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 were required by Ontario regulations 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, the Tax Court applied the O.A. Brown decision (affirmed by City of Calgary) to find that there was single supplies of electricity, stating that “[i]n 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.”
In affirming this finding, Boivin JA distinguished Kevin Davis Dentistry, which gave effect to the expressed Parliamentary intent to “provide for different tax treatment of supplies of orthodontic appliances and orthodontic service” (para. 25) whereas, here, the Ontario regulations did “not amount to as clear an indicator of Parliament’s intent as the GST Act did in Kevin Davis Dentistry” and “the intended tax treatment of what would constitute separate supplies in the present circumstances is not outlined in any statute as it was in the GST Act in Kevin Davis Dentistry” (para. 28). Goodyear Canada Inc. c. Québec (Sous-ministre du Revenu), 2002 CanLII 25441 (QC CA) was distinguishable on the ground that it “involved two separate contracts and two separate considerations paid, thus creating two distinct supplies” (para. 29).