|
Docket: 2001-333(GST)I |
|
BETWEEN: |
|
SATYA PAL, |
|
Appellant, |
|
and |
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent. |
____________________________________________________________________
Appeal heard together with the appeal of Satya Pal (2001-751(IT)I) on March 14 and 15, 2002 and April 6, 2004 at Toronto, Ontario
|
Before: The Honourable Justice M.J. Bonner |
|
|
|
|
|
Appearances: |
|
|
|
|
|
Counsel for the Appellant: |
James P. McReynolds |
|
|
|
|
Counsel for the Respondent: |
John Grant |
____________________________________________________________________
JUDGMENT
The appeal is dismissed.
Signed at Ottawa, Canada this 13th day of July 2004.
|
"M.J. Bonner" |
Bonner, J.
|
Citation: 2004TCC506 |
|
Date: 20040713 |
|
Docket: 2001-333(GST)I |
|
BETWEEN: |
|
SATYA PAL, |
|
Appellant, |
|
and |
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent. |
REASONS FOR JUDGMENT
Bonner, J.
[1] This is an appeal from an assessment under Part IX of the Excise Tax Act (the "Act"). The appeal was heard by this Court and was dismissed by a judgment dated March 22, 2002.
[2] The Appellant then brought an application to the Federal Court of Appeal for judicial review of the judgment.
[3] In its Reasons for Judgment this Court made no specific reference to one of the exhibits, the affidavit of Pritpal Singh Sehmi.
[4] The Court of Appeal allowed the application, set aside the judgment and remitted the matter to this Court for redetermination. The Court of Appeal directed as follows:
It will be open to the parties to adduce further evidence of the market value of taxi licence rentals and about any other matters that are considered advisable.
[5] Pursuant to the direction of the Court of Appeal a further hearing took place on April 6, 2004. One witness, Mr. Sehmi, testified at that hearing.
[6] The evidence of Mr. Sehmi was relevant to the principal issue in the appeal, namely, whether the Appellant was, during the period January 1, 1993 to December 31, 1996 covered by the assessment under appeal, a "small supplier" within ss. 148(l) of the Act. That turned on the question whether the value of the consideration described in paragraph 148(1)(a) of the Act exceeded the $30,000 threshold. If the Appellant was a small supplier and was not registered s. 166 of the Act applied. At the first hearing it was established that the Appellant was not registered.
[7] The subject matter of Mr. Sehmi's testimony was central to the issues raised by the pleadings. In his Notice of Appeal the Appellant pleaded in part:
1. The Appellant appeals from the decision of Canadian Customs and Revenue Agency ("CCRA") that he must be assessed as if he collected, and should have collected GST.
2. The Appellant appeals from the decision of CCRA that the assessment is based on net worth as opposed to actual income. The Appellant states that the net worth method of income computation is not the usual method of computing income.
...
8. As a result of an accident which occurred on August 12, 1992, the appellant was unable to drive his taxicab or to use his licence to operate the taxicab.
9. In September 1992, Mr. Pritpal Singh Sehmi entered into a lease agreement with the Appellant which provided that Mr. Sehmi would lease the taxi licence from the Appellant for the sum of $1,200.00 per month and that this amount could be changed by mutual agreement.
10. The Appellant continued receiving lease payments in the amount of $1,200.00 per month through 1993, 1994, 1995 and up to and including August 1996. The appellant and Mr. Sehmi agreed to the $1,200.00 per month figure, even though written agreements of January 1, 1994, August 23, 1994 and January 1, 1995. The continuation of the $1,200.00 per month was made as Mr. sehmi was partially disabled from working on a full-time basis.
11. The lease agreement was amended, effective September 1, 1996, to provide lease payments in the amount of $2,340.00 per month, but due to a continuing disability of Mr. Sehmi, the lease amount was agreed to be $1,170.00.
12. The total lease payments received by Mr. Pal for plate rental in 1994 was $14,400.00, for 1995 was $14,400.00 and for 1996, was $14,280.00.
13. Other than the income from the leasing of the licence plate, Mr. Pal had no other business income during the taxation years 1994, 1995 and 1996.
[8] In the Reply to the Notice of appeal the Respondent admitted that the Appellant had been involved in a motor vehicle accident and that he had entered into a September 1992 agreement to lease his taxicab.
[9] The Respondent went on to plead that in assessing the Appellant he made findings or assumptions including:
(c) the Appellant failed to maintain adequate books and records for the Period;
(d) the Appellant failed to report all the GST collectible pursuant to section 221 of the Act;
(e) the Minister used information available to him to reassess additional taxable income based on net worth for the taxation years 1994, 1995 and 1996, respectively for purposes of the Income Tax Act;
(f) the Appellant was assessed GST in the amount of $9,613.81 in relation to revenues not reported for purposes of the Income Tax Act and taxable supplies that the Appellant failed to report for purposes of the Act in the years 1994, 1995 and 1996;
[10] In its reasons for judgment the Court of Appeal stated in part:
[2] ... the Tax Court Judge stated that there was no cogent evidence that the $30,000 figure had not been exceeded. He said there was only "vague general statements" about this fact.
