22 June 2004 GST/HST Interpretation 50675 - Determining Indian Bands as Municipalities

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX (with attachments) concerning the application of the Goods and Services Tax (GST) to the supply of tangible personal property by an auctioneer, on behalf of the Sheriff, under the authority of a Writ of Seizure and Sale XXXXX.XXXXX

The Canada Revenue Agency (CRA) is unable to issue a GST ruling in regards to the matters raised in your submission. The CRA's policy with respect to the issuance of GST rulings is outlined in the enclosed document entitled GST Memorandum 1.4 Goods and Services Tax Rulings. You will note that for GST purposes, an application ruling provides the CRA's position on specific provisions of Part IX of the Excise Tax Act (ETA) as these relate to a clearly defined fact situation of a particular person. However, we are pleased to issue a GST interpretation based on our understanding of the information presented in your request.

Background Information

It is our understanding that XXXXX:

•   One of the responsibilities of the Sheriff is to enforce money-type judgments issued by the Courts.

•   The Sheriff will seize and sell personal property of judgment defendants under the authority of a Writ of Seizure and Sale.

•   The control of the seized personal property remains with the Sheriff until the personal property is disposed of.

•   The method most often used to dispose of seized personal property is by public auction.

•   Where the Sheriff engages the services of an auctioneer, the auctioneer becomes agent of the Sheriff to sell the seized personal property.

•   The auctioneer advertises the sale of seized personal property separately from any other sale items. A member of the Sheriff's office attends every sale of the personal property the Sheriff has seized and offered for sale by virtue of a Writ of Execution issued out of the Queen's Bench Court.

•   XXXXX

•   XXXXX

Interpretation Requested

When a court issues a money-type judgment, which is enforced by the Sheriff, under the authority of a Writ of Seizure and Sale, the Sheriff seizes and sells the tangible personal property of a judgment defendant. The tangible personal property may be sold at public auction by an auctioneer, acting on behalf of the Sheriff, pursuant to a Writ of Execution. Are supplies of tangible personal property, sold at public auction by an auctioneer acting on behalf of a Sheriff, subject to GST?

Interpretation Given

The CRA's policy statement P-226 Application of the GST/HST to supplies made pursuant to various creditor remedies describes various creditor remedies and the application of the GST/HST to those remedies. Included among the remedies discussed is the application of subsection 183(3) of the ETA to property seized and subsequently supplied by a court for the purpose of satisfying an amount owing under a judgement of the court.

In order for a supply to fall within subsection 183(3) of the ETA, all the following conditions must be met:

1) The court must have rendered a money type judgment with respect to an amount of money owing as opposed to a declaration of rights.

2) The judgment creditor (upon obtaining judgment, the creditor is referred to as the judgment creditor) must obtain from the court some legal process directed to one of the enumerated persons listed in the provision (i.e. a sheriff, bailiff or other officer of the court) directing that person to seize property of the judgment debtor to satisfy an outstanding judgment. The judgment creditor will seek to enforce the judgment by obtaining a writ of fieri facias (also referred to as a writ of seizure and sale) or a writ of execution.

3) After the seizure, the court or the sheriff, bailiff or other officer of the court makes the supply of the property.

4) The meaning of the phrase "officer of the court" is restricted to the class of persons or officers of the court, or their agents, who effect seizures and sales under the auspices of the court. This would exclude the judgment creditor.

Where all of the above conditions are met, subsection 183(3) of the ETA provides that the supply of the property by the court would be considered to be a supply made otherwise than in the course of a commercial activity, and therefore not subject to GST/HST.

The circumstances described in Example 1 of the policy statement deal with a situation where a sheriff seizes and subsequently auctions tangible personal property pursuant to a money judgment rendered by a court. This example provides for the application of subsection 183(3) and consequently the supply of the property is not subject to GST/HST. It is the CRA's view that the application of subsection 183(3) will not be affected where an auctioneer acts as auctioneer and agent for the Sheriff, and the auctioneer makes the supply of the tangible personal property on behalf of the Sheriff. It is the CRA's view that subsection 183(3) will continue to apply, regardless of whether or not the sheriff hires a third party auctioneer, so long as the requirements of subsection 183(3) are otherwise met.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-7945.

Yours truly,

Susan Mills
Specialty Tax Unit
Financial Institutions and Real Property Division
Excise and GST/HST Rulings Directorate

2004/06/25 — RITS 50842 — Timing Issue - Obligation to Account for Tax - Sales Accrual on Open Orders