MACLEAN
J.:—This
is
an
information
to
recover
from
Leon
L.
Plotkins,
who
carries
on
the
business
of
manufacturing
gasoline,
kerosene,
tractor
fuels,
and
other
petroleum
products,
under
the
firm
name
and
style
of
Lion
Refining
Co.
(hereafter
to
be
referred
to
as
"the
Refinery’’),
the
sum
of
$3,873.33,
as
sales
tax,
under
the
Special
War
Revenue
Act,
R.S.C.
1927,
c.
179,
or,
in
the
alternative,
to
recover
from
the
defendant
Lion
Oils
Ltd.
(hereinafter
to
be
referred
to
as
"‘Oils
Ltd.’’),
the
business
of
which
is
to
a
considerable
extent
concerned
with
the
sale
of
oil
products
manufactured
by
the
Refinery,
the
sum
of
$3,284.83,
and
from
the
Refinery
the
sum
of
$588.50,
as
sales
tax.
There
are
two
taxation
periods
covered
by
the
plaintiff’s
claim;
first,
that
from
September
1,
1932,
to
August
31,
1933.
With
this
period
the
Refinery
is
alone
concerned
for
Oils
Ltd.
had
not
commenced
business
operations
until
February,
1934,
and
the
amount
claimed
for
this
period
is
$588.50.
The
second
period
runs
from
August
31,
1933,
to
December
31,
1935.
In
this
period
the
assessment
was
made
against
the
Refinery
on
the
basis
of
the
sale
prices
of
Oils
Ltd.,
for
goods
sold
to
it
by
the
Refinery,
and
not
on
the
sale
prices
of
the
Refinery.
It
is
the
contention
of
the
plaintiff,
in
respect
of
the
second
taxation
period,
that
both
concerns
are
to
be
treated
as
one
business
and
that
the
sales
made
by
Oils
Ltd.
were
sales
of
the
Refinery
and
that
the
latter
is
liable
for
the
sales
tax
in
respect
of
the
said
sales,
or
in
the
alternative,
that
the
Refinery
was
but
the
instrument
or
agent
of
Oils
Ltd.;
that
the
operations
of
the
former
were
in
fact
the
operations
of
the
latter,
and
that
the
alleged
sales
made
by
the
Refinery
to
Oils
Ltd.
were
fictitious
and
illusory
and
made
with
intent
to
evade
payment
of
the
amount
of
the
sales
tax
properly
payable,
and
that
the
sales
of
Oils
Ltd.
to
the
trade
and
to
consumers
are
assessable
for
the
sales
tax.
In
the
further
alternative
it
is
pleaded
that
if
the
defendants
were
not
associated
or
related
as
principal
and
agent,
they
were,
nevertheless,
interrelated
or
associated
in
their
said
business
as
is
contemplated
by
a
certain
regulation
governing
the
computation
of
sales
tax,
made
and
issued
under
the
provisions
of
the
Special
War
Revenue
Act,
and
under
which
regulation
it
is
prescribed
that
in
such
cases
the
price
at
which
the
goods
are
regularly
sold
to
bona
fide
independent
wholesalers
by
either
of
them,
in
the
ordinary
course
of
business,
shall
be
the
value
upon
which
the
tax
is
payable.
The
provisions
of
the
Special
War
Revenue
Act
of
particular
interest
here
are
s.
85(a),
s.
86(1)
(a)
and
(&).
Section
85(a)
(amended
1932-33,
c.
52,
s.
2),
defines
"‘sale
price’’
as
follows:
"85(a)
‘sale
price’
for
the
purpose
of
calculating
the
amount
of
the
consumption
or
sales
tax,
shall
mean
the
price
before
any
amount
payable
in
respect
of
the
consumption
or
sales
tax
is
added
thereto,
and
shall
include
the
amount
of
other
excise
duties
when
the
goods
are
sold
in
bond
;
and
in
the
ease
of
goods
subject
to
the
taxes
imposed
by
Parts
X
and
XII
of
this
Act,
shall
include
the
amount
of
such
taxes;
in
the
case
of
imported
goods
the
sale
price
shall
be
deemed
to
be
the
duty
paid
value
thereof.
’
By
s.
86
1(a)
(amended
1932,
c.
54,
s.
