Section 280.1

At the time the appellant acquired a former restaurant (now vacant), he was registered for GST purposes, so that he was not charged GST. The sale was determined by Rabinovitch J to have been a taxable supply.

After the sale, Revenu Québec retroactively cancelled the appellant’s registration, effective to before the time of the sale. Rabinovitch J was skeptical that Revenu Québec had the power to cancel a taxpayer's registration retroactively but, as it was not within his jurisdiction to so determine, it was necessary for him to proceed on the basis that the appellant's registration had been retroactively invalidated.

He nonetheless concluded that, even though the appellant thus was not registered at the time of his acquisition (and was not charged GST by the vendor), the direct assessment of him by Revenu Québec was valid under s. 296(1)(b).

However, given the retroactive revocation of the registration, a penalty imposed by Revenu Québec pursuant to s. 280.1 was not valid, as the taxpayer was not required to file any return pursuant to s. 228(4)(b), i.e., there had been no failure to file.