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Citation: 2004TCC506
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Date: 20040713
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Docket: 2001-333(GST)I
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BETWEEN:
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SATYA PAL,
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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
Bonner, J.
[1] This is an appeal from an
assessment under Part IX of the Excise Tax Act (the
"Act"). The appeal was heard by this Court and
was dismissed by a judgment dated March 22, 2002.
[2] The Appellant then brought an
application to the Federal Court of Appeal for judicial review of
the judgment.
[3] In its Reasons for Judgment this
Court made no specific reference to one of the exhibits,
the affidavit of Pritpal Singh Sehmi.
[4] The Court of Appeal allowed the
application, set aside the judgment and remitted the matter to
this Court for redetermination. The Court of Appeal directed as
follows:
It will be open to the parties to adduce further evidence
of the market value of taxi licence rentals and about any other
matters that are considered advisable.
[5] Pursuant to the direction of the
Court of Appeal a further hearing took place on April 6, 2004.
One witness, Mr. Sehmi, testified at that hearing.
[6] The evidence of Mr. Sehmi was
relevant to the principal issue in the appeal, namely, whether
the Appellant was, during the period January 1, 1993 to December
31, 1996 covered by the assessment under appeal, a "small
supplier" within ss. 148(l) of the Act. That turned
on the question whether the value of the consideration described
in paragraph 148(1)(a) of the Act exceeded the
$30,000 threshold. If the Appellant was a small supplier and was
not registered s. 166 of the Act applied. At the first
hearing it was established that the Appellant was not
registered.
[7] The subject matter of Mr.
Sehmi's testimony was central to the issues raised by the
pleadings. In his Notice of Appeal the Appellant pleaded in
part:
1. The
Appellant appeals from the decision of Canadian Customs and
Revenue Agency ("CCRA") that he must be assessed as if
he collected, and should have collected GST.
2. The
Appellant appeals from the decision of CCRA that the assessment
is based on net worth as opposed to actual income. The Appellant
states that the net worth method of income computation is not the
usual method of computing income.
...
8. As a result
of an accident which occurred on August 12, 1992, the appellant
was unable to drive his taxicab or to use his licence to operate
the taxicab.
9. In
September 1992, Mr. Pritpal Singh Sehmi entered into a lease
agreement with the Appellant which provided that Mr. Sehmi would
lease the taxi licence from the Appellant for the sum of
$1,200.00 per month and that this amount could be changed by
mutual agreement.
10. The Appellant
continued receiving lease payments in the amount of $1,200.00 per
month through 1993, 1994, 1995 and up to and including August
1996. The appellant and Mr. Sehmi agreed to the $1,200.00 per
month figure, even though written agreements of January 1, 1994,
August 23, 1994 and January 1, 1995. The continuation of the
$1,200.00 per month was made as Mr. sehmi was partially disabled
from working on a full-time basis.
11. The lease agreement
was amended, effective September 1, 1996, to provide lease
payments in the amount of $2,340.00 per month, but due to a
continuing disability of Mr. Sehmi, the lease amount was agreed
to be $1,170.00.
12. The total lease
payments received by Mr. Pal for plate rental in 1994 was
$14,400.00, for 1995 was $14,400.00 and for 1996, was
$14,280.00.
13. Other than the income
from the leasing of the licence plate, Mr. Pal had no other
business income during the taxation years 1994, 1995 and
1996.
[8] In the Reply to the Notice of
appeal the Respondent admitted that the Appellant had been
involved in a motor vehicle accident and that he had entered into
a September 1992 agreement to lease his taxicab.
[9] The Respondent went on to plead
that in assessing the Appellant he made findings or assumptions
including:
(c) the Appellant
failed to maintain adequate books and records for the Period;
(d) the Appellant
failed to report all the GST collectible pursuant to section 221
of the Act;
(e) the Minister
used information available to him to reassess additional taxable
income based on net worth for the taxation years 1994, 1995 and
1996, respectively for purposes of the Income Tax Act;
(f) the
Appellant was assessed GST in the amount of $9,613.81 in relation
to revenues not reported for purposes of the Income Tax
Act and taxable supplies that the Appellant failed to report
for purposes of the Act in the years 1994, 1995 and
1996;
[10] In its reasons for judgment the Court
of Appeal stated in part:
[2] ... the Tax
Court Judge stated that there was no cogent evidence that the
$30,000 figure had not been exceeded. He said there was only
"vague general statements" about this fact.
