Date: 19980521
Docket: 97-2906-GST-I
BETWEEN:
SPECTRA DEVELOPMENT CORPORATION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Bowman, J.T.C.C.
[1] This appeal is from an assessment made under the Excise Tax Act by which the Minister of National Revenue disallowed a claim for input tax credits in the amount of $10,467.29.
[2] It is alleged that the appellant paid the sum of $160,000 to Sunny Coast Investments Ltd. ("SCI") for a number of expenses incurred by SCI. The appellant therefore contends that it is entitled to an input tax credit ("ITC") of $10,467.29 being the amount of the GST component in $160,000 ($160,000 ¸ 1.07 x .07).
[3] Section 169 of the Excise Tax Act permits a registrant to recover GST that it has paid in respect of a supply of goods or services. Essentially the process of payment, collection and recovery of GST occurs at each stage as goods or services move down the line to the ultimate consumer where, in effect, the buck stops.
[4] Among the conditions that must be met before a registrant is entitled to claim an ITC is that the registrant have received a supply of goods and services and that it have paid GST in respect thereof. Subsection 169(4) imposes strict requirements on a claimant to provide information and documentation relating to a claim for an ITC, and the Input Tax Credit Information Regulations go even further.
[5] The evidence in this case falls far short of establishing the appellant's entitlement to the ITC claimed, even on the most lenient interpretation of the rules of evidence that I permitted under the informal procedure. No shareholder or officer of the appellant testified. The evidence was given by two accountants and it never became particularly clear to me just what the legal relations were between the various entities.
[6] An agreement dated July 23, 1993 (Exhibit A-1) between SCI and Canada Asia Entrepreneurs Inc. ("CAE") was put in evidence relating to the development of some lands in Vancouver. SCI had a line of credit of $5,500,000 with Hongkong Bank of Canada and it borrowed money from the bank for the project.
[7] Exhibit A-2 is an authorization to the bank and to its solicitors McCarthy Tétrault, to pay out to various persons some portions of the loan, including $160,000 to SCI and the balance of the first advance to the appellant Spectra Development Corporation ("SDC") on behalf of the borrower.
[8] It is at this stage that the evidence becomes even murkier. It is alleged that SDC took over the function of CAE to manage the project and that it paid the bills. A cheque for $160,000 was put in evidence (Exhibit A-4). It was drawn on the McCarthy Tétrault trust account and was payable to SCI.
[9] A letter of April 13, 1994 from SDC to SCI (Exhibit A-5) appears to enclose a cheque payable to SCI for $160,000 and the witnesses said that they thought that this was probably the McCarthy Tétrault cheque.
[10] Also, a group of invoices totalling $158,249.19 including GST of $5,825.68 were put in evidence. These appear to have been paid by SCI.
[11] It is on this basis that SDC claims an ITC of $10,467.29.
[12] Even stretching all the rules of evidence to the breaking point, I do not see where the evidence establishes any right in SDC to an ITC of $10,467.29 or even $5,825.68 It is not even clear on what basis SDC can say it paid $160,000 to SCI. That money came from the Hongkong Bank of Canada through the trust account of McCarthy Tétrault and formed part of SCI's borrowings. In short, it has not been established that SDC ever paid, on its own behalf, any GST and that it ever fell heir to whatever ITCs SCI might have been entitled to.
[13] The problems are, of course, exacerbated by the fact that the project foundered and the numerous players are all suing each other.
[14] In conclusion, therefore, the appellant has not met the onus of making out even a prima facie case for its claim to an ITC. I need hardly add that the evidentiary requirements of subsection 169(4) and the ITC Information Regulations have not been met.
[15] The appeal is dismissed.
Signed at Ottawa, Canada, this 21st day of May 1998.
"D.G.H. Bowman"
J.T.C.C.
COURT FILE NO.: 97-2906(GST)I
STYLE OF CAUSE: Spectra Development Corporation and
Her Majesty The Queen
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: May 13, 1998
REASONS FOR JUDGMENT BY: D.G.H. Bowman
DATE OF JUDGMENT: May 21, 1998
APPEARANCES:
Agent for the Appellant: Julius Pataki
Counsel for the Respondent: David R. Poore, Esq.
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: George Thomson
Deputy Attorney General of Canada
Ottawa, Canada
97-2906(GST)I
BETWEEN:
SPECTRA DEVELOPMENT CORPORATION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 13, 1998 at Vancouver, British Columbia, by
the Honourable Judge D.G.H. Bowman
Appearances
Agent for the Appellant: Julius Pataki
Counsel for the Respondent: David R. Poore, Esq.
JUDGMENT
The appeal from the assessment made under the Excise Tax Act, notice of which is dated November 12, 1996 and which bears No. 11BU0401823, is dismissed.
Signed at Ottawa, Ontario, this 21st day of May 1998.
|
"D.G.H. Bowman" |
J.T.C.C.