THURLOW,
J.:—In
this
action
the
Crown
seeks
to
recover
$42,292.51
for
sales
taxes
payable
under
the
provisions
of
the
Excise
Tax
Act,
R.S.C.
1952,
c.
100,
as
amended,
and
the
Old
Age
Security
Act,
R.S.C.
1952,
c.
200,
in
respect
of
sales
of
humidifiers
made
by
the
defendants
between
August
1,
1956
and
December
31,
1958,
together
with
penalties
incurred
by
the
defendants
on
failure
to
pay
the
taxes
from
time
to
time
as
they
became
due.
The
applicable
portion
of
Section
30(1)
of
the
Excise
Tax
Act
by
which
the
first
of
the
taxes
in
question
is
imposed
reads
as
follows:
‘*30.
(1)
There
shall
be
imposed,
levied
and
collected
a
consumption
or
sales
tax
of
eight
per
cent
on
the
sale
price
of
all
goods
(a)
produced
or
manufactured
in
Canada
(i)
payable
.
.
.
by
the
producer
or
manufacturer
at
the
time
when
the
goods
are
delivered
to
the
purchaser
or
at
the
time
when
the
property
in
the
goods
passes,
whichever
is
the
earlier,’’
The
other
tax
is
imposed
by
Section
10
of
the
Old
Age
Security
Act,
subsections
(1)
and
(2)
of
which
provide:
“10.
(1)
There
shall
be
imposed,
levied
and
collected
an
Old
Age
Security
tax
of
two
per
cent
on
the
sale
price
of
all
goods
in
respect
of
which
tax
is
payable
under
section
30
of
the
Excise
Tax
Act
at
the
same
time,
by
the
same
persons
and
subject
to
the
same
conditions
as
the
tax
payable
under
that
section.
(2)
Subsection
(1)
shall
be
read
and
construed
as
though
the
tax
imposed
thereby
were
imposed
by
section
30
of
the
Excise
Tax
Act;
and
all
the
provisions
of
the
Excise
Tax
Act
shall
be
read
and
construed
as
though
the
tax
imposed
by
subsection
(1)
were
an
addition
to
the
tax
imposed
by
the
provisions
of
the
said
section
30.
’
’
By
Section
48
of
the
Excise
Tax
Act
every
person
required
by
or
pursuant
to
Part
VI
to
pay
taxes
is
required
to
file
a
monthly
return
of
his
taxable
sales
and
to
pay
the
taxes
not
later
than
the
last
day
of
the
first
month
succeeding
that
in
which
the
sales
were
made
and
subsection
(4)
of
the
same
section
provides
that
“48.
(4)
.
.
.
upon
default
in
payment
of
the
tax
or
any
portion
thereof
payable
under
Part
IV,
V
or
VI
within
the
time
prescribed
by
subsection
(3),
there
shall
be
paid
in
addition
to
the
amount
of
the
default
a
penalty
of
two-thirds
of
one
per
cent
of
the
amount
in
default
in
respect
of
each
month
or
fraction
of
a
month
during
which
the
default
continues.’’
The
sales
in
question
were
made
by
the
defendant
Wait-Skuttle
Company
which
is
a
firm
name
under
which
the
corporate
defendants,
Skuttle
Manufacturing
Company
of
Canada
Limited
and
B.
D.
Wait
Company
Limited
carry
on
business
in
partnership.
The
partnership
business
is
carried
on
at
Oakville,
Ontario
and
is
concerned
with
the
manufacture
and
sale
of
various
types
of
humidifiers.
It
is
admitted
that
during
the
period
in
question
Wait-Skuttle
Company
sold
to
various
customers
71,107
humidifiers
which
it
had
manufactured
in
Canada,
that
the
total
selling
price
of
these
humidifiers
was
$422,925.05
and
that
no
sales
tax
was
paid
by
the
defendants
on
any
of
these
sales.
Sales
tax
was,
however,
paid
by
the
defendants
on
other
sales
of
humidifiers
which
accounted
for
7
per
cent
or
8
per
cent
of
the
total
sales
made
by
Wait-Skuttle
Company
during
the
material
period.
As
to
these
no
question
arises
in
these
proceedings.
It
is
not
disputed
that
on
the
facts
which
I
have
thus
far
outlined
and
the
statutory
provisions
to
which
I
have
referred,
the
Crown
makes
out
a
prima
facie
case
for
the
taxes
which
it
claims
but
by
way
of
defence
the
defendants
maintain
that
the
sales
in
question
were
exempt
from
tax
under
one
or
the
other
of
two
provisions
of
the
Excise
Tax
Act
to
which
reference
will
be
made,
that
in
the
circumstances
to
be
related
the
Crown
is
estopped
from
asserting
its
claim
for
taxes
in
respect
of
the
sales
in
question
and
that
in
any
event
in
some
instances
the
taxes
in
respect
of
the
humidifiers
were
paid
by
the
purchasers
upon
subsequent
re-sale
thereof.
These
defences
will
be
outlined
in
greater
detail
later
in
these
reasons.
The
first
of
the
two
exempting
provisions
of
which
the
defendants
seek
the
benefit
is
Section
30(2)
of
the
Excise
Tax
Act
which
provides
that
“30.
(2)
Notwithstanding
anything
in
subsection
(1),
the
consumption
or
sales
tax
shall
not
be
payable
on
goods
(a)
sold
by
a
licensed
manufacturer
to
another
licensed
manufacturer
if
the
goods
are
partly
manufactured
goods
;
”
The
expression
‘‘licensed
manufacturer’’
is
defined
in
Section
29(1)
(b)
as
meaning:
‘‘any
manufacturer
or
producer
licensed
under
Part
VI
of
the
Act’’
and
it
is
not
disputed
that
at
all
material
times
both
the
defendants
and
the
customers
who
purchased
the
humidifiers
were
manufacturers
and
licensed
as
such
under
the
statute.
The
expression
‘‘partly
manufactured
goods”
is
also
defined
by
Section
29(1)
(d)
as
meaning
“only
goods
that
are
to
be
incorporated
into
and
form
a
constituent
or
component
part
of
an
article
that
is
subject
to
the
consumption
or
sales
tax;
the
Minister
is
the
sole
judge
as
to
whether
or
not
goods
are
‘partly
manufactured
goods’
within
the
meaning
of
this
section
;
’
’
It
is
I
think
desirable
at
this
point
to
emphasize
that
the
expression
“partly
manufactured
goods’’
and
the
exemption
provided
by
Section
30(2)
are
strictly
limited
to
goods
to
be
used
in
the
production
of
taxable
goods,
and
have
no
relevance
to
sales
of
goods
to
be
used
in
the
production
of
goods
which
are
exempt
from
tax
under
other
provisions
of
the
statute.
