MACLEAN
J.:—In
this
Information
the
plaintiff
seeks
to
recover
from
the
defendant
specified
sums
as
consumption
or
sales
tax,
and
as
excise
tax,
under
the
provisions
of
the
Special
War
Revenue
Act.
Paragraph
2
of
the
Information
states
the
grounds
of
the
plaintiff’s
claim
in
the
following
words:
"The
defendant
manufactured,
sold
and
delivered
tires
for
automotive
vehicles,
or
manufactured
such
tires
by
contract
for
labour
only,
not
including
the
value
of
the
goods
that
entered
into
the
same,
or
in
or
under
unusual
or
peculiar
manner
or
conditions
so
that
the
transactions
were
for
the
purpose
of
the
Special
War
Revenue
Act
to
be
regarded
as
sales.
’
This
paragraph
of
the
Information
virtually
pleads
s.
86
and
s.
87(c)
of
the
Special
War
Revenue
Act,
to
which
reference
will
later
be
made.
The
facts
necessary
to
disclose
the
question
for
determination
may
be
stated
in
fairly
brief
terms.
The
defendant
operates
a
garage
or
shop,
at
Vancouver,
B.C.,
and
a
substantial
part
of
its
business
is
the
retreading
of
tires
for
automotive
vehicles,
the
tread
of
a
tire
being
that
portion
which
strikes
the
pavement.
The
process
of
retreading
a
tire
was
described
by
the
president
of
the
defendant
company.
A
portion
of
the
old
tread,
or
all
of
it,
as
the
case
may
be,
is
removed
leaving
bare
and
intact
that
part
of
the
fabric
which
holds
the
tread;
the
side
walls
of
the
tire
are
not
disturbed.
There
is
then
cemented
on
the
fabrice
a
new
tread,
what
is
called
camel-back,
a
solid
semi-cured
piece
of
rubber,
manufactured
expressly
for
this
purpose.
After
the
camel-back
is
cemented
on
the
exposed
fabric,
the
tire
is
placed
in
a
mould
and
cured,
and,
as
I
understand
it,
it
is
while
the
tire
is
in
the
mould
that
the
tread
is
given
its
non-skid
features,
by
means
of
a
die.
The
defendant’s
business
of
retreading
tires
cannot,
I
think,
be
said
to
be
carried
on
in
any
very
large
way,
but
I
assume
it
is
quite
substantial.
Its
business
is
confined
to
one
shop
or
garage,
it
employs
no
agents
to
dispose
of
retreaded
tires
nor
does
it
sell
them
by
means
of
mail
orders
or
distributing
houses;
and
there
is
no
evidence
that
the
defendant
purchases
used
or
discarded
tires
from
the
public
for
the
purpose
of
retreading
and
selling
them,
subject,
however,
to
what
I
am
about
to
say.
If
a
customer
brings
to
the
defendant’s
garage
a
tire
to
be
retreaded,
he
gets
back
the
identical
tire,
newly
retreaded,
and
for
this
work
the
customer
pays
the
defendant
the
charges
usual
in
such
a
case.
If
it
is
inconvenient
for
a
customer
to
wait
for
his
own
tire
to
be
retreaded,
as
will
sometimes
happen,
the
defendant
will
retain
the
customer’s
tire
and
deliver
him
a
retreaded
tire,
one
from
stock,
charging
him
therefor
only
the
regular
price
for
retreading
a
tire;
it
seems
that
this
is
also
frequently
done
in
the
case
of
dealers
in
used
cars
requiring
newly
retreaded
tires;
transactions
of
this
kind
the
defendant
claims
to
be
a
mere
exchange
and
not
a
sale.
If
a
customer
purchases
a
new
manufactured
tire,
which
the
defendant
also
carries
in
stock
for
sale,
the
defendant
will
take
over
the
customer’s
old
tire,
if
it
is
suitable
for
retreading,
making
the
customer
an
allowance
for
the
same
on
the
purchase
price
of
the
new
manufactured
tire.
This
will
explain
how
the
defendant
comes
into
possession
of
used
tires,
which
in
due
course
it
retreads
or
repairs
and
carries
in
stock,
either
for
sale
to
the
public,
or
for
the
purpose
of
exchanging
the
same
for
a
customer
s
used
tire,
in
the
circumstances
I
have
just
explained.
