THE
CHIEF
JUSTICE:—It
is
necessary
first
to
ascertain
the
characteristics
of
the
tax,
the
validity
of
which
is
in
question.
The
charging
sections
are
sections
4
and
5
which
must
be
read
in
light
of
the
meanings
attached
to
the
phrases
therein
employed
by
the
interpretation
section.
Sections
4
and
5
are
as
follows
:—
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
Province
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.
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
person
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
material
provisions
of,
the
interpretation
section
are
2(a),
(d)
and
(e),
which
are
in
the
following
words
:—
2.
(a)
"‘Consumer’’
or
"‘Consumer
of
Tobacco’’
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.
(d)
“Purchaser”
means
any
person
who,
within
the
Province,
purchases
from
a
retail
vendor
tobacco
at
a
retail
sale
in
the
Province.
(e)
"‘Retail
Sale”
means
a
sale
to
a
consumer
for
purposes
of
consumption
and
not
for
resale.
Section
8
provides
that
the
tax
shall
be
collected,
accounted
for
and
paid
to
the
Minister
by
such
persons,
at
such
times
and
in
such
manner
as
the
regulations
may
prescribe.
The
statute
provides
for
the
licensing
of
vendors
and
inter
alia
by
section
3,
subsection
(2)
that
no
person
shall
sell
tobacco
at
a
retail
sale
unless
he
holds
a
retail
vendor’s
license.
The
regulations,
which
have
the
force
of
statute
(section
20,
subsection
2)
provide
(Regulations
5
and
6,
Form
II)
that
every
application
for
a
retail
vendor’s
license
shall
contain
an
undertaking
by
the
applicant
to
collect
and
remit
the
tax.
The
undertaking,
in
the
Form,
is
that
the
applicant
undertakes
to
act
as
agent
for
the
Minister
for
the
collection
of
the
tax
and
to
account
to
the
province
for
all
moneys
so
collected.
On
the
license
is
printed
a
notice
that
failure
on
the
part
of
a
vendor
to
collect
and
remit
the
tax
renders
him
liable
to
a
fine
and
to
imprisonment
in
default
of
payment.
There
are
two
forms
of
licenses,
an
itinerant
salesman’s
license
and
a
license
to
carry
on
the
business
of
a
retail
vendor
at
a
named
place
of
business.
The
effect
of
Regulations
9
and
12
is
that
no
person
shall,
either
as
principal
or
agent,
sell
tobacco
at
retail,
other
than
a
person
having
a
license
in
one
or
other
of
these
forms.
The
regulations
contain
important
provisions
touching
the
payment
of
the
tax.
By
Regulation
19
the
licensed
retail
vendor
is
hereby
constituted
an
agent
of
the
Minister
for
the
collection
of
the
tax,
and
the
Regulation
also
provides
that
the
retail
vendor
shall
collect
the
tax
from
the
consumer
at
the
time
of
purchase
of
tobacco
by
the
consumer.
By
Regulation
22
the
retail
vendor,
or
his
agent,
shall
deliver
to
every
purchaser
at
the
time
of
the
sale
a
receipt
for
the
tax
collected,
and
it
also
provides
that
no
sale
shall
be
made
unless
such
receipt
is
given.
By
Regulation
30
it
is
enacted
that
no
person
shall
purchase
tobacco
at
retail
without
paying
the
tax,
and
it
is
further
provided
that
no
person
shall
accept
delivery’’
of
tobacco
without
receiving
from
the
retail
vendor
a
receipt
for
such
tax.
The
condition
of
the
obligation
to
pay
under
section
4
is
that
the
tobacco
in
respect
of
which
the
liability
arises
has
been
pur-
chased
at
a
retail
sale.
It
is
true
the
section
describes
the
purchaser
as
“consumer,
‘
‘
but
consumer
means,
as
we
have
seen,
a
person
purchasing
tobacco
at
a
retail
sale
for
his
own
consumption,
or
for
the
consumption
of
other
persons
at
his
expense.
It
is
a
condition
of
a
legal
purchase
at
a
retail
sale
that
the
tax
be
paid
and
of
a
lawful
delivery
of
the
tobacco
to
a
purchaser
that
a
receipt
of
the
tax
be
also
delivered
to
him
by
the
seller.
There
can
be
no
legal
purchase
without
the
payment
of
the
tax;
there
can
be
no
legal
sale
without
the
delivery
of
a
receipt
for
the
tax.
In
the
ordinary
case,
sales
will
be
cash
sales.
The
price
demanded
will
be
the
‘‘price
to
the
consumer,’’
to
use
the
words
of
section
7;
that
is
to
say,
the
price
to
the
purchaser,
which
includes
the
amount
of
the
tax,
a
sum
which
is
earmarked
as
such,
of
course,
by
the
delivery
of
the
receipt.
In
a
practical
sense,
as
far
as
the
purchaser
is
concerned,
it
is
part
of
the
price
he
pays
for
his
tobacco.
As
regards
the
vendor,
it
is
the
sum
for
which
he
is
accountable
to
the
government
and,
in
fact,
it
comes
out
of
the
‘
price
to
the
consumer
’—
the
price
to
the
purchaser.
In
other
words,
the
payment
of
the
tax
is
not
only
a
condition
of
legal
purchase;
it
is
an
integral
element
in
the
transaction
of
sale
and
purchase
passing
from
the
purchaser
to
the
vendor
as
part
of
the
price
to
the
purchaser.
Moreover,
the
real
security
to
the
government
for
the
payment
of
the
tax
is
the
vendor’s
responsibility.
True
enough,
the
statute
declares
that
the
consumer
continues
to
be
liable
until
the
tax
is
collected,
but
the
real
sanction
for
the
obligation
of
the
purchaser
lies
in
the
fact
that
he
cannot
lawfully,
or
in
practice,
get
his
tobacco
without
paying
the
tax.
There
is
no
provision
for
keeping
account
of
consumption.
On
the
other
hand,
the
vendor
is
obliged,
as
licensee,
to
keep
account
of
his
purchases,
of
his
sales,
of
the
tobacco
he
has
on
hand
from
time
to
time.
Not
only
is
his
default
in
performing
his
duty
to
collect
the
tax
a
punishable
offence,
he
must
account
for
his
stamps
and
as
agent,
under
a
contractual
duty
to
collect
the
tax,
he
is
directly
responsible
if
he
has
made
a
sale
of
tobacco
without
performing
that
duty.
The
character
of
the
tax,
I
think,
can
best
be
determined
by
considering
the
ordinary
case
and
in
the
ordinary
case,
that
is
to
say,
in
all
but
exceedingly
few
cases,
the
sale
of
tobacco
by
a
licensed
retail
vendor
will
be
carried
out
in
the
manner
contemplated
by
the
Act
and
the
tax
will
be
simply
a
predetermined
fraction
of
the
price
to
the
purchaser
which
is
paid
to
the
vendor
and
by
him
remitted
to
the
government.
It
seems
to
me
to
be
proper
to
describe
such
a
tax
as
a
tax
on
tobacco
in
respect
of
the
commercial
dealing
between
the
retail
vendor
and
the
purchaser.
As
regards
section
5,
the
tax
is
imposed
upon
the
importer
of
tobacco
who
imports
it
for
his
own
consumption,
or
the
consumption
of
others
at
his
expense
and
that,
I
think,
is
a
tax
on
tobacco
in
respect
of
the
import
of
it
for
consumption.
To
turn
now
to
the
legal
questions
involved.
Section
5
imposes
an
import
duty
applying
to
imports
from
other
parts
of
Canada,
as
well
as
from
places
outside
of
Canada.
Although
not
collected
in
a
manner
in
which
customs
duties
are
collected
by
the
Dominion
Government
in
this
country,
it
is
of
the
nature
of
a
duty
of
customs.
In
the
Attorney-General
for
British
Columbia
v.
McDonald
Murphy
Lumber
Co.,
[1930]
A.C.
357,
at
364,
Lord
Macmillan,
speaking
for
the
Lords
of
the
Judicial
Committee,
said
:—
In
Wharton’s
Law
Lexicon
"‘Customs''
are
defined
as
""
duties
charged
upon
commodities
on
their
importation
into
or
exportation
out
of
a
country,’’
and
a
similar
definition
is
given
in
Murray’s
New
English
Dictionary.
I
shall
revert
to
section
5
after
discussing
the
tax
imposed
by
section
4.
The
enactment
of
section
4
and
the
ancillary
enactments
in
the
statute
and
regulations
are
justified
on
the
ground
that
they
constitute
legislation
in
relation
to
direct
taxation
within
the
province
within
the
meaning
of
section
92(2).
The
question
whether
the
tax
is
an
excise
duty
of
the
class
falling
within
the
exclusive
authority
of
the
Parliament
of
Canada
to
impose
can
be
considered
more
conveniently
with
section
5.
If
I
may
say
so
without
presumption,
the
subject
of
direct
and
indirect
taxation
as
it
affects
the
application
of
section
92(2)
has
been
put
in
a
very
clear
light
in
the
judgment
delivered
by
Lord
Thankerton
on
behalf
of
the
Lords
of
the
Judicial
Committee
in
the
Attorney-General
for
British
Columbia
v.
King-
come
Navigation
Co.
Ltd.,
[1934]
A.C.
45.
At
p.
55
it
is
said,
after
a
review
of
some
of
the
previous
decisions
of
the
Judicial
Committee,
these
decisions,
in
their
Lordships’
opinion,
make
clear
that
if
the
tax
is
demanded
from
the
very
person
who
it
is
intended
or
desired
should
pay
it,
the
taxation
is
direct.
His
Lordship
proceeds
to
point
out
that
in
the
case
of
typical
direct
taxes,
the
taxation
on
property
and
income,
for
example,
mentioned
by
Lord
Cave
in
the
City
of
Halifax
v.
Fairbanks
Estate,
[1928]
A.
C.
117,
such
taxes
are
imposed
in
respect
of
the
particular
taxpayer’s
interest
in
property
or
the
taxpayer’s
own
income,
and
they
are
a
peculiar
contribution
upon
him,
and
it
is
intended
and
desired
that
he
shall
pay
it,
though
it
is
possible
for
him,
by
making
his
own
arrangements
to
that
end,
to
pass
the
burden
on
in
the
sense
of
the
political
economists.
Such
taxes
are
contrasted
with
those
as
regards
which
the
taxing
authorities
are
indifferent
as
to
who
ultimately
bears
the
burden,
such
as
taxes
in
respect
of
transactions
and
taxes
in
respect
of
some
dealing
in
commodities,
such
as
their
import
or
sale.
The
words
of
the
judgment
are
these
:
.
.
.
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
the
one
of
the
parties
to
the
trading
in
the
particular
commodity
who
is
selected
as
the
taxpayer.
I
have
said
sufficient
to
show
why,
in
my
opinion,
the
tax
imposed
by
section
4
is
a
tax
in
respect
of
a
dealing
with
tobacco,
the
sale
and
purchase
of
it,
and
this
dealing
falls,
I
think,
within
the
class
of
dealings
with
commodities
envisaged
by
such
passages
in
their
Lordships’
Judgment.
On
behalf
of
the
respondent
it
is
said
that
this
is
a
tax
in
respect
of
consumption
and
that
it
stands
in
the
same
category
as
that
in
question
in
the
Attorney-General
for
British
Columbia
v.
Kingcome
Navigation
Co.
Ltd.,
[1934]
A.C.
45.
The
tax
in
question
there
was
payable
by
every
person
who
consumes
fuel
oil
in
the
province
in
respect
of
the
fuel
oil
consumed
and
at
the
rate
of
one-half
cent
a
gallon.
Every
person
consuming
fuel
oil
was
obliged
to
keep
such
books
and
records
and
furnish
such
returns
as
might
be
prescribed
by
the
regulation,
the
failure
to
do
so
being
a
punishable
offence.
The
amount
of
the
tax
was
recoverable
by
action
and
in
every
such
action
the
burden
of
proving
the
quantity
consumed
by
the
defendant
was
upon
him.
There
are
no
such
provisions
in
the
statute
before
us.
The
tax
is
not
payable
by
the
consumer
as
such.
It
is
payable
by
the
purchaser,
or
the
agent
of
the
purchaser,
and
the
statute
itself
contemplates
that
neither
of
them
may
be
the
consumer.
No
liability
attaches
to
the
consumer
as
such.
To
repeat,
in
the
practical
administration
of
the
Act
there
can
be
no
manner
of
doubt
that
the
payment
of
the
tax
and
the
delivery
of
the
receipt
take
place
as
acts
in
the
transaction
of
sale
and
purchase.
The
matter
of
consumption
never
comes
into
question.
On
behalf
of
the
respondent
it
is
argued
that
the
purchase
from
the
retail
vendor
is
a
purchase
for
consumption
because
the
tobacco
cannot
lawfully
be
sold
by
the
purchaser
unless
he
takes
out
a
vendor
‘s
license
which
insures
that
he
can
never
sell
except
at
a
loss.
There
is
no
limit,
however,
as
to
the
quantity
which
may
be
purchased
from
a
retail
vendor
and
any
purchaser
is
entitled
to
obtain
a
license
as
a
retail
vendor
and
the
license
fee
is
only
fifty
cents.
However,
as
a
rule,
tobacco
sold
at
retail,
in
the
ordinary
sense,
is
purchased
with
the
intention
that
it
will
be
consumed
by
the
purchaser,
or
his
friends
or
associates,
and
the
vast
majority
of
the
purchases
of
tobacco
at
retail
will
be
purchased
for
immediate
consumption.
It
does
not
at
all
follow
from
this
that
the
tax
is
a
tax
in”
respect
of
consumption,
especially
when
it
is
so
obviously
a
tax
in
respect
of
the
sale
and
purchase.
There
is
nothing
in
the
statute,
truly,
which
can
fairly
be
said
to
give
to
the
tax
the
character
of
a
tax
in
respect
of
consumption,
except
the
declaration
of
the
legislature
to
that
effect
and
some
collateral
provisions
which
are
relied
upon
as
supporting
the
contention
that
such
is
its
character.