The
other
provision
relied
on
by
the
defendants
is
Section
32(1)
which
provides
that
“The
tax
imposed
by
section
30
does
not
apply
to
the
sale
or
importation
of
the
articles
mentioned
in
Schedule
III.”
Schedule
III
consists
of
a
number
of
lists
of
articles
or
products
grouped
under
headings
such
as
“Building
Materials’’,
“Charitable,
Health,
ete.’’,
‘‘Coverings’’,
“Diplomatic”,
‘*
Engines’’,
“Farm
and
Forest’’,
“Foodstuffs”
and
“Machinery
and
Apparatus
to
be
used
in
manufacture
or
production’’.
In
some
cases
the
articles
are
named
without
restriction,
but
in
others
they
are
listed
in
conjunction
with
wording
which
limits
the
exemption
to
occasions
when
they
are
for
use
by
particular
purchasers
such
as
diplomatic
representatives
or
hospitals
or
when
they
are
for
use
for
some
defined
purpose.
In
the
latter
type
of
restriction
the
expression
‘‘to
be
used
exclusively’’
appears
in
many
items
but
sometimes
it
is
expressed
by
the
words
‘‘for
use
exclusively’’
and
sometimes
simply
by
the
word
‘‘used’’.
In
the
present
case
issues
arise
under
two
of
the
items
listed
under
the
heading
“Building
Materials’’,
these
two
items
being
as
follows:
“Furnaces,
stokers,
oil
or
gas
burners,
hot
water
and
steam
radiators
not
including
fittings,
for
the
heating
of
buildings;
Articles
and
materials
to
be
used
exclusively
in
the
manufacture
or
production
of
the
foregoing
building
materials,
except
hardware
for
doors
and
sash.’’
Before
outlining
the
facts
of
the
present
ease
reference
should
also
be
made
to
certain
regulations
established
pursuant
to
Section
38
of
the
Excise
Tax
Act
by
which
the
Minister
of
National
Revenue
is
authorized
to
make
such
regulations
as
he
deems
necessary
or
desirable
for
carrying
out
the
provisions
of
the
Act,
the
same
to
be
enforced
in
the
same
manner
as
all
other
provisions
of
the
Act.
The
regulations
in
question
are
entitled
“Regulations
Pertaining
to
Excise
and
Sales
Taxes’’
and
they
deal
with
a
number
of
topics,
the
first
of
which
is
entitled
“Certificates
of
Exemption’’.
This
topic
is
in
turn
dealt
with
under
several
subtitles
including
Licensed
Manufacturers,
Licensed
Wholesalers,
Hospitals,
Provincial
Governments
and
General.
Under
the
subtitle
‘‘Licensed
Manufacturers’’
it
is
prescribed
that
“
(a)
A
licensed
manufacturer,
when
purchasing
or
importing
goods
which
cannot
be
used
in,
wrought
into,
or
attached
to
articles
to
be
manufactured
or
produced
for
sale,
shall
not
quote
his
licence
number
nor
give
the
certificate
on
the
order
or
entry.
On
purchases
or
importations
of
goods
which
can
be
used
in,
wrought
into,
or
attached
to
taxable
goods
for
sale,
a
licensed
manufacturer
shall
quote
his
licence
number
and
give
the
certificate
on
the
order
or
entry.
The
certificate
to
be
given
by
a
licensed
manufacturer
is
to
be
in
the
following
general
form:
I/We
certify
that
the
goods
ordered/imported
hereby
are
to
be
used
in,
wrought
into,
or
attached
to
taxable
goods
for
sale.
Licence
Number
(Name
of
Purchaser)
(b)
A
licensed
manufacturer
shall
not
quote
his
licence
number
nor
give
the
certificate
as
above
when
purchasing
or
importing
goods
to
be
used
in,
wrought
into,
or
attached
to
articles
specified
as
exempt
from
the
Consumption
or
Sales
Tax.
(Note.—Except
in
respect
of
goods
conditionally
exempted
according
to
use.)”
On
the
wording
of
these
regulations
it
would
seem
to
follow
that
a
licensed
manufacturer
when
purchasing
goods
conditionally
exempted
from
tax
according
to
use
is
required,
when
the
goods
can
be
used
in,
wrought
into
or
attached
to
taxable
goods
for
sale
to
certify
that
they
are
to
be
so
used
whether
he
purchases
them
for
such
a
purpose
or
not.
I
turn
now
to
the
facts
developed
in
support
of
the
defence.
The
humidifiers
in
question
were
all
of
types
designed
for
use
in
conjunction
with
modern
hot
air
furnaces.
Some
of
them
can
also
be
used
in
conjunction
with
space
heaters
but
in
practice
very
few
are
so
used.
They
consist
of
an
open
water
tray
fitted
with
an
automatic
valve
to
regulate
the
level
in
the
tray
of
water
from
a
piped
supply
line,
a
number
of
glass
wool
evaporating
plates
so
shaped
as
to
permit
one
part
to
be
in
the
water
and
a
much
larger
surface
of
the
plate
to
be
above
the
water
and
to
overhang
the
tray,
and
a
metal
rack
to
hold
the
plates
vertically
in
place.
The
plates
absorb
the
water
by
capillary
action
and
the
current
of
air
passing
between
the
plates
removes
the
moisture
from
their
surfaces.
For
maximum
effectiveness
these
devices
must
be
mounted
within
two
to
eight
inches
of
the
heat
exchanger
of
a
hot
air
furnace
or
space
heater
and
in
a
position
where
the
circulating
air
when
warmed
by
the
heat
exchanger
will
pass
along
the
surfaces
of
the
plates.
But
they
or
some
models
of
them
are
also
advertised
as
capable
of
being
used
effectively
in
the
cold
air
return
stream
of
a
hot
air
furnace
or
near
the
furnace
in
the
main
warm
air
duct.
The
places
where
they
are
mounted
depend
on
the
model
or
design
of
the
particular
furnace.
In
some
eases
they
are
mounted
in
an
opening
specially
made
for
them
in
the
exterior
metal
work
of
the
furnace
either
at
the
base
or
half
way
up
from
the
base
or
near
the
top
and
in
other
cases
they
may
be
mounted
in
an
opening
in
the
sheet
metal
work
forming
the
plenum
or
bonnet
installed
above
the
furnace
from
which
the
heated
air
is
circulated
by
ducts
to
various
parts
of
the
building.
