The
Chief
Justice:—This
case
concerns
the
construction
and
application
of
the
Retail
Sales
Tax
Act,
RSM
1970,
c
R150
(originally
entitled
the
Revenue
Tax
Act),
as
amended
by
1972
(Man),
c
6
and
by
1974
(Man),
c
57,
Part
1,
to
Air
Canada
operations
and
services
in
through-flights
which
do
not
touch
down
in
Manitoba
and
in
flights
which
land
in
Manitoba
or
which
take
off
in
that
Province.
It
arose
under
an
amended
assessment
of
tax
under
the
Act,
confirmed
by
the
Manitoba
Minister
of
Finance
in
the
amount
of
$1,375,387,
including
interest
and
penalties,
and
covering
in
its
various
aspects
the
period
of
July
1,
1971
to
June
30,
1974.
Air
Canada
challenged
the
assessment
and
was
largely
successful
in
that
challenge
in
litigation
in
the
Manitoba
Courts.
Morse,
J
of
the
Manitoba
Queen’s
Bench,
after
lengthy
reasons,
came
to
the
following
conclusion:
To
summarize,
it
is
my
opinion
that
Air
Canada
was
not
liable
to
tax
under
the
Manitoba
Retail
Sales
Tax
Act
in
respect
of
aircraft,
aircraft
engines
and
parts
consumed,
and
services,
meals
and
liquor
consumed
or
supplied
in
aircraft
while
in
the
airspace
over
the
Province
of
Manitoba,
and,
accordingly,
the
decision
of
the
Minister
in
this
case
is
varied
to
that
extent.
The
formal
judgment
which
carried
out
this
conclusion
contains
the
following
relevant
provisions:
1.
THIS
COURT
DOTH
ORDER
AND
ADJUDGE
that
the
assessment
which
is
the
subject
of
this
appeal
be
reduced
and
varied—
(a)
by
removing
from
the
assessment
all
tax
purported
to
be
assessed
and
levied
in
respect
of
aircraft,
aircraft
engines
and
aircraft
parts
consumed,
and
services,
meals
and
liquor
consumed
or
supplied
in
aircraft
while
in
the
airspace
over
the
Province
of
Manitoba;
(b)
by
computing
the
value
of
the
portion
of
any
aircraft
consumed
in
Manitoba,
and
subject
to
tax
in
the
assessment
period,
as
being
the
depreciation
of
that
aircraft
during
that
period
computed
on
a
straight
line
basis
and
multiplied
by
the
proportion
that
the
miles
operated
by
the
aircraft
in
Manitoba
in
that
period
bear
to
the
total
miles
operated
by
the
aircraft
in
the
same
period;
(c)
by
removing
from
the
assessment
all
tax
purporting
to
be
assessed
and
levied
in
respect
of
inventory,
except
that
levied
in
respect
of
inventory
owned
by
Air
Canada
in
Manitoba
after
May
1,1972,
after
deducting
from
the
amount
of
the
last
mentioned
inventory
the
amount
of
the
inventory
owned
by
Air
Canada
in
Manitoba
immediately
prior
to
the
1st
day
of
May,
1972;
(d)
by
removing
from
the
assessment
all
tax
purporting
to
be
assessed
and
levied
in
respect
of
the
service
of
meals
or
liquor
alleged
to
have
been
served
or
supplied
on
aircraft
which
landed
or
took
off
from
the
Airport
at
the
City
of
Winnipeg
during
the
assessment
period;
(e)
by
removing
from
the
assessment
all
tax
purporting
to
be
assessed
and
levied
in
relation
to
the
time
tables
of
Air
Canada;
(f)
by
removing
from
the
assessment
all
tax
purporting
to
be
assessed
and
levied
in
relation
to
services,
cleaning
and
maintenance
of
aircraft,
janitorial
services
or
laundry
services
performed
outside
the
Province
of
Manitoba.
2.
AND
THIS
COURT
DOTH
FURTHER
ORDER
AND
ADJUDGE
that
after
reducing
and
varying
the
assessment
in
accordance
with
the
terms
of
this
judgment,
and
computing
the
tax
levied
payable
by
the
Appellant
in
respect
of
the
assessment
as
varied
the
Respondent
do
refund
to
the
appellant
without
interest
the
amount
by
which
the
monies
paid
by
the
Appellant
to
the
Respondent
in
relation
to
the
assessment
and
not
repaid
to
the
Appellant
exceed
the
tax
payable
under
the
assessment
as
varied
in
accordance
with
this
judgment.
