Daniel
J.
Charges
The
accused
Nita
Aulakh
and
Narinder
Aulakh
in
their
personal
capacities
are
each
charged
with
four
offenses
under
the
Income
Tax
Act
relating
to
failure
to
file
signed
individual
income
tax
returns
for
the
years
1988,
1989,
1990
and
1991
inclusive.
The
accused
corporation
and
the
male
accused
in
his
capacity
as
Director
of
the
accused
corporation
are
charged
with
failure
to
file
a
completed
Corporation
Income
Tax
Return
for
the
Tax
year
1991,
all
as
formally
demanded
to
be
done
within
90
days
from
service
of
the
respective
demands
by
Revenue
Canada
pursuant
to
paragraph
231.2(l)(a)
of
the
Income
Tax
Act.
Facts:
The
two
accused
individuals
were
served
by
Revenue
Canada
with
four
demands
pursuant
to
subsection
231.2(1)
of
the
Income
Tax
Act
to
file,
within
90
days
from
service
on
April
6,
1993,
individual
returns
for
the
years
1988
to
1991
inclusive,
while
a
similar
demand
was
served
upon
the
corporate
accused
and
the
accused
Narinder
Aulakh
in
his
capacity
as
its
Director
to
file
a
corporate
income
tax
return
for
the
1991
year.
None
of
the
required
tax
returns
were
completed
and
filed
within
the
requisite
90
day
time
frame
given
for
compliance.
An
investigation
by
Revenue
Canada
was
commenced
on
October
29,
1992.
Further
to
that
investigation,
several
telephone
conversations
and
visits
either
at
the
offices
of
Revenue
Canada,
or
at
the
accuseds’
business
or
residence,
took
place
between
the
Revenue
Canada
representative
and
the
accuseds.
Revenue
Canada
asked
the
accuseds
to
complete
and
file
corporation
and
individual
income
tax
returns
that
had
not
been
completed
and
filed
over
a
number
of
years
between
1988
and
1991
inclusive.
The
demand
was
not
made
further
to
any
ongoing
investigation
of
the
accuseds,
but
merely
because
no
tax
returns
had
been
filed.
The
accuseds
had
been
notified
that
in
the
event
they
did
not
comply
with
Revenue
Canada’s
requests
to
complete
and
file
the
requested
returns,
they
would
be
served
with
a
notice
pursuant
to
paragraph
231.2(l)(a)
of
the
Income
Tax
Act.
They
were
informed
that
if
they
were
unable
to
complete
their
returns
in
a
timely
fashion
due
to
the
unavailability
of
certain
information,
they
could
file
estimated
tax
returns
and
amend
them
later
once
the
information
was
available.
They
did
not
comply
with
those
requests
in
a
timely
manner
and
on
April
6,
1993,
they
were
properly
served
with
the
formal
paragraph
231.2(l)(a)
notices
to
file
such
returns
marked
as
Exhibits
herein.
None
of
the
accuseds
complied
with
the
demands
within
the
required
time
frame.
Subsequent
to
the
expiration
of
the
demand
period,
the
individual
accuseds
filed
their
individual
income
tax
returns
for
the
years
in
question
and
taxable
income
was
assessed
for
only
one
or
two
of
those
returns.
The
corporation
has
not
yet
filed
an
income
tax
return
for
the
1991
year.
Issues:
After
the
Crown
closed
its
case,
counsel
for
the
accuseds
made
an
application
for
a
directed
verdict
of
not
guilty
on
the
basis
that
all
of
the
elements
of
the
offence
were
not
proven
in
the
Crown’s
case.
One
issue
revolved
around
whether
or
not
the
Crown
had
to
prove
as
an
essential
element
of
its
case,
that
the
demand
was
made
as
a
part
of
a
"genuine
and
serious
inquiry",
and,
if
such
an
inquiry
was
requisite,
had
it
been
proven
beyond
a
reasonable
doubt
in
this
case.
At
issue
as
well,
was
whether
the
demand
should
have
been
made
under
paragraph
231.2(a)
rather
than
subsection
150(2)
of
the
Income
Tax
Act.
Paragraph
231.2(a)
reads
as
follows:
231.2(1)
Requirement
to
provide
documents
or
information
Notwithstanding
any
other
provision
of
this
Act
[my
emphasis],
the
Minister
may
subject
to
subsection
(2)
[dealing
with
unnamed
persons,
not
applicable
in
this
instance],
for
any
purpose
related
to
the
administration
or
enforcement
of
this
Act,
by
notice,
served
personally
or
by
registered
or
certified
mail,
require
that
any
person
provide,
within
such
reasonable
time
as
is
stipulated
in
the
notice,
(a)
any
information
or
additional
information,
including
a
return
of
income
Or
a
supplementary
return;
or
(b)
any
document.
