Date: 20000503
Docket: 1999-2503-GST-I
BETWEEN:
GKO ENGINEERING (A PARTNERSHIP),
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1] The appellant (GKO Engineering) appealed from assessment number 10111802 dated July 31, 1998 and from assessment number 833427 dated December 21, 1998, each of which were confirmed by respective Notices of Decision dated February 4, 1999. The appellant applied for a rebate in the sum of $23,114.78 by way of an Input Tax Credit (ITC) adjustment on line 207 of its Goods and Services Tax (GST) return for the reporting period from February 1 to February 28, 1998 on the basis that it had - in error - remitted said sum in tax when the services provided had been zero-rated and not actually subject to GST. In April, 1998 the appellant also submitted GST Form 189E entitled "General Application for Rebate of GST" in the name of GKO Engineering, on the basis the sum of $23,114.78 had been collected - in error - on the provision of services and should be the subject of a rebate issued by the Minister of National Revenue (the "Minister").
[2] The Minister issued a Notice of Decision - dated February 4, 1999 - in response to the objection filed by the appellant and confirmed assessment number 10111802. The relevant portion of the said decision is as follows:
"The substance of your representation is that you are entitled to a rebate of $23,114.78 in respect of the GST you charged in error on supplies which were zero-rated. You contend that the provisions of section 261 of the Excise Tax Act (the "ETA") are available to you as a means to recover the GST remitted in error.
Subsection 301(3) of the ETA requires the Minister on receipt of a Notice of Objection to:
"...reconsider the assessment and vacate or confirm the assessment or make a reassessment."
The evidence is that on March 31, 1998, you filed a GST return for the reporting period from February 1 to February 28 of 1998. You claimed an input tax credit (ITC) adjustment in this return under the provisions of subsection 232(1) of the ETA. This adjustment was denied and you were assessed accordingly. You also filed a rebate application on April 15, 1998 seeking a refund of the amount which you initially claimed as an adjustment in your GST return. The assessment of your rebate was made under the Notice of Assessment number 833427.
As the assessment under objection does not cover your rebate application, your representations regarding the rebate application cannot be addressed as part of this decision pursuant to subsection 301(3) of the ETA.
With respect to the assessment made to your GST return, subsection 232(1) of the ETA provides that within two years after the day an amount was charged to, or collected as tax from another person by a particular person, the particular person may adjust the amount charged in excess of the tax collectible, or refund or credit the excess amount where the excess amount was collected.
Subsection 232(3) of the ETA requires a particular person who adjusts, refunds or credits an amount of tax to another person in accordance with subsection 232(1) of the ETA to issue a credit note within a reasonable time, unless the other person issues a debit note, containing prescribed information for the amount. Where the particular person has already accounted for the tax originally charged or collected in a GST return for a previous reporting period, an amount equal to the tax adjustment can be deducted in calculating the net tax of the particular person for the reporting period in which the credit note is issued, or the debit note is received.
Subsection 123(1) of the ETA defines a person as:
"an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, union, club, association, commission or other organization of any kind."
The evidence is that the tax, which you allege to have charged and remitted in error, was charged by GKO Design Consultants Inc. and not by GKO Engineering (A Partnership). GKO Design Consultants Inc. and GKO Engineering (A Partnership) are separate persons pursuant to subsection 123(1) of ETA. Accordingly, the requirements of subsection 232(1) of the ETA are not met as you are not the particular person who charged the amount as tax. In addition, there is no evidence to indicate that GKO Engineering (A Partnership) was acting as the trustee on behalf of GKO Design Consultants Inc.
Furthermore, a credit note as required under subsection 232(3) of the ETA was never issued.
Under the circumstances, your representations do not provide a basis upon which to make a reassessment."
[3] On the same day - February 4, 1999 - the Minister issued a decision pertaining to assessment number 833427 which had been issued following the appellant's application for a rebate. Following an objection, the Minister confirmed the assessment, the relevant portion of which is as follows:
"The substance of your representation is that you are entitled to a rebate of $23,114.78 in respect of the GST you charged in error on supplies which were zero-rated. You contend that the provisions of section 261 of the Excise Tax Act (the "ETA") are available to you as a means to recover the GST charged and remitted in error.