By
an
order
of
April
1,
1977,
Morse,
J
assessed
the
tax
against
Air
Canada
at
a
mere
$1,856
and
ordered
a
refund
as
indicated
below.
It
is
not
clear
what
the
small
tax
represented,
but
it
did
signify
Air
Canada’s
substantial
immunity
from
liability
under
the
Manitoba
Retail
Sales
Tax
Act.
The
judgment
and
order
of
Morse,
J
were
affirmed
by
the
Manitoba
Court
of
Appeal
in
reasons
delivered
by
Monnin,
JA,
but
with
a
variation
by
ordering
the
Government
of
Manitoba
to
pay
interest
to
Air
Canada
on
a
refund
of
part
of
the
tax
which
it
had
paid
under
protest.
By
reason
of
this
variation,
the
refund
of
$1,432,181
with
interest
after
judgment,
directed
by
Morse,
J,
was
increased
by
the
Court
of
Appeal
to
$1,708,282.63.
On
appeal
by
leave
to
this
Court,
two
constitutional
questions
were
fixed
by
an
order
of
Pigeon,
J
of
August
18,
1978,
as
follows:
1.
Is
airspace
over
land
territory
of
the
Province
of
Manitoba
‘‘within
the
Province’’
so
as
to
permit
the
Province
to
tax
a
corporation
in
respect
of
its
use
of
aircraft
in
such
airspace
under
the
Retail
Sales
Tax
Act,
RSM
1970,
c
R150.
2.
Is
it
otherwise
intra
vires
the
Province
to
so
tax
a
business
within
the
Province.
The
Attorney
General
of
Canada
intervened
as
did
the
Attorneys
General
of
Quebec,
Nova
Scotia,
New
Brunswick,
British
Columbia,
Alberta
and
Saskatchewan.
The
appeal
was
heard
in
this
Court
by
a
Bench
of
seven
judges
on
November
7
and
8,
1979,
but
on
December
21,
1979
the
Court
ordered
a
rehearing
in
the
following
terms:
A
rehearing
of
this
appeal
is
directed
before
the
full
Court
[of
nine]
with
particular
reference
to
the
question
as
to
whether
the
taxes
assessed
against
the
respondent
pursuant
to
the
provisions
of
the
Retail
Sales
Tax
Act,
RSM
1970,
c
R150,
and
in
issue
in
this
appeal,
constitute
indirect
taxation
and
therefore
was
beyond
the
power
of
the
Legislature
of
the
Province
of
Manitoba
to
impose.
The
rehearing
took
place
on
January
23,
1980
and
the
same
intervenors
participated.
Counsel
for
the
appellant
Government
of
Manitoba
dropped
any
challenge
to
the
award
of
interest
by
the
Manitoba
Court
of
Appeal
and,
Similarly,
abandoned
any
claim
to
tax
in
respect
of
Air
Canada
time-tables.
At
the
rehearing,
no
issue
was
taken
by
the
appellant
with
respect
to
the
affirmed
order
of
Morse,
J
as
to
meal
service.
The
appeal
in
this
Court
was
thus
reduced
to
a
consideration
of
the
liability
of
Air
Canada
for
tax
in
respect
of
through-flights
over
the
air
space
above
Manitoba
and
in
respect
of
liquor
service
to
first
class
and
economy
passengers
during
such
flights,
and
in
respect
of
flights
that
land
in
Manitoba.
Those
that
land
in
Manitoba
from
outside
points
are
flights
that
involve
temporary
stopovers
pending
their
continuation
to
destinations
outside
the
Province.
There
was
no
suggestion
of
tax
liability
in
respect
of
flights
which
take
off
from,
ie
originate
in
Manitoba,
for
points
beyond.
Nor
are
we
concerned
in
this
case
with
Air
Canada
operations
that
begin
and
end
in
Manitoba;
no
such
operations
were
put
in
issue.
I
would
note
here
that,
as
stated
by
the
appellants
in
its
factum
on
the
first
hearing
in
this
Court,
“the
tax
is
imposed
only
once
during
the
lifetime
of
an
aircraft,
or
other
items
of
property
at
the
time
of
purchase’’,
this
last
word
taking
its
meaning
as
defined
in
the
Act.
Counsel
for
the
appellant
conceded
that
the
title,
“Retail
Sales
Tax
Act”
was
a
misnomer
because
the
Act
is
not
limited
to
the
levy
of
taxes
on
retail
sales
but
purports
to
encompass,
in
defined
circumstances,
consumption
and
use
of
tangible
personal
property,
whether
or
not
there
is
an
actual
retail
sale.
It
also
embraces
the
enjoyment
or
advantage
of
services.
Prior
to
May
1,
1972,
aircraft
in
interprovincial
and
foreign
flights
through
the
air
space
over
Manitoba
and
repair
parts
for
such
aircraft
were
exempted
from
tax
but
the
exemption
was
removed
by
the
1972
amendment
and
a
certain
taxing
formula
was
introduced
in
respect
of
aircraft
engaged
in
such
flights,
and
I
shall
come
to
it
shortly.
The
general
charging
section
of
the
Act
is
subsection
3(1)
which
reads:
Every
purchaser
of
tangible
personal
property
or
a
service,
except
tangible
personal
property
in
respect
of
which
tax
is
payable
under
subsection
(13),
shall
pay
to
Her
Majesty
in
right
of
Manitoba,
for
the
public
use
of
the
government,
a
tax
in
respect
of
the
consumption
thereof,
computed
at
the
rate
of
five
per
cent
of
the
fair
value
thereof.
I
reproduce
also
the
supporting
provisions
of
subsection
3(5)
and
subsection
3(6)
which
read:
3.
(5)
Every
person
who
consumes
within
the
province
tangible
personal
property
acquired
by
him
for
resale,
or
who
consumes
within
the
province
tangible
personal
property
manufactured,
processed,
produced,
or
purchased
by
him
within
or
without
the
province
shall,
for
the
purpose
of
this
Act
be
conclusively
deemed
to
have
purchased
that
property
at
a
retail
sale
in
the
province.
(6)
Every
retail
sale
to
a
purchaser
in
the
province
by
a
person
who
is
not
resident
within
the
province,
or
carrying
on
business
within
the
province,
shall
be
deemed
to
be
a
retail
sale
in
the
province
for
the
purposes
of
applying
the
tax
under
this
section.
It
was
the
contention
of
the
appellant
that
subsection
3(1)
is
the
only
charging
section
and
that
the
provisions
respecting
the
taxing
formula
applicable
to
aircraft,
found
in
subsection
4(6),
do
not
amount
to
a
separate
charging
section.
I
shall
come
back
to
this
later,
but
it
will
be
convenient
to
reproduce
subsection
4(6)
at
this
point
and,
as
well,
subsection
4(7):
4.
(6)
Notwithstanding
section
3,
where
an
aircraft
is,
in
the
opinion
of
the
minister,
operated
both
within
and
without
the
province
for
the
purposes
of
trade,
the
minister
may
estimate
the
proportion
that
the
number
of
miles
the
aircraft
is
operated
in
Manitoba
bears
to
the
total
number
of
miles
the
aircraft
is
operated
and
may,
for
the
purposes
of
this
Act,
fix
the
value
of
the
aircraft,
and
the
repair
parts
and
services
therefor,
as
that
part
of
the
value
thereof
that
bears
the
same
proportion
to
the
total
value
thereof
as
the
proportion
estimated
above;
and
tax
is
payable
on
that
part
of
the
value
of
the
aircraft
and
the
repair
parts
and
services
therefor
so
fixed.
4.(7)
Notwithstanding
section
3,
no
tax
is
payable
on
the
purchase
of
used
tangible
personal
property
other
than
(a)
a
snowmobile;
or
(b)
an
aircraft;
or
(c)
a
vehicle
required
to
be
registered
under
the
Highway
Traffic
Act',
purchased
by
one
individual
from
another
individual
where
the
transaction
is
not,
in
the
opinion
of
the
minister,
a
commercial
transaction.
What
gives
substance
to
subsection
3(1)
are
a
complex
of
definitions.