11)
the
sales
tax
is
imposed
"‘on
the
sale
price
of
all
goods,
produced
or
manufactured
in
Canada,
payable
by
the
producer
or
manufacturer
at
the
time
of
the
delivery
of
such
goods
to
the
purchaser
thereof.”’
Subsection
1(b)
(amended
1932,
c.
54,
s.
11)
also
imposes
the
sales
tax
"‘on
the
sale
price
of
all
goods,
imported
into
Canada,
payable
by
the
importer
or
transferee
who
takes
the
goods
out
of
bond
for
consumption
at
the
time
when
the
goods
are
imported
or
taken
out
of
warehouse
for
consumption.”
The
above
provision
of
the
Act
is
of
importance
here
because
it
appears
that
several
importations
of
goods
were
made
by
the
Refinery
either
on
its
own
account,
or
on
behalf
of
Oils
Ltd.,
and
upon
the
duty
paid
value
of
such
importations
the
sales
tax
was
paid
by
the
Refinery.
The
plaintiff
also
invokes
a
regulation
which
states:
"‘In
cases
where
vendor
and
purchaser
are
interrelated,
associated,
or
affiliated
concerns,
or
where
one
is
subsidiary
to
the
other,
the
price
at
which
the
goods
are
regularly
sold
to
bona
fide
independent
wholesalers
by
either
of
them,
in
the
ordinary
course
of
business,
shall
be
the
value
upon
which
the
tax
is
payable.’’
The
validity
of
this
regulation
is,
I
think,
subject
to
grave
doubt,
but
it
will
not
be
necessary,
upon
the
facts
disclosed
here,
to
consider
it
in
determining
the
issues
in
dispute.
The
facts
concerning
the
business
relations
of
Plotkins
&
Oils
Ltd.
are
of
importance
in
respect
of
the
second
taxation
period
and
it
is
desirable
that
they
be
stated
rather
fully.
Plotkins,
in
1932,
commenced
the
business
of
manufacturing
petroleum
products
under
the
registered
firm
name
of
Lion
Refining
Co.,
at
or
near
Calgary,
Alberta,
and
he
has
since
been
the
sole
owner
of
that
business.
In
1933
Oils
Ltd.
was
incorporated,
with
a
capital
of
$20,000,
the
shares
being
of
the
par
value
of
$50
each,
and
shares
aggregating
the
value
of
$5,700
have
been
sold
and
issued,
the
shareholders
numbering
eighteen.
Plotkins
is
the
holder
of
but
one
share
in
Oils
Ltd.,
a
qualifying
share
issued
to
him
at
the
time
of
the
incorporation
of
Oils
Ltd.
It
is
estimated
that
about
60%
of
the
business
of
Oils
Ltd.
had
its
origin
in
selling
to
the
trade
and
consumers,
petroleum
products
manufactured
by
and
purchased
from
the
Refinery,
and
about
40%
from
the
sale
of
such
articles
as
standard
gasoline,
ethyl
gasoline,
kerosene
distillates,
greases,
tires
and
automobile
accessories,
purchased
from
other
refiners
and
distributors,
and
which
articles
the
Refinery
did
not
produce.
Oils
Ltd.
owns
and
operates
five
or
six
filling
stations
in
Calgary
and
Edmonton,
Alberta,
and
is
the
owner
of
motor
trucks,
tanks,
pumps
and
distributing
equipment,
that
is,
outside
of
any
office
equipment.
The
Refinery
owns
certain
equipment
and
oil
lands
in
the
State
of
Montana,
U.S.A.,
besides
its
refining
plant,
storage
tanks,
buildings,
etc.,
in
Calgary,
the
total
invested
capital
now
being
about
$75,000.
Plotkins
stated
that
Oils
Ltd.
was
formed
originally
at
his
instance
for
the
purpose
of
marketing
the
products
of
the
Refinery.
Later,
he
subscribed
and
paid
for
70
shares
in
that
company,
in
addition,
I
think,
to
his
qualifying
share.
At
some
stage,
Plotkins
entered
into
negotiations
with
one,
Beauchemin,
and
associates,
whereby
the
latter
were
to
undertake
to
purchase
one-half
of
the
authorized
capital
shares
of
Oils
Ltd.
and
Plotkins
was
to
subscribe
for
and
purchase
the
remaining
half
of
such
shares.
However,
in
the
end,
Beauchemin
and
his
associates
were
able
only
to
purchase
shares
amounting
in
par
value
to
$5,700,
which
is
the
paid
up
capital
of
Oils
Ltd.
to-day,
distributed
among
18
different
shareholders.
The
original
proposal
was
that
Beauchemin
and
his
associates
were
to
invest
$10,000
in
Oils
Ltd.
and
Plotkins
an
equal
amount;
and
Beauchemin
and
his
associates
were
also
to
invest
$10,000
in
the
Refinery.
The
idea
was
that
each
would
have
the
same
amount
of
capital
in
the
Refinery
and
in
Oils
Ltd.,
but
this
scheme
failed
to
materialize.
Then,
there
came
a
time
when
Plotkins
disposed
of
his
share
holdings
in
Oils
Ltd.
because,
it
was
stated,
Beauchemin
and
his
associates
did
not
wish
the
control
of
Oils
Ltd.
to
be
in
the
hands
of
Plotkins;
the
retention
of
Plotkins’
qualifying
share
in
the
corporation
was
owing,
it
was
said,
to
an
oversight
in
not
selling
the
same,
or
in
not
transferring
back
the
same
to
Oils
Ltd.,
I
do
not
know
which.
Plotkins
was,
however,
appointed
manager
of
Oils
Ltd.
some
time
after
it
commenced
business,
exactly
when
is
not
clear.
The
business
of
Oils
Ltd.
is
carried
on
upon
the
premises
of
the
Refinery,
for
which,
it
was
said,
an
allowance
by
way
of
rent
is
made
in
calculating
the
administrative
expenses
of
Oils
Ltd.
The
accounting
and
clerical
work
of
both
concerns
is
carried
on
by
the
staff
of
Oils
Ltd.,
but
whether
or
not
an
allow-
ance
is
made
Oils
Ltd.-
for
such
services
was
not,
so
far
as
I
recall,
explained.
The
only
banking
account
is
in
the
name
of
Oils
Ltd.,
and
into
this
account
the
receipts
of
both
concerns
from
all
sources
are
deposited,
but
the
business
transactions
of
each
concern
are
kept
entirely
distinct
and
in
separate
books.
The
salaries
and
wages
of
officers
and
employees
of
both
concerns,
including
the
salaries
of
Plotkins
as
manager
of
both
Oils
Ltd.
and
the
Refinery,
and
all
bills
payable
by
the
Refinery,
upon
the
proper
voucher
and
order
of
the
Refinery,
are
paid
through
this
banking
account—the
Refinery
being
credited
or
debited
with
receipts
and
payments
in
the
books
of
Oils
Ltd.,
as
the
case
may
be.
The
Refinery
employs
some
15
or
20
people
exclusively
for
its
own
operations.
All
goods
sold
and
delivered
by
the
Refinery
to
Oils
Ltd.
are
duly
invoiced
to
the
latter,
and
it
would
appear
that
a
settlement
is
made
on
annual
balances
of
all
debit
and
credit
transactions
as
between
the
two
concerns,
although
that
is
not
quite
clear
from
the
evidence.
Where
goods
are
sold
by
the
Refinery
to
customers
other
than
Oils
Ltd.,
the
same
are
invoiced
in
the
name
of
Oils
Ltd.,
and
at
prices
identical
with
prices
charged
Oils
Ltd.
by
the
Refinery.
At
times,
the
Refinery
imported
or
purchased
from
producers
in
the
domestic
market,
for
the
account
of
Oils
Ltd.,
certain
goods
which
it
could
not
supply,
and
which
importations
or
purchases
were
delivered
over
to
Oils
Ltd.
at
cost,
together
with
the
cost
of
freight
and
handling.
The
Refinery
and
Oils
Ltd.
have
a
profit
and
loss
sharing
arrangement
in
the
proportion
of
$5,700,
the
paid
up
capital
of
Oils
Ltd.,
to
$20,000,
the
amount
of
Plotkins’
original
capital
investment
in
the
Refinery,
as
I
understand
it
;
the
division
of
profits
and
losses
on
this
basis
is
made
at
the
end
of
each
year.
It
was
upon
the
book
entries
of
sales
made
to
the
trade
and
consumers
by
Oils
Ltd.,
and
not
upon
the
selling
prices
from
the
Refinery
to
Oils
Ltd.,
that
the
assessments
for
the
sales
tax
here
in
dispute
were
made.
In
February,
1934,
the
Refinery
(as
‘‘the
Company’’)
and
Oils
Ltd.
(as
‘‘the
Purchasers’’)
entered
into
an
agreement
to
run
for
the
period
of
five
years,
with
an
option
to
Oils
Ltd.
to
renew
the
same
upon
the
same
terms
for
a
further
period
of
five
years,
and
some
of
the
terms
of
that
agreement
perhaps
should
be
mentioned;
paragraphs
1,
2,
3,
4,
5,
8,
9
and
11
of
the
agreement
are
as
follows:
“1.
The
Company
shall
sell
and
deliver
to
the
Purchasers
and
the
Purchasers
shall
purchase
and
receive
of
and
from
the
Company
the
whole
of
the
output
of
the
Company,
including
gasoline,
kerosene
distillate,
Gas
Oil,
Fuel
Oils
and
all
other
products
of
any
nature.
‘
4
2.
Notwithstanding
anything
hereinafter
mentioned
the
Purchaser
shall
purchase
exclusively
from
the
Company
all
products
that
the
Company
are
ready,
willing,
and
able
to
supply
to
price
calculated
in
accordance
with
Paragraph
8
hereof
and
are
required
by
the
purchaser.
‘3.
All
products
supplied
by
the
Company
to
the
purchaser
under
this
agreement
shall
be
made
according
to
specifications
mutually
agreed
upon.
"
‘4.
The
purchaser
covenants
and
agrees
that
the
minimum
quantity
of
products
to
be
accepted
by
it
under
the
terms
of
this
agreement
shall
not
be
less
than
forty
thousand
(40,000)
gallons
during
each
of
the
months
of
November,
December,
January
and
February
in
every
year
during
the
currency
of
this
agreement
and
eighty-five
thousand
(85,000)
gallons
in
every
month
of
the
year
not
heretofore
mentioned.
0’5.
The
purchaser
covenants
and
agrees
that
the
minimum
quantity
set
out
in
clause
four
(4)
hereof
shall
be
increased
in
every
month
of
each
successive
year
by
an
amount
equivalent
to
twenty-five
(25)
per
centum
of
the
monthly
gallonage
agreed
to
be
accepted
in
each
preceding
year
.
.
.
.
"
‘8.
The
prices
of
various
products
supplied
to
the
purchasers
under
this
agreement
shall
be
based
on
the
actual
cost
to
the
company
plus
one
cent
(lc.)
per
gallon.
The
terms
of
payment
shall
be
cash
on
receipt
of
invoice
from
the
Company.
"
‘9.
The
purchasers
shall
be
the
sole
representatives
of
the
company
in
regard
to
the
products
supplied
under
this
agreement
and
shall
use
every
endeavour
to
advertise
and
push
the
sale
and
solicit
business
for
products
so
supplied
by
the
Company
....
.
4
11.
Notwithstanding
anything
hereinbefore
set
out
the
Company
shall,
if
the
purchaser
does
not
accept
the
minimum
quantity
agreed
to
be
accepted
in
any
one
month,
extend
for
60
days
the
time
for
acceptance
of
such
quantity,
and
have
the
right
to
dispose
of
the
difference
between
the
quantity
actually
accepted
and
the
quantity
agreed
to
be
accepted
to
any
other
purchaser.
Any
number
of
gallons
in
excess
of
the
minimum
quantity
as
hereinbefore
set
out,
actually
accepted
in
any
one
month
shall
be
construed
as
accepted
in
any
succeeding
month
during
which
the
minimum
quantity
has
not
been
accepted.
’’
The
terms
of
the
agreement
as
to
the
quantities
of
goods
to
be
sold
and
purchased
were
not
fully
carried
out
during
the
period
in
question,
owing
in
some
cases
to
the
inability
of
the
Refinery
to
supply
the
precise
goods
required
by
Oils
Ltd.,
and
in
other
cases
to
the
non-acceptance
by
Oils
Ltd.
of
the
stipulated
quantities,
and
which
the
Refinery
was
able
to
furnish.
The
provision
as
to
price,
cost
plus
le
per
gallon,
was
found
to
be
impractical
and
was
not
adhered
to.
