Escape Trailer Industries Inc. v. R. – FCA: Court of Appeal dismisses appeal from Federal Court – taxpayer not entitled to remission order on HST and interest
https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/462025/index.do
Escape Trailer Industries Inc. v. The Queen (February 25, 2020 – 2020 FCA 54, Rennie, De Montigny, Locke (Author) JJ.A.).
Précis: The taxpayer sought a remission order in respect of harmonized sales tax (HST) plus interest totaling $273,183.39. When the Minister denied the request the taxpayer appealed to the Federal Court which refused to recommend a remission order. The taxpayer appealed to the Federal Court of Appeal which dismissed the appeal holding that the Assistant Commissioner’s determination that there were no extenuating factors justifying a remission order was not unreasonable under the circumstances. Thus the appeal was dismissed with costs.
Decision: The taxpayer argued that it should be granted a remission order for the tax and interest it paid in respect of certain trailer sales:
[6] Escape Trailer made a request for remission under subsection 23(2) of the FAA by letter dated November 24, 2014 to the CRA (the Remission Request). The relevant factual circumstances were described in the Remission Request. Escape Trailer explained that it is a manufacturer and seller of recreational vehicle travel trailers (RV trailers). The RV trailers relevant to the Remission Request (which were not registered in Canada or insured for use in Canada) were delivered by Escape Trailer to U.S. buyers in the parking lot of a Canadian duty-free shop at a border crossing between Canada and the U.S. between October 1, 2010 and September 30, 2012. The U.S. buyers would pass through Canadian customs to get to the parking lot and, upon delivery, would transport the RV trailers through U.S. customs. The U.S. buyers would be identified as the importers of the RV trailers. Escape Trailer did not collect any HST from the U.S. buyers on the basis that the supply of the RV trailers was made outside Canada, and therefore not subject to HST (or zero-rated).
The taxpayer applied for the remission order on various bases:
[8] There is some confusion as to the grounds asserted for Escape Trailer’s Remission Request. Its November 24, 2014 letter identified the four characteristics listed in paragraph 3 above, and indicated that it relied on three of them: (i) extreme hardship (also called financial hardship), (ii) incorrect action or advice on the part of CRA officials, and (iii) unintended results of the legislation. Page 4 of the letter suggested strongly that Escape Trailer was not originally relying on the characteristic of “financial setback coupled with extenuating factors.”
The Assistant Commissioner’s decision was based solely on the “extenuating factors” ground since the taxpayer dropped or did not pursue the remaining grounds.
The Assistant Commissioner rejected the extenuating factors ground. The Court of Appeal found that the decision was not unreasonable under the circumstances:
[28] In my view, this argument would have more force if Escape Trailer had asserted the extenuating factor of taxpayer error in its Remission Request. It did not. It is true that the Remission Request did describe discussions with the CRA that led Escape Trailer to believe that no HST had to be remitted for the RV trailer sales in question. Those discussions were considered by the Assistant Commissioner (in relation to the issue of incorrect advice from CRA officials), but they were found to be uncorroborated and insufficiently detailed to be reliable. More importantly, it is difficult to fault the Assistant Commissioner for his analysis of extenuating factors when no such factors were cited as such in the Remission Request (see Canada Revenue Agency v. Telfer, 2009 FCA 23, [2009] F.C.J. No. 71, at para. 31). In discussing the question of extenuating factors at all, the Assistant Commissioner was going further than Escape Trailer had asked.
[29] In my view, there was nothing unreasonable in the Assistant Commissioner’s analysis of extenuating factors.
As a result the appeal was dismissed with costs:
[32] Having found no error in the Assistant Commissioner’s analysis of the Remission Request, and noting the failure of Escape Trailer to meet any of the characteristics common in remission cases, and taking into account the discretionary and extraordinary nature of remission under subsection 23(2) of the FAA, I would dismiss the present appeal with costs.