2237065 Ontario Inc. v. R. – TCC: Incorporated truck driver subject to HST – not an “interlining carrier”


2237065 Ontario Inc. v. The Queen (September 3, 2019 – 2019 TCC 189, Wong J.).

Précis:   During calendar 2011 and 2012 the taxpayer worked as an interline truck driver for Dhatt Transfreight Service Inc. (“Dhatt”).  He incorporated because Dhatt required him to do so.  He drove Dhatt’s trucks during the period (although he later acquired his own truck).  Dhatt advised him that his services were zero-rated and he confirmed this in a call with CRA.  CRA assessed HST and he appealed to the Tax Court.  The Tax Court dismissed the appeal.  During the periods in question he provided driving services not freight transportation services.  There was no order as to costs since this was an informal procedure appeal.

Decision:   Justice Wong summarized the entire case quite succinctly:

[21]  During the Period, the appellant was a supplier of driving services (to a carrier) and not a carrier supplying a freight transportation service. The interlining provision at section 11, Part VII, Schedule VI does not apply because the appellant was not a carrier during the Period. Therefore, the driving services provided by the appellant during the Period were not zero-rated and the appellant was responsible for collecting HST.

[22]  With respect to the appellant’s assertion that the Minister should have determined the amount of tax by multiplying the sales by a factor of 13/113 rather than 13 percent, the factor of 13/113 is used when an amount is comprised of the sale price and HST together. The factor serves to identify what amount of a global sales figure is actually HST. The appellant did not collect HST so there was no mingling of sale proceeds with tax, and the Minister was correct to use 13 percent.

[23]  With respect to Mr. Das’ testimony that he relied on incorrect advice given to him by CRA officers, this court cannot be bound by CRA’s advice or interpretations. In Grondin v. The Queen, 2015 TCC 169, [2015] TCJ No. 138 at paragraph 21, Justice Paris said:

[T]he Court cannot be bound by erroneous departmental interpretations. In Moulton v. The Queen, [2002] 2 CTC 2395, Associate Chief Justice Bowman (as he was then) stated the following at paragraph 11:

The appellant argues with great conviction that he should be entitled to rely on advice given by the CCRA and relied upon by him in good faith. I agree that the result may seem a little shocking to taxpayers who seek guidance from government officials whom they expect to be able to give correct advice. Unfortunately such officials are not infallible and the court cannot be bound by erroneous departmental interpretations. Any other conclusion would lead to inconsistency and confusion…

As a result, the appeal was dismissed, without costs since it was an informal procedure appeal.