[1] On April 11, 2002, the Canadian International Trade Tribunal (the "CITT") dismissed the appeal filed by Scott Paper Limited (the "Plaintiff") from a decision of the Minister of National Revenue (the "Minister"), dated May 30, 2000. The Plaintiff had appealed from the decision of the Minister to refuse its application for refund of the federal sales tax (the "FST") sought by the Plaintiff pursuant to section 68 of the Excise Tax Act, R.S.C. 1985, c. E-15 (the "Act"). The Plaintiff now appeals from the decision of the CITT pursuant to section 81.24 of the Act. According to the Act, such appeals proceed by way of statement of claim and as a trial de novo.
[2] In this appeal, the Plaintiff seeks the following relief:
a. an order that this appeal be allowed and the decision of the CITT be set aside;
b. an order referring this matter back to the Minister of National Revenue for reconsideration on the basis that the Plaintiff is entitled to a refund of an amount equal to the amount of FST paid by it in error during the Relevant Period on its sales of both facial tissue and bathroom tissue plus interest as provided for under the ETA;
c. in the alternative, an order referring this matter back to the Minister of National Revenue for reconsideration on the basis that the Plaintiff is entitled to a refund of an amount equal to FST paid in error on its sales of facial and bathroom tissue up to but not exceeding $2,848,844 plus interest as provided for under the ETA;
d. its costs in this matter; and
e. such other relief as this Honourable Court deems just having regard to the circumstances.
FACTS
[3] The Plaintiff is a manufacturer of paper products, including facial and bathroom tissues, and at all material times was licensed as a manufacturer for FST purposes, pursuant to subsection 2(1) of the Act.
[4] The Defendant, Her Majesty the Queen in right of Canada, is represented by the Minister, and since November 1, 1999, Canada Customs and Revenue Agency (the "CCRA").
[5] On May 15, 1992, the Plaintiff submitted a claim to the Minister for reimbursement of FST in the amount of $2,848,844.00 (the "N15 Refund Claim") for the period April 1, 1990 to December 31, 1990 (the "Relevant Period"). The N15 Refund Claim, as filed, was broadly worded and identified the basis for seeing refund as "overpayment of F.S.T. on exempt sales".
[6] This N15 Refund Claim was filed on a protective basis, relying on the decision of the Federal Court of Appeal in CIP Inc. v. Deputy Minister of National Revenue, [1988] F.C.J. No. 582 (C.A.) (QL), where the Court upheld the Tariff Board's finding of fact that facial tissues are cosmetics. The Plaintiff argued that facial tissues could be obtained on a tax exempt basis by persons who were included in the description of "manufacturer or producer" as described in subsection 2(1) of the Act and who were licensed under the Act during the relevant period.
[7] The Minister, by Notice of Determination dated September 21, 1993, disallowed the N15 Refund Claim on the basis that the Plaintiff's sales of facial tissue were correctly made on a tax- paid basis. No audit was performed by the Defendant to determine the amount potentially recoverable under the N15 Refund Claim.
[8] On December 9, 1993, the Plaintiff filed a Notice of Objection to the Notice of Determination, on the basis that, according to the decision of the Federal Court of Appeal in CIP, supra, facial tissues should be included in the definition of "cosmetics" pursuant to subsection 2(1) of the Act and should not be subject to FST by virtue of paragraph 50(5)(g), formerly paragraph 27(2)(g) of the Act.
[9] On March 14, 1995, the Plaintiff agreed to hold its N15 Refund Claim in abeyance pending resolution of a similar claim by one of its major competitors, Kimberly-Clark Canada Inc. ("Kimberly-Clark"). By Reasons for Order dated March 12, 1998, the Federal Court determined that both facial and bathroom tissues were "cosmetics" for the purposes of the Act; see Kimberly-Clark Canada Inc. v. Her Majesty the Queen (1998), 145 F.T.R. 265 (T.D.).
[10] On June 24, 1998, at the Defendant's request pursuant to a desk audit, the Plaintiff provided documentation in support of it's N15 Refund Claim for "a refund of federal sales tax relating to tax paid on sales of facial tissues". All working papers, information and documentation then provided by the Plaintiff in support of its N15 Refund Claim referred only to its sales of facial tissues.
[11] In January 1999, the Defendant proceeded with an audit of the Plaintiff's sales of facial tissues during the relevant period, to determine the extent to which it would grant a refund. As the audit progressed, the Plaintiff was informed that the full amount of its N15 Refund Claim with respect to taxes paid in error in relation to facial tissues would not be allowed. On or about November 24, 1999, the Plaintiff requested that the Defendant consider taxes paid in error in relation to bathroom tissues, as part of the same N15 Refund Claim.
