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Citation: 2005TCC261
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Date: 20050412
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Docket: 2004-1531(GST)I
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BETWEEN:
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MICKEY SIKORA,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
McArthur J.
[1] These appeals were heard under the
goods and services tax (GST) provisions of the Excise Tax
Act (the Act) from assessments for the periods between
January 1, 1998 and March 31, 2002 and between October 1,
2001 and December 31, 2001. The Appellant, Mickey Sikora, was the
sole proprietor of a telecommunications research and development
business registered for the purpose of the Act. In dispute
is the amount of $26,080 input tax credits (ITCs) claimed by the
Appellant and disallowed by the Minister of National Revenue (the
Minister).
[2] The parties had agreed that a
determination of the 1998 taxation year would apply to the entire
period before the Court. At the outset of the hearing, the
Respondent's counsel advised that he believed that the issue
was one of voluminous receipts required under subsection 169(4)
of the Act which the Appellant did not produce in Court. I
agreed with his recommendation that an adjournment be granted to
permit the Minister's officers to be provided with and to
review these receipts. This Court is not the proper forum for a
full audit and in any event, the Appellant did not have this
relevant documentation with him.
[3] The Appellant stated that the
Minister had already seen all of his documents, that he had
already been excessively audited, and requested the opportunity
to tell his story of harassment by Canada Revenue Agency (CRA)
and its predecessors. The following exchange followed:
Mr. Sikora: ... The
Minister has seen all my documents in question.
But I don't believe that that's at issue at this
particular point of time. The issue before the Court is - if I am
being excessively audited is, I believe, my issue at court, not
the -- Minister's issue is that they have not seen the
documents, but I do have receipts that the documents have been
seen. So I'd like to continue with my argument, if that's
--
The Court: Well, I
am going to permit you. But, Mr. Sikora, --
The Witness: Yes?
The Court: -- if I
find I answer yes to what you believe is the issue, that you have
been excessively audited, what purpose does it serve you?
The Witness: It, um ..., What
we're doing is - I have been audited for '92, '93,
'94, '95, '96, '97, '98 and now it's a
matter if I let this continue they'll want to audit my books
for '99, 2000, 2001, 2002, 2003, 2004 every single year of
business.
They have been aggressive, and the resources to defend myself
against them have been astronomical, and I'm before the Court
after two years of trying to get here, and they have seen my
documents, and I have song-and-dancing with these people and the
Minister many a time, and I have a case, and I'd like a
judgment on how to control these people and get them off of me
and how we an proceed in the future to do business with the
Minister.
So I would like to start. I have the Minister has seen all my
documentation. Now it's just a matter of me presenting my
case and you making a decision of "is enough
enough".
The Court: Well,
even if I do, it does not serve a useful purpose. It would be my
opinion.
The Witness: Yes.
The Court: My
purpose here is to deal with the assessments that are before
us.
(Transcript pages 8 and 9)
[4] I permitted the Appellant to
proceed in the manner he requested. He vented his frustrations
endured over several years dealing with the Minister's
officers. I have no doubt he went through a very stressful period
although there are two sides with respect to these
confrontations. As I explained to the Appellant during the
hearing, it does not serve a purpose for me to determine who was
primarily at fault. My jurisdiction is simply to determine the
validity of the assessments. The question is: did the Appellant
present invoices or other evidence or otherwise satisfy the
requirements set out in subsection 169(4) and Regulation 3
under the heading "Prescribed Information" of the
Act?
[5] Upon the termination of the
hearing, I stated that with the lack of evidence before me I was
unable to give the Appellant any relief, but suspended my
judgment until December 7, 2004 to give the Appellant the
opportunity to present his evidence (1998 receipts) for review by
the Minister. My conclusion was more precisely explained to the
Appellant by the Respondent's counsel at the end of the hearing
transcript, which reads as follows:
He has a judgment. He is going to suspend that judgment. It is
a judgment that will address the issue of establishing what
happens with respect to your ITCs and also with respect to costs.
He has a judgment. What he is doing is he is saying "I am
going to suspend that judgment". He is looking for you to
provide Revenue Canada with the invoices for 1998 by that
date.
[6] Judgment was initially suspended
until December 7, 2004. During this period, the Appellant did not
provide the Respondent with the full documentation in the form of
individual receipts required to support his claims.
[7] A status hearing was held on
February 2, 2005. I further suspended judgment until March 31,
2005 to allow the Appellant a final opportunity to present the
Respondent his 1998 receipts in the continued belief that he had
these receipts.
[8] On March 29, 2005, the Appellant
wrote to the Court's Registrar to request an additional 30 days
to comply with the Court's instructions, but did not provide any
explanation as to why an additional extension was needed.