With
those
exceptions
the
spirit
of
the
agreement
was
observed
by
both
parties;
whether
the
agreement
is
presently
an
enforceable
one
is
perhaps
debatable,
but
in
any
event
I
do
not
think
that
is
of
vital
importance.
We
are
here
concerned
with
the
actual
transactions
that
took
place
between
the
two
defendants,
the
true
character
of
the
sales
in
question;
and
which
of
the
two
defendants
is
taxable
upon
such
sales
and
the
proper
basis
of
assessment.
I
may
at
once
dispose
of
the
issues
in
respect
of
the
first
period,
and
which
concern
the
Refinery
alone.
There
are
just
two
points
for
decision
in
respect
of
that
period.
The
Refinery
imported
from
the
United
States,
or
purchased
from
domestic
producers
or
wholesalers,
a
considerable
quantity
of
what
is
known
as
‘‘gas
oil,’’
which
it
sold
under
the
name
of
"‘tractor
fuel,
‘
and
sometimes
as
"
‘
gas
oil,
‘
‘
without
further
processing
or
manufacture,
and
without
any
change
in
the
structure
of
such
product.
Upon
such
sales
the
Refinery
was
assessed,
as
a
manufacturer
or
producer,
upon
its
selling
price,
or
the
selling
price
of
Oils
Ltd.,
and
not
on
the
import
or
purchase-price,
which
assessments,
in
my
opinion,
cannot
be
sustained,
and
this
I
think
was
conceded.
This
would
be
applicable
also
to
the
second
period,
in
so
far
as
the
same
state
of
facts
pertain
thereto.
There
was
one
other
point
in
issue,
the
sale
price
of
fuel
oil,
but
that
is
concluded
by
the
plaintiff
agreeing
that
the
price
should
be
reduced
from
5e
to
3¢
per
gallon.
The
only
point
therefore
to
be
determined
in
this
period
is
the
volume
of
taxable
sales,
and
unless
counsel
can
agree
upon
this
there
will
be
a
reference
to
determine
the
amount
of
the
taxation
payable
and
due,
because
I
see
no
way
of
doing
that
myself.
Another
point
might
also
be
disposed
of
at
this
stage.
<A
dispute
arose
between
the
Refinery
and
the
Department
of
National
Revenue
as
to
whether
the
mixing
of
raw
naphtha
and
gas
oil,
or
raw
naphtha
and
kerosene,
constituted
a
"
"
manufacture,
‘
‘
and
the
Department
ruled
that
it
did,
and
in
this
I
concur.
If
Oils
Ltd.,
engaged
in
the
same
practice—my
impression
is
that
it
did
not—it
also
would
be
a
"‘manufacturer''
and
liable
for
the
tax.
It
is
not
absolutely
clear
to
me
that-the
ruling
of
the
Department
was
accepted
by
the
Refinery
and
that
the
sales
tax
was
paid
on
such
manufactured
goods,
but
if
not
then
I
find
that
the
Refinery
is
liable
for
the
tax
upon
the
same,
in
the
proper
amount.
The
principal
question
for
decision
is
whether
it
is
against
the
selling
prices
of
the
Refinery,
or
those
of
Oils
Ltd.,
that
the
tax
should
be
levied,
or
whether
the
Refinery
should
be
assessed
upon
the
selling
prices
of
Oils
Ltd.,
and
in
fact
it
was
the
latter
that
was
done.
Cases
of
this
type
always
contain
perplexing
features,
and
they
are
difficult
to
resolve
with
confidence.
The
statute
imposes
the
tax
upon
the
producer
or
manufacturer.
The
tax
must
be
levied
against
the
sales
of
the
producer
or
manufacturer
unless
it
be
that
he
is
but
the
agent
of
another
for
any
of
such
purposes,
and
possibly
there
may
be
other
exceptions.
Imposing
the
tax
upon
other
persons
or
companies,
outwardly
independent
of
but
working
in
close
co-operation
with
the
manufacturer
or
producer,
particularly
in
selling
the
goods
of
the
latter,
is
bound
to
present
difficulties,—first,
because
the
former
is
not
in
fact
the
producer
or
manufacturer,
and
secondly,
because
the
selling
prices
of
the
former
will
usually
include
some
of
the
profit
customarily
exacted
by
wholesalers
and
retailers.
In
such
cases
very
clear
evidence
should
be
required
to
shift
the
imposition
of
the
tax
from
the
producer
or
manufacturer
to
another.
