Harberdan Construction Inc. v. The Queen, docket 98-85(GST)I (Informal Procedure)

98-85(GST)I

BETWEEN:

HARBERDAN CONSTRUCTION INC.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on March 11, 1999 at Toronto, Ontario, by

the Honourable Chief Judge D.H. Christie

Appearances

Agent for the Appellant:                       D. Harris

Counsel for the Respondent:                Sean O'Donnell

JUDGMENT

          The appeal from the assessment made under the Excise Tax Act, notice of which is dated January 24, 1996 and bears number 05EP0103321, is dismissed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada this 15^th day of September 1999.

"T.P. O'Connor"

J.T.C.C.

Date: 19990915

Docket: 98-85(GST)I

BETWEEN:

HARBERDAN CONSTRUCTION INC.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

O'Connor, J.T.C.C.

[1]      This appeal was heard by the late Honourable Donald H. Christie, C.J. on March 11, 1999 at Toronto, Ontario. He reserved judgment but regrettably passed away on May 3, 1999 before rendering judgment. I have been asked, with the consent of the parties, to render judgment based upon the transcript and the exhibits filed.

[2]      The Respondent's Reply sets forth the Respondent's position as follows:

3.          By Notice of Reassessment No. 05EP0103321, dated January 24, 1996, the Minister denied ITCs in the amount of $2,400.00 and assessed penalties and interest of $716.03 and $734.24, respectively.

4.          In so reassessing the Appellant, the Minister made the following assumptions of fact:

(a)         the Appellant was a registrant for purposes of the Part IX of Excise Tax Act, S.C. 1990, c. 45 as amended (the "Act");

(b)         the Appellant claimed $300.00 in ITCs and a net tax refundable for the same amount in the Goods and Services Tax (GST) returns for the periods ending 91/03/31, 91/06/30, 91/09/30, 91/12/31, 92/03/31, 92/06/30, 92/09/30 and 92/12/31;

(c)         The Appellant filed nil GST returns for the periods ending 93/03/31, 93/06/30, 93/09/30, 93/12/31, 94/03/31 and de-registered effective March 31, 1994;

(d)         the Appellant failed to maintain adequate books and records;

(e)         the Appellant reported no taxable supplies during the period;

(f)          the Appellant was not in commercial activity during the period;

(g)         the Appellant did not meet the documentary requirements of subsection 169(4) of the Act and the Input Tax Credit Information Regulations (the "Regulations") that are required in order for a registrant to claim ITCs if the registrant made taxable supplies;

(h)        the Appellant was properly denied the ITCs claimed as the Appellant was not engaged in commercial activity and, nevertheless, failed to meet the documentary requirements of the Act and the Regulations; and

(i)          the Appellant was properly assessed penalty and interest relating to net tax refundable to which the Appellant was not entitled.

[3]      The only exhibit produced was Exhibit A-1 which is a computer print-out of the Appellant's alleged expenses and the GST paid on those supplies for the period January 1, 1991 to December 23, 1991. The Appellant stated that he had supplied actual invoices and other materials to the Minister of National Revenue ("Minister") which somehow or other got lost. The Minister contends that he never received any documents supporting the input tax credits claimed.

[4]      Besides the Minister's contention that no adequate books and records were kept by the Appellant in addition the Appellant reported no sales during the period in question nor any GST amounts and consequently the Respondent concludes that there was no commercial activity being carried on and the Appellant is not entitled to the input tax credits claimed.

[5]      The Appellant's agent states that the Appellant did not report sales and GST collected because of bankruptcies which occurred amongst many of its customers and his inability to collect.

[6]      As mentioned, the Appellant was unable to produce any documents other than Exhibit A-1. Exhibit A-1 certainly does not prove that the Appellant paid GST on the supplies to the Appellant and it is clear that the Appellant did not report any sales of its own with relation to GST collected in respect of such sales.

[7]      The Appellant has the burden of proof of establishing his case and regrettably the Appellant has been unable to do so. This may have resulted from the bankruptcy of the Appellant's customers and his inability to collect but it would appear that since there were no sales there was no commercial activity carried on. In summary, because of the Appellant's lack of records and given the assumptions of the Minister in the Reply, and considering the Appellant has the burden of proof I have no alternative but to dismiss the appeal.

Signed at Ottawa, Canada this 15^th day of September 1999.

"T.P. O'Connor"

J.T.C.C.

COURT FILE NO.:                             98-85(GST)I

STYLE OF CAUSE:                           Harberdan Construction Inc. and The Queen

PLACE OF HEARING:                      Toronto, Ontario

DATE OF HEARING:                        March 11, 1999

REASONS FOR JUDGMENT BY:     The Honourable Judge T.P. O'Connor

DATE OF JUDGMENT:                     September 15, 1999

APPEARANCES:

Agent for the Appellant:             D. Harris

Counsel for the Respondent:      Sean O'Donnell

COUNSEL OF RECORD:

For the Appellant:

Name:                

Firm:                 

For the Respondent:                  Morris Rosenberg

                                                Deputy Attorney General of Canada

                                                          Ottawa, Canada