DuPont, J (Orally):—This matter is before me by way of appeal from the decision of the Minister of Revenue, dated December 15, 1976, relating to a retail sales tax assessment. The appellant is a corporation incorporated by special Act of the Parliament of Canada with powers to manufacture, use, supply and dispose of electricity, water and gas, and water hydraulic or other power by means of wires, cables, pipes, conduits, machinery or other appliances; and construct, maintain and operate works for the production, sale and distribution thereof.
The municipal corporation of the City of Cornwall entered into the contract authorized by by-laws under which the appellant, during all relevant times, supplied electrical power or energy required by such municipality. In the period commencing July 1, 1972 and ending June 30, 1975, the appellant purchased tangible, personal property which was used in the manufacture of such electric energy and which remained, at all times, the property of the appellant’s.
This appeal is concerned with the assessment of retail sales tax upon the purchase of that property. The appellant alleges that. it is exempt of such tax. The Retail Sales Tax Act, RSO 1970, c 415 provided in paragraph 5(1)60 as follows:
5.(1) The purchaser of the following classes of tangible personal property and taxable services is exempt from the tax imposed by this Act:
60. tangible personal property that is purchased in good faith pursuant to a contract entered into after the 1st day of June 1964 for use exclusively and not for resale by a municipality or a local board thereof and that enters directly into and becomes part of the construction of capital works.
Paragraph 5(1)60 of the Act was amended by SO 1973, c 23, subsec 46(6) to read as follows:
60. tangible personal property that enters directly into and becomes part of the construction of capital works that, upon completion, are owned by a municipality or by a local board thereof, if the cost of such tangible personal property is shown to have been directly and substantially borne by the municipality or local board that owns the capital works into the construction of which such tangible personal property entered.
Paragraph 30 of section 1 of Regulation 785, RRO 1970 passed under the Act states that in the Act and Regulations:
“local board” means a school board, public utility commission, transportation commission, public library board, board of park management, local board of health, board of commissioners of police, planning board, or any other board, commission committee, body or local authority established or exercising any power or authority under any general or special Act with respect to any of the affairs or purposes, including school purposes, of a municipality or of two or more municipalities or parts thereof and includes the Ontario Water Resources Commission and a conservation authority.
It is the submission of the appellant that for the purposes of the Act, it is a body established or exercising power or authority under such general or special Act with respect to the affairs of a municipality, and accordingly entitled to exemption under the Act.
The purpose of the exemption provided in paragraph 5(1)60 of the Act was dealt with by His Lordship Mr Justice Keith in Re Baiocco Construction Limited and Ministry of Revenue of Ontario, [1972] 3 OR 121. In that case the court was concerned with a registered subdivision agreement whereunder a subdivider agreed to provide for streets, storm sewers and other municipal services, pursuant to which it contracted with an agent or subcontractor to do the work under such agreement. The agent purchased tangible property for such purpose, and was held entitled to relief from the payment of retail sales tax. I quote from the judgment of Keith, J at p 123:
I think on any fair reading of this statute, which has obviously been enacted for sensible purposes and to prevent the unnecessary loading of sales tax on municipal services and the recipients of them, that the word ‘exclusively’ must be given a reasonable interpretation and, in my view, when a sub-divider enters into a contractual obligation to provide these services for the municipality and, in turn, seeks an agent or a subcontractor to do a certain part of that work, that in no way derogates from the purpose for which the tangible personal property was purchased in the first instance.
It was implicit in that case that the goods purchased were to become the exclusive property of the municipality and solely for the benefit of such municipality. In the present case the property in question is to remain that of the appellant. While it is argued that it is used exclusively for the manufacture of power for the municipality, the agreed statement of facts does not so provide. Counsel for the respondent is not prepared to admit such allegation of exclusive use.
It is clear that the terms of the private Act, pursuant to which the appellant was incorporated, provides for its right to carry on its operations over a wide area, and thus free to use all its assets including the property in question for the purpose of executing any of its undertakings. It was incorporated for the purpose of carrying on business for profit for its shareholders and not for the purpose of manufacturing power for the municipality. In every sense, the appellant is an independent contractor carrying on a commercial operation for gain.
It is the court’s view that the term “local board’’ as used in paragraph 30 of section 1 of the Regulations does not encompass a corporation in the position of the appellant. As I indicated, it is a private corporation operating for profit and, in so doing, is carrying on its. own affairs and not carrying on “the affairs of the municipality” as understood by the section.
The interpretation of the word “body” as contained in paragraph 30 can only be arrived at by considering its meaning within the context of the entire section which specifically lists eight bodies to which the provision applies. Such bodies are those normally existing as mun- icipally established for the governing and regulating of civic affairs with a view to providing certain services for the municipality. The appellant, which is a private corporation having as its object of carrying on a commercial operation for the financial benefit of its shareholders, does not fall within that class. The principle of statutory construction known as ejusdem generis doctrine applies restricting the construction of the general words within the section to the class indicated in the specific part.
Paragraph 60 of subsection (1) of section 5 of The Retail Sales Tax Act, as it existed prior to May 1973, has reference to property purchased for use “exclusively” by a municipality. On the facts of this case, the property in question is being used by the appellant and not the municipality. Neither can it be said that such property was purchased for the exclusive use by the appellant for the manufacture of power for the municipality, as it is free to use such property in contracts with other parties, although the evidence does not establish such additional use.
The amendment to paragraph 60 refers to the need for such property to be owned by either the municipality or local board. I have already held that the appellant is not a “local board” as understood by the section. It is also clear that the property remains, at all times, that of the appellant corporation and is never vested in the municipality.
The appellant seeks the benefit of an exemption under the Act. The onus is upon it to establish that it comes clearly within such exemption. I refer in particular to the case of Assessment Commissioner of the Village of Stouffville v Mennonite Home Association of York County (1973), DLR (2d) 237, where the Honourable Mr Justice Spence, speaking for the majority of the court, stated at page 240:
. . . It is, of course, clearly established that although the words of the statute must plainly assess the tax in order to bring the subject within the levy, the subject must, in turn, clearly establish that his case falls within the exemption in order to claim his benefits.
I find that the appellant has not discharged the onus cast upon it, and the appeal is thus dismissed.
At the request of counsel, I wish to add, however, that the disposition of this appeal might indeed have been otherwise had it been established that the company had been incorporated for the sole purpose of manufacturing power for the municipality, had carried on its business within such limitation, and that the property purchased was to become the property of the municipality on the termination of the contract. Such facts would support an allegation that the property was purchased substantially for the benefit of the municipality. However, such facts are not present in this case. Such observation is made at the request of both counsel.
The motion for judgment is dismissed with costs. To the extent that this motion is to be considered an appeal from the decision of the Minister which is hereby upheld, it is dismissed with costs.