I
do
not
think
too
much
importance
can
be
attached
to
the
declaration
of
the
legislature
that
the
tax
is
payable
in
respect
of
consumption.
The
British
North
America
Act
‘‘must
have
contemplated
some
tangible
dividing
line
referable
to
and
ascertainable
by
the
general
tendencies
of
the
tax
and
the
common
understanding
of
men
as
to
those
tendencies
(Bank
of
Toronto
v.
Lambe
(1887),
12
A.C.
575,
at
581,
City
of
Halifax
v.
Fair-
banks’
Estate,
[1928]
A.C.
117,
at
124).
Nor
was
it
probably
contemplated
that
the
‘‘tangible
dividing
line’’
between
direct
and
indirect
taxation
could
be
shifted
at
will
by
the
declarations
of
the
legislature
as
to
its
expectations,
or
intentions,
in
respect
of
the
ultimate
incidence
of
a
tax.
It
is
especially
important,
I
think,
in
the
application
of
Mill’s
test
not
to
be
led
away
by
legislative
declarations,
or
collateral
legislative
provisions,
imparting
to
the
legislation
a
form
calculated
to
give
a
colour
of
legality
to
the
legislative
effort.
I
return
now
to
section
5.
As
I
have
said
it
imposes
a
duty
in
respect
of
import.
Such
a
duty
is
one
of
those
mentioned
in
the
passage
quoted
from
Lord
Thankerton’s
judgment,
Attorney-
General
for
British
Columbia
v.
King
come
Navigation
Co.
Ltd.
[1934]
A.C.
45,
as
being
not
imposed
as
a
peculiar
con-
tribution
upon
one
of
the
parties
and
as
being,
consequently,
an
indirect
tax.
It
seems
clear,
moreover,
to
be
a
tax
within
section
122.
There
were
customs
duties
levied
on
manufactured
tobacco
by
the
provinces
at
the
time
of
Confederation.
The
Dominion
has
always
imposed
customs
duties
in
respect
of
imports
of
tobacco
and
it
would
seem
an
extraordinary
thing
if
each
one
of
the
provinces
could
impose
such
duties
upon
persons
who
import
for
their
own
consumption
and
who
should
be
obliged
to
pay
this
duty
after
paying
the
duty
imposed
by
the
Dominion;
and
equally
extraordinary
in
the
case
of
raw
tobacco
imported
by
an
importer
in
Montreal,
who
has
paid
the
customs
duty
upon
it
and
manufactured
it
there,
that
it
should,
on
shipment
into
New
Brunswick
to
a
consumer,
be
subjected
to
a
further
import
duty
in
that
province.
The
importation
which
brings
section
5
into
operation
seems
clearly
to
be
a
dealing
in
tobacco
within
the
meaning
of
the
judgment
quoted
above.
So
also,
I
think,
the
tax
imposed
by
section
4
is
an
excise
duty
within
the
contemplation
of
the
judgment.
At
pp.
58,
59,
Lord
Thank-
erton
says:—
In
their
Lordships’
opinion
the
customs
or
excise
duties
on
commodities
ordinarily
regarded
as
indirect
taxation,
referred
to
in
the
judgments
in
Fairbanks’
case,
[1928]
A.C.
117,
and
the
McDonald
Murphy
Lumber
Co.
f
s
case,
[1930]
A.C.
357,
are
duties
which
are
imposed
in
respect
of
commercial
dealings
in
commodities,
and
they
would
necessarily
fall
within
Mill’s
definition
of
indirect
taxes.
They
do
not
extend,
for
instance,
to
a
dog
tax,
which
is
clearly
direct
taxation,
though
the
machinery
of
the
excise
law
might
be
applied
to
its
collection,
or
to
a
license
duty,
such
as
was
considered
in
Lambe’s
case,
(1887),
12
A.C.
575.
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.
The
tax
imposed
by
section
4
fulfils
the
conditions
of
this
"‘definition
of
customs
and
excise
duties,’’
as
the
judgment
describes
this
passage.
The
distinction
between
the
New
Brunswick
statute
and
the
provisions
of
the
British
Columbia
Fuel-Oil
Act,
with
which
the
judgment
is
concerned,
is
brought
out
very
clearly
in
the
part
of
the
judgment
I
now
quote
at
p.
59
:—
Turning
then
to
the
provisions
of
the
Fuel-Oil
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
con-
sumed.
The
Act
does
not
relate
to
any
commercial
transaction
in
the
commodity
between
the
taxpayer
and
some
one
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
arrangement
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.
Accordingly
their
Lordships
are
of
opinion
that
the
tax
is
direct
taxation
within
the
meaning
of
s.
92,
head
2,
of
the
British
North
America
Act.
I
should
add
that
section
5,
in
my
opinion,
comes
within
the
ban
of
section
121.
I
do
not
think
either
the
decision
in
the
Gold
Seal
case,
(1921),
62
Can.
S.C.R.
424,
or
the
observations
in
the
Judgments,
are
in
any
way
in
conflict
with
this.
The
duty
imposed
by
section
5,
as
I
have
already
observedbeing
a
duty
imposed
by
a
provincial
legislature,
is,
of
course,
not
collected
through
the
machinery
of
the
customs,
but
levied
in
New
Brunswick
prior
to
Confederation
it
would
have
beer
levied
as
a
customs
duty;
and
considered
even
from
the
point
of
view
of
its
application
to
goods
imported
from
other
provinces,
it
is
of
the
nature
of
a
customs
duty,
if
the
expression
is
properly
applicable
in
such
circumstances.
Section
5
is
moreover,
IN
my
opinion,
an
enactment
in
regulation
of
trade
and
commerce
within
the
ambit
of
the
exclusive
authority
in
relation
to
that
subject
vested
in
the
Dominion
by
section
91.
I
should
add
that
the
tax
under
section
4
is
payable
by
the
purchaser’s
agent
where
the
purchase
is
made
by
an
agent.
On
the
principle
of
the
Manitoba
Grain
case,
[1925]
A.C.
561,
this
provision
appears
to
be
invalid.
For
these
reasons,
I
think
the
appeal
should
be
allowed.
RINFRET
J.:—The
question
in
this
case
is
about
the
constitutionality
of
‘‘An
Act
to
provide
for
imposing
a
tax
on
the
consumption
of
tobacco”
(e.
44
of
the
Acts
of
New
Brunswick,
1940),
hereinafter
referred
to
as
The
Tobacco
Tax
Act.
The
appellant
caused
a
writ
to
issue
in
the
Chancery
Division
of
the
Supreme
Court
of
New
Brunswick
claiming
an
injunction
restraining
the
defendants,
and
each
of
them,
from
entering
upon
the
store
premises
of
the
appellant,
in
the
city
of
Saint
John.
or
from
accosting,
questioning,
or
otherwise
interfering
with
customers
of
the
appellant
while
on
those
premises,
or
on
the
streets
adjacent
thereto,
with
reference
to
any
purchase
of
tobacco,
or
the
payment
of
any
tobacco
tax
under
the
authority
of
the
Act
above
mentioned,
or
the
regulations
under
it.
The
parties
concurred
in
stating
the
questions
arising
for
the
opinion
of
the
Court
as
follows:
The
appellant
is
a
Dominion
company
having
its
head
office
in
the
city
of
Saint
John,
in
the
province
of
New
Brunswick.
On
May
11,
1940,
the
legislature
of
the
province
of
New
Brunswick
enacted
The
Tobacco
Tax
Act,
which
came
into
force
on
October
1st,
1940,
by
proclamation
of
the
Lieutenant-
Governor
in
Council.
Certain
regulations
were
made
under
the
authority
of
the
Act.
On
October
15,
1940,
the
appellant
opened
a
store,
in
the
city
of
Saint
John,
and
thereafter
carried
on,
and
now
carries
on,
therein
the
business
of
selling
tobacco,
including
cigars
and
cigarettes,
without
having
obtained
any
license
so
to
do
under
The
Tobacco
Tax
Act,
or
the
regulations.
In
its
store,
the
appellant
sells
at
retail
sale
tobacco,
including
cigars
and
cigarettes,
manufactured
in
provinces
of
Canada
other
than
the
province
of
New
Brunswick,
to
persons
defined,
by
section
2(a)
of
the
said
Tobacco
Tax
Act,
as
“consumers”
or
“‘consumers
of
tobacco,”
without
collecting
the
tax
imposed
by
the
said
Act.
The
respondent
James
H.
Conlon
was,
on
the
coming
into
force
of
the
said
Tobacco
Tax
Act,
appointed
to
the
office
of
Tobacco
Tax
Commissioner,
it
being
an
office
created
under
the
regulations.
On
November
2,
1940,
and
from
time
to
time
thereafter,
the
respondent
John
McDonough,
an
inspector
appointed
under
the
Act,
and
others,
while
acting
under
the
instructions
of
the
other
respondents,
entered
upon
the
appellant’s
premises
and
proceeded
to
question
customers
of
the
appellant
as
to
whether
they
had
paid
the
tax
on
the
tobacco
purchased
by
them,
to
ask
them
to
produce
their
tobacco
tax
receipt
and
to
demand
their
names
and
addresses.
They
refused
to
leave
the
premises
when
requested
so
to
do
by
the
appellant,
and
claimed
that
they
were
entitled
to
remain
therein
and
to
question
customers
by
virtue
of
the
said
Tobacco
Tax
Act
and
the
regulations
made
thereunder.
By
reason
of
these
actions
of
the
respondents,
the
business
of
the
appellant
has
been
and
is
now
injuriously
affected.
The
question
for
the
opinion
of
the
Court
is
whether
the
Tobacco
Tax
Act,
or
any
of
the
provisions
thereof,
and
the
regulations
made
thereunder,
or
any
of
them,
are
ultra
vires
of
the
legislature
of
New
Brunswick;
and,
if
so,
in
what
particular,
or
particulars.
It
was
agreed
that,
if
the
Court
should
be
of
the
opinion
that
the
Act
and
the
regulations
were
wholly
intra
vires,
the
appellant’s
action
should
be
dismissed.
If
the
Court
should
be
of
opinion
that
the
Act
and
the
regulations
are
wholly
ultra
vires,
judgment
should
be
entered
in
favour
of
the
appellant
and
against
the
respondents
for
an
injunction
order
in
the
terms
of
the
writ
of
summons
herein.
If
the
Court
should
be
of
opinion
that
the
Act
or
regulations,
or
any
of
them,
are
intra
vires
in
part
and
ultra
vires
in
part,
the
Court
should
make
sueh
Order
by
way
of
declaration
or
of
substantive
relief
to
the
appellant,
as
shall
be
deemed
right
and
proper.
The
special
case
was
submitted
to
the
Appeal
Division
of
the
Supreme
Court;
and,
after
argument
heard,
the
Judgment
of
that
Court
was
delivered
by
the
Chief
Justice
of
the
province
of
New
Brunswick,
in
which
Grimmer
and
Richards
JJ.
concurred.
The
Court
unanimously
held
that
the
Act
was
within
the
constitutional
powers
of
the
Province.
After
having
quoted
the
material
sections
of
the
Act,
the
learned
Chief
Justice
stated
that
the
regulations
had
not
been
attacked,
except
upon
the
ground
that,
the
Act
being
ultra
vires,
they
fell
with
it.
He
proceeded
to
enumerate
the
grounds
of
objection
to
the
validity
of
the
Act:
(1)
That
the
transaction
was
not
within
the
Province;
(2)
That
it
was
an
attempt
to
impose
a
tax
upon
interprovincial
or
international
transactions
;
(3)
That
dealers
in
tobacco
could
not
without
their
consent
be
constituted
agents
for
the
Crown
for
the
collection
of
a
tax,
as
it
would
constitute
them
public
officers
;
(4)
That
the
tax
was
indirect
as
falling
upon
transactions
in
commodities
especially
;
(5)
That
it
was
an
indirect
tax
as
being
in
essence
a
sales
tax
;
(6)
That
the
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.
Dealing
first
with
grounds
of
objection
1
and
2,
the
judgment
failed
to
see
that
the
legislature
had
attempted
to
impose
a
customs
duty
upon
the
importation
of
tobacco
into
the
Prov-
ince,
contrary
to
the
contention
of
counsel
for
the
appellant.
In
the
opinion
of
the
Appeal
Division,
the
legislation
did
not
purport
to
affect
any
person
who
was
outside
of
the
Province,
nor
the
commodity
when
it
was
not
within
the
Province.
In
fact,
it
did
not
affect
the
commodity
at
all.
As
to
objection
no.
8,
the
Court
thought
that
it
also
failed
and
that
it
must
be
competent
for
the
legislature
to
provide
for
collectors
of
revenue,
if
that
revenue
derives
from
a
direct
tax.
Objections
4
and
5
were
taken
together.
In
the
Court’s
opinion,
they
raised
the
only
real
point
in
the
case,
viz.:
Whether
the
statute
imposes
direct
or
indirect
taxation.
The
attempt
made
to
treat
the
Act
as
imposing
a
stamp
tax
and
thus
bringing
it
within
Attorney-General
for
Quebec
v.
Queen
Insurance
Company
(1878),
3
A.C.
1090,
and
Attorney-
General
for
Quebec
v.
Read
(1884),
10
A.C.
141,
was
disregarded.
It
was
said
by
the
Court
that
what
was
called
a
‘‘stamp’’
in
argument
is
not
a
stamp
at
all.
It
was
not
regarded
as
such
nor
intended
to
be
affixed
to
anything.
It
was
simply
a
receipt
for
payment;
and
Regulation
20
was
referred
to.
As
to
the
attempt
of
counsel
for
the
appellant
to
assimilate
the
tax
to
a
sales
tax,
and,
therefore,
to
an
indirect
tax,
the
Court
thought
that
transmissibility
is
the
proper
test
for
the
present
case.
On
this
ground,
reference
was
made
to
Attorney-
General
for
Manitoba
v.
Attorney-General
for
Canada,
[1925]
A.C.
561,
where
the
tax
was
on
persons
selling
grain
for
future
delivery
;
and
to
Attorney-General
for
British
Columbia
v.
Canadian
Pacific
Railway,
[1927]
A.C.
