"(f) the Appellant also supplied other products which were not zero-rated pursuant to Schedule VI of the Act; and
(g) during the periods under appeal, the Appellant failed to collect tax of not less than $42,274.72 on its supply of products which were not zero-rated pursuant to Schedule VI of the Act."
Justice Campbell explained the fault in this Reply:
" Assumptions (f) and (g) are the two crucial assumptions of the seven pleaded in the Reply. They both contain statements of mixed fact and law. According to the jurisprudence, the Minister is prohibited from assuming statements of mixed fact and law and is limited to making factual assumptions only.
" In the present appeal, since the Minister’s crucial assumptions are statements of mixed law and fact, they have placed the Appellant at a distinct disadvantage in determining the case it would have to meet. The Respondent has assumed how the law is to be applied to the facts and has assumed the shoes were not zero-rated pursuant to Schedule VI of the Act. Such an assumption is not one of fact but, rather, states the answer to the precise question that is before me to decide. It consists of the Respondent’s opinion on the applicability of the law to the facts of the appeal. This is precisely the type of assumption the Supreme Court of Canada (Canada(Director of Investigation and Research)) had in mind when the Court defined questions of mixed fact and law.
" The Reply contains no assumptions of fact, or material facts pleaded elsewhere in the Reply, that would do the following: clearly distinguish for the Appellant those features of the footwear for which the Minister alleges HST should have been collected and remitted as opposed to those features of the footwear where HST did not have to be collected. Assumptions (f) and (g) do not assist the Appellant in this regard and merely make a statement as to how the law applies to the facts. As well, there were no other such facts assumed elsewhere in the Reply. Consequently, there is no onus on the Appellant to demolish the Minister’s assumptions, as they are invalid.
" Where the Minister has not set out any proper assumptions of fact in the pleadings, the onus then reverts to the Minister to establish the correctness of the assessment.
" The Respondent’s only evidence was the testimony of the appeals officer. Although Mr. Bourne was straightforward in providing his testimony, it did not establish that the footwear in issue should be, on a balance of probabilities, subject to HST. His conclusion was simply that he could not find sufficient information, either through product materials or the internet, to allow the shoes to be zero-rated. Rather, his conclusion was based on a lack of knowledge respecting the footwear. The Respondent bears the onus to establish that the footwear would be excluded from the scope of the legislative provision. I was not provided sufficient evidence to persuade me that, on a balance of probabilities, the shoes were not specially designed for use for a “crippled or deformed or similarly disabled foot”. Since there were no assumptions of fact pleaded and since the Respondent did not lead evidence in this regard, the Appellant must succeed in its appeal."
See Health Quest Inc v. The Queen, (2014 TCC Campbell)