sales of RVs or parts it arranged to deliver to
Canadian customers.
t) In
the period of April 1, 2007 through December 31, 2009, the Canadian customer
acted as the importer of record for the RVs or parts imported into Canada and
paid tax under the Division III of Part IX of the ETA (Tax on
Importations of Goods).
[48]
The evidence has established that these two assumptions
are incorrect. Contrary to paragraph 20s), it is clear from the testimony of
Mr. Wolf and the documents submitted in evidence that when the OT option was
chosen, the GST was collected and remitted by Jayco with respect to parts.
However, the provincial component of the HST was not collected on parts shipped
to a Canadian dealer located in an HST participating province. In addition, the
GST/HST was not collected by Jayco on the freight transportation service
relating to the parts.
[49]
Contrary to paragraph 20t), during the period of April
1, 2007 through December 31, 2009, the Canadian dealers were not the importers
of record with respect to the parts. Jayco was.
[50]
That said, there are some similarities between the RVs
and the parts. For example, the Canadian dealers could choose the DPU method of
shipment and pick up the parts at one of Jayco’s facilities in the USA or the
dealers could choose the OT method of shipping and have Jayco arrange their
shipment to Canada.
[51]
During the periods under litigation, Jayco stated that
it retained Frontier Supply Chain Solutions (“Frontier”) exclusively to assist
it in shipping parts. Frontier is a customs broker and logistics firm.
[52]
Orders for parts from Canadian dealers were processed
by Jayco’s parts department in Middlebury, Indiana. Once an order was received,
the department would select, pack, label and address the requested part(s).
Jayco then consolidated all the parts’ orders bound for Canada. Daily, Frontier
would arrange for a carrier, namely, Alvin Motor Freight Inc., to pick up the
consolidated orders at Jayco’s premises in Middlebury and ship them to
Frontier’s facility in Bensenville, Illinois.
[53]
At its facility in Bensenville, Illinois, Frontier
further consolidated the parts’ orders into one master load. Then nightly Alvin
Motor Freight Inc. transported the load from Frontier’s Bensenville facility to
Frontier’s facility in Winnipeg, Manitoba with one bill of lading for the
entire shipment. Jayco was the importer of record.
[54]
Once in Winnipeg, Frontier separated the consolidated
shipment into orders bound for eastern Canada and those bound for the western
Canada. Frontier then contracted with third party carriers to deliver them to
the dealers.
[55]
Frontier then invoiced Jayco for freight services,
customs duties, and the GST it had paid on Jayco’s behalf to Canada Customs.
[56]
In turn, Jayco invoiced the Canadian dealers for the
parts, the GST and the freight costs without any mark up for the freight
costs. In filing its GST returns, Jayco reported the GST and claimed input tax
credits (“ITCs”).
[57]
Relying on the advice of Frontier, Jayco only collected
from the dealers the GST charged to it by Frontier. Therefore, the provincial
component of HST was not collected by Jayco. Nor did Jayco collect the GST/HST
on freight transportation services since Frontier did not collect them.
[58]
Jayco’s position is that it was not required to collect
the GST on parts since the parts were delivered or made available outside
Canada pursuant to paragraph 142(2)(a) of the ETA. Jayco submits that
the GST it paid on the parts was paid in error. It follows that Jayco did not
have to collect and remit the provincial component of the HST on parts.
[59]
In addition, Jayco argues that the parts and the
freight transportation services are multiple supplies. The freight
transportation of tangible personal property is zero rated, pursuant to section
8 of Schedule V1, Part VII of the ETA. Therefore, Jayco submits that it
was not obliged to collect GST/HST on the freight transportation services.
[60]
The respondent took the same position as she did for
the RVs. She argued that in light of the contractual relationship, express or
implied, between Jayco and the Canadian dealers, Jayco agreed to deliver the
parts to the Canadian dealers at their business’ premises in Canada. In
addition, she stated that Jayco was not acting on behalf of the Canadian
dealers in arranging the delivery of the parts. In addition, Frontier was not
acting on behalf of the Canadian dealers, since it is clear from the evidence
that Frontier acted as the agent of Jayco. The contractual relationship was
between Frontier and Jayco and not Frontier and the Canadian dealers.
III. PRELIMINARY
ISSUES
[61]
Before addressing the issues under appeal, I first have
to deal with two procedural objections: one raised by Jayco and the other by
the respondent.
[62]
Jayco argues that I cannot entertain the respondent’s
argument that JET is not a separate corporate entity but rather an extension of
Jayco since this issue was not raised in her Reply to Notice of Appeal. In
order to do so, I would have to pierce the corporate veil.
[63]
I agree with Jayco. Since the issue was not raised in
the respondent’s pleading and the respondent did not ask to amend her Reply, I
will not entertain it.
[64]
For her part, the respondent argues that the issue of whether
the freight transportation service was a taxable supply or not and whether it constituted
a single supply or multiple supplies, could not be raised before me.
[65]
In her written submissions filed on February 2, 2018,
the respondent points out that although Jayco raised the issue at trial, it had
failed to do so in its Notice of Appeal.
[66]
I agree with the respondent. Since Jayco did not raise the
issue in its Notice of Appeal, it was not entitled to do so at trial.
[67]
Although this is sufficient to dispose of this objection,
there is a further reason for supporting the respondent’s objection. The
respondent pointed out that since Jayco was a specified person pursuant to subsections
301(b) and 301(1.2) of the ETA, it could not have raised the issue of
the taxability of the freight transportation service in its Notice of Appeal
pursuant to paragraph 306.1(1) of the ETA, since the issue was not
raised its Notice of Objection.
[68]
In light of the amounts in issue, it is clear that
Jayco was a specified person under subsections 301(b) and 301(1.2) of the ETA.
Under paragraph 306.1(1)(a) of the ETA, a specified person is not
allowed to raise an issue in its Notice of Appeal, unless the issue was first raised
in its Notice of Objection. Here, Jayco had not raised the issue of the
taxability of freight transportation service in its Notice of Objection.
IV. ISSUES
[69]
Therefore, the issues in this appeal are:
- was
Jayco required to collect and remit the GST/HST on the RVs it sold to Canadian
dealers when the OT option method of shipping was chosen by the dealers?
- was
Jayco required to collect and remit the provincial component of the HST on the
parts shipped from the USA to Canada?
V. APPELLANT’S
POSITION
[70]
Jayco submits that the RVs and the parts were
“delivered or made available outside Canada” to the Canadian dealers pursuant
to paragraph 142(2)(a) of the ETA. Neither the RVs nor the parts were
taxable supplies. Jayco submits that it did not have to collect and remit the GST/HST
on these supplies. In addition, Jayco submits that it was acting on behalf of
the Canadian dealers when arranging delivery of the goods to Canada.
[71]
Jayco argues that the RVs and parts were delivered and
made available to the Canadian dealers at its manufacturing facilities in
Indiana and Idaho when the products were turned over to the common carrier, JET
with respect to the RVs and Frontier with respect to the parts.
[72]
Jayco submits that its position is confirmed by the
testimonies of Mr. Wolf and Mr. Howe and the documentary evidence. Jayco
argues that there was an implicit agreement between Jayco and the Canadian
dealers that the delivery of the RVs and the parts took place outside Canada at
Jayco’s business premises in the USA.
[73]
Jayco also argues that if the contractual relationship
between Jayco and the Canadian dealers is not sufficient to allow me to
determine where the delivery occurred with respect to the RVs and the parts, I
have to apply the provisions dealing with the sale of goods in Indiana, namely
the Uniform Commercial Code‑Sales Chapter 26 (“IC-26-1-2”).
This legislation is similar to the Sale of Goods legislation in effect
in Ontario, British Columbia and Alberta. Jayco submits that under the
provisions of the IC-26-1-2, delivery occurred at the place of business
of Jayco in the USA.
[74]
The respondent’s position is that the RVs and the parts
were delivered or made available in Canada pursuant to paragraph 142(1)(a) of
the ETA. Therefore, the supplies are taxable. She argues that the
evidence supports a contractual relationship between the Canadian dealers and
Jayco, whereby Jayco agreed to deliver, in Canada, the RVs and parts it sold to
the Canadian dealers. She argued that this relationship may be inferred, either
from the documents or from the course of conduct of Jayco and the Canadian
dealers. She submits that the documents between Jayco and the Canadian dealers
created an expectation on the part of the Canadian dealers that the RVs would be
delivered to Canada.
[75]
The respondent argued that for the Canadian dealers, it
did not matter if the RVs were delivered by Jayco or JET, as long as the RVs
were delivered to their business’s premises in Canada. In any event, she argued
that JET acted as an agent of Jayco and not as agent of the Canadian dealers,
when delivering the RVs to the Canadian dealers.
[76]
The respondent submitted that Jayco could not have been
acting as an agent on behalf of the Canadian dealers when arranging the
transportation with JET for delivery in Canada, since under the general
provisions of the Dealership Sales and Services Agreement, Jayco could not act
as agent for the dealers.
A. Was
Jayco required to collect and remit the GST/HST on the RVs it sold to Canadian
dealers when the OT option method of shipping was chosen by the dealers?
[77]
This issue turns on whether paragraph 142(1)(a) or
142(2)(a) of the ETA applies.
[78]
Paragraph 142(1)(a) of the ETA provides that in
the context of the sale of tangible personal property, a supply is deemed to be
made in Canada, and thus subject to the GST/HST, if the property is delivered,
or made available to the recipient of the supply, in Canada. Paragraph
142(1)(a) reads as follows:
142(1) For the purposes of this Part,
subject to sections 143, 144 and 179, a supply shall be deemed to be made in
Canada, if
(a) in the case of
a supply by way of sale of tangible personal property, the property is, or is
to be, delivered or made available in Canada to the recipient of the supply;
[79]
Conversely, paragraph 142(2)(a) of the ETA
provides that the supply of tangible personal property by way of sale is deemed
to be made outside Canada if the property is delivered or made available
outside Canada to the recipient of the supply. Paragraph 142(2)(a) reads as
follows:
142(2) For the purposes of this Part, a
supply shall be deemed to be made outside Canada if
(a) in the case of
a supply by way of sale of tangible personal property, the property is, or is
to be, delivered or made available outside Canada to the recipient of the
supply;
[80]
The ETA does not define the meaning of the
phrase “delivered or made available” which is used in both paragraphs 142(1)(a)
and 142(2)(a) of the ETA. However, in light of the jurisprudence the words
“delivered or made available” is to be interpreted in the same manner as the
concept of “delivery” in the sale of goods legislation.[20] The meaning of
“delivery” is well established under such legislation.[21]
[81]
In its GST/HST Memorandum,[22] the CRA has adopted
this jurisprudence and indicated that the phrase, “delivered or made available”
in Canada or outside Canada used in paragraphs 142(1)(a) and 142(2)(a), is to
be given the same meaning as that assigned to the concept of “delivery” in sale
of goods legislation. The memorandum states as follows:
7. For purposes of paragraph 142(1)(a) and
142(2)(a) which deems supplies of tangible personal property by way of sale to
be made in Canada or outside Canada, the phrase “delivered or made available”
has the same meaning as that assigned to the concept of “delivery” under the
law of the sale of goods, as follows:
•
“Delivered” refers to those situations where
delivery of the tangible personal property under the applicable law of the
sale of goods is effected by actual delivery.
•
“Made Available” refers to those situations
where delivery of the tangible personal property under the applicable law of
the sale of goods is effected by constructive delivery (i.e., actual
physical possession of the tangible personal property is not transferred to the
recipient of the supply yet is recognized as having been intended by the
parties and as sufficient in law). For example, situations arise when a person
sells tangible personal property to another person and agrees to hold the
property as bailee for the buyer.
8. In any given case, the place where the
tangible personal property is delivered or made available may be determined by
reference to the place where the tangible personal property is considered to
have been delivered under the law of the sale of goods applicable in that case.
9. Generally, the place where tangible
personal property is delivered or made available can be determined by
reference to the terms of the contract.
10. In common law provinces, the law of the
sale of goods is primarily contained in the appropriate Sale of Goods Act. In
the province of Quebec, the obligation of the seller to deliver tangible
personal property to the buyer is contained in the Civil Code rather than in a
Sale of Good Act.
11. In those cases where the contract
between the parties is governed by the United Nations Convention on Contract
for the International Sale of Goods (Convention), the place where the tangible
personal property is delivered or made available will have to be determined in
accordance with the rules relating to delivery contained in the Convention
rather than in accordance with the domestic law of any province.
[Underlining added.]
[82]
The Dealership Sales and Service Agreement provides
that relationship between Jayco and authorized dealers is to be governed by the
laws of the State of Indiana.[23]
Therefore, regard must be had to the law of that jurisdiction.
[83]
As foreign law is a matter of fact to be proved at
trial through a qualified witness, Jayco called as a witness Mr. Borghenasi to
explain the provisions of IC 26-1-2 and how they applied to the
transactions in this appeal.
