PROVINCIAL AND TERRITORIAL TAXATION - British Columbia - Sales tax - Exemptions

Application by the Province for leave to appeal an order allowing the respondent’s appeal from a provincial sales tax assessment. The respondent managed a residential community. In the course of its business, the respondent purchased trailers that it then sold to purchasers who rented land managed by the respondent where the trailers would be placed. The respondent did not pay tax when it purchased the trailers on the basis that these transactions involved the sale of tangible personal property and was exempt from s. 37 of the Provincial Sales Tax Act but charged the ultimate purchasers tax and remitted it to the Province. The Province argued the respondent was liable for the tax at first instance under s. 37 when it acquired the trailers and ought not to have collected it from the purchasers. The Supreme Court judge found that the trailers retained their status as chattels and did not become affixed to the land thus making tax not payable under s. 37. Alternatively, he found that the contracts did not oblige the respondent to install the trailers as improvements to real property, thus not making it liable to pay tax under s. 79.

HELD: Application allowed. There was some merit to the appeal and the appellant had an arguable case. The judge’s finding that the trailers were not used for the purposes of fulfilling a contract for the supply and installation of affixed improvements to real property raised questions of law, fact, and mixed fact and law. The judge did not consider some of the conflicting case law. The correct interpretation of s.79(1)(c) was of general importance. There was no current appellate authority on this question, and a determination by this court could provide guidance to businesses, consumers and the Ministry.

Chemainus Gardens RV Resort Ltd. v. British Columbia (Attorney General), [2020] B.C.J. No. 1652, British Columbia Court of Appeal, S.A. Griffin J.A., October 20, 2020. Digest No. TLD-November232020007