[12] By notice of decision dated May 30, 2000, the Plaintiff's notice of objection was allowed in part and the determination varied. Of the initial claim in the amount of $2,848,844.00 with respect to sales of facial tissues, the amount of $1,684,444.00 was allowed, on the basis of the Federal Court's decision in Kimberly-Clark, supra. In that case, Justice Nadon had held that facial tissues were "cosmetics" for the purpose of subsection 2(1) of the Act. The refund with respect to FST paid in error in relation to bathroom tissues was denied on the grounds that the Plaintiff did not include this amount and did not identify "bathroom tissues" in the original N15 Refund Claim. It had failed to claim the refund within the two year statutory limitation provided in section 68 of the Act.
[13] The Plaintiff appealed the notice of decision to the CITT on or about August 17, 2000, pursuant to section 81.19 of the Act. The CITT dismissed the appeal by a decision dated April 11, 2002.
[14] The Plaintiff's appeal from the Minister's decision was heard on September 11, 2001 before a three member panel of the CITT. In its decision, dated April 11, 2002, the CITT described the issue before it as to whether the Plaintiff is entitled to a refund of FST paid in error, relative to its sales of bathroom tissues during the relevant period. The Panel noted that section 68 of the Act was fundamental to the appeal. That provision provides as follows:
| 68. Where a person, otherwise than pursuant to an assessment, has paid any moneys in error, whether by reason of mistake of fact or law or otherwise, and the moneys have been taken into account as taxes, penalties, interest or other sums under this Act, an amount equal to the amount of those moneys shall, subject to this Part, be paid to that person if he applies therefor within two years after the payment of the moneys.
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68. Lorsqu'une personne, sauf à la suite d'une cotisation, a versé des sommes d'argent par erreur de fait ou de droit ou autrement, et qu'il a été tenu compte des sommes d'argent à titre de taxes, de pénalités, d'intérêts ou d'autres sommes en vertu de la présente loi, un montant égal à celui de ces sommes doit, sous réserve des autres dispositions de la présente partie, être payé à cette personne, si elle en fait la demande dans les deux ans suivant le paiement de ces sommes.
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[15] Ms. Rosemary J. Anderson, an accountant representing the Plaintiff, testified before the CITT and said that the general wording of the N15 Refund Claim was deliberate, having regard to the protective nature of that claim. The N15 Refund Claim was based upon the CIP, supra decision, which addressed only facial tissue. She further testified that the amount claimed was based on calculations relative to sales of facial tissues and that, from the date of filing until November 1999, all communications referred only to facial tissues.
[16] Ms. Anderson testified as well that Mr. John Reid, President of Scott Paper Limited, specifically considered whether the Plaintiff should make a claim relative to bathroom tissue, as its competitor Kimberly-Clark had done, and made a deliberate decision to exclude the sales of bathroom tissues from the appeal because he was "sceptical" that they would be considered as a "cosmetic" for the purposes of the Act.
[17] Ms. Anderson further testified that when filing a refund claim, the taxpayer must specify the types of goods that the claim represents. However, she noted that the CCRA accepted and paid refund claims that were non-specific as to goods. She indicated that the parties initially agreed that the review of the claims would be cursory and expedited, and that the Plaintiff was only required to provide limited documents in support of the N15 Refund Claim. Finally, she testified that the Plaintiff only requested that bathroom tissue be considered when it became apparent that it was not going to receive the total amount claimed.
[18] Ms. Jennifer Watson, Income Tax/Excise Tax Auditor, also testified before the CITT. She indicated that from the date on which the N15 Refund Claim was filed until November 1999, all communications from the Plaintiff referred only to facial tissues. Prior to meeting with the Plaintiff in January 1999 for the purposes of proceeding with the audit, she indicated that she and other employees of the CCRA wondered why the supporting schedule provided by the Plaintiff was limited to tax overpaid only on facial tissue. She testified that the audit team would wait for the Plaintiff to raise the issue of toilet tissue.
[19] Ms. Watson further testified that the CCRA regularly accepted refund claims for which the reasons for refund were improperly or inadequately stated. She indicated that in such situations, auditors rely on working papers and attachments filed in support of the claim. She testified that upon receipt of the Plaintiff's request that bathroom tissues be included in the N15 Refund Claim, officials with the CCRA exchanged emails, discussing whether the Plaintiff was entitled to add a different good to its refund claim in relation to facial tissues, some seven and a half years after the claim was originally filed. Ultimately, the responsible appeals officer decided that the Plaintiff was not entitled to add another item to the claim after the expiry of the limitation period.