[84]
Mr. Borghenasi referred to the following provisions of IC
26-1-2, that he stated were relevant.
[85]
Under subsection 201.(14) of IC-26-1-2, delivery is
defined as:
201.(14) – “Delivery” means the following:
(A) With respect to an electronic document
of title, voluntary transfer of control;
(B) With respect
to instruments, tangible documents of title, chattel paper, or certificated
securities, voluntary transfer of possession.
[86]
Under section 301 of IC 26-1-2, the general
obligations of the parties in a sales transaction are set out:
General
Obligation-Sec. 301. The obligation of the seller
is to transfer and deliver and that of the buyer is to accept and pay in
accordance with the contract.
[87]
Subsection 308(a) of IC 26-1-2 provides that in
the sale of goods, the place of delivery is the seller’s place of business,
unless otherwise agreed:
Absence of
specified place for delivery- Sec 308. Unless
otherwise agreed:
(a) The place for delivery of goods is the
seller’s place of business or if he has none his residence; but
(b) In a contract for sale of identified
goods which to the knowledge of the parties at the time of contracting are in
some other place, that place is the place for their delivery; and . . .
[88]
Section 503 of IC 26-1-2 sets out the rules
respecting tender of delivery:
Manner of
seller’s tender of delivery-Sec. 503 (1) Tender of
delivery requires that the seller put and hold conforming goods at the buyer’s
disposition and give the buyer any notification reasonably necessary to enable
him to take delivery. The manner, time and place for tender are
determined by the agreement and IC 26-1-2, and in particular:
(a) tender must be at a reasonable
hour, and if it is of goods they must be kept available for the period
reasonably necessary to enable the buyer to take possession; but
(b) unless otherwise agreed, the
buyer must furnish facilities reasonably suited to the receipt of the goods.
(2) Where
the case is within IC 26-1-2-504 respecting shipment, tender requires
that the seller comply with its provisions.
(3) Where
the seller is required to deliver at a particular destination, tender requires
that he comply with subsection (1) and also in any appropriate case tender
documents as described in subsections (4) and (5).
(4) Where goods are in the possession
of a bailee and are to be delivered without being moved:
(a) tender requires that the seller
either tender a negotiable document of title covering such goods or procure
acknowledgement by the bailee of the buyer’s right to possession of the goods;
but
(b) tender
to the buyer of a nonnegotiable document of title or of a record directing the
bailee to deliver is sufficient tender unless the buyer seasonably objects, and
except as otherwise provided in IC 26-1-9.1, receipt by the bailee of
notification of the buyer’s rights fixes those rights as against the bailee and
all third persons; but risk of loss of the goods and of any failure by
the bailee to honor the nonnegotiable document of title or to obey the
direction remains on the seller until the buyer has had a reasonable time to
present the document or direction, and a refusal by the bailee to honor the
document or to obey the direction defeats the tender.
(5) Where the contract requires the
seller to deliver documents:
(a) he must tender all such documents
in correct form, except as provided in IC 26-1-2-323(2) with
respect to bills of lading in a set; and
(b) tender
through customary banking channels is sufficient and dishonor of a draft
accompanying the documents constitutes non-acceptance or rejection.
[89]
With respect to shipment by a seller, section 504 of IC
26-1-2 provides as follows:
Shipment by
seller- Sec. 504. Where the seller is
required or authorized to send the goods to the buyer and the contract does not
require him to deliver them at a particular destination, then unless otherwise
agreed he must
(a) put the goods in the possession
of such a carrier and make such a contract for their transportation as may be
reasonable having regard to the nature of the goods and other circumstances of
the case; and
(b) obtain and promptly deliver or
tender in due form any document necessary to enable the buyer to obtain
possession of the goods or otherwise required by the agreement or by usage of
trade; and
(c) promptly
notify the buyer of the shipment.
[90]
In his written summary opinion, Mr. Borghesani stated
as follows:
Under the laws of the State of Indiana,
unless otherwise agreed by the seller and the buyer:
the place of
delivery of goods is the sellers’ place of business or, if the seller does not
have place of business, his residence, but
if the contract
for sale of identified goods which to the knowledge of the parties at the time
of contracting are in some other location than the seller’s place of business or
residence, that place is the place of delivery.
If the seller is required or authorized to
send the goods to the buyer, in order to effect tender of delivery, unless
otherwise agreed between the seller and buyer, the seller must
put the goods in
the possession of a carrier and make a contract for their transportation as may
be reasonable having regard to the nature of the goods and other circumstances
of the case,
obtain and
promptly deliver or tender in due form any document necessary to enable the buyer
to obtain possession of the goods or otherwise required by the agreement
between the seller and buyer or by usage of trade, and
promptly notify
the buyer of the shipment.
However, regardless of whether the seller is
required or authorized to send the goods to the buyer, the place of delivery
remains the place agreed between the seller and the buyer, or in the absence of
such agreement, the seller’s place of business or residence.
[91]
Therefore, under IC-26-1-2, absent an agreement
between the seller and the buyer, delivery occurs at the seller’s place of
business. Where the seller is authorized, as here, to send the goods to the
buyer, the seller has to put the goods in the hands of a carrier and notify the
buyer of the shipment. In these circumstances, the place of delivery is the
seller’s place of business. This principle was confirmed by the Court of Appeal
of Indiana, Fourth District in Dept., State Rev. v Martin Marietta
Corp., where Justice Miller, writing for the Court, stated as follows:
The sales contracts between Standard and its
customers were shipment contracts. Title to the goods passed and delivery
occurred when the goods were loaded onto the common carrier for shipment to
Standard’s purchasers.
[92]
Mr. Borghesani also opined that once a seller turns the
goods over to the buyer, the buyer becomes responsible for any damages incurred
during transportation as title has passed to it. Mr. Borghesani noted, however,
that the provisions of the US Transportation Code dealing with Bill
of Lading issued by a common carrier for the transportation of goods from a
place in a State to a place in a foreign country, rendered the carrier liable
for any damages to the goods while in transit.[25]
Therefore, if damages were to occur to goods in transit, the Canadian dealer
would have to deal with the carrier (JET) and not the seller (Jayco).
[93]
Absent an agreement between Jayco and its Canadian
dealers on place of delivery, it is clear from a reading of section 308(a) of
the IC-26-1-2 and the testimony of Mr. Borghesani that delivery of the
RVs to the dealers would have occurred at Jayco’s place of business in the
USA.
[94]
However, section 308 of IC 26-1-2 permits a
seller and purchaser to agree on a place of delivery other than the default one
of the seller’s place of business or residence. Both parties submit that
there was such an agreement.