[3] Actually, Exhibit A-2, an affidavit of a Mr. Sehmi, who was the lessee of the taxicab, had been properly introduced into evidence (the same document as A-6 in A-212-02). That affidavit by the lessee stated that the annual rent he paid for the use of the taxicab was between $14,000 and $15,000. This was cogent evidence, properly introduced, that was not "vague" or "general" but it was completely ignored by the Tax Court Judge.
[4] The estimate by the Departmental Assessor of the annual rental income from the taxicab, based on the net worth method, ranged from approximately $49,000 to $74,000 annually.
[11] The affidavit of Mr. Sehmi is a document which on its face raises credibility questions for it suggests that he and the Appellant entered into a number of written agreements calling for payments to the Appellant which were not made. The document reads in part:
4. In September 1992, I attended at Mississauga General Hospital to visit Mr. Pal. At that time, I presented hm with a lease agreement so that I could lease his City of Mississauga taxicab plate No. 25 and Ministry of Transport Permit No. 443 ("the Licence"). Mr. Pal and I agreed that I would pay him $1,200.00 per month commencing September 1992.
5. I continued leasing the Licence and continued making payments in the amount of $1,200.00 per month.
6. On January 1, 1994, I entered into an agreement with Mr. Pal to extend the lease and to pay $1,500.00. Further agreements were made, including August 23, 1994, December 20, 1994 and September 13, 1996. However, even though we had signed further agreements, I continued paying Mr. Pal $1,200.00 per month.
7. The payments of $1,200.00 per month continued even during the period of time when I could not drive on a full-time basis, and Mr. Pal had agreed to reduce the lease payments to $600.00 a month.
8. In September 1996, we agreed to a new lease with payments of $2,340.00 per month. However, as I was only working on a part-time basis, we agreed that payments would be made in the amount of $1,170.00.
9. I paid Mr. Pal a total of $14,400.00 in 1994, $14,400.00 in 1995 and $14,280.00 in 1996.
10. I make this affidavit in support of an appeal by Mr. Pal of taxation assessments.
There was never any doubt that the document was relevant. The question was whether it should be given any weight.
[12] Mr. Sehmi was not called as a witness at the first hearing before this Court. At that time counsel who then acted for the Appellant stated that Mr. Sehmi was unable to appear but he did not say why. Thus Mr. Sehmi was not available for cross-examination on his affidavit. Counsel did not request an adjournment to permit Mr. Sehmi to testify in person. In those circumstances, despite the failure of counsel for the Respondent to object to the affidavit, I considered it unsafe to rely on the document.
[13] As noted earlier in these Reasons, Mr. Sehmi did testify at the second hearing. In his examination in chief, he confirmed what was said in the affidavit. Not surprisingly, he was cross-examined on the differences between the amounts which he had agreed in writing to pay and the amounts which he said he had in fact paid. He was unable to offer any consistent lucid explanation either for the difference between payments made and those agreed to be made or for entering into agreements to change the rate of payment and then continuing to pay at the old rate. At one point in the cross-examination he stated that he was confused. At another point, when asked directly how much he had paid to the Appellant he responded that he did not know, that he would have to check his papers and that he did not have his papers. In my opinion Mr. Sehmi was not a credible witness. In the result he did nothing to advance the Appellant's case.
[14] Thus, despite the second hearing, the outcome is unchanged. The evidence in support of the Appellant's case is weak, unpersuasive and insufficient to discharge the onus which rested on the Appellant.
[15] The appeal is dismissed.
Signed at Ottawa, Canada, this 13th day of July 2004.
|
"M.J. Bonner" |
Bonner, J.
|
CITATION: |
2004TCC506 |
|
COURT FILE NO.: |
2001-333(GST)I |
|
STYLE OF CAUSE: |
Satya Pal and Her Majesty the Queen |
|
PLACE OF HEARING: |
Toronto, Ontario |
|
DATE OF HEARING: |
April 6, 2004 |
|
REASONS FOR JUDGMENT BY: |
The Honourable Justice M.J. Bonner |
|
DATE OF JUDGMENT: |
July 13, 2004 |
|
APPEARANCES: |
|
Counsel for the Appellant: |
James P. McReynolds |
|
Counsel for the Respondent: |
John Grant |
|
COUNSEL OF RECORD: |
|
For the Appellant: |
|
Name: |
James P. McReynolds |
|
Firm: |
Solmon Rothbart Goodman Toronto, Ontario |
|
For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |