Viterra Inc. v. R. – TCC: Subsection 58(1) ruling denied on complex GST question - salient facts not before the Court

Viterra Inc. v. R. – TCC:  Subsection 58(1) ruling denied on complex GST question - salient facts not before the Court

https://decisia.lexum.com/tcc-cci/decisions/en/item/306254/index.do

Viterra Inc. v. The Queen (February 7, 2018 – 2018 TCC 29, D’Arcy J.).

Précis:   The taxpayer moved under Rule 58(1) for determination of an issue:

Was the Minister statute barred on February 19, 2016 from assessing GST collectible totalling $640,492.69 on the supply of investment management services made by the Appellant to three pension plan trusts (assuming such supplies were made), for the reporting periods from August 1, 2003 to July 31, 2004 and from August 1, 2004 to July 31, 2005?

The taxpayer argued that the new reassessments, which arose out of prior assessments to which it had objected, arose out of separate transactions and were, accordingly, statute-barred.

The Tax Court held that this was not an appropriate case for a determination under Rule 58(1) since many of the necessary facts were not before the Court and that the matter should be determined by the trial judge.  There was no order as to costs since the Crown had consented to the Rule 58(1) hearing.

Decision:  The underlying facts of this decision are somewhat involved:

[5]              The statement of accepted facts reads as follows:

a) the appellant was formerly known as Saskatchewan Wheat Pool (“SWP”);

b) SWP was a grain handling and agri-food processing and marketing company based in Regina, Saskatchewan;

c) during the material times, SWP was the administrator of three separate defined benefit pension plans (the “Pension Plans”);

d) each of the Pension Plans was funded through a separate trust established to hold and invest the assets of the respective Pension Plans;

e) during the periods from August 1, 2003 to July 31, 2004 and August 1, 2004 to July 31, 2005 (the “Relevant Periods”) SWP acquired the services of third party investment managers to manage the Pension Plans’ funds (the “Investment Services”);

f) during the Relevant Periods and at all material times, SWP was a GST registrant and was required to file GST returns on a monthly basis;

g) for each monthly reporting period within the Relevant Periods, SWP filed a GST return (collectively the “GST Returns”), and more than four years had elapsed before February 19, 2016 since the later of:

            i.          the date on which SWP was required to file its GST Return; or

            ii.          the date when SWP filed its GST Return;

h) in the GST Returns, SWP claimed, inter alia, input tax credits (“ITCs”) totalling $640,492.69 for the GST paid to investment managers in respect of the Investments [sic] Services;

i) the Minister originally assessed SWP for the Relevant Periods on August 10, 2007 and September 17, 2008 (the “Assessments”), respectively;

j) in the Assessments, the Minister denied SWP’s ITC claims on the GST paid to the investment managers in respect of the Investment Services on the basis that SWP did not acquire the Investment Services for consumption, use or supply in the course of SWP’s commercial activities;

k) SWP objected to the Assessments on November 2, 2007 and December 10, 2008, respectively, and SWP and the Minister agreed to hold the objections in abeyance pending the outcome of General Motors of Canada Limited’s (“GM”) appeal to the Federal Court of Appeal, which dealt with a similar issue;

l) nearly seven years after the Federal Court of Appeal decided GM’s appeal, the Minister issued reassessments for the Relevant Periods on February 19, 2016 (the “Reassessments”);

m) in the Reassessments, the Minister allowed the ITCs totalling $640,492.69 claimed by SWP in respect of the GST paid to the investment managers on the Investment Services;

n) however, in the Reassessments, the Minister also included unreported GST collectible totalling $640,492.69 by SWP on the supply of the Investment Services by SWP to the Pension Plans; and

o) there is no allegation of SWP making misrepresentations attributable to its neglect, carelessness, or wilful default in respect of the Investment Services.

The taxpayer’s position was that the reassessment arose out of separate transactions and were therefore statute-barred:

[15]         The Appellant argues that subsections 298(3) and 298(6.1) do not give the Minister the authority to issue, after the expiry of the statutory limitation period, a reassessment, to give effect to a decision on an objection that assesses new tax on different transactions. Specifically, the Minister cannot take into account new or different transactions after the expiry of the statutory limitation period. The Appellant argues that this is the result even if the reassessment results in the same or a lower amount of tax payable.

[16]         It is the Appellant’s position that the reassessments of the determination of the Appellant’s entitlement to input tax credits in respect of supplies made by third party investment managers to the Appellant and the determination of the taxation of an alleged supply by the Appellant of investment management services to the Pension Plans involve two separate transactions. The first transaction is the supply of services by the third party investment managers to the Appellant and the second is the supply of services by the Appellant to the Pension Plans.

[17]         The Appellant argues that the Minister cannot assess in respect of the second transaction after the expiry of the statutory limitation period.

The Court found that this was not an appropriate case for a determination under Rule 58(1) because many material facts were not before the Court:

[45]         In order to answer the Rule 58 Question, the Court must determine whether the supply of the investment management services by third parties to the Appellant and by the Appellant to the Pension Plans is part of the same transaction, or a series of transactions, such that the Minister did not consider any new transactions when reassessing the Appellant. The relevant facts, including agreements, required to make such a determination are not before the Court.

[46]         For example, the Appellant’s counsel admitted during oral argument that the Appellant resupplied the investment management services to the Pension Plans. As a result, there may be an interrelationship between the Appellant’s acquisition of the investment management services and its resupply of such services to the Pension Plans. I do not have the facts before me to determine if such a relationship exists and, if it does, the nature or extent of such relationship. The Court cannot answer the Rule 58 Question without such knowledge. It cannot answer the question in a factual vacuum.

[47]         In my view, assuming that the parties place the relevant evidence before the Court, only a trial judge can answer the Rule 58 Question.

The Court therefore declined to answer the question raised on the Rule 58(1) application and left the matter for the trial judge.  There was no order as to costs since the Crown had consented to the Rule 58(1) hearing.