Les Entreprises Drf Inc v. Canada (National Revenue)
(June 12, 2014 – 2014 FCA 159) was an appeal from a decision of the Tax Court denying the appellant input tax credits and upholding the imposition of penalties on the basis that the court did not accept the evidence of the appellant that the services in question were in fact rendered. The appellant argued that the trial judge erred in imposing a standard of due diligence rather than one of good faith. The Federal Court of Appeal did not agree:
 I cannot agree. In the particular circumstances and context of this case, the Judge was clearly entitled to make the finding that there was no prima facie evidence demonstrating that the services described in the invoices were indeed rendered. It is noteworthy to mention the following: the issue of whether the services in this case were rendered or not – notwithstanding by whom – could be considered a relevant consideration not only to determine if the appellant was entitled to the ITC, but also to determine if the appellant acted in good faith.
 Findings of facts and of mixed fact and law of the Judge are reviewable under the standard of palpable and overriding error (Housen v. Nikolaisen, 2002 SCC 33,  2 S.C.R. 235).
 In the present case, I am of the view that the Judge thoroughly analyzed the evidence before him. His conclusion rests upon his assessment of the credibility of the witnesses he heard and of the documentary evidence. The Judge’s assessment does not contain an overriding and palpable error.
 Although the appellant has raised a serious issue of law with respect to the defence of due diligence and good faith, in light of the findings of fact of the Judge, it is not appropriate to deal with this matter in this case.
The appeal was dismissed with costs.