[20] The CITT expressed its conclusions in the following terms:
The Tribunal does not agree with the appellant's interpretation of section 68 of the Act. Section 68 of the Act indicates that the amount of the moneys paid in error by a person will be paid to the person "if he applies therefor" within the required period. In the Tribunal's view, the person has not fulfilled the requirement of "appl[ying] therefor" unless the person gives a reasonable indication of what he is applying for. Consequently, it is the Tribunal's view that section 68 requires that a person who applies for a refund indicate the nature of the alleged error.
To accept the appellant's interpretation would require the Tribunal to ignore the explicit wording of the part of the section pertaining to the two-year limitation period. The limitation period would be rendered meaningless if an applicant could simply make a blanket claim, within the two-year period, and then use that claim to support an unlimited number of specific claims, made over an unlimited period of years, as new potential errors are identified. The Tribunal also notes that, according to the Act, the "N 15" form is to be prescribed by the respondent. In this regard, the Tribunal further notes that the "N 15" form and attached schedules clearly require that the applicant provide detailed information regarding the nature of the refund claim.
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In fact, documentation provided by the appellant in support of its claim, prior to the respondent's determination, and the communications from the appellant to the respondent during the period clearly indicate that the appellant's refund claim was intended to be only in relation to tax paid in error on sales of facial tissue, not on sales of bathroom tissue. The evidence also indicates clearly that the appellant calculated the amount of its claim with reference only to taxes paid in error in relation to facial tissue. The appellant first raised the issue of bathroom tissue in 1999, approximately six years after the respondent's notice of determination and well after the two-year limitation period had expired. Therefore, the appellant's refund claim in respect of bathroom tissue was filed late.
For these reasons, the appeal is dismissed.
[21] On August 8, 2002, the Plaintiff appealed the CITT's decision and began the present action by filing a statement of claim, which was amended on February 5, 2004. The Plaintiff argued that the refund granted did not take into account FST that it overpaid on qualifying sales of facial tissues to certain licensed manufacturers (the "Additional Qualifying Sales") and further, a portion of the amount to which it was otherwise entitled in respect of tax overpaid on its sales of facial tissue (the "Limitation Date Amount") was also denied on the basis that the N15 Refund Claim was filed after May 19, 1992. The issues concerning the Additional Qualifying Sales and the Limitation Date Amount were resolved by the parties on or about February 4, 2004. On March 25, 2004, the Plaintiff was granted a refund in the amount of $445,813.00, excluding interest, overpaid in respect of its sales of facial tissue during the Relevant Period.
[22] In the course of pre-trial preparation, in October 2003 the Defendant produced a series of e-mails that were exchanged among employees of the CCRA between November 29, 1999 and December 22, 1999, concerning the Plaintiff's request for refund of FST relative to bathroom tissues. These e-mails disclose a discussion as to whether the N15 was broad enough to cover a claim in respect of bathroom tissues. The e-mails show a difference of opinion among employees of the CCRA on that point.
ISSUE
[23] The issue to be determined on this appeal is whether, on the basis of the N15 Refund Claim, the Plaintiff is entitled to a refund of FST paid in error relative to its sales of bathroom tissue during the Relevant Period, notwithstanding the fact that the claim does not identify bathroom tissues.
[24] The parties have agreed that:
a. Should this Court determine that the Plaintiff is entitled to a refund, pursuant to section 68 of the Act, for FST paid in error with respect to its sales of both facial tissue and bathroom tissue, plus interest, for the Relevant Period, the matter must be remitted back to the Minister so that an audit may be conducted of the amount claimed by the Plaintiff with respect to its sales of bathroom tissues.
b. Alternatively, should this Court determine that the Plaintiff is entitled to a refund up to, but not exceeding, $2,848,844.00, the Defendant notes that the amounts already refunded, that is the amounts of $1,684,444.00 and $445,813.00, must be taken into account, leaving the maximum relief for which the Plaintiff would be entitled to be $718,587.00, plus interest.
SUBMISSIONS
A. The Plaintiff's Arguments
[25] The Plaintiff submits that it is well established, as a matter of law, that amounts paid in error as tax under the Act are to be refunded to taxpayers pursuant to section 68, unless there are clear and express statutory provisions precluding such recovery and in this regard, relies on Amoco Canada Petroleum Company Ltd. v. Minister of National Revenue (1985), 57 N.R. 274 (F.C.A.). In the present case, there is no dispute between the parties that the Plaintiff paid FST in error on its sales of both facial and bathroom tissue during the Relevant Period.
