Complete Cuisine & Fine Foods to go (1988) Ltd. c. The Queen

Complete Cuisine & Fine Foods to go (1988) Ltd. c. The Queen Court (s) Database Tax Court of Canada Judgments Date 2003-04-14 Neutral citation 2003 TCC 210 File numbers 2002-683(GST)I Judges and Taxing Officers David W. Beaubier Subjects Part IX of the Excise Tax Act (GST) Decision Content Docket: 2002-683(GST)I BETWEEN: COMPLETE CUISINE & FINE FOODS TO GO (1988) LTD., Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ Appeal heard on April 2, 2003 in Victoria, British Columbia Before: The Honourable Judge Beaubier Appearances: Counsel for the Appellant: George F. Jones, Q.C. Counsel for the Respondent: Michael Taylor ____________________________________________________________________ JUDGMENT The appeal from the assessment made under the Excise Tax Act, notice of which is dated September 18, 2001 and bears number 11CU2000256, is allowed and the assessment is referred to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment. The Appellant is awarded party and party costs. Signed at Saskatoon, Saskatchewan, this 14th day of April 2003. "D.W. Beaubier" J.T.C.C. Citation: 2003TCC210 Date: 20030414 Docket: 2002-683(GST)I BETWEEN: COMPLETE CUISINE & FINE FOODS TO GO (1988) LTD., Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ REASONS FOR JUDGMENT Beaubier, J.T.C.C. [1] This appeal pursuant to the Informal Procedure was heard at Victoria, British Columbia, on April 2, 2003. Roy Greve, the founder of the Appellant, testified on behalf of the Appellant. Rosa Liu, B. Comm., C.G.A., testified on behalf of the Respondent. [2] Paragraphs 3 to 8 inclusive of the Reply to the Notice of Appeal outline the matters in issue. They read: 3. By Notice of Assessment numbered 11CU2000256, dated September 18, 2001, the Minister of National Revenue (the "Minister") assessed the Appellant for under-reported Goods and Services Tax ("GST") of $16,521.31, as detailed in the attached Schedule "A", plus corresponding penalty and interest of $1,961.76 and $1,658.26, respectively, for the reporting period from October 1, 1998 to September 30, 2000, (the "Assessment Period"). 4. A Notice of Objection was filed on September 28, 2001. 5. By Notice of Decision dated January 15, 2002, the Minister confirmed the assessment. 6. In so assessing the Appellant, the Minister relied on the following assumptions of fact: a) the Appellant was incorporated in British Columbia on October 5, 1988; b) the Appellant registered under Part IX of the Excise Tax Act, R.S.C. 1985, c. E-15, (the "Act") effective January 1, 1991, and was assigned a GST registration number 101076826; c) the Appellant was required to file quarterly GST returns; d) the Appellant's major business activity is providing take-out gourmet food and catering services; e) at all material times, the Appellant advertised itself as a caterer; f) at all material times, the Appellant provided supplies that were zero-rated and taxable at the standard rate of 7%; g) at all material times, the Appellant's supplies taxable at 7% included: i) the delivery of non-frozen meals; ii) sandwiches and soups; iii) desserts and cookies; iv) party trays; and v) catering services; h) for the Assessment Period, the Appellant filed its GST returns reporting GST of $1,860.51 and input tax credits ("ITCs") of $20,856.46, claiming net refunds of $18,995.95, as detailed in Schedule "B"; i) by Notice of Assessment numbered 11CU2000256, dated September 18, 2001, the Minister assessed the Appellant for under-reported GST of $16,521.31 in respect of prepared meals (the "Meals"); j) at all material times, the Appellant prepared and cooked all the food that formed part of the Meals; k) in respect of the meals, the Appellant offered a menu of seven dishes for a fixed price of $6.50 per dish or serving; l) the Meals could either be picked up by the customers or delivered for an additional fee; m) the Meals consisted of refrigerated, fully cooked foods; n) at all material times, the Meals were not supplies of frozen food; and o) in preparing the Meals, the Appellant processed and arranged the food to the customer's specifications, and after they were re-heated the Meals were ready to eat. B. ISSUES TO BE DECIDED 7. The issue is whether the Meals are taxable at the standard rate of 7 percent. C. STATUTORY PROVISIONS RELIED ON 8. He relies on subsection 123(1) and sections 165, 221, 222, 228, 238, 280 and 296 of the Excise Tax Act, R.S.C. 1985, c. E-15 (the "Act"), as amended, and paragraph 1(o.5) of Part III of Schedule VI. [3] The following paragraphs and subparagraphs of the assumptions in paragraph 6 were not refuted: a); b); c); g) ii), iii), and iv); h); i); j); k); and l). [4] By the remaining paragraphs and subparagraphs of paragraph 6, the Court finds: 6 d) The Appellant's major business activity is providing the supply, by way of over the counter sale of delicatessen food; 6 e) Is only correct because the Appellant advertised, inter alia under the "catering" title in the Yellow Pages of the Victoria telephone book. 6 f) Is in dispute in regard prepared non-frozen meals that were delivered to customers. 