934,
where
the
Privy
Council
stated
that
fuel-oil,
being
a
marketable
commodity,
those
who
purchased
it,
even
for
their
own
use,
acquired
a
right
to
take
it
into
the
market;
and
that,
therefore,
a
tax
levied
on
the
first
purchasers
of
fuel-oil
came
within
the
general
principle
which
determines
that
the
tax
is
an
indirect
one.
Reference
was
also
made
by
the
learned
Chief
Justice
to
Rex
v.
Caledonian
Collieries
Ltd.,
[1928]
A.C.
358,
which
dealt
with
a
percentage
tax
imposed
on
mine
owners
on
the
gross
revenue
of
coal
mines,
and
where
it
was
held
that
the
general
tendency
of
the
tax
upon
the
sums
received
from
the
sale
of
the
commodity
which
the
mine
owners
produced
was
that
they
would
seek
to
recover
it
in
the
price
charged
to
the
purchaser,
and
that,
although,
under
the
particular
circumstances,
the
recovery
of
the
tax
be
economically
undesirable
or
practically
impossible,
nevertheless
the
general
tendency
of
the
tax
remained.
The
effect
of
the
Privy
Council
decision
in
Lower
Mainland
Dairy
v.
Crystal
Dairy,
[1933]
A.C.
168,
at
176,
and
of
the
decision
of
this
Court
in
Lawson
v.
Interior
Tree
Fruit
and
Vegetable
Committee
of
Direction,
[1931]
S.C.R.
357,
at
364,
was
also
examined;
and
the
Court
found
that
the
cases
were
not
in
the
same
category
as
the
present
case.
The
Court
then
discussed
the
judgment
of
Lord
Thankerton
in
Attorney-General
for
British
Columbia
v.
Kingcome
Navigation
Company,
[1934]
A.C.
45,
where
the
noble
Lord
reviewed
previous
judgments
of
the
Board
and
said
that:
These
decisions
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.
*
*
*
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
in
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.
Of
the
Fuel
Oil
Tax
Act
of
British
Columbia,
Lord
Thankerton
said
that
it
was
clear
that
the
Act
purported
to
exact
the
tax
from
a
person
who
had
consumed
fuel-oil,
the
amount
of
the
tax
being
computed
broadly
according
to
the
amount
consumed,
and
the
Act
did
not
relate
to
any
commercial
transaction
in
the
commodity
between
the
taxpayer
and
someone
else.
Although
it
was,
of
course,
possible
that
individual
taxpayers
may
recoup
themselves
by
the
contract
or
arrangements
under
which
the
oil
was
acquired,
this
could
not,
in
their
Lordships’
opinion,
affect
the
nature
of
the
tax.
The
Appeal
Division,
in
the
present
case,
then
pointed
out
the
differences
between
the
Act
considered
by
the
Privy
Council
in
the
King
come
case,
[1934]
A.C.
45,
and
the
case
at
present
under
review
were
two
:
Firstly,
the
British
Columbia
tax
was
imposed
upon
the
person
"‘who
has
consumed
fuel-oil’’;
the
New
Brunswick
Act
imposed
the
duty
"‘before
consumption
of
the
commodity.”
It
was
shown
that
by
actual
consumption,
under
the
British
Columbia
Act,
the
purchaser
became
the
ultimate
consumer.
The
Appeal
Division
thought
that
the
same
result
was
attained
by
the
express
provisions
of
sec.
3(2)
of
the
New
Brunswick
Act,
which
took
away
the
right
of
resale
from
the
purchaser
from
a
retail
dealer.
The
statute
thereby
made
him
the
ultimate
consumer.
As
a
result
of
that
action,
it
seemed
impossible
to
conceive
that
the
purchaser
attempting
to
resell
could
have
a
market,
unless
he
was
prepared
to
sell
the
commodity
at
a
definite
loss.
Secondly,
there
was
no
definition
of
the
word
‘‘consumer’’
in
the
British
Columbia
Act,
and
obviously
there
could
be
none,
while
section
2(a)
of
the
New
Brunswick
Act
contained
a
definition
and
by
it
the
consumer
could
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
by
other
persons
at
his
expense.
The
appellant
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.
To
this
argument,
the
Court
thought
the
answer
was:
‘
"
That
there
is
not,
and
cannot
be,
a
sale
by
the
agent
to
his
principal.”
True,
the
agent,
if
he
had
not
the
required
money
in
advance,
would
be
entitled
to
be
indemnified
by
his
principal;
but
indemnity
is
not
sale.
i(
Qui
facit
per
alium
facit
per
se
ff
applies.
This
is
only
part
of
the
machinery
of
the
Act.
Forbes
v.
Attorney-General
of
Manitoba,
[1937]
A.C.
260.
Summing
up,
the
learned
Chief
Justice
came
to
the
conclusion
that
the
tax
was
not
imposed
upon
the
vendor,
it
was
not
imposed
upon
the
goods;
it
was
imposed
upon
the
consumer,
and
measured
and
valued
by
the
extent
of
his
purchases.
The
consumer
paid
the
tax
at
the
time
of
the
sale
to
him.
The
vendor
paid
no
tax;
and
the
tax
could
not
by
any
possibility
enter
as
a
factor
into
the
price
charged
by
him.
That
there
was
a
perception
of
the
tax
at
the
moment
that
the
commodity
passed
from
the
vendor
to
the
buyer
did
not
make
it
a
sales
tax.
It
seemed
to
fall
within
the
class
of
excise
taxes
which
may
be
levied
by
a
provincial
legislature.
But
it
was
immaterial
how
it
was
described;
the
incidence
of
the
tax
fell
upon
and
was
borne:
by
the
ultimate
consumer
and
could
not
be
passed
on.
For
these
reasons,
the
Court
held
that
the
Act
was
within
the
constitutional
power
of
the
Province.
From
that
judgment,
Atlantic
Smoke
Shops
now
appeals
to
this
Court
by
special
leave
granted
therefor
by
the
Appeal
Division
of
the
Supreme
Court
of
New
Brunswick;
and
the
Attorney-General
of
the
province
of
Quebec
intervenes
to
support
the
constitutionality
of
the
New
Brunswick
Act,
in
view
of
the
fact
that
the
legislature
of
Quebec
has
adopted
a
similar
statute.
The
Tobacco
Tax
Act
now
in
question
enacts,
in
sec.
3,
that
(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
the
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
who
is
not
a
vendor
duly
licensed
under
this
Act.
By
section
4,
it
is
enacted
that
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
Province
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
purchases.
By
section
5:
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.
In
the
Act,
“Consumer”
or
“Consumer
of
tobacco”
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.
(Section
2a).
“Purchaser”
means
any
person
who,
within
the
Province,
purchases
from
a
retail
vendor
tobacco
at
a
retail
sale
in
the
Province
(Section
2d).
“Retail
sale”
means
a
sale
to
a
consumer
for
purposes
of
consumption
and
not
for
resale
(Section
2e).
“Retail
vendor”
means
any
person
who,
within
the
Province
sells
tobacco
to
a
consumer
(Section
2/).
By
section
7
:
7.
No
retail
vendor
shall
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.
By
section
9:
9.
The
Minister
may
make
such
allowance
as
the
Lieutenant-
Governor
in
Council
may
determine
to
vendors
for
their
services
in
collecting
the
tax.
And
finally,
by
section
10
:
10.
A
consumer
shall
be
and
remain
liable
for
the
tax
imposed
by
this
Act
until
the
same
has
been
collected.
For
the
purpose
of
carrying
into
effect
the
provisions
of
the
Act,
the
Lieutenant-Governor
in
Council
was
authorized
to
make
such
regulations,
not
inconsistent
with
the
spirit
of
the
Act,
as
were
considered
necessary,
or
advisable
(section
20);
and,
amongst
other
things,
for
(a)
providing
for
the
affixing
of
stamps
on
tobacco
or
on
the
packages
in
which
it
was
sold,
before
or
at
the
time
it
is
sold
to
the
consumer,
as
evidence
of
the
tax
having
been
paid
;
and
it
is
enacted
that
such
regulations
shall
have
the
same
force
and
effect
as
if
enacted
by
the
Act
and
that
they
shall
be
published
in
the
Royal
Gazette
(section
20-2).
Of
the
regulations
so
made,
only
the
following
should
be
quoted
:
19.
Every
licensed
retail
vendor
is
hereby
constituted
an
agent
of
the
Minister
for
the
collection
of
the
tax
and
shall
collect
the
tax
from
the
consumer,
etc.
23.
The
retail
vendor
shall
account
for
and
remit
the
amount
of
tax
collected
to
the
Tobacco
Tax
Commissioner
within
ten
days
immediately
following
the
calendar
month
during
which
any
sale
has
taken
place
and
shall
with
his
remittance
forward
to
the
Tobacco
Tax
Commissioner
a
statement
containing
the
information
required
by
Form
4
in
the
Schedule
of
these
regulations.
Retail
vendors
are
required
to
make
an
application
for
the
license
to
sell
at
retail.
That
application
is
signed
by
them
and
the
form
so
signed
contains
the
following
undertaking:
I/we
hereby
make
application
for
a
license
as
indicated
above
under
the
provisions
of
The
Tobacco
Tax
Act,
1940.
I/we,
upon
acceptance
of
license
to
retail
tobacco,
agree
and
undertake
to
act
as
the
agent
of
the
Minister
for
the
collection
of
the
tax
imposed
by
said
Act
and
to
account
to
the
Province
of
New
Brunswick
for
all
moneys
so
collected,
as
provided
by
the
Act
and
Regulations.
The
form
of
license
itself
contains
the
following
prescriptions
:
Penalty
as
prescribed
by
the
Act.
Failure
on
the
part
of
a
vendor
to
collect
the
tax
renders
him
liable
to
a
fine
of
not
less
than
ten
or
more
than
five
hundred
dollars,
and
costs;
and,
in
default
of
payment,
to
imprisonment
to
a
term
not
exceeding
three
months.
The
form
of
tobacco
tax
return
provides
for
the
deduction
of
a
commission
of
3%,
being
the
allowance
to
the
vendor
for
his
services
in
collecting
the
tax
;
and.
it
contains
the
following
:
Enclosed
find
the
sum
of
$
.
.
.
which
is
the
amount
of
Tobacco
Tax
collected
by
me
during
the
month
of
after
deductions
being
made
as
described
above.
And
attached
to
the
return
is
a
declaration
which
has
to
be
signed
by
the
vendor
to
the
effect
that
the
remittance
is
a
true
return
of
all
taxable
sales
made
during
the
last
preceding
month,
and
that
the
return
herein
truly
represents
all
tax
imposable
by
law
accruing
upon
such
sales
or
transactions
as
are
chargeable
under
the
Tobacco
Tax
Act.
The
attack
made
upon
the
Act
by
the
appellant
and
the
grounds
of
appeal
from
the
Appeal
Division
of
the
Supreme
Court
of
New
Brunswick,
which
upheld
the
Act,
are:
(1)
The
Act
is
not
legislation
upon
the
matters
assigned
to
the
legislative
jurisdiction
of
the
provinces
by
sec.
92
of
the
British
North
America
Act
;
(2)
The
Act
purports
to
impose
a
tax
for
the
raising
of
a
revenue
for
provincial
purposes,
but
it
is
neither
(a)
a
direct
tax,
or
(b)
a
tax
within
the
Province,
as
authorized
by
subsection
2
of
section
92;
(3)
The
tax
is
not
confined
in
its
effect
to
the
province
of
New
Brunswick,
nor
to
the
persons
upon
whom
it
is
levied;
(4)
The
Act
infringes
upon
the
exclusive
legislative
jurisdiction
of
the
Dominion
Parliament
to
impose
customs
or
excise
duties
;
(5)
The
Act
purports,
in
violation
of
the
provisions
of
section
121
of
the
British
North
America
Act,
to
impose
a
tax
upon
articles
grown,
produced
or
manufactured
in
other
provinees
of
Canada
when
introduced
into
New
Brunswick
for
purposes
of
consumption
;
(6)
The
licenses
provided
for
in
the
Act
in
question
are
not
within
the
category
of
shop,
saloon,
tavern,
auctioneer
or
other
licenses
in
order
to
the
raising
of
a
revenue
for
provincial,
local
or
municipal
purposes
under
section
92,
subsection
9,
of
the
British
North
America
Act.
(7)
The
Regulations
are
invalid
because
the
statute
which
authorizes
them
is
wholly
ultra
vires.
It
is
to
be
observed,
as
already
pointed
out
in
the
reasons
for
judgment
of
the
Appeal
Division,
that
the
regulations
are
not
brought
into
question
except
in
so
far
as
they
are
authorized
by
the
statute
and
that
they
will
have
to
be
found
ultra
vires
only
if
the
statute
itself
is
held
unconstitutional.
They
may,
therefore,
be
disregarded
for
the
purpose
of
the
present
discussion
;
and
that
disposes
of
ground
of
appeal
no.
7.
Ground
no.
1
is
only
a
general
statement
of
the
objections
of
the
appellant,
the
details
of
which
are
enumerated
in
grounds
2,
3,
4,5
and
6.
Those,
therefore,
are
the
grounds
which
have
to
be
examined
in
order
to
decide
the
present
appeal.
It
is
alleged
in
ground
of
appeal
no.
2
that
the
tax
imposed
is
not
a
direct
tax,
contrary
to
the
powers
of
a
provincial
legislature
under
head
2
of
sec.
92.
“Direct
taxation’’
alone
may
be
imposed
by
a
Province,
and
it
must
be
‘‘taxation
within
the
Province.”
It
was
said
by
this
Court,
in
City
of
Charlottetown
v.
Foundation
Maritime
Limited,
[1932]
S.C.R.
589,
at
594:
It
is
no
longer
open
to
discussion,
on
account
of
the
successive
decisions
of
the
Privy
Council,
that
the
formula
of
John
Stuart
Mill
(Political
Economy
ed.,
1886,
vol.
II,
p.
415)
has
been
judicially
adopted
as
affording
a
guide
to
the
application
of
section
92,
head
2
{Fairbanks
case,
[1928]
A.C.
117,
at
125).
Mill’s
definition
was
held
to
embody
‘‘the
most
obvious
indicia
of
direct
and
indirect
taxation’’
and
was
accepted
as
providing
a
logical
basis
for
the
distinction
to
be
made
between
the
two
(Bank
of
Toronto
v.
Lambe,
[1887]
12
A.C.
575,
at
582).
The
expression
“indirect
taxation’’
connotes
the
idea
of
a
tax
imposed
on
a
person
who
is
not
supposed
to
bear
it
himself
but
who
will
seek
to
recover
it
in
the
price
charged
to
another.
And
Mill
‘s
eanon
is
founded
on
the
theory
of
the
ultimate
incidence
of
the
tax,
not
the
ultimate
incidence
depending
upon
the
special
circumstances
of
individual
cases,
but
the
incidence
of
the
tax
in
its
ordinary
and
normal
operation.
It
may
be
possible
in
particular
cases
to
shift
the
burden
of
a
direct
tax,
or
it
may
happen,
in
particular
circumstances,
that
it
might
be
economically
undesirable
or
practically
impossible
to
pass
it
on
(The
King
v.
Caledonian
Collieries,
[1928]
A.C.
358).
It
is
the
normal
or
general
tendency
of
the
tax
that
will
determine,
and
the
expectation
or
the
intention
that
the
person
from
whom
the
tax
is
demanded
shall
indemnify
himself
at
the
expense
of
another
might
be
inferred
from
the
form
in
which
the
tax
is
imposed
or
from
the
results
which
in
the
ordinary
course
of
business
transactions
must
be
held
to
have
been
contemplated.
The
definition
of
John
Stuart
Mill,
above
referred
to,
states:
Taxes
are
direct
or
indirect.
A
direct
tax
is
one
which
is
demanded
from
the
very
persons
who
it
is
intended
or
desired
should
pay
it.
Indirect
taxes
are
those
which
are
demanded
from
one
person
in
the
expectation
and
intention
that
he
shall
indemnify
himself
at
the
expense
of
another;
such
as
the
excise
or
customs.
Now
the
appellant
contends
that
the
tax
we
are
now
examining
comes
under
the
definition
of
an
indirect
tax
because
it
is
imposed
upon
the
taxpayer
with
respect
to,
and
by
reason
of,
his
entering
into
a
commercial
transaction
or
trade
in
commodities;
also
because
it
taxes
all
agents
who
purchase
tobacco
on
behalf
of
their
principals
or
who
bring
tobacco
into
the
province
of
New
Brunswick
on
behalf
of
their
principals.
Of
course,
the
question
of
the
nature
of
the
tax
is
one
of
substance.
It
does
not
turn
only
on
the
language
used
by
the
legislature
which
imposed
it;
and
in
testing
the
validity
of
the
statute,
the
first
requisite
is
to
ascertain
the
real
nature
of
the
tax
imposed.
It
may
be
admitted
as
a
principle,
which
generally
proves
to
be
true,
that
a
tax
upon
a
person
with
respect
to
his
consumption
of
some
commodity
within
the
Province
is
direct
taxation
and
intra
vires,
even
although,
in
some
instances
and
circuitously,
he
is
enabled
to
pass
the
burden
on
to
someone
else.
It
may
be
assumed
that,
generally
speaking,
a
tax
upon
a
person
with
respect
to
a
commercial
transaction,
such
as
a
sale
or
purchase,
based
upon
and
with
respect
to
the
price
of
the
commodity,
is
indirect
taxation
and
ultra
vires
of
a
province,
even
although,
in
some
instances,
the
party
taxed
may
not
pass
the
burden
to
anyone
else.
In
the
Kingcome
case,
[1934]
A.C.
45,
the
tax
was
imposed
on
the
consumer
of
fuel
oil
according
to
the
quantity
which
he
consumed
within
the
province.
It
was
held
that
this
was
direct
taxation
and
intra
vires.
The
British
Columbia
Act,
in
their
Lordships’
view,
did
not
relate
to
any
transaction
in
the
commodity
between
the
taxpayer
and
someone
else.
Here,
the
appellant
argues
that
the
tax
is
upon
the
purchaser
of
commodities,
imposed
at
the
time
of
the
purchase,
and
with
respect
to
the
commodity
purchased;
and
that
it
is
accordingly
an
indirect
tax
and
ultra
vires.
He
relies
on
a
long
line
of
decisions
of
the
Privy
Council
upholding
this
principle.
If
we
turn
to
the
New
Brunswick
statute,
we
find
that
the
charging
section
(sec.
4)
imposes
the
tax
only
on
the
consumer
of
tobacco,
in
respect
of
the
consumption
of
such
tobacco,
and
computed
at
the
rate
of
ten
per
centum
of
the
retail
price
of
the
tobacco
purchased.
The
statute
makes
it
clear
that
the
only
person
who
it
is
intended
or
desired
should
be
taxed
is
the
consumer.
It
is
just
as
much
a
consumption
tax
as
was
the
British
Columbia
tax
in
the
Kingcome
case,
[1934]
A.
C.
45.
For
the
purpose
of
deciding
whether
such
a
tax
is
a
direct
or
an
indirect
tax,
it
does
not
matter
that
the
tax
is
imposed
before
or
after
consumption
of
the
commodity.
The
point
is
that
the
tax
is
imposed
in
respect
of
the
actual
consumption,
that
the
legislature
intends
that
it
should
be
a
tax
with
respect
to
consumption
and
that
the
language
of
the
statute
is
so
guarded
that,
except
in
extremely
exceptional
and
almost
inconceivable
cases,
it
makes
it
impossible
for
the
consumer
to
pass
it
on
to
someone
else,
or,
in
the
words
of
Mill,
to
"
"indemnify
himself
at
the
expense
of
another.’’
In
fact,
the
statute
is
framed
in
such
a
way
that
the
legislature
has
indicated
its
intention
that
the
person
on
whom
the
tax
is
imposed
will
bear
it
himself
;
and
if
it
has
taken
every
precaution
to
prevent
the
consumer
from
indemnifying
himself
at
the
expense
of
another.
This
must
be
inferred
both
from
the
form
in
which
the
tax
is
imposed
and
from
the
results
which,
in
the
ordinary
course
of
business
transactions
must
be
held
to
have
been
contemplated.
Indeed,
it
may
not
only
be
inferred
from
the
statute
itself,
but
it
is
there
expressly
so
stated.
The
consumer
who
is
taxed
is
a
person
who,
within
the
province,
purchases
tobacco
at
a
retail
sale,
in
the
province,
for
consumption
of
himself,
or
of
other
persons
at
his
expense.
By
definition,
‘‘purchaser’’
means
a
person
within
the
Province
purchasing
from
a
retail
vendor
at
a
retail
sale
in
the
Province.
A
‘‘retail
vendor’’
means
a
person,
within
the
Province,
selling
tobacco
to
a
consumer,
and
that
is
to
say:
a
person
who
holds
a
retail
vendor’s
licence,
issued
to
him
under
the
authority
of
the
Act,
and
whose
licence
is
in
force
at
the
time
of
the
sale.
And,
also
by
definition,
a
“retail
sale’’
means
a
sale
to
a
consumer
for
purposes
of
consumption
and
not
for
resale.
The
right
of
the
consumer
to
resell
is
taken
away
by
the
provisions
of
the
Act,
thus
meeting
the
possibility
suggested
by
Viscount
Haldane,
in
Attorney-General
for
British
Columbia
v.
Canadian
Pacific
Railway
Co.,
[1927]
A.C.
934.
It
was
stated
in
that
ease
that
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
resell
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.
In
the
present
case,
this
possibility
has
been
provided
against
;
and
no
legal
resale
by
the
consumer
may
take
place
within
the
province.
Not
only
that;
but
the
fact
that
the
tax
is
imposed
upon
a
consumer
purchasing
at
a
retail
sale,
in
view
of
the
definition
of
the
words
‘‘retail
sale’’
in
the
Act,
means
that
the
tax
is
imposed
only
in
respect
of
a
“sale
to
a
consumer
for
purposes
of
consumption
and
not
for
resale
‘
‘
;
and
it
follows
that
if
some
alleged
consumer
purchased
tobacco
with
the
concealed
intention
of
reselling
it,
he
might,
as
a
consequence,
become
open
to
a
penalty
for
violating
the
Act
;
but
he
would
not,
within
the
precise
terms
of
the
Act,
come
under
the
provisions
of
the
charging
section
(sec.
4),
and
conceivably
he
might
not
render
himself
liable
to
the
tax.
Here,
on
account
of
the
prescriptions
of
the
Act,
the
possibility
of
a
resale
cannot
be
said
to
be
according
to
the
common
understanding
of
men;
and
the
legislature,
by
its
statute,
has
taken
every
means
to
provide
against
that
possibility.
The
King
v.
Nat
Bells
Liquors
Ltd.,
[1922]
2
A.C.
128,
at
135,
136.
It
is
the
general
tendency
of
the
legislation
that
must
be
considered,
and
exceptional
cases
must
be
ignored.
The
suggestion
made
by
the
appellant
that
the
purchaser
may
go
outside
the
province
and
resell
there
can
hardly
be
entertained.
Section
4,
read
with
sections
2(a)
and
2(e),
imposes
the
tax
on
one
who
purchases
in
the
Province
for
consumption
there.
The
purchaser
may
exceptionally
go
outside
and
consume
the
tobacco
sold
in
the
province;
but
this
would
be
an
exceptional
case
resulting
from
the
free
act
of
the
purchaser
once
he
has
become
the
absolute
owner
of
the
tobacco
;
and
this
isolated
case
cannot
make
of
the
statute
one
imposing
a
tax
outside
the
province.
The
effect
of
the
tax
is
intended
to
be
confined
to
the
province
of
New
Brunswick.
It
is
imposed
upon
the
consumers
of
tobacco
in
New
Brunswick;
and
it
does
not
pretend
to
have
any
effect
at
all
outside
the
province.
But
it
is
argued
that
the
tax
is
indirect
because
the
Act
taxes
the
agent
with
respect
to
his
transaction
on
behalf
of
his
principal;
and
the
Privy
Council’s
decisions
in
Cotton
v.
The
King,
[1914]
A.C.
176,
and
in
Attorney-General
for
Manitoba
v.
Attorney-General
for
Canada,
[1925]
A.C.
561,
and
in
Provincial
Treasurer
of
Alberta
v.
Kerr,
[1933]
A.C.
710,
are
relied
on.
The
Act
taxes
the
“consumer”;
and,
by
definition,
“Consumer”
includes
a
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
*
*
*
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.
And
the
Act
further
says
that
a
consumer,
and
therefore
an
agent,
in
the
circumstances
within
the
definition,
shall
be
and
remain
liable
for
the
tax
imposed
by
this
Act
until
the
sale
has
been
collected.
From
a
practical
point
of
view,
it
may
be
said
that
this
feature
of
the
Act,
so
far
as
it
is
made
a
point
against
its
constitutionality,
is
almost
negligible.
Under
the
Act,
the
tax
shall
be
computed
at
the
rate
of
ten
per
centum
of
the
retail
price
of
the
tobacco
purchased.
(section
4).
The
circumstance
no
doubt
contemplated
by
the
Act,
when
a
person
would
purchase
tobacco
‘‘on
behalf
of
or
as
agent
for
a
principal,”
would
be
where
the
purchaser
sends
a
messenger
to
a
tobacco
store,
with
the
object
of
buying
for
him
the
tobacco
which
he
intends
to
consume.
The
purchasers
meant
to
be
so
covered
are
purchasers
of
tobacco
‘‘at
a
retail
sale,’’
and
‘‘for
consumption’’
by
the
principal.
In
ninety-nine
cases
out
of
a
hundred,
the
tax,
in
such
cases,
would
amount
to
something
between
ten
to
fifty
cents,
the
latter
being
an
extreme
suggestion.
It
is
to
be
assumed
that,
in
almost
every
case,
the
messenger
would
have
received
his
principal’s
money
to
pay
both
for
the
tobacco
and
for
the
tax.
The
amount
of
the
tax,
at
all
events,
would
be
but
a
trifle;
and
the
instances
where
it
may
happen
that
the
messenger
would
advance
the
money
would
be
extremely
scarce.
I
would
be
very
loath
to
declare
a
provincial
statute
unconstitutional
on
such
a
slim
objection.
Moreover,
it
is
very
doubtful
whether
the
occurrence
in
such
a
case
could
really
be
described
as
"‘passing
on.’’
This,
to
my
mind,
is
not
the
kind
of
‘‘passing
on’’
deemed
to
be,
in
the
decided
cases,
the
characteristic
of
an
indirect
tax.
The
"
"
agent,
‘
‘
in
this
instance,
would
not
be
paying
for
himself,
but
for
and
on
behalf
of
the
principal.
There
would
be,
as
a
consequence,
no
enhancement
of
the
actual
cost
as
between
the
agent
and
his
principal.
Moreover,
should
this
feature
of
the
Act
be
found
unconstitutional—which,
in
my
view,
it
should
not—it
is
severable,
and
it
may
not
be
allowed
to
defeat
either
the
whole
Act
or
its
principle.
The
objection
would
be
met
by
deleting
the
provision
concerning
agents
in
the
definition
of
"‘consumer.’’
As
the
tax
must
be
paid
immediately
4
at
the
time
of
making
the
purchase,
‘
‘
no
valid
retail
sale
may
be
made
without
the
tax
being
paid
at
once,
and
there
is
no
perceivable
object
in
enacting
that
the
agent
will
remain
responsible
for
it.
I
have
now
discussed
the
grounds
of
appeal
nos.
1,
2
and
3.
The
others
do
not
require
elaborate
consideration.
As
to
ground
no.
4,
I
cannot
agree
that
the
Act
infringes
upon
the
exclusive
legislative
jurisdiction
of
the
Parliament
of
Canada
to
impose
customs
and
excise
duties.
Section
5
of
the
Act
is
relied
on
for
the
appellant
‘s
argument
on
this
point.
It
provides
that
a
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
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
in
respect
of
such
tobacco,
etc.
*
*
*
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.
