Baxter
C.J.:—In
an
action
originating
in
the
Chancery
Division
the
parties
have
agreed
upon
a
special
case
for
submission
to
this
Court
to
determine
the
constitutionality
of
the
Act
of
Assembly
4
Geo.
VI
(1940)
c.
44
"‘An
Act
to
provide
for
imposing
a
tax
upon
the
consumption
of
tobacco/
‘
Argument
was
heard
on
the
20th
and
21st
November
instant,
Mr.
J.
F.
H.
Teed,
K.C.,
Mr.
A.
N.
Carter
and
Mr.
L.
MCC.
Ritchie
appearing
for
the
plaintiff
and
Mr.
Peter
J.
Hughes,
K.C.
for
the
defendants.
The
material
sections
of
the
Act
are:
"‘4.
Every
consumer
of
tobacco
purchased
at
a
retail
sale
in
the
Province
shall
pay
to
His
Majesty
the
King
in
the
right
of
the
Provinee
for
the
raising
of
a
revenue,
at
the
time
of
making
his
purchase,
a
tax
in
respect
of
the
consumption
of
such
tobacco,
and
such
tax
shall
be
computed
at
the
rate
of
ten
per
centum
of
the
retail
price
of
the
tobacco
purchased.
‘
‘
‘‘Consumer”
or
“Consumer
of
Tobacco”
is
defined
by
s.
2
(a).
It
“means
any
person
who,
within
the
Province,
purchases
from
a
vendor
tobacco
at
a
retail
sale
in
the
Province
for
his
own
consumption
or
for
the
consumption
of
other
persons
at
his
expense
or
who,
within
the
Province,
purchases
from
a
vendor
tobacco
at
a
retail
sale
in
the
Province
on
behalf
of
or
as
agent
for
a
principal
who
desires
to
acquire
such
tobacco
for
consumption
by
such
principal
or
other
persons
at
the
expense
of
such
principal.”
“5.
Every
person
residing
or
ordinarily
resident
or
carrying
on
business
in
New
Brunswick,
who
brings
into
the
Province
or
who
receives
delivery
in
the
Province
of
tobacco
for
his
own
consumption
or
for
the
consumption
of
other
persons
at
his
expense
or
on
behalf
of
or
as
agent
for
a
principal
who
desires
to
acquire
such
tobacco
for
consumption
by
such
principal
or
other
persons
at
his
expense
shall
immediately
report
the
matter
to
the
Minister
and
forward
or
produce
to
him
the
invoice,
if
any,
in
respect
of
such
tobacco
and
any
other
information
required
by
the
Minister
with
respect
to
the
tobacco
and
shall
pay
the
same
tax
in
respect
of
the
consumption
of
such
tobacco
as
would
have
been
payable
if
the
tobacco
had
been
purchased
at
a
retail
sale
in
the
Province
at
the
same
price.”
The
Act
aims
to
control
the
tobacco
trade
in
the
Province
by
licensing
wholesale
and
retail
vendors.
A
wholesale
vendor
is
one,
who,
within
the
Province,
sells
tobacco
for
the
purpose
of
resale.
A
retail
vendor
is
one,
who,
within
the
Province,
sells
tobacco
to
a
consumer
and
not
for
resale.
Section
2(i)
and
(f).
Section
20
gives
wide
powers
for
making
regulations
by
the
Lieutenant-Governor
in
Council.
Regulation
17
provides
that
no
wholesale
vendor,
who
is
not
also
a
licensed
retail
vendor,
shall
sell
tobacco
to
any
person
other
than
a
licensed
vendor.
The
charges
for
vendor’s
licenses
are
nominal
under
Reg.
18,—$5
for
each
place
of
business
of
a
wholesale
vendor,
and
500.
for
each
place
of
business
of
a
retail
vendor,
and
500.
each
for
an
itinerant
salesman’s
and
a
special
retail
vendor’s
license.
Regulation
19
constitutes
every
licensed
retail
vendor
an
agent
of
the
Minister
(The
Provincial
Secretary-Treasurer
by
s.
2(b))
for
the
collection
of
the
tax
and
is
required
to
collect
the
tax
from
the
consumer
at
the
time
of
the
purchase
of
tobacco
by
the
consumer.
The
tax
(Reg.
21)
is
to
be
computed
at
the
rate
of
10%
of
the
retail
price
of
the
tobacco
purchased.
Provision
is
made
for
the
giving
of
receipts
by
the
retail
vendor
or
his
agent
and
sale
is
forbidden
unless
such
receipt
is
given
(Reg.
22).
These
receipts
are
of
such
design
as
the
Minister
may
approve
(Reg.
20)
and,
at
present,
are
in
the
form
of
stamps,
which
are
not,
however,
required
to
be
affixed
to
anything.
They
simply
profess
to
be
receipts.
Provision
is
also
made
by
the
regulations
for
the
remitting
to
a
person
called
the
Tobacco
Tax
Commissioner,
of
the
moneys
received
under
the
Act.
The
regulations
further
provide
that
no
person
shall
give
tobacco
to
another
as
a
premium,
prize
or
otherwise,
unless
the
tax
has
been
paid
on
the
retail
value
and
a
vendor
may
not
consume
or
give
tobacco
to
his
employees
or
other
persons
without
the
tax
has
been
paid
on
the
retail
value
thereof.
No
person
may
purchase
tobacco
at
retail
without
paying
the
tax
or
accept
delivery
of
the
same
without
receiving
from
the
retail
vendor
a
receipt
for
the
tax.
For
contravention
of
these
regulations
penalties
are
provided.
The
following
are
the
material
parts
of
s.
3
of
the
Act,
relating
to
vendors’
licenses.
“3(1)
No
person
shall
sell
any
tobacco
in
the
Province
for
resale
unless
he
holds
a
wholesale
vendor’s
license
issued
to
him
under
authority
of
this
Act
and
such
license
is
in
force
at
the
time
of
sale.
“(2)
No
person
shall
sell
any
tobacco
in
the
Province
at
a
retail
sale
unless
he
holds
a
retail
vendor’s
license
issued
to
him
under
authority
of
this
Act
and
such
license
is
in
force
at
the
time
of
sale.
“
(3)
No
wholesale
vendor
shall
sell
any
tobacco
in
the
Province
for
resale
in
the
Province
to
a
person
who
is
not
a
vendor
duly
licensed
under
this
Act.’’
By
s.
7
a
retail
vendor
is
forbidden
to
“advertise
or
hold
out
or
state
to
the
public
or
to
any
consumer,
directly
or
indirectly,
that
the
tax
or
any
part
thereof
imposed
by
this
Act
will
be
assumed
or
absorbed
by
the
retail
vendor
or
that
it
will
not
be
considered
as
an
element
in
the
price
to
the
consumer
or,
if
added,
that
it
or
any
part
thereof
will
be
refunded,”
and
by
s.
10
a
consumer
shall
be
and
remain
liable
for
the
tax
imposed
by
the
Act
until
the
same
has
been
collected.
The
regulations
have
not
been
attacked
except
upon
the
ground
that
the
Act
being
ultra
vires,
they
fall
with
it.
The
grounds
of
objection
to
the
validity
of
the
Act
were
(1)
that
the
taxation
was
not
within
the
Province;
(2)
that
it
was
an
attempt
to
impose
a
tax
upon
interprovineial
or
international
transactions;
(3)
that
dealers
in
tobacco
could
not
without
their
consent
be
constituted
agents
of
the
Crown
for
the
collection
of
a
tax
as
it
would
consitute
them
public
officers;
(4)
that
the
distinction
between
direct
and
indirect
taxation
was,
practically,
that
the
former
was
upon
things
in
the
taxpayers’
possession
such
as
municipal
taxation
on
personal
estate
or
taxation
upon
real
estate
or
succession
duties
but
that
the
latter
fell
upon
transactions
in
commodities
especially
;
(5)
that
this
was
not
an
Act
for
the
imposition
of
a
tax
upon
the
consumption
of
tobacco
but
was
in
its
essence
a
sales
tax
which,
of
necessity,
must
be
an
indirect
tax;
also
that
taxation
of
an
agent
was
vital
to
the
scheme
of
the
Act
and
that
taxation
so
imposed
upon
an
agent
gave
him
a
right
to
be
indemnified
by
his
principal,
thus
indirectly
imposing
the
tax
upon
the
principal.
As
to
points
1
and
2
Mr.
Teed
relied
on
the
provisions
of
s.
9
but
we
fail
to
see
that
the
Legislature
has
attempted
to
impose
a
customs
duty
upon
the
importation
of
tobacco
into
the
Province.
The
section
only
applies
to
‘‘consumers’’
and
these
are
required
to
furnish
the
Minister
with
certain
information.
The
legislation
does
not
purport
to
affect
any
person
who
is
outside
of,
nor
the
commodity
when
it
is
not
within
the
Province—in
fact,
it
does
not
affect
the
commodity
at
all.
Mr.
Teed
put
forward
the
argument
that
a
person
having
purchased
tobacco
within
the
Province
might
consume
it
elsewhere.
Once
he
has
paid
a
consumer’s
tax
he
is
free
to
consume
it
wherever
he
pleases.
It
is
enough
to
read
the
cases
of
Royal
Bk.
v.
The
King
(1913),
9
D.L.R.
337,
where
the
legislation
expressly
affected
property
not
within
the
Province
:
A.-G.
B.C.
v.
Macdonald
Murphy
Lbr.
Co.,
[1930]
2
D.L.R.
721
where
the
imposition
of
an
export
tax
by
a
provincial
Legislature
was
attempted;
Provincial
Treasurer
of
Alberta
v.
Kerr,
[1933]
4
D.L.R.
81
and
Cotton
v.
The
King,
15
D.L.R.
283,
[1914]
A.C.
176
(both
dealing
with
succession
duties)
to
see
that
there
is
no
possible
analogy
to
the
facts
of
the
present
case.
Mr.
Teed’s
proposition
(point
3)
that
dealers
in
tobacco
could
not
be
constituted
agents
of
the
Crown
for
the
collection
of
a
tax,
without
their
consent,
also,
in
our
opinion,
fails.
He
contended
that
it
constituted
them
holders
of
public
offices
and
as
such
that
they
would
be
disqualified
from
being
elected
as
representatives
to
the
provincial
Legislature.
It
seems
very
doubtful
whether
s.
14B
as
enacted
by
the
Act
of
1938,
c.
17,
s.
5,
would
apply
in
this
sense
but
it
is
not
even
necessary
to
resolve
the
doubt.
A
vendor
can
give
up
his
business
if
he
wishes
to
be
certain
that
he
is
eligible
as
a
candidate.
That
may
be
a
hardship
on
the
individual
but
it
must
be
competent
for
the
Legislature
to
provide
collectors
of
the
revenue
if
that
revenue
comes
from
the
imposition
of
a
direct
tax.
Points
4
and
5
may
be
taken
together.
They
raise
the
only
real
point
in
the
case,
viz.:
whether
the
statute
imposes
direct
or
indirect
taxation.
An
attempt
was
made
to
treat
the
Act
as
imposing
a
stamp
tax
and
thus
bring
it
within
A.-G.
Que.
v.
Queen
Ins.
Co.
(1878),
3
App.
Cas.
1090
and
A.-G.
Que.
v.
Reed
(1884),
10
App.
Cas.
141.
These
cases
decided
that
a
stamp
tax
was
indirect
taxation.
But
what
was
called
a
‘‘stamp’’
in
argument
is
not
a
stamp
at
all.
It
is
not
required
or
intended
to
be
affixed
to
anything.
It
is
a
simple
receipt
for
payment.
See
Reg.
20.
The
objection
to
a
stamp
tax
is
that
it
is
not
or
may
not
be
borne
ultimately
by
the
person
who
pays
it.
Counsel
for
the
dealers
postulated
that
a
sales
tax
was
an
indirect
tax.
Generally
speaking
that
is
correct
but
we
do
not
think
that
there
can
not
be
a
sales
tax
which
is
a
direct
tax.
Bk.
Toronto
v.
Lambe
(1887),
12
App.
Cas.
575
where
the
question
first
arose
was
not
a
case
of
a
sales
tax.
Lord
Hobhouse
there
adopted
for
practical
purposes
the
definition
of
a
direct
tax
as
‘‘
‘one
which
is
demanded
from
the
very
persons
who
it
is
intended
or
desired
should
pay
it’
’’
[p.
