http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/30914/index.do 
Daruwala et al. v. The Queen[1] (April 5, 2012) is an example of an uncommon procedure where the Crown applied pursuant to subsection 311(1) of the
Excise Tax Act[2] for the determination of a GST question arising out of a transaction common to an assessment or proposed assessment in respect of two or more taxpayers. The underlying facts are not complex:
[2] The facts relating to the application are as follows. The Appellants (Respondents to the Application) applied for a GST rebate with respect to a residential property located in West Vancouver, British Columbia (“the Residence”); claiming that the Residence fell within the definition of “used residential property” and was therefore exempt from GST in accordance with Schedule V, Part I of the Act. The Applicant asserts pursuant to facts contained in the affidavit of Vince Ting, Litigation Officer with the CRA, that the Appellant purchased the “never occupied” Residence from the builder, TRG Construction Corp. (“TRG”). There are no contradicting assertions of fact regarding the “never occupied” nature of the Residence in the affidavit. The assertion of the Appellant from its pleadings, to be advanced, adduced and proven at the hearing, is that TRG did allow an undisclosed third party to occupy the Residence between the time of construction and the Appellants’ purchase of it. If TRG allowed such an interceding occupancy (“Interceding Occupancy”), the Appellants may otherwise be entitled to their GST rebate presently denied by the Minister. The Minister seeks to have this question of fact, namely, whether there was or was not an Interceding Occupancy determined by this Court and to render any determination binding upon both the Appellant and TRG.
The application was subject to subsection of 18.32(2) of the
Tax Court of Canada Act[3] which provides:
18.32(2) If an application has been made under . . . section 311 of the
Excise Tax Act . . . for the determination of a question, the application or determination of the question shall, subject to section 18.33, be determined in accordance with sections 17.1, 17.2 and 17.4 to 17.8, with any modifications that the circumstances require.
and paragraph 58(1)(a) and subsection 58(2) of the
Tax Court of Canada Rules (General Procedure)[4]:
58(1) A party may apply to the Court,
(a) for the determination, before hearing, of a question of law, a question of fact or a question of mixed law and fact raised by a pleading in a proceeding where the determination of the question may dispose of all or part of the proceeding, substantially shorten the hearing or result in a substantial saving of costs, or
…
and the Court may grant judgment accordingly.
(2) No evidence is admissible on an application,
(a) under paragraph (1)(a), except with leave of the Court or on consent of the parties, or
(b) under paragraph (1)(b).
In determining whether the Crown had met the threshold requirements necessary to succeed in its application the court relied upon a passage from
Brenneur v. The Queen:[5]
[35] I am not satisfied that such a contingent intention to consider reassessing a taxpayer constitutes a proposed assessment of that taxpayer for the purposes of section 174. It is often the case that a taxpayer and one of the other witnesses are adverse in fiscal interest and that they give conflicting testimony. It does not seem appropriate that each time that occurs the CRA should have the right to ask the Court to consider making the witness a party to the tax proceeding. It is the CRA’s responsibility to investigate and decide which version of the facts it believes is more likely than not correct. While it may be appropriate in a close or grey-area case to permit the CRA to ask the Court to consider ordering a reference, this hardly seems appropriate where the CRA, after investigation, has concluded clearly in one direction and not the other. Again, while references in circumstances such as those in the present case would remove the risk of inconsistent decisions ultimately being issued by the Court in two different proceedings, that would come at a remarkable and unjustifiable price if all witnesses in tax appeals whose fiscal interests were adverse to the appellant’s were to be subject to applications for section 174 references to have them joined as parties to the appeal in which they are otherwise testifying or being compelled to testify. Since I do not accept that there is a proposed reassessment by the CRA of Mr. Batalha for the purposes of section 174, this Court has no jurisdiction to grant the respondent’s application for a reference of common questions and the application will be dismissed, with costs.
The court held that the Crown had not met the onus upon it and dismissed its application:
[12] Factually, in respect of the proposed assessee, TRG, the Applicant has:
1. provided no representations or evidence of any direct communication to TRG of any possible reassessment or any grounds or basis for same;
2. disclosed no results, facts or conclusions arising from any conduct of a review of TRG’s files in order for the Minister to assess the likelihood of any proposed reassessment; and
3. disclosed no reasonable, tangible or theoretical efficiencies to be gained from the prior determination of the question, rather than simply proceeding with the otherwise pending hearing of the single appeal.
[13] On the final point, it should be noted that the Appellant’s present appeal is proceeding under the
Excise Act, Informal Procedures of this Court. The appeal appears to be entirely factually based. It is a reasonable proposition that simply proceeding to a hearing of the present single appeal under such streamlined rules would equally simplify the process; without the need of involving the third party in an equally, if not procedurally more complicated process in order to determine a factual, as opposed to a legal question under section 311. Based upon the timid and hardly evident nature of any proposed reassessment by the Minister of TRG in the Applicant’s submissions, on balance the Court finds that the outcome of the single party appeal will more fulsomely, expeditiously and determinatively confirm the CRA’s ultimate decision regarding any proposed reassessment of TRG.
As noted previously this type of application is uncommon but nevertheless, where the Crown is successful, this procedure can result in third party taxpayers becoming unwilling parties to tax appeals in which they potentially have no fiscal interest. Thus it is important that the court, as was the case here, require that the Crown meet its relatively high procedural onus or have its application dismissed.
[1] 2012 TCC 116.
[2]311(1) Where the Minister is of the opinion that a question arising out of one and the same transaction or occurrence or series of transactions or occurrences is common to assessments or proposed assessments in respect of two or more persons, the Minister may apply to the Tax Court for a determination of the question.
R.S.C. 1985, c. E-15.
[3] R.S.C. 1985, c. T-2.
[4] SOR/90-688a.
[5] 2010 TCC 610.