The appellant, a not-for-profit corporation operating an open-access virtual law library, appealed the Minister's denial of input tax credits (ITCs) for GST paid to third-party service providers.
The Minister argued the appellant provided an exempt supply because the public had free access to the library, meaning no consideration was received.
The appellant argued it received consideration from the Federation of Law Societies of Canada, which paid an annual levy to fund the library.
The Tax Court of Canada allowed the appeal, finding that the Federation's payments constituted consideration for the supply of the virtual library, creating a direct link between the payment and the supply.
As the supply was made for consideration in the course of a commercial activity, it was a taxable supply, entitling the appellant to claim ITCs totaling $745,690.89.