The
evidence
also
discloses
that
in
early
and
now
obsolete
types
of
hot
air
furnaces
restoration
of
humidity
in
the
warmed
air
was
secured
by
simple
evaporation
from
the
surface
of
water
in
a
jacket
forming
part
of
the
inner
castings
of
the
furnace
and
that
with
the
development
of
furnaces
equipped
with
forced
circulating
devices,
the
older
method
was
replaced
by
the
use
in
connection
with
hot
air
furnaces
of
humidifiers
of
the
type
here
in
question.
It
also
appears
that
furnace
manufacturers
purchase
these
humidifiers
from
manufacturers
and
supply
them
to
customers
with
their
furnaces
which
are
themselves
usually
not
entirely
assembled
as
units
when
packed
for
shipment
and
in
some
cases
are
shipped
disassembled
to
a
very
considerable
extent.
When
the
humidifier
is
to
be
installed
in
the
furnace
casing
the
opening
for
it
is
ordinarily
made
by
the
furnace
manufacturer
but
the
humidifier
is
not
necessarily
mounted
in
the
opening
prior
to
installation
of
the
furnace.
In
other
cases
the
opening
for
the
humidifier
may
be
made
in
the
plenum
by
the
manufacturer
of
the
furnace
if
he
also
supplies
the
plenum
or
if
he
does
not
supply
the
plenum
by
a
heating
contractor
engaged
in
installing
the
furnace
and
constructing
the
plenum
for
it.
In
some
cases
the
price
quoted
for
the
furnace
includes
the
humidifier
supplied
for
it,
in
others
the
price
of
the
humidifier
is
quoted
separately
but
they
are
supplied
as
a
matter
of
course
in
practically
all
cases
of
sales
of
hot
air
furnaces.
Humidifiers
of
these
types
besides
being
used
in
conjunction
with
furnaces
are,
as
already
stated,
sometimes
installed
in
space
heaters
which
are
not
included
in
the
list
of
exempted
building
material
in
Schedule
III
and
they
are
also
at
times
sold
for
use
as
replacements
in
which
cases
as
well
there
is
no
exemption
from
sales
taxes.
The
defendants’
business
in
manufacturing
and
selling
humidifiers
has
been
carried
on
at
Oakville,
Ontario
since
1947.
Most
of
the
humidifiers
which
they
manufacture
are
sold
to
manufacturers
of
furnaces
who
hold
licences
under
the
Excise
Tax
Act
and
when
selling
to
them
the
defendants
took
care
to
ensure
that
in
every
case
the
order
bore
the
sales
tax
licence
number
of
the
purchaser
and
a
certificate.
They
did
not
pay
tax
on
these
sales
but
reported
them
as
not
taxable
and
from
time
to
time
over
the
years
prior
to
1956
their
records
were
examined
by
auditors
of
the
Department
of
National
Revenue
and
no
question
was
raised
as
to
the
propriety
of
their
procedure
nor
was
any
claim
ever
made
for
tax.
Such
an
examination
was
made
in
July
1956
and
when
early
in
1957
following
the
death
of
B.
D.
Wait,
the
principal
shareholder
of
B.
D.
Wait
Company
Limited,
a
request
was
made
for
a
further
examination
to
verify
the
company’s
position
with
respect
to
sales
tax
liability
that
defendant
was
informed
by
someone
employed
by
the
department
that
the
company’s
procedure
was
in
order
and
that
no
examination
was
necessary.
The
sales
here
in
question
were
made
following
the
audit
of
July
1956
and
there
is
no
evidence
of
any
further
audit
having
been
made
from
August
1,
1956
to
December
31,
1958.
However,
in
July
1958
a
letter
was
received
stating
that
the
Department
had
received
information
suggesting
that
sales
tax
was
not
being
paid
in
connection
with
sales
of
humidifiers
and
that
in
the
view
of
the
Department
humidifiers
were
taxable
‘‘for
the
reason
that
they
are
placed
in
the
plenum,
which
is
considered
to
be
part
of
the
duct
work’’.
Correspondence
followed
in
which
the
defendants
first
said
that
their
practice
was
to
sell
to
furnace
manufacturers
‘‘who
show
their
sales
tax
licence
in
their
purchase
orders
and
who
collect
the
sales
tax
at
their
sale
level’’
and
that
when
sales
were
made
to
others
the
sales
tax
was
collected
and
reported
and
remitted
to
the
Department
at
the
end
of
each
month.
Later
on
receiving
a
further
letter
from
the
Department
dated
August
18,
1958
suggesting
that
manufacturers
of
tax
exempt
furnaces
should
furnish
a
certificate
that
the
‘‘humidifiers
were
to
be
incorporated
into
tax
exempt
furnaces
in
order
to
qualify
for
exemption’’,
the
defendants
replied
that
4
this
is
the
way
we
have
always
operated
and
will
continue
to
do
so’’,
Still
later
on
December
5,
1958
the
Department
wrote
another
letter
stating
that
humidifiers
are
held
to
be
taxable
at
the
time
of
sale
and
that
44
a
manufacturer’s
sales
tax
licence
number
should
not
be
accepted”.
With
respect
to
the
sales
here
in
question
made
between
August
1,
1956
and
December
31,
1958,
I
am
satisfied
that
each
order
bore
the
sales
tax
licence
number
of
the
purchaser
and
a
certificate
of
one
kind
or
another.
In
at
least
one
case
the
certificate
simply
stated
that
the
goods
ordered
were
‘‘to
be
used
in,
wrought
into,
or
attached
to
articles
for
resale’’
but
most
of
the
certificates
stated
either
that
the
goods
ordered
were
4
to
be
used
in,
wrought
into,
or
attached
to
taxable
goods
for
sale’’
or
words
to
that
effect
or
that
the
goods
were
‘‘to
be
used
in,
wrought
into,
attached
to
or
consumed
in
the
manufacture
of
goods
exempted
from
tax
under
Schedule
III
of
the
Act”
or
wording
to
that
effect
and
in
at
least
one
instance
the
certificate
stated
that
the
goods
ordered
were
‘‘to
be
used
in,
wrought
into,
or
attached
to
exempted
furnaces
for
sale’’.
The
evidence
does
not
make
clear
to
what
extent
the
form
which
stated
that
the
goods
were
to
be
used
in
making
exempt
goods
was
used
but
a
comparison
of
the
number
and
dates
of
purchase
orders
bearing
this
type
of
certificate
which
were
available
on
a
search
for
them
being
made
with
the
number
found
bearing
the
other
type
of
certificate
suggests
that
the
latter
type
was
probably
used
in
the
majority
of
cases
prior
to
August
1958
when
the
defendants
circulated
to
their
customers
copies
of
the
Department’s
letter
of
August
18,
1958
suggesting
that
the
other
type
of
certificate
be
furnished.
