The applicant, a tobacco manufacturer, challenged the Minister of Finance's demand for security under the Tobacco Tax Act.
The applicant argued that because its products were sold exclusively to on-reserve First Nations retailers and for export, they were not subject to Ontario tax, and thus no security could be demanded.
The Divisional Court dismissed the application, finding that the plain language of s. 12(2)(f.1) of the Act requires the Minister to demand security for unmarked fine cut tobacco as if it were destined for taxable sale, to protect against the risk of product diversion.
The court also found the Minister's decision to reduce the required security amount was reasonable.