“Purchaser”
is
defined
in
paragarph
2(1
)(i)
in
these
terms:
“purchaser”
means
any
person
who
(i)
purchases,
acquires,
or
leases
tangible
personal
property
at
a
retail
sale
in
the
province;
or
(ii)
commands
or
receives
a
service
at
a
retail
sale
in
the
province;
or
(iii)
in
the
case
of
a
person
residing
or
ordinarily
resident
or
carrying
on
business
or
intending
to
carry
on
business
in
the
province,
brings
into
the
province,
or
causes
to
be
brought
into
the
province,
or
receives
delivery
in
the
province,
of
tangible
personal
property
acquired
by
him
outside
the
province;
or
(iv)
uses
tangible
personal
property
manufactured
by
him
inside
or
outside
the
province;
for
his
own
consumption
or
for
consumption
by
other
persons
at
this
expense
or
on
behalf
of,
or
as
agent
for
a
principal
who
desires
to
purchase,
acquire,
or
lease
such
property,
or
command
or
receive
such
service,
for
consumption
by
such
principal
or
by
other
persons
at
his
expense;
The
definition
of
“consumption”
is
in
paragraph
2(1)(b)
and
it
reads:
“consumption”
includes
(i)
the
consumption
or
use
of
tangible
personal
property;
(ii)
the
incorporation
of
tangible
personal
property
into
real
property
including
tangible
personal
property
manufactured
by
the
purchaser
or
further
processed
or
otherwise
improved
by
him
for
the
purpose
of
incorporating
it
into
real
property;
and
(iii)
the
receiving
of
the
benefit,
enjoyment,
assistance
or
advantage
of
a
service;
“Tangible
personal
property”
is
defined
in
paragraph
2(1)(p)
and
“use”
is
defined
in
paragarph
2(1)(r).
The
definitions
are
as
follows:
(p)
“tangible
personal
property”
means
personal
property
that
can
be
seen,
weighed,
measured,
felt,
or
touched,
or
that
is
in
any
other
way
perceptible
to
the
senses;
(r)
“use”
includes
storage
and
the
exercise
of
any
right
or
power
over
tangible
personal
property
incidental
to
the
ownership
of
that
property;
Also
relevant
is
the
definition
of
“service”
in
paragraph
2(1)(n)
and
it
reads:
“service”
means
the
provision
of
an
accommodation
or
a
facility,
or
the
discharge
of
a
function,
falling
within
any
of
the
classes
of
accommodation,
facilities,
or
functions,
mentioned
in
section
5,
where
they
are
provided
or
discharged
by
a
seller
for
the
benefit,
enjoyment,
assistance,
or
advantage
of
a
person
other
than
the
seller
on
the
other
and
at
the
expense
of
a
purchaser;
It
will
be
noticed
that
subsection
3(1)
excepts
the
tax
payable
under
subsection
3(13),
and
it
appears
to
me
that
it
is
difficult
to
escape
the
conclusion
that
subsection
3(13),
dealing
with
a
tax
on
liquor,
is
a
special
charging
section
in
respect
of
that
commodity.
Subsection
3(13)
reads:
Every
purchaser
of
liquor,
as
defined
in
the
Liquor
Control
Act,
other
than
beer,
as
defined
in
that
Act
and
manufactured
in
Canada,
shall
pay
to
Her
Majesty
in
right
of
Manitoba
for
the
public
use
of
the
government
a
tax
in
respect
of
the
consumption
thereof,
computed
at
the
rate
of
ten
per
cent
of
the
fair
value
thereof.
Air
Canada
has
offices
in
Manitoba
and
also
has
maintenance
and
service
facilities
for
its
aircraft
which
land
there
or
take
off
from
there,
and
it
was
contended
that,
if
the
tax
that
is
imposed
is
a
tax
in
personam,
then
Air
Canada
is
liable
to
pay
it,
in
respect
of
overflights
and
in
respect
of
aircarft
that
land
in
Manitoba,
and
also
in
respect
of
aircraft
parts
which
are
found
in
Air
Canada’s
facilities
in
Manitoba,
unless
the
tax
is
indirect.
This
submission
involves,
initially,
the
construction
of
Manitoba’s
taxing
statute
as
it
applies
to
Air
Canada
and,
indeed,
to
other
air
carriers,
foreign
and
domestic
which
have
places
of
business
in
Manitoba
and
which
fly
through
or
into
and
then
out
of
the
Province.
There
is
involved,
secondly,
the
constitutional
question,
posed
by
the
order
of
Pigeon,
J,
in
the
light
of
Manitoba’s
assertion
that
is
has,
in
any
event,
legislative
jurisdiction
over
the
air
space
above
the
Province
and
may
thus
tax
upon
the
entry
of
aircraft
into
that
air
space.
The
evidence
discloses
that
Air
Canada
aircraft
on
overflights
fly
at
an
altitude
of
at
least
31,000
feet,
that
liquor
is
served
on
such
overflighs
but
not
when
aircraft
land
in
Manitoba,
and
not
when
taking
off
until
cruising
altitude
is
reached.
Construction
of
the
Taxing
Statute
In
my
opinion,
subsection
4(6)
of
the
Retail
Sales
Tax
Act
is
as
much
a
charging
section,
relating
particularly
to
aircraft,
repair
parts
and
services
therefor,
as
is
subsection
3(1)
in
its
generality;
but
it
is
obvious
that
if
the
calculation
of
the
tax
on
the
formula
prescribed
by
subsection
4(6)
is
merely
the
measure
applied
to
quantify
a
tax
in
personam,
then
subsection
4(6)
must
draw
in
the
reference
in
subsection
3(1)
to
the
words
“every
purchaser
of
tangible
personal
property
or
a
service
.
.
.
shall
pay
a
tax
in
respect
of
the
consumption
thereof
...”.
If
this
were
not
so,
we
would
be
dealing
generally
with
a
personal
tax
but
in
the
case
of
aircraft,
repair
parts
and
services
therefor
with
a
tax
on
property
and
services.
I
do
not
think,
having
regard
to
the
terms
of
the
Act,
that
such
a
distinction
should
be
made,
and
hence
I
proceed
on
the
basis
of
the
tax
being
a
personal
tax
under
both
the
general
charging
subsection
3(1)
and
under
the
particular
related
charging
Subsection
4(6).
This,
however,
raised
the
question
whether
the
provincial
tax,
if
a
direct
tax,
may
be
imposed
upon
a
“person’’
like
Air
Canada
(which
carried
on
business
in
many
places
in
Canada
and
abroad)
and
whether
in
this
case
the
tax
is
simply
measured
by
extraprovincial
considerations.
Bank
of
Toronto
v
Lambe
(1887),
12
App
Cas
575
is
said
to
support
this
and
I
shall
return
to
that
case
later.
Whether
the
taxing
statute
has
proceeded
on
this
basis
depends,
of
course,
on
its
terms
and
on
their
construction.
In
the
present
case,
the
Government
of
Manitoba
purports
to
treat
Air
Canada
as
a
“purchaser’’
by
reason
of
being
an
entity
engaged
in
business
in
the
Province.
The
only
definition
provisions
relied
on
by
the
appellant
and,
indeed,
the
only
ones
that
could
be
relied
on
are
those
found
in
subparagraph
(iii)
of
paragraph
2(1
)(i)
and
subsection
3(5)
and
it
will
be
useful
to
reproduce
them
again:
2.(1)(i)
“purchaser”
means
any
person
who
(iii)
in
the
case
of
a
person
residing
or
ordinarily
resident
or
carrying
on
business
or
intending
to
carry
on
business
in
the
province,
brings
into
the
province,
or
causes
to
be
brought
into
the
province,
or
receives
delivery
in
the
province,
of
tangible
personal
property
acquired
by
him
outside
the
province;
for
his
own
consumption
or
for
consumption
by
other
persons
at
his
expense
or
on
behalf
of,
or
as
agent
for
a
principal
who
desires
to
purchase,
acquire,
or
lease
such
property,
or
command
or
receive
such
service,
for
consumption
by
such
principal
or
by
other
persons
at
his
expense;
3.(5)
Every
person
who
consumes
within
the
province
tangible
personal
property
acquired
by
him
for
resale,
or
who
consumes
within
the
province
tangible
personal
property
manufactured,
processed,
produced,
or
purchased
by
him
within
or
without
the
province
shall,
for
the
purpose
of
this
Act
be
conclusively
deemed
to
have
purchased
that
property
at
a
retail
sale
in
the
province.
I
question
whether,
under
these
provisions,
the
statute
captures
overflights.
There
is
no
express
language
in
them
that
does
so,
and
there
entire
tenor
suggests
that
they
envisage
that
tangible
personal
property
and
services
under
subparagarph
(iii)
of
paragraph
2(1
)(i)
and
subsections
3(1)
and
4(6)
will
come
to
rest
or
be
performed,
as
the
case
may
be,
on
Manitoba
terra
firma.
Moreover,
I
cannot
appreciate
how
Air
Canada,
as
a
person
in
Manitoba,
can
be
said
to
bring
into
the
Province
or
cause
to
be
brought
into
the
Province
any
aircarft,
repair
parts
and
services
on
overflights
which
originate
outside
of
Manitoba,
either
in
another
part
of
Canada
or
in
a
foreign
country
and
which
do
not
depend
on
any
action
of
Air
Canada
in
Manitoba
but
rather
on
action
taken
by
it
as
a
resident
or
person
doing
business
elsewhere.