Pursuant to subsection 261(1) of the ETA, where a person pays an amount as or on account of, or that was taken into account as tax, net tax, penalty, or interest in circumstances where the amount was not payable or remittable by the person, the person may claim a rebate for the amount.
Subsection 123(1) of the ETA defines a person as:
"an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, union, club, association, commission or other organization of any kind."
The evidence is that GKO Design Consultants Inc. (GKO Design) made supplies for $330,211.14 and charged GST of $23,114.78 on the supplies for a total charge of $353,325.92. GKO Design received a total of $298,323.03 leaving a balance receivable of $55,002.89. GKO Engineering (A Partnership) (GKO Engineering) had previously claimed an adjustment of $23,114.78, this being the GST charged by GKO Design, to its net tax in the GST return for the reporting period ending February 28, 1998.
Under subsection 123(1) of the ETA, GKO Design and GKO Engineering are separate persons. There is no evidence to indicate that GKO Engineering was acting as the trustee on behalf of GKO Design. Accordingly, the only conclusion that can be made is that GKO Engineering could never have remitted the $23,114.78 GST as part of its net taxes.
Under subsection 261(2) of the ETA, a rebate cannot be paid to a person to the extent that the amount was taken in account as tax or net tax for a reporting period of the person, and the Minister has assessed the person for the particular reporting period.
The evidence is that GKO Design was audited and assessed for the period from May 1, 1992 to April 30, 1996. Subject to subsection 261(2) of the ETA, a rebate cannot be paid for the amount remitted by GKO Design as part of its net taxes for these particular reporting periods.
By operation of subsection 225(1) and 228(2) of the ETA, a person is required to remit GST as part of its net tax for a particular reporting period. Net tax includes all amounts collectible or collected as tax or on account of tax by the person during the period.
It is a fact that GKO Design over a period of time had charged $23,114.78, and collected part of the amount, as tax on the taxable supplies it made. In the circumstances, GKO Design was required by subsection 225(1) and 228(2) of the ETA to remit the amounts charged as part of its net tax remittance for the GST reporting periods in which the amounts making up the $23,114.78 were charged. Therefore, the remittances of net tax made by GKO Design do not come within the ambit of tax or net tax paid in error under subsection 261(1) of the ETA. Rather, the recipient of the supplies may be in a position to apply for a rebate under this subsection.
Given the foregoing, your representations do not provide a basis upon which to make a reassessment."
[4] Don Cimino testified he is a Chartered Accountant and, since November, 1997, had been the Chief Financial Officer of the appellant and is responsible for finance, accounting, treasury, revenue and tax-related matters. He familiarized himself with the details concerning the within appeal. Subsequent to joining the appellant - an engineering consulting firm - that also provides services to non-residents, he discovered certain invoices which had been sent to a company called Man-Takraf Inc. (MTI) - a corporate entity in the United States. The particular invoices related to services provided by GKO Design Consultants Inc. (GKO Design), an entity that - prior to November 1, 1997 - had been the vehicle through which engineering services had been provided to MTI and other clients. Upon examining the invoices and noting that 7% GST had been charged to MTI on the amount of services rendered, he proceeded to confirm the services billed out on the invoice had been related to a project in Indonesia. As a result, Cimino stated he took the position that any GST charged, collected and remitted to the Minister relating to those invoices issued to MTI had been the subject of an error because the services were clearly zero-rated and not subject to any imposition of GST pursuant to the Excise Tax Act (the"Act"). In the process of examining past records, Cimino also discovered a small invoice to a company in Chile on which GST had been charged, collected and remitted in error. Cimino filed - Exhibit A-1 - a rebate claim under section 261 of the Act using the form entitled, "General Application for Rebate of GST". The application was filed in the name of GKO Engineering and Cimino had attached a separate page listing the description of the work done on a Copper Smelter Project in Indonesia for MTI together with