[26] The Plaintiff argues that the N15 Refund Claim, as submitted, was sufficiently broad to include tax paid in error on its sales of bathroom tissue. It submits that the initial documentation filed in support of its claim was limited to sales of facial tissue during the Relevant Period for the simple reason that Ms. Anderson mistakenly believed that the Plaintiff was limited to the recovery of the $2,848,844.00 face value amount of the claim, and that the tax paid in error on sales of facial tissue well exceeded that amount. In so limiting the documentation submitted, the Plaintiff argues that it did not intend to limit the scope of its claim as filed.
[27] It submits that the scope of the claim is defined by the N15 Refund Claim itself, filed in writing as required by section 68. Any variation to the terms of the claim would also have to be in writing, and cannot be narrowed or expanded through subsequent statements by either party; see Glaxo Smithkline Inc. v. Canada, [2003] 4 C.T.C. 2916 (T.C.C.).
[28] Given that the N15 Refund Claim was validly filed, and is sufficiently broad to encompass tax paid in error by the Plaintiff on its sales of bathroom tissue during the Relevant Period, the Plaintiff submits that it is entitled to a refund of the tax paid in error. Denial of such refund would be contrary to the broad, general and well established practice of the CCRA that a refund claim may be found to be valid despite an absence of detailed information on the N15 form. Failure of the CCRA to observe its well-known practice in the present case would result in an impermissible double-standard, amounting to a breach of the Defendant's obligation to treat similarly situated taxpayers in a similar manner, as discussed in Mitchell et al. v. Canada (Attorney General) (2002), 296 N.R. 259 (F.C.A.) and the CCRA's "Fairness Pledge" and Policy.
[29] As well, the Plaintiff submits that having informed the Defendant of the protective nature of the N15 Refund Claim shortly after it was filed, it is not open to the Defendant to assert, some seven years later, that the form of the claim was somehow deficient. The Plaintiff argues that it has clearly complied with the provisions of section 68, and with the Defendant's longstanding administrative practice for the handling of refund claims. Accordingly, it is entitled to a refund of an amount equal to the FST overpaid by it on its sales of bathroom tissue during the Relevant Period.
[30] While the Plaintiff argues that the foregoing is determinative of this appeal by way of trial de novo, it continues to review the decision of the CITT. It argues that a plain reading of section 68 reveals that the only obligatory element in that provision is the filing of the formal claim, within two years of the overpayment, for an amount equal to the amount of the overpayment. In requiring that a person who applies for a refund must indicate the nature of the alleged error in the claim, the Plaintiff says that the CITT erred in law by misreading the clear wording of the statute and by reading into the section words which are not contained in that provision.
[31] The Plaintiff submits that it is well established in Canadian tax jurisprudence that the "plain meaning" rule governs the interpretation of taxation statutes. Where a statutory provision is clear and unambiguous, the Court should give effect to the clear wording of the statute; see Canada v. Antosko, [1994] 2 S.C.R. 312. Accordingly, the purposive approach has a limited role in the interpretation of taxation statutes.
[32] The Plaintiff submits that only where the language is ambiguous in its application to the facts will it be useful to resort to the object and purpose of the provision at issue; see Friesen v. Canada, [1995] 3 S.C.R. 103 and Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 622. The Plaintiff submits that these principles have equal application under the Act, as confirmed by the Federal Court of Appeal in Polygon Southampton Development Ltd. v. Canada (2003), 7 R.P.R. (4th) 1 (F.C.A.).
[33] The Plaintiff argues that on its face, there is no requirement in section 68 that the nature of the error giving rise to the overpaid tax be identified. It submits that to deprive it of its entitlement to a refund relative to bathroom tissue, on the basis that it was necessary to specify in the N15 Refund Claim the nature of the error, would require clear and express words to that effect in section 68. The Plaintiff argues that the CITT misapprehended the proper interpretive approach to section 68, leading to an erroneous decision which should not be followed; see Potash Corp. of Saskatchewan Inc. v. Canada (2003), 313 N.R. 325 (F.C.A.).
[34] Furthermore, in administering claims under the Act, the Defendant does not require that such information be submitted at the time the claim is filed. The CITT did not have before it evidence of the CCRA's administrative practices respecting FST refund claims since that evidence was only provided to the Plaintiff after the CITT hearing, at the direction of the Information Commissioner of Canada.
