Citation: 2012TCC274
Date: 20120725
Docket: 2011-3631(GST)I
BETWEEN:
JOSHUA SCOTT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1]
The issue in this
appeal is whether the Appellant is entitled to a rebate of any portion of the
GST paid by the Appellant on the purchase of an automobile in 2010.
[2]
On May 21, 2010 the Appellant
purchased a used Toyota Corolla from Ken Shaw Lexus Toyota. Prior to purchasing
the vehicle the Appellant identified a problem with the air-conditioning
system. The Appellant was assured that there was nothing wrong with the vehicle.
[3]
After the Appellant
took delivery of the vehicle he noticed that the problem persisted. He took the
vehicle to the dealership to have it inspected and they discovered that the air-conditioning
system was leaking. The dealership told the Appellant that he could exchange
the car for another comparable vehicle, if one could be found. The dealership
attempted to locate a similar vehicle to the one purchased by the Appellant but
was unable to do so. Since a similar vehicle could not be located, the
Appellant and the dealership entered into an agreement in August under which
the dealership purchased the vehicle from the Appellant.
[4]
When the vehicle was
sold to the Appellant on May 21, 2010, the purchase price (excluding taxes) was
$11,061.94. The Appellant paid provincial sales tax of $884.96 and GST of
$553.10. Because the vehicle had been driven for approximately 4,000 km during
the time that the Appellant had the vehicle, the dealership paid the Appellant
$9,700 for the vehicle on August 3, 2010. No GST was charged or collected on
the sale of the vehicle by the Appellant to Ken Shaw Lexus Toyota on August 3,
2010.
[5]
The Appellant applied
to both the provincial government for a rebate of the provincial sales tax paid
by him on the purchase of the vehicle on May 21, 2010 and to the Canada Revenue
Agency for a rebate of the GST paid by him on the purchase of the vehicle on
May 21, 2010. While the Appellant has received a rebate of a portion of the
provincial sales tax paid by him on the purchase of the vehicle, no rebate of
the GST was paid to the Appellant.
[6]
There were two sections
of the Excise Tax Act that were referred to during argument - sections
261 and 232. Section 261 of the Excise Tax Act provides as follows:
261.
(1) Where a person has paid an amount
(a)
as or on account of, or
(b)
that was taken into account as,
tax,
net tax, penalty, interest or other obligation under this Part in circumstances
where the amount was not payable or remittable by the person, whether the
amount was paid by mistake or otherwise, the Minister shall, subject to
subsections (2) and (3), pay a rebate of that amount to the person.
[7]
In this case there were
two bills of sale. The first bill of sale shows the purchase, on May 21, 2010,
of the used Toyota Corolla by the Appellant from Ken Shaw Lexus Toyota. The second document is a wholesale bill of sale dated August 3, 2010 which shows a
sale of the vehicle from the Appellant to Ken Shaw Lexus Toyota.
[8]
In this case there is
no basis upon which section 261 of the Excise Tax Act could apply in
relation to the tax paid by the Appellant to Ken Shaw Lexus Toyota on May 21,
2010. Clearly the sale of the vehicle to the Appellant on that date was a
taxable supply of a vehicle to the Appellant and tax was payable under the Excise
Tax Act in relation to this transaction.
[9]
The other section that
was discussed was section 232 of the Excise Tax Act. This section
provides as follows:
232.
(1) Where a particular person has charged to, or collected from, another person
an amount as or on account of tax under Division II in excess of the tax under
that Division that was collectible by the particular person from the other
person, the particular person may, within two years after the day the amount
was so charged or collected,
(a)
where the excess amount was charged but not collected, adjust the amount of tax
charged; and
(b)
where the excess amount was collected, refund or credit the excess amount to
that other person.
(2)
Where a particular person has charged to, or collected from, another person tax
under Division II calculated on the consideration or a part thereof for a
supply and, for any reason, the consideration or part is subsequently reduced,
the particular person may, in or within four years after the end of the
reporting period of the particular person in which the consideration was so
reduced,
(a)
where tax calculated on the consideration or part was charged but not
collected, adjust the amount of tax charged by subtracting the portion of the
tax that was calculated on the amount by which the consideration or part was so
reduced; and
(b)
where the tax calculated on the consideration or part was collected, refund or
credit to that other person the portion of the tax that was calculated on the
amount by which the consideration or part was so reduced.
[10]
In Elguindy v. The
Queen, [2006] TCC 107, [2006] G.S.T.C. 18, Justice Bowie described
section 232 of the Excise Tax Act as follows:
8 Section
232* of the Act makes provision for a vendor to refund tax paid to a
customer in circumstances where the sales contract is later mutually rescinded,
or is adjusted to reduce the price. That section has no application in the
present case, however, as the contract has been neither rescinded nor amended.
(*
denotes a footnote reference that has not been included)
[11]
In this case the
original contract between Ken Shaw Lexus Toyota and the Appellant was not
rescinded nor was there any adjustment made to the purchase price of the
vehicle under this transaction. The parties treated the transactions as two
separate sales – one on May 21, 2010 and the second on August 3, 2010.
Therefore section 232 of the Excise Tax Act does not apply in this
situation. In any event even if this section were to apply, the tax would be
refunded by Ken Shaw Lexus Toyota to the Appellant and not rebated by the Respondent
to the Appellant.
[12]
There is no basis upon
which the Appellant can claim a rebate from the Respondent for any portion of
the GST paid by the Appellant to Ken Shaw Lexus Toyota on the purchase of the
vehicle on May 21, 2010.
[13]
As a result the appeal
of the Appellant from the denial of the rebate claimed by the Appellant under
the Excise Tax Act for GST paid by the Appellant to Ken Shaw Lexus Toyota in relation to the purchase of an automobile on May 21, 2010 is dismissed, without
costs.
Signed at Ottawa, Canada, this 25th day of July, 2012.
“Wyman W. Webb”
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