[3] Actually,
Exhibit A-2, an affidavit of a Mr. Sehmi, who was the lessee of
the taxicab, had been properly introduced into evidence (the same
document as A-6 in A-212-02). That affidavit by the lessee stated
that the annual rent he paid for the use of the taxicab was
between $14,000 and $15,000. This was cogent evidence,
properly introduced, that was not "vague" or
"general" but it was completely ignored by the Tax
Court Judge.
[4] The estimate by
the Departmental Assessor of the annual rental income from the
taxicab, based on the net worth method, ranged from approximately
$49,000 to $74,000 annually.
[11] The affidavit of Mr. Sehmi is a
document which on its face raises credibility questions for it
suggests that he and the Appellant entered into a number of
written agreements calling for payments to the Appellant which
were not made. The document reads in part:
4. In
September 1992, I attended at Mississauga General Hospital to
visit Mr. Pal. At that time, I presented hm with a lease
agreement so that I could lease his City of Mississauga taxicab
plate No. 25 and Ministry of Transport Permit No. 443 ("the
Licence"). Mr. Pal and I agreed that I would pay him
$1,200.00 per month commencing September 1992.
5. I continued
leasing the Licence and continued making payments in the amount
of $1,200.00 per month.
6. On January
1, 1994, I entered into an agreement with Mr. Pal to extend
the lease and to pay $1,500.00. Further agreements were made,
including August 23, 1994, December 20, 1994 and September
13, 1996. However, even though we had signed further agreements,
I continued paying Mr. Pal $1,200.00 per month.
7. The
payments of $1,200.00 per month continued even during the period
of time when I could not drive on a full-time basis, and
Mr. Pal had agreed to reduce the lease payments to $600.00 a
month.
8. In
September 1996, we agreed to a new lease with payments of
$2,340.00 per month. However, as I was only working on a
part-time basis, we agreed that payments would be made in the
amount of $1,170.00.
9. I paid Mr.
Pal a total of $14,400.00 in 1994, $14,400.00 in 1995 and
$14,280.00 in 1996.
10. I make this affidavit
in support of an appeal by Mr. Pal of taxation assessments.
There was never any doubt that the document was relevant. The
question was whether it should be given any weight.
[12] Mr. Sehmi was not called as a witness
at the first hearing before this Court. At that time counsel who
then acted for the Appellant stated that Mr. Sehmi was
unable to appear but he did not say why. Thus Mr. Sehmi was not
available for cross-examination on his affidavit. Counsel did not
request an adjournment to permit Mr. Sehmi to testify in person.
In those circumstances, despite the failure of counsel for the
Respondent to object to the affidavit, I considered it unsafe to
rely on the document.
[13] As noted earlier in these Reasons, Mr.
Sehmi did testify at the second hearing. In his examination in
chief, he confirmed what was said in the affidavit. Not
surprisingly, he was cross-examined on the differences between
the amounts which he had agreed in writing to pay and the amounts
which he said he had in fact paid. He was unable to offer any
consistent lucid explanation either for the difference between
payments made and those agreed to be made or for entering into
agreements to change the rate of payment and then continuing to
pay at the old rate. At one point in the cross-examination he
stated that he was confused. At another point, when asked
directly how much he had paid to the Appellant he responded that
he did not know, that he would have to check his papers and that
he did not have his papers. In my opinion Mr. Sehmi was not a
credible witness. In the result he did nothing to advance the
Appellant's case.
[14] Thus, despite the second hearing, the
outcome is unchanged. The evidence in support of the
Appellant's case is weak, unpersuasive and insufficient to
discharge the onus which rested on the Appellant.
[15] The appeal is dismissed.
Signed at Ottawa, Canada, this 13th day of July 2004.
Bonner, J.
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