[35] The Federal Court in W. Ralston (Canada) Inc. v. Canada (Minister of National Revenue) (2002), 221 F.T.R. 30 (T.D.) endorsed the CITT's decision in the present case. However, the Plaintiff argues that the circumstances of that case are clearly distinguishable.
[36] In W. Ralston, supra, the company's initial appeal to the CITT was dismissed on the grounds that to contest an assessment, the taxpayer in that case was required to serve a Notice of Objection to the assessment, rather than to file a refund claim. In dismissing the taxpayer's appeal in that case, it was not necessary for the Court to have commented on the issue that is the subject of the present appeal. The Plaintiff submits that the court's conclusion that section 68 "commands that the 'application' state the type of goods and the nature of the error" is obiter, and further, is contrary to the interpretive principles set down by the Supreme Court.
B. The Defendant's Arguments
[37] The Defendant denies that the Plaintiff is entitled to a refund of FST with respect to its sales of bathroom tissue during the Relevant Period. It submits that section 68 of the Act requires that the claim specify the error, as well as the nature of the products, for which the FST has allegedly been paid in error. The Defendant argues that the Plaintiff's interpretation of section 68 serves to render the limitation period meaningless as there would be no end to taxpayers revisiting past errors that conceivably fall within the blanket reason provided on the N15 form.
[38] The Defendant argues that, contrary to the Plaintiff's submissions, the "plain meaning" rule does not govern the interpretation of taxing statutes. The Supreme Court has clearly concluded that courts cannot simply look to the plain meaning of the specific provisions in question, but must also heed the scheme and object of the Act, the context of the words in issue, and the intention of the legislature; see Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27. The Defendant says that the Supreme Court has held that this modern approach to statutory interpretation is applicable to the interpretation of legislation in both the non-tax and tax context, relying in this regard, on Ludco Enterprises Ltd. v. Canada, [2001] 2 S.C.R. 1082.
[39] Furthermore, the Defendant that it is an established principle of statutory interpretation that the legislature does not intend to produce absurd or unreasonable consequences. Interpretations that "defeat the purpose of a statute or render some aspect of it pointless or futile" are considered absurd or unreasonable; see Rizzo Shoes, supra. The Defendant therefore submits that the CITT did not err when it undertook a purposive analysis of section 68, having regard to the context.
[40] The Defendant further notes that section 71 of the Act provides that no person has a right to recover any monies paid as taxes except as provided in the Act or another act of Parliament. Parliament has established a process for the claiming of refunds, as set out in section 68 of the Act. Further, pursuant to subsection 72(2), applications are to be made in the prescribed form and contain the prescribed information; see Riverside Concrete Ltd. v. Canada (Minister of National Revenue) (1995), 92 F.T.R. 241 (T.D.). Accordingly, the Defendant argues that the CITT properly found that the N15 form clearly requires that a taxpayer provide detailed information regarding the nature of the refund claim. To find otherwise would make it impossible for Revenue Canada to verify the validity of the claim; see Barney Printing v. Canada (Minister of National Revenue), [2001] C.I.T.T. No. 36 (CITT)(QL).
[41] The Defendant refers to W. Ralston, supra where this Court similarly concluded that the type of goods and the nature of the error must be stated.
[42] The Defendant submits that the purpose of limitation provisions, such as the two-year limitation provision prescribed in section 68, " to limit uncertainty in the business and financial affairs of individuals" as stated in Michelin Tires (Canada) Ltd. v. Canada (1998), 158 F.T.R. 101 (T.D.). It follows that, in order to fulfill the obligation of "applying therefor" within two years, a taxpayer must explain the nature of the claim with express reference to the goods; see Riverside, supra. The Defendant argues that the Plaintiff's interpretation would nullify the two-year limitation period.
[43] Furthermore, the Defendant submits that the Plaintiff made a deliberate choice to exclude sales of bathroom tissue during the Relevant Period, from the claim. Between the filing of the refund claim in May 1992 and November 1999, all working papers, information and documentation provided by the Plaintiff referred only to its sales of facial tissues. The Plaintiff only requested that its sales of bathroom tissue be considered when it became apparent that it was not going to receive the total amount claimed on its refund claim relative to its sales of facial tissues, some 7½ years after the filing of the N15 Refund Claim. Notwithstanding the broad wording of its claim, the Plaintiff's clear intent, as evidenced by its correspondence, working papers and information submitted between May 1992 and November 1999, was to apply for a refund relative to its sales of facial tissue alone.
