The registrant served retail travel agencies by booking and purchasing airline tickets for the agencies' customers, which resulted in the receipt by it of commissions from the airlines. If the customers cancelled or revised their travel plans, the travel agencies were liable to pay an amount to the registrant, indicated as a penalty, cancellation charge, or, where appropriate, a replacement charge (collectively, the "cancellation charges").
Archambault J found that the registrant was obligated to collect GST on the cancellation charges on the basis that the fees arose from a taxable supply of services. After noting that the registrant's usual business model was to earn commissions from the airlines on ticket sales, Archambault J stated:
However, if no ticket is issued by the airline, Skylink is not entitled to a commission. And yet Skylink has provided services: it has done the necessary searches in the airlines; reservation systems and made a reservation. ... Regardless of whether that payment be charcterized as cancellation charges, penalty or replacement charges, its true nature is remuneration for services which Skylink has provided to the retail agencies.