6 g) i) Is the subject matter of the action. The Appellant prepared vegetables to the blanched stage in large quantities which were then immediately refrigerated for 24 hours; starches (potatoes, rice, pasta) were also prepared, cooked and refrigerated for 24 hours; meat, poultry and fish were also partially cooked to a fixed temperature in large quantities and refrigerated (quick cooled) for 24 hours. After the 24 hours these were assembled in 7" aluminium foil packages to a fixed total weight and sold in the package for $6.50 plus a delivery charge. The meat or fish portion in the package was a fixed weight which varied according to the Appellant's costs. The remaining ingredients were added into the package to arrive at a total uniform weight for each package. If a customer telephoned an order and specified another precooked vegetable that the Appellant had refrigerated, that vegetable could be substituted for the vegetable that the Appellant had planned for that package group. The result is that the Appellant argued that it was selling a fixed weight of food, while the Respondent argued that it was catering a meal. The food was not fully cooked. The directions on each package ordered the purchaser to heat the contents in an oven at 375 º for 30 minutes or to microwave the contents on another container for 3 minutes. (Exhibit R-2). Mr. Greve is a professional chef and he testified that these directions had to be carried out to complete the cooking process. The Court accepts this testimony by Mr. Greve. Finally, if any pre-packed packages were left in stock at the end of the day, they were frozen and sold as frozen food; these are not the subject of this assessment. 6 g) v) The concept of "catering services" will be dealt with later in these Reasons 6 m) Therefore, the Court finds that the food was not fully cooked when it was delivered to the customer. The customer had to heat the contents of the package pursuant to its directions to finish the cooking process. [5] The question then is whether the cooked food in the delivered packages was a supply of food or beverages sold under a contract for, or in conjunction with, catering services pursuant to paragraph 1 (o.5) of the Part III of Schedule VI of the Excise Tax Act. [6] "Catering" is defined by the Oxford Dictionary, Second Edition, as: Purveying of food or other requisites. and That caters; concerned with catering. [7] The phrase used in the Act is "catering services". The word "service" is defined by the Oxford Dictionary, Second Edition, as "performance of the duties of a 'servant' for work done in obedience to and for the benefit of a master". Thus the catering service must be performed for the benefit of the caterer. In this case the purchaser must perform the cooking services for him or herself. The Appellant is not required to perform any catering services. The word "services" indicates more than merely purveying or selling food on other requisites. [8] "O"rated items under Part III 1. (o.5) include "supplies of food or beverages for human consumption...other than supplies of ...(o.5) food or beverages sold under a contract for, or in conjunction with, catering services". [9] The Appellant did not supply any services in conjunction with food. It merely sold a package of food. It did deliver the package on request, and for an additional fee, as many grocery stores still deliver groceries. But the delivery service was just that. It had nothing to do with the food. The delivery might have been for a pair of shoes and it would not have required any more effort or service. [10] Upon receipt of the package, a purchaser had to cook the food before it could be consumed. The food in the package had not been completely cooked by the Appellant. More than mere "warming" was required. The directions on each package stated the following: CHEF ON THE RUN 2020 Oak Bay Ave Victoria Tel: (250) 595-3151 HEATING GUIDELINES OVEN - preferred method Always leave foil lid on FRESH DINNERS Preheat oven to 375 º Heat in oven for 30 min. Leave foil lid on. FROZEN DINNERS Preheat oven to 425 º Place frozen dinner in oven - 45 minutes MICROWAVE METHOD *FRESH DINNERS ONLY* Transfer to plate Heat approx 3 minutes on high [11] The Appellant did not supply any amenities or "additional amenities". [12] Moreover, Mr. Greve stated that many of the Appellant's customers make more than one serving from the package; a subsequent meal can be made from remnants; the contents cannot be consumed on the spot; normally a preparer would put the package contents on one or more plates after cooking it; and utensils are required to eat the cooked contents. In fact, it is not even up to the standard of preparation of a can of pork and beans which can be eaten cold straight from the can. This must be cooked first by the purchaser. [13] The appeal is allowed. The Appellant is awarded its party and party costs. Signed at Saskatoon, Saskatchewan, this 14th day of April 2003. "D. W. Beaubier" J.T.C.C. CITATION: 2003TCC210 COURT FILE NO.: 2002-683(GST)I STYLE OF CAUSE: Complete Cuisine & Fine Foods To Go (1988) Ltd. PLACE OF HEARING: Victoria, British Columbia DATE OF HEARING: April 2, 2003 REASONS FOR JUDGMENT BY: The Honourable Judge D.W. Beaubier DATE OF JUDGMENT: April 14, 2003 APPEARANCES: Counsel for the Appellant: George F. Jones, Q.C. Counsel for the Respondent: Michael Taylor COUNSEL OF RECORD: For the Appellant: Name: George F. Jones Firm: Jones Emery Hargreaves Swan 1212-1175 Douglas Street Victoria, B.C. V8W 2E1 For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada