Morrison,
C.J.S.C.:—The
question
raised
in
this
action
is
whether
what
is
locally
known
as
the
Fuel-oil
Tax
Act,
1930
(B.C.),
c.
71,
and
particularly
secs.
2,
5(1)
and
6
thereof,
is
invalid
as
being
an
attempt,
in
the
first
place,
to
impose
indirect
taxation
in
contravention
of
sec.
92(2)
of
the
B.N.A.
Act,
1867,
which
only
conferred
powers
of
direct
taxation
upon
the
Provinces
of
Canada
and,
in
the
second
place,
to
impose
excise
taxation
and,
in
the
third
place,
as
being
an
interference
with
trade
and
commerce
allotted
exclusively
to
the
Federal
Parliament.
Fuel-oil,
the
commercial
consumable
commodity
dealt
with
by
the
Legislature
in
the
Act
in
question,
is
manufactured
from
crude
petroleum
which
is
imported
free
of
duty
into
the
Province
from
foreign
ports
and
is
kept
for
sale
and
is
sold
within
the
Province.
By
sec.
5(1)
I
take
it
that
the
producers
of
fuel-oil
pay
the
small
licence
fee
which
would
be
added
to
the
price
and
passed
on
to
the
consumer
who
in
turn
is
taxed
upon
consumption
pur-
suant
to
sec.
2.
No
crude
petroleum
is
produced
in
British
Columbia
except
in
negligible
quantities.
Coal
is
found
in
large
areas
of
the
Province.
Coal
mining
is
and
has
been
one
of
the
most
important
permanent
industries
of
the
Province
both
in
external
and
internal
trade.
The
consumption
of
refined
oil
manufactured
from
the
crude
in
Vancouver
comes
into
direct
and
effective
competition
with
the
consumption
of
coal
and
tends
to
leave
the
trade
in
that
commodity
in
a
somewhat
mutilated
condition.
Secs.
2,
5(1)
and
(2)
and
6
are
as
follows:
"‘2.
For
the
raising
of
a
revenue
for
Provincial
purposes
every
person
who
consumes’
any
fuel-oil
in
the
Province
shall
pay
to
the
Minister
of
Finance
a
tax
in
respect
of
that
fuel-oil
at
the
rate
of
one-half
cent
a
gallon.’’
.
"5(1)
Upon
the
expiration
of
thirty
days
after
the
commencement
of
this
Act,
no
person
shall
keep
for
sale
or
sell
fueloil
in
the
Province
unless
he
is
the
holder
of
a
licence
issued
pursuant
to
this
section
in
respect
of
each
place
of
business
at
which
fuel-oil
is
so
kept
for
sale
or
sold
by
him.
"(2)
The
manner
of
application
and
the
forms
of
application
and
of
the
licence
shall
be
as
prescribed
in
the
regulations.
A
licence
fee
of
one
dollar
shall
be
payable
in
respect
of
each
licence.”
“6(1)
Every
Collector,
constable,
and
every
person
authorized
in
writing
by
the
Minister
of
Finance
to
exercise
the
powers
of
inspection
under
this
section
may
without
warrant
enter
upon
any
premises
on
which
he
has
cause
to
believe
that
any
fuel-oil
is
kept
or
had
in
possession,
and
may
inspect
the
premises
and
all
fuel-oil
found
thereon,
and
may
interrogate
any
person
who
is
found
on
the
premises
or
who
owns,
occupies,
or
has
charge
of
the
premises.
‘
‘
The
question
as
to
what
taxation
it
is
competent
for
the
Provincial
Legislature
to
impose
is
a
legal
one.
Rex
v.
Caledonian
Collieries
Ltd.
[1928]
3
D.L.R.
657,
quoting
Lord
Hobhouse,
in
Bank
of
Toronto
v.
Lambe
(1887)
12
App.
Cas.
575.
At
the
time
of
Confederation
there
was
a
well-recognized
classification.
Taxes
on
property
and
income
were
classified
as
direct
while
duties
of
customs
and
excise
were
classified
as
indirect
taxes.
If
a
new
form
of
taxation
arises
a
formula
of
economists
may
be
used
but
not
for
the
purpose
of
placing
a
tax
hitherto
recognized
as
belonging
to
one
class
into
a
different
class.
Customs
and
excise
are
duties
imposed
on
commodities
partly
for
the
purpose
of
raising
a
revenue,
but
more
truly
for
the
purpose
of
regulating
Trade
and
Commerce.