It
may
be
that
if
an
aircraft
and
aircraft
parts
are
landed
in
Manitoba,
Air
Canada
may
be
said
to
have
“received
delivery”
in
the
Province
any
aircraft,
repair
parts
and
services
on
overflights
which
ter
to
which
I
will
come
later
in
these
reasons.
In
my
view
of
Manitoba’s
taxing
statute,
although
the
tax
that
it
imposes
is
in
personam,
it
is
exacted
upon
the
bringing
of
tangible
personal
property
into
the
Province.
If
this
is
not
shown,
then
the
statute
itself
precludes
the
exaction
of
the
tax
even
if
Air
Canada
has
a
presence
in
Manitoba.
The
question
whether
overflights
fall
within
the
statute
was,
however,
contested
not
on
the
issue
of
construction
which
I
have
just
canvassed,
but
on
the
larger
question
whether
the
mere
entry
into
the
air
space
over
Manitoba
was
enough
to
bring
Air
Canada
under
tax
liability
in
respect
of
aircraft,
repair
parts
and
services
used
and
given
on
such
overflights.
Overflights:
The
Claim
of
Jurisdiction
in
the
Air
Space
Manitoba’s
claim
to
tax
under
its
statute
is,
as
I
have
already
noted,
based
on
the
contentions
that
(1)
it
has
legislative
jurisdiction
in
the
air
space
above
it
and
(2)
upon
entry
of
Air
Canada
aircraft
into
that
air
space,
that
tangible
personalty
is
sufficiently
within
the
Province
for
tax
purposes.
In
the
view
that
I
take
of
this
case,
I
find
it
unnecessary
to
explore
the
extent
to
which
a
Province
has
legislative
jurisdiction
in
the
air
space
per
se.
Here
the
claim
to
jurisdiction
is
made
without
limitation,
but
that
is
not
the
reason
for
not
embarking
upon
an
inquiry
into
the
extent
and
nature
of
the
jurisdiction
under
section
92
of
the
British
North
America
Act.
Such
an
inquiry
would
lead
much
beyond
the
compass
of
the
facts
in
the
present
case
and
would
necessarily
involve
considerations
of
federal
authority
if
the
air
space
ad
infinitum
is
to
be
the
focus
of
inquiry.
It
is
enough
here
to
limit
an
issue
arising
in
such
an
uncharted
field
to
the
facts
out
of
which
it
arises
and
to
the
statute
under
which
it
is
pursued.
I
am
prepared,
on
this
view,
to
assume
that
the
Province
has
some
legislative
jurisdiction
in
the
air
space
above
it
so
that
the
pivotal
question
is
whether
Air
Canada
aircraft,
engaged
in
overflights
are
“within
the
Province”,
as
this
quoted
phrase
is
used
in
subsection
92(2)
which
empowers
a
Province
to
impose
“direct
taxation
within
the
Province
in
order
to
the
raising
of
a
revenue
for
provincial
purposes”.
Merely
going
through
the
air
space
over
Manitoba
does
not
give
the
aircraft
a
situs
there
to
support
a
tax
which
constitutionally
must
be
“within
the
Province”.
In
the
case
of
aircraft
operations,
there
must
be
a
substantial,
at
least
more
than
a
nominal,
presence
in
the
Province
to
provide
a
basis
for
imposing
a
tax
in
respect
of
the
entry
of
aircraft
into
the
Province.
There
is
a
pertinent
observation
by
Jackson,
J
in
a
concurring
judgment
in
Northwest
Airlines,
Inc
v
Minnesota
(1943),
322
US
292,
to
which
I
wish
to
refer.
He
said
this,
at
304:
Certainly
today
flight
over
a
state
either
casually
or
on
regular
routes
and
schedules
confers
no
jurisdiction
to
tax.
Earlier
ideas
of
a
state’s
sovereignty
over
the
air
above
it
might
argue
for
such
a
right
to
tax,
but
it
is
one
of
those
cases
where
legal
philosophy
has
to
take
account
of
the
fact
that
the
world
does
move.
Does
the
act
of
landing
within
a
state,
even
regularly
and
on
schedule,
confer
jurisdiction
to
tax?
Undoubtedly
a
plane,
like
any
other
article
of
personal
property,
could
land
or
remain
within
a
state
in
such
a
way
as
to
become
a
part
of
the
property
within
the
state.
But
when
a
plane
lands
to
receive
and
discharge
passengers,
to
undergo
servicing
or
repairs,
or
to
await
a
convenient
departing
schedule,
it
does
not
in
my
opinion
lose
its
character
as
a
plane
in
transit.
