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Taxation ? Goods and services tax ? Fuel tax ? Aboriginal law ? Applicants are Status Indian, as defined in the Indian Act, R.S.C. 1985, c. I-5 ? Applicants assessed under Excise Tax Act, R.S.C. 1985, c. E-15, and An Act Respecting the Québec Sales Tax, CQLR c. T-0.1 for failure to collect and remit taxes from sales of gasoline to non-Indian consumers ? Whether the Royal Proclamation, 1763, an autonomous source of Aboriginal rights, grants Natives a right to free and open trade with all subjects of the Crown ? Whether Natives’ right to free and open trade with all subjects of the Crown granted by the Royal Proclamation, 1763 is constitutionally protected ? Whether the tax compliance and administrative burdens uniquely placed upon Status-Indian merchants carrying on business within a reserve and trading with Natives and non-Natives are an infringement of their constitutional right to trade freely and openly with all subjects of the Crown ? Whether the Fuel Tax Act, CQLR c. T-1, the Excise Tax Act and the Quebec Sales Tax Act are inoperative insofar as they infringe on this right ? Whether the liabilities that applicants are made to bear under these statutes are contrary to the protections afforded them by ss. 87 to 90 of the Indian Act ? Whether Status Indians carrying on business entirely within the protected confines of the reserve are meant to have an economic advantage resulting from the protections afforded them by ss. 87 to 90 of the Indian Act ? Whether the courts below misapplied the principles relevant to economic advantage put forth by this Court.

The applicants are Status Indians and members of the Mohawk Nation. They own gasoline stations on a reserve. The majority of gasoline consumers are not Indian, but they purchase gas on the reserve in order to save money because merchants are not collecting applicable taxes on gasoline. Unlike Status Indian consumers who live on the reserve, other consumers must pay the federal goods and services tax (GST) and Quebec sales tax (QST) when they purchase gasoline. The applicants are required to collect and remit these taxes to Revenue Quebec which collects and administers GST on behalf of Canada. The applicants pay neither GST nor QST when they purchase fuel from their suppliers, but they do pay fuel tax, which is compensated when a retail sale is made.

Quebec’s Minister of Revenue sought to assess the applicants for the sales taxes that should have been collected and remitted. In response, the applicants sought a declaration that, as Status Indians, they had no obligation to act as collection agents of the applicable taxes, and that certain provisions of the Indian Act, the Excise Tax Act, the Quebec Sales Tax Act and the Fuel Tax Act be declared inapplicable to them. The applicants further argued that they had the right to trade freely, based on the Royal Proclamation, 1763, and an ancestral right within the meaning of s. 35 of the Constitution Act, 1982. They also challenged Quebec’s fuel tax exemption program designed to benefit Indians from the exemption to pay fuel taxes when purchasing gasoline on a reserve.