An Alberta court has frozen a french fry manufacturer’s bid to challenge the taxable definition of processed potatoes.
P.E.I.-based Cavendish Farms Corp. had appealed its 2020 tax assessment by the Lethbridge Composite Assessment Review Board (CARB), arguing that the sum unfairly included packaging equipment and its automated storage and retrieval system (ASRS) as taxable structure and not machinery and equipment.
But the CARB dismissed the appeal at that time, concluding “none of the improvements at issue were (non-assessable) machinery and equipment,” states the Dec. 20 Court of King’s Bench ruling issued by Justice Johnna Kubik.
While that decision was upheld by judicial review, it was overturned on appeal in 2022 by the Alberta Court of Appeal, which ruled CARB had failed to provide sufficient reasons for its decision.
But by then, the City of Lethbridge had assessed the plant located in the city on its 2021 taxes, on the same basis it had previously, leading to a food fight in Court of King’s Bench.
The company was hoping to be granted further judicial review of the dispute but the City of Lethbridge argued the french fry case had already been salted away.
“With respect to the packaging equipment and ASRS, the CARB concluded that the raw potato was transformed into a frozen french fry prior to being boxed, stored and deep frozen,” stated Kubik’s ruling in citing the city’s case.
“The CARB determined that processing was complete at the point the frozen french fry was bagged. The CARB also determined that the ASRS was associated with storage and that any further freezing that occurred in the ASRS was related to quality, not processing … and thereby assessable.”
But Cavendish Farms, noted Kubik, argued CARB had interpreted taxation regulations too narrowly, adding the packaging machinery and ASRS would be removed from the plant once it was sold, rendering it untaxable.
Cavendish Farms opened the Lethbridge facility in 2019.
But the judge concluded “the packaging equipment is anchored to the floor of the building by bolts and that the ASRS is a 115-foot high, 40,000-square-foot structure.”
And she also said CARB’s ability to determine when the potatoes were fully processed into french fries played an important factor in hashing out what equipment was assessable by the city.
“The CARB … accepted that deep freezing, while contributing to quality control prior to shipping, did not change an already frozen french fry into something different,” she wrote.
“Effectively, the CARB drew a distinction between operational units which were related to processing, and those which were related to marketability.”
Kubik dismissed Cavendish’s arguments, concluding the City of Lethbridge hadn’t created a new recipe to determine such a case and its contention was baked in by previous court rulings.
If the two parties aren’t able to cook up an agreement on court costs within 30 days, a hearing could be scheduled, ruled Kubik.