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Docket: 2004-1531(GST)I |
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BETWEEN: |
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MICKEY SIKORA, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeals heard on September 22, 2004, at Toronto, Ontario, by
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The Honourable Justice C.H. McArthur |
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Appearances: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
John Grant |
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JUDGMENT
The appeals from assessments made under the Excise Tax Act, notices of which are dated November 29, 2002, and July 29, 2002, for the periods January 1, 1998 to March 31, 2002, and October 1, 2001 to December 31, 2001, are dismissed, without costs.
Signed at Ottawa, Canada, this 12th day of April, 2005.
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"C.H. McArthur" |
McArthur J.
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Citation: 2005TCC261 |
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Date: 20050412 |
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Docket: 2004-1531(GST)I |
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BETWEEN: |
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MICKEY SIKORA, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
McArthur J.
[1] These appeals were heard under the goods and services tax (GST) provisions of the Excise Tax Act (the Act) from assessments for the periods between January 1, 1998 and March 31, 2002 and between October 1, 2001 and December 31, 2001. The Appellant, Mickey Sikora, was the sole proprietor of a telecommunications research and development business registered for the purpose of the Act. In dispute is the amount of $26,080 input tax credits (ITCs) claimed by the Appellant and disallowed by the Minister of National Revenue (the Minister).
[2] The parties had agreed that a determination of the 1998 taxation year would apply to the entire period before the Court. At the outset of the hearing, the Respondent's counsel advised that he believed that the issue was one of voluminous receipts required under subsection 169(4) of the Act which the Appellant did not produce in Court. I agreed with his recommendation that an adjournment be granted to permit the Minister's officers to be provided with and to review these receipts. This Court is not the proper forum for a full audit and in any event, the Appellant did not have this relevant documentation with him.
[3] The Appellant stated that the Minister had already seen all of his documents, that he had already been excessively audited, and requested the opportunity to tell his story of harassment by Canada Revenue Agency (CRA) and its predecessors. The following exchange followed:
Mr. Sikora: ... The Minister has seen all my documents in question.
But I don't believe that that's at issue at this particular point of time. The issue before the Court is - if I am being excessively audited is, I believe, my issue at court, not the -- Minister's issue is that they have not seen the documents, but I do have receipts that the documents have been seen. So I'd like to continue with my argument, if that's --
The Court: Well, I am going to permit you. But, Mr. Sikora, --
The Witness: Yes?
The Court: -- if I find I answer yes to what you believe is the issue, that you have been excessively audited, what purpose does it serve you?
The Witness: It, um ..., What we're doing is - I have been audited for '92, '93, '94, '95, '96, '97, '98 and now it's a matter if I let this continue they'll want to audit my books for '99, 2000, 2001, 2002, 2003, 2004 every single year of business.
They have been aggressive, and the resources to defend myself against them have been astronomical, and I'm before the Court after two years of trying to get here, and they have seen my documents, and I have song-and-dancing with these people and the Minister many a time, and I have a case, and I'd like a judgment on how to control these people and get them off of me and how we an proceed in the future to do business with the Minister.
So I would like to start. I have the Minister has seen all my documentation. Now it's just a matter of me presenting my case and you making a decision of "is enough enough".
The Court: Well, even if I do, it does not serve a useful purpose. It would be my opinion.
The Witness: Yes.
The Court: My purpose here is to deal with the assessments that are before us.
(Transcript pages 8 and 9)
[4] I permitted the Appellant to proceed in the manner he requested. He vented his frustrations endured over several years dealing with the Minister's officers. I have no doubt he went through a very stressful period although there are two sides with respect to these confrontations. As I explained to the Appellant during the hearing, it does not serve a purpose for me to determine who was primarily at fault. My jurisdiction is simply to determine the validity of the assessments. The question is: did the Appellant present invoices or other evidence or otherwise satisfy the requirements set out in subsection 169(4) and Regulation 3 under the heading "Prescribed Information" of the Act?
[5] Upon the termination of the hearing, I stated that with the lack of evidence before me I was unable to give the Appellant any relief, but suspended my judgment until December 7, 2004 to give the Appellant the opportunity to present his evidence (1998 receipts) for review by the Minister. My conclusion was more precisely explained to the Appellant by the Respondent's counsel at the end of the hearing transcript, which reads as follows:
He has a judgment. He is going to suspend that judgment. It is a judgment that will address the issue of establishing what happens with respect to your ITCs and also with respect to costs. He has a judgment. What he is doing is he is saying "I am going to suspend that judgment". He is looking for you to provide Revenue Canada with the invoices for 1998 by that date.
[6] Judgment was initially suspended until December 7, 2004. During this period, the Appellant did not provide the Respondent with the full documentation in the form of individual receipts required to support his claims.
[7] A status hearing was held on February 2, 2005. I further suspended judgment until March 31, 2005 to allow the Appellant a final opportunity to present the Respondent his 1998 receipts in the continued belief that he had these receipts.
