Tax Court of Canada


Tax

Goods and Services Tax

Administration and enforcement

Registrant was not entitled to claim interest on letter of credit as “costs of proceedings”

Minister of National Revenue assessed American registrant for uncollected GST/HST on sales of recreational vehicles (RVs) and freight transportation service relating to parts and uncollected provincial component of HST with respect to parts shipped from US to Canadian dealers. Registrant provided letter of credit to secure its unpaid GST/HST and paid interest of $1,409,710.52 on it. Tax Court judge allowed registrant’s appeal in part. Judge held that registrant was not required to collect and remit GST and HST on RVs but was required to collect and remit provincial component of HST on parts shipped from US to Canada. Registrant brought motion for costs. Motion granted. Registrant was awarded costs of appeal of $427,222.42 plus tax but not costs of motion. Registrant was substantially successful in its appeal as 98 per cent of assessed amount related to sales of RVs. Registrant was entitled to Tariff A fees of Tax Court of Canada Rules (General Procedure) prior to settlement offer and substantial indemnity costs of $347,856.80 after offer. Registrant was not entitled to claim interest on letter of credit as “costs of proceedings” under s. 147(3)(j) of Rules or as disbursement under Tariff B of Rules. Interest related to GST/HST owed and was not paid to establish that Minster’s assessment was incorrect. It was difficult to understand why Minister did not admit one fact or foreign law but this conduct did not justify enhancing fees beyond substantial indemnity after settlement offer. Taking into account factors under s. 147(3) of Rules, costs should be enhanced to $20,000 for period before offer of settlement. Registrant was entitled to $59,365.62 as disbursements after 15 per cent discount.

Jayco, Inc. v. The Queen (2018), 2018 CarswellNat 7470, 2018 TCC 239, Johanne D’Auray J. (T.C.C.); additional reasons (2018), 2018 CarswellNat 534, 2018 TCC 34, Johanne D’Auray J. (T.C.C. [General Procedure]).

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