550285 Alberta Ltd. v. The Queen

96-4091(GST)I

BETWEEN:

550285 ALBERTA LTD.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on August 13, 1998 at Edmonton, Alberta, by

the Honourable Judge D.W. Beaubier

Appearances

Agent for the Appellant: David Dorward, C.A.

Counsel for the Respondent: Deborah Horowitz

JUDGMENT

The appeal from the reassessment made under the Excise Tax Act, notice of which is dated December 1, 1995 and bears number 10DT1701821, is dismissed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada this 31st day of August 1998.

"D.W. Beaubier"

J.T.C.C.

Date: 19980831

Docket: 96-4091(GST)I

BETWEEN:

550285 ALBERTA LTD.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Beaubier, J.T.C.C.

[1] This appeal pursuant to the Informal Procedure was heard at Edmonton, Alberta on August 13, 1998. The President of the Appellant, Harbans Singh Saini, was the only witness.

[2] Paragraphs 6 to 11 inclusive of the Reply to the Notice of Appeal read as follows:

6. By Notice of Assessment number 10DT1701780, dated November 10, 1995, the Minister assessed the Appellant net tax of $3,212.58, penalty of $123.32 and interest of $152.93 for the period December 1, 1994 to February 28, 1995 ("the relevant period"). The amount assessed as net tax was calculated as follows:

net tax reported on returns ($1,054.20)

input tax credits disallowed 4,266.78

net tax assessed $3,212.58.

7. By Notice of Reassessment number 10DT1701821, dated December 1, 1995, the Minister assessed the Appellant net tax of $1,092.35 for the relevant period, which was calculated as follows:

net tax per Notice of Assessment

#10DT1701780 $3,212.58

additional input tax credits allowed (4,266.78)

input tax credit on vehicle disallowed 2,146.55

net tax assessed $1,092.35.

8. The Appellant objected to Notice of Reassessment number 10DT1701821 by a Notice of Objection postmarked January 24, 1996.

9. The Minister confirmed the assessment by a Notice of Decision dated July 8, 1996.

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

(a) the facts admitted or stated above;

(b) the Appellant registered for the purposes of the Act under the trade name Parkland Motel, Rimbey Alberta, effective February 17, 1993, and was assigned GST registration number 134649821;

(d) the Appellant was required to file its returns on a quarterly basis, with a year end of the end of February;

(e) on the return for the reporting period which ended February 28, 1995, the Appellant reported tax collectible of $3,212.58, claimed input tax credits of $4,266.78 and claimed a net tax refund of $1,054.20;

(f) the $4,266.78 claimed by the Appellant as input tax credits on the return for the reporting period which ended February 28, 1995, included $2,146.55 with respect to a 1994 Dodge Grand Caravan (the "vehicle");

(g) Great West Plymouth supplied the vehicle to Harbans Singh Saini and Daljit Kaur Saini, for consideration of $30,665.00, plus tax of $2,146.55;

(h) a 1992 Chevrolet Astrovan, which was owned by Harbans Singh Saini, was traded-in as part of the consideration for the vehicle;

(i) no tax was charged or collected on the 1992 Chevrolet Astrovan which was traded-in;

(j) the vehicle was registered in the name of Harbans Singh Saini;

(k) the tax with respect to the vehicle was not paid or payable by the Appellant;

(l) the vehicle was not supplied to the Appellant by Great West Plymouth or anyone else;

(m) Harbans Singh Saini and Daljit Kaur Saini did not use the vehicle exclusively in their commercial activities;

(n) the Appellant did not use the vehicle primarily in the course of its commercial activities;

(o) the vehicle was not used primarily for the transportation of goods or equipment in the course of gaining or producing income;

(p) prior to filing its returns for the reporting periods which ended February 28, 1995, the Appellant did not obtain sufficient documentation, which contained the prescribed information, as required by subsection 169(4) of the Act and sections 2 and 3 of the Input Tax Credit Information Regulations thereunder, to support the input tax credit with respect to the vehicle which was claimed by the Appellant and disallowed by the Minister.

B. ISSUE TO BE DECIDED

11. The issue to be decided in this appeal is whether the Appellant is entitled to an input tax credit in the amount of $2,146.55 with respect to the vehicle.

[3] Except for assumptions (a), (k), (m), (n) and (o), they are correct. The Caravan purchased was a 7 passenger seated van. After a few days, Mr. Saini removed all but seats for two people. He is an industrial electrician and he used the van to travel to and from his home in St. Albert to a newly purchased motel in Lloydminster which he was improving. He had a separate Tempo car for his wife and four children.

[4] The Caravan is a passenger vehicle and was sold with seats for seven in it. Mr. Saini tried to purchase and finance it through the Appellant, but its bank would not allow that. So he and his wife purchased and financed it individually. His position is that he and his wife were trustees for the Appellant. Its financial statements were not filed. There is no evidence as to the category in which the vehicle was licensed or insured.

[5] Mr. Saini testified that after the first few days the vehicle was used solely in commercial activities. The Appellant's name is not on the sales agreement. The documentation described in assumption (p) was not provided pursuant to the Act and Regulations.

[6] Because the Act and Regulations were not complied with, the Bill of Sale is not in the Appellant's name and there is no agreement of trust or corporate record in evidence indicating that the van is the Appellant's, the appeal is dismissed.

Signed at Ottawa, Canada this 31st day of August 1998.

"D.W. Beaubier"

J.T.C.C.

COURT FILE NO.: 96-4091(GST)I

STYLE OF CAUSE: 550285 Alberta Ltd. and The Queen

PLACE OF HEARING: Edmonton, Alberta

DATE OF HEARING: August 13, 1998

REASONS FOR JUDGMENT BY: The Honourable Judge D.W. Beaubier

DATE OF JUDGMENT: August 31, 1998

APPEARANCES:

Agent for the Appellant: David Dorward, C.A.

Counsel for the Respondent: Deborah Horowitz

COUNSEL OF RECORD:

For the Appellant:

Name:

Firm:

For the Respondent: Morris Rosenberg

Deputy Attorney General of Canada

Ottawa, Canada