Robertson v. The Queen

Robertson v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2015-09-10
Neutral citation
2015 TCC 219
File numbers
2004-2266(GST)G
Judges and Taxing Officers
Réal Favreau
Subjects
Part IX of the Excise Tax Act (GST)
Decision Content
Docket: 2004-2266(GST)G
BETWEEN:
ÉDOUARD ROBERTSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
Appeal heard on May 27, 28 and 29, and June 4, 5, 6, 10, 11 and 12, 2014, at Alma, Quebec.
Before: The Honourable Justice Réal Favreau
Appearances:
Counsel for the appellant:
François Bouchard
Jean-François Delisle
Counsel for the respondent:
Anick Pelletier
Patrick Vézina
Nancy Bonsaint
JUDGMENT
The appeal from the reassessment made with respect to the appellant's company by Quebec's Minister of Revenue, as agent for the Minister of National Revenue, under Part IX of the Excise Tax Act, dated February 17, 2004, and bearing number 1651017, regarding the reporting periods from June 1, 1996, to May 31, 2002, is dismissed with costs, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of September 2015.
"Réal Favreau"
Favreau J.
Translation certified true
On this 18th day of January 2016
François Brunet, Revisor
Citation: 2015 TCC 219
Date: 20150910
Docket: 2004-2266(GST)G
BETWEEN:
ÉDOUARD ROBERTSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1] This is an appeal from the reassessment made with respect to the appellant's company by Quebec's Minister of Revenue, acting as agent for the Minister of National Revenue (the Minister), under Part IX of the Excise Tax Act, R.S.C. 1985, c. E‑15, as amended (the ETA), dated February 17, 2004, and bearing number 1651017, regarding the reporting periods from June 1, 1996, to May 31, 2002 (the impugned assessment).
[2] Under the impugned assessment, the Minister is claiming the following sums from the appellant: $302,689.40 in goods and services tax (GST), $39,712.04 in penalties under subsection 280(1) of the ETA, and $29,214.07 in interest. The amount of GST assessed per period is set out in Schedule A, as appended to the Amended Reply to the Notice of Appeal dated October 14, 2011, and reproduced at the end of this judgment.
[3] The impugned assessment vacated and replaced the reassessment dated May 8, 2003, and bearing No. 1650879, which concerned the June 1, 1993, to May 31, 2002, reporting periods, and under which the Minister claimed $514,172.81 in total from the appellant: $334,438.97 in GST, $102,554.04 in penalties, and $77,179.80 in interest. In making the impugned assessment, the Minister relied on the same facts regarding the June 1, 1996, to May 31, 2002, reporting periods as those underlying the reassessment dated May 8, 2003, except for the operating period of the appellant's company. In fact, the Minister assumed that the appellant only started operating his company on or about June 1, 1996. When making the impugned assessment, the June 1, 1993, to May 31, 1996, reporting periods were assessed as zero, with adjustments for interest and penalties.
[4] The reassessment dated May 8, 2003, was vacated and replaced by the original assessment dated August 5, 2002, and bearing number 1245832, under which the Minister was claiming from the appellant $751,626.18 in total, that is, $488,146.26 in GST, $150,264.01 in penalties, and $113,215.91 in interest.
[5] At issue are the following points:
(a) Did the Minister properly assess the appellant on the ground that, under the ETA, he was required to collect GST on taxable sales made to non-Indians and to remit this GST to the Minister?
(b) In the impugned assessment, did the Minister properly calculate the percentage of non-taxable supplies made to Indians?
(c) Was the impugned assessment time-barred?
(d) Did the Minister properly impose a penalty on the appellant for failing to collect GST and to remit it to the Minister under subsection 280(1) of the ETA?
[6] The appellant raises the following four errors, in fact and in law, against the impugned assessment:
(a) The ETA's inconsistency with the Indian Act, R.S.C. 1985, c. I-5, as amended (the Indian Act);
(b) The lack of procedural fairness towards the appellant;
(c) The absence of a treaty with the Montagnais du Lac St-Jean and the appellant's Aboriginal rights;
(d) The fact that the impugned assessment is overestimated and time-barred.