Respondent's counsel strongly opposed the granting of an
extension. The Appellant's request was disallowed because he had
already been provided with ample opportunity to produce the full
documentation required to support his appeal, and had failed to
do so and it would appear that he has a fixation directed solely
towards proceeding before the Federal Court for damages against
the Minister.
[9] Throughout the hearing and his
correspondence with the Respondent and the Court, the Appellant
insisted that the real issue was the treatment he had received at
the hands of CRA. While the Appellant may or may not have been
excessively audited since 1992, the only matter this Court can
consider is the two assessments in which the Minister disallowed
ITCs in the amount of $26,080 and assessed penalties of $4,729
and $3,321. It is these assessments and penalties that are the
focus of my decision and not the actions of CRA and its
predecessors over the years.
[10] Subsection 169(4) of the Act
states:
A registrant may not claim an input tax credit for a
reporting period unless, before filing the return in which the
credit is claimed,
(a) the
registrant has obtained sufficient evidence in such form
containing such information as will enable the amount of the
input tax credit to be determined, including any such information
as may be prescribed; and
(b) where the
credit is in respect of property or a service supplied to the
registrant in circumstances in which the registrant is required
to report the tax payable in respect of the supply in a return
filed with the Minister under this Part, the registrant has so
reported the tax in a return filed under this Part.
(Emphasis added)
The prescribed information in section 3 of the ITC
Information Regulations is comprehensive and very onerous
on the taxpayer.
[11] To offset the rigid enforcement of
obtaining the "prescribed information", there is an argument
to be made that the phrase in subsection 169(4) "the
registrant has obtained sufficient evidence" could be
interpreted as follows: as long as the taxpayer has the
information at the time the return is filed then that is
sufficient without the necessity of presenting "any such
information as may be prescribed".
[12] The respected GST author David Sherman
supports this approach, stating the following in an editorial
comment after the decision in Owraki v. The
Queen,[1]
... Subsection 169(4) is often thought to require the
registrant to produce the document on audit or at the Tax Court
hearing. However, as I have noted in previous editorial comments,
this is not technically what it requires. It requires only that
the registrant have the documentary evidence at the time of
filing the GST return. If a witness is credible, the Court
can conclude that the registrant had the documents at some point
before filing the return, even if they are no longer available.
This position was accepted by the CCRA in a Consent Judgment
before the Tax Court when I presented this point to the
Department of Justice: see David Sherman, "Input Tax Credits
Without Documentation - Sometimes the Impossible is
Possible". GST & Commodity Tax (Carswell), Vol.
XIII, No. 9 (November 1999) pp. 65-67.
Owraki was precisely such a case. The appellants had a
believable tale of having left a briefcase, with all their
financial records and supporting documents, in a taxi in Iran.
The Court accepted this evidence and concluded that the required
documentation for subsection 169(4) had been available at the
time.
See also Dosanjh, [2004] G.S.T.C. 47, where Justice
Miller applied the same approach. It is refreshing to see the
Court taking this direction.
[13] I do not disagree with this approach,
but the Appellant has not established that he had the documentary
evidence at the time of filing the return. He did not accept the
suggestion that it would be in his best interest to adjourn the
hearing to present his documentation.
[14] During the hearing, the Appellant
stated that the documents in question were available and he had
not brought them because he determined they were not the issue. I
suspended my judgment to permit the Appellant to provide the
relevant invoices which I believed were readily available. After
six months they still have not been produced. On this evidence, I
cannot conclude that the Appellant had the required documentation
at the time of filing the GST return.
[15] What are we left with? Mr. Sikora
testified he had evidence, namely receipts, that entitled him to
ITCs in the amount of $26,080. While the Appellant did indicate
that some documentation had been lost in the mail in the course
of his correspondence with the Respondent over the years, those
documents were for transactions that occurred in the fourth
quarter of 2001, not between January 1 and December 31,
1998.
[16] Exhibit A-3 includes a receipt dated
December 3, 2003. This refers to a summary of invoices, not the
actual invoices. There is no proof that the prescribed
information was in the hands of the Appellant at the time the
claims were filed. The Appellant stated there are 1998 receipts
for the ITCs claimed, and that they are in his possession. They
are not lost, as was the situation in Owraki. The
Appellant was made aware he needed to present these invoices, yet
he still failed to do so despite two extensions granting him
approximately four additional months.
[17] In light of the Appellant's continued
failure to present the full documentation required of him during
the allotted time, the appeals are therefore dismissed, without
costs.
Signed at Ottawa, Canada, this 12th day of April, 2005.
McArthur J.
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