Court of Appeal of Quebec

Agence du revenu du Québec c. Stamatopoulos

March 28, 2018

500-09-025851-163

Marcotte, Schrager, Roy

Appeal from a judgment of the Court of Quebec allowing an appeal from an assessment. Dismissed.

The respondent acted as an intermediary between the clothing manufacturers and the sub-contractors that make the clothing. For the period between March 2, 2006, and August 31, 2009, the Agence du revenu du Québec (ARQ) refused input tax refunds (ITR) claimed for the provision of services rendered by subcontractors. The respondent contested the assessment issued under the Act respecting the Québec sales tax (CQLR, c. T-0.1), which also imposed penalties, and the trial judge allowed the appeal. The ARQ criticizes the judge for erring in his assessment of the facts by finding that there were no false invoices and for imposing a burden of proof that was not the ARQ’s to meet, namely , of demonstrating that companies other than the subcontractors appearing on the invoices had rendered the services.

The judge did not err in finding that the clothing was manufactured by the subcontractors whose names are on the invoices. In the absence of a palpable and overriding error in the assessment of evidence, there is no reason to intervene in this respect. Moreover, under the Act respecting the Québec sales tax, the taxpayer’s burden is to make a prima facie case that the invoices for the provision of a taxable service were indeed issued by the person with whom they did business directly for the purpose of a real transaction. Taxpayers must provide prima facie proof of their contractual relationship to the provider whose name is on the invoice and the fact that it actually acquired the provisions or services for which ITR claims were made. Once the taxpayer has met this initial burden, it is up to the tax authorities to prove that the person with whom the taxpayer did business directly did not act as “provider” or “intermediary”. To impose on the taxpayer the burden of proving that the person with whom they did business directly for the purpose of a real commercial transaction personally provided the services without using the services of a third party goes beyond what the Regulation respecting the Québec sales tax requires (CQLR, c. T-0.1, r.2). The judge did not commit a reviewable error in his application of the evidentiary rules when he found that the respondent had met his initial burden of rebutting the ARQ’s presumptions. 


*Summary by SOQUIJ
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