Locator of Missing Heirs Inc. v. Canada
A-781-95
Robertson J.A.
1/5/97
12 pp.
Judicial review of Tax Court decision taxpayer not exempt from obligation to collect, remit Goods and Services Tax (GST) in accordance with Excise Tax Act; as not establishing "due diligence" in ascertaining legal obligations, required to pay six percent penalty imposed under s. 280-Taxpayer's business finding missing heirs to property of deceased persons-Through lawyer as intermediary, would negotiate fee based on percentage of value of property-Many heirs non-residents of Canada-Based on lawyer's "first impression" taxpayer assuming exempt from requirement to collect, remit GST-Ultimately Minister assessing taxpayer as owing $36,000 including unremitted GST, interest, penalty-Taxpayer subject to Act unless engaged in business dealing with "exempt supply" such as "financial service" defined in part in s. 123(1)(d) as transfer of ownership of financial instrument-"Financial instrument" defined as "equity security" defined as "share of capital stock of corporation"-Application dismissed-Tax Court not erring in concluding services provided by taxpayer not tax exempt-No factual basis for argument services provided to non-residents "zero-rated" i.e. rate of tax 0%-Factual vacuum as to precise nature of services rendered by taxpayer to heirs-Taxpayer submitting "arranges" for provision of financial services identified in s. 123(1)(d),(e),(f) as contemplated by s. 123(1)(l)-Arguing entire supply deemed exempt if offering exempt supply in course of providing taxable supply flawed-S. 138 providing supply incidental to another supply treated as part of other supply-Service of locating property, heirs not incidental to indemnity services-As to due diligence finding, Tax Court's reasons simply placing on taxpayer obligation to have sought ruling from Department in more timely fashion-Right to invoke due diligence defence not matter of settled law in Federal Court-Minister's objections in this and other cases i.e. Canada (Attorney General) v. 770373 Ontario Ltd., [1997] F.C.J. No. 153 (F.C.A.) to defence helpful for purposes of future litigation-By extrapolation from R. on the information of Mark Caswell v. Corporation of City of Sault Ste-Marie, [1978] 2 S.C.R. 1299, taxpayers seek to import due diligence defence into s. 280-Minister suggesting that type of analysis not according sufficient weight to fact that in Sault SteMarie penalty for conviction under provincial social welfare statute ranging from fine to imprisonment depending on whether first-time or repeat offender involved-Cases under Excise Tax Act, unlike Sault Ste-Marie, not reasonably characterized as quasicriminal prosecutions pursuant to public interest legislation-In context of Customs Act, Court has refused to accord defence of reasonable care to importer whose goods seized, forfeited in light of erroneous declaration: R. v. Letarte, [1981] 2 F.C. 76 (C.A.)-Judge Bowman of Tax Court emerging as forceful advocate of existence of due diligence defence in context of s. 280 by distinguishing Letarte, case following it: Pillar Oilfield Projects Ltd. v. Canada, [1993] G.S.T.C. 49 (T.C.C.)-Minister questioning validity of distinction-Further objecting to availability of due diligence defence in context of s. 280 as Act specifically providing for such defence in s. 323 concerning liability of corporate directors-Implication that if Parliament granted right to raise due diligence defence in s. 323, presumably intended defence would not be available in conjunction with s. 280 which is silent on matter-In light of M.N.R. v. Nassau Walnut Investments Inc., [1997] 2 F.C. 279 (C.A.) Minister conceding s. 323 not determinative of issue-Rather s. 323 raising rebuttable inference as to Parliament's intent in respect of s. 280-Minister maintaining due diligence defence frustrating purpose of s. 280, i.e. to serve as impetus for timely collection of amounts owing to Receiver General under Act, Part IX-Excise Tax Act, R.S.C., 1985, c. E-15, ss. 123 (as enacted by S.C. 1990, c. 45, s. 12), 280 (as enacted idem), 323 (as enacted idem).