the invoice dates and the amount of GST remitted in error on each invoice. He also listed additional invoices in which GST had been charged in error on services provided to companies located in Chile and Thailand. The total of the GST charged on all of the invoices totalled $23,114.78 and the period covered by the claim was from January 31, 1996 to October 31, 1997. Cimino added a note at the bottom of that sheet stating MTI was a non-resident corporation in the United States and the engineering services had been supplied to MTI in respect of foreign projects and, accordingly, such services were for use exclusively outside of Canada and the supply was zero-rated. He went on to point out that the GST had been calculated and remitted on the fees charged to MTI and to the others listed on the sheet. Cimino stated that - in his view - GKO Engineering was the trade name of GKO Design, the corporation. On November 1, 1997, GKO Engineering was established to carry on the business formerly undertaken by GKO Design. Cimino referred to a Trade Name/Partnership Search - Exhibit A-2 - filed with Corporate Registration System of the Province of Alberta in which GKO Engineering had registered as a partnership carrying on the business of engineering design consultants and listed 9 members of the partnership, of which GKO Design was one. Prior to the formation of the partnership on November 1, 1997, GKO Design had used GKO Engineering as a trade name and had - obtaining a Certificate - Exhibit A-3 - dated August 14, 1997 issued by the Registrar of Corporations for the Province of Alberta certifying that GKO Design Consultants Inc. carried on its trade or business in the City of Edmonton and elsewhere in the Province of Alberta under the firm name and style of "GKO Engineering", a division of GKO Design Consultants Inc. and that the said business had been carried on under the name of GKO Engineering since the 1st day of May, 1997. At that time, no other person or persons were associated with GKO Design in the business. Cimino referred to an invoice - part of Exhibit A-4 - dated October 31, 1997 sent to MTI in Englewood, Colorado. The engineering services had been provided to MTI during the period January, 1996 to October, 1997. The total amount invoiced was $183,068.00 of which Cimino stated MTI still owed a balance of approximately $55,000.00. The invoice referred to: GKO Job No. E348.
[5] In cross-examination, Don Cimino agreed that on October 31, 1997 the partnership, GKO Engineering, was not yet in existence. The majority of the services provided to MTI were prior to the formation of the partnership. In reviewing invoices, it became apparent to Cimino that the work had been done in relation to offshore projects and he made inquiries of senior executives at GKO Design which permitted him to confirm the services had been provided to an offshore entity. Cimino stated he is also the Chief Financial Officer of GKO Design, the corporation which is a member of the partnership, GKO Engineering. GKO Engineering is a multi-disciplinary group serving industrial-based clients. The particular work forming the subject of the invoices at issue in the within appeal was performed in Edmonton and the resultant designs, drawings and reports were provided to the client, MTI. A bundle of invoices presented to MTI and a summary thereof was filed as Exhibit R-1. The summary contained a calculation of the GST charged and remitted in error. There were two separate projects undertaken by MTI and most invoices had been submitted to MTI on the letterhead of GKO Design except for the one dated October 31, 1997 which was in the name of GKO Engineering. Upon issuing invoices - including GST - to MTI, the amount of the GST was remitted to Revenue Canada in the course of filing the next return. GKO Design was entitled to certain ITC's but these were very small in relation to the amount of the GST charged. Cimino agreed GKO Design was not out of pocket, per se, and confirmed no credit note had ever been issued to MTI and no debit note had been received from MTI. He stated MTI was not aware it had overpaid the invoices by reason of GST having been included. GKO Design claimed the outstanding amount of the MTI invoice - in the sum of $55,000.00 - as a bad debt for GST purposes when filing later returns. The application for rebate - Exhibit R-2 - had been filed in the name of GKO Engineering as claimant pursuant to section 261 of the Act. Cimino stated that in preparing the application he no longer used the old GST number which had been previously assigned to GKO Design since all activities were done in the name of the partnership.
