Docket: 2010-3715(GST)I
BETWEEN:
SERVICES D'ENTRETIEN L.C. INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Appeal heard on November 7, 2012, at Montréal, Quebec.
Before: The Honourable Justice
Réal Favreau
Appearances:
|
Counsel for the appellant:
|
Marie-Christine Leboeuf
|
|
Counsel for the respondent:
|
Joëlle Bitton
|
____________________________________________________________________
JUDGMENT
The appeal from the reassessment made under
Part IX of the Excise Tax Act, notice of which is dated September 7,
2010, and bears no number, for the period from December 1, 2008, to December 31,
2008, is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 6th day of February 2013.
“Réal Favreau”
Translation
certified true
on this 20th day of March 2013
Daniela Guglietta, Reviser
Citation: 2013TCC46
Date: 20130206
Docket: 2010-3715(GST)I
BETWEEN:
SERVICES D'ENTRETIEN L.C. INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1]
This is an appeal from
a reassessment dated September 7, 2010, under Part IX of the Excise Tax
Act, R.S.C., 1985, c. E‑15, as amended (the ETA), for the period
from December 1, 2008 to December 31, 2008 (the relevant period).
[2]
On April 29, 2009, the Minister
of Revenue of Quebec, acting as agent for the Minister of National Revenue (the
Minister), issued an assessment against the appellant for the relevant period under
which the Minister assessed the following amounts:
|
Total GST/HST and adjustments
|
$3,637.04
|
|
Total ITCs and adjustments
|
($662.51)
|
|
Net tax as assessed
|
$2,974.53
|
|
Arrears interest
|
$40.94
|
|
Total [amount owing]
|
$3,015.47
|
[3]
The amount of net tax
that should have been declared by the appellant for the relevant period was
$2,974.53, that is:
|
ITCs claimed
|
($3,075.99)
|
|
Adjustment (ITCs disallowed)
|
$6,050.52
|
|
Total
|
$2,974.53
|
[4]
In response to the notice
of objection filed by the appellant for the relevant period, the Minister issued
a reassessment dated September 7, 2010, by which the amounts previously assessed
were reduced by $474.12 (that is, $449.65 as an adjustment in the calculation of
the reported net tax and $24.47 in interest), so that the amount of net tax
that should have been declared by the appellant for the relevant period is
$2,524.88 ($2,974.53 - $449.65).
[5]
The issue is whether
the Minister was justified in disallowing the input tax credits (ITCs) claimed
by the appellant in the amount of $2,524.88.
[6]
In making the
reassessment under appeal, the Minister relied on the following findings and assumptions
of fact described in paragraph 26 of the Reply to the Notice of Appeal:
[Translation]
(a) The
facts admitted above;
(b) The
appellant is a registrant for the purposes of Part IX of the ETA;
(c) The appellant operates a business that provides
janitorial and maintenance services;
(d) The appellant filed its net tax returns with the Minister
for the relevant period;
(e) The appellant acquired taxable supplies of property and
services for consumption, use or supply in the course of its commercial
activities during the relevant period for which the GST was payable by the
appellant to the suppliers;
(f) The appellant recorded in its records the GST payable as an
ITC and claimed said ITC amount in the calculation of the net tax that it reported
to the Minister for the relevant period;
(g) Of the total amount of ITCs claimed in the calculation of
its net tax for the relevant period, the appellant claimed an amount totalling $6,713.03
for supplies of services it acquired during the relevant period, including
$6,050.52 in ITCs from supplier Jorge Barcelona, which were disallowed;
(h) The appellant did not provide the Minister, when required
to do so, with information sufficient, including any such information as may be prescribed, to enable the
amount of $6,050.52 in ITCs mentioned in the previous subparagraph that it
claimed and obtained in the calculation of the net tax for the relevant period;
(i) Specifically, the appellant provided the Minister with
supporting documents and records to determine said ITC amount, supporting
documents that did not meet the requirements of the ETA and its regulations;
(j) The supporting documents provided in support of the
disallowed ITCs in the amount of $6,050.52 for supplies of property or services
it allegedly acquired during the relevant period are not consistent with the
regulations as they contain no tax number, no tax amount or no mention that the
tax is included;
(k) Conversely, ITCs in the amount of $449.25 were allowed for
the supplier’s invoices for 2008;
(l) Consequently, the appellant owes the Minister the amount
of the adjustments made to its net tax reported for the relevant period, plus
penalties and interest.
