Express Gold – Federal Court suggests that a taxpayer can bring a mandamus motion if CRA drags out an audit of GST/HST refund claims for ulterior or strategic reasons

ETA s. 229(1) requires that a net tax refund claimed in a return is to be paid “with all due dispatch after the return is filed.” Pentney J found that this provision required that the Minister proceed “with all due dispatch” in determining whether the refund should be paid (i.e., if CRA so chooses, it can apply an “audit first with all due dispatch, then pay” system, rather than a “pay right away, audit later” system, as argued by the registrant.)

Here, the registrant claimed a net refund claim of $9.13 million in its August 2018 return, and then, on December 6, 2018 - which was only two months after having been notified by CRA that that return would be audited and that, in the meantime, no refund would be paid - made an application for a mandamus order to compel the Minister to pay the net refund. This was found not to have been a reasonable time in which to require an audit to be performed.

Pentney J stated:

I have concluded that the Applicant brought its application before a reasonable time for the performance of the [“with all due dispatch”] duty had elapsed, and so I am dismissing the application. In doing so, it is worth underlining that if the Applicant has or obtains evidence that the CRA is acting for an ulterior purpose, or that the audit is being continuously expanded in bad faith, or otherwise not proceeding in a reasonable time-frame, it can bring another motion.

Neal Armstrong. Summary of Express Gold Refining Ltd. v. Canada (National Revenue), 2020 FC 614 under ETA s. 229(1).