Mrs.
Wait
the
president
of
B.
D.
Wait
Company
Limited
stated
in
evidence
that
both
forms
were
in
use
prior
to
as
well
as
after
receipt
of
the
Department’s
letter
but
while
I
accept
her
evidence
as
showing
that
the
second
type
of
certificate
was
used
in
some
cases
before
the
Department’s
letter
was
received,
it
is
noteworthy
that
no
purchase
order
dated
prior
to
the
letter
and
bearing
such
a
certificate
could
be
found
or
produced.
In
any
event
it
is
clear
that
whether
the
certificate
received
was
of
the
one
kind
or
the
other
the
ordinary
course
of
the
defendants’
business
on
receiving
an
order
with
such
a
certificate
and
a
sales
tax
licence
number
thereon
was
to
sell
and
deliver
the
goods
and
to
report
the
sale
as
not
taxable,
without
taking
any
further
action
to
ensure
that
the
humidifiers
were
in
fact
used
in
the
manufacture
or
production
of
tax
exempt
furnaces
or
in
the
manufacture
of
taxable
goods
such
as
space
heaters.
The
effect
of
the
evidence
on
this
point
is
I
think
that
the
defendants
regarded
their
customers
as
reliable
and
trusted
them
to
see
to
it
that
the
goods
were
used
for
a
purpose
which
would
render
them
exempt
and
that
they
regarded
it
as
being
the
responsibility
of
the
purchaser
to
either
use
the
goods
for
such
a
purpose
or
to
pay
the
tax
on
making
any
other
disposition
of
them
such
as
a
sale
for
replacement
purposes.
The
statute,
however,
it
may
be
noted,
imposes
no
tax
on
a
sale
by
a
licensed
manufacturer
other
than
the
sale
made
by
the
manufacturer
of
the
goods
and
while
as
a
result
of
the
giving
of
the
certificate
the
purchasers
may
have
incurred
liability
to
indemnify
the
defendants
for
tax
in
respect
of
goods
disposed
of
otherwise
than
as
stated
in
the
certificates
no
liability
on
the
part
of
the
purchasers
to
the
Crown
for
the
tax
would
thereby
arise.
It
will
be
convenient
to
deal
first
with
the
defence
that
the
sales
in
question
were
exempt
under
Section
32(1)
and
Schedule
III
to
the
Act.
The
defendants’
first
point
on
these
provisions
was
that
the
humidifiers
were
furnace
fittings
or
fittings
for
furnaces
and
were
exempt
under
the
first
of
the
items
which
I
have
quoted.
It
was
said
that
the
words
‘‘not
including
fittings”
in
that
item
apply
only
to
“‘hot
water
and
steam
radiators’’
and
that
accordingly
in
the
case
of
furnaces,
fittings
should
be
regarded
as
included.
The
short
answer
to
this
in
my
opinion
is
that
even
assuming
that
the
humidifiers
were
fittings
for
furnaces
and
would
be
exempted
on
sale
of
a
furnace
to
which
they
were
fitted
the
sales
in
question
were
not
sales
of
furnaces
but
were
sales
of
humidifiers
which
are
not
listed
in
the
item.
The
defendants’
other
contention
which,
to
my
mind,
raises
the
most
substantial
issues
in
the
action
was
that
these
humidifiers
were
articles
to
be
used
exclusively
in
the
manufacture
or
production
of
furnaces
for
the
heating
of
buildings
within
the
meaning
of
the
second
of
the
items
which
I
have
quoted
from
Schedule
III
and
that
the
sales
were
therefore
exempt.
With
respect
to
this
submission,
counsel
for
the
Crown
contended
that
the
exempting
section
ought
to
be
read
with
the
taxing
section
and
that
when
so
read,
the
exemption
should
be
interpreted
as
meaning
‘‘articles
and
materials
produced
and
manufactured
in
Canada
and
sold
to
be
used
exclusively
in
the
manufacture
or
production
of
the
foregoing
building
materials’’.
In
this
connection
reference
was
made
to
the
judgment
of
the
Privy
Council
in
The
King
v.
Carling
Export
Brewery
and
Malting
Co.
Ltd.,
[1931]
A.C.
485,
and
it
was
submitted
that
anyone
seeking
the
benefit
of
the
exemption
must
be
in
a
position
to
show
that
the
goods
were
sold
pursuant
to
an
arrangement
that
they
were
to
be
used
in
the
exempted
manner,
that
the
goods
have
in
fact
been
used
in
that
manner
and
that
the
seller
has
seen
to
it
that
they
were
so
used.
Counsel
went
on
to
submit
that
instead
of
establishing
the
facts
which
would
entitle
the
defendants
to
the
exemption
the
evidence
indicates
that
some
of
the
humidifiers
were
to
be
used
in
space
heaters
and
some
as
replacement
parts
and
that
some
would
be
installed
in
the
plenum
or
duct
work
where
they
would
form
part
of
the
warm
air
heating
system
rather
than
part
of
the
furnace
which
was
itself
but
a
part
of
the
heating
system,
that
even
when
attaching
a
humidifier
to
a
furnace
in
his
factory
a
furnace
manufacturer
is
merely
attaching
one
part
of
a
warm
air
heating
system
to
another
and
in
so
doing
he
cannot
be
said
to
be
manufacturing
a
furnace
and
that
if
any
of
the
humidifiers
were
sold
to
be
used
exclusively
in
the
manufacture
of
tax
exempt
furnaces
there
is
no
evidence
of
how
many
(with
the
exception
of
66
humidifiers
referred
to
in
two
orders
of
which
evidence
was
given
whereon
the
certificate
given
by
the
purchaser
stated
that
the
goods
ordered
were
to
be
used
in
the
manufacture
of
tax
exempt
goods)
and
that
apart
from
what
was
stated
in
the
certificates
there
was
no
evidence
of
the
use
to
which
any
of
the
humidifiers
was
put.
In
the
Carling
Export
Brewery
case
the
wording
on
which
exemption
from
one
of
the
taxes
in
question
was
claimed
was
‘‘Provided
that
the
consumption
or
sales
tax
specified
in
this
section
shall
not
be
payable
on
goods
exported’’
and
in
this
Court
[[1929]
Ex.
C.R.
130]
Audette,
J.
held
that
entitlement
to
the
exemption
turned
simply
on
whether
or
not
the
goods
were
in
fact
exported.
