Date: 19980505
Docket: T-528-98
BETWEEN:
ROBIN GILES BRANT O/A FREE FLOW GAS BAR
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER
ROTHSTEIN, J.:
[1] The plaintiff applies for an interlocutory injunction to enjoin the Minister of National Revenue from undertaking collection action in respect of the federal Goods and Services Tax ("G.S.T.") which the plaintiff has failed to remit since 1991.
[2] The plaintiff owns a gas bar on the Tyendinaga Mohawk First Nation Territory. He is a status Indian. The gas bar sells gasoline to Indians and non-Indians. The Minister claims that the plaintiff is required to remit G.S.T. in respect of sales of gasoline to non-Indians. The plaintiff says that by reason of Aboriginal rights, treaty rights, and section 87 of the Indian Act, R.S.C. 1985, c. I-5, as amended, and perhaps other authority, the plaintiff is not liable to remit G.S.T. to the Minister. This issue has been the subject of a Notice of Assessment and Objection and will be proceeded with and determined in the Tax Court of Canada.
[3] The plaintiff has never remitted G.S.T. to the Minister and has never taken steps to register or to file records with respect to the G.S.T. In October, 1997 the Minister estimated that the plaintiff's liability with respect to G.S.T. amounted to approximately $484,000 for the period January 1, 1991 to June 30, 1996. As a result, collection action was instituted which resulted in funds in an off-reserve bank account of the plaintiff being seized. As well, the Minister took action to seize gasoline tax rebate funds payable by the Ontario Ministry of Finance to the plaintiff.1
[4] The plaintiff says that a number of serious issues arise in the proceedings in this Court and the defendant concedes that some but not all of the issues raised by the plaintiff are serious. One serious issue is whether the funds seized by the Minister were "on" or "off" the reserve and whether they are immune from seizure under subsection 89(1) of the Indian Act. The plaintiff has satisfied me there is at least one and perhaps more serious issues in this case.
[5] As to irreparable harm the plaintiff concedes that the viability of the gas bar does not depend on a refund of the funds already seized by the Minister. There is therefore no basis for a mandatory injunction requiring such refund.
[6] However, the plaintiff does say that unless the ongoing seizures of the Ontario fuel tax rebates stop, the gas bar will imminently go out of business. The rebate amounts to $0.14 per litre out of a total selling price of approximately $0.55 to $0.58 per litre. Sales to status Indians entitled to exemption from tax constitute approximately 50% of the plaintiff's sales.
[7] However, no reliable financial records were filed in the proceedings and indeed it was represented that the plaintiff does not keep such records. Further, although the plaintiff's evidence is that the gas bar is being cross-subsidized by other family businesses, there are no bank records which show transfers of cash to the gas bar from other sources. The quality of the plaintiff's evidence on this point leaves much to be desired. In addition, the defendant has shown that the plaintiff's retail prices are very close to his competitor's prices. That he does not remit G.S.T. and yet charges close to the market price charged by competitors who remit G.S.T. raises questions about the plaintiff's assertions of irreparable harm.
[8] Even if the plaintiff could demonstrate irreparable harm, the balance of convenience weighs in favour of the defendant. The plaintiff was essentially unresponsive to the defendant's request for cooperation with respect to G.S.T. remittance since 1994. In failing to cooperate and remit G.S.T., (subject to objection and resolution of the issue of liability) the plaintiff has relied upon a Tyendinaga Band by-law forbidding the remission of tax to any foreign government, i.e. the Government of Canada. However, at the same time, the plaintiff was remitting deductions at source for employees for income tax, unemployment insurance and Canada Pension Plan purposes. The plaintiff's position in relying on the by-law with respect to G.S.T. and yet remitting other taxes is inconsistent. Most seriously, after the seizure action taken by the Minister, the plaintiff stopped remitting source deductions to Revenue Canada on behalf of his employees even though he knew that a portion of the funds were derived from the employees and that a trust is impressed on these funds. There is no indication that the defendant has acted arbitrarily or oppressively. The balance of convenience favours the defendant.
[9] The interlocutory injunction is dismissed. The parties have agreed to seek an expedited determination of a preliminary question of law which may determine the right of the Minister to seize certain funds and that matter should not be delayed.
J U D G E
OTTAWA, ONTARIO
MAY 5, 1998
__________________1 Eligible status Indians do not pay provincial fuel tax on their purchases of gasoline from the plaintiff although the plaintiff, in his purchase of bulk gasoline, does pay such tax. The rebate arises from the plaintiff making application to the Ontario Government for rebate of the tax the plaintiff has paid in respect of gasoline subsequently sold to status Indians.