The
plaintiff
contends
that,
in
all
the
transactions
which
I
have
described,
the
defendant
is
a
manufacturer
or
producer
of
a
tire
or
tires,
and
is
brought
within
either
sec.
86
or
sec
87(c)
of
the
Special
War
Revenue
Act.
and
is
liable
for
the
taxes
claimed.
The
defendant.
it
is
claimed,
takes
a
tire
which
is
no
longer
of
use,
particularly
when
stripped
of
the
old
tread,
and
it
has
produced
a
new
article
of
commerce.
It
is
contended
also
on
behalf
of
the
plaintiff
that
there
is
no
distinction
between
the
case
of
a
sale
of
a
retreaded
tire
from
stock
to
the
publie,
and
the
case
where
a
tire
is
retreaded
to
the
order
of
a
customer
and
to
whom
it
is
returned
when
the
retreading
has
been
completed,
and
that
the
latter
transactions
are
to
be
regarded
as
sales.
The
relevant
provisions
of
the
Special
War
Revenue
Act
may
now
be
referred
to.
Sec.
80(1)
has
reference
to
the
excise
tax
claimed
and
reads
as
follows
:—
‘80.
(1)
Whenever
goods
mentioned
in
Schedules
I
and
II
of
this
Act
are
imported
into
Canada
or
taken
out
of
warehouse,
or
manufactured
or
produced
in
Canada
and
sold,
there
shall
be
imposed,
levied
and
collected,
in
addition
to
any
other
duty
or
tax
that
may
be
payable
under
this
Act
or
any
other
statute
or
law,
an
excise
tax
in
respect
of
goods
mentioned.
(a)
in
Schedule
I,
at
the
rate
set
opposite
to
each
item
in
the
said
schedule
computed
on
the
duty
paid
value
or
the
sale
price,
as
the
case
may
be;
(b)
in
Schedule
II,
at
the
rate
set
opposite
to
each
item
in
said
schedule.’’
See.
86(1)
is
in
part
as
follows:
*
•
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,
payable
by
the
producer
or
manufacturer
at
the
time
of
the
delivery
of
such
goods
to
the
purchaser
thereof.’’
See.
87
of
the
Act
reads
thus
:
«
4
87.
Whenever
goods
are
manufactured
or
produced
in
Canada
under
such
circumstances
or
conditions
as
render
it
difficult
to
determine
the
value
thereof
for
the
consumption
or
sales
tax
because
(a)
a
lease
of
such
goods
or
the
right
of
using
the
same
but
not
the
right
of
property
therein
is
sold
or
given;
or
(b)
such
goods
having
a
royalty
imposed
thereon,
the
royalty
is
uncertain,
or
is
not
from
other
causes
a
reliable
means
of
estimating
the
value
of
the
goods;
or
(c)
such
goods
are
manufactured
by
contract
for
labour
only
and
not
including
the
value
of
the
goods
that
enter
into
the
same,
or
under
any
other
unusual
or
peculiar
manner
or
conditions
;
or
(d)
such
goods
are
for
use
by
the
manufacturer
or
producer
and
not
for
sale;
the
Minister
may
determine
the
value
for
the
tax
under
this
Act
and
all
such
transactions
shall
for
the
purposes
of
this
Act
be
regarded
as
sales.’’
I
propose
first
to
discuss
the
transactions
where
the
defendant
has
merely
retreaded
the
customer’s
tire.
Under
s.
86
the
tax
is
imposed
when
goods
manufactured
or
produced
in
Canada
have
been
sold,
and
delivery
made
to
the
purchaser.
I
am
unable
to
appreciate
how
the
contention
can
be
seriously
advanced
that
a
person
who
neither
owns
nor
sells
an
article,
but
which
he
has
repaired
for
the
owner,
is
liable
to
the
sales
tax
under
s.
86,
in
the
absence
of
precise
words
imposing
the
tax.
I
do
not
think
it
can
be
said
that
the
defendant
in
retreading
or
repairing
a
tire
at
the
request
of
its
owner,
and
who
on
completion
of
the
work
delivers
back
to
the
owner
the
identical
tire
he
was
given
to
retread,
has
manufactured
or
produced
a
tire,
or
that
he
has
made
a
sale.
In
such
cases
there
is
never
a
sale
and
unless
there
is
a
sale
no
sales
tax
is
imposed
;
the
tax
is
not
on
goods
manufactured,
it
is
on
goods
manufactured
and
sold
and
in
my
opinion
the
defendant
is
not
liable
for
the
tax
in
such
cases,
under
s.
86
of
the
Act.
These
transactions
with
customers,
or
owners
of
tires,
must,
I
think,
be
looked
at
as
single
transactions,
for
material
supplied
and
labour
performed,
and
nothing
else.
Next,
we
must
consider
if
s.
87
has
the
effect
of
making
the
defendant
liable
for
the
sales
tax,
based
on
the
amount
paid
by
the
customer
for
having
his
tire
retreaded,—not
on
the
value
of
the
tire
claimed
to
be
manufactured.
It
is
upon
this
section
of
the
Act,
particularly
s.
87(c),
that
the
plaintiff
must
rely
for
the
recovery
of
the
tax,
in
connection
with
tires
retreaded
for
the
customer.
It
is
my
opinion,
that
when
the
defendant
retreads
a
tire
for
a
customer
it
does
not
manufacture
a
tire,
by
contract
for
labour
only,
and
I
cannot
think
that
s.
87(c)
has
any
application
whatever
to
transactions
of
this
nature.
In
such
cases
there
is
no
contract
on
the
part
of
the
defendant
to
manufacture
or
produce
a
tire
for
the
customer,
nor
does
the
customer
deliver
to
the
defendant
any
material
with
which
to
manufacture
or
produce
a
tire,
that
is,
in
the
sense
intended
by
s.
87(c).
The
defendant
merely
repairs
or
retreads
a
tire,
a
simple
and
ordinary
operation.
There
is
no
distinction
between
repairing
an
automobile
tire
and
repairing
anything
else,
for
the
owner.
There
is
nothing
unusual
or
peculiar
about
a
transaction
which
merely
involves
the
repair
of
an
article
by
a
tradesman,
and
payment
by
the
owner
of
the
article
for
the
services
rendered.
There
is
no
particular
significance
in
the
word
"‘retreading’’
and
one
can
only
say
it
is
a
very
convenient
and
descriptive
term
to
use,
Just
as
the
word
‘
"
sole
‘
‘
is
used
in
respect
of
shoes.
To
say
that
when
a
tire
is
delivered
to
the
defendant
by
a
customer
for
retreading,
it
is
no
tire
at
all,
particularly
at
the
instant
of
time
when
the
old
tread
is
removed,
is
not,
I
think,
in
fact
true,
and
it
is
a
contention
that
is
not
at
all
impressive
to
me.
I
cannot
think
that
the
words
"
‘
manufacture,
‘
‘
or
""goods,”
mentioned
in
87(c)
include,
or
were
intended
to
include,
transactions
of
the
nature
which
I
am
discussing,
or
that
such
transactions
were
intended
to
be
treated
as
sales.
It
is
common
knowledge
that
finished
goods
are
sometimes
manufactured
or
produced
by
business
concerns,
and
frequently
by
individuals—men
and
women—for
persons
who
provide
the
material
entering
into
such
goods,
under
contract
for
labour
only,
and
this
practice
is
known
to
prevail
to
a
considerable
degree
in
branches
of
the
clothing
trade,
and
other
examples
of
this
practice
might
be
given.
It
may
be
that
it
was
the
intention
of
87(c)
to
tax,
in
such
cases,
as
a
manufacture
and
as
a
sale,
the
cost
of
the
labour
performed
by
those
who
convert
the
furnished
raw
material
into
finished
garments.
If
it
were
intended
to
include
in
the
same
category
repair
work
performed
upon
a
used
article
belonging
to
another,
then,
I
think,
it
should
appear
as
a
separate
section,
and
in
clear
and
unmistakable
language.
The
purpose
of
s.
87(a),
(&)
and
(d)is
readily
understood.
I
do
not
think
the
sales
tax
was
intended
to
apply
in
the
case
of
repair
work
applied
to
an
automobile
tire,
owned
by
a
customer,
in
order
to
prolong
its
life,
the
customer
never
having
parted
with
his
possession
of
the
same.
It
is
my
opinion
therefore
that
the
defendant
is
not
liable
for
the
tax,
upon
such
transactions
under
s.
87
of
the
Act.
I
have
now
to
consider
the
balance
of
the
transactions
which
I
have
earlier
described,
sales
of
retreaded
tires
made
from
stock
to
the
public,
and
the
trading
or
exchanging
of
old
tires
for
newly
retreaded
tires
held
in
stock,
the
additional
consideration
being
the
usual
charge
for
retreading
the
customer’s
tire.
I
think
these
two
classes
of
transactions
are
to
be
treated
as
being
in
substance
the
same,
and
they
are
both
readily
distinguishable
from
the
case
where
the
tire
is
retreaded
for
the
customer
and
owner.
If
there
is
a
taxable
sale
in
the
first
mentioned
class,
there
is,
I
think,
a
taxable
sale
in
the
other
class.
The
way
in
which
the
latter
transactions
are
carried
out
may
differ,
the
form
of
the
consideration
may
differ,
but
the
substance
of
the
transaction
is
the
sale
of
a
retreaded
tire.
The
receipt
of
the
old
tire
as
part
of
the
consideration
in
the
second
mentioned
class,
does
not,
I
think,
negative
the
idea
of
a
sale.
While
not
entirely
free
from
doubt
that
is
the
conclusion
I
have
reached
in
respect
of
that
point.
Now,
in
respect
of
these
two
classes
of
transactions,
was
there
a
manufacture
or
production?
The
facts
in
the
Biltrite
Tire
Company
ease
([1937]
Ex.
C.R.
1)
strongly
supported
the
contention
of
the
Crown
that
there
was
a
‘‘manufacture.’’
There,
the
business
of
retreading
and
selling
tires
was
carried
on
in
a
very
large
way,
as
will
appear
from
the
report
of
that
case.
Here,
the
defendant
does
not
buy
old
tires
from
the
publie,
it
acquires
them
by
way
of
trading
old
tires
for
newly
manufactured
tires,
or
by
way
of
exchanging
newly
retreaded
tires
for
old
tires.
There
is
that
distinction
between
the
Biltrite
Tire
Company
case
and
the
one
under
consideration,
but
that
distinction
is
largely
quantitative,
and
while
I
cannot
state
the
exact
volume
of
the
defendant’s
transactions
falling
within
the
two
classes
mentioned,
yet
they
must
have
been
substantial,
and
at.
least
they
were
not
merely
occasional
transactions.
What
the
defendant
does
is
to
acquire
used
tires,
and
by
retreading
and
repairing
them
they
are
made
more
valuable
and
marketable,
their
life
is
prolonged,
and
the
defendant
deals
in
them,
and
makes
such
transactions
a
part
of
its
business.
There
is,
I
think,
a
distinction
between
the
case
where
one
retreads
or
repairs
a
tire
for
an
individual
owner,
a
casual
and
unknown
customer
In
some
instances,
and
the
case
where
one
procures
used
tires
in
substantial
quantities,
for
the
purpose
of
repairing
or
improving
them
for
the
purpose
of
selling
them
to
the
public
at
a
profit.
I
think,
for
the
purposes
of
the
Act,
this
may
fairly
be
said
to
constitute
a
manufacture
and
so
I
hold.
My
conclusion
therefore
is
that
the
defendant
is
not
liable
for
the
tax
claimed
in
the
case
where
it
merely
retreads
the
tire
of
a
customer
and
delivers
it
back
to
the
customer,
but
in
all
other
cases
I
think
the
defendant
must
be
held
liable
for
the
tax
claimed.
There
will
be
a
reference
to
determine
the
amount
of
the
sales
which
I
hold
to
be
taxable,
unless
the
parties
can
agree
upon
this
themselves.
Until
this
has
been
determined
the
matter
of
costs
will
be
reserved.
Judgment
accordingly.
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