BETWEEN:
and
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
____________________________________________________________________
Appeal heard on March 31, 2006, at Montréal, Quebec.
Before: the Honourable Justice Lucie Lamarre
Appearances:
____________________________________________________________________
JUDGMENT
The appeal from the assessment under Part IX of the Excise Tax Act, notice of which is dated October 3, 2003, and bears the number 03402029 for the period from February 1, 1999 to July 31, 2002, is dismissed.
Signed at Ottawa, Canada, this 7th day of April 2006.
Translation certified true
on this 14th day of August 2006.
Gibson Boyd, Translator
BETWEEN:
9070-2945 QUÉBEC INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
(Decision rendered orally at Montréal, Québec on March 31, 2006.)
[1] The Appellant appeals the assessment under the Excise Tax Act ("ETA") by which $427,126.10 are claimed against it in goods and services tax ("GST") as well as interest and penalties, in respect of the period from February 1, 1999 to July 3, 2002.
[2] The Appellant is a registrant for the purposes of Part IX of the ETA. It operates under the name of "Super Marché du Véhicule Récréatif", a business specialized in the sale of used recreational vehicles belonging to third party owners who are individuals not registered for the purposes of Part IX of the ETA. The Appellant signs a consignment agreement with the third party owners of the recreational vehicles, under which said owners leave the vehicles with it on consignment and give the mandate to proceed with the sale of these vehicles for a value indicated in the agreement (Exhibit I-3).
[3] When the Appellant receives a purchase offer inferior to the one indicated in the consignment agreement, it obtains approval from the owner. When the purchase offer is accepted, a bill of sale is agreed to between the seller and the recipient through the Appellant. The latter is paid a commission by the seller.
[4] The Appellant did not collect the GST from the buyer on the sale of the vehicles, in the belief that it was not required, yet did collect GST on its commission income.
[5] The Minister of National Revenue ("Minister") assessed the Appellant on the GST which should have been paid by the buyers under the terms of Subsection 177(1) of the ETA. Subsection 177(1) reads as follows:
Agents
177. (1) 177. (1) Where
(a) a person (in this subsection referred to as the "principal") makes a supply (other than an exempt or zero-rated supply) of tangible personal property to a recipient (otherwise than by auction),
(b) the principal is not required to collect tax in respect of the supply except as provided in this subsection, and
(c) a registrant (in this subsection referred to as the "agent"), in the course of a commercial activity of the agent, acts as agent in making the supply on behalf of the principal,
the following rules apply:
...
(e) in any other case, the supply of the property to the recipient is deemed, for the purposes of this Part, to be a taxable supply made by the agent and not by the principal and the agent is deemed, for the purposes of this Part other than section 180, not to have made a supply to the principal of services relating to the supply of the property to the recipient
[6] Under the terms of this paragraph, the Appellant had to collect GST if it was acting as agent for the vehicle owners. Article 2130 of the Civil Code of Québec defines the mandate:
Art. 2130. Mandate is a contract by which a person, the mandator, empowers another person, the mandatary, to represent him in the performance of a juridical act with a third person, and the mandatary, by his acceptance, binds himself to exercise the power.
The power and, where applicable, the writing evidencing it, are also called power of attorney.
[7] It is clear in the case at hand that the Appellant was acting as agent for the vehicle owners. The consignment agreements are specific on this point. Moreover, such agreements have already been analysed by this Court, and it was concluded that a mandate was in existence (see Caravane Taschereau v. Her Majesty, [2002] T.C.J. 325 (QL), Moran v. R., 2005 CarswellNat 634, [2005] G.S.T.C. 50, Horsnall v. Canada, [2005] T.C.J. No. 421 (QL), 2005 CarswellNat 2683).
[8] The Minister was therefore right to assess the Appellant for the GST payable on these sales. As the Appellant did not need to collect GST on the commissions received from the sellers under the terms of subsection 177(1) of the ETA, the Minister was right in reducing the amount assessed on the surplus amount of GST collected on these commissions.
[9] As for the interest and penalties assessed under section 280 of the ETA, the Minister was also justified in his assessment. The fact that the Appellant was ill advised by its accountant is not valid grounds to invoke a reasonable diligence defence (see Corporation de l'école polytechnique v. Canada, 2004 FCA 127, [2004] F.C.J. no. 563 (QL)).
[10] For these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this this 7th day of April 2006.
"Lucie Lamarre"
Lamarre J.
Translation certified true
on this 14th day of August 2006.
Gibson Boyd, Translator
COURT DOCKET NUMBER: 2005-1467(GST)I
STYLE OF CAUSE: 9070-2945 QUÉBEC INC. v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: March 31, 2006
REASONS FOR JUDGMENT BY: The Honourable Justice Lucie Lamarre
DATE OF JUDGMENT: April 7, 2006
APPEARANCES:
|
Agent for the Appellant: |
Denis Desormeaux |
|
Counsel for the Respondent: |
Benoît Denis |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Minister Justice of Canada
Ottawa, Canada