Citation: 2012 TCC 9
Date: 20120215
Docket: 2011-307(GST)APP
BETWEEN:
LEAH DIOME,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Angers J.
[1]
A notice of assessment
pursuant to the Canadian Excise Tax Act (ETA) was sent to the applicant
on or about December 16, 2009. On April 8, 2010, the applicant was sent an
official demand for payment of the tax debt. On or about May 3, 2010 the
applicant retained legal counsel, and on May 14, 2010 an application to extend
the time for filing an objection to the notice of assessment was made to the
Minister of National Revenue (the Minister). The request was refused on
January 6, 2011. The applicant now seeks an order from this Court that
the application be granted and that the request for an extension of time be deemed
a valid request. The application herein is dated January 27, 2011.
[2]
An application for such
an order is granted if the conditions set out in subsection 304(5) of the ETA
are met. That subsection reads as follows:
(5) When application to be granted – No application shall be
granted under this section unless
(a) the application was made under subsection 303(1)
within one year after the expiration of the time otherwise limited by this Part
for objecting or making a request under subsection 274(6), as the case may
be; and
(b) the person demonstrates that
(i) within the time otherwise limited by
this Act for objecting,
(A) the person was unable to act or to give a mandate to act in the
person’s name, or
(B) the person had a bona fide intention to object to the
assessment or make the request,
(ii) given the reasons set out in the application and the
circumstances of the case, it would be just and equitable to grant the
application, and
(iii) the application was made under subsection 303(1) as soon
as circumstances permitted it to be made.
[3]
The applicant is a
member of the Mohawk Nation and a status Indian for the purposes of the Indian
Act. She resides on the Kahnawake Indian Reserve where she carries on a
business which consists of a convenience store and a gas station. The applicant
has been a registrant under the ETA since 2004-2005, and the permit to
operate the business is in her name.
[4]
In October 2008,
Jeannot Vachon, an auditor with Revenu Québec was given a mandate to audit the
applicant’s business with respect to provincial sales tax (PST) and goods and
services tax (GST) remittances going back to 2007 and including 2008. At that
time, the applicant was under an obligation to file quarterly reports. None was
filed for the gas station for 2007 and only one had been filed in 2006. The
auditor contacted the applicant to request the accounting documents relating to
the business and sent her a letter requesting them. He did not receive a reply,
but the applicant requested, in December 2008, an extension of time to mid‑January
2009 to comply. The documents requested were never produced.
[5]
In May of 2009, the
auditor sent the applicant an official requirement to provide documents, but
did not receive anything. In October 2009, he prepared an estimated assessment
and sent it by certified mail to the applicant at the same address as that which
was on file; that address has been confirmed by the applicant and has not
changed over the years. Again, he did not hear from the applicant. The applicant
is still registered under the ETA and still does not file her quarterly
reports.
[6]
A notice of assessment
was issued to the applicant on December 16, 2009. Daniel Gagnon head of the
mailing department, fully explained the process followed by Revenu Québec in
sending out notices of assessment and any other communication. I do not intend
to go through all the details of that process. Suffice it to say that I am
satisfied that the notice of assessment in this particular case was mailed, and
therefore sent to the applicant, on the date of the assessment.
[7]
In March 2010, the
applicant’s file was transferred to the collection section of Revenu Québec and
on March 10, 2010 a letter was sent to the applicant requesting payment. Revenu
Québec did not hear from the applicant. On April 8, 2010, garnishee orders were
issued to two third parties in order to collect from them any monies they may have
owed the applicant. A lawyer acting for the applicant eventually contacted
Revenu Québec on April 29, 2010 and on May 10, 2010 to request information
pertaining to the garnishee orders issued to the third parties and a statement
of account. These documents were sent to the lawyer along with a copy of the
notice of assessment.
[8]
The applicant’s mother
is in charge of the day-to-day operation of the business. Whenever the
applicant receives mail that has to do with the business, she hands it over to
her mother. She cannot fully remember if she became aware of this matter as she
says she was going through some rough times in the fall of 2010. She did give
her mother some papers. She recalls having been a registrant since 2004 or
2005. She filed an application to be registered and says she must have seen the
application when it was presented to her, but she does not know when that may
have been. She recalls speaking with the auditor assigned to her case and having
gone to his office, but does not recall any discussions about a GST assessment.