In
regard
to
this,
it
should
be
observed
that
it
affects
only
persons
residing,
or
ordinarily
resident,
or
carrying
on
business
in
New
Brunswick.
But
it
is
argued
that,
since
it
covers
such
a
person
who
brings
into
the
province,
or
who
receives
delivery
in
the
province
of
tobacco
from
outside,
the
tax
is
an
attempt
to
impose
customs
duties,
which
are
of
the
exclusive
competency
of
the
Dominion
Parliament.
I
do
not
think
that
it
is
a
customs
duty
within
the
meaning
of
those
words
as
they
are
generally
understood.
Under
section
5,
the
tax
is
not
collected
at
the
border
of
New
Brunswick,
or
before
the
tobacco
is
allowed
to
enter
the
territory
of
the
Province.
That
section
covers
the
case
of
a
resident
of
New
Brunswick,
or
of
a
person
carrying
on
business
therein,
who
brings
into
the
Province
tobacco
for
his
own
consumption,
or
for
the
consumption
of
other
persons
at
his
own
expense.
The
consumer
of
tobacco
is
not
called
upon
to
pay
the
tax
before
the
tobacco
comes
into
the
province,
or
before
he
receives
possession
of
the
tobacco.
He
pays
after
delivery,
or
after
he
has
come
into
possession.
Surely
there
must
be
a
moment
when
property
entering
a
province
becomes
property
in
the
province
subject
to
be
taxed
by
the
province.
To
my
mind,
section
5
has
no
other
purpose
than
to
equalize
between
purchasers
in
the
Province
and
purchasers
residing
in
New
Brunswick
who
happen
to
have
purchased
tobacco
outside
of
it.
It
may
be
styled
legislation
incidental
to
the
scheme
of
The
Tobacco
Tax
Act;
it
cannot
be
regarded
as
imposing
a
customs
duty.
Then,
as
ground
of
appeal
no.
5,
the
appellant
urges
that
the
Act
purports,
in
violation
of
the
provisions
of
section
121
of
the
British
North
America
Act,
to
impose
a
tax
upon
articles
grown,
produced
or
manufactured
in
any
one
of
the
provinces,
when
introduced
into
the
province
of
New
Brunswick
for
purposes
of
consumption.
Under
the
provisions
of
the
Act,
tobacco
enters
perfectly
free
into
the
Province;
but
the
consumer
is
taxed
in
connection
with
the
consumption
of
a
commodity
which
is
in
the
consumer’s
possession
in
the
Province.
The
legislature
has
assumed
that
one
who
acquires
for
the
purpose
of
consumption
will
consume.
The
exceptional
cases
where
he
might
change
his
mind
after
introducing
into
the
province
the
tobacco
he
has
purchased
for
consumption
are
legitimately
ignored
by
the
legislature.
It
would
seem
further
that
section
121
of
the
British
North
America
Act
only
aims
at
the
prohibition
of
customs
duties
when
the
articles
of
the
growth,
produce
or
manufacture
of
any
one
of
the
provinces
are
carried
into
any
other
province
(Gold
Seal
Ltd.
v.
Dominion
Express
Company
&
The
Attorney-General
of
the
province
of
Alberta
(1921),
62
Can.
S.C.R.
424).
On
the
occasion
of
their
importation
from
other
provinces,
the
admission
into
the
province
must
be
free
and
that
is
to
say
that
no
tax
or
duty
can
be
imposed
as
a
condition
of
such
admission
(The
King
v.
Nat
Bell
Liquors
Ltd.,
[1922]
2
A.C.
128).
Incidentally,
it
need
hardly
be
said
that
the
invalidity
of
section
5
could
not
affect
the
rest
of
the
statute
(Toronto
Corporation
v.
York
Corporation,
[1938]
A.C.
415).
The
last
ground
of
appeal
is
that
the
license
required
from
the
vendors
is
not
one
authorized
by
Head
9
of
sec.
92
of
the
British
North
America
Act.
It
has
been
repeatedly
held
that
the
licenses
specifically
enumerated
in
Head
9
of
section
92
are
not
the
only
licenses
which
provincial
legislatures
may
provide
for.
It
has
been
held
also
that
the
words
‘‘other
licenses”
in
sub-head
9
are
not
limited
to
licenses
eyusdem
generis
(Brewers
Malsters
Association
v.
Attorney-General
for
Ontario,
[1897]
A.C.
231;
Attorney-
General
for
Manitoba
v.
Manitoba
License
Holders
Association,
[1902]
A.C.
73;
Shannon
v.
Lower
Mainland
Dairy
Products
Board,
[1938]
A.C.
708).
Provincial
legislatures
can
provide
for
licenses
not
only
for
the
purpose
of
revenue,
but
also
for
the
purpose
of
regulating
matters
within
their
powers.
For
example,
they
have
the
power
of
requiring
licenses
as
an
incident
of
any
of
their
other
powers,
apart
from
the
power
to
require
licenses
merely
for
the
purpose
of
raising
a
revenue.
A
license
can,
therefore,
be
required
by
a
Province
as
a
means
of
collecting
a
tax
which
is
valid,
or
as
a
means
of
compelling
those
who
are
entrusted
with
the
duty
of
collecting
a
tax
to
comply
with
that
duty.
Such
is
the
case
here.
It
may
be
said,
as
a
matter
of
fact,
that
the
license
required
under
The
Tobacco
Tax
Act
is
a
means
of
enabling
the
Province
to
possess
a
list
of
the
names
of
the
agents
who
are
entrusted
with
the
collection
of
the
tax.
In
the
King
come
Navigation
case,
[1934]
A.
C.
45,
the
statute
there
considered
also
provided
for
a
license.
Under
all
the
circumstances,
I
think
that
the
judgment
appealed
from
was
right
and
The
Tobacco
Tax
Act
was
competently
enacted
by
the
legislature
of
the
province
of
New
Brunswick.
The
appeal
should,
therefore,
be
dismissed
with
costs,
except
that
there
will
be
no
costs
to
the
Intervenant,
the
Attorney-
General
of
the
province
of
Quebec.
CROCKET
J.:—I
agree
with
my
brother
Rinfret
and
the
judgment
of
the
Appeal
Division
of
the
Supreme
Court
of
New
Brunswick
that
The
Tobacco
Tax
Act,
as
enacted
by
the
Legislature
of
that
Province,
is
wholly
intra
vires.
My
brother
Rinfret
has
so
methodically
and
exhaustively
dealt
with
the
various
points
involved
in
the
appeal
as
argued
before
us
that,
agreeing
with
him,
as
I
do,
in
all
his
conclusions
thereon,
I
find
it
difficult
to
state
my
own
reasons
for
arriving
at
the
same
conclusion
without
reiterating
much
of
what
he
has
so
pointedly
said.
However,
in
the
circumstances,
I
feel,
even
at
that
risk,
I
should
do
so.
Apart
from
the
objection
that
the
vendors’
licenses
provided
for
by
the
statute
are
not
licenses
within
the
meaning
of
s.
92(9)
of
the
B.N.A.
Act,
all
the
grounds
upon
which
its
constitutional
validity
was
challenged
here,
as
in
the
court
below,
centre
around
the
question
as
to
whether
the
tax
thereby
imposed
is
a
direct
tax
within
the
meaning
of
s.
92(2)
of
that
Act.
As
to
the
nature
or
form
of
the
tax
imposed,
the
appellant
of
course
contends
that
it
is
an
"
"
indirect,
‘
‘
rather
than
a
4
"
direct
‘
‘
tax,
for
the
reason
that
it
arises
out
of
a
commercial
or
trading
transaction,
to
which
the
intended
taxpayer
is
a
party,
and
that
it
therefore
falls
within
the
meaning
of
the
so-called
trading
cases,
which
were
so
strongly
relied
upon
to
support
the
appeal,
as
well
as
for
the
reason
that
upon
the
true
construction
of
s.
2(a)
the
tax
is
imposed,
not
only
upon
the
purchasing
prospective
consumer,
but
alternatively
upon
his
agent
in
making
the
purchase
for
him.
As
to
the
cases
thus
relied
upon,
it
will
be
found
on
examination
that
they
all
proceed
upon
the
ground
that,
although
a
tax
purports
to
be
imposed
upon
one
party
to
a
commercial
or
trading
transaction,
its
real
nature
is
determinable
by
the
practicability
of
its
being
passed
on
to
other
persons
by
means
of
a
resale
and
thus
absorbed
in
the
purchase
price
obtained
on
its
resale.
The
pronouncement
of
Viscount
Haldane
in
Attorney-General
for
British
Columbia
v.
Canadian
Pacific
Railway
Company,
[1927]
A.C.
934,
at
938,
was
especially
relied
upon
in
this
regard,
as
stated
by
my
brother
Rinfret.
In
the
present
case,
as
Baxter
C.J.,
in
the
court
below
distinctly
held,
and
as
clearly
appears
from
the
very
careful
analysis
my
learned
brother
here
has
made
of
the
relevant
provisions
of
the
New
Brunswick
Act,
this
possibility
has
been
definitely
eliminated
by
the
statute
itself.
Not
only
does
s.
3(2)
expressly
enact
that
no
person
shall
sell
any
tobacco
in
the
province
at
a
retail
sale
unless
he
holds
a
vendor’s
license
issued
to
him
under
authority
of
this
Act
and
such
license
is
in
force
at
the
time
of
sale,
but
clause
(e)
of
s.
2
declares
that
‘retail
sale”
means
a
sale
to
a
consumer
for
the
purposes
of
consumption
and
not
for
resale.
Furthermore,
s.
4
in
the
most
explicit
terms
imposes
the
tax
on
the
consumer
in
respect
of
the
consumption
of
the
tobacco
purchased,
and
makes
it
payable
at
the
time
the
purchaser
makes
his
purchase.
It
is
true
that
the
word
‘
consumer,
‘
‘
as
defined
in
s.
2(a),
includes,
not
only
a
person,
who
purchases
tobacco
at
a
retail
sale
in
the
Province
for
his
own
consumption
or
for
the
consumption
of
other
persons
at
his
expense,
but
one
who
purchases
the
tobacco
on
behalf
of
or
as
the
agent
for
a
principal,
who
desires
to
acquire
such
tobacco
for
consumption
by
such
principal
or
other
persons
at
the
expense
of
such
principal,
and
that
s.
10
provides
that
the
consumer
shall
be
and
remain
liable
for
the
tax
imposed
by
this
Act
until
the
same
has
been
collected.
So
far,
however,
as
purchases
made
in
the
Province
are
concerned,
it
is
plain
that
the
tax
must
be
paid
at
the
time
of
the
purchase,
and
that
if
the
tax
is
not
then
paid
no
purchase
can
lawfully
be
made,
so
that
s.
10
cannot
very
well
be
intended
to
apply
to
the
purchase
of
any
tobacco
within
the
Province.
It
is
obviously
intended
to
apply
to
the
provisions
of
s.
5
in
any
case
where
a
person
residing
or
ordinarily
resident
or
carrying
on
business
in
the
Province
may
be
found
to
have
brought
into
the
Province
or
have
received
delivery
in
the
Province
of
tobacco
purchased
outside
the
Province
for
his
consumption,
when
he
is
required
to
report
the
fact
to
the
Minister
and
then
to
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.
In
any
event,
as
I
read
the
relevant
provisions,
the
tax
is
imposed
upon
the
consumer
in
respect
of
his
own
consumption
of
it
or
the
consumption
of
it
by
other
persons
at
his
expense,
whether
the
tobacco
be
purchased
by
him
personally
or
by
someone
whom
he
has
requested
to
make
the
purchase
for
him,
either
within
or
without
the
Province.
It
cannot
reasonably,
in
my
opinion,
be
held
to
be
a
tax
imposed
upon
any
other
person
than
upon
the
consumer
himself
in
respect
of
tobacco
purchased
for
his
own
consumption
or
consumption
by
other
persons
at
his
expense.
It
was
surely
never
intended
to
make
a
servant
or
a
messenger,
who
might
be
sent
by
his
employer
to
buy
a
package
of
tobacco
or
cigarettes
for
consumption
by
his
employer
or
his
employer’s
friend
at
his
employer’s
expense,
liable
for
the
tax
so
explicitly
imposed
by
the
statute
in
respect
of
the
consumption
of
the
tobacco
thus
purchased.
The
fact
that
the
purchase
is
made
for
the
master
and
intending
consumer
by
a
servant
or
messenger
does
not
make
the
purchase
any
less
the
purchase
of
the
master,
either
at
law
or
according
to
the
common
understanding
of
men,
than
if
the
master—the
intending
consumer—
went
to
the
retail
store
to
make
it
personally.
No
purchase
being
possible
without
payment
of
the
tax,
there
could
in
the
ordinary
course
of
events
be
but
few
instances
where
a
master
would
send
a
servant
or
messenger
to
a
retail
vendor’s
shop
to
buy
tobacco
for
him
without
giving
him
the
money
to
pay
both
the
tax
and
the
price
of
the
tobacco.
It
would
only
be
in
a
case
where
the
intending
consumer
at
the
moment
found
himself
without
the
necesary
money
that
there
would
be
any
likelihood
of
the
messenger
himself
paying
either
the
tax
or
the
purchase
price
with
any
other
than
the
consumer’s
own
money.
In
such
a
contingency
the
master
might
borrow
the
necessary
money
from
someone
else,
or
possibly
the
servant
might
himself
for
the
time
being
lend
the
money
to
his
master,
if
he
had
the
change
in
his
own
pocket.
Constructively
at
least
the
money
paid
to
the
vendor
would
none
the
less
be
the
master’s.
The
tax
itself
would
not
amount
at
the
most
in
such
a
case
to
more
than
five
or
ten
cents,
for
the
statute
provides
for
the
computation
of
the
tax
to
the
nearest
cent
(one-half
cent
being
considered
as
one
cent)
at
the
rate
of
ten
per
centum
of
the
retail
price
of
the
tobacco
purchased.