[6] Counsel for the appellant submitted the central issue of the appeal was whether the appellant could obtain relief in respect of money wrongly charged as GST and remitted to the Minister. Counsel pointed out the services were zero-rated and GST should not have been charged, collected and remitted by GKO Design and it should be entitled to the return of said amounts. The decision issued by the Minister pertaining to assessment number 10111802 referred to a GST return for the reporting period from February 1 to February 28, 1998 in which the appellant had claimed an ITC under the provisions of subsection 232(1) of the Act. In said decision, the Minister stated that "Subsection 232(3) of the ETA (Excise Tax Act) requires a particular person who adjusts, refunds or credits an amount of tax to another person in accordance with subsection 232(1) of the ETA to issue a credit note within a reasonable time, unless the other person issues a debit note, containing prescribed information for the amount" (emphasis mine). Counsel submitted that was clearly wrong as section 261 of the Act referred to a "payment made in error" and it was obvious the provisions of section 232 were not mandatory in terms of issuing a credit note or receiving a debit note in order to make an adjustment for an error. In any event, MTI is statute-barred from claiming a rebate because more than two years have passed since April, 1996. Counsel for the appellant concedes the appellant could have utilized the provisions of section 232 but chose not to do so. Counsel advised that the first four amounts set out on Exhibit A-1 should be deleted from any reassessment if the appellant were to be successful in the within appeal because they were included in an assessment period under section 296 of the Act. As a result, the most the appellant could be allowed by way of rebate would be the sum of $16,690.66. As for the issue of the proper entity to apply for the rebate, counsel submitted GKO Engineering had been a trade name of GKO Design. The application had been made in the name of GKO Engineering and while the Minister would not have initially had knowledge the rebate was on behalf of GKO Design, any confusion had been cleared up at the objection level when the full information had been provided to the officials at Revenue Canada. Counsel referred to the fact the Minister - in April, 1998 - did not advise the appellant that the Minister considered the wrong entity to have applied for the rebate and - instead - only raised that issue in December, 1998 when an Appeals Officer advised - during the course of meetings - that GKO Design could not then apply for a rebate because it was out of time. Counsel also referred to Exhibit R-1 which included invoices in the name of GKO Design wherein the relevant GST number was included at the bottom of each page. The certification by Don Cimino on the application only required that it had been "correct and complete to the best of my knowledge" and perfection was not the applicable standard.
[7] Counsel for the respondent submitted the use of section 261 in the manner desired by the appellant would permit a windfall. Although GKO Design collected GST when it was not applicable to the provision of services, when it remitted the amount of GST to Revenue Canada it was not - itself - out of pocket. The application for rebate was made in the name of GKO Engineering which - as a partnership - did not exist until November 1, 1997 and the registration of the partnership was not done until April 29, 1998. Counsel submitted there is no duty on the Minister to discover errors in documentation submitted by persons remitting tax in accordance with the Act.
[8] The position of the Minister seems to be that any amounts of GST collected must be remitted pursuant to the provisions of subsection 225(1) of the Act and if some tax has been collected in error then the only method of making the appropriate adjustment is to utilize the provisions of section 232 by issuing credit notes or receiving a debit note as set forth in subsection 232(3) of the Act. In the Notice of Decision dated February 4, 1999 pertaining to assessment number 10111802, Ms. Sui Li, on behalf of the Minister, stated that said subsection "required" a person to issue a credit note within a reasonable time unless the other person issued a debit note. The difficulty with that statement is it does not conform with the wording of subsection 232(1) of the Act which reads in part as follows:
232.(1) Where a particular person has charged to, or collected from, another person an amount as or on account of tax under Division II in excess of the tax under that Division that was, collectible by the particular person from the other person, the particular person may, within two years after the day the amount was so charged or collected, (emphasis mine)
(b) where the excess amount was collected, refund or credit the excess amount to that other person."
[9] Then, subsection 232(3) goes on to explain the method to be utilized in issuing credit or debit notes in order to carry out the adjustment, refund or credit required.