Subsection
150(2)
reads
as
follows:
150(2)
Demand
for
Returns
Whether
or
not
he
is
liable
to
pay
tax
under
this
Part
for
a
taxation
year
and
whether
or
not
a
return
has
been
filed
under
subsection
(1)
or
(3),
every
person
shall,
on
demand
from
the
Minister,
served
personally
or
by
registered
letter,
file,
within
such
reasonable
time
as
may
be
stipulated
therein,
with
the
Minister
in
prescribed
form
and
containing
prescribed
information
a
return
of
the
income
for
the
taxation
year
designated
therein.
Section
233
provides
as
follows:
233.
Information
Return.
Every
person
shall,
on
written
demand
from
the
Minister
served
personally
or
otherwise,
whether
or
not
the
person
has
filed
an
information
return
as
required
by
this
Act
or
a
regulation,
file
with
the
Minister,
within
such
reasonable
time
as
may
be
stipulated
in
the
demand,
such
information
as
is
designated
therein.
Submissions:
(a)
Accuseds’
Submissions:
In
support
of
his
application,
the
accuseds’
counsel
provided
the
Court
with
two
decisions:
Richardson
and
Sons
Ltd.
v.
M.N.R.
et
al.,
[1984]
1
S.C.R.
614,
C.T.C.
345,
84
D.T.C.
6325
and
Skalbania
Ltd.
v.
Canada,
[1989]
2
C.T.C.
183,
89
D.C.T.
5495
(B.C.
Co.
Ct.)
(referred
to
herein
as
Skalbania
#1)
which,
it
was
argued,
stood
for
the
proposition
that
the
Crown
has
to
not
only
establish
that
a
demand
was
made
pursuant
to
paragraph
231.2(l)(a)
and
that
the
demand
was
not
complied
with,
but
additionally,
that
the
demand
was
made
as
a
part
of
a
"genuine
and
serious
inquiry".
Accuseds’
counsel
also
argued
the
demand
was
not
made
under
the
correct
provision
(paragraph
221
(l)(d)
being
the
particular
and
subsection
231(3)
being
the
general
provision).
He
sought
to
apply
the
same
principle
in
Pretty
v.
Solly
(1859),
25
Beav.
606,
53
E.R.
1032
that
was
applied
by
Wilson
J.
in
Canadian
Bank
of
Commerce
v.
A.G.
(Canada),
[1962]
S.C.R.
729,
[1962]
C.T.C.
35,
39,
62
D.T.C.
1014,
1236.
As
stated
in
the
Pretty
case
at
page
583
(E.R.
1034):
The
rule
is,
that
wherever
there
is
a
particular
enactment
and
a
general
enactment
in
the
same
statute,
and
the
latter,
taken
in
its
most
comprehensive
sense,
would
overrule
the
former,
the
particular
enactment
must
be
operative,
and
the
general
enactment
must
be
taken
to
affect
only
the
other
parts
of
the
statute
to
which
it
may
properly
apply.
He
argued
that
the
CIBC
decision
was
based
upon
a
determination
the
two
aforesaid
sections
of
the
Income
Tax
Act
overlapped
and
therefore,
the
demand
was
not
made
under
the
correct
provision.
As
such,
he
submitted,
the
Crown’s
case
failed
in
the
absence
of
evidence
establishing
the
existence
of
a
"genuine
and
serious
inquiry"
required
to
be
proven
when
demand
is
made
under
paragraph
231.2(1)(a).
Counsel
also
argued
this
principle
has
been
extended
to
the
particular
sections
and
facts
in
the
present
case
by
the
Skalbania
#1
decision.
He
cited
the
following
quote
from
that
decision
at
page
185
(D.T.C.
5496):
With
respect,
I
conclude
that
the
learned
trial
judge
was
not
dealing
with
the
specific
issue
which
was
raised
before
him,
which
has
been
raised
again
on
this
appeal,
of
the
difference
of
the
two
sections.
The
Richardson
case
is
ample
authority
for
the
conclusion
that
section
231.2
is
available
to
the
Minister
to
facilitate
an
ongoing
and
serious
inquiry.
Subsection
150(2)
is
available
to
the
Minister
generally
to
demand
a
return
whether
or
not
a
tax
return
has
been
filed.
