Morrison, C.J.S.C.:—The question raised in this action is whether what is locally known as the Fuel-oil Tax Act, 1930 (B.C.), c. 71, and particularly secs. 2, 5(1) and 6 thereof, is invalid as being an attempt, in the first place, to impose indirect taxation in contravention of sec. 92(2) of the B.N.A. Act, 1867, which only conferred powers of direct taxation upon the Provinces of Canada and, in the second place, to impose excise taxation and, in the third place, as being an interference with trade and commerce allotted exclusively to the Federal Parliament.
Fuel-oil, the commercial consumable commodity dealt with by the Legislature in the Act in question, is manufactured from crude petroleum which is imported free of duty into the Province from foreign ports and is kept for sale and is sold within the Province. By sec. 5(1) I take it that the producers of fuel-oil pay the small licence fee which would be added to the price and passed on to the consumer who in turn is taxed upon consumption pur- suant to sec. 2. No crude petroleum is produced in British Columbia except in negligible quantities. Coal is found in large areas of the Province. Coal mining is and has been one of the most important permanent industries of the Province both in external and internal trade. The consumption of refined oil manufactured from the crude in Vancouver comes into direct and effective competition with the consumption of coal and tends to leave the trade in that commodity in a somewhat mutilated condition. Secs. 2, 5(1) and (2) and 6 are as follows:
"‘2. For the raising of a revenue for Provincial purposes every person who consumes’ any fuel-oil in the Province shall pay to the Minister of Finance a tax in respect of that fuel-oil at the rate of one-half cent a gallon.’’ .
"5(1) Upon the expiration of thirty days after the commencement of this Act, no person shall keep for sale or sell fueloil in the Province unless he is the holder of a licence issued pursuant to this section in respect of each place of business at which fuel-oil is so kept for sale or sold by him.
"(2) The manner of application and the forms of application and of the licence shall be as prescribed in the regulations. A licence fee of one dollar shall be payable in respect of each licence.”
“6(1) Every Collector, constable, and every person authorized in writing by the Minister of Finance to exercise the powers of inspection under this section may without warrant enter upon any premises on which he has cause to believe that any fuel-oil is kept or had in possession, and may inspect the premises and all fuel-oil found thereon, and may interrogate any person who is found on the premises or who owns, occupies, or has charge of the premises. ‘ ‘
The question as to what taxation it is competent for the Provincial Legislature to impose is a legal one. Rex v. Caledonian Collieries Ltd. [1928] 3 D.L.R. 657, quoting Lord Hobhouse, in Bank of Toronto v. Lambe (1887) 12 App. Cas. 575. At the time of Confederation there was a well-recognized classification. Taxes on property and income were classified as direct while duties of customs and excise were classified as indirect taxes. If a new form of taxation arises a formula of economists may be used but not for the purpose of placing a tax hitherto recognized as belonging to one class into a different class.
Customs and excise are duties imposed on commodities partly for the purpose of raising a revenue, but more truly for the purpose of regulating Trade and Commerce. The Provincial Legislature has no power to impose them. A.-G. B.C. v. A.-G. Can. [1923] 1 D.L.R. 223, at pp. 224, 226 and 228, and in the same case in the Privy Council, [1924] 4 D.L.R. 69, Reference is also made to the Act of Union passed in 1840 (Imp.), 3. 35, see. XLIII. I have also been referred to A.-G. New South Wales v. Collector of Customs (1908) 5 C.L.R. 818. I am not unmindful of the Special War Revenue Act, 1915 (Can.), ce. 8 as amended by 1920 (Can.), 3. 71, in which the tax is called an excise particularly sec. 2 (enacting secs. 19BB and 19BBB) and group 6 of the Customs Tariff Act, R.S.C. 1927, c. 44, Sch. A, item 267. From this it will be gathered that crude oil imported into and refined in Canada shall be free from import or excise duties.
The defendant submits that a Provincial Legislature cannot by the employment of a subterfuge, encroach on the domain reserved to the Dominion by attempting to levy a form of revenue which differs in its real nature from the semblance which the Provincial Legislature has sought to give to it, and that the actual incidence of the tax is of no legal significance once it is possible to assign the legislation in question to a particular type of revenue which has long been familiar to Legislatures and Courts. Lawson v. Interior Tree Fruit c Vegetable Committee [1931] 2 D.L.R. 193 at p. 197 ; Halifax v. Fairbanks [1927] 4 D.L.R. 945; A.-G. B.C. v. Macdonald Murphy Lbr. Co. [1930] 2 D.L.R. 721.
The question of direct and indirect taxation has been dealt with judicially on many occasions, the latest pronouncement on the subject to which I have been referred is A.-G. B.C. v. Macdonald Murphy Lbr. Co. which also supports the proposition just mentioned that if the offending provisions are in their true character an Excise Act then the Provincial Legislature may not enact it. Excise is an inland duty or impost levied upon the manufacture, sale or consumption of commodities within the country and has for its essence the intention that ultimately it is to be borne by the consumer and thus that it enters into the price of the commodity and affects its relative use in competition with other commodities, as for instance, coal, which not only is susceptible of but in practical reality is being put to the same use. It is immaterial at what stage between the producer and the consumer the imposition is levied since the line of incidence extends to the consumer.
It has been strongly pressed upon me that what the Legislature has done is to impose a duty of oc. per gallon on all fuel-oil consumed in the Province which includes the fuel-oil produced from the crude petroleum imported to be refined as specified in the Customs Tariff Act thus conflicting with the policy of the Dominion in this behalf. A.-G. Can. v. A.-G. Ont. [1898] A.C. 247; Toronto Elec. Com’rs. v. Snider, [1925] 2 D.L.R. 5; A.-G. Que. v. Queen Ins. Co. (1878) 3 App. Cas. 1090. In short the Act strikes at the use, enjoyment or consumption of this commodity, the levying of imposition upon which is the very essence of an excise tax.
For these reasons in my opinion the Province is under a constitutional disability to impose it. The action is dismissed with