In
the
Supreme
Court
[[1930]
S.C.R.
361]
a
somewhat
narrower
view
was
adopted,
the
Court
holding
that
since
the
tax
was
payable
at
the
time
of
sale
the
exemption
applied
only
when
the
goods
were
exported
by
the
manufacturer
himself
pursuant
to
contractual
arrangements
therefor
between
him
and
the
purchaser
and
prior
to
his
parting
with
ownership
and
control
of
the
goods.
In
the
Privy
Council
reference
was
made
to
the
provision
for
a
refund
of
tax
in
cases
where
goods
were
in
fact
exported
after
their
sale
by
the
manufacturer,
as
indicating
that
the
mere
fact
of
exportation
was
insufficient
to
entitle
the
manufacturer
to
exemption
but
it
was
held
that
the
manufacturer
could
succeed
in
his
claim
for
exemption
by
establishing
(a)
that
the
goods
were
sold
under
arrangements
that
they
were
to
be
exported;
and
(b)
that
he
saw
to
it
that
they
were
so
exported.
On
the
facts
the
Privy
Council
then
held
that
the
onus
had
been
discharged.
While
I
do
not
regard
the
judgment
in
the
Carling
Export
Brewery
case
as
affording
an
exhaustive
interpretation
of
the
exempting
provision
which
was
under
consideration,
the
case
appears
to
me
to
lend
support
for
the
view
that
the
fact
(if
it
were
established
to
be
the
fact)
that
following
their
sale
the
humidifiers
here
in
question
were
used
in
the
manufacture
or
production
of
furnaces
would
not
by
itself
be
sufficient
to
entitle
the
defendants
to
exemption
and
that
in
a
case
of
this
kind
where
the
defendants
have
parted
with
both
possession
and
title
to
the
humidifiers
without
paying
the
tax,
which
under
the
statute
becomes
payable
when
the
property
passes
or
when
the
goods
are
delivered
to
the
purchaser
whichever
is
earlier,
the
least
that
is
required
of
them
in
seeking
the
benefit
of
the
exemption
provided
by
Section
32(1)
is
that
they
establish
that
the
humidifiers
were
sold
under
contractual
arrangements
requiring
the
purchaser
to
use
them
exclusively
in
the
manufacture
or
production
of
the
exempted
building
materials
that
is
to
say
furnaces
for
the
heating
of
buildings,
and
that
they,
the
defendants,
saw
to
it
that
the
humidifiers
were
so
used.
There
may
be
cases,
such
as
those
referred
to
in
Section
31(1)
in
which
no
actual
sale
takes
place,
wherein
the
subsequent
use
to
which
the
goods
are
put
may
be
the
only
material
facts
upon
which
exemption
depends,
but
in
the
case
of
an
actual
sale
whereby
the
manufacturer
parts
with
both
title
and
possession
of
his
goods,
there
would
be,
at
the
time
when
according
to
the
terms
of
the
statute
the
tax
becomes
payable,
nothing
to
distinguish
a
taxable
sale
from
an
exempt
sale
if
the
right
to
exemption
depended
entirely
on
what
later
became
of
the
goods
and
no
one
could
ever
know
whether
the
tax
was
payable
or
not
even
on
the
simplest
sale
until
the
ultimate
destiny
of
the
goods
was
known.
This
leads
me
to
conclude
that
whenever
the
manufacturer
parts
with
title
or
possession
of
his
goods
by
any
type
of
actual
sale
save
one
by
the
terms
of
which
the
goods
are
to
be
used
exclusively
for
a
purpose
which
would
render
them
exempt,
liability
for
the
tax
arises
at
the
time
mentioned
in
the
statute
and
that
it
is
only
in
cases
where
under
the
contractual
arrangements
for
the
sale
the
goods
are
to
be
used
by
the
purchaser
for
a
purpose
which
will
render
them
exempt
and
where
the
manufacturer
on
whom
the
tax
is
imposed
sees
to
it
that
the
arrangements
are
in
fact
carried
out,
that
the
exemption
can
apply.
The
kinds
of
arrangements
with
purchasers
which
may
be
appropriate
to
achieve
this
result
may
vary
considerably
according
to
the
nature
of
the
goods
but
this
interpretation
of
the
statute
appears
to*
me
to
make
it
necessary
for
a
manufacturer
who
relies
on
the
exemption
and
parts
with
his
goods
without
paying
the
tax,
to
maintain
himself
in
readiness
to
prove
both
that
the
goods
were
sold
under
such
contractual
arrangements
for
their
use
in
accordance
with
the
exempting
provision
and
that
he
has
seen
to
it
that
the
arrangements
were
in
fact
carried
out.
Turning
now
to
the
facts
of
the
present
case
in
so
far
as
they
relate
to
the
exemption
provided
by
Section
32(1)
there
was
first
no
evidence
of
any
contractual
arrangements
of
a
general
character
between
the
defendants
and
any
of
their
customers
that
the
humidifiers
were
to
be
used
exclusively
in
the
manufacture
or
production
of
furnaces
for
the
heating
of
buildings
and
the
only
evidence
there
is
on
the
question
is
that
of
the
various
certificates
which
appeared
on
the
orders.
With
respect
to
these
I
am
of
the
opinion
that
a
certificate
on
an
order
stating
that
the
goods
ordered
are
to
be
used,
wrought
into
or
attached
to
articles
for
resale,
as
occurred
in
at
least
one
case,
can
by
no
means
be
regarded
as
evidence
of
a
contract
by
the
purchaser
to
use
the
humidifiers
so
ordered
exclusively
in
the
manufacture
of
furnaces
for
heating
buildings
nor
do
I
think
that
a
certificate
that
the
goods
ordered
are
to
be
used
in,
wrought
into
or
attached
to
taxable
goods
for
sale
or
wording
to
the
like
effect
ean
be
regarded
as
evidence
of
a
contract
to
use
the
goods
exclusively
in
the
manufacture
of
furnaces
which
would
be
exempt
from
tax.
The
fact
that
the
regulations
which
I
have
quoted
required
that
there
be
a
certificate
in
the
prescribed
form
may
serve
to
explain
why
certificates
of
that
type
appeared
on
the
purchase
orders,
but
I
do
not
think
that
they
lend
any
aid
to
the
defendants
in
their
efforts
to
establish
that
under
the
contract
for
their
sale,
the
goods
were
to
be
used
exclusively
in
the
production
of
furnaces
for
the
heating
of
buildings.
It
must
I
think
be
borne
in
mind
that
the
purpose
of
the
regulations
is
to
carry
out
the
provisions
of
the
statute,
that
is
to
say,
to
collect
the
taxes
thereby
imposed.
