C.A. No. 02846
NOVA SCOTIA COURT OF APPEAL
Roscoe, Hart and Pugsley, JJ.A.
Cite as: Nova Scotia (Finance) v. South Shore Dental Holdings Ltd., 1993 NSCA 169
BETWEEN:
MINISTER OF FINANCE ) John D. Wood
) for the Appellant
Appellant )
)
)
- and - ) Harvey L. Morrison
) for the Respondent
)
SOUTH SHORE DENTAL HOLDINGS )
LIMITED )
)
Respondent )
) Appeal Heard:
) September 23, 1993
)
) Judgment Delivered:
) September 23, 1993
)
)
THE COURT: Appeal dismissed and respondent shall have its costs in the amount of $1,000.00, per oral reasons for judgment of Roscoe, J.A.; Hart and Pugsley, JJ.A. concurring.
The reasons for judgment of the Court were delivered orally by:
ROSCOE, J.A.:
The respondent company purchased office furnishings, dental equipment and a motor vehicle and leased them to its sole shareholder, Dr. Gregory Gatchell, a dentist. The respondent was registered as a vendor pursuant to the Health Services Tax Act, R.S.N.S. 1989, c.198 and as such did not pay health services tax on the purchase of the equipment. The lease required Dr. Gatchell to pay health services tax as part of each lease payment. It was intended that the payments under the lease be at market rates. The respondent company remitted the tax to the Provincial Tax Commission. Through an oversight by its accountant, the company neglected to increase the payments required under the lease as new equipment was acquired.
In September 1992 a routine audit was conducted by the Tax Commission and as a result, Dr. Gatchell was asked to surrender the company's registration certificate, which he did. After the audit, Notices of Assessment were issued against the company in the amount of $16,540.82, including interest.
The respondent filed a Notice of Objection with the Provincial Tax Commissioner who confirmed the assessment. The Nova Scotia Utility and Review Board reversed the ruling of the Tax Commissioner after finding that the respondent did not purchase the equipment as the agent for Dr. Gatchell and therefore was not a "purchaser" as defined in s. 2(o) of the Health Services Tax Act. The Minister appeals that decision of the Board pursuant to s. 30 (1) of the Utility and Review Board Act, S.N.S. 1992, c.11, which is as follows:
"30 (1) An appeal lies to the Appeal Division of the Supreme Court from an order of the Board upon any question as to its jurisdiction or upon any question of law, upon filing with the Court a notice of appeal within thirty days after the issuance of the order. "
The issue on this appeal is whether the respondent was a purchaser within the meaning of the Health Services Tax Act. Section 2(o) of the Act provides:
" ' purchaser ' means any person who acquires tangible personal property at a sale in the Province for his own consumption or use or for the consumption or use by other persons at his expense, or on behalf of or as agent for a principal who desires to acquire such property for consumption, or use by such principal or other persons at his expense, and includes a user and a promotional distributor to the extent that the fair value of any tangible personal property provided by way of promotional distribution exceeds any payments specifically made therefor by the person to whom such property is so provided; "
The appellant submits that the Board erred in its finding that the respondent was not a purchaser. The argument is rather circuitous. It is submitted that the respondent is not a vendor, therefore it must be a purchaser. The appellant says that the respondent is not a vendor because it only has one customer and that customer, Dr. Gatchell, is the company's sole shareholder.
Section 2(y) of the Act is as follows:
" 'vendor' means any person who in the ordinary course of his business within the Province sells tangible personal property to a purchaser at a retail sale in the Province. "
In effect the appellant submits that the corporate veil of the respondent must be pierced and that the company and Dr. Gatchell are one and the same. To circumvent the rule in Salomon v. Salomon, [1897] A.C. 22, the appellant argues that the tax deferral scheme permits the respondent to "take advantage" of its position as a Trustee for the Province in collecting sales tax.
With respect, this argument is flawed and cannot be accepted. The fact that the respondent had only one customer is immaterial. The Act does not make exceptions depending on how many customers a vendor has or on the basis of the relationship between a vendor and purchaser. The Act does not purport to distinguish between arm's length and non-arm's length transactions. There is absolutely no evidence of fraud, deceit or breach of trust in this case that would warrant lifting the corporate veil.
The appellant has not established that the Board erred in law in its finding that the respondent was not a purchaser as defined in the Act. The personal property in question was not consumed or used by the company. The company, in the ordinary course of its business, leased the property to Dr. Gatchell who was the user of it. He was the person obliged to pay the sales tax and did so.
The appeal is dismissed. The respondent shall have its costs in the amount of $1,000.00.
J.A.
Concurred in:
Hart, J.A.
Pugsley, J.A.