British Columbia Telephone Company v. Her Majesty the Queen, [1982] CTC 363, 82 DTC 6316

Pratte, J:—This is an application under section 28 of the Federal Court Act to review and set aside a decision of an official of the Department of National Revenue made on December 18, 1981, rejecting the applicant’s application for the refund of federal sales tax.

On December 8, 1978, the Trial Division rendered judgment in the case of B C Railway Co v The Queen, [1979] 2 FC 122; [1979] CTC 56; 79 DTC 5257, and held that paragraph 28(1 )(d) of the Excise Tax Act* [1] as it then read, which ostensibly imposed a tax on goods manufactured and produced for the use of their manufacturers or producers, did not in effect impose such a tax because it did not specify the time when the tax was payable.

On June 13, 1979, the applicant, acting on the basis of that judgment, submitted to the Department of National Revenue a claim for the refund of a sum of $5,658,902.65 allegedly paid by it in error, between October, 1970 and December, 1978, under paragraph 28(1 )(d) of the Excise Tax Act as taxes on goods manufactured by it for its own use.

The applicant’s claim was made under subsection 44(1) and (7) of the Excise Tax Act:

44(1) A deduction from, or refund of, any of the taxes imposed by this Act may be granted

(c) where the tax was paid in error;

(7) If any person, whether by mistake of law or fact, has paid or overpaid to Her Majesty any moneys that have been taken to account as taxes imposed by this Act, such moneys shall not be refunded unless application has been made in writing within two years after the moneys were paid or overpaid.

It is common ground that the applicant’s claim, in so far as it related to taxes paid after April 1, 1975, was properly rejected since the Excise Tax Act was amended in July, 1981, with retroactive effect to April 1, 1975, so as to correct the defect pointed out by the B C Railway decision.* [2] The other part of the applicant’s claim, which related to taxes paid before April 1, 1975, was rejected on the ground that the application for the refund had not been made within the two year time limit prescribed by subsection 44(7). That is the decision against which this section 28 application is directed.

Counsel for the applicant conceded that his client’s claim would have been correctly dismissed if it had been based solely on the application of June 13, 1979. However, he argued that the applicant had applied for the refund before that date, within the two year time limit. To prove his point, counsel referred to two letters, one of November 24, 1972, and the other of February 22, 1974, which the applicant had sent to the Department. In each of those two letters the applicant notified the Department of its intention to claim a refund of taxes. The letter of November 24, 1972 read as follows:

Please be advised that the B.C. Telephone Co. intends to submit refund claims within the next year or so covering federal sales taxes paid on electrical equipment and supplies, telephone equipment and supplies, photographic and microfilming equipment and supplies, telephone directories and printed goods which were subsequently used under exempt conditions. The period under question will extend from November 29, 1970 to the date of this letter.

Please confirm receipt of this letter.

The letter of February 22, 1974 was drafted in identical terms except that the date appearing at the end of the first paragraph was changed so as to read February 22, 1972. These two letters, referred to by counsel as “letters of intent”, had been written in order to protect the applicant’s rights pursuant to a practice approved by the Department. That practice was described in the following terms in a “Memorandum ET 313” published by the Department:! [3]

12. Persons entitled to a refund of taxes must file their refund claim within two years of the time when the refund first became payable. Where the claimants are unable to complete their claim within the two year limit, they may protect their right to the refund by submitting to their District Excise Tax Office an application in letter form. These letters must be submitted in duplicate and should state the following:

(a) the reason for the claim,

(b) the nature of the goods,

(c) the period covered by the claim, and

(d) the approximate date upon which the completed claim on form N 15 will be filed.

Counsel for the applicant argued that the two letters of intent that had been sent to the Department by the applicant were, in effect, applications for refunds. He concluded that the applicant had, within the two year time limit, claimed reimbursement of the taxes that it had paid by mistake under paragraph 28(1 )(d) of the Excise Tax Act.

I do not see any merit in that submission.

Assuming for the sake of the argument that the two letters of intent should be considered as applications for the refund of amounts paid as sales tax, their effect would have been to preserve the applicant’s right to claim the reimbursement of the sales tax paid on goods which, after their acquisition or manufacture by the applicant, had been “used under exempt conditions”.* [4] The applicant, therefore, would still have the right to claim that reimbursement. However, what the applicant claimed in the application that was rejected by the decision under attack was something entirely different, namely, the reimbursement of the sales tax paid on goods manufactured by it for its own use whether or not those goods were “used under exempt conditions’. That was a new claim which was made for the first time on June 13, 1979; as it related to taxes paid prior to April 1, 1975, it was properly rejected as being made after the expiry of the two year time limit fixed by subsection 44(7).

In view of that conclusion, I need not express any opinion on the submission made by counsel for the respondent that the decision under attack is not reviewable under section 28 of the Federal Court Act. Whether that decision is reviewable or not, the application must fail.

For those reasons, I would dismiss the application.