Tax Court of Canada Judgments

Date: 19990528

Docket: 1999-1126-GST-APP

BETWEEN:

JEAN MASSAROTTO,

Applicant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Order

P.R. Dussault, J.T.C.C.

[1] This is an application to extend the time for filing a notice of objection to an assessment under the Goods and Services Tax (“GST”) provisions of the Excise Tax Act (“the Act”).

[2] The Reply to the Application for an Extension of Time reads as follows:

[TRANSLATION]

1. On August 23, 1996, the Minister of National Revenue (“the Minister”) issued notice of assessment T96R288 for the period from April 1 to June 30, 1992;

2. The applicant did not file a notice of objection with the Minister within the time set out in section 301 of the Excise Tax Act, R.S.C. 1985, c. E-15, as amended (hereinafter “the ETA”), which expired on November 21, 1996;

3. An application to extend the time for filing a notice of objection was filed with the Minister on September 14, 1998;

4. On December 22, 1998, the Minister notified the applicant that he was refusing his application to extend the time for filing an objection to the above-mentioned assessment because the application had not been made within one year after the expiration of the time—455 days—otherwise limited by the ETA for objecting, as set out in section 303(7)(a) of the ETA;

5. On January 28, 1999, the applicant applied to this Honourable Court to extend the time for filing a notice of objection;

6. The respondent submits that the application should be dismissed for the following reason:

(a) The application to the Minister under section 303(1) of the ETA was not made within one year after the expiration of the time otherwise limited by the ETA for objecting, the whole in accordance with section 304(5)(a) of the ETA.

[3] The applicant argued that he never received or saw the notice of assessment referred to in paragraph 1 of the Reply to the Application for an Extension of Time.

[4] He stated that in 1992 he had built a few small buildings with one Benoît Bois, with whom he was doing business at the time. He said that the buildings were rented and then sold during the time covered by the assessment, that is, April to June 1992. According to the applicant, he and Mr. Bois have not done business together since then and have even been involved in legal disputes in connection with past transactions. He said that Mr. Bois has since declared bankruptcy.

[5] The applicant said that he was not in partnership with Mr. Bois and that they sold the buildings under both of their names. However, in his application to the Minister of National Revenue (“the Minister”) to extend the time for objecting dated September 14, 1998 (Exhibit A-6), the applicant referred to a “partner” with whom he had a [TRANSLATION] “tacit and oral partnership contract”. In a document entitled [TRANSLATION] “Statement of GST Audit Adjustments” (“Statement of Adjustments”), which will be discussed below (Exhibit A-2, page 2, and Exhibit A-4), the auditor described the applicant as an [TRANSLATION] “owner in partnership”. The evidence adduced does not show what the true business relationship was between the applicant and Mr. Bois in 1992. Were they involved in a partnership, a joint venture or co-ownership? A clear answer to this question is impossible without additional evidence. However, one thing is certain: these two individuals no longer had a business relationship on August 23, 1996, when, according to paragraph 1 of the Reply to the Application for an Extension of Time set out above, “the Minister . . . issued notice of assessment T96R288 for the period from April 1 to June 30, 1992”.

[6] The applicant said that it was not until June 1998 that he learned from Revenu Québec’s collections unit that his dealings with Mr. Bois had been audited in 1996, that he had been assessed in August 1996 and that he owed about $35,000. The applicant stated that he never met the auditor, one Jean-Pierre Lemieux, in 1996. He also said that, at the time, no one ever contacted him about the audit and the subsequent assessment. Mr. Bois did not tell him about the audit and assessment either.

[7] The applicant said that, following a June 1998 meeting with three representatives of Revenu Québec’s auditing unit in Laval, including the auditor, Mr. Lemieux, he received in the mail the Statement of Adjustments indicating the amounts owed for the period from April 1 to June 30, 1992 (Exhibits A-2 and A-4). However, the Statement of Adjustments referred to the fact that the original was given to both Mr. Bois and the applicant himself on June 26, 1996. According to the applicant, he never received that document at the time and Mr. Lemieux himself admitted that he never met with him during the audit. In any event, the applicant said that he was never given the notice of assessment at issue here and never received it.

[8] After receiving the audit documents in July 1998, the applicant sent the Ministère du Revenu du Québec a notice of objection on September 14, 1998 (Exhibit A-7). The information therein about the contested notice of assessment includes a number that seems to actually be a reference number and not the number of the notice of assessment referred to by the respondent in her Reply to the Application for an Extension of Time. The date indicated is not that of the assessment but rather that of the Statement of Adjustments mentioned above. However, the contested amount, $35,034.53, is correct, and it also corresponds to the amount given in the Statement of Adjustments. The same is true of the period referred to.

[9] The same day, September 14, 1998, the applicant also sent an application to extend the time for filing, as he put it, [TRANSLATION] “a notice of objection to the statement of audit adjustments (SAA), which is not even a proper notice of assessment, for the period from 1992.04.01 to 1992.06.30” (Exhibit A-6).

[10] On December 22, 1998, the application was refused because it had not been made within one year after the expiration of the time for filing a notice of objection (Exhibit A-8).

[11] On January 28, 1999, the applicant applied to the Court to have the time for filing a notice of objection extended. However, he indicated that he wanted to file a notice of objection [TRANSLATION] “to an assessment dated January 31, 1997, bearing notice number T97F050, with respect to GST number 134200450 for the period from July 1, 1992, to December 31, 1996”. Obviously, an application so worded with reference to another assessment cannot help but add to the confusion already surrounding this case.

[12] First of all, if I take the view that the application actually concerns an assessment notice of which is numbered T97F050 and dated January 31, 1997, for the period from July 1, 1992, to December 31, 1996, the application must be dismissed because I have no evidence that a previous application to extend the time for objecting was made to the Minister as provided for in subsection 303(1) of the Act.

[13] Moreover, if (as the respondent did in her Reply to the Application for an Extension of Time reproduced above) I take the view—which strikes me as more logical—that the application is instead to extend the time for objecting to the assessment allegedly made on August 23, 1996, for the period from April 1 to June 30, 1992, notice of which is numbered T96R288,[1] I should also dismiss the application, since it was not made within 30 days after the day the decision was mailed by the Minister as provided for in subsection 304(1) in fine of the Act.

[14] There is more, however. When the application was heard, counsel for the respondent filed a copy of a notice of (re)assessment dated August 23, 1996, and numbered T96R288 (Exhibit I-1). According to that notice, $35,034.53 was owed for the period from April 1 to June 30, 1992. The notice is addressed as follows:

[TRANSLATION]

BENOIT BOIS AND JEAN MASSAROTTO

21 Rue de l’Érablière

R.R. # 2

Saint-Jérôme, Quebec J7Z 5T5

[15] The applicant claimed that he never received that notice, that he did not know the address in question, that he has never lived there and that his address is 2977 Avenue Renaissance in Boisbriand, Quebec. He said that he did not know whether the address referred to in the notice of assessment is that of Mr. Bois. He knew only that Mr. Bois lived in the Saint-Jérôme area at the time they were doing business together.

[16] Thus, not only is the applicant saying that he never received the notice of assessment, but it also seems that the notice was never sent to him by the Minister at his own address. Moreover, I note that, in her Reply to the Application for an Extension of Time, the respondent does not state that the notice of assessment was sent to the applicant or any other person. No evidence was adduced on this point: the respondent did not call any witnesses or file any affidavits.

[17] It has been established that an assessment is not complete, and is therefore not valid, unless a notice is sent to the taxpayer concerned after the assessment is made. In this regard, reference may be made to the Exchequer Court’s judgment in Scott v. M.N.R., 60 DTC 1273, [1960] C.T.C 402. More recently, the Federal Court of Appeal, relying on subsection 152(2) of the Income Tax Act, reaffirmed this principle in Aztec Industries Inc. v. The Queen, 95 DTC 5235 (at page 5237), [1995] 1 C.T.C. 327 (at page 330). In that case, the taxpayer, which had made its application out of time as in the case at bar, alleged not only that it had not received the notice of assessment but also that no such notice had ever been issued. Hugessen J.A., who rendered judgment for the Federal Court of Appeal, noted that in such circumstances the burden of proving the existence of the notice of assessment and the date of its mailing falls on the Minister, since those facts are normally within his knowledge and he controls the means of proving them.

