Mobil Oil Canada, Ltd. v. Canada
T-832-88
Reed J.
10/2/93
20 pp.
Plaintiff purchased Dash-8 aircraft in 1985 for use in connection with activities in oil and gas fields located in remote areas of northern Alberta and British Columbia -- Claiming purchase of plane exempt from federal sales tax because plane used for purpose described in Excise Tax Act, s. 6(b)(i) (aircraft purchased for use exclusively in provision of air services directly related to exploration and development of natural resources) -- Plane flying regularly scheduled routes to remote areas to fly crews in and out of oil and gas fields -- Explanation of oil and gas field activities -- Use of secondary or enhanced recovery system to increase production of oil well -- Aircraft used to transport employees involved with maintenance and operation of equipment used in secondary and enhanced recovery systems, data collection activities, operation and maintenance of equipment for lifting and treating reservoir fluids, new construction of roads, flow lines, capital additions to equipment, installation of new equipment, Mobil management employees who decided where and when to develop field also used aircraft, employees of Mobil contractors who worked in areas in question and employees of Rainbow Pipeline (company responsible for transporting crude to Edmonton) for fee -- Friends, relatives of Mobil employees carried on "space available" basis -- Meaning of "exploration and development" -- "And" used disjunctively, not conjuntively -- Exploration and development two distinct activities -- May be great deal of exploration leading to no development -- Development activity separated in time from exploration also qualifies under s. 6(b)(i) -- Nothing in overall scheme of Part XVII or in specific categories listed in s. 6(b) indicating passenger and freight service, if directly related to development of natural resources, outside s. 6(b)(i) -- Transporting family, friends, Rainbow employees for fee, casual and incidental use -- Not removing aircraft from s. 6(b)(i) -- S. 6(b)(i) applies to "natural resources" in general, not just petroleum industry -- Natural resources including water to blueberries -- Effect of Bridges Brothers Limited v. D.M.N.R. for Customs and Excise (1985), 85 DTC 5285 (F.C.A.) on interpretation of "development" in context of oil and gas fields -- S. 6(b)(i) not intended to cover "development" in broadest sense, i.e. including all processing of natural gas and oil, even at refinery stage -- Term interpreted by reference to category of natural resources to which referrable -- Definition of "development" in Glossary of Geology and Related Sciences pertinent: work done to open up mine or ore body as opposed to actual extraction of ore -- In so far as exploitation of mineral resources concerned, development of oil or gas field involving work done to open up "ore" body i.e. give access to oil or gas, but not including on-going operation of facilities used to extract oil or gas, once facilities put in place -- Development not including treatment or processing of oil and gas in field before transmission to refinery -- Not including operation of secondary and enhanced recovery systems once installed -- Suggestion oil and gas having no commercial value until reaches well head or until processed in field before being placed in pipeline not accepted -- Insufficient to simply disprove defendant's assumptions -- Burden of proof on plaintiff to prove use of aircraft within s. 6(b)(i) -- Plaintiff not meeting burden of proving Dash-8 purchased "for use exclusively in provision of ... air services directly related to" development of oil and gas fields -- Plaintiff simply asserting employees transported on plane worked both at operating existing facilities and involved with any new construction -- Not trying to establish employees would have spent more time involved in development work than in on-going operation of facilities -- Excise Tax Act, R.S.C. 1970, c. E-13, Schedule III, Part XVII (as enacted by S.C. 1974-75-76, c. 24, s. 21), s. 6(b)(i) (as am. by S.C. 1980-81-82-83, c. 68, s. 40).