The judge’s reasons in this case are long — 50 pages — but essentially this was a directors’ liability case and the question was whether the used car auctioneer had delivered the cars to Indians under GST tax-exempt conditions. Based on CRA policy on GST for car sales to Indians, no GST applied to the sales of cars delivered to a reserve. The judge found that the cars were delivered to reserves or, at least, the director had reasonably supposed that they were delivered to reserves.
“While a director could have done more to better evidence delivery to a Reserve, as I said, perfection is not required.” (Para. 152)
In a long side point, the judge disagreed with the Government and the appellant director that the issue was simply whether the cars were delivered to a reserve, consistent with CRA policy on GST and Status Indians. He said the test for GST/HST Indian Act cases is still undecided but CRA’s policy on delivery to a reserve is not the right one. Even so, Hershfield J. agreed to decide the case on the basis of whether cars were delivered to a reserve.
This case is interesting because its facts differ from the usual directors’ liability case. In the usual case, the corporation collects the GST but doesn’t send it to CRA, often because the corporation has cash-flow trouble and uses the GST money to finance the business. Here the question was whether tax applied at all to the sales and whether the director was careful enough in deciding whether tax applied.