Since
the
demand
here
was
made
under
an
inapplicable
section,
the
conviction
cannot
be
sustained
and
the
conviction
is
set
aside.
(b)
Crown’s
Submissions:
The
Crown
argued
it
was
not
necessary
to
prove
a
genuine
and
serious
inquiry,
given
the
decision
in
R.
v.
Dakus
(1988)
87
A.R.
374
(Alta.
Q.B.),
and
noted
the
1986
addition
of
the
"Notwithstanding
any
other
provision
of
this
Act"
clause
to
section
231.2(1)
(effective
February
13,
1986,
through
S.C.
1986,
c.
6,
section
121
whereby
subsection
231(3)
was
replaced
by
what
is
presently
subsection
231.2(1))
after
the
Richardson
case
had
been
decided.
This
amendment
was
not
considered
in
Skalbania
#1
and
the
Crown
submitted
that
obviated
an
argument
regarding
overlap
of
the
two
sections
dealing
with
demands
for
returns.
Even
if
it
was
necessary
to
prove
a
genuine
and
serious
inquiry,
the
Crown
submitted
that
had
been
done.
Findings
of
Law:
Elements
of
the
Offence:
(a)
Overlapping
Offenses:
The
1986
amendment
adding
the
"Notwithstanding
any
other
provision
of
this
Act"
clause
requires
subsection
231.2(1)
to
be
interpreted
on
a
’stand
alone
basis’.
The
word
"notwithstanding"
is
defined
in
Webster’s
New
Twentieth
Century
Dictionary—Unabridged,
2nd
Edition
as
"in
spite
of;
without
hindrance
or
obstruction
from;
despite".
I
accept
that
definition.
It
is,
therefore,
irrelevant
that
other
more
specific
sections
of
the
Income
Tax
Act
(most
particularly
subsection
150(2))
overlap
with
paragraph
231.2(l)(a)
of
the
Income
Tax
Act.
The
decisions
of
Richardson
and
Skalbania
#1
cannot
therefore,
be
relied
upon
as
a
legally
current
statement
of
the
elements
required
to
be
proven
by
the
Crown
with
respect
to
an
offence
under
paragraph
231.2(l)(a)
as
far
as
they
relate
to
the
issue
of
overlapping
sections
of
the
Income
Tax
Act.
If
Revenue
Canada
determines
it
should
proceed
under
paragraph
231.2(l)(a)
rather
than
subsection
150(2),
that
is
their
prerogative.
(b)
"Genuine
and
Serious
Inquiry":
The
Richardson
case
is
quite
distinguishable
from
the
instant
case
and
that
of
Dakus
on
its
facts.
In
coming
to
her
conclusions
with
respect
to
the
elements
of
an
offence
under
subsection
231(3)
{now
231.2(1)},
Wilson
J.
in
the
Richardson
case,
relied
on
the
CIBC
decision.
In
both
cases,
demands
were
made
upon
persons
whose
tax
liability
was
not
in
issue,
for
information
respecting
third
parties
whom
Revenue
Canada
was
investigating.
In
the
instant
case,
demands
were
made
upon
the
same
persons
and
corporation
whose
tax
liability
was
under
investigation.
The
Dakus
case
had
facts
on
all
fours
with
the
facts
of
the
instant
case.
The
accused
therein
was
charged
with
four
offenses
under
subsection
231(3)
(as
it
then
was)
for
failing
to
comply
with
a
Revenue
Canada
demand
to
complete
and
file
an
Individual
Income
Tax
Return
within
the
specified
period.
The
Crown
placed
into
evidence
the
Affidavits
of
a
Revenue
Canada
officer
which
established
service
of
the
demands
and
non-compliance
with
the
said
demands.
The
Crown
closed
its
case
and
the
accused
successfully
applied
for
a
directed
verdict
of
not
guilty
in
front
of
the
Provincial
Court
trial
Judge
on
the
basis
an
essential
element
of
the
offence
was
not
proven:
that
being
the
request
for
information
and
returns
must
be
done
further
to
a
genuine
and
serious
inquiry
into
the
accuseds’
tax
liability
further
to
the
decision
in
Richardson.
In
the
Dakus
case,
Girgulis
J.
discussed
the
case
of
R.
v.
Schacher,
[1987]
1
C.T.C.
75,
86
D.T.C.
6580
(Alta.
Prov.
Ct.),
in
finding
no
necessity
for
the
Crown
to
prove
as
an
element
of
the
offence
the
’genuine
and
serious
inquiry
into
the
tax
liability
of
some
person
or
persons’.
