Duff, C.J.C.:—The respondents are a company engaged in the business of wholesale dealers in, and dyers and dressers of, raw furs. They purchase raw furs or skins from trappers and other persons, dress and dye these skins and sell them to furriers who make them into fur garments. Occasionally they sell to retailers. Other dyers and dressers in Canada it seems dress and dye furs for furriers, but, as a rule, they are not owners of the furs. The respondents, on the other hand, dress and dye their own furs and resell them. The respondents insist upon the importance of the fact that the furs, in the operations to which they subject them, are neither cut nor " 1 trimmed’ ‘ by them, but that they confine themselves to cleaning, combing and dyeing the raw furs.
The controversy concerns the basis of taxation, under the Special War Revenue Act, in respect of furs sold by the respondents. Before and after the promulgation of Regulation 17, to which reference will be made hereafter, the respondents held a licence under the Special War Revenue Act (1915) and amendments, in which they were variously described as fur dressers and dyers, and manufacturing fur dressers and dyers. Prior to the passing of the regulation mentioned, they, being licensed in the same form, sold mainly to furriers who were licensed manufacturers, although there were sales also to persons who were not licensees. As regards the former sales, they were, by the proviso of sec. 19BBB (1), exempt from sales tax. As regards the latter, they did not dispute their liability to pay, and did pay sales tax. After the promulgation of the regulation, their customers, the furriers, ceased to be licensees and, consequently, (assuming that sec. 19BBB (1) applied to them and that they were liable to pay sales tax thereunder), they continued to pay the tax. Other dyers and dressers, however, by force of the regulation, came under another rule. They, dyers and dressers, that is to say, who performed the work of dyeing and dressing for others, were obliged by the regulation to pay a tax on the "current market value” of the dressed furs. The respondents paid taxes under sec. 19BBB (1), or duty on the sale price of the goods. A discrimination was thereby effected, the respondents complain, between them and their competitors, who, being the owners of furs, had them dyed and dressed by dyers and dressers. In practice, it appears that in these last mentioned cases, the market value of the fur was taken by the revenue department to be the cost price of the fur plus the amount paid to the dyer and dresser, and the sales tax at the statutory rate was calculated thereon. The respondents, on the other hand, who paid their tax pursuant to the provisions of sec. IDBBB (1), paid upon the price which they charged the purchaser, that is to say, they paid, not only upon the cost of dyeing and dressing and the original cost of the fur, but they paid the tax rate on their profit as well.
There appears to be no manner of doubt about the facts, and the primary question is whether or not the respondents are right in their contention that they ought to be taxed upon the same footing as their competitors. The question does not seem to be susceptible of elaborate discussion. Perhaps the most convenient way of putting it is first of all to set out the provisions of sees. 86 (a) (b) and (c) and 87 of c. 179, R.S.C. 1927, which contain the material parts of sec. 19BBB (1), in respect of which there has been no substantial change :
86. In addition to any duty or tax that may be payable under this Act or any other statute or law, there shall be imposed, levied and collected a consumption or sales tax of four per cent on the sale price of all goods;
"‘(a) produced or manufactured in Canada, payable by the producer or manufacturer at the time of the sale thereof by him; or
"‘(b) imported into Canada, payable by the importer or transferee who takes the goods out of bond for consumption, at the time when the goods are imported or taken out of warehouse for consumption; or
" (0) sold by a licensed wholesaler to another than a licensed manufacturer, and (if the goods were manufactured or produced in Canada) the tax shall be computed on the price for which the goods are sold by the licensed manufacturer to the said licensed wholesaler, and the said price shall include the amount of the excise duties on goods sold in bond.
1’87. Whenever goods are manufactured or produced in Canada under such circumstances or conditions as render it difficult to determine the value thereof for the consumption or sales tax because
"‘(a) a lease of such goods or the right of using the same but not the right of property therein is sold or given; or
"(b) such goods have a royalty imposed thereon, the royalty is uncertain, or is not from other causes a reliable means of estimating the value of the goods ; or
"(c) such goods are manufactured by contract for labour only and not including the value of the goods that enter into the same, or under any other unusual or peculiar manner or conditions ; or
‘“(d) such goods are for use by the manufacturer or producer and not for sale ;
‘‘the Minister may determine the value for the tax under this Act and all such transactions shall for the purposes of this Act be regarded as sales.’’
