Newave – Federal Court states that allegations of procedural fairness at the audit stage can be addressed at the objection or appeal stage
After a lengthy audit, CRA concluded that the “business” of the applicant (Newave) consisted of generating fraudulent input tax credit claims. CRA proposed to deny those claims and gave Newave 30 days to respond (subsequently extended to 60 days).
Counsel demanded that all documents reviewed or relied upon by CRA be disclosed in order that it could make “fulsome” representations before any reassessments were made. CRA refused after the 60-day period, and shortly thereafter reassessed. A few days before the reassessments, Newave applied for judicial review, challenging CRA’s previous decision not to provide disclosure and additional time for submissions and, a day after the reassessments, made a further application challenging CRA’s decision to issue the reassessments. Newave also sought a stay of any collection action by CRA and of deregistration of Newave, both pending the disposition of the applications for judicial review.
After dismissing the stay applications, Little J went on to grant the Crown’s application to strike out the applications. Regarding the first application, he stated:
[T]he real goals of the applicant’s first Notice of Application were not to remedy alleged procedural fairness concerns, but instead were to halt and attempt to control CRA’s reassessment process. … In substance, the content of the pleading is an attempt to interfere with the Minister’s statutory duty to assess. …
[A]ny allegations about procedural fairness at the audit stage can be remedied at the objection or appeal stage… .
Before also allowing the motion to strike the second application, he stated:
[T]he second Notice of Application is an improper challenge to the Reassessments in the guise of a judicial review application. Any such attack on the merits of the Reassessments, or the facts and law on which they are based, must be done under the processes in the Excise Tax Act… .
Neal Armstrong. Summary of Newave Consulting Inc. v. Canada (National Revenue), 2021 FC 1203 under Federal Courts Act. s. 18.5.