CRA assessed Canadian Air Lines ("CAIL") in June 2000 for failure to charge GST on frequent flier points which the appellant ("RBC") paid for. CAIL did not pay the assessment and in January 2001, CRA assessed RBC for GST that was payable by it on the same points purchases. In rejecting submissions on behalf of RBC that the second assessment gave rise to double taxation, Hershfield J stated (at paras. 68, 69 and 73):
[I]t is untenable to think that recipients would be liable to pay two collectors for GST on the same transactions. To prevent this…[s]ubsection 278(2) provides that amounts collectable by the Crown from a recipient cannot be paid to the Crown if the supplier is liable to collect the tax from the recipient.
…It is not enough then that an assessment has been issued against the Appellant. As long as CAIL as supplier has an obligation under section 221 to collect tax from the Appellant as agent of Her Majesty…the Crown cannot collect the tax payable by the Appellant as recipient of a supply except on behalf of CAIL.
… CAIL filed the Plan under the CCAA which released it of its liabilities arising before March 24, 2000. As the Plan was accepted by CAIL's creditors…it may necessarily follow that CAIL's collection obligation under section 221 was terminated so as to lift the limitation in subsection 278(2). But in the absence of provisions in the Act spelling out when such limitation is lifted, such finding is best left for another day – perhaps in a collection forum.