[8] On March 29, 2005, the Appellant wrote to the Court's Registrar to request an additional 30 days to comply with the Court's instructions, but did not provide any explanation as to why an additional extension was needed. Respondent's counsel strongly opposed the granting of an extension. The Appellant's request was disallowed because he had already been provided with ample opportunity to produce the full documentation required to support his appeal, and had failed to do so and it would appear that he has a fixation directed solely towards proceeding before the Federal Court for damages against the Minister.
[9] Throughout the hearing and his correspondence with the Respondent and the Court, the Appellant insisted that the real issue was the treatment he had received at the hands of CRA. While the Appellant may or may not have been excessively audited since 1992, the only matter this Court can consider is the two assessments in which the Minister disallowed ITCs in the amount of $26,080 and assessed penalties of $4,729 and $3,321. It is these assessments and penalties that are the focus of my decision and not the actions of CRA and its predecessors over the years.
[10] Subsection 169(4) of the Act states:
A registrant may not claim an input tax credit for a reporting period unless, before filing the return in which the credit is claimed,
(a) the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined, including any such information as may be prescribed; and
(b) where the credit is in respect of property or a service supplied to the registrant in circumstances in which the registrant is required to report the tax payable in respect of the supply in a return filed with the Minister under this Part, the registrant has so reported the tax in a return filed under this Part.
(Emphasis added)
The prescribed information in section 3 of the ITC Information Regulations is comprehensive and very onerous on the taxpayer.
[11] To offset the rigid enforcement of obtaining the "prescribed information", there is an argument to be made that the phrase in subsection 169(4) "the registrant has obtained sufficient evidence" could be interpreted as follows: as long as the taxpayer has the information at the time the return is filed then that is sufficient without the necessity of presenting "any such information as may be prescribed".
[12] The respected GST author David Sherman supports this approach, stating the following in an editorial comment after the decision in Owraki v. The Queen,[1]
... Subsection 169(4) is often thought to require the registrant to produce the document on audit or at the Tax Court hearing. However, as I have noted in previous editorial comments, this is not technically what it requires. It requires only that the registrant have the documentary evidence at the time of filing the GST return. If a witness is credible, the Court can conclude that the registrant had the documents at some point before filing the return, even if they are no longer available. This position was accepted by the CCRA in a Consent Judgment before the Tax Court when I presented this point to the Department of Justice: see David Sherman, "Input Tax Credits Without Documentation - Sometimes the Impossible is Possible". GST & Commodity Tax (Carswell), Vol. XIII, No. 9 (November 1999) pp. 65-67.
Owraki was precisely such a case. The appellants had a believable tale of having left a briefcase, with all their financial records and supporting documents, in a taxi in Iran. The Court accepted this evidence and concluded that the required documentation for subsection 169(4) had been available at the time.
See also Dosanjh, [2004] G.S.T.C. 47, where Justice Miller applied the same approach. It is refreshing to see the Court taking this direction.
[13] I do not disagree with this approach, but the Appellant has not established that he had the documentary evidence at the time of filing the return. He did not accept the suggestion that it would be in his best interest to adjourn the hearing to present his documentation.
[14] During the hearing, the Appellant stated that the documents in question were available and he had not brought them because he determined they were not the issue. I suspended my judgment to permit the Appellant to provide the relevant invoices which I believed were readily available. After six months they still have not been produced. On this evidence, I cannot conclude that the Appellant had the required documentation at the time of filing the GST return.
[15] What are we left with? Mr. Sikora testified he had evidence, namely receipts, that entitled him to ITCs in the amount of $26,080. While the Appellant did indicate that some documentation had been lost in the mail in the course of his correspondence with the Respondent over the years, those documents were for transactions that occurred in the fourth quarter of 2001, not between January 1 and December 31, 1998.
[16] Exhibit A-3 includes a receipt dated December 3, 2003. This refers to a summary of invoices, not the actual invoices. There is no proof that the prescribed information was in the hands of the Appellant at the time the claims were filed. The Appellant stated there are 1998 receipts for the ITCs claimed, and that they are in his possession. They are not lost, as was the situation in Owraki. The Appellant was made aware he needed to present these invoices, yet he still failed to do so despite two extensions granting him approximately four additional months.
[17] In light of the Appellant's continued failure to present the full documentation required of him during the allotted time, the appeals are therefore dismissed, without costs.
Signed at Ottawa, Canada, this 12th day of April, 2005.
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'C.H. McArthur" |
McArthur J.
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CITATION: |
2005TCC261 |
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COURT FILE NO.: |
2004-1531(GST)I |
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STYLE OF CAUSE: |
Mickey Sikora and Her Majesty the Queen |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
September 22, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice C.H. McArthur |
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DATE OF JUDGMENT: |
April 12, 2005 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
John Grant |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
N/A |
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Firm: |
N/A |
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For the Respondent: |
John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada |