Bell Canada was required as a result of ETA s. 236.01 and the related regulation to recapture 100% of the input tax credits that it claimed in respect of the 8% Ontario HST that it paid on the consideration for the supplies to it in Ontario of electricity. The suppliers to it of such electricity (the “Local Distributors”) were required by law to itemize charges on their invoices to show four categories of items: electricity, delivery, regulatory charges and debt retirement charge. Bell Canada submitted that, rather than receiving a single supply of electricity, it received multiple supplies of electricity, delivery services and regulatory services, so that the electricity component (subject to recapture) was reduced.
In rejecting this submission, D’Arcy J stated (at paras. 123-125):
In substance and reality, the alleged separate supplies of the delivery services and regulatory services are integral parts, integrants or components of the overall supply of electricity. The supply to the Local Distributors of the transmission services and the regulatory services is work of a preparatory nature to the supply of the electricity. Similarly, the costs that the Local Distributors incur in distributing the electricity relates to work of a preparatory nature to the supply of electricity. As … noted in City of Calgary, such supplies are parts or components of the single overall supply of electricity.