Subject: Appeal by the King against Tax Court of Canada decisions which struck certain corporate residency allegations from the Minister of National Revenue’s assumptions of fact.
Key Details:
The Minister reassessed the net tax of the respondents under Part IX of the Excise Tax Act.
The reassessments were based on the premise that the respondents should have collected GST/HST for services supplied to Lowfroc Investments Ltd. and/or WebOps S.A.R.L. in Canada.
The respondents argued that the services were zero-rated supplies to non-residents of Canada.
The Tax Court struck the "Impugned Assumption" from the Minister's assumptions due to it being a mixed question of fact and law, which led to the appeal.
Legal Issues:
Nature of the Impugned Assumption: Determining whether the assumption about the location of controlling mind and management is a question of fact or mixed fact and law.
Appropriateness of Striking the Assumption: Whether the Tax Court erred in law by striking out the assumption as an abuse of process.
Judgment:
Judges: Goyette J.A., de Montigny J.A., LeBlanc J.A.
Decision: The appeal was dismissed with costs.
Reasoning:
The Tax Court’s conclusion that the Impugned Assumption was one of mixed fact and law was not erroneous.
The striking out of the Impugned Assumption was not an overriding and palpable error.
The respondents would be prejudiced and the hearing process would be abused if they were left to speculate about the underlying facts of the Impugned Assumption.
Costs: Costs of $5000 were awarded against the appellant.
Conclusion:
The Federal Court of Appeal upheld the Tax Court's decision to strike the Impugned Assumption. The case emphasizes the importance of distinguishing between factual assumptions and those that are mixed questions of fact and law in tax litigation.