Long
ago
this
Court
held
that
the
landing
of
a
ship
within
the
ports
of
a
state
for
similar
purposes
did
not
confer
jurisdiction
to
tax.
Hays
v
Pacific
Mail
SS
Co,
17
How
596;
St
Louis
v
Ferry
Co,
11
Wall
423;
Morgan
v
Parham,
16
Wall
471;
cf
Ayre
&
Lord
Tie
Co
v
Kentucky,
202
US
409.
I
cannot
consider
that
to
alight
out
of
the
skies
onto
a
landing
field
and
take
off
again
into
the
air
confers
any
greater
taxing
jurisdiction
on
a
state
than
for
a
ship
for
the
same
purposes
to
come
alongside
a
wharf
on
the
water
and
get
under
way
again.
The
appellant
relied
on
this
case
and
also
on
Braniff
Airways
Inc
v
Nebraska
State
Board
of
Equalization
and
Assessment
(1953),
347
US
590
in
support
of
its
contentions
that
is
may
properly
tax
aircraft
which
enter
air
space
above
it.
In
my
opinion,
these
cases
do
not
assist
the
appellant’s
contention.
They
turn
on
considerations
that
are
not
relevant
to
the
present
case
and
on
constitutional
provisions
that
have
no
application
to
the
position
asserted
by
Manitoba.
The
Northwest
Airlines
case
concerned
a
Minnesota
personal
property
tax
which
was
held
to
be
leviable
against
a
Minnesota
corporation
having
its
principal
place
of
business
in
that
State,
in
respect
of
its
entire
fleet
of
airplanes,
all
of
which
were
registered
with
the
federal
Civil
Aeronautics
Authority
in
a
city
in
the
State
as
the
home
port.
Although
the
fleet
operated
in
interstate
commerce,
none
of
the
airplanes
was
continuously
out
of
the
State
during
the
taxation
year,
and
it
was
held
that,
absent
restricting
federal
legislation,
it
was
open
to
the
State
of
the
domicile,
the
home
State,
to
impose
the
tax
without
violating
either
the
federal
commerce
clause
or
the
due
process
clause
of
the
Constitution.
No
question
of
legislative
jurisdiction
over
air
space
was
involved.
In
the
Braniff
case,
an
apportioned
ad
valorem
tax
by
the
State
of
Nebraska
levied
on
the
flight
equipment
of
an
interstate
air
carrier
was
sustained
where
it
was
shown
that
the
carrier
regularly
made
eighteen
stops
a
day
in
Nebraska,
although
it
was
not
incorporated
there
nor
was
its
home
port
there.
This
was
held
to
be
a
sufficient
contact
with
Nebraska
to
support
the
apportioned
tax.
Again,
no
question
arose
as
to
legislative
jurisdiction
over
the
air
space
and
certainly
none
in
respect
of
overflights.
What
remains
for
consideration
on
this
aspect
of
the
case
is
a
submission
based
on
Bank
of
Toronto
v
Lambe,
supra.
The
submission
is
that,
regardless
of
whether
the
air
space
above
Manitoba
is
within
the
Province,
the
appellant
was
entitled
to
tax
Air
Canada
in
respect
of
its
airplanes,
parts
and
services
on
overflights
by
regarding
these
facilities
as
merely
the
means
of
measuring
a
tax
in
personam.
There
are
two
answers
to
this
con-
tention.
First,
this
is
not
the
way
in
which
the
tax
has
been
imposed.
I
have
already
adverted
to
the
issue
of
construction
and
it
is
clear
from
the
statute
that,
although
I
accept
the
tax
as
in
personam,
it
is
exacted
upon
the
bringing
of
tangible
personal
property
into
the
Province.
That
was
not
done
in
this
case.
Second,
I
do
not
agree
that
Bank
of
Toronto
v
Lambe,
supra,
supports
the
contention.
Although
that
case
was
concerned
with
an
activity
which,
like
the
one
here,
is
within
exclusive
federal
regulatory
authority
and
a
provincial
tax
upon
the
bank
as
carrying
on
business
in
the
Province
and
measured
by
extraprovincial
considerations
was
sustained,
its
principle
cannot,
in
my
view,
be
extended
to
make
interprovincial
and
transnational
aircraft
operations
as
measuring
standards
to
determine
the
amount
of
tax
imposed
upon
an
air
carrier
which
has
a
business
office
in
the
taxing
Province.
Flights
that
Land
in
Manitoba
I
need
not
dwell
on
this
aspect
of
the
case
which
concerns
flights
that
Originate
outside
Manitoba
but
which
land
in
the
Province
temporarily
and
then
proceed
out
of
Manitoba.
It
is
governed
by
my
reasons
in
respect
of
overflights,
being
based
on
the
same
principles,
but
there
are
a
few
additional
observations
that
I
wish
to
make.
I
emphasize
again
that
the
momentary
transitory
presence
of
agencies
of
transportation
in
the
Province
cannot
bring
them
under
the
Retail
Sales
Tax
Act
any
more
than
they
could
be
brought
under
it
if
they
did
not
enter
the
Province
or
were
overflying
the
Province,
although
the
operators
of
such
services
had
places
of
business
in
the
Province.
Apart
from
constitutional
considerations,
I
do
not
see
how
such
operators
can
be
said
to
be
“purchasers”,
as
defined
in
subparagraph
(iii)
of
paragraph
2(1
)(i),
which
alone
of
the
four
definitions
of
“purchaser”
in
paragraph
2(1
)(i)
has
any
possible
application.
This
is
not
a
case
of
anyone
in
the
Province
bringing
in
or
receiving
delivery
in
the
Province
of
tangible
personal
property
“acquired
by
him
outside
the
Province”.
There
is
no
acquisition
involved,
however
broadly
the
word
is
defined.
I
doubt,
as
well,
whether
there
is
any
“consumption”
involved
in
temporary
stopovers,
although
that
word
is
defined
in
paragraph
2(1)(b)
to
include
“the
consumption
or
use
of
tangible
personal
property”.
Moreover,
there
is,
at
best,
merely
a
notional
drawing
into
the
taxation
net
of
interprovincial
and
extraprovincial
operations,
and
constitutional
authority,
which
is
limited
to
direct
taxation
within
the
Province,
cannot
be
extended
by
self-serving
definitions.
The
present
case,
in
so
far
as
it
concerns
the
attempted
imposition
of
a
tax
in
respect
of
personal
property
brought
into
the
province,
finds
no
support
in
Atlantic
Smoke
Shops
Ltd
v
Conlon,
[1943]
AC
550.
That
case,
dealing
with
a
tax
in
respect
of
tobacco,
either
purchased
in
the
Province
or
brought
in
from
outside
for
consumption
in
the
Province,
was
based
on
retail
sale
transactions,
unlike
the
present
case.
Moreover,
there
was
reality
in
its
consumption
aspect
which
was
its
essential
feature.
Conclusion
For
the
reasons
given
above,
I
hold
that
the
Manitoba
Retail
Sales
Tax
Act
is
ultra
vires
in
so
far
as
it
purports
to
tax
Air
Canada
on
overflights
of
its
aircraft
through
the
air
space
over
Manitoba
and
on
flights
which
land
temporarily
in
Manitoba
from
outside
points
before
proceeding
onward.
The
Act
does
not
impose
a
tax
that
can
be
said
to
be
“within
the
Province”
under
subsection
92(2)
of
the
British
North
America
Act.
In
addition,
I
do
not
think
that
in
its
own
terms
it
is
applicable
to
Air
Canada
in
respect
of
such
flights.
In
view
of
this
conclusion,
I
find
it
unnecessary
to
deal
with
the
question
whether
the
tax
(even
on
the
assumption
that
it
within
the
Province)
is
a
direct
tax.
Although
the
Court
ordered
a
rehearing
with
particular
reference
to
this
question,
I
think
it
preferable
to
avoid
dealing
with
it,
in
conformity
with
the
general
rule
in
constitutional
cases
not
to
engage
issues
which
do
not
squarely
arise
for
decision.
I
am
relieved
by
my
holding
from
examining
a
number
of
issues
touching
the
method
of
assessment
under
the
Act
and
the
propriety
of
some
of
the
paragraphs
of
the
formal
order
of
Morse,
J,
such
as
paragraphs
(b)
and
(c).
Equally,
it
is
unnecessary
to
consider
taxability
in
respect
of
the
consumption
of
liquor
by
both
first
class
and
economy
passengers
since
it
follows
from
my
main
conclusions
that
any
liquor
sales
to
passengers
cannot
be
Said
to
be
sales
in
Manitoba.
The
appeal
is,
accordingly,
dismissed
with
costs.
There
was
no
crossappeal
with
respect
to
the
assessment
of
tax
against
Air
Canada
in
the
sum
of
$1,856
and
that
liability
therefore
stands.
There
will
be
no
costs
to
or
against
any
of
the
intervenors.
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