The appellant was entitled to receive amounts under an Alberta energy assistance program to defray additional costs to users (consumers and businesses) from a spike in natural gas and electricity costs. Although such users were the ones entitled to receive such government grants, as a matter of convenience the grants were paid directly to the suppliers on the due dates for the invoices, provided that such amounts had been “credited” by the suppliers to the users. The suppliers invoiced the appellant for the full value of the natural gas and electricity supplied, plus GST thereon. Webb JA found that if, for some reason, the suppliers had not been paid the grants, they would have held the users including the appellant liable for the full invoice amounts rather than just the amounts net of the "credits" shown on the invoices for the Alberta grant to be received by the suppliers.
The appellant applied for a GST rebate under s. 261 on the basis that the GST payable by it should reflect consideration net of the credit, and was denied that rebate. In dismissing the appeal on the basis that there had been no such reduction in the value of the consideration, Webb JA stated (at para. 13):
When the suppliers received the funds from the Province, the liability of the appellant was then reduced since such amount was accepted by the suppliers as partial payment of the amount that the appellant otherwise had to pay under its agreements with the suppliers. However, this was after the date of the invoices and after the liability arose to pay the GST. Therefore, the liability of the appellant for GST under the Act was correctly calculated as 7% of the amount payable for the supply of natural gas and electricity before the credit for the amount that the suppliers would subsequently receive from the Province is taken into account.