Iris Technologies – Federal Court of Appeal states that CRA’s assessing does not oust Federal Court jurisdiction to review exercises of CRA discretion

During an audit of the appellant (Iris), CRA refused Iris’ requests for immediate payment of its refund claims, suspecting that Iris was participating in a “carousel” scheme (i.e., under which GST/HST is never remitted at the other end of the chain). Iris considered that the requirement in ETA s. 229(1) that net refund claims be paid “with all due dispatch” meant that it should be paid right away rather than awaiting the conclusion of the audit, and appealed the dismissal of its motion in the Federal Court, for an interim mandatory injunction to compel the payment of $62.3 million in GST/HST refunds, to the Court of Appeal.

Rennie JA endorsed the findings in Express Gold that “the obligation to pay a refund with all due dispatch did not displace the Minister’s obligation to verify that the refund is in fact payable under the ETA” and that “’a reasonable interpretation of subsection 299(1) is that the Minister may choose to audit a claim for a net tax refund, in order to determine whether the amount is properly claimed’”.

Respecting the meaning of “with all due dispatch,” he noted:

In what appears to be a relatively complex case, the CRA’s estimate that the audit would take ten months to complete is reasonable. Those ten months have not yet elapsed.

Rennie JA further stated (also similarly to Express Gold):

… I do not wish to be taken as endorsing the Minister’s arguments that the issuing of the notices of assessment deprives the Federal Court of jurisdiction to consider the Minister’s exercise of discretion under the ETA.

…[T]he Federal Court retains jurisdiction to consider the application of administrative law principles and obligations to the exercise of discretion by the Minister in the application of the ETA. Examples of this include allegations of acting for an ulterior purpose or in bad faith, abuse of his or her powers or not proceeding in a reasonable time frame.

Neal Armstrong. Summary of Iris Technologies Inc. v. Canada (National Revenue), 2020 FCA 117 under ETA s. 229(1).