[44] Finally, in response to the Plaintiff's arguments concerning an administrative policy for handling refund claims under section 68, the Defendant submits that there is no such policy. Neither the testimony of Ms. Watson, nor the email exchange within CCRA, support the existence of an administrative policy that would allow a refund of the FST in the present case.
[45] While the Defendant acknowledges that Revenue Canada has granted refunds greater than that claimed by taxpayers in other cases, it was for the same goods originally claimed. Moreover, Revenue Canada did so, not on the basis of an administrative policy, but rather on the basis of the CITT decision in Erin Michaels Mfg. Inc. v. Canada (Minister of National Revenue), [1997] C.I.T.T. No. 2 (CITT)(QL). That case did not consider the issue of adding other goods to a refund claim after the expiration of the two-year statutory limitation period, but dealt with whether the appellant's refund was limited to the amount for which it had initially applied, in relation to the same goods.
[46] In any event, even if there was an administrative policy, the Defendant argues that it is well established that a taxpayer cannot assert a legal entitlement to a tax refund on any basis other than in accordance with legislation; see Groupe Bocenor Inc. v. Canada (Minister of National Revenue) (2002), 301 N.R. 16 (F.C.A.). Furthermore, the Plaintiff has not relied on this alleged administrative policy as a basis for its entitlement to a refund of FST paid in error on its sales of bathroom tissue, in its amended statement of claim.
ANALYSIS
A. The Nature of the Proceeding and the Evidence
[47] As noted above, this appeal is in the nature of a trial de novo. At all relevant times, section 81.24 and the relevant section of subsection 81.28(3) of the Act read as follows:
| 81.24 Any party to an appeal to the Tribunal under section 81.19, 81.21, 81.22 or 81.23 may, within one hundred and twenty days after the day on which the decision of the Tribunal is sent to that party, appeal the decision to the Federal Court.
81.28 (3) An appeal to the Federal Court under this Part is deemed to be an action in the Federal Court to which the Federal Courts Act and the rules made under that Act applicable to an ordinary action apply, except as varied by special rules made in respect of such appeals and except that [...]
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81.24 Toute partie à un appel entendu par le Tribunal en vertu de l'article 81.19, 81.21, 81.22 ou 81.23 peut, dans un délai de cent vingt jours suivant la date d'envoi de la décision du Tribunal, en appeler de cette décision à la Cour fédérale.
81.28 (3) Un appel à la Cour fédérale en vertu de la présente partie est réputé être une action devant celle-ci à laquelle la Loi sur les Cours fédérales et les règles établies conformément à cette loi s'appliquent comme pour une action ordinaire, sauf dans la mesure où l'appel est modifié par des règles spéciales établies à l'égard de tels appels, sauf que_: [...]
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[48] The exceptions provided in paragraphs (a) to (c) in subsection 81.28(3) are not relevant for the purposes of this appeal. The appeal to the CITT leading to the decision here under appeal was a proceeding under section 81.19 of the Act. No "special rules" as that expression is used in subsection 81.28(3) have been made in respect of the current appeal.
[49] Two witnesses testified at the hearing before the CITT, that is Ms. Anderson on behalf of the Plaintiff and Ms. Watson on behalf of the Defendant. The transcript of their evidence is part of the Joint Trial Record filed on May 7, 2004. No further witnesses were called at the hearing of this matter on March 31, 2005. However, there is new evidence consisting of a series of e-mails. This evidence was not before the CITT.
B. Interpretation of Section 68 of the Act
[50] I agree with the submissions of the Defendant that the proper approach to the interpretation of section 68 of the Act is that enunciated by the Supreme Court of Canada in Rizzo Shoes, supra, in endorsing the modern approach to statutory interpretation as set out by Elmer A. Driedger in Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983) at page 87, which reads as follows:
Today there is only one principle or approach, namely, the words are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament.
[51] This rule has been adopted by the Supreme Court of Canada in all areas of the law, including tax law; see Ludco, supra at paras. 36-37; Markevich v. Canada, [2003] 1 S.C.R. 94, at para. 12; and Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, at para. 41.
[52] In interpreting legislation, the Court must address several issues. First, it must consider the words and ask whether the language carries a plain and ordinary meaning, or is there ambiguity or lack of clarity. Second, the context of the legislation must be examined, having regard to the history of the provision in question, the scheme of the statute, the object of the statute and the policy considerations of Parliament in enacting the legislation.