Relevant facts
[7] The appellant is an Indian within the meaning of the Indian Act and a member of the Mashteuiatsh Montagnais Band (Pointe-Bleue).
[8] The appellant has been operating a fur manufacturing and sales business as René Robertson fourrures EDA since at least or about June 1, 1996. Before that, the company, which has been in the family for four generations, was operated by the appellant's father, René Robertson, and other ancestors.
[9] During the period at issue, the appellant had a place of business at 1619 Ouiatchowan Street on the Mashteuiatsh Indian Reserve (Pointe-Bleue), Roberval District. The appellant operated the business publicly and openly.
[10] In March 2000, Revenu Québec made its first request to the appellant to audit his books and records in order to assess whether he owed GST.
[11] In a letter dated March 8, 2000, the appellant asked Revenu Québec to contact his local political representatives, the Conseil des Montagnais du Lac St-Jean, aware of the negotiations under way at the time between the Government of Canada, the Government of Quebec and the Conseil tribal Mamuitun mak Nutahquan to redefine the political and economic powers of the communities that were part of the Conseil tribal.
[12] On or about April 17, 2001, Revenu Québec informed the appellant by telephone that its officials wished to audit the appellant's books and records on site on May 6, 2001.
[13] On April 20, 2001, the appellant wrote to the Conseil des Montagnais to ask it to intervene, stating that he was willing to collect GST and to remit it to the local authority, in accordance with the repatriation of powers by the Conseil des Montagnais.
[14] On May 2, 2001, Revenu Québec sent the appellant a requirement to produce information on GST and a similar requirement for Quebec sales tax (QST) so that it could assess him for the April 1, 1997, to March 31, 2001, period.
[15] In a letter dated May 11, 2001, the Chief of the Conseil des Montagnais asked the Minister to order its officials to suspend their interventions in the Mashteuiatsh community pending the outcome of the tripartite negotiations between the Government of Canada, the Government of Quebec and the Conseil tribal Mamuitun mak Nutahquan.
[16] In a letter dated July 5, 2001, the Deputy Minister of Revenu Québec denied the May 11, 2001, request of the Chief of the Conseil des Montagnais, explaining that the negotiations under way would not postpone, alter, suspend or cancel Revenu Québec's current efforts to fulfill its mission.
[17] On or about October 29, 2001, Revenu Québec informed the appellant by telephone that it intended to audit his books and records on or about November 14, 2001.
[18] On November 1, 2001, the appellant wrote to the Acting Chief of the Conseil des Montagnais to enquire about the status of the negotiations with the federal and Quebec governments and of the Conseil's current position on the question of tax.
[19] On November 12, 2001, Revenu Québec sent the Caisse populaire Desjardins Pointe-Bleue a requirement to produce information and documents regarding René Robertson Fourrures and Édouard Robertson for the October 1, 1997, to September 30, 2001, period.
[20] On January 8, 2002, Revenu Québec sent a requirement to produce information and documents, similar to the one described in the previous paragraph, to the Bank of Montreal's Grande-Allée branch in Québec, where the appellant had an account.
[21] On February 3, 2002, the appellant again wrote to the local political authorities to request an update on the negotiations with the federal and provincial authorities.
[22] By February 2002, Revenu Québec had still not audited the appellant's books and records, despite its many requests to do so.
[23] On August 5, 2002, Revenu Québec sent the appellant a draft GST and QST assessment for the June 1, 1993, to May 31, 2002, period, without completing a full audit of the appellant's books and records given the appellant's repeated refusals to provide said documents for the purposes of an audit.
[24] The draft assessment and the original notice of assessment for GST bear the same date, August 5, 2002, meaning that the appellant had no time to provide Revenu Québec authorities with additional information.
[25] On August 26, 2002, Clifford Moar, Chief of the Conseil des Montagnais, sent Quebec's Minister of Revenue a letter asking him to suspend the proceedings regarding the assessments made against the appellant on the basis that the Conseil des Montagnais du Lac St-Jean had signed a framework agreement with the Government of Quebec covering several matters, including a sectoral agreement on taxation, and that this agreement was in the process of being approved by the Quebec Cabinet.
[26] On September 25, 2002, Revenu Québec's collections division sent the appellant a final notice of payment for a total of $1,591,519.64 in GST and QST.