At
page
379
and
380
he
stated:
If
by
this,
the
learned
trial
judge
meant
to
say
that
the
Crown
has
the
onus
in
proving
as
an
essential
element
of
its
case
that
the
inquiry
is
a
serious
and
genuine
one
and
that
is
an
additional
element
to
be
proved
in
the
Crown’s
case
beyond
proof
of
the
element
as
described
in
the
ratio
decidendi,
namely,
to
obtain
information
relevant
to
the
tax
liability
of
some
specific
person
or
persons,
then
I
do
not
agree
with
his
analysis.
But
I
do
not
disagree
with
his
application
of
the
law
to
the
case
before
him,
resulting
in
the
dismissal.
In
Schacher,
the
learned
trial
judge
was
satisfied
that
the
requirement
or
demand
letter
was
not
related
to
a
genuine
or
serious
inquiry
by
the
Minister
of
National
Revenue,
but
was
in
fact,
a
result
of
requests
and
inquiries
from
the
Royal
Canadian
Mounted
Police.
In
short,
the
evidence
established
to
the
satisfaction
of
Ketchum,
P.C.J.,
that
the
requirement
was
not
for
a
purpose
related
to
the
administration
or
enforcement
of
the
Income
Tax
Act.
If
the
tax
liability
of
an
accused
person
is
not
the
subject
of
a
genuine
and
serious
inquiry
by
the
Minister,
then
it
cannot
be
said
that
the
Minister
is
acting
for
a
purpose
relating
to
the
administration
and
enforcement
of
the
Act.
But
that
does
not
mean
to
say
that
the
Crown
must
establish
as
an
essential
element
of
its
case
affirmative
evidence
of
genuine
and
serious
inquiry
regarding
the
information
requested
relating
to
the
tax
liability
of
a
specific
person
[my
emphasis].
If
evidence
raises
an
issue
as
to
whether
or
not
the
inquiry
is
a
genuine
or
serious
one,
then
the
Crown
must
satisfy
the
trier
of
fact,
beyond
a
reasonable
doubt,
that
the
purpose
of
the
requirement
or
demand
is
not
a
subterfuge
or
a
frivolous
one,
but
is
a
proper
demand
for
information
relating
to
tax
liability
of
the
accused,
that
is,
it
is
a
genuine
and
serious
one.
Dakus
was
cited
with
approval
in
the
decision
of
Skalbania
v.
Canada,
[1991]
C.T.C.
160
(B.C.Co.Ct.)
(herein
referred
to
as
Skalbania
#2).
In
that
case,
Catliff
J.
noted
at
page
161:
On
the
facts,
Richardson
would
appear
to
have
marginal
relevance
to
the
case
of
a
demand
made
against
a
specific
taxpayer
in
respect
of
his
unfiled
tax
returns.
In
the
Skalbania
#2
decision,
the
Crown
(relying
on
Richardson)
led
evidence
establishing
the
demand
made
was
further
to
a
genuine
and
serious
inquiry
into
Skalbania’s
tax
liability.
Commenting
on
the
Crown’s
argument
that
although
they
had
led
such
evidence,
it
was
not
a
requisite
element
of
the
offence,
Catliff
J.
quoted
(at
page
162)
with
approval
the
passage
from
the
Dakus
decision
at
page
378:
Surely,
it
is
obvious
that
a
request
for
a
tax
return
is
a
request
for
information
concerning
income
and
deductions
and
relates
directly
to
the
tax
liability
of
the
recipient
of
the
demand.
While
Cartwright
J.
(in
Canadian
Bank
of
Commerce
v.
A-G
(Canada),
[1962]
S.C.R.
729,
62
D.T.C.
1236)
went
on
to
refer
to
a
genuine
and
serious
inquiry,
I
understand
this
to
mean
that
the
request
cannot
be
used
as
a
subterfuge
for
some
other
purpose.
That
concern
may
be
more
readily
apparent
when
the
person
asked
to
provide
the
information
is
not
the
person
whose
tax
liability
is
of
concern
or
where
the
information
requested
is
not
directly
related
to
tax
liability;
that
is,
when
it
is
not
apparent
what
the
purpose
of
the
requirement
or
demand
is.
Catliff
J.
went
on
to
say
at
page
162:
There
is
no
suggestion
here
that
the
demand
to
file
tax
returns
was
a
subterfuge
for
some
other
purpose.
The
demands
which
were
filed
as
exhibits
to
the
affidavits
of
service
at
trial
are
introduced
by
the
words:
For
purposes
related
to
the
administration
of
the
Income
Tax
Act,
pursuant
to
paragraph
231.2(l)(a)
of
the
said
Act,
I
hereby
require
...