For
my
part
I
would,
like
my
brother
Rinfret,
be
very
loath
to
hold
that
the
mere
fact
of
the
purchase
being
made
by
a
servant
or
by
a
special
messenger
under
such
exceptional
circumstances
could
have
the
effect
of
converting
what
is
otherwise
so
plainly
a
direct
tax
upon
a
consumer
in
respect
of
his
own
consumption
of
tobacco,
and
thus
within
the
constitutional
power
of
a
Provincial
Legislature,
into
an
indirect
tax
entirely
beyond
thé
legislative
power
of
any
of
the
Provinces.
The
statute
intends
the
payment
of
but
one
tax
in
respect
of
each
separate
purchase
of
tobacco
in
the
Province.
This,
as
I
have
said,
it
definitely
requires
to
be
paid
at
the
time
the
purchase
is
made
by
or
in
behalf
of
the
prospective
consumer.
If
the
servant
or
messenger
in
the
circumstances
I
have
indicated,
either
for
his
own
or
for
his
master’s
convenience,
voluntarily
makes
the
payment
for
his
master
with
his
own
money
or
with
money
borrowed
by
him
for
the
purpose,
it
surely
cannot
well
be
said
that
he
thereby
becomes
the
‘"consumer”
within
the
meaning
of
the
charging
section
of
the
statute,
and
that
the
statute
imposes
the
tax
upon
him
and
not
upon
his
master
as
the
prospective
consumer.
The
statute
certainly
does
not
compel
the
servant
or
agent
to
pay
the
tax
if
the
master
or
employer
does
not
provide
him
with
the
money
for
the
purpose.
It
would
in
such
circum
stances
be
purely
a
voluntary
payment
upon
his
part
wholly
incompatible
with
the
legal
conception
of
a
tax.
It
seems
to
me
that
there
would
be
quite
as
much
reason
for
saying
that
if
the
prospective
consumer,
not
having
the
money
in
his
pocket
at
the
moment,
borrowed
it
from
a
servant
or
from
anybody
else,
went
to
the
vendor’s
shop
himself,
and
made
the
purchase
and
paid
the
tax
with
the
borrowed
money,
the
lender,
and
not
the
purchaser,
would
thereby
become
the
consumer
and
the
taxpayer.
Even
if
the
alternative
provision
contained
in
s.
2(a)
concerning
the
purchase
within
the
province
from
a
retail
vendor
by
an
agent
for
his
principal
for
consumption
by
the
latter
or
by
other
persons
at
his
expense
must
be
construed
as
constituting
the
servant
or
agent,
and
not
the
principal,
for
whom
the
purchase
is
made,
the
intended
taxpayer
in
such
circumstances
as
above
suggested,
the
servant
or
agent
would
not
surely
find
it
any
less
practicable
or
possible
to
pass
on
the
tax
to
his
master
by
means
of
a
resale
to
him,
than
the
master
would
to
pass
it
on
by
the
same
means
to
anybody
else—in
the
face
of
the
express
statutory
prohibition
against
any
resale
in
any
manner
whatsoever.
Perhaps
I
should
in
this
connection
mention
s.
7
in
addition
to
the
other
sections
I
have
referred
to.
This
section,
so
far
as
all
retail
vendors
are
concerned,
precludes
as
effectually
as
any
statutory
provisions
can
the
absorption
of
the
tax
in
the
retail
price
or
its
recoupment
in
whole
or
in
part
to
the
purchaser.
Reading
all
the
material
sections
together,
it
is
impossible,
I
think,
to
conceive
how
the
Legislature
could
more
effectually
have
indicated
its
intention
that
this
tax
should
be
demanded
from
the
very
persons,
who
it
intended
or
desired
should
pay
it.
This
is
the
essential
characteristic
of
‘‘direct,’’
as
distinguished
from
‘‘indirect’’
taxation,
and
constitutes
the
true
criterion
for
determining
whether
a
particular
tax
falls
under
the
former
or
the
latter
category,
as
expounded
by
John
Stuart
Mill
in
his
well
known
treatise
on
Political
Economy,
and
adopted
by
the
Judicial
Committee
of
the
Privy
Council
in
Bank
of
Toronto
v.
Lambe
(1887),
12
A.C.
575,
and
in
Cotton
v.
Rex,
[1914]
A.C.
176,
and
other
cases,
and
so
distinctly
reaffirmed
by
Lord
Thankerton
in
the
recent
case
of
Attorney-General
for
British
Columbia
v.
Kingcome
Navigation
Co.,
[1934]
A.C.
45,
as
to
the
meaning
of
the
term
‘‘direct
taxation”
in
s.
92(2)
of
the
British
North
America
Act.
In
the
face
of
the
various
provisions
of
the
statute
itself,
how
can
it
logically
be
said
that
the
tax
imposed
by
the
impugned
statute
is
a
tax
which
the
Legislature
intended
should
be
borne
by
any
other
person
than
the
prospective
consumer
himself,
or
that
it
is
a
tax,
the
general
tendency
of
which
is
to
enhance
or
in
any
way
affect
the
retail
price
of
tobacco
either
within
or
without
the
Province?
The
definite
provisions
of
the
statute
itself
in
my
judgment
make
the
question
as
to
the
general
tendency
of
the
tax
quite
irrelevant,
unless
indeed
one
is
disposed
to
question
the
good
faith
of
the
Legislature
and
regard
the
whole
scheme
of
the
statute
as
a
mere
pretence
or
eolourable
arrangement
in
order
to
disguise
what
is
claimed
to
be
‘‘indirect
taxation,
‘
which
is
not
within
its
legislative
powers,
as
"
direct
taxation,’’
which
is.
For
my
part
I
am
not
disposed
to
do
so.
With
all
respect,
the
only
ground
to
my
mind
upon
which
any
argument
could
possibly
be
based
in
support
of
the
contention
that
the
tax
imposed
by
the
Act
is
not
a
direct
tax
within
the
competency
of
the
Provinces
under
the
provisions
of
s.
92(2)
of
the
British
North
America
Act
is
that
of
the
inclusion
of
the
alternative
provision
regarding
purchases
by
agents
in
the
definition
of
“consumer”
in
s.
2(2)
of
the
impugned
statute.
The
most
that
can
be
said
as
to
this
is
that
the
language
of
the
alternative
clause
may
be
confusing.
Seeing
that
no
retail
purchase
could
lawfully
be
made
within
the
Province
without
the
tax
being
immediately
paid,
this
clause
would
appear
to
have
no
perceivable
object
and
to
be
quite
unnecessary
to
the
levying
of
the
intended
tax.
For
this
reason
the
draftsman
would
have
been
well
advised,
in
my
opinion,
to
omit
it.
It
could
be
deleted
at
any
time
without
affecting
the
vital
object,
of
the
Act.
As
to
s.
5,
it
is
directed
only
against
persons
ordinarily
resident
or
carrying
on
business
in
New
Brunswick,
who
might
otherwise
seek
to
avail
themselves
of
favourable
opportunities
to
buy
their
tobacco
outside
the
Province
and
thereby
easily
evade
the
tax,
which
s.
4
so
plainly
intends
to
apply
to
all
consumers
alike
in
the
Province.
Its
only
and
perfectly
obvious
purpose
is
to
close
such
an
inviting
opening
to
such
persons
as
might
be
inclined
to
dodge
the
intended
tax
by
such
convenient
means.
The
section
merely
places
such
persons
on
the
same
footing
in
respect
of
their
consumption
of
tobacco
purchased
by
or
for
them
outside
the
Province
as
all
‘‘consumers,’’
who
buy
their
tobacco
within
the
Province.
It
does
not
purport
in
any
sense
to
prohibit
any
one
from
buying
tobacco
outside
the
Province,
but
makes
it
clear
that
when
one
does
so
and
brings
it
into
the
Province
or
receives
delivery
of
it
in
the
Province
for
his
own
consumption
he
does
not
thereby
free
himself
of
liability
to
pay
the
same
tax
in
respect
of
its
consumption
as
if
he
had
bought
it
at
a
retail
store
within
the
Province
at
the
same
price.
Surely
if
the
charging
section
of
the
statute
is
itself
within
the
legislative
competency
of
the
Province,
such
a
purely
subsidiary
section—having
no
other
perceivable
object
than
the
prevention
or
the
evasion
or
defeat
of
the
intended
tax—cannot
well
be
held
to
be
beyond
it.
As
to
the
contention
that
the
intended
tax
is
in
reality
a
customs
or
excise
duty
and
consequently
an
*
"
indirect
tax,
‘
‘
and
that
its
attempted
imposition
therefore
infringes
the
exclusive
legislative
jurisdiction
of
the
Dominion
Parliament
in
relation
to
the
creation
or
alteration
of
such
duties,
as
expressly
conferred
by
s.
122
of
the
B.N.A.
Act,
precisely
the
same
objection
was
made
in
the
Kingcome
case,
[1934]
A.C.
45,
regarding
the
imposition
of
the
fuel
oil
tax
by
the
British
Columbia
Fuel
Oil
Tax
Act,
1930,
c.
71,
as
amended
by
the
statute
of
1932,
e.
51,
upon
every
consumer
of
fuel
oil
according
to
the
quantity
which
he
has
consumed.
The
Judicial
Committee
overruled
the
objection
as
inconsistent
with
its
own
decisions,
"
which,”—to
quote
the
language
of
Lord
Thankerton—
go
back
to
the
year
1878,
and
settled
that
the
test
to
be
applied
in
determining
what
is
“direct
taxation,’’
within
the
meaning
of
s.
92,
head
2,
of
the
Act
of
1867
is
to
be
found
in
Mill’s
definition
of
direct
and
indirect
taxes.
That
is
surely
conclusive
as
to
this
ground
of
appeal.
It
is
argued
as
well
that
s.
5
of
the
New
Brunswick
statute
contravenes
s.
121
of
the
B.N.A.
Act,
as
interposing
an
obstacle
to
the
free
admission
of
tobacco
as
an
article
of
the
growth,
produce
or
manufacture
of
any
one
of
the
Provinces
into
each
of
the
other
Provinces,
within
the
meaning
of
that
enactment.
This
section
came
before
this
Court
for
interpretation
for
the
first
time
in
1921,
in
the
ease
of
Gold
Seal
Ltd.
v.
Attorney-
General
for
Alberta
(1921),
62
Can.
S.
C.
R.
424,
at
439,
on
the
question
of
the
constitutional
validity
of
an
enactment
of
the
Parliament
of
Canada
contained
in
ch.
8,
10
Geo.
V,
1919,
prohibiting
the
importation
of
intoxicating
liquor
into
those
Provinces,
where
its
sale
for
beverage
purposes
is
forbidden
by
provincial
law.
The
case
was
heard
by
Sir
Louis
Davies,
C.J.,
and
Idington,
Duff,
Anglin
and
Mignault,
JJ.
Duff,
J.,
dealing
with
the
construction
of
s.
181,
held
that
the
phraseology
adopted,
when
the
context
is
considered
in
which
the
section
is
found,
shows
that
the
real
object
of
the
clause
is
to
prohibit
the
establishment
of
customs
duties
affecting
interprovincial
trade
in
the
products
of
any
Province
of
the
Union.
Anglin,
J.,
expressed
the
view
that
the
impugned
legislation
was
not
obnoxious
to
s.
121
of
the
B.N.A.
Act.
The
purpose,
he
said,
of
that
section
is
to
insure
that
articles
of
the
growth,
produce
or
manufacture
of
any
Province
shall
not
be
subjected
to
any
customs
duty
when
carried
into
any
other
Province.
Prohibition
of
import
in
aid
of
temperance
legislation
is
not
within
the
purview
of
the
section.
Mignault,
J.,
thought
that
the
object
of
s.
121
was
not
to
decree
that
all
articles
of
the
growth,
produce
or
manufacture
of
any
of
the
Provinces
should
be
admitted
into
the
others,
but
merely
to
secure
that
they
should
be
admitted
‘‘free,’’
that
is
to
say,
without
any
tax
or
duty
imposed
as
a
condition
of
their
admission.
The
essential
word
here,
he
continued,
is
"
free,”
and
what
is
prohibited
is
the
levying
of
customs
duties
or
other
charges
of
a
like
nature
in
matters
of
interprovincial
trade.
The
clear
effect
of
these
three
several
pronouncements
as
read
together,
it
seems
to
me,
is
that
the
words
‘‘admitted
free,’’
as
used
in
s.
121,
mean
admitted
free
of
customs
duties,
and
for
that
reason,
and
that
reason
only,
even
an
express
prohibition
of
the
import
of
intoxicating
liquor
from
one
province
to
another
in
aid
of
provincial
temperance
legislation
is
not
within
the
purview
of
the
section.
That
is
precisely
how
the
head-note
of
the
case
states
the
decision
of
the
court
on
the
construction
of
the
section
relied
on
as
invalidating
the
legislation
there
in
question.
Whether
or
not
that
decision
means
that
the
section
only
applies
to
Dominion
legislation,
it
plainly
implies,
I
most
respectfully
think,
that
the
Parliament
of
Canada
may
validly
go
so
far
as
to
expressly
prohibit
the
admission
from
one
Province
to
another
of
any
article
of
the
growth,
produce
or
manufacture
of
another
Province,
so
long
as
the
prohibition
does
not
involve
the
imposition
of
a
customs
duty.
If
that
be
so
in
respect
of
the
application
of
the
section
to
Dominion
legislation,
how
can
this
Court
now
consistently
hold
that
a
provincial
enactment,
which
neither
prohibits
nor
in
any
sense
obstructs
nor
restrains,
as
between
vendor
and
purchaser,
the
passage
of
any
such
article
from
one
Province
to
another,
does
fall
within
the
purview
of
the
intended
ban?
No
one
contends
or
could
well
contend
that
intoxicating
liquor
is
not
quite
as
much
an
article
of
the
growth,
produce
or
manufacture
of
one
or
more
of
the
Provinces
of
Canada
as
tobacco.
Surely
s.
121
of
our
Constitutional
Act
was
never
intended
to
have
one
meaning
in
its
application
to
Dominion
legislation
and
quite
another
meaning
in
its
application
to
pro-
vincial
legislation.
And
for
my
part
I
cannot
see
how
the
fact
that
in
the
Gold
Seal
case,
(1921)
62
Can.
8.C.R.
424,
at
470,
the
court
was
considering
an
enactment
of
the
Parliament
of
Canada
in
relation
to
the
importation
of
intoxicating
liquor
from
one
Province
to
another
can
justify
us
in
completely
discarding
the
construction
so
explicitly
placed
on
s.
121
of
the
B.N.A.
Act
in
that
case,
and
now
construing
the
words
‘
‘
admitted
free,’’
as
used
therein,
in
such
a
sweeping
sense
as
that
contended
for
in
support
of
this
appeal.
If
we
were
being
called
upon
to
interpret
the
section
for
the
first
time,
and
if
I
may
say
so
with
all
respect,
I
should
be
disposed
to
regard
it
in
precisely
the
same
light
as
Mignault,
J.,
so
clearly
expounded
it
in
the
passage
I
have
quoted,
and
to
hold
that
it
was
inserted
in
the
Imperial
Act
merely
to
secure
that
they
(articles
of
the
growth,
produce
or
manufacture
of
any
of
the
Provinces)
should
be
admitted
"free’
(in
each
of
the
other
Provinces),
that
is
to
say,
without
any
tax
or
duty
imposed
as
a
condition
of
their
admission,
and
that
what
is
prohibited
is
the
levying
of
customs
duties
or
other
charges
of
a
like
nature
in
matters
of
interprovincial
trade.
This
treats
the
section
as
applicable
to
Dominion
and
provincial
legislation
alike,
and
in
no
way
concerns
the
distribution
of
legislative
powers
as
between
the
Dominion
and
the
Provinces.
It
recognizes
on
the
one
hand
the
exclusive
power
of
the
Dominion
to
create
and
impose
both
customs
and
excise
duties,
and
on
the
other
the
exclusive
right
of
the
Provinces
to
impose
direct
taxation
within
the
Province
for
the
purpose
of
raising
revenue
for
provincial
purposes,
so
long
as
the
imposition
of
such
duties
or
taxes
by
either
authority
does
not
constitute
an
obstacle
to
the
admission
of
articles
grown,
produced
or
manufactured
in
any
one
or
more
of
the
Provinces
into
any
other
Province
in
the
sense
of
imposing
any
condition
to
such
admission.
For
the
reasons
already
stated,
I
cannot
see
how
the
New
Brunswick
Tobacco
Tax
Act
imposes
any
condition
whatever
to
the
importation
or
admission
into
that
Province
of
tobacco,
whether
it
be
the
produce
of
any
other
Province
of
Canada
or
of
any
foreign
country.
The
tax
or
charge
contemplated
by
s.
5
is
a
tax
or
charge
which,
I
repeat,
is
not
payable
until
after
the
tobacco
has
been
brought
into
the
Province
by
the
prospective
consumer
or
received
by
him
within
the
Province
for
consumption
by
himself
or
others
at
his
expense.
Indeed
the
tax
is
neither
leviable
nor
in
any
manner
recoverable
until
after
the
intending
consumer
has
reported
to
the
Provincial
Secretary-Treasurer
the
fact
that
he
has
brought
the
tobacco
into
the
Province
or
received
delivery
of
it
within
the
Province
for
that
purpose,
and
the
price
paid
for
it
to
the
outside
vendor.
The
objection
that
the
statute’s
requirements
regarding
vendors’
licenses
are
ultra
vires
of
the
Legislature
as
not
falling
within
the
purview
of
s.
92(9)
of
the
B.N.A.
Act,
is
equally
untenable
for
the
reasons
so
convincingly
stated
by
my
brother
Rinfret.
I
agree
with
him
that
the
appeal
should
be
dismissed
with
costs
against
the
appellant,
but
with
no
costs
to
the
intervenant,
the
Attorney-General
of
the
Province
of
Quebec.
KERWIN
J.:—Speaking
generally,
the
tax
in
question
is,
in
my
opinion,
a
direct
tax
for
the
raising
of
a
revenue
for
provincial
purposes
within
the
meaning
of
head
2
of
section
92
of
the
British
North
America
Act.
The
mere
insertion,
by
the
legislature,
of
the
phrase
in
section
4
of
the
Act
‘‘a
tax
in
respect
of
the
consumption
of
such
tobacco”
is
not
conclusive
but
upon
consideration
it
appears
to
me
that
the
tax
is
imposed
upon
the
very
person
it
is
intended
should
bear
it
and
who,
in
the
ordinary
course,
will
not
be
able
to
pass
it
on.
The
’’consumer”
of
tobacco
purchasing
it
at
a
retail
sale
in
the
Province
is
ordered
to
pay
the
tax
at
the
time
of
purchase,
and
the
vendor
is
made
the
collecting
agency
for
the
Province.
In
my
view
the
tax
is
not
imposed
on
one
of
the
parties
to
a
sale
of
tobacco
in
respect
of
that
transaction,
and
the
fact
that
it
is
imposed
before
consumption
(instead
of
after
consumption
as
in
the
King
come
case,
(1934)
A.C.
45)
is
not
of
importance
if
my
conclusion
as
to
the
true
nature
and
tendency
of
the
tax
is
correct.
In
two
respects
the
statute
is
partially
ultra
vires.
The
attempt
by
that
part
of
the
definition
of
"consumer”
or
‘‘consumer
of
tobacco’’
to
impose
the
tax
on
an
agent
must,
I
think,
fail
as
being
indirect
taxation.
However,
the
principal
is
liable
for
the
tax
and
the
part
relating
to
the
agent
is
clearly
severable.
Section
5,
which
is
also
severable,
is
ultra
vires
because
it
infringes
the
provisions
of
section
121
of
the
British
North
America
Act.
The
statute
before
this
Court
in
the
Gold
Seal
case,
(1921)
62
Can.
S.C.R.
424,
at
470,
was
a
Dominion
enactment
and
there
is
nothing
in
any
of
the
judgments
inconsistent
with
this
conclusion.
It
is
true
that
the
person
who
brings
into
New
Brunswick
tobacco
for
his
own
consumption
reports
the
matter
to
the
Minister
but
the
fact
that
the
entry
into
the
Province
may,
or
always
will,
precede
the
reporting
and
payment
of
the
tax,
makes
it
none
the
less
an
impost
upon
the
production
or
manufacture
of
another
province
if
the
tobacco
in
question
falls
within
that
class.
If,
of
course,
the
tobacco
is
brought
from
a
foreign
country,
the
tax
directed
to
be
paid
by
section
5
is
a
customs
duty
and
beyond
the
powers
of
a
provincial
legislature.
The
main
purpose
of
the
statute
is
to
impose
direct
taxation
within
the
Province
but
it
is
not
ancillary
to
that
purpose
to
attempt
to
regulate
external
trade
in
a
particular
commodity
or
to
impose
a
customs
duty
thereon.
A
provincial
legislature
is
not
authorized
thus
to
seize
a
power
that
was
expressly
withheld
from
it.
With
the
two
exceptions
mentioned,
the
statute
is
intra
vires
and
as
the
repugnant
provisions
are
severable,
the
plaintiff
appellant,
which
carries
on
the
business
of
selling
tobacco
in
New
Brunswick,
is
unable
to
succeed
in
its
action
which
by
the
judgment
a
quo
stands
dismissed.
The
appeal
should
be
dismissed
but
there
should
be
no
costs.
Hudson
J.:—I
have
had
an
opportunity
of
reading
the
judgment
prepared
by
my
brother
Rinfret
and
agree
with
the
conclusions
at
which
he
has
arrived,
except
on
one
point,
that
is,
the
personal
liability
imposed
on
an
agent.
This,
I
think,
oversteps
the
limits
of
Provincial
legislative
jurisdiction
but,
with
this
qualification,
I
would
dismiss
the
appeal.
TASCHEREAU
J.:—The
Supreme
Court
of
New
Brunswick,
Appeal
Division,
held
that
the
Tobacco
Tax
Act
and
regulations
thereunder
are
constitutional.
The
Atlantic
Smoke
Shops
Limited
now
appeals
to
this
Court,
and
the
Attorney-General
for
the
province
of
Quebec
(where
a
law
substantially
similar
has
been
enacted)
having
been
allowed
to
intervene,
joins
with
the
Attorney-General
for
New
Brunswick,
and
submits
that
the
Act
is
intra
vires
of
the
province.
The
Act
which
was
enacted
on
the
11th
of
May,
1940,
came
into
force
on
the
first
day
of
October
of
the
same
year
by
Proclamation
of
the
Lieutenant-Governor
in
Council.
The
appellant
has
a
retail
store
in
the
city
of
Saint
John
and
carries
on
the
business
of
selling
tobacco,
including
cigars
and
cigarettes,
and
has
refused
to
obtain
the
license
required
by
the
Act.
It
has
also
neglected
to
collect
the
tax
imposed
upon
every
purchaser.
The
appellant
submits
that
this
tax
is
not
a
direct
tax,
nor
a
tax
within
the
province;
that
the
Act
infringes
upon
the
executive
legislative
jurisdiction
of
the
Dominion
to
impose
customs
and
excise
duties,
and
that
the
license
provided
for
is
not
within
the
category
of
licenses
for
which,
under
section
92,
subsection
9,
of
the
British
North
America
Act,
the
provinces
have
legislative
powers.
The
principal
sections
of
the
Act
which
have
to
be
considered
are
the
following
4
—
Section
4,
which
is
the
taxing
section,
reads
:—
Every
consumer
of
tobacco
purchased
at
a
retail
sale
in
the
province
shall
pay
to
His
Majesty
the
King
in
the
right
of
the
province
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.
The
word
"‘consumer’’
is
defined
as
follows
:—
2.
In
this
Act,
unless
the
context
otherwise
requires
(a)
"Consumer”
or
‘‘Consumer
of
Tobacco’’
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.
The
Act
further
provides
that
the
purchaser
must
purchase
from
a
retail
vendor
who
must
obtain
a
license
issued
from
the
proper
authorities;
and
a
retail
sale
is
defined
as
being
a
‘
sale
to
a
consumer
for
purposes
of
consumption
and
not
for
sale.
‘
‘
Every
licensed
retail
vendor
is
constituted
an
agent
of
the
Minister
for
the
collection
of
the
tax,
and
he
must
collect
it
from
the
purchaser
upon
whom
the
tax
is
imposed,
at
the
time
the
purchase
is
made
within
the
Province.
The
provinces
draw
their
powers
to
impose
direct
taxation
from
section
92,
subsection
2
of
the
British
North
America
Act,
and
in
order
to
determine
whether
this
particular
tax
is
direct
or
indirect,
the
rule
many
times
adopted
by
this
Court
and
by
the
Judicial
Committee
of
the
Privy
Council
has
once
more
to
be
applied.
In
City
of
Charlottetown
v.
Foundation
Maritime
Limited,
[1932]
S.C.R.
589,
at
593,
Mr.
Justice
Rinfret,
delivering
the
judgment
of
the
Court,
analyzed
the
various
pronouncements
on
this
matter
and
said
:—
At
the
time
of
the
passing
of
the
Act,—and
before,—the
classification
of
the
then
existing
species
of
taxes
into
these
two
separate
and
distinct
categories
was
familiar
to
statesmen.
Certain
taxes
were
then
universally
recognized
as
falling
within
one
or
the
other
category.
The
framers
of
the
Act
should
not
be
taken
to
have
intended
to
disturb
‘
the
established
classification
of
the
old
and
well
known
species
of
taxation.’’
(City
of
Halifax
v.
Fairbanks’
Estate,
[1928]
A.C.
117,
at
125).
Customs
or
excise
duties
were
the
classical
type
of
indirect
taxes.
Taxes
on
property
or
income
were
commonly
regarded
as
direct
taxes.
These
taxes
had
come
to
be
placed
respectively
in
the
category
of
direct
or
indirect
taxes
according
to
some
tangible
dividing
line
referable
to
and
ascertainable
by
their
general
tendencies.
(Bank
of
Toronto
v.
Lambe
(1887),
12
A.C.
575,
at
582.)
As
to
the
taxes
outside
these
classifications
the
meaning
of
the
words
“direct
taxation’’
as
used
in
the
Act,
is
to
be
gathered
from
the
common
understanding
of
these
words
which
prevailed
among
the
economists
who
had
treated
such
subjects
before
the
Act
was
passed.
It
is
now
settled
that
the
tax
is
direct,
if
it
is
demanded
from
the
very
person
who
it
is
intended
or
desired
shall
pay
it,
and
it
is
indirect,
if
it
is
demanded
from
one
person
in
the
expectation
and
intention
that
he
shall
indemnify
himself
at
the
expense
of
another.
It
is
also
the
general
tendency
of
the
legislation
that
has
to
be
considered,
although
in
exceptional
cases
the
person
made
liable
by
the
law
to
pay
the
tax
may
succeed
in
passing
it
on,
and
indemnify
himself
upon
a
resale
of
the
commodity.
(Attorney-General
for
British
Columbia
v.
Canadian
Pacific
Railway,
[1927]
A.C.
934,
at
938;
Rex
v.
Caledonian
Collieries
Limited,
[1928]
A.C.
358,
at
361,
362.)
When
the
ultimate
incidence
of
the
tax,
in
its
ordinary
and
normal
operation,
is
uncertain,
then
the
tax
is
indirect,
because
the
question
whether
the
tax
is
direct
or
not
cannot
depend
upon
those
special
events
which
may
vary
at
the
time
of
payment.
(Attorney-General
for
Quebec
v.
Read
(1884),
10
A.C.
141,
at
143;
Attorney-General
for
British
Columbia
v.
Kingcome,
[1934]
A.C.
45,
at
52.)
In
the
case
submitted
to
this
Court,
(I
will
deal
later
with
the
clause
making
the
agent
personally
liable)
the
tax
is
clearly
imposed
upon
the
purchaser
of
tobacco,
who
is
the
last
purchaser.
It
is
a
purchasing
tax,
not
imposed
on
the
transaction
of
the
commodity,
but
upon
every
purchaser
at
the
time
of
making
his
purchase
at
a
retail
sale
in
the
Province.
This
purchaser
is
the
person
intended
by
the
Legislature
to
pay
the
tax,
and
he
does
pay
it
at
the
time
of
the
purchase.
