CRA refused to process three GST/HST returns of the taxpayer (“353”) on the basis that such returns had not been filed within the four-year ITC limitation period under s. 225(4)(b), notwithstanding that such returns essentially represented corrections of a single global return covering over four years that had been timely filed.
After such refusal and more than one year after its objection was denied by CRA, 353 brought a mandamus application before the Federal Court to compel the Minister to grant refunds in respect of the initial three quarters. The Federal Court denied 353's motion on the basis, inter alia, that its ITC claims were denied by s. 296(4)(b). In particular, s. 296(4)(b) denied a refund of an overpayment of tax (attributable to an ITC) if, on the assessment date, such ITC could not have been claimed on that date in a return (due to the s. 225(4)(b) 4-year limitation).
Roussel JA dismissed the taxpayer’s appeal, stating (at paras. 3-4):
The Federal Court found that the unexplained 15‑month delay of inactivity between the appellant being notified by the CRA that its objection was invalid and the appellant initiating proceedings before the Tax Court of Canada created an equitable bar to the issuance of an order of mandamus … .
Absent a palpable and overriding error, this Court cannot interfere with the Federal Court’s exercise of discretion … .
[W]e need not comment on the Federal Court’s interpretation of paragraph 296(4)(b) … and these reasons should not be construed as an endorsement of the Federal Court’s analysis or conclusions with respect to this issue.