[53] Section 68 and subsection 72(2) are relevant and provide as follows:
| 68. Where a person, otherwise than pursuant to an assessment, has paid any moneys in error, whether by reason of mistake of fact or law or otherwise, and the moneys have been taken into account as taxes, penalties, interest or other sums under this Act, an amount equal to the amount of those moneys shall, subject to this Part, be paid to that person if he applies therefor within two years after the payment of the moneys.
72. (2) An application shall be made in the prescribed form and contain the prescribed information.
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68. Lorsqu'une personne, sauf à la suite d'une cotisation, a versé des sommes d'argent par erreur de fait ou de droit ou autrement, et qu'il a été tenu compte des sommes d'argent à titre de taxes, de pénalités, d'intérêts ou d'autres sommes en vertu de la présente loi, un montant égal à celui de ces sommes doit, sous réserve des autres dispositions de la présente partie, être payé à cette personne, si elle en fait la demande dans les deux ans suivant le paiement de ces sommes.
72. (2) Une demande doit être faite en la forme prescrite et contenir les renseignements prescrits.
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[54] It follows that the first part of the analysis will involve determining the ordinary and grammatical meaning of the words "if he applies therefor within two years." The word "therefor" refers to any moneys paid in error, while the words "within two years" clearly establish a two-year limitation from the date on which the moneys were paid in error. In my opinion, the wording of the statute is not clear on a "plain meaning" interpretation of section 68, as argued by the Plaintiff. The degree of specificity required to establish the content of "paid any moneys in error" is not clear upon a plain and ordinary reading of the statute. In my opinion, it is clear that in order for the two-year limitation period to operate, the moneys paid in error must be reasonably identifiable.
[55] In view of this lack of clarity, it is necessary to consider the other contextual aspects inherent in the modern approach to statutory interpretation. With respect to interpreting the Act, Malone J.A. in Her Majesty the Queen v. RJR-MacDonald Inc., [2001] 2 F.C. 191 (C.A.) said the following at paragraph 5:
Other panels of this Court have struggled with interpreting the provisions of the Excise Tax Act which has been the subject of numerous amendments. Those difficulties were recently identified by my colleague Décary J.A. in the following words:
When dealing with ... piecemeal legislation such as the Excise Tax Act, ... which, unlike, for example, the Income Tax Act, has no coherent structure and contains no basic rules to start with and which is amended on a routine basis to accommodate or redress specific situations in a constantly evolving commercial reality, the Court should be reluctant to compare microscopically the words of provisions devised at different times and in a different context and meant to address distinct concerns.
[56] In general terms, the Act is a taxation statute that is designed to generate revenues for the government. At the same time, the Act also provides for rebates and refunds to taxpayers. Section 68 provides the process by which taxpayers may claim refunds of moneys paid in error. At a policy level, as noted in the Amoco, supra case relied upon by the Plaintiff, it cannot be lightly presumed that Parliament does not intend the government to pay its debts. However, at the same time, as noted in Riverside, supra, that while it may be arguable that the government should not be able to avoid paying refunds for taxes paid in error by reliance on a limitation period or that the limitation period should be longer, that is a matter for Parliament, and not the court, to address. Accordingly, in my opinion, the interpretation of section 68 must necessarily consider the creation of the two-year limitation period and the policy considerations that accompany such limitation period.
[57] In Dawe v. Minister of National Revenue (Customs and Excise) (1994), 174 N.R. 1 (F.C.A.) at paragraph 18, the Federal Court of Appeal addressed the purpose of a statutory limitation period as follows:
First, a limitation period is dictated by very fundamental principles relating to an efficient and proper administration of justice. Litigation has to come to an end so that judgments and decisions can be enforced. Limitation periods are designed to achieve that end and cannot be ignored. Nor, as I have already pointed out, can they be waived or extended in the absence of a clear statutory provision: Rules of Court cannot be used to enlarge or abridge the time prescribed by a statute. [citation omitted].
...
[58] The imposition of a two-year limitation period as part of the refund process under the Act indicates, in my opinion, Parliament's intention that there be a degree of certainty in the resolution of refund claims. That certainty is with respect to time, but, in my opinion, the proper administration of the Act also requires some certainty as to the nature and scope of the refund claimed. As the Defendant noted, in Rizzo Shoes, supra the Supreme Court held that it would be absurd or unreasonable to interpret a statute in such a way as to defeat the purposes of the statute or to render some aspects of it pointless or futile.
[59] In my view, if the category of products claimed for is left indeterminate, Parliament's intention in imposing a statutory limitation period would be effectively defeated.
