HYPERTEC SYSTÈMES INC.
Decisions
v.
THE MINISTER OF NATIONAL REVENUE
Appeal No. AP-92-067
TABLE OF CONTENTS
Ottawa, Friday, March 19, 1993
Appeal No. AP-92-067
IN THE MATTER OF an appeal heard on December 17, 1992, under section 81.19 of the Excise Tax Act, R.S.C. 1985, c. E-15;
AND IN THE MATTER OF a decision of the Minister of National Revenue dated April 6, 1992, with respect to a notice of objection served under section 81.17 of the Excise Tax Act.
BETWEEN
HYPERTEC SYSTÈMES INC. Appellant
AND
THE MINISTER OF NATIONAL REVENUE Respondent
The appeal is allowed.
Arthur B. Trudeau ______ Arthur B. Trudeau Presiding MemberJohn C. Coleman ______ John C. Coleman Member
Desmond Hallissey ______ Desmond Hallissey Member
Michel P. Granger ______ Michel P. Granger Secretary
The appellant is a manufacturer of microcomputers. The respondent refused to allow the appellant a full rebate of the federal sales tax paid on the components used in the manufacture of the microcomputers on the ground that the conditions set forth in section 120 of the Excise Tax Act had not been met in this case. The issue in this appeal is whether the appellant is entitled to a full federal sales tax inventory rebate in accordance with section 120 of the Excise tax Act.
HELD: The appeal is allowed. Relying on the decision rendered on September 18, 1992, in Techtouch Business Systems Ltd. v. The Minister of National Revenue, the Tribunal found that all the components in the appellant's inventory, either as is or as components of finished products, fell within the terms of section 120 of the Excise Tax Act.
Place of Hearing: Ottawa, Ontario Date of Hearing: December 17, 1992 Date of Decision: March 19, 1993Tribunal Members: Arthur B. Trudeau, Presiding Member John C. Coleman, Member Desmond Hallissey, Member
Counsel for the Tribunal: Robert Desjardins
Clerk of the Tribunal: Dyna Côté
This is an appeal under section 81.19 of the Excise Tax Act [1] (the Act) of a determination of the Minister of National Revenue (the Minister). In a notice of decision dated April 6, 1992, the Minister disallowed the appellant's claim and confirmed the determination concerning the partial rebate of the federal sales tax (FST) paid on the goods in the appellant's inventory. The amount at issue is $44,214.98.
The appellant is a manufacturer of microcomputers. The appellant uses a variety of components in manufacturing its microcomputers, including motherboards, housings and memory chips. The Minister refused to grant the FST rebate on the components, under section 120 of the Act, [2] on the ground that the components to be attached to, or incorporated in, the microcomputers were not covered by the rebate, since they were not, at the time of inventory, "for taxable supply." Moreover, components incorporated into, or assembled to, microcomputers are no longer tax-paid goods at the time of sale, within the meaning of subsection 120(1) of the Act.
The issue in this appeal is whether the appellant is entitled to the full FST inventory rebate under section 120 of the Act.
In a letter dated December 7, 1992, and addressed to the Tribunal, counsel for the respondent pointed out that the facts in this case appear to be similar to those in Techtouch Business Systems Ltd. v. The Minister of National Revenue, [3] a decision on which the appellant relied in its brief. This letter also stated that the respondent, without consenting, would not oppose this appeal. In a subsequent letter to the Tribunal, dated December 16, 1992, counsel for the respondent informed the Tribunal that the Minister had no objection to this appeal being decided on the basis of the documents on record.
Several recent decisions of the Tribunal have dealt with the issue raised in this appeal. In Techtouch, the Tribunal found that all components held in the appellant's inventory, either as is or as components of finished products, fall within the terms of section 120 of the Act. Like counsel for the respondent, the Tribunal is of the opinion that the facts in this case are similar to those in Techtouch. For these reasons, and giving special consideration to the position of the respondent in this matter, the Tribunal finds that there is no reason to depart from that decision.
The appeal is allowed.
[ Table of Contents]
1. R.S.C. 1985, c. E-15.
2. See An Act to amend the Excise Tax Act, the Criminal Code, the Customs Act, the Customs Tariff, the Excise Act, the Income Tax Act, the Statistics Act and the Tax Court of Canada Act , S.C. 1990, c. 45, s. 12.
3. Canadian International Trade Tribunal, Appeal No. AP-91-206, September 18, 1992.
Initial publication: June 12, 1997