They
are
not
designed
to
afford
protection
from
the
liability
which
may
arise
or
the
consequences
which
may
ensue
if
when
selling
his
goods
a
manufacturer
assumes
that
he
is
entitled
to
exemption
and
does
not
pay
the
tax
nor
are
they
designed
to
waive
the
right
of
the
Crown
to
taxes
or
the
right
or
duty
of
the
Minister
to
collect
them
or
to
afford
exemptions
beyond
those
expressly
provided
by
the
statute.
Unfortunately
for
persons
engaged
in
business
there
appears
to
be
nothing
in
the
statute
or
in
the
regulations
to
afford
assurance
either
that
a
claim
will
not
some
day
be
asserted
for
taxes
in
respect
of
goods
exempted
by
reference
to
the
use
to
which
they
are
to
be
put
or
that
a
manufacturer
will
not
one
day
be
called
upon
to
pay
the
tax
if
he
is
unable
to
prove
that
the
goods
which
he
sold
and
upon
which
he
did
not
pay
the
tax
were
in
fact
exempt.
In
reading
the
regulations
it
is
noticeable
that
they
prescribe
only
the
procedure
which
a
purchaser
is
to
follow
in
ordering
goods
the
sale
of
which
to
him
may
for
one
reason
or
another
be
exempt
from
tax.
Nothing
is
prescribed
as
to
what
the
vendor,
who
is
the
party
to
be
exempted,
if
anyone
is
entitled
to
exemption,
is
to
do,
and
there
is
nothing
in
them
to
afford
the
vendor
any
assurance
that
he
can
rely
on
the
certificate
as
proof
that
the
sale
is
exempt.
Rather
they
appear
to
me
to
be
designed
entirely
to
ensure
that
records
of
sales
represented
as
exempt
from
tax
will
be
available
if
and
when
the
Minister
requires
them
for
the
purpose
of
checking
on
the
liability
of
either
party
for
tax.
On
the
other
hand,
the
certificate
which
quoted
a
sales
tax
licence
number
and
stated
that
the
goods
ordered
were
to
be
wrought
into
exempted
furnaces
may
I
think
be
regarded
as
evidence
of
a
contract
to
use
the
goods
in
such
a
way
that
they
would
be
exempted
from
tax
and
having
regard
to
the
fact
that
the
nature
of
the
humidifiers
ordered
was
such
that
they
could
be
used
only
in
conjunction
with
furnaces
or
space
heaters
I
think
that
the
certificate
which
stated
that
the
goods
ordered
were
to
be
used
in,
wrought
into,
attached
to
or
consumed
in
the
manufacture
of
goods
exempted
from
tax
under
Schedule
III
to
the
Act
may
in
the
circumstances
properly
be
construed
as
meaning
that
the
humidifiers
ordered
were
to
be
used
in
the
manufacture
of
tax
exempt
furnaces
and
thus
as
evidence
of
a
contract
to
use
the
goods
in
such
a
way
that
they
would
be
exempted
from
tax.
It
is
thus
only
in
cases
where
the
latter
two
types
of
certificates
were
given
that
the
contractual
arrangement
required
for
exemption
existed
and
while
I
regard
Mrs.
Wait’s
evidence
as
establishing
that
there
were
other
cases
in
which
such
certificates
were
given,
I
am
unable
to
ascertain
on
the
evidence
in
which
or
in
how
many
eases
such
certificates
were
given
beyond
the
two
as
to
which
details
were
established
and
which
represented
sales
of
66
humidifiers
in
September
and
October,
1958
for
a
total
sum
of
$415.80.
I
turn
now
to
the
question
of
whether
it
has
been
established
that
the
defendants
saw
to
it
that
the
humidifiers
were
used
exclusively
in
the
manufacture
or
production
of
tax
exempt
furnaces.
On
this
point
the
evidence
does
not
show
what
became
of
the
humidifiers
sold
in
any
of
the
transactions
and
the
most
that,
in
my
opinion,
can
be
said
of
it
is
that
it
indicates
that
these
humidifiers
were
useful
only
in
conjunction
with
warm
air
furnaces
or
with
space
heaters
and
that
when
it
was
certified
on
the
order
that
the
humidifiers
were
to
be
used
in
the
manufacture
of
tax
exempt
furnaces
as
well
as
in
many
instances
where
it
was
certified
that
they
were
to
be
used
in,
wrought
into,
or
attached
to
taxable
goods,
the
probability
is
that
they
were
in
fact
used
in
conjunction
with
warm
air
furnaces.
There
is
no
evidence
that
the
customers
who
purchased
the
humidifiers
were
constituted
as
representatives
of
the
defendants
in
dealing
with
the
humidifiers
or
that
the
defendants
retained
any
other
form
of
control
over
the
use
to
which
the
humidifiers
were
put
or
even
that
they
so
much
as
required
their
customers
to
keep
or
that
the
customers
actually
kept
any
records
of
the
use
to
which
the
humidifiers
were
in
fact
put.
Moreover,-
it
is
clear
that
the
defendants
made
no
efforts
to
police
or
otherwise
supervise
their
customers’
use
of
the
humidifiers.
This
may
be
understandable
since
most
of
the
purchasers
were
customers
of
long
standing
whose
reliability
in
honouring
their
contracts
the
defendants
had
no
occasion
to
doubt,
but
in
my
opinion
it
fell
far
short
of
what
is
required
by
the
statute
of
a
manufacturer
who
parts
with
his
goods
without
paying
the
tax
and
then
seeks
the
benefit
of
an
exemption
the
right
to
which
depends
on
the
use
of
the
goods
exclusively
for
a
particular
purpose.
I
am
accordingly
of
the
opinion
that
it
has
not
been
established
with
respect
to
any
of
the
sales
in
question
that
the
defendants
saw
to
it
that
the
humidifiers
sold
were
used
exclusively
in
the
manufacture
or
production
of
furnaces
and
the
defendants’
claim
to
exemption
under
Section
32(1)
therefore
fails.
I
come
now
to
the
defence
that
the
humidifiers
were
“partly
manufactured
goods’’
within
the
meaning
of
the
definition
of
Section
29(1)
(d)
and
thus
exempt
under
Section
30(2)
(a).