[95]
The respondent submits that there was an agreement
between Jayco and the Canadian dealers that the delivery of the RVs would take
place at the dealers’ business premises in Canada and that therefore the
default place of delivery provided in section 308(a) of IC 26-1-2 was
inapplicable. She states that the contractual relationship setting out the
place of delivery is to be inferred from the conduct of Jayco and the dealers
and the documentary evidence.
[96]
Jayco, on the other hand, submits that it had agreement
with the Canadian dealers to arrange for the delivery of the RVs at its
business premises in the USA. In support of its position, it points to the
testimonial evidence, its conduct and that of its Canadian dealers and the
documentary evidence.
[97]
After an analysis of the evidence, I conclude that there
was an agreement between Jayco and the Canadian dealers that the delivery of
the RVs would take place at the business premises of Jayco in the USA at the
time the RVs were turned over to the common carrier.
[98]
It is clear from the testimony of Mr. Wolf that Jayco
was acting on behalf of the Canadian dealer when arranging the transportation
of an RV with the common carrier JET. He stated that he understood that the
dealer became the owner of the RV when it was turned over to JET. Mr. Wolf
explained that if damages occurred to the RV at the time it was imported into
Canada, the dealer had to deal with JET, as Jayco did not have any insurance to
cover damages occurring at the time of importation of the RV to Canada.
[99]
The Canadian dealer, Mr. Howe, testified that Jayco was
acting on behalf of his dealership when arranging the delivery of an RV with
the common carrier JET. His understanding was that his dealership owned the RV
from the date of the issuance of the invoice which was issued the day on which
that the RV was turned over to the common carrier JET. This was because his
dealership became liable to the financing company for the RV at that time.
Therefore, he considered that his dealership was already the owner of the RV
when it was imported into Canada.
[100] I do not have any reason to doubt the testimonies of Mr. Wolf
and Mr. Howe. Both were credible witnesses. Their testimonies were
forthright, un‑contradicted and supported by the documentary evidence
submitted at trial.
[101] I have already described the various documents governing the
relationship between Jayco and the Canadian dealers and the process for
purchasing an RV, i.e. the Dealership Sale and Service Agreement, the Order
Form, the Acknowledgment Number Order Form, the Invoices, the Dealer to Ship
Advisory. With one exception, the documents did not distinguish between a sale
where the DPU method of shipment was used and one where the OP method was used.
The exception was that under the OT option, the invoice included the
transportation charges as a separate charge.
[102] None of the above documents contain any explicit mention as to where
the delivery of the RV would take place. This was acknowledged by Ms. Cohoe in
her testimony.
[103] However, there are a number of indications in the documents which
support Jayco’s position that delivery of the RVs took place at its place of
business in the USA.
[104] Under the MFA with the inventory financing companies, Jayco agreed
that the RV included in the invoice had to be shipped to, or made available for
pick up by, the dealer as of the date of the invoice. If Jayco did not meet
this requirement, it had to reimburse the financing company for the amount
advanced by the company. In addition, the financing company could only withdraw
its financing approval before the RV was shipped, namely before the RV was
transferred over to the common carrier at the date of the invoice. Therefore,
at that point in time, the delivery had to occur, since according to the MFA,
Jayco had the right to be paid for the RV by the financing companies. At the
same time, the Canadian dealer became liable to pay for the RV.
[105] It is also clear from the evidence that Jayco was acting on behalf
of the Canadian dealers in arranging the shipment with the common carrier JET.
Once the RV was turned over to JET, JET became the agent of the Canadian dealer
and became responsible for any damages occurring to the RV while in its
possession pursuant to the provisions of the US Transportation Code dealing
with the Bill of Lading.
[106] The Dealer Ready to Ship Advisory[26]
provides another indication that the delivery occurred at the business’
premises of Jayco. At the time that the RV was turned over to the common carrier
JET, Jayco notified the Canadian dealer in writing that the RV was ready to be
shipped with the point of dispatch being Middlebury, Indiana or Twin Falls,
Idaho.
[107] In addition, the certificate of origin was always issued and dated
on or before the RV was turned over to the common carrier for shipment to the
dealer. The certificate of origin stated that “Jayco transferred the vehicle
to the Canadian dealer.” Although the certificate of origin does not
determine the place of delivery, the terms on the certificate of origin
indicated that “the vendor had transferred the ownership to the
Canadian dealer at the time that the RV was turned over to the common carrier”,
which is another indication that the delivery occurred at that time.
[108] Proof of delivery can be evidenced by documents of title, including
a bill of lading. In this appeal, the common carrier was the agent for the
consignee on the bill of lading, namely the Canadian dealer. This is another
indication that title had passed to the Canadian Dealer and the delivery
occurred in the USA. As it was stated by Justice Hogg of the Ontario Court of
Appeal in Marshall and Van Allen v Crown Assets Disposal Corporation, at paragraph 8:
The agreement to sell and the actual sale
are two distinct things. The act of delivery completes the sale. Delivery is
accomplished by the purchaser obtaining the actual physical possession of the
goods or, if certain conditions are present, there may be a symbolical
delivery which divests the seller’s possession and, in the event of the
purchase-price of the goods not having been paid, such delivery is sufficient
to terminate the vendor’s lien or right to detain the goods until the
purchase-price is paid. Delivery may be made by giving the purchaser possession
of the key of the warehouse where the goods are located. The transfer to the
buyer of a bill of lading, as representing the goods, forms a good delivery in
performance of the contract. Other mercantile documents, such as a delivery
order from the seller to a warehouseman to deliver the goods to the purchaser,
do not represent the goods, so far as delivery by the seller in performance is
concerned, and in the case of such a document some further act or acts must be
done: Benjamin on Sale, 8th ed. 1950, pp. 741-2. Benjamin also states,
referring to s. 29(3) of the English Sale of Goods Act, which is identical in
its terms with s.28(3) of the Ontario statute, that the proviso in this section
that nothing therein “shall affect the operation of the issue or transfer of
any document of title to goods” does not alter the common law distinction
between the transfer of a bill of lading and that of other documents so far as
regards performance of the contract. The present case is not concerned with a
bill of lading but with the order from the respondent to the custodian to
deliver the tractor crawlers to the appellants.
[Underlining
added.]