The
question
of
whether
the
Crown
is
obliged
to
introduce
such
evidence
to
prove
an
offence
related
to
paragraph
231.2(l)(a)
is
not
therefore
one
I
need
decide.
If
I
were
required
to
decide
it,
I
would
be
inclined
to
agree
with
what
Girgulis
J.
in
Dakus
says
is
obvious.
I
can
find
no
distinguishing
features
of
the
instant
case
which
would
take
it
out
of
the
purview
of
the
Dakus
case
which
is
binding
authority
in
the
Province
of
Alberta.
There
is
no
evidence
in
the
instant
case
to
suggest
Revenue
Canada’s
demands
were
not
made
further
to
serious
and
genuine
inquiries
and
there
was
no
subterfuge
involved
in
the
demands
made.
The
purpose
of
the
demands
was
clearly
stated
on
the
Exhibits
filed,
just
as
it
was
in
the
Skalbania
#2
case.
The
Crown
does
not
have
to
prove,
in
relation
to
those
demands
made
on
the
accuseds
to
complete
and
file
the
appropriate
income
tax
returns,
the
existence
of
a
"genuine
and
serious
inquiry".
The
onus
to
prove
the
"genuine
and
serious
inquiry"
only
arises
where
the
evidence
suggests
an
improper
motive,
a
lack
of
seriousness
relating
to
a
particular
individual,
or,
in
the
proper
case,
where
the
Crown
is
engaged
in
a
"fishing
expedition"
for
information
regarding
a
third
party
who
is
being
investigated.
I
find
the
Crown
has
proven
service
of
the
demands
made
pursuant
to
s.
231.2(1)(a)
of
the
Income
Tax
Act
and
proof
of
non-compliance
of
those
demands.
As
confirmed
by
Dukas,
those
are
the
only
elements
of
the
offence
the
Crown
is
required
to
prove.
Even
were
the
Crown
obliged
to
prove
the
existence
of
a
"genuine
and
serious
inquiry"
in
the
instant
case,
I
find
it
has
done
so.
An
inquiry
into
the
tax
liability
of
each
accused
person
and
corporation
was
commenced
in
October
of
1992.
Several
meetings
and
telephone
calls
were
exchanged
between
the
Revenue
Canada
officer
and
the
accused
persons
in
their
individual
capacity
and
with
the
male
accused,
in
his
representative
capacity
as
Director
of
the
corporate
accused,
all
between
October
1992
and
April
1993,
relating
to
their
respective
tax
liabilities
for
the
years
in
question.
Notwithstanding
they
were
informed
a
paragraph
231.2(l)(a)
demand
would
be
made
if
they
did
not
voluntarily
comply
with
the
requests
for
tax
return
completions
and
filings,
and
notwithstanding
they
were
given
the
opportunity
to
file
returns
which
could
later
be
amended
as
a
consequence
of
subsequently
located
information,
each
accused
failed
to
complete
and
file
the
requisite
returns
as
requested.
As
a
result
of
the
inquiries
and
the
lack
of
proper
response
from
all
accused,
the
paragraph
231.2(l)(a)
demands
were
made.
The
90
day
time
limit
to
file
such
returns,
in
light
of
the
prior
six
months
discussions
about
their
filing
that
had
already
transpired,
was
a
reasonable
time
to
be
stipulated
for
response.
The
Crown’s
evidence
establishes
this
inquiry
was
genuine
and
particularized
against
each
of
these
accuseds.
It
was
ongoing
over
a
period
of
six
months.
Much
dialogue
between
the
parties
ensued.
Revenue
Canada
was
serious
about
its
inquiry.
It
did
not
abandon
it
due
to
lack
of
response.
The
accuseds’
continued
reticence
and
failure
to
comply
with
lawful
requests
to
complete
and
file
the
required
tax
returns,
coupled
with
notice
compliance
would
be
required
under
paragraph
231.2(l)(a)
of
the
Income
Tax
Act
if
they
failed
to
act
appropriately,
gave
Revenue
Canada
reasonable
cause
to
make
and
serve
the
formal
demands
it
did
under
that
section.
Following
the
Dakus
decision,
in
the
absence
of
evidence
raising
the
issue
of
improper
purpose
for
the
request
for
information,
the
affidavit
evidence
exhibited
in
this
trial
is
prima
facie
proof
of
the
charges.
Conclusion
The
accuseds’
application
for
a
directed
verdict
of
not
guilty
is
denied.
Application
denied.