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GOODS AND SERVICES TAX (GST) - Interpretation - Zero-rated supplies

Monday, April 27, 2020 @ 10:21 AM  

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Appeal by Escape Trailer from the dismissal of its application for judicial review of a decision of the Assistant Commissioner of the Canada Revenue Agency. RV trailers were delivered by the appellant to American buyers in the parking lot of a Canadian duty-free shop at a border crossing between Canada and the United States. The American buyers would pass through Canadian customs to get to the parking lot and would transport the RV trailers through American customs as the importers of the RV trailers. The appellant did not collect any HST from the American buyers on the basis the supply of the RV trailers was made outside Canada. The CRA determined the supply of the RV trailers was made in Canada and HST was payable. The appellant did not appeal the reassessments and paid the amount owing, $273,183, and subsequently requested a remission order under s. 23(2) of the Financial Administration Act. The CRA refused to recommend a remission order.

HELD: Appeal dismissed. Merely proving the RV trailers were exported was insufficient. The appellant fulfilled none of the conditions for zero-rating its RV trailers. The CRA’s analysis of the issue of unintended results of the legislation and its finding that the legislative intent was that only purchasers who were not consumers could take possession of goods in Canada for export on a zero-rated basis were reasonable. The CRA reasonably concluded the situation the appellant found itself in, being liable for HST amounts that were not collected from customers, was not caused by any unintended results of the legislation but rather by its failure to comply with any of the detailed conditions for zero-rating. It reasonably found there were no extenuating factors that made a remission order appropriate.

Escape Trailer Industries Inc. v. Canada (Minister of National Revenue - M.N.R.), [2020] F.C.J. No. 274, Federal Court of Appeal, D.J. Rennie, Y. de Montigny and G.R. Locke JJ.A., February 25, 2020. Digest No. TLD-April272020002