http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/65013/index.do 
Caisse populaire Desjardins de Québec v. The Queen[1] (December 2, 2013) dealt with an assessment for failure to comply with a GST garnishment:
[1] The Caisse populaire Desjardins de Québec (Caisse populaire) is appealing from the assessment dated February 22, 2011 and made under section 317 of the Excise Tax Act (the Act). This assessment arises from the fact that the Caisse populaire did not comply with a garnishment, or to be more specific, to a requirement to pay (requirement) relating to the goods and services tax owing by the tax debtor, Café de la paix (1980) inc. (Café).
[2] The Caisse Populaire submits that the assessment is unfounded because, at the time of the seizure, it did not owe any money to Café. Even if the amount of $10,197.66 (amount seized) appeared in the savings account of Café at the time of the receipt of the Requirement, it was not payable to Café since there was legal compensation under section 1673 of the Civil Code of Québec (C.C.Q.) and section 69 of the Act respecting financial services cooperatives, S.Q., c. C-67.3. Section 69 states:
A financial services cooperative may, to obtain payment of any specific, liquid and exigible claim it has against a member or depositor, withhold any sum of money it owes to the member or depositor and use it to compensate its claim, except in the case of the redemption of qualifying shares issued by it.
[Emphasis added.]
[3] Article 1673 C.C.Q. provides as follows:
1673. Compensation is effected by operation of law upon the coexistence of debts that are certain, liquid and exigible and the object of both of which is a sum of money or a certain quantity of fungible property identical in kind.
A person may apply for judicial liquidation of a debt in order to set it up for compensation.
[Emphasis added.]
[4] According to the Caisse populaire, there was compensation of the amount seized in the savings account since, before the seizure, it had an exigible debt of a similar amount on Café. Counsel for the respondent defined the issue as follows: was there compensation for the seized amount before the communication of seizure on January 24, 2011? According to him, the amounts advanced by the Caisse populaire under a variable credit contract (credit contract) were not exigible at that time and, therefore, no compensation could be effected to make $10,197.66 disappear from Café’s patrimony. This amount was still owing to Café by the Caisse populaire.
[Footnote omitted]
The court concluded that the debtor was insolvent at the date the garnishment was served and thus there was no amount owing to it by the appellant at that date:
[25] Another element makes the existence of insolvency of Café on January 24, 2011, highly likely and supports the validity of the notice of stay. It is the document produced at tab 9 of Exhibit I-1 by the respondent, who notes that there was an assignment on March 25, 2011, two months later. This event suggests that the proposal in bankruptcy was accepted by creditors and indicated that Café went bankrupt. This bankruptcy, which occurred exactly two months after the notice of intention to file a proposal in bankruptcy, was sufficient to support the presumption that insolvency existed before the service of the request.
[26] It must also be remembered that, on January 24, 2011, the Ministère du Revenu du Québec served on the Caisse populaire a requirement to pay and also served, under the Act respecting the ministère du Revenu, a notice to a garnishee, the total amount claimed being $157,682.92.
[27] In summary, as there was a situation of insolvency on January 24, 2011, before the Caisse populaire received the requirement and that, at that time, if there was a term, there was forfeiture of the term and Café’s debt to the Caisse populaire under the terms of the credit contract became exigible. Therefore, there was legal compensation of the amount seized, the amount that the Caisse populaire owed to Café on January 24, 2011, and this compensation was in partial payment of the balance due on the line of credit. The amount of $10,197.66, which is the amount seized, was not due by the Caisse populaire to Café. Thus, there was nothing to be seized at this date.
[28] For these reasons, the appeal of the Caisse populaire is allowed and the assessment of February 22, 2011, is vacated, with costs.
[1] 2013 TCC 376.