Section
98
(amended
1932-33,
c.
50,
s.
20)
provides
that
where
goods
are
sold,
in
the
judgment
of
the
Minister,
at
less
than
the
fair
price,
and
this
means
the
selling
price
of
the
producer
or
manufacturer,
the
Minister
may
determine
the
fair
price.
That
seems
a
very
suitable
and
just
provision,
particularly
if
the
taxpayer
has
the
right
of
appeal
therefrom.
This
provision
of
the
statute
would
seem
to
contain
all
the
machinery
necessary
for
settling
all
disputes
of
the
nature
in
question
here,
which
usually
is
but
the
contention
that
the
producer
or
manufacturer
has
sold
his
goods
at
an
unfair
price,
which
he
seeks
to
conceal
by
some
subterfuge
or
another;
that
is
always
the
question
at
stake
in
such
cases—largely
a
question
of
fact.
I
was
referred
to
the
Palmolive
case
[1933]
S.C.R.
131,
but
I
do
not
think
the
facts
there
are
similar
to
the
facts
of
this
case.
There,
it
was
held
that
the
manufacturing
company
was
merely
the
agent
of
the
selling
company
and
subject
in
all
things
to
the
direction
and
control
of
the
latter,
and
that
the
operations
of
the
former
were
the
operations
of
the
latter,
and
there
was
some
evidence
to
support
that
finding.
I
do
not
think
it
is
possible
to
say
that
in
the
case
under
consideration
the
Refinery
was
the
manufacturing
agent
of
Oils
Ltd.,
but
it
might
be
argued
that
Oils
Ltd.
was
merely
the
selling
agent
of
the
Refinery,
and
in
fact
that
is
one
of
the
contentions
here
made
by
the
plaintiff.
It
seems
to
me
that
the
Refinery
and
Oils
Ltd.
must
be
held
to
be
independent
trading
units,
and
the
agreement
and
the
facts
concerning
their
several
activities,
I
think,
support
that
conclusion.
Their
business
relations
were
of
course
intimate
and
probably
so
designed
for
their
mutual
advantage,
but
that
does
not
of
itself
constitute
them
a
single
business
enterprise
for
the
purposes
of
the
tax,
or
otherwise.
That
requires
a
state
of
facts
that
indubitably
points
to
a
business
arrangement
made
to
evade
the
tax,
or,
that
one
so
dominated
and
controlled
the
business
of
the
other
that
one
is
obliged
to
say
that
the
existence
of
that
other
was
apparent
only
and
not
real;
I
do
not
think
that
can
be
said
here.
The
divisions
of
profits
and
losses
on
the
basis
of
capital
employed
by
each
is
a
suspicious
and
unusual
circumstance,
but
that
circumstance
after
all
does
not
go
to
the
question
as
to
which
concern
was
in
fact
the
manufacturer
or
producer,
or
to
the
question
of
the
proper
sales
prices.
The
Refinery,
it
is
perfectly
clear,
was
the
manufacturing
concern,
and
it
sold
its
goods
to
Oils
Ltd.
which
was
to
sell
the
same
to
the
trade
and
consumers,
generally
at
an
advanced
price
which
would
not
be
improper.
Neither
can
I
see
how
it
can
be
said
that
the
Refinery
was
but
the
agent
of
Oils
Ltd.,
in
manufacturing
the
goods
in
question.
I
think,
however
unusual
the
practice
of
the
defendants
dividing
their
respective
profits
and
losses,
each
was
an
independent
trading
unit,
and
each
acted
on
its
own
behalf.
The
facts
disclosed
concerning
their
several
business
activities,
I
think,
support
such
a
conclusion.
I
therefore
am
of
the
opinion
that,
upon
all
the
facts
disclosed,
it
cannot
be
said
that
the
Refinery
was
not
the
manufacturer
or
producer
of
the
goods
in
question,
or
that
it
was
the
mere
agent
of
Oils
Ltd.,
or
that
Oils
Ltd.
is
not
I
turn
now
to
the
question
of
the
sale
prices
of
the
goods
in
question,
by
the
Refinery,
because
that
is
still
a
matter
of
importance.