[60] Parliament has provided a process under the Act whereby taxpayers can claim refunds for taxes paid in error, as long as that refund is applied for within the two-year limitation period. The process commences with an application for refund using a prescribed form, pursuant to subsection 72(2) of the Act. That prescribed form is the N15 form and the form clearly requires the applicant to provide the reason for refund. As noted by the Court in Riverside, supra, "presumably, such a form is to fulfill Revenue Canada's need to have specified information in order to verify the validity and amount of the refund claimed."
[61] The observations of the Court in W. Ralston, supra with respect to a broadly worded claim, apply in this case. At paragraph 20, the Court says as follows:
I cannot agree with the plaintiff's proposition. To permit a taxpayer to rely on a broadly [sic] general claim for a refund would allow him to avoid the operation of the two-year (previously four-year) limitation period found in s. 68 of the Act and would render the section devoid of any meaning. In my opinion, such an interpretation would clearly be contrary to the intent of Parliament in enacting the limitation period contained in s. 68. I therefore find that this provision commands that the "application" state the type of goods and the nature of the error. I find this latter interpretation more consistent with the object and purpose of s. 68, which must also be read in conjunction with s. 71 and s. 72(2) of the Act.
[62] In my view, the general wording of the N15 Refund Claim, that is "Overpayment of F.S.T. on Exempt Sales" is insufficient to satisfy the statutory requirements for a section 68 refund on bathroom tissue. It is obvious that the Plaintiff clarified the scope of its claim when it indicated to the Defendant that it was a protective claim filed on the basis of the CIP, supra case, which dealt only with facial tissue. All of the documentation provided by the Plaintiff, up to November 1999, related only to facial tissue.
[63] In her evidence before the CITT, Ms. Anderson said that the Plaintiff was aware that its competitor, Kimberly-Clark, was filing a refund claim for bathroom tissue as well as facial tissue. However, the Plaintiff took no action to specify to the Defendant that its claim was protective in nature, on the same grounds advanced in Kimberly-Clark, supra. Indeed, it is clear from the evidence of Ms. Anderson that the Plaintiff consciously decided to omit bathroom tissue from its claim and did not attempt to include this product on its N15 Refund Claim until it realized that it had insufficient documentation to support the full claim in the amount of $2.8 million. Further, the Plaintiff, up to that time, thought that it was limited to claiming a cap of $2.8 million, and that the facial tissues would achieve this refund. It later learned that there was no bar to claiming in excess of the amount initially claimed, and sought to introduce documentation regarding bathroom tissue as well.
[64] The new evidence that was provided, consisting of a series of e-mails exchanged between employees of CCRA, does not, in my opinion, change the situation. At most, these e-mails show that there was a difference of opinion as to whether the N15 addressed the issue of a refund for bathroom tissues. It appears that Ms. Watson was of the view that the claim was sufficiently broad. Others, in particular Mr. Janmohamed, disagreed. Ultimately, the determination of whether the request for tax refund meets the statutory requirements is a matter of statutory interpretation and the new evidence does not assist in that regard.
[65] In light of my conclusions as to the interpretation of section 68, the e-mails do not change the result. The Plaintiff was required to identify the goods which were the subject of the refund report and did not do so.
[66] Accordingly, in my opinion, the Defendant did not err in limiting the scope of the N15 Refund Claim to facial tissues sold during the Relevant Period, to the exclusion of bathroom tissue.
CONCLUSION
[67] Based upon the foregoing, I conclude that the N15 Refund Claim filed by the Plaintiff under section 68 of the Act on May 15, 1992 does not entitle it to claim a refund with respect to FST paid in error on its sales of bathroom tissue during the Relevant Period.
ORDER
The appeal is dismissed, with costs to the Defendant.
"E. Heneghan"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1270-02
STYLE OF CAUSE: SCOTT PAPER LIMITED
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: THURSDAY, MARCH 31, 2005
REASONS FOR ORDER
AND ORDER: HON. MADAM JUSTICE HENEGHAN
DATED: OCTOBER 3, 2005
APPEARANCES: Mr. Thomas B. Akin
Mr. Brian C. Pel
FOR THE PLAINTIFF
Ms. Anne Turley
FOR THE DEFENDANT
SOLICITORS OF RECORD:
McCarthy Tetrault LLP
Toronto, Ontario
FOR THE PLAINTIFF
John H. Sims, Q.C.
Deputy Attorney General of Canada
FOR THE DEFENDANT
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