Date: 20130205
Docket: A-343-12
Citation: 2013 FCA 25
CORAM: EVANS
J.A.
DAWSON
J.A.
STRATAS
J.A.
BETWEEN:
TWENTIETH CENTURY FOX HOME
ENTERTAINMENT CANADA LIMITED
Appellant
and
THE ATTORNEY GENERAL OF CANADA
THE MINISTER OF NATIONAL REVENUE
AND
THE ASSISTANT COMMISSIONER,
LEGISLATIVE POLICY AND REGULATORY
AFFAIRS BRANCH OF THE CANADA
REVENUE AGENCY
Respondents
Heard at Vancouver, British
Columbia, on February 5, 2013.
Judgment delivered
from the Bench at Vancouver, British Columbia, on February 5, 2013.
REASONS FOR JUDGMENT OF THE COURT BY: EVANS
J.A.
Date: 20130205
Docket: A-319-12
Citation: 2013 FCA 25
CORAM: EVANS
J.A.
DAWSON
J.A.
STRATAS
J.A.
BETWEEN:
TWENTIETH CENTURY FOX HOME
ENTERTAINMENT CANADA LIMITED
Appellant
and
THE ATTORNEY GENERAL OF CANADA
THE MINISTER OF NATIONAL REVENUE
AND
THE ASSISTANT COMMISSIONER,
LEGISLATIVE POLICY AND REGULATORY
AFFAIRS BRANCH OF THE CANADA
REVENUE AGENCY
Respondents
REASONS FOR JUDGMENT
OF THE COURT
(Delivered from the Bench at Vancouver, British Columbia, on February 5, 2013)
EVANS J.A.
[1]
This
is an appeal by Twentieth Century Fox Home Entertainment Canada Limited (Fox)
from a decision of the Federal Court (2012 FC 823), in which Justice Phelan
(Judge) dismissed an application for judicial review by Fox to set aside a
decision by the Assistant Commissioner (A/Commissioner) of the Canada Revenue
Agency (CRA).
[2]
In
that decision, dated July 14, 2011, the A/Commissioner advised Fox that he
would not recommend that the Minister of National Revenue (MNR) accept Fox’s
application for the remission of approximately $1 million of Goods and Services
Tax (GST) that it had over-remitted for the period July 2000 to March 2003 as a
result of an error in Fox’s computer software.
[3]
Fox
had obtained a rebate of approximately $11.5 million of GST that it overpaid
because of the same error. However, since Fox had remitted the $1 million in
question in the present appeal more than two years before it discovered the
error, it was out of time to apply for a rebate of this amount. The relevant
provisions of the Excise Tax Act, R.S.C. 1985, c. E-15, provide as
follows.
|
261. (1) 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) 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.
|
261. (1) Dans le cas où une
personne paie un montant au titre de la taxe, de la taxe nette, des
pénalités, des intérêts ou d’une autre obligation selon la présente partie
alors qu’elle n’avait pas à le payer ou à le verser, ou paie un tel montant
qui est pris en compte à ce titre, le ministre lui rembourse le montant,
indépendamment du fait qu’il ait été payé par erreur ou autrement.
…
(3) Le remboursement n’est
versé que si la personne en fait la demande dans les deux ans suivant le
paiement ou le versement du montant.
|
[4]
Subsection
23(2) of the Financial Administration Act, R.S.C. 1985, c. F-11 (FAA)
confers a discretion on the Governor in Council, exercisable on the
recommendation of the appropriate Minister (in this case the MNR), to remit any
tax when it considers that the collection of the tax would be “unreasonable or
unjust” or that it is “otherwise in the public interest to remit the tax”.
|
23.(2) The Governor in Council
may, on the recommendation of the appropriate Minister, remit any tax or
penalty, including any interest paid or payable thereon, where the Governor
in Council considers that the collection of the tax or the enforcement of the
penalty is unreasonable or unjust or that it is otherwise in the public
interest to remit the tax or penalty.
|
23.(2) Sur recommandation du
ministre compétent, le gouverneur en conseil peut faire remise de toutes
taxes ou pénalités, ainsi que des intérêts afférents, s’il estime que leur
perception ou leur exécution forcée est déraisonnable ou injuste ou que,
d’une façon générale, l’intérêt public justifie la remise.
|
[5]
Except
as specifically provided by either Part IX of the ETA (which includes section
261) or the FAA, a taxpayer has no right to recover money paid to Her Majesty
as GST: ETA, section 312.