There
was
put
in
evidence
by
the
Refinery
a
tabulated
statement
showing
a
list
of
the
various
named
products
which
it
sold
to
Oils
Ltd.
and
the
prices
charged
therefor
respectively,
and
the
prices
at
which
such
sales
were
assessed
for
the
tax,
which,
I
understand,
in
all
cases
were
the
selling
prices
of
Oils
Ltd.
to
the
public.
There
were
also
put
in
evidence
invoices
showing
importations,
or
purchases
from
domestic
producers,
by
the
Refinery,
mostly
in
1935,
for
its
own
account
or
that
of
Oils
Ltd.,
of
such
articles
as
motor
fuel,
kerosene
disan
independent
trading
unit.
tillates,
tractor
fuel,
naphtha
and
washed
naphtha,
which
the
Refinery
could
not
at
the
time
supply
Oils
Ltd.
I
do
not
propose
to
mention
all
the
details
of
these
invoices,
or
review
any
of
the
explanations
made
concerning
them
by
Plotkins.
It
will
suffice
to
say
that
these
invoices
show
duty
paid
importations,
or
purchases
from
domestic
producers,
of
oil
products,
which,
expressed
in
imperial
gallons,
cost
the
Refinery
respectively
9.4,
11.8,
9.8,
7%,
8.9,
8.4,
10%4,
10%4,
8.5,
8.9,
10,
11.2,
8.4,
and
10.3c.
per
gallon,
and
upon
these
importations
and
domestic
purchases
the
assessments
for
the
sales
tax,
stated
in
the
same
order,
were
based
upon
a
selling
price
of
13,
1312,
1212,
1312,
1214,
13,
1212,
IOI/2,
12.7,
12.7,
1214,
18,
131/2,
and
14%2c.
per
gallon
respectively.
It
would
appear
that
in
one
case
the
tax
was
paid
when
the
goods
were
properly
free
of
the
tax;
and
in
one
other
case
the
tax
paid,
inadvertently
on
the
part
of
both
parties
it
was
said,
was
much
higher
than
was
payable.
I
am
not
required
to
make
any
adjustments
in
respect
of
those
matters.
Upon
all
these
importations
and
domestic
purchases
the
Refinery
made
returns
on
account
of
sales
tax
on
the
basis
of
the
purchase-prices,
and
so
far
as
I
can
gather
the
tax
thereon
was
in
all
cases
paid.
I
have
no
reason
to
doubt
that
the
purchases
which
I
have
just
mentioned
might
have
been
made
by
any
one
else
in
wholesale
quantities,
and
upon
the
same
terms
as
to
price.
The
tax
upon
these
purchases
having
once
been
paid
I
do
not
understand
how
it
can
be
said
that
the
tax
may
be
imposed
on
resales
of
such
purchases;
and
I
was
not
referred
to
any
provision
of
the
statute
authorizing
the
tax
on
such
resales.
In
such
eases
it
matters
not
what
were
the
business
relations
between
the
Refinery
and
Oils
Ltd.
Plotkins
stated
that
he
showed,
but
ineffectually,
the
investigating
officer
of
the
Revenue
Department
certain
of
these
invoices
which
would
exemplify
the
principle
of
assessment
for
which
he
was
contending,
namely,
that
the
tax
should
not
be
assessed
against
the
Refinery
‘s
importations
of
goods,
or
goods
purchased
from
domestic
refineries,
because
the
tax
had
already
been
paid
thereon,
or
that
he
was
willing
to
pay
the
same
upon
the
proper
assessment,
and
that
the
price
of
certain
goods
should
not
be
varied
because
they
were
sold
under
a
name
different
from
that
under
which
they
were
manufactured,
imported
or
purchased.
The
prices
at
which
the
Refinery
sold
to
Oils
Ltd.
were
determined
largely
by
the
prices
at
which
the
Refinery
could
import
similar
goods
from
a
certain
refinery
in
the
State
of
Montana,
or
from
domestic
manufacturers.
The
importations
and
domestic
purchases
illustrated
by
the
invoices
referred
to
seem
to
have
been
made
in
the
usual
course
of
business,
and
there
is
nothing
to
indicate
that
the
prices
therein
mentioned
were
not
the
bona
fide
prices
current
at
the
time,
and
at
which
prices
others
might
have
made
purchases,
from
the
same
vendors,
of
the
corresponding
goods.
And
there
is
something
further
to
add.