[27] On October 2, 2002, the Deputy Minister of Revenu Québec replied to the August 26, 2002, letter from the Chief of the Conseil des Montagnais, reiterating that, until an agreement on taxation was reached, Revenu Québec was bound to apply current taxation rules fairly and to all the taxpayers and agents it serves. The Deputy Minister offered to meet with all Mashteuiatsh Reserve merchants who had received an assessment in order for both parties to attempt, in good faith, to agree on satisfactory payment terms.
[28] In a letter dated October 4, 2002, the appellant reiterated his position that he recognized only one political authority within the Mashteuiatsh community, namely, the Conseil des Montagnais, and that he was willing, on a voluntary basis, to levy a sales tax as of January 1, 2003, and to remit that tax to the Conseil des Montagnais in order to give the respective political leaders the time to find realistic, achievable solutions that satisfied both parties.
[29] On the same day, that is, October 4, 2002, the appellant again wrote to the Conseil des Montagnais asking it to clearly state its position on taxation to the federal and provincial governments.
[30] In a letter dated October 9, 2002, the Chief of the Conseil des Montagnais asked the Premier of Quebec, Bernard Landry, to suspend any collection proceedings against Mashteuiatsh companies, including that of the appellant.
[31] In response to the letter dated October 9, 2002, René Trudel, the Quebec Minister responsible for Aboriginal Affairs, wrote a letter to the Chief of the Conseil des Montagnais, dated December 20, 2002, stating that André Forget of Revenu Québec would contact Alain Nepton shortly in order to set up a sectoral negotiation table on taxation.
[32] On or about January 31, 2003, Revenu Québec's collections division sent the appellant's financial institution an order to pay $783,191.34 in accordance with section 317 of the ETA.
[33] On February 14, 2003, in accordance with section 316 of the ETA and following the appellant's refusal to comply with the final notice of payment, Revenu Québec's collections division registered with the Registry of the Federal Court a certificate having the same effect as a judgment rendered against the appellant, ordering him to pay $783,734 to Revenu Québec under Federal Court Docket No. GST-627-03.
[34] In a letter dated February 18, 2003, the appellant, through his counsel, asked Revenu Québec to respond to his letter dated October 4, 2002, which the appellant saw as an objection to the original assessment dated August 5, 2002.
[35] In a letter dated March 4, 2003, Revenu Québec's collections division served the appellant with copies of the two judgments held in favour of Quebec's Minister of Revenue. One of these decisions was made in accordance with the ETA, while the other was rendered under the Act respecting the ministère du Revenu. In accordance with both decisions, the appellant was liable to pay $1,655,999.47, including $783,734.83 payable in GST, including the duties, penalties and interest incurred until March 4, 2003. This amount was to be paid no later than April 4, 2003.
[36] In an email dated March 14, 2003, André Forget of Revenu Québec's Aboriginal affairs directorate informed counsel for the appellant that Revenu Québec was willing to rapidly review the arguments of taxpayer Édouard Robertson if it was given quick access his company's books and records in order to analyze them.
[37] In a letter dated April 1, 2003, Revenu Québec asked the appellant to provide it with documents to allow it to audit the years of 1994 to 2002.
[38] In April 2003, the appellant, for the first time, offered to cooperate with Revenu Québec, by authorizing it to audit his books and records at his place of business on the Mashteuiatsh Reserve.
[39] On April 15, 2003, Revenu Québec sent the appellant a new draft assessment, the result of this audit, claiming from him $514,172.81 in total, namely $334,438.97 in GST, $102,554.04 in penalties, and $77,179.80 in interest.
[40] On May 8, 2003, the Minister made a reassessment bearing number 1650879, which replaced and vacated the August 5, 2003, assessment, and in which he sought $514,172.81 in total from the appellant for the June 1, 1993, to May 31, 2002, period.
[41] On May 29, 2003, the appellant filed, through his counsel, a notice of objection in due and proper form against assessment number 1650879 made by Revenu Québec on May 8, 2003, [translation] "without prejudice to the first objection sent on October 4, 2002".