582]
and
concluded
that
the
tax
there
imposed
was
"‘not
a
tax
on
any
commodity
which
the
bank
deals
in
and
can
sell
at
an
enhanced
price
to
its
cus-
tomers,’’
[p.
583]
Brewers
Maltsters
9
Ass
9
n
v.
A.-G.
Ont.,
[1897]
A.C.
231
went
on
the
ground
that
the
license
fee
there
imposed
was
not
a
transmissible
tax.
We
think
that
transmissibility
is
the
proper
test
for
the
present
case.
On
this
ground
we
were
referred
to
A.-G.
Man.
v.
A.-G.
Can.,
[1925]
2
D.L.R.
691,
A.C.
561.
That
was
a
tax
on
persons
selling
grain
for
future
delivery.
In
concluding
the
judgment
of
the
Privy
Council
Viscount
Haldane
said
(p.
696)
:
"
"
Turning
to
the
only
remaining
question,
whether
the
tax
is
in
substance
indirect,
and
bearing
in
mind
that
by
s.
5
the
liability
is
expressed
as
if
it
were
to
be
a
personal
one,
it
is
impossible
to
doubt
that
the
tax
was
imposed
in
a
form
which
contemplated
that
some
one
else
than
the
person
on
whom
it
was
imposed
should
pay
it.
The
amount
will,
in
the
end,
become
a
charge
against
the
amount
of
the
price
which
is
to
come
to
the
seller
in
the
world
market,
and
be
paid
by
some
one
else
than
the
persons
primarily
taxed.
The
class
of
those
taxed
obviously
includes
an
indefinite
number
who
would
naturally
indemnify
themselves
out
of
the
property
of
the
owners
for
whom
they
were
acting.’’
Much
similar
was
the
case
of
A.-G.
B.C.
v.
C.P.R.,
[1927]
4
D.L.R.
113,
A.C.
934
where
the
first
vendor
in
the
Province,
on
the
sale
to
the
first
purchaser
was
to
levy
and
collect
a
tax
and
pay
it
over
to
the
government.
It
was
urged
in
argument
that
there
was
no
escape
from
the
language,
again
of
Viscount
Haldane
who
said
(p.
116)
:
"
"
It
may
be
true
that,
having
regard
to
the
practice
of
the
respondents,
the
oil
they
purchase
is
used
by
themselves
alone
and
is
not
at
present
resold.
But
the
respondents
might
develop
their
business
so
as
to
include
resale
of
the
oil
they
have
bought.
The
principle
of
construction
as
established
is
satisfied
if
this
is
practicable,
and
does
not
for
its
application
depend
on
the
special
circumstances
of
individual
cases.
Fuel-oil
is
a
marketable
commodity,
and
those
who
purchase
it,
even
for
their
own
use,
acquire
the
right
to
take
it
into
the
market.
It
therefore
comes
within
the
general
principle
which
determines
that
the
tax
is
an
indirect
one.’’
R.
v.
Caledonian
Collieries,
[1928]
3
D.L.R.
657
was
a
percentage
tax
imposed
upon
mine
owners
in
respect
of
the
gross
revenue
of
coal
mines.
Lord
Warrington
said
at
p.
659
:
"
"
The
respondents
are
producers
of
coal,
a
commodity
the
subject
of
commercial
transactions.
Their
Lordships
can
have
no
doubt
that
the
general
tendency
of
a
tax
upon
the
sums
received
from
the
sale
of
the
commodity
which
they
produce
and
in
which
they
deal
is
that
they
would
seek
to
recover
it
in
the
price
charged
to
a
purchaser.
Under
particular
circumstances
the
recovery
of
the
tax
may,
it
is
true,
be
economically
undesirable
or
practically
impossible,
but
the
general
tendency
of
the
tax
remains.
‘"It
is
said
on
behalf
of
the
appellant
that
at
the
time
a
sale
is
made
the
tax
has
not
become
payable
and
therefore
cannot
be
passed
on.
Their
Lordships
cannot
accept
this
contention;
the
tax
will
have
to
be
paid,
and
there
would
be
no
more
difficulty
in
adding
to
the
selling
price
the
amount
of
the
tax
in
anticipation
than
there
would
be
if
it
had
been
actually
paid.’’
Lower
Mainland
Dairy
etc.
Committee
v.
Crystal
Dairy
Ltd.,
11933]
1
D.L.R.
82,
A.C.
168
was
in
the
same
category.
The
Privy
Council
said
(p.
86)
:
‘‘There
can
be
little
doubt
that
such
taxes
have
a
tendency
to
enter
into
and
affect
the
price
which
the
taxpayer
will
seek
to
obtain
for
his
commodities,
as
is
the
case
with
excise
and
customs.”
“I
think,’’
said
Duff
J.
as
he
then
was,
in
Lawson
v.
Interior-
Tree
Fruit
c
Vegetable
Committee,
[1931]
2
D.L.R.
193,
at
p.
197,
S.C.R.
357,
‘‘the
contention
of
the
appellant
is
well
founded,
that
such
levies
so
imposed,
have
a
tendency
to
enter
into
and
to
affect
the
price
of
the
product.
I
think,
moreover,
that
levies
of
that
character,
assuming
for
the
moment
they
come
under
the
head
of
taxation,
are
of
the
nature
of
those
taxes
on
commodities,
on
trade
in
commodities,
which
have
always
been
regarded
as
indirect
taxes.’’
We
have
as
the
final
word
in
this
series
of
cases
the
judgment
of
Lord
Thankerton
in
A.-G.
B.C.
v.
Kingcome
Nav.
Co.,
[1934]
1
D.L.R.
31,
where
referring
to
previous
judgments
of
the
Board
he
says
(pp.
37-8)
:
‘‘
These
decisions,
in
their
Lordships’
opinion,
made
clear
that
if
the
tax
is
demanded
from
the
very
persons
who
it
is
intended
or
desired
should
pay
it,
the
taxation
is
direct,
and
that
it
is
none
the
less
direct,
even
if
it
might
be
described
as
an
excise
tax,
for
instance,
or
is
collected
as
an
excise
tax.
‘
‘
And
later
at
pp.
39-40:
"‘As
has
already
been
pointed
out
the
ultimate
incidence
of
the
tax,
in
the
sense
of
the
political
economist,
is
to
be
disregarded,
but
where
the
tax
is
imposed
in
respect
of
a
transaction,
the
taxing
authority
is
indifferent
as
to
which
of
the
parties
to
the
transaction
ultimately
bears
the
burden,
and,
as
Mill
expresses
it,
it
is
not
intended
as
a
peculiar
contribution
upon
the
particular
party
selected
to
pay
the
tax.
Similarly,
where
the
tax
is
imposed
in
respect
of
some
dealing
with
commodities,
such
as
their
import
or
sale,
or
production
for
sale,
the
tax
is
not
a
peculiar
contribution
upon
that
one
of
the
parties
to
the
trading
in
the
particular
commodity
who
is
selected
as
the
taxpayer.’’
Again
he
says
(pp.
41-2)
:
‘‘Customs
and
excise
duties
are,
in
their
essence,
trading
taxes,
and
may
be
said
to
be
more
concerned
with
the
commodity
in
respect
of
which
the
taxation
is
imposed
than
with
the
particular
person
from
whom
the
tax
is
exacted.’’
And
on
p.
42:
"
Turning
then
to
the
provisions
of
the
Fuel-oil
Tax
Act
here
in
question,
it
is
clear
that
the
Act
purports
to
exact
the
tax
from
a
person
who
has
consumed
fuel-oil,
the
amount
of
the
tax
being
computed
broadly
according
to
the
amount
consumed.
The
Act
does
not
relate
to
any
commercial
transaction
in
the
commodity
between
the
taxpayer
and
someone
else.
Their
Lordships
are
unable
to
find,
on
examination
of
the
Act,
any
justification
for
the
suggestion
that
the
tax
is
truly
imposed
in
respect
of
the
transaction
by
which
the
taxpayer
acquires
the
property
in
the
fuel-oil
nor
in
respect
of
any
contract
or
arrangements
under
which
the
oil
is
consumed,
though
it
is
of
course,
possible
that
individual
taxpayers
may
recoup
themselves
by
such
a
contract
or
arrangement;
but
this
cannot
affect
the
nature
of
the
tax.’’
The
differences
between
the
Act
there
considered
and
the
Act
under
review
here
are
two—firstly,
the
B.C.
Act
imposes
the
tax
upon
the
person
who
has
consumed
fuel
oil
thereby
avoiding
the
decision
in
A.-G.
B.C.
v.
C.P.R.,
[1927]
4
D.L.R.
113,
A.C.
934
that
‘‘Fuel
oil
is
a
marketable
commodity
and
those
who
purchase
it,
even
for
their
own
use,
acquire
the
right
to
take
it
into
the
market.
‘
Our
Act
imposes
the
duty
before
consumption
of
the
commodity.
By
actual
consumption
under
the
B.C.
Act
the
purchaser
becomes
the
ultimate
consumer.
We
think
the
same
result
is
attained
by
the
express
provisions
of
s.
3(2)
which
takes
away
the
right
of
resale
from
the
purchaser
from
a
retail
dealer.
He
must
obtain
a
vendor’s
license
to
do
so
or
else
he
violates
the
law
and
is
subject
to
a
penalty
if
he
does
so.
The
statute
makes
him
the
ultimate
consumer.
Such
ultimate
purchaser,
if
he
seeks
to
sell
again,
must
acquire
a
legal
capacity
to
do
so.
He
has
purchased
tobacco,
at
retail,
and
presumably
at
the
ordinary
market
price
of
that
commodity.
He
has
paid
a
tax
which
by
the
theory
of
the
political
economist
he
is
to
pass
on.
To
this
he
must
add
the
cost
of
the
permission
of
the
authorities
to
become
a
vendor.
It
seems
impossible
to
conceive
that
he
ean
have
a
market
unless
he
is
prepared
to
sell
the
commodity
at
a
definite
loss.
Secondly,
as
was
powerfully
argued
by
Mr.
Carter,
there
is
no,
and
obviously
there
could
be
no
definition
of
“consumer”*
under
the
B.C.
Act.
Section
2(a)
of
our
Act
contains
a
definition
which
is
quoted
in
full
at
the
beginning
of
this
judgment.
By
it
the
consumer
may
purchase
from
a
vendor
by
means
of
an
agent.
The
principal
must
be
one
who
desires
to
acquire
the
tobacco
for
consumption
by
himself
or
for
other
persons
at
his
expense.
Mr.
Carter
contended
that
the
tax,
necessarily
paid
by
the
agent,
would
be
‘‘passed
on’’
to
the
principal
which
would
bring
the
transaction
within
the
trading
cases
to
which
reference
has
already
been
made.
But
we
think
the
answer
to
this
argument
is
that
there
is
not
and
can
not
be
a
sale
by
the
agent
to
his
principal.
Mr.
Carter
says
that
the
agent
is
entitled
to
be
indemnified
by
his
principal.
This
can
not
be
controverted
but
indemnity
is
not
sale.
No
person
has
been
introduced
into
the
series
with
whom
a
transaction
of
sale
has
taken
place.
Qui
facit
per
alium
facit
per
se
applies.
This
is
only
part
of
the
machinery
of
the
Act.
Forbes
v.
A.-G.
Man.,
[1937]
1
D.L.R.
289
at
pp.
293-4.
The
tax
is
not
imposed
upon
the
vendor
:
it
is
not
imposed
upon
the
goods
:
it
is
imposed
upon
the
consumer
and
measured
by
the
extent
and
value
of
his
purchase.
The
consumer
pays
the
tax
at
the
time
of
the
sale
to
him.
The
vendor
pays
no
tax
and
the
tax
ean
not
by
any
possibility
enter
as
a
factor
into
the
price
charged
by
him.
That
there
is
a
perception
of
the
tax
at
the
moment
that
the
commodity
passes
from
the
seller
to
the
buyer
does
not
make
it
a
sales
tax.
It
seems
to
fall
within
the
class
of
excise
taxes
which
may
be
levied
by
a
provincial
Legislature.
But
it
is
immaterial
how
it
is
described.
The
incidence
of
the
tax
falls
upon
and
is
borne
by
the
ultimate
consumer
and
can
not
be
passed
on.
For
these
reasons
we
hold
that
the
Act
is
within
the
constitutional
powers
of
the
Province.
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