The
Crown
joined
issue
on
this
plea
and
added
that
the
defendants
have
never
applied
for
and
the
Minister
has
never
made
an
adjudication
in
respect
of
the
humidifiers
and
to
this
the
defendants
have
rejoined
that
relying
on
the
certificates
of
exemption
which
they
received
from
their
customers,
on
the
fact
that
at
divers
times
their
books
had
been
audited
by
officers
of
the
Department
of
National
Revenue
and
found
to
be
in
good
order
and
that
they
had
been
advised
both
that
their
books
had
been
found
to
be
in
good
order
and
that
they
had
the
following
proper
procedure
in
the
payment
of
sales
tax
and
relying
also
on
the
Department’s
letter
of
August
18,
1958
to
which
reference
has
already
been
made,
the
defendants
did
not
collect
sales
tax
on
the
sales
of
the
humidifiers
in
question
and
cannot
now
do
so
and
that
the
Crown
is
estopped
from
denying
that
the
Minister
had
made
an
adjudication
that
the
humidifiers
were
‘‘partly
manufactured
goods’’
and
therefore
exempt
from
tax.
Alternatively,
it
was
pleaded
and
argued
that
if
the
Minister
has
not
made
an
adjudication
this
Court
has
jurisdiction
to
make
it.
Apart
from
the
alleged
estoppel
it
is,
I
think,
clear
that
on
the
issue
of
whether
in
fact
the
humidifiers
were
‘
partly
manufactured
goods’?
within
the
meaning
of
Section
30(2)
(a)
in
the
absence
of
evidence
of
a
decision
to
that
effect
by
the
Minister
(and
there
is
no
evidence
of
such
a
decision
in
the
present
case)
the
defence
cannot
succeed
for
the
statute
makes
the
Minister
the
sole
judge
of
what
are
‘‘partly
manufactured
goods’’
and
the
Court
has
in
my
opinion
no
authority
to
enter
upon
the
enquiry.
While
the
Minister
might
readily
conclude
that
these
humidifiers
are
"partly
manufactured
goods’’
when
they
are
to
be
incorporated
into
space
heaters,
I
do
not
see
on
what
basis
he
could
reach
the
conclusion
that
they
were
goods
to
be
incorporated
into
taxable
goods,
and
thus
"partly
manufactured
goods”
within
the
meaning
of
the
definition,
when
they
were
to
be
used
in
the
manufacture
or
production
of
tax
exempt
furnaces
unless
he
were
also
to
decide
that
the
right
to
exemption
under
Section
30(2)
depends
entirely
on
the
terms
of
the
contract
of
sale,
and
not
at
all
upon
the
use
to
which
the
goods
may
subsequently
be
put.
But
these
are
matters
which
are
committed
by
the
statute
to
his
judgment
alone
and
as
I
see
it
the
Court
is
not
given
authority
to
review
his
decision
or
to
make
a
decision
for
him.
Vide
Central
Electricity
Generating
Board
v.
Halifax
Corporation,
[1962]
3
All
E.R.
915.
The
utmost
which
the
Court
might
do,
where
the
matter
is
undecided,
is
to
stay
the
action
for
recovery
of
the
taxes
until
a
decision
is
made
but
that
course
appears
to
me
to
be
unwarranted
in
the
present
case
because
no
application
for
such
a
stay
has
been
made
at
any
stage
of
these
proceedings
and
because
it
was
not
shown
that
any
application
has
ever
been
made
to
the
Minister
for
a
decision.
What
was
mainly
relied
on
to
establish
the
plea
that
the
humidifiers
were
‘‘partly
manufactured
goods’’
was
the
alleged
estoppel.
It
was
argued
that
since
1941
the
defendants
had
been
taking
certificates
from
their
customers
and
until
the
letter
of
August
18,
1958
there
had
been
no
suggestion
from
the
Department
that
they
were
wrong
in
so
doing
or
that
they
should
not
have
been
taking
certificates,
that
on
receiving
the
certificates
they
collected
no
sales
tax
and
there
was
never
any
complaint
about
this
from
the
Department
and
that
they,
the
defendants,
cannot
now
recover
the
sales
tax
from
their
customers,
that
the
conduct
of
the
Department
in
not
requiring
payment
of
the
tax
can
be
justified
on
the
ground
that
in
its
view
the
humidifiers
were
“partly
manufactured
goods’’
and
that
the
Minister
must
be
regarded
as
having
made
a
determination
that
these
goods
were
“partly
manufactured
goods”
and
that
in
the
circumstances
the
Crown
is
estopped
from
claiming
that
the
Minister
has
not
judged
these
goods
to
be
“partly
manufactured
goods”.
In
my
opinion,
even
apart
from
the
legal
question
as
to
whether
an
estoppel
can
bar
the
right
of
the
Crown
to
collect
the
tax
(vide
Woon
v.
M.N.R.,
[1951]
Ex.
C.R.
18:
[1950]
C.T.C.
263),
no
case
for
an
estoppel
of
the
kind
mentioned
has
been
made
out.
It
must,
I
think,
be
remembered
that
the
statute
imposes
the
tax
and
creates
a
legal
duty
on
the
manufacturer
not
only
to
pay
it
but
to
file
a
monthly
return
of
his
taxable
sales.
Upon
him
thus
is
cast
the
responsibility
of
deciding
which
sales
he
will
report
as
taxable
and
which
he
will
treat
as
exempt.
Upon
the
Minister
is
put
the
responsibility
to
collect
the
tax
and
to
decide,
when
a
dispute
arises,
whether
or
not
goods
are
“partly
manufactured
goods’?
within
the
meaning
of
the
definition,
but
he
owes
no
duty
to
the
taxpayers
to
audit
their
records
for
the
purpose
of
assuring
them
that
what
they
have
treated
as
exempt
sales
were
in
fact
exempt
and
I
see
no
reason
to
think
that
his
audits
are
made
with
any
such
object
in
mind.
In
the
present
case
the
substance
of
what
I
think
has
occurred
is
that
the
defendants
have
accepted
certificates
from
their
customers,
which,
it
is
perhaps
unnecessary
to
say,
were
not
representations
by
the
Minister,
and
thinking
that
they
could
rely
on
these
certificates
have
regarded
the
sales
as
exempt
and
reported
them
as
non-taxable.
In
this
situation
it
is
I
think
readily
conceivable
that
an
officer
of
the
Department
on
making
an
audit
or
check
and
seeing
that
in
the
case
of
each
sale
the
order
bore
the
sales
tax
licence
number
of
the
purchaser
and
a
certificate
would
find
nothing
in
the
records
of
the
defendants’
business
to
suggest
that
the
defendants’
reporting
was
incorrect.
But
it
seems
to
me
that
he
would
have
nothing
to
indicate
what
had
in
fact
become
of
the
humidifiers
after
the
defendants
had
parted
with
them.
