sale on reserves. The system also includes an elaborate marking
and labelling regime for tobacco products to identify whether tax
on a product has been prepaid.
 As with many regulatory regimes, there are provisions for
penalties and fines for breaches of the statute. Participants in
the system are required to provide security as a condition of
receiving a permit. The minister is entitled to assess penalties
and taxes owed by a participant and to satisfy them from the
security provided. These provisions protect the integrity of the
tax system by ensuring that the tax is paid, collected and remitted to the minister.
 With this background, I turn to the specific statutory
 Section 2 imposes a tax, to be paid by every “consumer”,
at the rate of 16.475 cents on every cigarette and on every gram
or part gram of a tobacco product other than cigarettes and
cigars purchased by the consumer.1 A “tobacco product” is
defined in s. 1(1) as tobacco in any form in which it is used or
consumed and includes snuff.
 The minister’s demand for security in this case is related
to UFCT. This is defined by s. 1(1) as “fine cut tobacco that is not
marked fine cut tobacco”. This definition, and the definition of
“marked fine cut tobacco”, are key to the appellant’s statutory
 “Marked fine cut tobacco” is defined under s. 1(1) as “fine
cut tobacco in a package that is marked or stamped with an
indicium as required under the regulations”. This refers to fine
cut tobacco that has a mark or stamp on its packing to indicate
that taxes have been paid.
 The term “fine cut tobacco” is not defined in the TTA, but
it is defined in a regulation made under the TTA, namely, R.R.O.
1990, Reg. 1034 (the “Regulation”). Section 1(1) of the Regulation defines “fine cut tobacco” as “loose tobacco product that
has been refined to the point where it could be formed into a
 The minister’s demand for security was made pursuant to
the provision at issue in this appeal, s. 12(2)(f.1):
12(2) The Minister shall demand security in a form acceptable to the
1 Section 2(1) of the TTA states that the tobacco tax rate is 11.1 cents. Pursuant to s. 2(2.2) of the TTA, the minister may make regulations prescribing a different rate of tax. The current tax rate (effective April 28, 2017) is
16.475 cents: Tobacco Tax Rates, O. Reg. 5/05.