[42] In a letter dated June 16, 2003, Revenu Québec informed the appellant that his notice of objection dated May 29, 2003, could not be accepted because it was served outside the time prescribed by the ETA.
[43] On June 23, 2003, Revenu Québec sent the appellant a new final notice of payment for a total of $1,151,972.50 in GST and QST, including interest and penalties until June 23, 2003.
[44] On June 30, 2003, and July 3, 2003, the appellant, directly and through his counsel, again demanded in writing a response to his original notice of objection dated October 4, 2002.
[45] In a letter dated July 4, 2003, Revenu Québec's Direction des oppositions confirmed that the appellant's notice of objection for the June 1, 1993, to May 31, 2002, period had indeed been served within the time prescribed by the ETA.
[46] On July 14, 2003, Revenu Québec sent the appellant's financial institution a new payment order for the sum of $556,660.30 under section 317 of the ETA.
[47] In a letter to counsel for the appellant dated July 17, 2003, Revenu Québec explained that the reassessment replaced the preceding assessment regarding which the appellant had sent his letter dated October 4, 2002. The question of whether this letter amounted to a notice of objection had consequently become moot.
[48] On July 21, 2003, counsel for the appellant wrote to Revenu Québec again about the prejudice suffered by the appellant from the lack of a response to the various notices of objection served by him in reply to the various notices of assessment he had received.
[49] In a letter dated August 25, 2003, the appellant told the new chief of the Conseil des Montagnais, Gilbert Dominique, that he was at the point of giving up and filing for bankruptcy as a result of the pressure put on him by Revenu Québec and his financial institution.
[50] Upon his receipt from Revenu Québec of a notice of revocation of his certificate of registration under the ETA on September 16, 2003, with the order [translation] "to cease operating his company immediately . . .", the appellant filed an application for an interlocutory injunction under docket No. 155‑17‑000043-030 with the Quebec Superior Court in order to have the notice of revocation of his certificate of registration stayed.
[51] The parties reached an interim agreement, designed, among other things, to suspend the proceedings relating to the application for an interlocutory injunction and to bring before this Court the objection proceedings with respect to all issues concerning the validity of the notices of assessment.
[52] On January 27, 2004, Revenu Québec's Direction des oppositions sent the appellant its response to the notice of objection by assessing the duties owed under the ETA at $233,763.29 in GST instead of $334,438.
[53] On February 17, 2004, the Minister made a reassessment bearing number 1651017 for $302,690.20 in total, that is, $233,763.29 in GST, $39,712.84 in penalties, and $29,214.07 in interest.
Testimony of Édouard Robertson
[54] Mr. Robertson operates a business that buys and sells fur pelts and a workshop that produces leather and fur clothing on the Mashteuiatsh reserve. The fur trade is not the main item of his total sales.
[55] The business's clients are mainly non-Indians. Sales to Indians account for only about 20% of the business's total sales.
[56] In 1996, Mr. Robertson purchased the business then operated by his father, with the exception of the part of the business involving the purchase and sale of raw fur pelts, which he acquired in 2001. The business purchase price was $440,000, which was financed through a loan entered into with the Bank of Montreal.
[57] When he purchased the business in 1996, there were four fur traders in Lac St‑Jean, including Mr. Robertson. Only 10% of the volume of fur pelts purchased by Mr. Robertson came from Indian trappers.
[58] In 1996, Mr. Robertson's business had only four temporary employees, who made hats, mittens and accessories. At the time, the business's sales amounted to no more than $400,000. Over the following years, sales grew continuously, reaching $1,264,223.60 for the fiscal year starting June 1, 2001, and ending May 31, 2002. The number of employees grew as sales grew, reaching 15 to 20, both permanent and temporary, employees in total.
[59] According to the income statement for each of the years at issue, with the exception of the year starting June 1, 1996, and ending May 31, 1997, for which there are no financial statements, the main items making up the sales figure were hats, mittens, boots, moccasins, handicrafts, and new, used and remodeled fur coats; the cleaning, repair and storage of fur coats; the sale of mounted animals; the sale of pelts; and wholesale (contracts).
