The appellant ("Michelin") sold its inventory of imported tires to an affiliated corporation ("Uniroyal") on December 28, 1990 and repurchased the inventory on January 2, 1991. As Uniroyal had been registered as a manufacturer, Michelin generated a full refund under s. 68.2 of the 13.5% federal sales tax it had paid; whereas if it had continued to hold this inventry, it would have received a rebate under s. 120 only at a rate of 8.1% as the owner of the tires on Janauary 1, 1991. In confirming the Minister's application of s. 274 to deny a refund of more than 8.1%, the Tribuanl stated (at p. 17-23) that s. 68.2:
allows refunds in case where a manufacturer, wholesale or importer, that has paid FST on the purchase of certain goods, subsequently sell these goods under tax-exempt circumstances. In this case, the Tribunal is of the view that, by allowing the appellant its refund, the overall intent of the provision…would not be met.