Jim’s Motor Repairs (Calgary) Ltd. v. Her Majesty the Queen, [1996] 3 CTC 261

Dubé J.: — The plaintiff appeals pursuant to the Excise Tax Act (Canada) R.S.C. c. E-13 (the “Act”) from a Notice of Decision dated April 24, 1992 of the Minister of National Revenue (the “Minister”) and a Decision from the Canadian International Trade Tribunal rendered on February 28, 1994.

The plaintiff, an Alberta Company located in Calgary, is a dealer of lawn mowers and lawn mower parts. According to its statement of claim it made an application for a federal sales tax inventory rebate in the sum of $19,603.35 pursuant to Section 120 of the Act.

It alleges that the said application was completed on the prescribed form, together with the required schedules, on February 18, 1991 and mailed to Revenue Canada on that same date. The application was disallowed on the ground that it was filed beyond the statutorily prescribed time limit. Subsection 120 (8) of the Act prescribes that no rebate shall be paid under this section unless the application therefor is filed with the Minister before 1992.

The Canadian International Trade Tribunal denied the plaintiff’s appeal as it found that the plaintiff did not file its application within the statutorily prescribed time limit. This is a trial de novo and it is common ground that the sole issue to be resolved is whether or not the plaintiff filed his application with the Minister before the year 1992.

The plaintiff called two witnesses: Harvey Riczu, the owner and manager of Jim’s Motor Repairs (Calgary) Ltd. and his accountant Amir Moosa. Harvey Riczu, age 38, is a mechanic who started in the family business at the age of 15 with a grade 9 education. His evidence is to the effect that his accountant came to his place of business on February 17, 1991 after the end of the company’s financial year which terminates on January 31. The accountant conducted an audit, made an inventory and Harvey Riczu gave him the dealer’s copy of the Statement of Account (Exhibit P-2). The accountant took the Application for Federal Sales Tax Inventory Rebate with him and came back the next day with the forms filled out. Harvey Riczu duly signed both the original application and the working copy in the presence of the accountant. He then placed the original application into a self-addressed envelope accompanying the application, sealed it and mailed it himself.

Under severe examination and cross-examination he stated that he remembers clearly having placed the envelope on his desk with other items to be mailed. He himself, as he does regularly in late afternoon, walked to the post office box and dropped the envelope into it. The accountant took the working copy with him to his office. Harvey Riczu said that he was not particularly worried that the cheque was not forthcoming from Revenue Canada as he expected that his GST returns would be deducted from it On the following year or in January, 1992 when the accountant returned for his yearly visit he asked Harvey Riczu if he had received the tax rebate and upon his negative answer the accountant started to enquire from Revenue Canada.

Amir Moosa is a certified management accountant who has been working for the city of Calgary since 1981 and does some of private accounting on his own spare time. He testified that he normally visits the plaintiff’s place of business once a year unless he is called over for special problems. He remembers clearly that he asked Harvey Riczu to prepare his inventory for the purposes of applying for the federal sales tax inventory rebate. On February 17, 1991, which was a Sunday, he went to the plaintiff’s place of business where he picked up the Inventory Statement of Account. He came back the next day with the original copy and working copy of the Application for Federal Sales Tax Inventory Rebate (Exhibit P-1) and had both documents signed in his presence by Harvey Riczu.

He recognized his own handwriting on the working copy pointing out to this particular phrase “prepared by Amir Moosa CMA tel 285-1310 Feb 18, 1991”. He testified that he wrote those words on the application “to improve the chances of recovery” of his client, implying that he expected Revenue Canada to pay more attention to an application by a chartered accountant. He had Harvey Riczu sign both the original and the copy, as it is his practice to do so. He actually saw Harvey Riczu affix his signature to both documents. He also saw him put it in the self- addressed envelope, seal it, and place it on his desk along with other documents.

When Amir Moosa returned the following year he was surprised to hear that the plaintiff had not yet received his tax rebate. Harvey Riczu told him that he thought it would be an offset of the GST payable by him against the FST rebate. Thereupon Amir Moosa contacted Revenue Canada in Calgary and more particularly Lan Blank. In cross-examination he recognized his signature on a letter sent by him to Lan Blank dated January 31, 1992 referring to a previous telephone conversation and asking acknowledgment of a copy of a FST application mailed on February 18, 1991 in the amount of $19,603.35 (Exhibit D-l).

The Crown called one witness, Rhéal Plamondon, an appeals officer at Revenue Canada, Calgary. He provided a full background of the file in question. The original application of the plaintiff was never received at Revenue Canada. The document does not appear in the computer nor in the manual log. The document was not to be found in Ottawa. The only document received was the working copy dated February 18, 1991 mailed by Amir Moosa and received on February 3, 1992. He also filed a document to the effect that the plaintiff was generally late in filing its GST returns (Exhibit D-7). Another document entitled “Summary of Decision” (Exhibit D-10) provides an analysis of the issues involved and his recommendation that “the objection be disallowed and the determination be confirmed”. He" also penned in the following remark at the end of the document “the goods were FST paid — double taxation on the goods — negative impact on Company’s cash flow”.

It is common ground that an application under subsection 120 (8) of the Act is considered to have been filed by: the taxpayer on the date that it was mailed and that the date of postmark is» evidence of the date of mailing. However, in the instant case, there is no postmark in evidence as the original application was either never mailed or never received. Thus the only evidence available consists in the testimonies of Harvey Riczu and his accountant, Amir Moosa. Basically its a question of credibility.

These two testimonies are clearly to the effect that the original application was prepared and placed in the self-addressed envelope on February 18, 1991. And, according to Harvey Riczu, the envelope was mailed by him that same afternoon. It is true that there are some minor discrepancies between their evidence in this Court and their evidence before the Canadian International Trade Tribunal. Nevertheless, they both generally said the same thing.

I find it very difficult to believe that a chartered accountant, permanently employed by the City of Calgary, would perjure himself merely to: come to the assistance of a minor part-time client. It is even less plausible that Harvey Riczu would have neglected to mail the application after having called upon the services of his chartered accountant to prepare it. Moreover, he had the rather substantial sum of $19,603.35 to gain by mailing the application and double taxation to face by not mailing it.

As to the evidence of the appeals officer, Rhéal Plamondon, it was competent and highly believable, but it merely shows that Revenue Canada never received the original application. His evidence is also to the effect that the plaintiff paid Revenue Canada all his GST returns for that year and that the net result of the missing application is double taxation against the plaintiff.

Of course I am not granting equitable relief in this matter but I am analyzing the credibility of the two material witnesses in light of all the circumstances, including the obvious, namely that one would not, willingly or negligently, expose himself to double taxation by failing to drop a letter in a mail box.

Consequently, judgment is granted in favour of the plaintiff and the Notice of Decision is referred back to the Minister for reconsideration on the basis that the plaintiffs application for a federal sales tax inventory rebate was filed with the Minister before 1992.

Costs to the plaintiff.

Appeal allowed.