Docket: 2012-1652(GST)I
BETWEEN:
MAHMOOD AFLAKI ALIMORADI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on common evidence with the appeals of
Seyfollah Sadeghi (2012-1653(GST)I) and
Mostafa Sadeghi Marmari (2012-1654(GST)I)
on May 17, 2013, at Toronto, Ontario.
Before:
The Honourable Justice Paul Bédard
Appearances:
|
Agent
for the Appellant:
|
Prakash
Kkhanna
|
|
Counsel for the Respondent:
|
Alisa Apostle
Louis L’Heureux
|
____________________________________________________________________
JUDGMENT
The appeal with respect to an assessment
under Part IX of the Excise Tax Act dated April 20, 2010, is
dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 25th day of June 2013.
“Paul Bédard”
Docket: 2012-1653(GST)I
BETWEEN:
SEYFOLLAH SADEGHI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the
appeals of
Mahmood Aflaki Alimoradi (2012-1652(GST)I)and
Mostafa Sadeghi Marmari (2012-1654(GST)I)
on May 17, 2013, at Toronto, Ontario.
Before:
The Honourable Justice Paul Bédard
Appearances:
|
Agent for the
Appellant:
|
Prakash Kkhanna
|
|
Counsel for the
Respondent:
|
Alisa Apostle
Louis L’Heureux
|
____________________________________________________________________
JUDGMENT
The appeal with respect to an assessment
under Part IX of the Excise Tax Act dated April 20, 2010, is dismissed
in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 25th day of June 2013.
“Paul Bédard”
Docket: 2012-1654(GST)I
BETWEEN:
MOSTAFA SADEGHI MARMARI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the
appeals of
Mahmood Aflaki Alimoradi (2012-1652(GST)I)
and Seyfollah Sadeghi (2012-1653(GST)I)
on May 17, 2013, at Toronto, Ontario.
Before:
The Honourable Justice Paul Bédard
Appearances:
|
Agent for the
Appellant:
|
Prakash Kkhanna
|
|
Counsel for the
Respondent:
|
Alisa Apostle
Louis L’Heureux
|
____________________________________________________________________
JUDGMENT
The appeal with respect to an assessment
under Part IX of the Excise Tax Act dated April 20, 2010, is
dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 25th day of June 2013.
“Paul Bédard”
Citation: 2013 TCC 204
Date: 20130625
Dockets: 2012-1652(GST)I
2012-1653(GST)I
2012-1654(GST)I
BETWEEN:
MAHMOOD AFLAKI ALIMORADI,
SEYFOLLAH SADEGHI,
MOSTAFA SADEGHI MARMARI,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bédard J.
[1]
These three appeals were
heard on common evidence. The appellants have appealed from assessments made against
them under subsection 325(1) of the Excise Tax Act (the “Act”). It
is admitted by the appellants that at all relevant times they were persons
related to 900766 Ontario Inc. (the “Corporation”) within the meaning of the Income
Tax Act.
[2]
On or about
January 16, 2007, each of the appellants received a cheque in the amount
of $29,767.25 from the Corporation. On February 19, 2007, an amount of
$10,199.42 was distributed to each of the three appellants. Finally, on
March 25, 2008 a further $1,474.07 was distributed to each of the three
appellants, who were the three shareholders of the Corporation at all material
times. At all material times, the Corporation was a goods and services tax
(“GST”) registrant and was carrying on commercial activities. The time the
above‑mentioned transfers took place, the Corporation was liable to remit
under the Act GST amounting to not less than $227,661 plus interest and
penalties, as shown in Schedule A to the Reply to the Notice of Appeal.
The Corporation did not remit this amount to the Receiver General. As of April 20,
2010, the date of the Notice of Assessment, the Corporation owed not less than
$383,082.54, which comprised:
i)
net tax of $227,661.60,
ii)
penalties of $56,089.08,
and
iii)
interest of $99,331.86,
as indicated in the Schedule A to the Reply to the
Notice of Appeal.
[3]
The conditions to be
met for subsection 325(1) of the Act to apply are the following:
i)
there must be a
transfer of property,
ii)
the transferor and
transferee must not be dealing at arm’s length,
iii)
there must be no
consideration or inadequate consideration flowing from the transferee to the
transferor, and
iv)
the transferor must be
liable to pay an amount under the Act for the reporting period that includes
the time at which the property was transferred or any preceding reporting
period.
