The respondent was a manufacturer of lumber for sale, but consumed a portion of its manufactured lumber in its construction and building operations. In addition to imposing a sales tax on goods manufactured for sale, s. 87(d) of the Special War Revenue Act imposed tax on goods which were “for use by the manufacturer or producer and not for sale”. The Exchequer Court had found that the manufacturer was not subject to sales tax on the lumber that it so consumed on that basis that such lumber was produced in the ordinary course of business for sale, and not specifically for use by the manufacturer. In reversing this decision, Smith J stated (at p. 492):
To so construe [s. 87] is to put a narrow and technical construction upon the precise words used in clause (d), without taking into consideration the meaning and intent of the statute as a whole. It seems to me clear that the real intention was to levy a consumption or sales tax of four per cent, on the sale price of all goods produced or manufactured in Canada, whether the goods so produced should be sold by the manufacturer or consumed by himself for his own purposes.