Decisions

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Ottawa, Wednesday, November 10, 1993

Appeal No. AP-92-030

IN THE MATTER OF an appeal heard on May 18, 1993, under section 81.19 of the Excise Tax Act, R.S.C. 1985, c. E-15;

AND IN THE MATTER OF a decision of the Minister of National Revenue dated March 31, 1992, with respect to a notice of objection served under section 81.17 of the Excise Tax Act.

BETWEEN

ORLY AUTOMOBILE INC. Appellant

AND

THE MINISTER OF NATIONAL REVENUE Respondent

The appeal is dismissed.

Kathleen E. Macmillan ______ Kathleen E. Macmillan Presiding Member

Michèle Blouin ______ Michèle Blouin Member

Charles A. Gracey ______ Charles A. Gracey Member

Michel P. Granger ______ Michel P. Granger Secretary

On January 1, 1991, the appellant had an inventory of goods such as roofing materials, trim edged mouldings, trim clips, stripe material, glue, cleaning materials, etc., and, having paid federal sales tax on them, applied for a refund of the tax in the amount of $4,046.27 under section 120 of the Excise Tax Act. The respondent approved only $335.87 of the claim, leaving a balance of $3,710.40. The issue in this appeal is whether the appellant is entitled to the balance in accordance with section 120 of the Excise Tax Act.

HELD: The appeal is dismissed. The Tribunal did not have the benefit of any evidence submitted by the appellant in the furtherance of its case. As such, there was not sufficient evidence to substantiate the appellant's claim.

Place of Hearing: Ottawa, Ontario Date of Hearing: May 18, 1993 Date of Decision: November 10, 1993
Tribunal Members: Kathleen E. Macmillan, Presiding Member Michèle Blouin, Member Charles A. Gracey, Member
Counsel for the Tribunal: David M. Attwater
Clerk of the Tribunal: Janet Rumball

This is an appeal under section 81.19 of the Excise Tax Act [1] (the Act) of a determination of the Minister of National Revenue. The Tribunal disposed of the matter on the basis of its record as supplemented by a brief and affidavit submitted by the respondent. The issue in this appeal is whether the appellant is entitled to a federal sales tax (FST) inventory rebate in accordance with section 120 [2] of the Act.

On March 3, 1993, the Tribunal ordered the appellant, Orly Automobile Inc., to file its brief by March 18, 1993, after which the respondent would have 60 days to file a response. It was further ordered that, upon failure by the appellant to comply with the order, the Tribunal would dispose of the matter on the basis of the written documents before it, subject to a request by the respondent for a hearing. The order was made subsequent to two requests by the respondent for a postponement of the hearing due to the appellant's failure to file a brief and to one extension of time granted to the appellant to file its brief. The appellant failed to comply with the order and, on May 3, 1993, the respondent filed its brief supported by an affidavit of an auditor of the Department of National Revenue (Revenue Canada). No hearing was requested by the respondent.

During 1986 and 1987, the appellant was in the business of installing car roofing kits. The appellant invoiced its clients on an all-inclusive basis, the materials and labour supplied not being invoiced separately. Most installations were made on new cars, the appellant's clientele being comprised of car dealers. On January 1, 1991, the appellant had an inventory of goods such as roofing materials, trim edged mouldings, trim clips, stripe material, glue, cleaning materials, etc., and, having paid FST on them, applied for a refund of the tax in the amount of $4,046.27 under section 120 of the Act. The respondent approved only $335.87 of the claim, leaving a balance of $3,710.40, which was in issue in this appeal.

The application was disallowed by Revenue Canada on the basis that the goods were not items of inventory as defined in the Act, but were goods consumed in the performance of a service contract. In argument, counsel for the respondent further contended that, as the appellant changed its business activities in 1988, it was no longer installing car roofing kits in the ordinary course of its business. Also, since the appellant failed to file a brief and to lead evidence, it had not discharged its burden of proof.

After considering the evidence on file, the Tribunal disagrees with the respondent's assertion that all the goods in issue are merely consumed in the performance of a service contract. However, the Tribunal did not have the benefit of any evidence submitted by the appellant in the furtherance of its case. As such, there was not sufficient evidence to substantiate the appellant's claim.

Accordingly, the appeal is dismissed.

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1. R.S.C. 1985, c. E-15.

2. S.C. 1990, c. 45, s. 12.

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Initial publication: June 11, 1997