[9]
Her address and that of
the business have remained the same since 2008. In December of 2009, a friend
of hers would pick up her mail, open it and stack it, after which the
applicant gets to see it. She does not know if she received the notice of
assessment but admits that she is cognizant of the fact that sometimes letters
from Revenu Québec are sent to her. She does not recall having received the
estimated assessment. She testified that she did file GST returns and that she
does receive the forms for remittances, but does not handle the paperwork for
the gas station. She does not know the numbers for the business, nor is she
aware of the third party garnishee orders.
[10]
As said earlier, the
applicant’s mother operates the business on a day-to-day basis. The applicant
has the licence that allows them to buy the gas for the station. All mail from
the government goes to the applicant and her mother gets it from the applicant.
[11]
The applicant’s mother
acknowledges having received during the winter and spring of 2010, what she
calls "government affairs," some of which were in French. She knows
that her daughter got notices, but since they do not pay taxes on the reserve and
have never had to file anything with anybody, receiving all these documents never
disturbed her. She knew, though, that others on the reserve were also getting
notifications so she retained a lawyer. That is when she joined, in May 2010, a
group that had a court case in progress.
[12]
According to the
applicant’s mother, her daughter has chosen to file her GST returns annually. The
mother acknowledged that she had filed GST returns, but said she had done so under
protest. She admits that she does not charge tax on gas even to non-Indians.
Her position is that no one on the reserve deals with tax as Mohawks do not pay
any. She had serious health problems in 2010 but was able to continue managing
the business.
[13]
The group that the
applicant's mother says her daughter joined after consulting with a lawyer in
the spring of 2010 was Jack W. Leclaire et al. In Jack W. Leclaire et
al v. The Attorney General of Quebec et al., a judgment had been issued by
the Quebec Superior Court on June 17, 1994 as a result of an interlocutory application
made by the aforesaid group. There were eleven applicants, all with Indian
status and operating gasoline retail sales outlets on the Kahnawake and Kanesatake
reserves. The applicants each held a registration certificate under the Québec
Sales Tax Act (QSTA). The QSTA requires every person with
such a certificate to collect from non-Indian consumers and to remit to the Quebec
Minister of Revenue (Quebec Minister) the PST on fuel. Having failed to comply
with these requirements, the applicants were assessed and the province required
a guarantee with respect to the amounts they each owed. The 1994 judgment was
in response to the interlocutory application which was made in order to halt
the collection measures taken by the Quebec Minister.
[14]
The applicants argued
that their ancestral rights, which are protected by the Canadian and Quebec charters of rights, exempted them from liability
under the Quebec Fuel Tax Act, Part IX of the ETA and the Quebec Retail Sales Tax Act.
[15]
The Superior Court
ordered a stay of all the Quebec Minister's enforcement measures but it was
done on the condition that the applicants fulfil their duty to collect and
remit the tax imposed on non-Indian fuel consumers. The condition reads as
follows:
Ordonne aux requérants de percevoir et de remettre au ministre du
Revenu les taxes imposées en vertu de la Loi concernant l'impôt sur la vente
en détail, de la Loi sur la taxe de vente du Québec et de la Loi
sur la taxe d'accise aux consommateurs non-Indiens qui se procurent du
carburant à leur station-service et ce, dès le moment où ils recommenceront à
exploiter leur commerce de vente au détail de carburant. Des rapports mensuels
accompagnés des remises des montants de taxe perçus devront être remis au
ministre. Le premier rapport ainsi que les montants de taxe perçus devront être
remis au ministre du Revenu le 1er août 1994 et à tous les premiers
jours de chaque mois par la suite jusqu'à ce qu'un jugement au fond soit
prononcé.
[16]
On May 25, 2010, the
applicant, Leah Diome, moved the Quebec Superior Court for a declaratory
judgment, for the suspension of administrative measures and for the joining of
her motion with the matter of Jack W. Leclaire et al. for hearing. The
evidence does not reveal the outcome of the motion but Exhibit A-3, dated July
7, 2010, indicates that the Quebec Superior Court issued a directive to all
parties stating that the management of the two cases was being given to one
judge, who would hear both cases together.