[7]
Alcino Carreira, owner
of the appellant, testified at the hearing and stated that Jorge Barcelona was
hired as a subcontractor to provide janitorial services. According to Mr.
Carreira, Mr. Barcelona began providing services in 2004 on a temporary basis
and became permanent in 2005 or 2006. Mr. Barcelona was employed by the
appellant until July 2008. According to Mr. Carreira, a verbal agreement
existed between the parties to the effect that Mr. Barcelona would receive $2,100 per
month, including taxes, for the services he provided, once he became permanent.
[8]
Seeing as Mr. Carreira
could not remember the amount paid by the appellant for the services provided
by Mr. Barcelona in 2004, counsel for the respondent produced three invoices
submitted by Mr. Barcelona in 2004, which showed that the amount paid for the
provision of his services was $1,218 per month, that the tax numbers were indicated
and that the taxes were claimed.
[9]
Counsel for the
appellant filed in a bundle Jorge Barcelona’s invoices for the period from
January 2005 to July 2008, which showed that the amount paid for the provision
of services was of $2,100 per month. These invoices had no tax number nor
any mention of taxes.
[10]
Nadine Fischer, who had
acted as the appellant’s accountant since March 4, 2008, testified at the
hearing and stated that she had been informed by Francine Lebel, an auditor for
Revenue Québec, that Mr. Barcelona had been the
subject of a tax audit and that he was a registrant for the purposes of the goods
and services tax. Upon checking the accounting records and finding that no ITC
claim had been filed, Ms. Fischer undertook, therefore, to claim the taxes for
the services paid to Jorge Barcelona from January 2005 to mid-July 2008 in his
GST/HST and QST Returns for the period from December 1, 2008, to December 31,
2008.
[11]
Seeing as Jorge
Barcelona indeed had tax numbers, Ms. Fischer assumed that the price asked for his
services included the taxes because certain invoices for the months of April,
May and June 2008 included the taxes, and the amount charged for the services
for prior periods was identical.
Analysis
[12]
Section 169(4)(a)
of the ETA clearly states that a registrant may claim an ITC for a reporting
period if, before filing the return in which the credit is claimed, the
registrant has obtained sufficient evidence as will enable the amount of the credit
to be determined, including any such information as may be prescribed. Section 3
of the Input Tax Credit Information (GST/HST) Regulations, SOR/91‑45,
as amended (the Regulations) provides that information to be provided must
include the registration number assigned to the supplier.
[13]
Counsel for the
appellant admitted that the invoices in respect of which the ITCs were claimed
by the appellant did not comply with the requirements of the ETA and the
Regulations because the tax numbers of the supplier of services were not
mentioned. However, she submitted that the appellant was entitled to the ITCs
because the amount charged for the provision of services included the taxes.
[14]
In 3922731 Canada
Inc. (Docket 2009‑2966(GST)I, Rip C.J. had to address this issue and
he concluded that it was irrelevant whether or not the invoice was “tax inclusive”.
[15]
In this case, the
appellant did not meet the onus on it to produce the necessary documentation to
obtain ITCs with respect to the invoices issued by Jorge Barcelona.
[16]
The appeal is dismissed.
Signed at Ottawa,
Canada, this 6th day of February 2013.
“Réal Favreau”
Translation
certified true
on this 20th day of March 2013
Daniela Guglietta, Reviser
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