[60] For the main items making up his business's sales, Mr. Robertson provided many highly useful explanations. His business manufactured hats, mittens, moccasins and reverse lambskin coats. The hats were made from 80% wild animals and 20% farmed minks, while mittens and moccasins were produced from 100% beaver pelts. The business bought and resold tanned moose leather moccasins made by Huron or Atikamekw. Boots were made by an independent supplier from 100% wild animal skins.
[61] Fur coats were tailored or remodeled by a Montréal company operating as Fourrures Micheline Inc., of which Mr. Robertson bought 49% of the voting shares in 1998. According to Mr. Robertson, about 40% of the pelts used by Fourrures Micheline Inc. came from farmed animals, and 60% from wild animals. Fourrures Micheline Inc. made an assignment in 2003 or 2004.
[62] Handicrafts were mainly made by the local community and other Aboriginal communities.
[63] Wholesale sales represented manufacturing contracts for the company Canuck. Sales to Canuck started in 1998 and, over the years, became the biggest item of the business's sales. To fill orders from Canuck, Mr. Robertson's business used both wild coyote pelts (90% of which came from Canada and 10%, from the state of Montana in the United States) and silver fox pelts. The main supplier of the Canadian coyote pelts and silver fox pelts was Roberge Fourrures, a company located in Montréal. Mr. Robertson also purchased dressed, or tanned, furs from Roberge Fourrures as well as from Finish and Norwegian supplies, and he had pelts tanned by Vaudry, a non-Aboriginal company.
[64] Mr. Robertson bought raw furs from his father, who bought them from trappers. Ninety per cent of the raw furs were sold to Fourrures Micheline Inc., and the other ten to other non-Aboriginal manufacturers, who made coats from them. The other raw fur sales were excluded from the sales figure of Mr. Robertson's business until 2001 because they related to the business activities of the appellant's father.
[65] Mr. Robertson also had reverse lambskin coats and fleece and leather (pig- and lambskin) clothing made by design studios in Montréal.
[66] The sales of mounted hides related to bear skin rugs.
[67] Before acquiring his father's business, Mr. Robertson was the director general of the Conseil des Montagnais du Lac St‑Jean from 1991 to 1996. From 1996 to 2010, he took care of the business on a full-time basis. In 2010, he became the director general of the Société de Développement Économique Ilnu (SDEI), whose mandate is to promote business development on the Mashteuiatsh reserve. According to recent figures, the reserve has some 125 businesses in a community of about 2,000 inhabitants.
Expert testimony
[68] Historian and anthropologist Claude Gélinas, Ph.D., testified for the appellant and filed an expert report entitled "Les Montagnais du Lac Saint-Jean et leur tradition de commerce des fourrures" [The Montagnais du Lac Saint‑Jean and the traditional fur trade]. The study begins by painting a picture of the trading tradition among the Aboriginal people of the Lac Saint Jean region from prehistoric times until the middle of the 20th century, more specifically, the tradition of trading in furs. The author attempts to show how, even in pre-contact times, Aboriginal peoples were participating in broad exchange networks across northeastern North America as part of which they were able to procure a variety of products from neighbouring groups in order to supplement their subsistence economies, very often in exchange for fur.
[69] The study shows that the Montagnais's trading tradition always existed in a context of complete political and narrative autonomy. The absence of political institutions above the community level in the Eastern Subarctic before the arrival of the Europeans left Aboriginal families and bands free to establish trade relations with whomever they wished. This reality did not really change after contact, in the sense that the absence of treaties subjecting the Montagnais du Lac Saint-Jean to the authority of the Crown, the inexistence of effective governing institutions in the Lac Saint-Jean area before the second half of the 19th century and the absence of the major restrictions on the fur trade imposed by the Indian Act allowed the Montagnais to freely engage in this activity until the mid‑20th century.
[70] The third part of the study deals with the historical size of the territory occupied and exploited by the Montagnais and to which they had access over the centuries, in order to hunt and trap.
[71] The sources for this study were filed as Exhibit A-7 in 11 volumes of printed, double-sided documents. Given the relevance of the analysis provided in this study, I have appended all of its conclusions.