[17]
The applicant's first
argument relates to an obligation on the Minister to allow the extension of
time for the applicant to file an objection to the assessment by virtue of the
fact that the applicant is an Indian. The applicant relies on the Supreme Court
of Canada decision in Haida Nation v. British Columbia (Minister of
Forests), [2004] 3 S.C.R. 511, wherein that court established a general
framework for the Crown's duty to consult and accommodate before aboriginal
title or rights claims are decided. It is called the honour of the Crown. As
soon as the Crown has knowledge of the potential existence of an aboriginal
right and as soon as it contemplates conduct that might adversely affect that
right, the Crown should honour its duty to consult.
[18]
The content and scope
of this duty vary according to the circumstances. In Delgamuukw v. British
Columbia, [1997] 3 S.C.R. 1010, the Supreme Court of Canada wrote at
paragraph 168:
. . . The nature and scope of the duty of consultation will vary with
the circumstances. In occasional cases, when the breach is less serious or
relatively minor, it will be no more than a duty to discuss important decisions
that will be taken with respect to lands held pursuant to aboriginal title.
Of course, even in these rare cases when the minimum acceptable standard is
consultation, this consultation must be in good faith, and with the
intention of substantially addressing the concerns of the aboriginal peoples
whose lands are at issue. In most cases, it will be significantly deeper
than mere consultation. Some cases may even require the full consent of an
aboriginal nation, particularly when provinces enact hunting and fishing
regulations in relation to aboriginal lands.
[Emphasis
added.]
[19]
In my opinion, the applicant's argument that her obligation
to collect and remit GST under the ETA violates her aboriginal right to not
be subject to any taxation has to be one of the less serious violations if indeed
there is any violation of her aboriginal right at all. The ETA only
requires a registrant to collect GST and to remit the amount thereof, which the
registrant holds in trust. Other than the fact that it entails somewhat of an administrative
burden, the collection and remittance of the GST does not infringe upon or
affect any aboriginal rights. This is not a case where actual tax is levied on
an individual with Indian status.
[20]
In R. v. Adams, [1996]
3 S.C.R. 101, at paragraph 29, the Supreme Court of Canada reiterated its prior
position adopted in R. v. Van der Peet, [1996] 2 S.C.R. 507, regarding
the substance of aboriginal rights. The Supreme Court cited the following
passage from Van der Peet :
. . . Aboriginal rights arise from the prior occupation of land, but
they also arise from the prior social organization and distinctive cultures of
aboriginal peoples on that land. In considering whether a claim to an
aboriginal right has been made out, courts must look at both the relationship
of an aboriginal claimant to the land and at the practices, customs and
traditions arising from the claimant's distinctive culture and society. . . .
[21]
I do not believe that
the circumstances of this case affect in any way aboriginal rights as described
above and they therefore do not create an obligation on the Crown to honour its
duty to consult.
[22]
In my opinion,
section 87 of the Indian Act does not release individuals with Indian
status from the obligation to collect and remit the GST when they are selling
goods in the commercial mainstream to non-Indian consumers. If they did supply
goods and services to individuals with Indian status and collect tax from them,
these same individuals could be entitled to claim a refund. In R. v. Johnson,
156 N-S.R. (2d) 71 (N.S. C.A.) and Tseshaht Band v. British Columbia, 1992 Carswell 188, 69 B.C.L.R. (2d) 1
(B.C. C.A.), it was ruled that collecting and remitting taxes on consumer sales
does not in itself constitute payment of a tax. In Tseshaht, (supra)
the Court stated:
Under s. 87 of the Indian
Act, the personal property of an Indian or a band on a reserve is exempt
from taxation, and no Indian or band is subject to taxation in respect of the
ownership, occupation, possession, or use of such property. The scheme of the Motor
Fuel Tax Act and the Tobacco Tax Act is that the tax is payable by
"purchasers" and "consumers" respectively when the product
is purchased for personal use. The arrangements in place, whereby amounts equal
to the tax to be collected by the retailer were remitted from purchaser to
vendor in the distribution chain, were designed for ease of administration and
accounting, but payment of such an amount was not itself payment of a
"tax".
