http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/98219/index.do 
Syed v.The Queen (October 22, 2014 – 2014 TCC 307, Masse D.J.) (translation dated March 31, 2015).
Précis: The appellant, Shamsuddin Syed (“Shamsuddin”), was the sole director of Buffet Samrat Inc. (“Samrat”). He was assessed as a director for Samrat’s unpaid GST, plus interest and penalties for the period January 1, 2003 to December 31, 2006. His wife, Abida Begum Syed (“Abida”) was assessed in respect of $110,000, which was transferred to her by Samrat at the end of December 2008 and at the beginning of January 2009. The GST payable by Samrat was computed by means of an alternative audit method based on average percentages sales for restaurants. Shamsuddin disputed the computation method and whether he was a director of Samrat at the relevant times. The Court held that his evidence was not credible and sustained both assessment.
Decision: Mr. and Mrs. Syed were assessed in respect of the GST arrears of Samrat:
[1] In docket 2012‑4656(GST)I, Shamsuddin Syed (Shamsuddin) was assessed by notice of assessment dated July 11, 2011, and bearing the number F‑032866, under subsection 323(1) of the Excise Tax Act, R.S.C. (1985), c. E‑15 (the ETA) in his capacity as director of a company, Buffet Samrat Inc. (Samrat). The assessment in the amount of $86,640.07 included the goods and services tax (the GST) and related interest and penalties, which Samrat is required to pay to the Minister of National Revenue (the Minister) under subsection 228(2) of the ETA for the period from January 1, 2003, to December 31, 2006. As explained below, the amount of this assessment is reduced to $66,666.39.
[2] In docket 2012‑4656(GST)I, Abida Begum Syed (Abida) was assessed by notice of assessment dated February 27, 2012 and bearing the number F‑036082 under subsection 325(2) of the ETA, with respect to the amount of $110,000, which was transferred by Samrat at the end of December 2008 and at the beginning of January 2009. The amount of the assessment is $57,357.83. The Minister submits that Abida was not dealing with Samrat at arm’s length and that she received this money without consideration. Therefore, according to the respondent, Abida and Samrat are jointly and severally liable to pay the assessment.
Revenue Quebec used an alternative method for computing Samrat’s outstanding GST liability:
[13] The total number of litres of alcohol purchased by Samrat is determined. This allows the software to extrapolate the total number of litres of alcohol sold based on the number of litres purchased for the year. Then, the number of litres of alcohol purchased by the company is reduced by 5% as losses. According to Mr. Richard, those losses refer to alcohol that is not found on clients’ bills. This number is necessarily arbitrary because Samrat did not keep records of losses and promotions that would help establish a more precise percentage. The 5% rate is generally the percentage of losses that may be found in the industry. It is presumed that all litres of alcohol purchased less the losses and promotions are sold, given that there was very little change in inventory of alcohol from one year to the next. Afterward, the bills for sales were reviewed. To estimate the actual sales and compare them to the declared sales, Mr. Richard carried out a sampling. The software randomly selects dates and periods of time to review. Indeed, a sampling of the food bills was taken and all the sales for this period are recorded and computerized. The litres of alcohol sold are determined and then, a ratio of the sales is established for the sampling periods, by dividing the total sales by the total number of litres of alcohol sold. If we multiply the number of litres of alcohol purchased by the ratios of each year, we obtain an estimate of taxable supplies during the year. Given the relationship between sales figures, represented by the total sales, and the volume of alcohol sold, a certain amount of alcohol sales must be expected. However, the restaurant had declared only amounts lower than the expected sales figures. In this case, the difference between the sales reported by Samrat and the reconstructed sales was $186,299 for 2003 (a difference of 97.35% compared with reported sales), a difference of $257,479 for 2004 (a difference of 104.50%), a difference of $134,056 (a difference of 61.29%) for 2005, and a difference of $135,280 (a difference of 63.09%) for 2006. The total difference between the reconstructed income and the income reported by Samrat for the taxation period totals $713,114.
The Court rejected all of the taxpayers’ defences:
[69] Having considered all the evidence, I find, on a balance of probabilities, the following:
(a) The Minister was justified in using an indirect method to reconstruct Samrat’s income. I am also of the view that the appellants did not discharge their burden of proof to establish that Samrat’s assessment is ill-founded. I am of the view that the assessment established with respect to the company Buffet Samrat Inc., in accordance with the consent judgment made by Justice Jorré of the Tax Court of Canada dated April 26, 2013, in case number 2011 1092(GST)G, is valid and I confirm the said assessment.
(b) I am of the view that the transfers totaling $110,000 that were made by Samrat directly to Abida were done without consideration. I am also of the view that at the time when the transfers were made, Samrat owed the Minister a GST debt. Under section 325(1) of the ETA, the appellant Abida is jointly and severally liable to pay the sums for which Samrat is liable under the ETA, for a maximum of $53,956.53.
(c) I find that the appellant Shamsuddin did not discharge his burden of proof to demolish the accuracy of the Minister’s assumptions: see Hickman Motors Ltd v. Canada, [1997] 2 S.C.R. 336. I find that Shamsuddin never ceased to be the director of the company either in law or in fact. I am persuaded that Shamsuddin did not resign from the position of director, he was not replaced and he was not relieved of his powers and obligations as director of Samrat. Therefore, he was at all times a de jure director. I am also convinced that, despite the fact that Samrat ceased its commercial operations in December 2008, Shamsuddin performed and/or appointed his brother to perform on his behalf, multiple actions as director until January 5, 2012. Therefore, he was a de facto director at all relevant times. I am of the view that the assessment is not statute barred and the appellant Shamsuddin cannot avail himself of the provisions of subsection 323(5) of the ETA.
(d) I am of the view that the appellant Shamsuddin, as director of the restaurant, did not act with the care, diligence and skill that a reasonably prudent person would have shown to prevent Samrat’s failure to pay the GST collected from the restaurant’s clients. Therefore, he cannot avail himself of the defence provided in subsection 323(3) of the ETA.
As a result Mrs. Syed’s appeal was dismissed and Mrs. Syed’s appeal was allowed in part to reflect a reduction of Samrat’s GST liability arising out of a prior consent judgement in its appeal.