[72] Historian Alain Beaulieu, Ph.D., testified for the respondent and adduced an expert report entitled "Commerce, Structure politique et changements sociaux : le cas des Montagnais du Saguenay-Lac-Saint-Jean, 1600-1950" [Trade, political structure and social change: the case of the Montagnais of the Saguenay-Lac-Saint-Jean, 1600–1950]. This authoritative study, covering three and a half centuries of history, provides an historical analysis of the role played by the Montagnais du Lac-Saint-Jean in the fur trade.
[73] It is impossible to reproduce the wealth of historical data this study covers; it is worth reproducing, however, some particularly revealing excerpts, specifically with respect to the pre-contact period:
[translation]
Canada's colonial history is closely linked to the history of the fur trade. This commercial activity, which led to the foundation of a French colony in North America, also played a key role in the relations the Europeans established with the Aboriginal nations. The fur trade formed the basis for a network of alliances established by the French as early as the 17th century, the ramifications of which spread far into the continent, partly thanks to a series of trading posts and forts. Following the conquest of New France, in 1760, the fur trade continued to play an important economic role for many decades. It did not really start losing its central position in Eastern Canada's colonial economy until the 19th century, when a new activity, the forestry industry, took its place, by stimulating the economic growth of the British colonies and opening up new territories for colonization. (Page 1)
The dynamic role played by Aboriginal people in the fur trade can therefore no longer be ignored. What must be avoided, however, is embellishing their participation, given that the fur trade also had disruptive effects on their own communities: in the medium term, participation in the fur trade resulted in a situation of dependence for most Aboriginal groups. (Page 2)
In its early days, the fur trade certainly fostered the establishment of a harmonious relationship between Europeans and Aboriginal people, but it also integrated Aboriginal people into the economic and political sphere of the European powers. Indeed, in the 17th century, the French established themselves in the St. Lawrence Valley with the firm intention of asserting their authority, as was the intention of the British, when they replaced the French in 1760. The fur trade was certainly one of the first areas where the French exercised powers associated with the establishment of a new sovereignty. The granting of trade monopolies over large territories, in order to stimulate colonization or generate income for the state, is one of the most striking examples of this. (Page 2)
Historically, the fur trade, specifically with respect to the relationship of dependence it established, initiated a process that led to the integration of Indian nations into the new political order, which structured their autonomy by limiting and governing it. It is certain, however, that as long the fur trade remained an activity that was essential to the colony's survival, the colonial powers could not gain a strong hold over the Aboriginal nations. It would be a mistake to deny the influence of the colonial power in this area; but it would be another one to give this influence an importance or role that it did not have. It is no accident then that when the fur trade began to decline in the 19th century, the colonial government strengthened its authority over eastern Canada's Aboriginal societies by creating reserves, enacting the Indian Act and deploying a strategy of guardianship in its relations with Aboriginal people. (Page 3)
The Montagnais, like other Aboriginal people from northeastern North America, were integrated into bartering networks, through which they were able to procure certain goods and products they did not make themselves. Recent archeological digs have shed more light on this aspect of the economy of Aboriginal societies and support the descriptions of the first European observers.
. . .
Thanks to archaeological excavations carried out on various sites in central Quebec, the St. Lawrence Valley, southern Ontario, the United States and even Mexico, we know that there were already several trade routes before the arrival of the Europeans. Based on the artefacts discovered, archeologists have found that wares were circulating over great distances. It is not surprising then to find products from the Atlantic or Pacific coasts in the North American heartland, that is, far away from where they came from. Materials such as quartzite, jasper, copper and catlinite, which have been discovered at various North American sites, show that Aboriginal people were engaging in long-distance trade. They also exchanged other items, such as pottery, flintstone, rope, wampum and fishing nets, and various convenience goods, such as dried fish, corn and tobacco. (Page 12)
Archeological discoveries and a reinterpretation of 17th-century historical sources have led many researchers to completely revise their vision of trade in the Aboriginal societies of northeastern North America. A common trend is to present Aboriginal people—and this is true of the Montagnais, including those of Tadoussac—as savvy, skilled traders seeking to outplay their competitors. This image, which is supported by documentation (see the following section), should not, however, make us lose sight of the overall context in which Aboriginal people conducted business. To properly understand the Montagnais's trading traditions at the time of contact, they must be looked at in the context in which they developed, that is, in an economy with a radically different foundation than that of a market or capitalist economy.
