http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/72356/index.do 
Health Quest Inc v. The Queen (June 30, 2014 – 2014 TCC 211) was an HST appeal dealing with whether certain therapeutic shoes were subject to HST:
[4] The Appellant was represented by Heidi Scott, its director. She is a certified pedorthist who works for the Appellant. As I understand the evidence, she has specialized training in fitting therapeutic footwear for the relief of various disabling conditions of the feet. The Appellant is a distributor of such footwear and, according to Ms. Scott, acts as a “dispensing profession”, comparable to a pharmacy.
[5] The assessment for the Period was based on the overall sales for two months only, August and December of 2009. The Appellant was assessed for uncollected HST in the amount of $42,274.72 for the Period. After the audit, the Appellant was advised to follow the auditor’s definition of zero-rated footwear for subsequent taxation years. The auditor instructed the Appellant to “… apply tax to everything we sold that was not modified” (Transcript, page 25). Based on this advice, the Appellant applied HST to the sale of many shoes sold in 2010 and 2011 that would not normally have been taxed. According to Ms. Scott, this put the Appellant at a disadvantage in the marketplace because competitors had not been forced to adopt this practice. She testified that insurance companies and third party billers questioned their practice of taxing formerly zero-rated footwear. This prompted Ms. Scott to seek further instructions from the Minister’s office but, each time she made contact, she received conflicting advice as to which shoes should be zero-rated. One official referenced a “list” of non‑exempt shoes but others, including Craig Bourne, the appeals officer who testified at this hearing, denied that a “list” existed.
The operative provision of the
Excise Tax Act was section 24.1:
[23] In 2008 and 2009, the applicable provision, section 24.1 of Schedule VI, Part II of the Act read as follows:
24.1 [Footwear] – A supply of footwear that is specially designed for use by an individual who has a crippled or deformed foot or other similar disability, when the footwear is supplied on the written order of a medical practitioner.
It provides that certain footwear will be zero-rated for HST purposes under certain circumstances. The section has been amended slightly, with its current wording being somewhat broader and, as well, by allowing the prescriptions to come from all specified professionals, not only medical practitioners. This change would not affect the outcome of this appeal and the Respondent did not put in issue the prescriptions respecting the footwear that was sold. In fact, the parties agreed that all of the shoes that are the subject of this appeal were accompanied by the proper medical prescriptions. Prior to 1996, a written prescription was not required for shoes to be zero-rated.
In essence the Crown’s position seemed to be that “off the shelf” product was taxable whereas products modified for a specific client were exempt. While the appellant took the position that all of the products in question had been modified the evidence submitted did not entirely bear that out. Nor was there any expert evidence before the court as to the use of the unmodified products.
Nevertheless the court concluded that the Minister’s pleadings put the onus on the Crown to establish that the products were taxable:
[32] The Reply contains no assumptions of fact, or material facts pleaded elsewhere in the Reply, that would do the following: clearly distinguish for the Appellant those features of the footwear for which the Minister alleges HST should have been collected and remitted as opposed to those features of the footwear where HST did not have to be collected. Assumptions (f) and (g) do not assist the Appellant in this regard and merely make a statement as to how the law applies to the facts. As well, there were no other such facts assumed elsewhere in the Reply. Consequently, there is no onus on the Appellant to demolish the Minister’s assumptions, as they are invalid.
[33] Where the Minister has not set out any proper assumptions of fact in the pleadings, the onus then reverts to the Minister to establish the correctness of the assessment.
…
[36] The Respondent’s only evidence was the testimony of the appeals officer. Although Mr. Bourne was straightforward in providing his testimony, it did not establish that the footwear in issue should be, on a balance of probabilities, subject to HST. His conclusion was simply that he could not find sufficient information, either through product materials or the internet, to allow the shoes to be zero-rated. Rather, his conclusion was based on a lack of knowledge respecting the footwear. The Respondent bears the onus to establish that the footwear would be excluded from the scope of the legislative provision. I was not provided sufficient evidence to persuade me that, on a balance of probabilities, the shoes were not specially designed for use for a “crippled or deformed or similarly disabled foot”. Since there were no assumptions of fact pleaded and since the Respondent did not lead evidence in this regard, the Appellant must succeed in its appeal.
As a result the appeal was allowed with costs.