[109] Finally, the clarifications made in 2015 to the Dealership Sale and
Service Agreement reflect the conduct of Jayco and the Canadian dealers during
the periods under appeal. In 2015, Jayco went back to using the method of
shipping with respect to the RVs that it had used prior to 2010 and during the
periods under appeal. This was confirmed by both Mr. Wolf and Mr. Howe in their
testimonies. In 2015, the Dealership Sale and Service Agreement, was modified
to clearly indicate that delivery of the RVs would take place in the USA.
ACKNOWLEDGEMENT OF EXISTING FOB FACTORY TERMS:
CLARIFICATION TO
DEALERSHIP SALES AND SERVICE AGREEMENT
PLACE
OF DELIVERY OF PRODUCT(S)
All products sold by Jayco to the Dealer are
sold FOB factory, or more specifically Ex Works (Incoterms 2010) Jayco’s
factory in the United States.
Meaning of DPU (Dealer Pick-Up): If the
Dealer selects DPU (Dealer Pick-up) when placing an order with Jayco, the
product(s) purchased are sold by Jayco to the Dealer Ex Works (Incoterms 2010)
Jayco’s manufacturing facilities in Indiana or Idaho, or such Jayco facilities
or warehouse as may be determined by Jayco.
Meaning of O/T (Other Transport): If the
Dealer selects O/T (Other Transport) when placing an order with Jayco, the
product(s) purchased are sold by Jayco to the Dealer Ex Works (Incoterms 2010)
Jayco’s manufacturing facilities in Indiana or Idaho, or such Jayco facilities
or warehouse as may be determined by Jayco (the “Delivery Point”), but Jayco
shall for a separate fee in addition to the purchase price of the product(s)
contract or procure a contract for the carriage of the product(s) from the
Delivery Point to the Dealer’s Dealership Location or such other place in North
America as the Dealer may specify.
(A copy of Incoterms 2010 can be found at http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/.)
[110] I will now explain why I rejected the respondent’s position. She
argued that the Canadian dealers had an expectation that the RVs would be
delivered by Jayco to their business’ premises in Canada. She submitted that it
was clear from the documents produced at trial that the RVs would be delivered
in Canada.
[111] She stated that by Jayco accepting the Order Form whereby the dealer
had chosen the OT method of shipment for the RV, Jayco became legally and
factually obligated to deliver the RVs to Canada.
[112] In my view, what the Canadian dealers expected, when opting for the
OT method of shipping, was that Jayco would make the arrangements on their
behalf with a common carrier for the shipment of the RVs to Canada, not that
Jayco would deliver the RVs. This was assumed as a factual basis by the
Minister in assessing Jayco, at subparagraph 20(h)ii) of the Reply to Notice of
appeal:
20(h)ii) The customer (the
dealer) could have the Appellant (Jayco) arrange a common carrier to transport
the product to the customer, in which cases the customer would select the “OT”
(Other Transportation Method).
[113] This is further illustrated on some of the Order Forms, where some
of the Canadian dealers indicated JET beside the OT option of shipment. The
Canadian dealers knew that JET or a common carrier chosen by JET would deliver
the RVs and not Jayco.
[114] The respondent further argued that Jayco could not act as an agent
of the Canadian dealers when arranging the transportation with JET for delivery
in Canada, in light of the Dealership Sale Service Agreement. Paragraph M.1 of
the Agreement states as follows:
This Agreement does not make either party
the agent of legal representative of the other for any reason, nor does it
grant either party authority to assume or create any obligation in the name of
the other.
[115] Mr. Wolf explained that this provision of the Dealership Sale
Service Agreement was put in to ensure that the Canadian dealers would not
represent to their customers that they were acting on behalf of Jayco, namely
selling RVs on behalf of Jayco. He also added that the clause was also included
so as to protect the dealers, by ensuring them that Jayco was not going to sell
factory direct into a dealer’s territory.
[116] In my view, this clause has to be interpreted in its context. The
purpose of clause M.1 is to protect Jayco, the dealers and the customers of the
dealers. In addition, the evidence was that the Canadian dealers authorized
Jayco to arrange the delivery on behalf of them. Once the RVs were transferred
to the common carrier JET, the latter became the agent of the dealers.
[117] The respondent argued that the decision in ADV Ltd and AFX
Company,[29]
(“ADV”), was applicable to this appeal. In ADV, the question
to be determined was the same as in this appeal, namely whether the delivery of
the ADV’s products took place in Canada or outside Canada. If the delivery took
place outside Canada, ADV did not have to collect and remit the GST/HST.
[118] ADV had two mail order companies located in New York State. The
Canadian customers placed an order with ADV by completing an order form and
mailing it to a post office box address in Windsor, Ontario. The customers had
to pay, in addition to the price of the goods, a pre-set shipping charge and
one dollar for insurance. The insurance was charged by ADV for lost shipments
or if damage occurred to the goods during transit. Most of the goods sold by
ADV cost less than twenty dollars. All the goods were individually placed in
envelopes with the address of the customers. Once there were enough goods to
merit a shipment to Canada, the goods were transported from the business
premises of ADV in Farmingdale, New York by a cartage company J.B. Hunt
(“Hunt”) to Detroit. In Detroit, another carrier, P.D.Q. Courier (“PDQ”),
cleared the goods through Canadian Customs in Windsor and mailed the goods to
the Canada Post facility in Windsor. Pursuant to a contract with ADV, Canada
Post applied the proper postage and delivered the goods by parcel post to the
buyers across Canada.
[119] Justice Bowie rejected the argument that delivery to the carrier in
such circumstances constituted delivery to the Canadian customers. He noted, on
the basis of subsection 31(2) of the Ontario Sale of Goods Act and
decisions such as Dunlop v Lambert that the law contemplates that the
carrier in such circumstances must be acting as agent of the buyer, “even
though it may be selected and instructed by the seller.”[30] Justice Bowie held
in ADV that there was nothing in the evidence, except the consist
sheets, that ADV either through PDQ or otherwise, were acting as agents for the
customers to enter the goods to Canada. Justice Bowie also rejected the argument
that because the customers were billed for shipping costs and insurance,
delivery had been effected when the goods were transferred to the carrier. He
noted that the shipping charge was a flat sum for goods being delivered throughout
the country,[31]
and concluded that the shipping charges and insurance were part of the selling
price of the goods.[32]
[120] In my view, Justice Bowie’s findings in ADV do not apply to
the RVs, since I have concluded that Jayco was acting for the Canadian dealers
when arranging the shipping of the RVs with JET. JET as a common carrier became
by law the agent of the Canadian dealers when the RVs were imported to Canada.
No evidence was submitted to prove otherwise.
[121] In addition, unlike the situation in ADV, where the freight
costs charged was a flat rate no matter where the purchasers lived in Canada,
Jayco provided significant evidence as to the efforts taken by it and JET to
structure the transportation charges and surcharges in order to ensure that the
dealers would bear cost of the freight charges. In addition, the price for the
RV was the same regardless of which shipping option was chosen by the Canadian
dealers (DPU or OT). As explained by Mr. Wolf, it was decided that freight
transportation charges would be on the same invoice as the RVs, to allow the
dealers to obtain financing on the freight as well as the RVs sold by Jayco.
Therefore, the facts with respect to the RVs are distinguishable than the facts
in ADV.
[122] Accordingly, after an analysis of the facts and the applicable law,
I conclude that the RVs were delivered at the business premises of Jayco in the
USA. The supplies of RVs were deemed to be made outside Canada pursuant to
paragraph 142(2)(a) of the ETA. Therefore, the supply of the RVs did not
constitute taxable supplies.
B. Was
Jayco required to collect and remit the provincial component of the HST on the
parts shipped from the USA to Canada?
[123] While there were similarities between the procedure for buying parts
and that for buying RVs, the contractual arrangement between Jayco and the
Canadian dealers and the shipping methods used by Jayco were quite different.
[124] With respect to the parts, the documentary evidence was limited to
Dealership Sales and Service Agreement, a few Acknowledgment Number Order Form and a few invoices. No certificate of
origin, no Ready to Ship Advisory, or bill of lading was filed in evidence.
[125] In my view, the decision of ADV applies to the parts. I will not
repeat the facts of ADV, since I have already set them out at paragraph 118
of these reasons.
[126] Justice Bowie found that under the contractual arrangement between
ADV and Hunter and PDQ, Hunt and PDQ were acting on behalf of ADV and not
behalf of the customers. The same situation obtains here.
[127] I do not agree with Jayco’s argument that Frontier was acting on
behalf of the Canadian dealers. I find that the evidence clearly establishes
that Frontier was mandated by Jayco and acted as an agent for Jayco and not for
the Canadian dealers. This was confirmed by the testimony of Mr. Howe when he
testified that he was against using Frontier from the beginning because in his
view, this method of delivery would not work for its dealership.
[128] Mr. Wolf also testified that Frontier acted as an agent of Jayco.
Furthermore, in the document explaining the contractual arrangement between
Jayco and Frontier, it is expressly written that Frontier would act as an agent of
Jayco.
The business arrangement with Frontier
Supply Chain Solutions requires us to operate in Canada as a Non-Resident Importer.
Jayco already had an NRI number on file, but it was not in use. This NRI number
is now active and Frontier operates as our agent in Canada.
[129] Accordingly, when Frontier hired Alvin Motor Freight to pick up the
parts at the business premises of Jayco in Middlebury to transport them at
Frontier’s facility in Bensenville and then from Bensenville to Frontier’s
facility in Winnipeg to be further distributed to each Canadian dealer, title
did not pass and the delivery did not occur at the business premises of Jayco
since Frontier was not acting on behalf of the Canadian dealers. If damages had
occurred to the parts while in transit, in my view, the risk would have been
Jayco’s.
[130] In addition, although no bill of lading was submitted in evidence
with respect to the parts, in the document explaining the contractual
relationship between Jayco and Frontier, it is indicated that “Frontier
would consolidate all material bound for Canada, and move it to Bensenville, IL
daily. This is Frontier US consolidation point. It is moved via Alvin Motor Freight
under one Bill of Lading.” Therefore, since Frontier was using one bill of
lading for the entire shipment, it is clear that the bill of lading could not
serve as a title and delivery document for individual parts orders going to
different dealers. Nor, for the same reason, could the consolidated bill
of lading be used to illustrate a “symbolical delivery” of the parts as was
argued by Jayco with respect to the RVs. It is also clear that the consignees
under a consolidated bill of lading could not have been the Canadian dealers. Finally,
Jayco was the importer of record and not the Canadian dealers.
[131] Although it was stated by Jayco, that Frontier was used exclusively
during the periods under appeal, the documentary evidence showed that UPS and
Old Dominion was also used by Jayco to move the parts from the USA to Canada.
No evidence was submitted by Jayco with respect to the contractual arrangements
it had with UPS and Old Dominion.
[132] In light of the evidence, namely the contractual arrangements, the
conduct of Jayco, the Canadian dealers and Frontier, and the bill of lading, I conclude
that the parts were delivered or made available in Canada. Therefore, Jayco had
to collect and remit the provincial component of the HST.
VIII. DISPOSITION
[133] The appeal is allowed with respect to the supply of the RVs.
[134] All the other aspects of the assessments will remain unchanged.
[135] With costs in favour of the appellant.
Signed at
Ottawa, Canada, this 16th day of February 2018.
“Johanne D’Auray”
ANNEX
1
Version of document from 2009-12-15 to
2009-12-31:
Excise Tax Act
R.S.C., 1985, c. E-15
General rule —
in Canada
142 (1) For the purposes of this Part, subject
to sections 143, 144 and 179, a supply shall be deemed to be made in Canada if
(a) in
the case of a supply by way of sale of tangible personal property, the property
is, or is to be, delivered or made available in Canada to the recipient of the
supply;
General
rule — outside Canada
(2) For
the purposes of this Part, a supply shall be deemed to be made outside Canada
if
(a) in
the case of a supply by way of sale of tangible personal property, the property
is, or is to be, delivered or made available outside Canada to the recipient of
the supply;
Imposition
of goods and services tax
165 (1) Subject to this Part, every recipient
of a taxable supply made in Canada shall pay to Her Majesty in right of Canada
tax in respect of the supply calculated at the rate of 5% on the value of the
consideration for the supply.
Tax
in participating province
(2) Subject
to this Part, every recipient of a taxable supply made in a participating
province shall pay to Her Majesty in right of Canada, in addition to the tax
imposed by subsection (1), tax in respect of the supply calculated at the tax
rate for that province on the value of the consideration for the supply.
Collection
of tax
221 (1) Every person who makes a taxable supply
shall, as agent of Her Majesty in right of Canada, collect the tax under
Division II payable by the recipient in respect of the supply.
INDIANA
CODE – TITLE 26
COMMERCIAL LAW
Definitions and index of definitions
Sec. 103. (1) In IC 26-1-2,
unless the context otherwise requires:
(a) "Buyer" means a person who buys or contracts to buy
goods.
(d) "Seller" means a person who sells or contracts to
sell goods.
(4) In addition, IC 26-1-1 contains
general definitions and principles of construction and interpretation
applicable throughout IC 26-1-2.
Formerly: Acts 1963, c.317, s.2-103. As amended by P.L.152-1986,
SEC.121; P.L.222-1993, SEC.3; P.L.57-2000, SEC.15; P.L.143-2007, SEC.7.
General
definitions
Sec. 201.
(14) “Delivery” means the following:
(A) With respect to an electronic document of title, voluntary
transfer of control.
(B) With respect to instruments, tangible documents of
title, chattel paper, or certificated securities, voluntary transfer of
possession.
General obligations of parties
Sec. 301. The obligation of the seller is to transfer and deliver
and that of the buyer is to accept and pay in accordance with the contract.
Formerly: Acts 1963, c.317, s.2-301.
Absence of specified place for delivery
Sec. 308. Unless otherwise agreed:
(a)
the place
for delivery of goods is the seller’s place of business or if he has none his
residence; but
(b)
in
a contract for sale of identified goods which to the knowledge of the
parties at the time of contracting are in some other place, that place is the
place for their delivery;
(c)
and
documents of title may be delivered through customary banking channels.
(Formerly:
Acts 1963, c.317, s.2-308.) As amended by P.L.3-1989, SEC.149.
Open time for payment or running of credit; authority to ship
under reservation
Sec. 310. Unless otherwise agreed:
(a) payment is due at the time and place at which the buyer is to
receive the goods, even though the place of shipment is the place of delivery;
and
(b) if the seller is authorized to send the goods, he may ship
them under reservation and may tender the documents of title, but the buyer may
inspect the goods after their arrival before payment is due, unless such
inspection is inconsistent with the terms of the contract (IC 26-1-2-513);
and
(c) if delivery is authorized and made by way of documents of
title otherwise than by subdivision (b), then payment is due, regardless of
where the goods are to be received:
(i) at the time and place at which the buyer is to receive
delivery of the tangible documents; or
(ii) at the time the buyer is to receive delivery of the
electronic documents and at the seller’s place of business or, if none, the
seller’s residence; and
(d) where the seller is required or authorized to ship the goods
on credit, the credit period runs from the time of shipment, but postdating the
invoice or delaying its dispatch will correspondingly delay the starting of the
credit period.
Formerly: Acts 1963, c.317, s.2-310. As amended by P.L.152-1986,
SEC.133; P.L.143-2007, SEC.10.
Passing of title; reservation of security; limited application of
this section
Sec. 401. Each provision of IC 26-1-2 with
regard to the rights, obligations, and remedies of the seller, the buyer,
purchasers, or other third parties applies irrespective of title to the goods,
except where the provision refers to such title. Insofar as situations are not
covered by the other provisions of IC 26-1-2 and
matters concerning title become material, the following rules apply:
(1) Title to goods cannot pass under a contract for sale prior to
their identification to the contract (IC 26-1-2-501),
and unless otherwise explicitly agreed, the buyer acquires by their
identification a special property as limited by IC 26-1.
Any retention or reservation by the seller of the title (property) in goods
shipped or delivered to the buyer is limited in effect to a reservation of a
security interest. Subject to these provisions and to the provisions of IC 26-1-9.1 on
secured transactions, title to goods passes from the seller to the buyer in any
manner and on any conditions explicitly agreed on by the parties.
(2) Unless otherwise explicitly agreed, title passes to the buyer
at the time and place at which the seller completes his performance with
reference to the physical delivery of the goods, despite any reservation of a
security interest and even though a document of title is to be delivered at a
different time or place, and in particular despite any reservation of a
security interest by the bill of lading:
(a) if the contract requires or authorizes the seller to send the
goods to the buyer but does not require him to deliver them at destination,
title passes to the buyer at the time and place of shipment; but
(b) if the contract requires delivery at destination, title passes
on tender there.
(3) Unless otherwise explicitly agreed, where delivery is to be
made without moving the goods:
(a) if the seller is to deliver a tangible document of title,
title passes at the time when and the place where he delivers such documents
and if the seller is to deliver an electronic document of title, title passes
when the seller delivers the document; or
(b) if the goods are at the time of contracting already identified
and no documents of title are to be delivered, title passes at the time and
place of contracting.
(4) A rejection or other refusal by the buyer to receive or retain
the goods, whether or not justified, or a justified revocation of acceptance
revests title to the goods in the seller. Such revesting occurs by operation of
law and is not a "sale".
Formerly: Acts 1963, c.317, s.2-401. As amended by P.L.152-1986,
SEC.141; P.L.57-2000, SEC.18; P.L.143-2007, SEC.12.
Manner of seller’s tender of delivery
Sec. 503. (1) Tender of delivery requires that the seller put and
hold conforming goods at the buyer’s disposition and give the buyer any
notification reasonably necessary to enable him to take delivery. The manner,
time and place for tender are determined by the agreement and IC 26-1-2, and in
particular:
(a) tender must be at a reasonable hour, and if it is of goods
they must be kept available for the period reasonably necessary to enable the buyer
to take possession; but
(b) unless otherwise agreed, the buyer must furnish facilities
reasonably suited to the receipt of the goods.
(2) Where the case is within IC 26-1-2-504 respecting shipment,
tender requires that the seller comply with its provisions.
(3) Where the seller is required to deliver at a particular
destination, tender requires that he comply with subsection (1) and also in any
appropriate case tender documents as described in subsections (4) and (5).
(4) Where goods are in the possession of a bailee and are to be
delivered without being moved:
(a) tender requires that the seller either tender a negotiable
document of title covering such goods or procure acknowledgement by the bailee
of the buyer’s right to possession of the goods; but
(b) tender to the buyer of a nonnegotiable document of title or of
a record directing the bailee to deliver is sufficient tender unless the buyer
seasonably objects, and except as otherwise provided in IC 26-1-9.1, receipt by
the bailee of notification of the buyer’s rights fixes those rights as against
the bailee and all third persons; but risk of loss of the goods and of any
failure by the bailee to honor the nonnegotiable document of title or to obey
the direction remains on the seller until the buyer has had a reasonable time
to present the document or direction, and a refusal by the bailee to honor the
document or to obey the direction defeats the tender.
(5) Where the contract requires the seller to deliver documents:
(a) he must tender all such documents in correct form, except as
provided in IC 26-1-2-323(2) with respect to bills of lading in a set; and
(b) tender through customary banking channels is sufficient and
dishonor of a draft accompanying the documents constitutes nonacceptance or
rejection.
(Formerly: Acts 1963, c.317, s.2-503.) As amended by P.L.152-1986,
SEC.145; P.L.143-2007, SEC.13.
