http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/233140/index.do
Aswal v. The Queen (July 19, 2017 – 2017 TCC 134, D’Auray J.).
Précis: The taxpayers, operating as “Annie’s Gas Bar and Variety”, sold a truck that had been used in their business but did not collect or remit GST/HST ($1,755). The invoice issued by the taxpayers did not indicate that it was a GST/HST registrant. That meant that the purchaser had to pay 13% Ontario retail sales tax (“Motor Vehicle Tax”) directly to the Province of Ontario (which assumed that this was a sale between non-registrants). The appeal was dismissed since the payment of Ontario tax by the purchaser did not relieve the appellants of their obligation to charge and remit GST/HST.
Decision: The Tax Court had little choice but to dismiss the appeal:
[11] In practice, issues arise when the documentation provided to evidence the sale does not indicate that the vehicle is sold by a person that is a registrant. For example, the invoice does not indicate a registration number for GST/HST and it is clear from the invoice that no GST/HST has been charged on the sold vehicle. In these cases, the Ministry of Transportation correctly assumes that the transactions are private sales between non-registrants. In such cases, the Motor Vehicle Tax must be paid by the purchaser of the vehicle upon registration.
[12] This was exactly the case in this appeal. The invoice provided was unfortunately inadequate. Therefore, the 13% Motor Vehicle Tax was charged upon the registration of the vehicle by the Ministry of Transportation.
[13] This situation places both the vendor and the purchaser in a disadvantageous position since the former is still liable to remit the GST/HST to the federal government, which should have been collected from the purchaser, and the latter is not eligible to claim input tax credits because he/she did not pay GST/HST on this specific transaction.
[14] To avoid this type of issue, clear documentation should be provided to the Ministry of Transportation, upon the registration of the vehicle.
[15] That said, if the Motor Vehicle Tax is erroneously paid by a purchaser upon registration of the vehicle, a purchaser may ask the Ministry of Transportation for a refund. Some conditions must be met for the Motor Vehicle Tax to be refunded. Only the purchaser will be allowed to request a refund and there is a statutory time limit after which it is not possible to claim a refund. The form is entitled “Application for Refund of Ontario Retail Sales Tax for Motor Vehicles Purchased Privately” and can be found on the Ontario Ministry of Finance’s website. However, I do not know if the appellant meets the conditions for a refund in this appeal, the appellant could get in touch with the Ontario Ministry of Transportation to inquire.
[16] Although the appellant mistakenly believed that the GST/HST had been paid to the Ministry of Transportation, by the person who purchased its truck, this was not the case.
[17] This is a very unfortunate situation but as I have already stated, I do not have any other choice than to dismiss the appeal.