[23]
In R v. Johnson,
(supra), Justice Hallett found reasons to his decision in the
legislative intention summed it up as follows:
Indian retail vendors who sell
tobacco products on reserves to non-natives (as does Johnson) deal with the
tobacco on the same basis as all other retail vendors. Johnson, as a retail
vendor, does not have a s. 87(1)(b) exemption with respect to sales to
non-natives as Parliament could never have intended that an Indian dealing in
the commercial mainstream, as does Johnson, would not do so on the same basis
as other Canadians. Johnson, a retail vendor who sells to non-natives, must
purchase tobacco from a wholesaler and pay an amount equivalent to the tax that
is levied on the consumer unless he has quota under the quota system. If he
imports he must have a wholesale vendor's permit. Johnson did not acquire the
tobacco in question as an Indian consumer on a reserve but as a retail vendor
who sells to non-natives.
[24]
Before I deal with the
issue of whether the applicant has fulfilled the obligations and conditions of
subsection 304(5) of the ETA, I simply want to emphasize the fact that
this Court has exclusive jurisdiction to hear and determine references and
appeals on matters arising under Part IX of the ETA. Paragraph 12(1) of
the Tax Court of Canada Act reads as follows:
The Court has exclusive original jurisdiction to hear and
determine references and appeals to the Court on matters arising under the Air
Travellers Security Charge Act, the Canada Pension Plan, the Cultural
Property Export and Import Act, Part V.1 of the Customs Act,
the Employment Insurance Act, the Excise Act, 2001, Part IX of
the Excise Tax Act, the Income Tax Act, the Old Age Security
Act, the Petroleum and Gas Revenue Tax Act and the Softwood
Lumber Products Export Charge Act, 2006 when references or appeals to the
Court are provided for in those Acts.
[25]
The application to the
Minister for an extension of time for the filing of a notice of objection was
made under paragraph 303(1) of the ETA within one year after the
expiration of the time otherwise limited by Part IX for objecting. The
assessment is dated December 16, 2009 and the application was made on May 14,
2010.
[26]
The next step is for
the applicant to demonstrate that within the time otherwise limited by the ETA
for objecting, namely the 90-day period after December 16, 2009, she was
unable to act or give a mandate to act in the her name or that she had a bona
fide intention to object to the assessment or make the request.
[27]
The applicant's lawyer argued
that the applicant and her mother were unable to act because of ill health. Each
described her state of health, but their evidence failed to establish how their
health problems actually prevented them from objecting or from mandating
someone to object. The applicant has clearly admitted that all mail received
with regard to the operation of the business is given to her mother and that she
does not handle the paperwork for the gas station. Although she does not recall
having received the assessment, she is cognizant of the fact that she sometimes
receives letters from Revenu Québec. In my opinion, her state of health at the
relevant times would not have been a factor in light of the fact that she does
not run the business and does not deal with the paperwork. Moreover, the
evidence has established that the applicant's mother, despite her poor health,
has continued to run and operate the business on a day-to-day basis. I
therefore fail to see how their state of health made both of them unable to act
in this instance or to give a mandate to act in the applicant’s name. The
evidence does not disclose either that a mandate to act on the assessment was
given by the applicant to her mother.
[28]
On the issue of whether
the applicant had a bona fide intention to object, the applicant's
lawyer argued that the measure taken by the applicant and her mother in May
2010 by joining the group that had filed an interlocutory motion in the
Superior Court of Quebec demonstrates the applicant's bona fide
intention to object to the assessment. That may well demonstrate an intention
on the applicant's part to participate in the litigation process initiated by
that group, but that intention has nothing to do with the assessment issued on
December 16, 2009, and even if it did have something to do with it, the step
was taken beyond the 90-day period for objecting. In addition, the applicant's
reaction was prompted by the fact that official demands for payment and
garnishee orders against the applicant's gas supplier had been issued.
[29]
The inaction of the
applicant during that 90-day period appears to be consistent with her attitude
towards Revenu Québec prior to the assessment being issued. I find that the
applicant's general attitude with respect to her legal obligations under the ETA
and in particular with respect to the filing of an objection to a notice of
assessment to be one of indifference and/or negligence.
[30]
As such, there is no
evidence before me that allows me to conclude that, at any time during the
90-day period, within which she could have objected to the assessment, the
applicant had any bona fide intention to object to the assessment. In my
opinion, this is not a situation in which an application for an extension of
time to object to a notice of assessment should be granted. There is no need
for me to review the other obligations given the above conclusions.
[31]
The application is
therefore dismissed.
Signed, this 15th day of February 2012.
“François Angers”
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