He
would
not
be
able
to
tell
from
the
orders
whether
the
goods
were
used
in
the
manufacture
of
space
heaters
which.
would
be
taxable
goods
or
in
the
manufacture
of
furnaces,
which
would
not
be
taxable,
or
as
replacements.
Assuming
then
that
he
were
asked
by
the
defendants,
who
were
anxious
to
know
where
they
stood,
since
they
had
been
treating
sales
as
not
taxable,
whether
they
were
operating
as
the
Department
wished,
for
him
to
reply
that
the
defendants’
records
were
in
order
or.
that
the
procedure
in
reporting
was
correct
appears
to
me
to
import
nothing
with
respect
to
the
taxability
or
otherwise
of
the
sales
which
the
defendants
had
treated
and
reported
as
exempt
from
tax
and
to
my
mind
neither
such
a
statement
alone
nor
such
a
statement
coupled
with
the
fact
that
for
a
long
time
no
tax
was
claimed
raises
any
necessary
or
even
probable
implication
that
the
Minister
had
decided
that
the
humidifiers
in
question
were
either
in
whole
or
in
part
“partly
manufactured
goods”.
It
signifies,
if
anything,
merely
that
on
the
information
received
there
was
nothing
which
indicated
that
the
sales
reported
as
non-taxable
were
in
fact
taxable.
There
is
in
this
situation,
in
my
opinion,
no
basis
for
inferring
a
representation
that
the
Minister
had
decided
that
the
humidifiers
sold
by
the
defendants
were
“partly
manufactured
goods’’
nor
is
there
evidence
either
in
the
letter
of
August
18,
1958
or
elsewhere
in
the
case,
of
any
express
representation
by
anyone
to
that
effect
or
of
anyone
having
been
authorized
to
make
any
such
representation.
Moreover,
even
if
it
were
to
be
inferred,
from
the
fact
that
no
complaint
was
made
and
no
tax
was
claimed
following
an
audit
of
records
of
sale
transactions
up
to
a
particular
date
in
many
of
which
the
orders
bore
a
certificate
that
the
goods
were
to
be
used
in
manufacturing
taxable
goods,
that
the
Minister
had
decided
that
the
goods
sold
pursuant
to
such
orders
were
“partly
manufactured
goods’’
there
would
still,
in
my
opinion,
be
no
basis
for
drawing
such
an
inference
with
respect
to
the
goods
involved
in
subsequent
transactions
the
records
of
which
had
not
been
audited
by
anyone
on
behalf
of
the
Minister,
even
though
the
orders
may
have
borne
the
same
kind
of
certificate
as
had
appeared
on
the
orders
in
transactions
which
had
occurred
earlier
and
had
been
examined.
As
the
definition
of
“partly
manufactured
goods’?
refers
to
the
use
to
which
the
goods
are
to
be
put
it
must,
I
think,
necessarily
be
open
to
the
Minister
to
decide
the
question
in
relation
to
particular
sales,
especially
where
the
goods
are
of
a
kind
that
can
be
used
in
making
non-taxable
goods
as
well
as
taxable
goods
and
a
decision
that
the
goods
involved
in
one
sale
or
in
a
number
of
sales
were
‘‘partly
manufactured
goods’’
within
the
defini-
tion
would
not
in
my
opinion
imply
that
a
similar
decision
had
also
been
made
or
would
be
made
with
respect
to
the
goods
involved
in
subsequent
transactions
in
respect
of
which
there
had
not
even
been
an
examination
of
the
records
by
anyone
acting
on
the
Minister’s
behalf.
It
will
be
recalled
that
an
audit
took
place
in
July
1956
but
that
there
was
no
evidence
of.
any
subsequent
audit
and
that
the
claim
relates
only
to
sales
made
after
the
beginning
of
August
1956.
And
while
the
defendant,
B.
D.
Wait
Company
Limited
may
have
felt
reassured
by
what
it
was
told
early
in
1957
as
to
its
procedure
being
in
order
and
an
audit
at
that
time
being
unnecessary
there
is
no
evidence
that
the
person
who
made
the
statement
was
authorized
to
exercise
the
function
of
the
Minister
to
make
a
decision
under
Section
29(1)
(d)
or
to
represent
that
the
Minister
had
made
such
a
decision
and
such
a
statement
would
not
in
my
view
afford
a
basis
for
inferring
that
the
Minister
had
even
considered,
let
alone
decided,
the
question
with
respect
to
the
goods
involved
in
sales
made
following
the
audit
of
July
1956.
There
was
accordingly
in
my
opinion
nothing
to
estop
the
Crown
from
denying
in
this
action
that
the
humidifiers
in
question
were
‘
partly
manufactured
goods
’
’
or
from
denying
that
the
Minister
had
decided
that
the
humidifiers
were
1
‘
partly
manufactured
goods’’.
The
defence
that
the
sales
were
exempt
from
tax
under
Section
30(2)
(a)
therefore
fails.
It
was
also
pleaded
generally
that
the
Minister
was
for
the
same
reasons
estopped
from
collecting
the
tax
but
as
no
argument
was
put
forward
on
this
point,
I
do
not
propose
to
discuss
it
further
than
to
say
that
for
the
like
reasons
the
plea
in
my
opinion
is
not
maintainable.
Finally,
it
was
argued
that
when
after
obtaining
humidifiers
on
which
tax
had
not
been
paid
a
customer
sold
one
of
them
as
a
replacement,
he
would
report
the
sale
and
pay
the
tax
on
the
Department,
that
the
defendants
were
entitled
to
credit
on
the
Crown’s
claim
for
all
sums
so
paid
and
that
a
reference
should
defendants
were
so
entitled.
There
is,
however,
no
proof
that
any
defendants
were
entitled.
There
is,
however,
no
proof
that
any
such
payment
was
made
on
behalf
of
the
defendants
or
indeed
that
any
such
payment
was
made
and
the
defendants
can
therefore
obtain
no
abatement
of
the
claim
on
this
ground.
In
the
result,
therefore,
the
Crown
is
entitled
to
succeed
in
its
claim
for
taxes
amounting
to
$42,292.51
and
for
the
penalties
payable
under
Section
48(4)
of
the
Act
in
respect
of
the
failure
of
the
defendants
to
pay
the
tax
when
due
and
if
the
parties
are
unable
to
agree
on
the
amount
of
such
penalties
there
will
be
a
reference
to
inquire
and
report
thereon.
The
Crown
is
also
entitled
to
costs.
Judgment
accordingly.
CLARA
M.
LLOYD
(Administratrix
oF
WILLIAM
J.
LLOYD,
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