[18] Hugessen J.A. continued by citing subsections 244(5), 248(7), 244(14) and 244(9) of the Income Tax Act, on which the Minister may rely and which are clearly designed to alleviate his burden of proof. In spite of those provisions, counsel for the Minister conceded that the Minister had been unable to prove the existence, mailing or mailing date of a notice of assessment. In the circumstances, the Court therefore concluded that the application for an extension of the time for objecting had to be dismissed, not because it had been made out of time as the Tax Court of Canada judge had held but rather because the Minister had failed to prove that the notice of assessment existed or had been sent. The taxpayer’s application to extend the time for objecting was therefore moot, since the assessment was non-existent or incomplete and therefore invalid.[2]

[19] Like subsection 152(2) of the Income Tax Act, subsection 300(1) of the Act provides as regards the GST that, after making an assessment, the Minister must send the person assessed a notice of the assessment. The actual words used are “shall send”, which means that the provision is clearly a mandatory one.

[20] However, unlike in the Income Tax Act, the definition of the word “person” set out in subsection 123(1) of the Act includes for GST purposes a “partnership”. Moreover, as is the case with income tax, the Act contains a number of presumptions about the date of an assessment and the date the notice was mailed and received. They are in subsections 335(11), 335(10) and 334(1). Subsection 335(5) deals with the affidavit evidence of an officer with respect to the nature and contents of a document.

[21] Other rules concerning the sending and service of notices and other documents are set out in section 333 and cover, inter alia, the sending or service of a notice or document to or on a partnership.

[22] In the case at bar, given the wording of the notice of objection and of the application to extend the time for objecting that the applicant made to the Minister on September 14, 1998, the Minister knew that the applicant was claiming that he had not received the notice of assessment. Obviously, that claim was not taken into account and the application was refused on the basis of paragraph 303(7)(a) of the Act, that is, by relying on the fact that it had not been made within one year after the time otherwise limited by the Act for objecting. The respondent is now asking that the application made to this Court following the Minister’s decision be dismissed under paragraph 304(5)(a) of the Act for the same reason.

[23] In my view, the copy of a notice of assessment submitted by counsel for the respondent and identified as Exhibit I-1 is not sufficient evidence of a valid, complete assessment with respect to the applicant. The applicant declared that he never received or even saw that document, which was addressed to Mr. Bois and him but sent to an address that is not his and that he does not know.

[24] Assuming that the Minister could have argued (which he did not) that a partnership may have existed between Mr. Bois and the applicant in 1992, it is my opinion, in view of the evidence adduced, that such a partnership certainly no longer existed in 1996.[3] I thus consider it highly doubtful that the Minister could have proved that the notice of assessment was validly sent to the applicant on the basis of the provisions of the Act referred to above, including section 333. In any event, the respondent has not adduced any evidence to show that the notice of assessment was validly sent to the applicant. Nor has counsel for the respondent attempted to rely on any provision of the applicable legislation.

[25] In short, it would have had to be shown that the assessment was complete and valid in respect of the applicant, especially as regards the issue of whether the notice of assessment could validly have been sent to him at the address in question.

[26] Yet nothing of the kind has been done. In the circumstances, I am of the opinion that the Minister has not shown that a complete and valid assessment was made with respect to the applicant. Accordingly, it is my view that the Minister cannot recover the amounts claimed under that alleged assessment. In this regard, reference may be made to the decision by Judge Bowman of this Court in Rick Pearson Auto Transport Inc. (supra, note 2).

[27] Applying the principle stated by the Federal Court of Appeal in Aztec Industries Inc. (supra), I must therefore dismiss this application to extend the time for objecting on the ground that the Minister has not proved the validity of the assessment since he has not shown that the notice of assessment was sent to the applicant.

Signed at Ottawa, Canada, this 28th day of May 1999.

“P.R. Dussault”

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 28th day of March 2000.

Erich Klein, Revisor

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