Majority
have felt obliged to call them as witnesses himself, as coun- Geonam sel for the respondents must have realized. He seems to have elected deliberately not to press the obvious objection to the document. In these circumstances, the objection comes, I think, too late.
EAsTRN
The appeal should be allowed and the judgment of the learned trial judge restored, with costs in all the courts. Duff J.
Judgment of the Court
LAMONT J.-The sole question in this appeal is: Did the Crown in the court below on the evidence establish as against the appellant a statutory liability for the taxes sued for?
The action was brought to recover from the appellant the sum of $15,249.80 sales tax under s. 19BBB (1) of the Special War Revenue Act, 1915, and amendments, and $33,076.85 excise or gallonage tax under s. 19B 1 (b) of the same Act.
In the statement of claim the Crown alleged that the Brewing Company was, during the periods therein referred to, licensed to carry on the trade or business of a brewer. It also alleged that, on and after the first day of June, 1925, and prior to the first day of May, 1927, the company made sales of beer subject to the tax imposed by s. 19BBB (1), and thereby became liable to pay the tax. Further that the company had, during the same period, manufactured and sold beer subject to the tax imposed by s. 19B 1 (b) and became, therefore, liable to pay that tax also. These sections in part read as follows:- 19BBB 1. In addition to any duty or tax that may be payable under this Part, or any other statute or law, there shall be imposed, levied and collected a consumption or sales tax of five per cent. on the sale price of all goods produced or manufactured in Canada, including the amount of excise duties when the goods are sold in bond, which tax shall be payable by the producer or manufacturer at the time of the sale thereof by him. Provided that the consumption or sales tax specified in this section shad not be payable on goods exported.
19B 1 (b). There shall be imposed, levied and collected upon all goods enumerated in Schedule II to this Part, when such goods are imported into Canada or taken out of warehouse or when any such goods are manufactured or produced in Canada and sold on and after the twenty-fourth day of May, one thousand nine hundred and twenty-two, in addition to S.C.R.]
any duty or tax that may be payable under this Act, or any other statute or law, the rate of excise tax set opposite to each item in said Schedule Co., LTD.
Provided that such excise tax shall not be payable when such goods THE are manufactured for export, under regulations prescribed by the Minister Em j of Customs and Excise.
- Schedule II provides that the rate of excise tax on beer shall be twelve and a half cents per gallon.
A perusal of these sections makes it clear that under each of them the tax is imposed in respect of beer manufactured or produced in Canada and sold by the manufacturer or producer. The onus was, therefore, on the Crown to prove that the beer, in respect of which the taxes were claimed, had not only been sold by the company but had also been manufactured by it, unless such manufacture was admitted, or not denied. The statement of defence contains the following:- (1) The Defendant does not admit that it was licensed to carry on the trade or business of a brewer or as such manufactured or sold beer. (5) The defendant does not admit that it manufactured or sold beer subject to any tax and denies that it became liable to pay to His Majesty any of the sums referred to in paragraph 5 of the Information.
(6) The defendant expressly denies all the allegations contained in the Information herein and denies that any taxes or moneys are due or owing as alleged therein.
This defence was notice to the Crown that the company was not admitting anything and would require the Crown to establish the liability of the company to pay the tax. We have carefully examined the evidence submitted on behalf of the Crown (no evidence was given on behalf of the company) but are unable to find anything therein which, in our opinion, establishes, either expressly or inferentially, that the company had manufactured the beer in respect of which the taxes are claimed. The only evidence of manufacture was that given by A. E. Nash, a member of the accounting firm of Clarkson, Gordon, Gilfoyle & Nash, which firm had been retained by the Crown to make an examination of the company's books. Mr. Nash, among other questions, was asked:- Q. Has your firm made an examination of the accounts of defendants, the Sarnia Brewing Company, with a view of ascertaining the Crown's claim for gallonage and sales tax?-A. They 'have.
Q. Were you able to ascertain from the books of the Company the number of gallons manufactured and sold by them from the time they commenced business in 1925 up to the 30th of April, 1927, the period covered by the Information?-A. Yes.
That statement was put in as Ex. No. 1. On cross-examination, however, Nash admitted that he had not personally examined the books or vouchers of the appellant, nor any of the documents on which Ex. No. 1 was based. Not having examined the company's books or documents, he was not in a position to testify as to what information could be ascertained from them. His evidence, therefore, in so far as it was directed towards establishing that the company had manufactured the beer sold by it, cannot be said to have any probative force.
The only other witness who gave evidence was G. R.
Troop, who had personally examined the books, vouchers and documents of the company. Troop testified that he had verified in the company's books the figures that appeared in Ex. No. 1, that those figures were correct and had been taken by him from the books of the brewery.
Unfortunately the books themselves were not put in evidence and an examination of Troop's evidence and of Ex.
No. 1 fails to disclose any reference whatever in either of them to the manufacture or production of the beer.
The learned President of the Exchequer Court held that the evidence of Troop and Ex. No. 1 established that the beer in question had been manufactured and sold by the company. They did, without doubt, establish that it had been sold, but, as there is no reference in either of them to the manufacture of the beer, we are unable to find that such manufacture was established. The learned President evidently overlooked the defect in the Crown's proof, for in his judgment he says:
The company was contending that the onus was on the
Crown not only to prove the sale of the beer, but also to prove that it had not been manufactured for export; while the contention of the Crown was that the onus was on the company to bring itself within the provisos of the sections quoted, in part, above. Nothing, however, was said or done at the trial on behalf of the company to mislead the Crown or to relieve it of the obligation of proving every fact neces- S.C.R.]