[6]
In
the decision under review, the A/Commissioner denied Fox’s application for
remission of the $1 million under subsection 23(2) on the basis of two
provisions of the Remission Guidelines adopted by the CRA to structure the
exercise of discretion under this provision.
[7]
First,
an over-remittance of GST as a result of an error in Fox’s computer software
was not a circumstance “beyond a person’s control”. Second, in view of Fox’s
large current assets ($194.6 million) and gross revenues ($163.8 million in the
year ending June 30, 2010), Fox would not suffer financial hardship if the $1
million that it had overpaid was not remitted: thus Fox would not suffer “a
significant financial setback” that would strain its “limited resources”.
[8]
The
Judge stated that a review of the A/Commissioner’s discretionary decision for
unreasonableness must take account of the broad policy-based nature of the
Governor in Council’s power under subsection 23(2) of the FAA to grant the
extraordinary remedy of remission, after the limitation period for a rebate had
expired.
[9]
The
Judge stated that the A/Commissioner looked broadly at the impact of the
proposed remission and held that it was reasonable to have regard to “the size
of the corporation, its assets and its inter-corporate structure” (para. 41).
Nor was the A/Commissioner’s decision rendered unreasonable by the fact that he
might have emphasized Fox’s net rather than gross revenues, and might have
taken the view that the computer software error was outside Fox’s control.
Finally (at para. 47), the Judge adopted the reasoning of Justice de Montigny
in Waycobah First Nation v. Canada (Attorney General), 2010 FC 1188 at
para. 31, to the effect that the words "public interest" in
subsection 23(2) of the FAA must be viewed in the context of the regulatory
scheme governing the operation of the taxation statutes and of the principles
underlying the ETA as a whole.
[10]
Parliament
has provided that the only right to recover an over-payment of GST is that
contained in section 261. A taxpayer who has no right to a statutory rebate
because it is claimed too late has no right to recover a mistaken over-payment,
but may apply for a favourable exercise of discretion under subsection 23(2).
[11]
Like
the Judge, we are satisfied that the A/Commissioner’s decision not to recommend
that Fox’s overpayment be remitted was reasonable, given the breadth of the
Governor in Council’s statutory discretion, the extraordinary nature of the
relief not otherwise available to taxpayers, and the guidelines on which he
relied in exercising the discretion.
[12]
In
our opinion, it is not material for present purposes that Fox did not owe the
$1 million that it erroneously overpaid, but failed to apply to recover within
the time prescribed by Parliament. The thrust of counsel’s submission is that,
in these circumstances, the A/Commissioner has virtually no discretion to
refuse to recommend a remission. This argument is, in our view, inconsistent
with the statutory scheme.
[13]
For
these reasons, and despite counsel’s able submissions, the appeal will be
dismissed with costs.
"John M.
Evans"
FEDERAL COURT OF
APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
APPEAL FROM A JUDGMENT OF THE
HONOURABLE MR. JUSTICE PHELAN.
DATED JUNE 28, 2012, DOCKET NO. T-1374-11
DOCKET: A-343-12
STYLE OF CAUSE: Twentieth Century Fox
Home Entertainment Canada Limited v. The Attorney General of Canada, the Minister of National Revenue, and The Assistant Commissioner, Legislative Policy and Regulatory
Affairs Branch of the Canada Revenue Agency
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: February
5, 2013
REASONS FOR JUDGMENT
OF THE COURT BY: Evans,
Dawson, Stratas JJ.A.
DELIVERED FROM THE
BENCH BY: Evans
J.A.
DATED: February
5, 2013
APPEARANCES:
|
Joel
A. Nitikman and Jessica Fabbro
|
FOR
THE APPELLANT
|
|
Michael
Taylor
|
FOR
THE RESPONDENTS
|
SOLICITORS
OF RECORD:
|
Fraser
Milner Casgrain LLP,
Vancouver, British Columbia
|
FOR THE APPELLANT
|
|
William
F. Pentney
Deputy Attorney General of Canada
Vancouver, British Columbia
|
FOR THE RESPONDENTS
|
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