The
Provincial
Legislature
has
no
power
to
impose
them.
A.-G.
B.C.
v.
A.-G.
Can.
[1923]
1
D.L.R.
223,
at
pp.
224,
226
and
228,
and
in
the
same
case
in
the
Privy
Council,
[1924]
4
D.L.R.
69,
Reference
is
also
made
to
the
Act
of
Union
passed
in
1840
(Imp.),
3.
35,
see.
XLIII.
I
have
also
been
referred
to
A.-G.
New
South
Wales
v.
Collector
of
Customs
(1908)
5
C.L.R.
818.
I
am
not
unmindful
of
the
Special
War
Revenue
Act,
1915
(Can.),
ce.
8
as
amended
by
1920
(Can.),
3.
71,
in
which
the
tax
is
called
an
excise
particularly
sec.
2
(enacting
secs.
19BB
and
19BBB)
and
group
6
of
the
Customs
Tariff
Act,
R.S.C.
1927,
c.
44,
Sch.
A,
item
267.
From
this
it
will
be
gathered
that
crude
oil
imported
into
and
refined
in
Canada
shall
be
free
from
import
or
excise
duties.
The
defendant
submits
that
a
Provincial
Legislature
cannot
by
the
employment
of
a
subterfuge,
encroach
on
the
domain
reserved
to
the
Dominion
by
attempting
to
levy
a
form
of
revenue
which
differs
in
its
real
nature
from
the
semblance
which
the
Provincial
Legislature
has
sought
to
give
to
it,
and
that
the
actual
incidence
of
the
tax
is
of
no
legal
significance
once
it
is
possible
to
assign
the
legislation
in
question
to
a
particular
type
of
revenue
which
has
long
been
familiar
to
Legislatures
and
Courts.
Lawson
v.
Interior
Tree
Fruit
c
Vegetable
Committee
[1931]
2
D.L.R.
193
at
p.
197
;
Halifax
v.
Fairbanks
[1927]
4
D.L.R.
945;
A.-G.
B.C.
v.
Macdonald
Murphy
Lbr.
Co.
[1930]
2
D.L.R.
721.
The
question
of
direct
and
indirect
taxation
has
been
dealt
with
judicially
on
many
occasions,
the
latest
pronouncement
on
the
subject
to
which
I
have
been
referred
is
A.-G.
B.C.
v.
Macdonald
Murphy
Lbr.
Co.
which
also
supports
the
proposition
just
mentioned
that
if
the
offending
provisions
are
in
their
true
character
an
Excise
Act
then
the
Provincial
Legislature
may
not
enact
it.
Excise
is
an
inland
duty
or
impost
levied
upon
the
manufacture,
sale
or
consumption
of
commodities
within
the
country
and
has
for
its
essence
the
intention
that
ultimately
it
is
to
be
borne
by
the
consumer
and
thus
that
it
enters
into
the
price
of
the
commodity
and
affects
its
relative
use
in
competition
with
other
commodities,
as
for
instance,
coal,
which
not
only
is
susceptible
of
but
in
practical
reality
is
being
put
to
the
same
use.
It
is
immaterial
at
what
stage
between
the
producer
and
the
consumer
the
imposition
is
levied
since
the
line
of
incidence
extends
to
the
consumer.
It
has
been
strongly
pressed
upon
me
that
what
the
Legislature
has
done
is
to
impose
a
duty
of
oc.
per
gallon
on
all
fuel-oil
consumed
in
the
Province
which
includes
the
fuel-oil
produced
from
the
crude
petroleum
imported
to
be
refined
as
specified
in
the
Customs
Tariff
Act
thus
conflicting
with
the
policy
of
the
Dominion
in
this
behalf.
A.-G.
Can.
v.
A.-G.
Ont.
[1898]
A.C.
247;
Toronto
Elec.
Com’rs.
v.
Snider,
[1925]
2
D.L.R.
5;
A.-G.
Que.
v.
Queen
Ins.
Co.
(1878)
3
App.
Cas.
1090.
In
short
the
Act
strikes
at
the
use,
enjoyment
or
consumption
of
this
commodity,
the
levying
of
imposition
upon
which
is
the
very
essence
of
an
excise
tax.
For
these
reasons
in
my
opinion
the
Province
is
under
a
constitutional
disability
to
impose
it.
The
action
is
dismissed
with
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