There
seems
to
have
been
a
disagreement
between
the
Refinery
and
the
Revenue
Auditor
regarding
the
standard
or
grade
of
certain
oil
products
which
the
Refinery
imported
or
purchased
under
one
name,
and
sold
under
another
name,
for
example,
a
product
imported
as
‘
4
gas
oil
‘
‘
was
sold
as
‘‘tractor
oil,
‘
‘
and
apparently
a
distinction
was
made
between
them
for
taxation
purposes.
Plotkins
claimed
they
were
the
same
thing
and
upon
the
evidence
before
me
I
feel
obliged
to
hold
that
in
this
he
was
correct.
Again
the
Refinery
purchased
from
the
Royalite
Oil
Co.
Ltd.
of
Turner
Valley,
Alberta,
the
manufacturer
or
producer,
a
product
called
‘‘absorption
plant
gasoline,’’
which
the
Refinery
did
not
produce,
and
which
it
sold
as
‘‘motor
fuel;’’
any
one
could
have
bought
the
same
article
for
71%c,
per
gallon
as
did
the
Refinery
;
but
for
this
reason
the
assessment
for
the
sales
tax
seems
to
have
been
fixed
at
the
rate
of
131/20.
per
gallon,
as
if
it
were
in
fact
another
article
that
was
sold;
this
seems
to
me
to
be
untenable.
Again
the
Refinery
did
not
produce
gasoline
of
the
highest
standard;
the
only
evidence
on
the
point
goes
to
show
that
the
gasoline
produced
by
the
Refinery
was
of
a
third
grade
or
standard,
and
the
Refinery
claims
that
this
should
always
have
been
taken
into
consideration
in
ascertaining
the
current
price,
and
in
making
the
assessment,
of
its
sales
of
gasoline.
I
cannot
but
think
that
this
contention
is
a
correct
one
in
estimating
the
fair
market
price
of
gasoline
produced
and
sold
by
the
Refinery
;
the
Refinery
was,
I
think,
obliged
to
consider
this
factor
as
an
element
in
its
price-fixing.
It
seems
to
me
that
the
revenue
officers
did
not
properly
approach
the
matter
of
the
sales
tax
assessments
in
question,
and
this
of
course
was
inevitable
if
they
had
concluded
that
the
proper
basis
of
assessment
against
the
Refinery
was
the
selling
price
of
Oils
Ltd.
to
the
trade
and
the
public.
Further,
it
is
to
be
remembered
that
the
Refinery
was
not
bound
to
sell
its
products
at
precisely
the
same
prices
eharged
by
other
importers,
manufacturers
or
producers,
in
Canada;
that
was
never
contemplated
by
the
Act,
as
there
might
be
many
very
obvious
reasons
why
the
prices
of
the
one
should
be
lower
or
higher
than
those
of
the
other.
Upon
the
evidence
before
me
it
is
my
opinion
that
the
Refinery
is
the
party
liable
for
the
tax,
and
that
generally
it
has
made
returns
for
the
tax
in
connection
with
the
sale
transactions
in
question
here,
upon
the
proper
basis,
and
at
the
proper
prices.
However,
the
evidence
perhaps
is
not
complete
in
respect
of
every
transaction
and
in
some
respects
it
is
somewhat
confusing,
and
I
hesitate
to
say
that
the
information
should,
at
once,
be
dismissed.
If
under
the
terms
of
this
judgment
the
plaintif
is
advised
that
the
prices
of
some
of
the
sales
transactions
of
the
Refinery
have
not
been
fully
established
by
the
evidence,
or
that
they
should
be
more
definitely
determined,
or,
if
there
is
any
reasonable
ground
for
a
difference
of
opinion
as
to
the
net
amount
payable
by
the
Refinery
under
this
judgment,
then
I
grant
leave
to
the
plaintiff
to
move
within
30
days
from
the
date
of
this
judgment,
to
show
cause
why
an
order
should
be
made
directing
the
appointment
of
a
Referee
to
take
evidence
in
respect
of
any
such
matters,
and
to
report
thereon.
However
I
hope
this
will
not
be
necessary.
Failing
such
a
motion
on
the
part
of
the
plaintiff,
within
the
period
mentioned,
this
action
e
will
stand
dismissed
with
costs,
but
otherwise
the
matter
of
costs
will
be
reserved.
Judgment
accordingly.
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