Minister of National Revenue v. Calgary (City) 2012 SCC 20
Sales and Service Taxes - Goods and services tax (incl. harmonized sales tax) - Administration, collection and enforcement - Input tax credit - Eligibility for
The city constructed a transit system for city residents’ use under obligations imposed on it by the City Transportation Act (CTA). In the course of constructing the system, the city entered into funding agreements with the province as contemplated by the CTA. The city paid GST on purchases made in constructing the system. Since the provision of a municipal transit service was an exempt supply, as defined in the Excise Tax Act, the city was not entitled to claim input tax credits regarding purchases made in providing the transit system. The city took the position that the construction of the system (as opposed to its operation) was a separate supply to the province under its contracts with the province (the funding agreements) such that the construction was not an exempt supply. Accordingly, the city claimed input tax credits with respect to GST paid in connection with the construction (approximately $6.5 million). The Minister of National Revenue denied the claim. The city appealed.
The Tax Court of Canada (TCC), in a decision reported at 2009 TCC 272, allowed the appeal. The Minister appealed.
The Federal Court of Appeal, in a decision reported at (2010), 403 N.R. 41, allowed the appeal, setting aside the TCC decision and confirming the Minister’s assessment. The city appealed.
The Supreme Court of Canada dismissed the appeal.