Words and Phrases - "delivery"
Montecristo Jewellers Inc. v. Canada, 2020 FCA 12
Customers would purchase watches or jewellery at Vancouver stores of the appellant in order to take them as gifts on their regular trips to China. The appellant’s staff would personally take the items to the airport (shortly before the flight departure) where they were inspected by a CBSA officer who would stamp a completed E15 form (a Canadian customs form evidencing exportation of the listed items) and then essentially ensure or monitor that the items were not handed over to the customer until shortly before boarding. The Tax Court rejected the appellant’s contention that jewellery sold pursuant to what the appellant called its Export Sales Procedure was jewellery delivered or made available outside Canada within the meaning of paragraph 142(2)(a) of the Act, so that the appellant was not required to withhold and remit tax under the Act. The Court also rejected the appellant’s submission that the supply of jewellery was a zero-rated supply within the meaning of paragraph 12(a) of Part V of Schedule VI of the Act.
Before going on to find that there was no zero-rating under Sched VI, Pt. V, s. 12(a), Dawson JA stated (at paras 4, 5):
The Tax Court made no error in failing to find an implied term of the contract between the appellant and its customer that jewellery sold under the Export Sales Procedure was to be delivered outside of Canada. …[T]hat procedure … is wholly inconsistent with the asserted implied term.
Similarly, the Tax Court made no error in finding that the jewellery was delivered in Canada to the recipient of the supply within the meaning of paragraph 142(1)(a) of the Act. The concept of delivery … is to be interpreted in the same manner as …delivery in the applicable sales of goods legislation (Jayco…). The British Columbia Sale of Goods Act… defines “delivery” to mean the “voluntary transfer of possession from one person to another”… [which] occurred when the customer received the jewellery at the airport in Vancouver.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part V - Section 12 - Paragraph 12(a) | no zero-rating where no delivery to common carrier | 258 |
Montecristo Jewellers Inc. v. The Queen, 2019 TCC 31, aff'd 2020 FCA 12
Customers would purchase watches or jewellery at Vancouver stores of the appellant in order to take them as gifts on their regular trips to China. The appellant’s staff would personally take the items to the airport (shortly before the flight departure) where they were inspected by a CBSA officer who would stamp a completed E15 form (a Canadian customs form evidencing exportation of the listed items) and then essentially ensure or monitor that the items were not handed over to the customer until shortly before boarding.
After finding that the sales were not zero-rated, Lyons J went on to find that the supplies of the items (the “Jewellery”) were made in Canada as they were delivered in Canada. After quoting with approval the position in Memorandum 3.3 as to the meaning of "delivery" and "made available" (signifying constructive delivery) and quoting with approval the statement in Marshall and Van Allen v Crown Assets Disposal Corporation, [1956] OR 930 (Ont CA) that “Delivery is accomplished by the purchaser obtaining the actual physical possession of the goods or, if certain conditions are present, there may be a symbolical delivery which divests the seller's possession,” she stated (at paras. 99, 104):
… [T]he focus in section 142 is on “delivered”. Generally, that equates to delivery of a full voluntary transfer of possession of the property to the buyer immediately upon physical possession by the buyer without restriction. …
Clearly, Customers were given full possession of the Jewellery at the time these were hand delivered, before or after airport security. Full possession enabled Customers to derive the full benefit of the Jewellery immediately upon physical delivery of the Jewellery. The appellant had done everything that needed to be done to enable the Customers to use the Jewellery and derive the benefits without any restrictions on use or possession. Customers then also assumed risks inherent in the Jewellery; for example, if Jewellery was lost the risk was the Customers’.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part V - Section 12 - Paragraph 12(a) | items were not “shipped” to China under a “contract of carriage” when they were handed directly to the customer on boarding the aircraft | 190 |
Jayco, Inc. v. The Queen, 2018 TCC 34
The appellant (Jayco – which was registered for GST/HST purposes) would arrange for a wholly-owned freight transportation company (“JET”) to deliver recreational vehicles, that Jayco had manufactured at its facility in Indiana, to Canadian dealers, with those dealers being the importers of record. The freight transportation service was included on the Jayco invoice to a Canadian dealer and was based on an approximate estimate of the transportation cost. Jayco also sold parts to the Canadian dealers, as to which it retained a customs broker and logistics firm (“Frontier”) to consolidated the parts’ orders into one master load and used a freight transportation company to transport the load to Frontier’s facility in Winnipeg under one bill of lading for the entire shipment. Frontier then contracted with third party carriers to deliver the parts to the Canadian dealers.
After noting (at para. 91) that under the Uniform Commercial Code, “absent an agreement between the seller and the buyer, delivery occurs at the seller’s place of business,” D’Auray J went on to conclude that although “None of the above documents contain any explicit mention as to where the delivery of the RV would take place” (para. 102), “there was an agreement between Jayco and the Canadian dealers that the delivery of the RVs would take place at the business premises of Jayco in the USA at the time the RVs were turned over to the common carrier” (para. 97) – so that the place of supply of the RVs was outside Canada under ETA s. 142(2)(a). Indicative factors in this regard included:
- Under the manufacturer’s financing agreements with inventory financing companies, Jayco had the right to be paid at the point of shipment (para. 104).
- “Once the RV was turned over to JET, JET became the agent of the Canadian dealer and became responsible for any damages occurring to the RV while in its possession pursuant to the provisions of the US Transportation Code dealing with the Bill of Lading” (para. 105). In this regard, D’Auray J referenced (at para. 108) the statement in Marshall v Crown Assets Disposal Corp., [1956] O.J. No. 572, that:
… [I]f certain conditions are present, there may be a symbolical delivery which divests the seller’s possession … . The transfer to the buyer of a bill of lading, as representing the goods, forms a good delivery in performance of the contract.
- [T]he certificate of origin was always issued and dated on or before the RV was turned over to the common carrier for shipment to the dealer (para. 107).
- A statement in the Dealership Sale Service Agreements that neither party was “the agent … of the other for any reason” had “to be interpreted in its context” (para. 116) and, in fact, Jayco acted on the dealers’ behalf in arranging delivery.
However, the parts were delivered to Canadian dealers by Frontier as Jayco’s agent given an express statement “that Frontier would act as an agent of Jayco” (para. 128), and the fact that “Frontier would consolidate all material bound for Canada … under one Bill of Lading” indicated “that the bill of lading could not serve as a title and delivery document for individual parts orders going to different dealers,” nor “could the consolidated bill of lading be used to illustrate a ‘symbolical delivery’ of the parts” (para. 130). Thus, “the parts were delivered or made available in Canada,” so that Jayco was required to collect HST on their sale.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 306.1 - Subsection 306.1(1) - Paragraph 306.1(1)(a) | issue of multiple supplies not raised in Notice of Objection (or Notice of Appeal) | 155 |
| Tax Topics - General Concepts - Agency | statement in agreement that taxpayer was not an agent was not followed in practice | 142 |