Shipment by seller
Sec.
504. Where the seller is required or authorized to send the goods to the buyer
and the contract does not require him to deliver them at a particular
destination, then unless otherwise agreed he must
(a)
put the goods in the possession of such a carrier and make such a contract for
their transportation as may be reasonable having regard to the nature of the
goods and other circumstances of the case; and
(b) obtain and promptly deliver or tender in due form any document
necessary to enable the buyer to obtain possession of the goods or otherwise
required by the agreement or by usage of trade; and
(c) promptly notify the buyer of the shipment.
Failure to notify the buyer under paragraph (c) or to make a
proper contract under paragraph (a) is a ground for rejection only if material
delay or loss ensues.
(Formerly: Acts 1963, c.317, s.2-504.)
Seller’s shipment under reservation
Sec. 505. (1) Where the seller has identified goods to the
contract by or before shipment:
(a) His procurement of a negotiable bill of lading to his own
order or otherwise reserves in him a security interest in the goods. His
procurement of the bill to the order of a financing agency or of the buyer
indicates in addition only the seller’s expectation of transferring that
interest to the person named.
(b) A nonnegotiable bill of lading to himself or his nominee
reserves possession of the goods as security, but except in a case of
conditional delivery (IC 26-1-2-507(2)),
a nonnegotiable bill of lading naming the buyer as consignee reserves no
security interest even though the seller retains possession or control of the
bill of lading.
(2) When shipment by the seller with reservation of a security
interest is in violation of the contract for sale, it constitutes an improper
contract for transportation within IC 26-1-2-504,
but impairs neither the rights given to the buyer by shipment and
identification of the goods to the contract nor the seller’s powers as a holder
of a negotiable document of title.
Formerly: Acts 1963, c.317, s.2-505. As amended by P.L.152-1986,
SEC.146; P.L.143-2007, SEC.14.
Risk of loss in the absence of breach
Sec. 509. (1) Where the contract requires or authorizes the seller
to ship the goods by carrier:
(a) if it does not require him to deliver them at a particular
destination, the risk of loss passes to the buyer when the goods are duly
delivered to the carrier even though the shipment is under reservation (IC 26-1-2-505);
but
(b) if it does require him to deliver them at a particular
destination and the goods are there duly tendered while in the possession of
the carrier, the risk of loss passes to the buyer when the goods are there duly
so tendered as to enable the buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered without
being moved, the risk of loss passes to the buyer:
(a) on his receipt of possession or control of a negotiable document
of title covering the goods; or
(b) on acknowledgment by the bailee of the buyer’s right to
possession of the goods; or
(c) after his receipt of possession or control of a nonnegotiable
document of title or other direction to deliver in a record, as provided
in IC 26-1-2-503(4)(b).
(3) In any case not within subsection (1) or (2), the risk of loss
passes to the buyer on his receipt of the goods if the seller is a merchant.
Otherwise the risk passes to the buyer on tender of delivery.
(4) The provisions of this section are subject to contrary
agreement of the parties and to the provisions of IC 26-1-2-327 on
sale on approval and IC 26-1-2-510 on
effect of breach on risk of loss.
Formerly: Acts 1963, c.317, s.2-509. As amended by P.L.152-1986,
SEC.147; P.L.143-2007, SEC.16.
Sale of Goods Act
R.S.O. 1990, CHAPTER S.1
Definitions and interpretation
1 (1) In this Act,
“buyer” means the person who buys or agrees to buy goods;
(“acheteur”)
“delivery” means the voluntary transfer of possession from one
person to another; (“livraison”)
“document of title” includes a bill of lading and warehouse
receipt as defined by the Mercantile Law Amendment Act,
any warrant or order for the delivery of goods and any other document used in
the ordinary course of business as proof of the possession or control of goods
or authorizing or purporting to authorize, either by endorsement or delivery,
the possessor of the document to transfer or receive goods thereby represented;
(“titre”)
“seller” means a person who sells or agrees to sell goods;
(“vendeur”)
Duties of seller and buyer
26 It is the duty of the seller to deliver the goods and of the buyer
to accept and pay for them in accordance with the terms of the contract of
sale. R.S.O. 1990, c. S.1, s. 26.
Payment and delivery concurrent
27 Unless otherwise agreed, delivery of the goods and payment of
the price are concurrent conditions, that is to say, the seller shall be ready
and willing to give possession of the goods to the buyer in exchange for the
price and the buyer shall be ready and willing to pay the price in exchange for
possession of the goods. R.S.O. 1990, c. S.1, s. 27.
Rules as to delivery
28(1) Whether it is for the buyer
to take possession of the goods or for the seller to send them to the buyer is
a question depending in each case on the contract, express or implied, between
the parties, and apart from any such contract, express or implied, the place of
delivery is the seller’s place of business, if there is one, and if not, the
seller’s residence, but where the contract is for the sale of specific goods
that to the knowledge of the parties, when the contract is made, are in some
other place, then that place is the place of delivery.
Where
no time for delivery fixed
(2) Where under the contract of sale the
seller is bound to send the goods to the buyer but no time for sending them is
fixed, the seller is bound to send them within a reasonable time.
Where goods in possession of third person
(3) Where the goods at the time of sale are in the possession of a
third person, there is no delivery by the seller to the buyer unless and until
such third person acknowledges to the buyer that the goods are being held on
the buyer’s behalf, but nothing in this section affects the operation of the
issue or transfer of any document of title to goods.
Demand or tender of delivery
(4) Demand or tender of delivery may be treated as ineffectual
unless made at a reasonable hour, and what is a reasonable hour is a question
of fact.
Expenses of putting goods in deliverable
state
(5) Unless otherwise agreed, the expenses of and incidental to
putting the goods in a deliverable state shall be borne by the seller. R.S.O.
1990, c. S.1, s. 28.
Delivery to carrier
31(1) Where in pursuance of a
contract of sale the seller is authorized or required to send the goods to the
buyer, the delivery of the goods to a carrier whether named by the buyer or
not, for the purpose of transmission to the buyer, is, in the absence of
evidence to the contrary, delivery of the goods to the buyer.
Seller’s contract with carrier
(2) Unless otherwise authorized by the buyer, the seller shall
make a contract with the carrier on behalf of the buyer that is reasonable
having regard to the nature of the goods and the other circumstances of the
case, and if the seller omits so to do and the goods are lost or damaged in
course of transit, the buyer may decline to treat the delivery to the carrier
as a delivery to the buyer or may hold the seller responsible in damages.
R.S.O. 1990, c. S.1, s. 31.
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