[4]
Essentially, the appellants
argue that they were improperly assessed by the Minister under subsection
325(1) of the Act since:
i)
the amount of $124,322.22
distributed amongst them was “the repayment” of their loans to the Corporation;
ii)
at the time the
Corporation transferred $124,322.22 to the appellants, it was not liable to
remit any amounts to the Receiver General for Canada under subsections 225(1)
and 228(2) of the Act since the Corporation never received notices of the assessments
listed in Schedule A to the Reply to the Notice of Appeal.
[5]
I wish to point out
immediately that the Minister of National Revenue (the “Minister”) did not
allege in the Reply to the Notice of Appeal that there was no consideration or
inadequate consideration flowing from the appellants to the Corporation.
Consequently, I am of the opinion that the burden of proof regarding
consideration rested on the respondent.
[6]
Only Mr. Mostafa
Sadeghi Marmari testified for the appellants. Essentially, he testified that
the Corporation never received notices of the assessments listed in
Schedule A to the Reply to the Notice of Appeal and that the above‑described
transfers of assets by the Corporation to the appellants were “repayment” of
their loans to the Corporation.
[7]
In the present cases,
it is useful to make certain general comments on the credibility of
Mr. Mostafa Sadeghi Marmari, who, I repeat, was the only person to testify
in support of the three appeals. I emphasize that the appellants filed no
document in support of their position. In my view, it would be hazardous to give
Mr. Mostafa Sadeghi Marmari’s testimony any credence without any
conclusive corroborating evidence in the form of documentation or testimony by
credible witnesses.
[8]
Mr. Mostafa
Sadeghi Marmari’s answers were vague, imprecise and ambiguous. All too often in
cross‑examination he was unable to provide any valid explanations regarding
the Corporation’s operations and financial statements; he constantly repeated
that only the Corporation’s outside accountant, who, I note again, did not
testify, could have provided valid explanations. Not only were Mr. Marmari’s
answers generally vague and imprecise, they were, on essential issues,
contradicted by documentary evidence. For example, he testified that the
transfers of assets by the Corporation were made to repay the appellants’
advances to the Corporation. However, the documentary evidence filed by the
respondent (Exhibits R‑1, R‑2 and R‑3) established
clearly that at the relevant time the appellants were not creditors of the
Corporation since at all material times the corporation’s only creditor was the
Bank of Montreal. For those reasons, I attach little probative value to
Mr. Mostafa Sadeghi Marmari’s testimony.
Conclusion
[9]
In the present cases,
the respondent has satisfied me that the transfers of assets to the appellants
by the Corporation can only be characterized as dividends or winding‑up
dividends. The appellants, on the other hand, failed to satisfy me that the
Corporation did not receive notices of the assessments listed in
Schedule A to the Reply to the Notice of Appeal.
[10]
Several decisions of
this Court, the Federal Court of Appeal and the Supreme Court of Canada have
clearly established that subsection 325(1) of the Act applies to a
dividend so that payment of a dividend constitutes a transfer of property
within the meaning of section 325 (i.e., a transfer without
consideration).
[11]
Consequently, I am of
the opinion that the four conditions for subsection 325(1) of the Act to
apply are met in the present cases.
[12]
For the above reasons,
the appeals are dismissed.
Signed at Ottawa, Canada, this 25th day of June 2013.
“Paul Bédard”
CITATION: 2013 TCC 204
COURT FILE NO.: 2012‑1652(GST)I, 2012‑1653(GST)I,
2012‑1654(GST)I
STYLE OF CAUSE: MAHMOOD AFLAKI ALIMORADI,
SEYFOLLAH SADEGHI,
MOSTAFA SADEGHI MARMARI v.
HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: May 17, 2013
REASONS FOR JUDGMENT BY: The
Honourable Justice Paul Bédard
DATE OF JUDGMENT: June 25, 2013
APPEARANCES:
|
Agent for the
Appellants:
|
Prakash Kkhanna
|
|
Counsel for the
Respondent:
|
Alisa Apostle
Louis L’Heureux
|
COUNSEL OF RECORD:
For the Appellants:
Name:
Firm:
For the
Respondent: William F. Pentney
Deputy
Attorney General of Canada
Ottawa, Canada
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