Darbaj et al. v. R. – TCC: Court lacks jurisdiction to direct GST rebate where application filed late

Bill Innes on Current Tax Cases

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/70819/index.do New Window

Hassen Darbaj and Wafaa Darbaj v. The Queen (April 1, 2014 – 2014 TCC 103) involved an application for a transitional rebate of GST pursuant to subsection 256.74(1) of the Excise Tax Act. Unfortunately the taxpayers made the application after the expiration of the two year period provided by subsection 256.74(7) of the statute:

256.74(7) Application for rebate – A rebate under this section in respect of a residential complex shall not be paid to a person, unless the person files an application for the rebate within two years after the day on which ownership of the complex is transferred to the person.

The taxpayers alerted the Minister to the lateness issue in their rebate application but the rebate was initially granted. Subsequently the file was reviewed and they were reassessed denying the rebate. The court rejected the taxpayers’ argument based on fairness and dismissed the appeal:

[8] In my view, there is no basis on which the reassessment may be vacated. Pursuant to s. 256.74(7) of the Act, a rebate is not to be paid unless the taxpayer applies for it within two years. Although the Minister allowed the rebate at first, the Minister is entitled to reconsider this decision and issue a further assessment pursuant to subsection 297(2) of the Act. This provision reads:

297.(2) Reassessment – The Minister may reassess or make an additional assessment of the amount of a rebate, notwithstanding any previous assessment of the amount of the rebate.

[9] The appellants submit that the reassessment should be vacated on grounds of fairness. However, the judicial authorities are clear that if an assessment is permitted by the legislation, this Court cannot vacate the assessment on grounds of fairness, even if the problem is due to an error on the part of the CRA. Accordingly, the submissions based on fairness must be rejected.

[10] I would conclude that the reassessment issued on January 17, 2011 is correct and that the appeal must be dismissed.