Under
section
10
of
the
Act,
he
is
made
liable
for
the
tax
imposed
until
it
has
been
collected.
There
is
no
expectation
or
intention
that
this
purchaser
from
whom
the
tax
is
demanded
shall
pass
it
on
and
indemnify
him-
self,
and
that
someone
else
than
the
person
primarily
taxed
will
pay
it
eventually.
The
appellant
has
cited
the
case
of
the
Attorney-General
for
British
Columbia
v.
Canadian
Pacific
Railway,
[1927]
A.C.
934,
at
938,
where
it
was
decided
that
a
tax
imposed
upon
every
person
purchasing
fuel
oil
within
the
Province
for
the
first
time
after
its
manufacture,
was
an
indirect
tax,
and
therefore
ultra
vires.
The
Judicial
Committee
came
to
the
conclusion
that
fuel
oil
is
a
marketable
commodity,
and
that
those
who
purchase
it
for
the
first
time
after
its
manufacture,
even
for
their
own
use,
acquire
the
right
to
take
it
into
the
market
and
indemnify
themselves
at
the
expense
of
others.
This,
therefore,
brought
the
tax
within
the
principles
which
made
it
an
indirect
tax.
In
the
present
case,
it
is
the
last
purchaser
who
is
taxed
and
it
is,
therefore,
quite
impossible
that
the
tax
can
be
passed
on.
In
the
case
already
cited
of
the
Attorney-General
for
British
Columbia
v.
Kingcome,
[1934]
A.C.
45,
the
Judicial
Committee
upheld
the
validity
of
the
second
fuel
oil
tax
enacted
by
the
province
of
British
Columbia.
The
Legislature
imposed
a
tax
upon
every
consumer
of
fuel
oil
according
to
the
quantity
consumed.
It
was
held
that
the
tax
was
direct
taxation,
because
it
was
demanded
from
the
very
person
who
it
is
intended
or
desired
should
pay
it.
As
the
tax
does
not
relate
to
any
commercial
dealing
with
the
commodity,
it
does
not
fall
within
the
category
of
customs
and
excise
duties
which
are
within
the
legislative
powers
of
the
Dominion..
In
that
case,
Lord
Thankerton
expresses
himself
as
follows
:—
It
is
clear
that
the
Act
(fuel
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.
Accordingly,
their
Lordships
are
of
opinion
that
the
tax
is
direct
taxation
within
the
meaning
of
section
92,
head
2,
of
the
British
North
America
Act.
I
have
no
doubt
that
‘this
tax
is
a
direct
one,
and,
therefore,
within
the
powers
of
the
Legislature
of
New
Brunswick.
The
next
point
raised
is
that
the
tax
is
not
a
tax
within
the
Province.
The
argument
is
that
the
Legislature
is
attempting
to
tax
a
non-resident
of
the
province
of
New
Brunswick
with
respect
to
his
consumption
of
tobacco
outside
the
Province.
The
Act
provides
that
the
tax
is
levied
only
when
the
purchaser
purchases
in
the
Province.
It
is
undoubted
that
it
is
within
the
powers
of
the
Legislature
to
tax
any
person
found
in
the
Province,
whether
that
person
is
therein
domiciled
or
not,
if
taxed
directly.
Bank
of
Toronto
v.
Lambe
(1887),
12
A.C.
575,
at
584;
Forbes
v.
Attorney-General
for
Manitoba,
[1937]
A.C.
260.
The
purchaser
pays
the
tax
at
the
time
and
place
he
purchases
the
commodity.
Although
this
tax
has
been
called
a
consumption
tax,
it
is
more
a
purchasing
tax
which
is
paid
by
the
last
purchaser
who
is
deemed
to
be
the
consumer.
As
section
2(a)
of
the
Act
says,
‘‘consumer’’
means
any
person
who
within
the
Province
purchases
*
*
*
for
his
own
consumption.
As
the
purchase
is
made
within
the
Province,
it
seems
clear
that
the
taxation
is
imposed
within
the
Province,
even
if
by
exception
the
tobacco
purchased
is
consumed
in
a
different
Province.
It
is
only
in
exceptional
cases
resulting
from
the
act
of
the
purchaser
that
the
tobacco
may
be
consumed
outside
the
Province.
The
appellant
has
also
raised
the
contention
that
this
tax
is
ultra
vires
because
it
violates
the
disposition
of
section
121
of
the
B.N.A.
Act,
which
says
:—
121.
All
articles
of
the
growth,
produce,
or
manufacture
of
any
one
of
the
provinces
shall,
from
and
after
the
Union,
be
admitted
free
into
each
of
the
other
provinces.
The
argument
of
the
appellant
is
that
the
Act
purports
to
impose
a
tax
upon
articles
produced
or
manufactured
in
another
province
of
Canada
when
introduced
into
New
Brunswick.
In
the
submission
of
the
appellant
the
objectionable
clause
of
the
Act
is
section
5,
which
reads
as
follows
:—
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.
This
tax,
In
my
opinion,
is
not
a
customs
duty
nor
an
excise
tax.
In
Attorney-General
for
British
Columbia
v.
Kingcome,
[1934]
A.C.
45,
Lord
Thankerton
said
:—
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.
In
the
case
of
Bank
of
Toronto
v.
Lambe
(1887),
12
A.C.
579,
at
582,
Lord
Hobhouse
expressed
himself
in
the
following
manner
:—
It
is
not
like
a
customs
duty
which
enters
into
the
price
of
the
taxed
commodity.
These
customs
duties
impose
a
condition
on
the
admission
of
the
commodity
before
reaching
the
consumer,
and
as
Mr.
Justice
Mignault
says
in
Gold
Seal
Limited
v.
Dominion
Express
Company
(1921),
62
Can.
S.C.R.
424,
at
470:—
I
think
that,
like
the
enactment
I
have
just
quoted,
the
object
of
section
121
was
not
to
decree
that
all
articles
of
the
growth,
produce
or
manufacture
of
any
of
the
provinces
should
be
admitted
into
the
others,
but
merely
to
secure
that
‘hey
should
be
admitted
‘‘free,’’
that
is
to
say
without
any
tax
or
duty
imposed
as
a
condition
of
their
admission.
The
essential
word
here
is
‘‘free’’
and
what
is
prohibited
is
the
levying
of
customs
duties
or
other
charges
of
a
like
nature
in
matters
of
interprovincial
trade.
The
tax
contemplated
by
the
Tobacco
Act
is
imposed
only
once
the
importation
is
made,
and
such
importation
in
the
province
of
New
Brunswick
does
not
depend
upon
the
payment
of
the
tax.
If
we
were
to
adopt
the
construction
suggested
by
the
appellant,
no
purchaser
of
a
commodity
coming
from
a
different
province
could
ever
be
taxed.
When
the
commodity
has
entered
into
the
Province,
I
see
no
valid
reason
why
the
purchaser
could
not
be
compelled
to
pay
a
tax
to
the
provincial
authorities.
It
has
also
been
submitted
that
the
retail
vendors
are
subject
to
the
payment
of
a
license
and
that
the
licensing
provisions
found
in
the
Act
are
not
authorized
by
the
British
North
America
Act.
I
fail
to
see
how
the
appellant
can
succeed
on
this
ground.
The
licenses
provided
for
in
section
92,
subsection
9,
of
the
British
North
America
Act
are
not
the
only
licenses
in
relation
to
which
the
various
provinces
may
enact
laws.
They
may
provide
for
licenses
not
only
for
the
purpose
of
raising
a
revenue,
but
they
have
also
the
right
to
require
licenses
as
an
incident
to
any
one
of
their
other
powers.
The
appellant
has
submitted
also
that
the
Tobacco
Act
purports
to
tax
not
only
the
principal
but
also
the
agent
who,
on
behalf
of
his
principal,
purchases
tobacco.
The
appellant’s
argument
is
that
the
agent
purchasing
for
his
principal
is
by
the
law
liable
for
the
payment
of
the
tax
and
that
it
is,
therefore,
possible
that
he
may
recoup
himself
in
passing
on
the
tax
to
his
principal.
It
will
be
remembered
that
under
section
2,
paragraph
(a)
of
the
Act,
"
"
consumer
‘
means
not
only
any
person
who
within
the
Province,
purchases
tobacco
for
his
own
consumption,
but
also
any
other
person
who
purchases
tobacco
in
the
Province
as
agent
for
his
principal
who
desires
to
acquire
such
tobacco
for
consumption
by
such
principal.
This
consumer,
whether
he
is
the
principal
or
the
agent,
is
personally
liable
for
the
payment
of
the
tax,
under
section
10
which
reads
as
follows
:—
10.
A
consumer
shall
be
and
remain
liable
for
the
tax
imposed
by
this
Act
until
the
same
has
been
collected.
It
is
clear,
therefore,
that
the
agent
who
purchases
tobacco
for
his
principal
is
personally
liable
for
the
payment
of
the
tax-
To
my
mind,
this
disposition
has
the
effect,
when
such
a
transaction
is
made,
to
make
the
tax
an
indirect
tax.
In
Cotton
v.
The
King,
[1914]
A.C.
176,
the
Judicial
Committee
after
having
construed
the
provisions
of
the
Quebec
Succession
Duties
Act,
as
entitling
the
collector
of
inland
revenue
to
collect
the
duties
on
the
estate
from
the
person
making
the
declaration
(the
notary)
came
to
the
conclusion
that
this
tax
was
indirect.
Lord
Moulton
said:—
How,
then,
would
the
Provincial
Government
obtain
the
payment
of
the
succession
duty?
It
could
only
be
from
someone
who
was
not
intended
to
bear
the
burden
but
to
be
recouped
by
someone
else.
Such
an
impost
appears
to
their
Lordships
plainly
to
lie
outside
of
the
definition
of
direct
taxation
accepted
by
this
Court
in
previous
cases.
In
Burland
v.
The
King,
[1922]
1
A.C.
215,
the
Judicial
Committee
discussed
the
Cotton
case,
[1914]
A.C.
176,
thought
that
it
could
not
be
distinguished
and
reaffirmed
the
principle
cited
supra.
Later,
in
1924,
in
the
reference
by
the
Governor
General
in
Council,
[1924]
S.C.R.
317,
the
Supreme
Court
of
Canada
came
to
the
conclusion
that
the
Grain
Futures
Taxation
Act
of
Manitoba
purporting
to
impose
a
tax
upon
every
person
whether
broker,
agent
or
principal,
entering
into
a
contract
for
the
sale
of
grain
for
future
delivery,
was
ultra
vires
of
the
legislature.
At
page
322,
Sir
Lyman
Duff,
the
present
Chief
Justice
of
Canada,
said
:—
The
statute,
therefore,
in
so
far
as
it
levies
a
tax
upon
principals
in
the
transactions
to
which
it
applies,
would,
if
the
legislation
were
so
limited,
be
in
my
opinion
valid.
I
am
unable,
however,
to
perceive
how,
consistently
with
the
decisions
upon
the
subject,
it
is
possible
to
sustain
the
tax
upon
brokers
and
agents
as
a
legitimate
exercise
of
the
authority
of
the
province
in
relation
to
direct
taxation.
This
case
was
submitted
to
the
Privy
Council,
(Attorney-
General
for
Manitoba
and
Attorney-General
for
Canada,
[1925]
A.C.
561)
and
the
judgment
of
the
Supreme
Court
was
upheld.
The
same
principles
were
applied
in
The
Provincial
Treasurer
of
Alberta
v.
Kerr,
[1933]
A.C.
710.
In
that
case,
Lord
Thanker-
ton
said
:—
Under
the
Alberta
Succession
Duties
Act,
the
duties
in
question
were
imposed
on
the
executors
on
their
application
for
probate,
and
letters
probate
could
not
be
issued
without
the
consent
of
the
Provincial
Treasurer,
whose
duty
was
to
secure
payment
of
the
duties
or
obtain
security
therefor
by
a
statutory
bond
before
giving
such
consent.
There
can
be
no
doubt
that
normally
the
application
for
probate
will
be
by
executors,
and
the
issue
is
whether
the
legislature
intended
or
desired
that
an
executor
should
pay
the
duties
without
any
expectation
that
such
executor
should
indemnify
himself
at
the
expense
of
some
other
person.
In
their
Lordships’
opinion,
the
determination
of
this
issue
depends
on
the
answer
to
a
simple
test,
which
was
applied
in
the
cases
of
Cotton
v.
Alleyn,
[1922]
1
A.C.
215,
already
referred
to,
namely,
whether
the
executor
is
personally
liable
for
duties.
If
the
executor
is
so
liable,
then
the
tax
is
imposed
on
the
executor,
with
the
obvious
intention
that
he
should
indemnify
himself
out
of
the
beneficiaries’
estate,
and
the
taxation
is
indirect.
If
the
executor
is
not
personally
liable
for
the
duties,
then
the
tax
is
truly
imposed
on
the
beneficiaries
and
the
taxation
is
direct.
In
the
present
case,
the
agent
is
made
personally
liable
for
the
tax.
It
is
imposed
upon
him
but
it
was
obviously
the
intention
of
the
Legislature
that
he
should
indemnify
himself
at
the
expense
of
his
principal.
This
makes
the
taxation
indirect,
and,
therefore,
ultra
vires.
However,
the
invalidity
of
the
section
declaring
the
agent
who
buys
on
behalf
of
his
principal
personally
liable
for
the
tax,
does
not
affect
the
rest
of
the
statute
which
is
severable,
and
which
I
find
within
the
powers
of
the
Legislature
of
New
Brunswick
(Toronto
Corporation
v.
York
Corporation,
11938]
A.C.
415).
My
conclusion
is
that
the
Tobacco
Tax
Act
enacted
by
the
province
of
New
Brunswick
is
within
the
legislative
powers
of
that
Province,
and
that
it
is
intra
vires,
except
the
sections
making
the
agent
who
buys
tobacco
for
his
principal
personally
liable
for
the
tax.
The
appeal,
should,
therefore,
be
dismissed
without
costs
to
either
party
here
and
in
the
courts
below.
Appeal
dismissed,
no
costs.
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