The first contention on behalf of the respondents is that they are not producers or manufacturers within the meaning of s. 86. Although the point does not in any way govern our decision, we cannot properly proceed to the consideration of the substance of this contention without first observing that if the article sold by the respondents is not an article produced or manufactured in Canada within the meaning of sec. 86, it is difficult to understand upon what ground it can be contended that it is an article "manufactured or produced’’ within the meaning of sec. 87. If the skin or fur as cleaned, "‘made pliable’’, to use the expression of one of the witnesses, and dyed by them and sold by them, as "‘merchantable stock-in-trade’’, to use an expression assented to by the principal witness on behalf of the respondents, does not fall within the description 1*** goods produced or manufactured in Canada’’ (sec. 86), it is not, at all events, immediately obvious how it can fall within the description "‘goods * * * manufactured or produced in Canada’’ within the meaning of sec. 87.
Furthermore, there is nothing before us to indicate that the goods, which were the subject of sales in respect of which the respondents paid the taxes now reclaimed, fall within sec. 87 (c) ; that is to say; that they are goods manufactured under contract for labour only, and, indeed, if they are not ‘ 4 manufactured”, it is difficult to bring them within the verbal frame of sec. 87 (c).
We are not able to agree with the view advanced by the respondents that these articles sold by them are not within the contemplation of sec. 86. The words ‘‘produced’’ and "‘manu- factured’’ are not words of any very precise meaning and, consequently, we must look to the context for the purpose of ascertaining their meaning and application in the provisions we have to construe. Sec. 19BBB (1) gives us some assistance. Goods which are to be used in, or wrought into, or attached to, articles to be manufactured or produced for sale may still be "‘goods produced or manufactured” in Canada within the meaning of the section. And the matter is further elucidated by reference to subsec. 4, which enumerates many exceptions. By that subsection, the section shall not apply to "‘sales or importations” of a number of different things. Among these there is a significant item in these words,
“pulpwood, tan bark and other articles the product of the forest when produced and sold by the individual settler or farmer. ‘ ‘
This suggests rather pointedly that the phrase ‘‘goods produced or manufactured’’ contemplates such things as pulpwood and tanbark, to which it appears to be assumed the section will apply when produced and sold by others than the ‘‘individual settler or farmer’’, by, for example, the holder of a timber berth or licence. Light is thrown upon the meaning of the word “produced” by the fact that pulpwood and tan bark and other articles, the product of the forest, are contemplated as being produced within the meaning of the statute. We have further the item ‘‘wool no further prepared than washed’’ which seems to imply that wool still further prepared, by dyeing for example, if sold, comes within the incidence of the tax. Then we have ‘‘raw furs’’ which is not without its implication. It is not easy to see why a raw fur which is separated from the animal upon which it grew, when combed, ‘ 1 made pliable” and dyed and thereby turned into ‘‘merchantable stock-in-trade’’, has not become something which is ‘‘produced’’ if the term " 1 produced” is properly applicable to such things as ‘‘pulpwood’’ and ‘‘tan bark’’. Nor does the case appear to be very different if the operation begins by a purchase of the fur which has already been taken from the animal and ends with the large stage of preparation which fits it to be sold as a fur that can be described as ‘‘dressed and dyed.”
We think the sales made by the respondents are sales within the scope of sec. 86.
This seems to be sufficient to dispose of the case. It may be that in working out the statute there has been some regrettable inequality, but the respondents’ claim necessarily rests upon the proposition that they were taxable only under the regulation which we think very plainly is not intended to apply to sales within the contemplation of sec. 86.
Although it does not strictly enter into the argument, it may not be out of place to observe that the dyer or dresser who neither owns the fur nor sells the fur, within the proper meaning of the word, is clearly not within sec. 86. He may come within sec. 87 and, if so, the transaction between him and the owner of the fur, which is not truly a sale at all, is deemed to be a sale for the purposes of the Act. The respondents, as we have already observed, are not shewn to be within sec. 87, but, if they are a ‘‘producer’’ or ‘‘manufacturer’’ they are within sec. 86.
We do not think it necessary to express any opinion upon the question of law that might arise for discussion if we had taken a different view of the statute and the regulation.
The appeal should be allowed and the action dismissed but, in the circumstances there should be no costs.
Appeal allowed, no costs.