The appellant made warranty repairs to heavy trucks. It sent warranty claims to the manufacturers who appraised the work and approved all, part or none of the bill. Only on approval would the manufacturer pay the bill. CRA claimed that GST was collectible when the claim was sent; the appellant said the amount payable was not fixed and due until the manufacturer approved it. Justice Favreau agreed with the appellant:
“[38] Taking account of the preceding [arguments of appellant and Crown], i conclude that:
a) the assessment is manifestly wrong since based on the client accounts in the appellant’s financial records [which did not reflect the amount claimed from the manufacturers but simply recorded the value of the labor and parts spent on the repair];
b) the system for submitting claims did not constitute an “invoice” within the meaning of the ETA because the manufacturers had no obligation at that time to pay;
c) the moment when the consideration for the supply becomes due is the moment when the manufacturer approves the claim which corresponds to the moment when the debt is created and the moment when the manufacturer is liable to pay all or part of the consideration of the supplier according to the written agreement, as is specifically provided in paragraph 152(1)(c) of the ETA. [My translation.]
See Garage Gilles Roy (2007) inc. c. La Reine, 2014 CCI (Favreau)