[10] In the Notice of Decision - also dated February 4, 1999 - pertaining to assessment number 833427 confirming the Minister's refusal to allow the application for a rebate pursuant to subsection 261(1) of the Act, the last paragraph of the decision reads:
"It is a fact that GKO Design over a period of time had charged $23,114.78, and collected part of the amount, as tax on the taxable supplies it made. In the circumstances, GKO Design was required by subsection 225(1) and 228(2) of the ETA to remit the amounts charged as part of its net tax remittance for the GST reporting periods in which the amounts making up the $23,114.78 were charged. Therefore, the remittances of net tax made by GKO Design do not come within the ambit of tax or net tax paid in error under subsection 261(1) of the ETA. Rather, the recipient of the supplies may be in a position to apply for a rebate under this subsection."
[11] The wording of subsections 261(1) and 261(3) is:
"261(1) Rebate of payment made in error- Where a person has paid an amount
(a) as or on account of, or
(b) that was taken into account as,
tax, net tax, penalty, interest or other obligation under this Part in circumstances where the amount was not payable or remittable by the person, whether the amount was paid by mistake or otherwise, the Minister shall, subject to subsections (2) and (3), pay a rebate of that amount to the person.
(3) Application for rebate - A rebate in respect of an amount shall not be paid under subsection (1) to a person unless the person files an application for the rebate within two years after the day the amount was paid or remitted by the person."
[12] The definition of "person" is found in subsection 123(1) of the Act, as follows:
""person" means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, union, club, association, commission or other organization of any kind;"
[13] Counsel for the appellant posited a hypothetical scenario where a clerk at a supermarket charged - in error - GST on apples for a period of one month before the mistake was discovered. According to the position taken by the Minister in the decisions issued, the grocery store has to track down each customer from whom GST was collected - in error - and issue that person a credit note or in the one-in-a-hundred-thousand chance that customer is also registered for GST and makes a taxable supply to the supermarket, to obtain a debit note for the amount of GST charged. Counsel for the respondent submitted - at one point - that section 261 of the Act would not apply to the appellant because the appellant was never "a person who paid an amount" of tax to the Minister. This proposition flies in the face of the plain wording of the provision which refers to an amount that was paid on account of tax that was "remittable" by the person and the Minister's own decision (re: assessment 833427) at page 2 - paragraph 4 - that defined net tax as "all amounts collectible or collected as tax or on account of tax by the person during the period". I fail to see how the Minister could insist that section 232 of the Act is the only manner by which an adjustment could be made. If there is no continuing relationship between the parties how can adjustments be made by means of debit or credit notes? It seems to me that a customer who is not a GST registrant must be able to use the provisions of subsection 261(1) in order to recover money paid as tax which - under the circumstances - was not actually "payable" by that person and, further, in paying money - as GST - that was not due, therefore, the amount was not then "remittable" by the person collecting the tax."
[14] Since the period for which GKO Design was audited and assessed was May 1, 1992 to April 30, 1996, the Minister found that subsection 261(2) of the Act prevented a rebate being paid to the extent that the amount was taken into account as tax or net tax for the reporting period of the person and the Minister has assessed the person for the particular reporting period.
[15] There is provision for the Minister to deal with the matter of an allowable rebate and it is found in subsection 296(2.1) as follows:
"Allowance of unclaimed rebate - Where, in assessing the net tax of a person for a reporting period of the person or an amount (in this subsection referred to as the "overdue amount") that became payable by a person under this Part, the Minister determines that
(a) an amount (in this subsection referred to as the "allowable rebate") would have been payable to the person as a rebate if it had been claimed in an application under this Part filed on the particular day that is
(i) if the assessment is in respect of net tax for the reporting period, the day on or before which the return under Division V for the period was required to be filed, or
(ii) if the assessment is in respect of an overdue amount, the day on which the overdue amount became payable by the person,
and, where the rebate is in respect of an amount that is being assessed, if the person had paid or remitted that amount,
(b) the allowable rebate was not claimed by the person in an application filed before the day notice of the assessment is sent to the person, and
(c) the allowable rebate would be payable to the person if it were claimed in an application under this Part filed on the day notice of the assessment is sent to the person or would be disallowed if it were claimed in that application only because the period for claiming the allowable rebate expired before that day,
the Minister shall, unless otherwise requested by the person, apply all or part of the allowable rebate against that net tax or overdue amount as if the person had, on the particular day, paid or remitted the amount so applied on account of that net tax or overdue amount."
[16] All of the foregoing is background material which assists one in facing the issue of whether the appellant - as the entity applying for the rebate - was the correct person. This is extremely important because subsection 261(3) requires the application for the rebate be made "within two years after the day the amount was paid or remitted by the person". GKO Engineering is a partnership that was formed on November 1, 1997. Before that date, GKO Design - a corporation - carried on an engineering consulting business and on August 15, 1997 it filed a document - Exhibit A-3 - entitled "Declaration As To Trade Name" with the Registrar of Corporations for the Province of Alberta, declaring it had carried on business using the name of GKO Engineering since May 1, 1997. Counsel for the appellant submitted that subsection 272.1(1) of the Act applied. It reads:
"Partnerships - For the purposes of this Part, anything done by a person as a member of a partnership is deemed to have been done by the partnership in the course of the partnership's activities and not to have been done by the person."
[17] The problem for the appellant - GKO Engineering - is that the payments of GST collected from MTI and others were made prior to the formation of the partnership of which GKO Design became a member on November 1, 1997. Therefore, the GST payments made by GKO Design cannot be deemed to have been made by the partnership pursuant to subsection 272.1(1) because the partnership did not exist at the time the payments were made. It follows that GKO Design was the "person" required to apply for the rebate since it had made the payments. The use of the trade name GKO Engineering by GKO Design was not formally recognized by way of registration until August 14, 1997 and referred therein to an effective date of May 1, 1997, subsequent to the provision of the majority of the services provided to MTI by GKO Design. Had GKO Design applied for the GST rebate in accordance with subsection 272.1(1) that application would have been deemed to have been done by the partnership and it should have had no effect on the entitlement since GKO Design would have complied with section 261 of the Act. The reverse, however, does not apply and GKO Engineering - the partnership - cannot apply for the rebate and have that action deemed to have been done by GKO Design - a member of the partnership. The nine entities making up GKO Engineering following the formation of the partnership on November 1, 1997 could now carry on business as partners and acts by one could bind the partnership for various purposes but the partnership could not - without more - perhaps, by way of formal assignments of all receivables of whatever kind - purport to become the qualified person to pursue rebates or entitlements belonging specifically to a single member of the partnership, the right to which had arisen before becoming a member of the larger family. For example, if the City of Edmonton had wrongly assessed an amount of property tax for 1995 on land owned by GKO Design, it would be unusual for the City to entertain a rebate application in the name of GKO Engineering and I doubt the relevant legislation would permit it.
[18] The Court does not have any jurisdiction to extend the deadline for an application for the rebate. In the case of Sterling Business Academy Inc. v. The Queen, 99 GTC 3038, Judge Rip, Tax Court of Canada, held that a flaw in the legislation did not allow the Court to extend the deadline. He stated at page 3038:
"To be sure, the section 261 of the Act permits persons who paid the GST to apply for a rebate, but the rebate will not be paid unless the person files the application for the rebate within two years after he paid the GST. Since the payments we are concerned with were made before 1996 and it is now December, 1998, the students are not eligible for the rebate. The same problem affects the appellant who may have been entitled to a refund or adjustment of tax pursuant to section 232. There is no procedure available in the Act to permit the students to have returned to them what is rightfully theirs. The Tax Court of Canada Act does not give a judge of the Tax Court jurisdiction to issue an order that may remedy the matter. This is a flaw in the legislation."
[19] It is unfortunate the application for the rebate was made by GKO Engineering when it should have been made by GKO Design, a corporate body which still existed and was a member of the partnership, GKO Engineering. The Minister would be in no position - initially - to comprehend the situation as the GST number of GKO Engineering was used in the rebate application. Earlier, the relief sought in relation to the GST remitted on tax improperly collected was by way of an ITC on the return of GKO Engineering for a particular reporting period from February 1 to February 28, 1998. This led to an assessment which was then confirmed in a decision and the application for rebate in April, 1998 by the appellant led to the other decision being issued, although both were dated February 4, 1999. Later on, the correct identity of the person collecting the tax was known to the Minister and the proper invoices to MTI and others were provided which clearly showed the GST registration number of GKO Design having been used to collect and remit the tax. The corporation - MTI - was never aware it had overpaid invoices by remitting amounts inclusive of GST. The appellant did not want to notify MTI of any right to claim a refund because MTI owed it the sum of $55,000.00. There would have been no incentive on the part of MTI to make application for the rebate since the appellant could have sued, obtained a judgment and then issued a garnishee to divert payment of the rebate to itself. The facts in the within appeal are peculiar and it is unfortunate the incorrect entity - the appellant - applied for the rebate and the matter was not corrected until time expired. I would not like to think the Minister hid in the weeds on this one in order to take advantage of the misstep by the appellant. It is obvious the Minister has great difficulty in accepting that the GST wrongly collected from MTI - although it did not come directly from the pocket of the appellant - still creates a windfall for the fisc since it was never properly exigible pursuant to the provisions of the Act. In fact, until I indicated I was not prepared to entertain the submission - because it had never formed any part of the two decisions nor had it been referred to in the pleadings filed on behalf of the Minister - counsel for the respondent was prepared to make the argument that the services provided by GKO Design to MTI and others were not proven - conclusively - to have been zero-rated and, therefore, maybe the tax had been properly collected, after all. It is true the Minister is not a tax planner for anyone, including GST registrants and the appellant in the within appeal should have taken the time to think the matter through and to have applied for the rebate in a timely fashion by using GKO Design as the proper applicant. The problem was, I suspect, that the erroneous charging, collecting and remission of tax occurred prior to Don Cimino coming on board as Chief Financial Officer for both GKO Engineering and GKO Design and he was working to unscramble the matter in a manner whereby a portion of the former account receivable of GKO Design in the sum of $55,000.00 could be collected by means of the rebate application and then be placed into the partnership coffers, probably in accordance with the agreement of all members upon forming the partnership on November 1, 1997. However, like the Income Tax Act and other legislation dealing with the collection of revenue, the Excise Tax Act requires strict compliance and, as a result, the technical provisions may not otherwise appear to possess any stand-alone rationale for their existence. Unless great care is taken, this can lead to errors which cannot later be undone except in accordance with statutory time limits, rigid confines from which there is no escape.
[20] For the foregoing reasons, the appeal is dismissed.
Signed at Toronto, Ontario, this 3rd day of May 2000.
|
"D.W. Rowe" |
D.J.T.C.C.
COURT FILE NO.: 1999-2503(GST)I
STYLE OF CAUSE: GKO Engineering (A Partnership) and H.M.Q.
PLACE OF HEARING: Edmonton, Alberta
DATE OF HEARING: February 11, 2000
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: May 3, 2000
APPEARANCES:
Counsel for the Appellant: Gordon D. Beck
Counsel for the Respondent: Mark Heseltine
COUNSEL OF RECORD:
For the Appellant:
Name: Gordon D. Beck
Firm: G.D. Beck Prof. Corp.
Edmonton, Alberta
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-2503(GST)I
BETWEEN:
GKO ENGINEERING (A PARTNERSHIP),
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on February 11, 2000 at Edmonton, Alberta, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Gordon D. Beck
Counsel for the Respondent: Mark Heseltine
JUDGMENT
The appeal from the assessments made under the Excise Tax Act, notices of which are dated July 31, 1998 and December 21, 1998 and bear numbers 10111802 and 833427 respectively, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Toronto, Ontario, this 3rd day of May 2000.
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"D.W. Rowe" |
D.J.T.C.C.