Date: 19991006
Docket: 1999-1263-GST-I
BETWEEN:
ISLAND ORTHOTICS LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
O'Connor, J.T.C.C.
[1] This appeal was heard at Charlottetown, Prince Edward Island on September 23, 1999.
Facts and Issue
[2] The principal facts and the issue involved are summarized in the Reply to the Notice of Appeal as follows:
6. By Notices of Assessment Numbered 579919, 579918 and 579917 dated July 16, 1998, the Minister of National Revenue (the "Minister") advised the Appellant that he had assessed its ITC entitlement for the periods from January 1, 1991 to December 31, 1991, January 1, 1992 to December 31, 1992 and, January 1, 1993 to December 31, 1993, respectively, as follows:
GST Reporting Period ITC's Denied
January 1, 1991 to December 31, 1991 $3,534.55
January 1, 1992 to December 31, 1992 $4,471.25
January 1, 1993 to December 31, 1993 $3,013.78
Total Assessment $11,019.58
7. In so assessing the Appellant for the periods from January 1, 1991 to December 31, 1991, January 1, 1992 to December 31, 1992 and, January 1, 1993 to December 31, 1993, the Minister made the following assumptions of fact:
a) at all relevant times the Appellant was required to be registered under Part IX of the Excise Tax Act (the "Act");
b) the Appellant did not register under Part IX of the Act until early 1998;
c) at all relevant times the Appellant's principal activity was the supply of orthotic medical devices;
d) in filing its annual GST returns for the periods from January 1, 1991 to December 31, 1991, January 1, 1992 to December 31, 1992 and, January 1, 1993 to December 31, 1993, the Appellant reported ITC's as follows:
GST Reporting Period ITC's Denied
January 1, 1991 to December 31, 1991 $3,534.55
January 1, 1992 to December 31, 1992 $4,471.25
January 1, 1993 to December 31, 1993 $3,013.78
Total Assessment $11,019.58
e) the GST returns referred to in the previous subparagraph 7(d) were filed by the Appellant on April 1, 1998, more than four years after the day on which the returns were due to be filed; and
f) the Appellant was not entitled to the ITC's referred to ...
B. ISSUE TO BE DECIDED
8. The issue to be decided is whether the Appellant is entitled to ITC's for the years 1991, 1992 and 1993.
[3] The Appellant, through its agent, Barry MacKinnon, testified that when the GST legislation was introduced he went to the GST office to register his business and that the person he talked to informed him that because of the nature of his business, namely health care providing orthotic services, he was not required to register and was not required to collect GST and not required to file. He concludes that he was entitled to rely on that advice and that he should be entitled to the ITC's claimed for the 1991, 1992 and 1993 years.
Analysis
[4] First of all, it is clear that the Appellant was required to register as provided in the Act. Further, it is clear that the Appellant, since it did not file returns for the 1991, 1992 and 1993 years within four years from their filing due dates, is not entitled to claim ITC's for those years because of subsection 225(4) of the Excise Tax Act, which so far as material, provides as follows:
An input tax credit of a person for a particular reporting period of the person shall not be claimed by the person unless it is claimed in a return under this Division filed by the person on or before the day that is
...
(b) where the person is not a specified person during the particular reporting period, the day on or before which the return under this Division is required to be filed for the last reporting period of the person that ends within four years after the end of the particular reporting period; or
...
[5] The issue becomes, therefore, whether the Appellant should be entitled to the ITC's for the three years in question because he relied on advice given by someone in the GST office.
[6] This is essentially saying that the Minister is estopped from assessing in a manner contrary to the advice given. This issue arises frequently and was succinctly analyzed by Bowman, J. of this Court in Goldstein v. Her Majesty the Queen, 96 DTC 1029. He stated at 1034 that:
Estoppel is no longer merely a rule of evidence. It is a rule of substantive law. Lord Denning calls it "a principle of justice and of equity."
It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to the Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment. The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved, because estoppels cannot override the law.
The question of the interpretation of paragraph 146(1)(c) is a matter of law and I must decide it in accordance with the law as I understand it. I cannot avoid that obligation because the Department of National Revenue may previously have adopted an interpretation different from that which it now propounds. The question is not whether the Crown is bound by an earlier interpretation upon which a taxpayer has relied. It is more to the point to say that the courts, who have an obligation to decide cases in accordance with the law, are not bound by representations, opinions or admissions on the law expressed or made by the parties.
I believe that that is a correct analysis of the law. I adopt it and conclude that I must apply subsection 225(4), the meaning of which is clear.
[7] Consequently, since the Appellant was obliged to register and file returns and since it did not and only filed for the three years in question after the expiry of the four year period provided for in subsection 225(4), the appeal is dismissed.
Signed at Ottawa, Canada this 6th day of October 1999.
"T.P. O'Connor"
J.T.C.C.