The registrant (UPS), in its capacity as a licensed customs broker, overpaid GST on goods it brought into Canada on behalf of persons to whom it had delivered shipments from outside of Canada. It reported the overpayments in its monthly GST returns by deducting the amount of the overpayments from its own GST liability as a supplier of goods and services.
In finding that this approach to obtaining a refund of the overpaid GST was authorized under 261(1), Rothstein, J. rejected a submission that the only person entitled to a rebate is the person who is liable to pay the GST. The reference in s. 261(1) to "other obligation" did not establish that, in order to access s. 261, UPS was required to have been liable on its own account for the overpaid GST. Rothstein J stated (at paras. 17, 20):
It cannot have been the intention of Parliament that persons who were not liable for GST but paid GST in error could not obtain a rebate.
...Section 261(1) is worded broadly. ... It would not be in accordance with the ordinary and grammatical meaning of the provision to read s. 261(1) in such a way as to preclude persons who have paid or overpaid GST in error from obtaining a rebate from the Minister.