Autonun – Court of Quebec rejects an ARQ request to change the sales tax provision on which its assessment rested

Three weeks before trial, the ARQ auditor concluded that Autonun should have been assessed pursuant to QSTA s. 318 (similar to ETA s. 182, regarding amounts forfeited to a taxable supplier being deemed to be inclusive of tax), rather than pursuant to QSTA s. 92 (similar to ETA s. 168(9), regarding deposits not being taxable consideration until applied as consideration) on which the assessment of Autonun had been based. One week later, the ARQ sought leave of Autonun to amend its pleading to provide that the assessment rested on s. 318 rather than s. 92, which Autonun refused.

Before rejecting the ARQ’s request to make such amendment, Bergeron JCQ first noted that TAA s. 95.2 (similar to ITA s. 152(9) and ETA s. 298(6.1)) on its face gave the ARQ an unfettered right to advance an alternative basis for its assessment. However, he found that where the amendment request was made in the context of a Quebec court proceeding, it was required to satisfy the Quebec Code of Civil Procedure, including section 206 thereof. Section 206 provides that there can be such an amendment “provided doing so does not delay the proceeding and is not contrary to the interests of justice” but that “the amendment of a pleading must not result in an entirely new application having no connection with the original one.”

Bergeron JCQ found that none of the quoted tests were satisfied: there would be significant delays including fresh discovery of the ARQ; the ARQ had failed to explain to Autonun why it had changed the assessment’s basis (so that Autonun would be required to “navigate blindly, in thick fog”; and (regarding the third test) there was indeed a new application given that the auditor had affirmed “that the foundations underlying QSTA sections 92 and 318 are conceptually different and lead to different results”.

Neal Armstrong. Summary of Autonum, Solutions de financement aux consommateurs inc. v. Agence du revenu du Québec, 2024 QCCQ 1195 under ITA s. 152(9).