It is especially important to avoid falling into the trap of presenting the Montagnais as capitalists before this term became the concept it is today. Their trading activities were essentially part of a subsistence economy, focused on satisfying the needs of the community and its families. Unlike that of a market economy, the commercial strategy of a subsistence economy is not to accumulate surplus: this would have been unthinkable in a society such as that of the Montagnais, where mobility was of primary importance. This clearly did not exclude the possibility of acquiring certain "luxury" or more unusual goods, as long as it did not undermine the Montagnais's fundamentally nomadic culture and lifestyle. The Montagnais could therefore acquire goods but only in such quantity that it would not hinder their group's ability to travel, and, in turn, threaten the group's survival.
The fact that accumulating property was impossible is also reflected in other fundamental features of Montagnais culture, such as the Montagnais' disregard for material goods and any kind of behaviour displaying a desire for exclusive ownership of property. (Page 16)
The St. Lawrence Valley's potential for developing the fur trade was quickly realized by the building of a trading post, including one in Québec, in 1608, and another one in Trois-Rivières, in 1634; however, the mouth of the Saguenay was the first area to welcome such a post. Built by merchant Pierre de Chauvin in 1600, the Tadoussac post was the centre of the fur trade in northeastern North America for a few decades. At the time, the mouth of the Saguenay River was controlled by the Montagnais of Tadoussac, who were then at the heart of a trading network that extended far into the interior. They would travel up the Saguenay River and buy furs from the Aboriginal people of the north. Their strategic position allowed them to position themselves as middlemen between Aboriginal peoples of the interior and European traders, who met to trade at the mouth of the Saguenay River every year. (Pages 24 and 25)
To preserve their position as middlemen in the fur trade, the Montagnais strictly controlled access to the Saguenay, thus preventing the French from venturing up the river and establishing direct ties with their suppliers.
. . .
It was not until the end of the 1640s, after being significantly weakened, that the Montagnais relaxed their control over this area (see below). (Page 26)
While freedom of trade benefitted the Montagnais—who clearly gained from the competition between traders—it disadvantaged the French traders, as it decreased their profit margins. Very quickly, therefore, certain traders attempted to have this freedom restricted by requesting that they be granted trade monopolies. . . .
Similar requests multiplied in the late 16th and early 17th century, but it was not until the 1610s that a truly coherent policy was established by France, with the creation of the Compagnie de Canada in 1613–1614, a crucial step in this regard. Later, other companies took over, the most well-known of them being the Compagnie de la Nouvelle-France, also known as the Compagnie des Cent-Associés, or the Company of One Hundred Associates, which was founded by Cardinal Richelieu. In 1627, this company was granted not only New France by the King but also a monopoly over any trading in this territory for a 15-year period, after which it would preserve solely the monopoly of the trade in furs exported from the colony.
In exchange for these monopolies, the French government required traders to assist in populating the colony, by transporting families of colonists there every year. In this manner, the Company of One Hundred Associates was to bring 4,000 people to Canada in the 15 years following its creation. Even though this population policy did not result in all of the anticipated goals, it was nonetheless a concrete example of France's desire to regulate the fur trade in order to establish a colony in the St. Lawrence Valley. (Pages 29 and 30)
The breach in the monopoly exercised by the Montagnais of Tadoussac over the trade with the Aboriginal nations from the interior grew in 1650, when three Frenchmen—Louis Couillart de Lespinay, Courville and Simon Guion—travelled to the area to trade directly with the Montagnais. This trading approach, which would have been unthinkable a few decades, let alone a few years, earlier, marked the end of the first period in the history of Franco-Montagnais trading relations and, to some extent, laid the groundwork for a new phase, which saw the setting up of a new trading monopoly in this territory, one created by the colonial government. This monopoly—the Domaine du roi—defined the history of trade in this region for almost two centuries. (Page 40)
The Agreement-in-Principle of General Nature [74] As Exhibit A-3, the respondent produced the February 12, 2009, sworn statement of Natalie Aubin, an employee of the Department of Indian Affairs and Northern Development and the senior negotiator representing the Government of Canada at the main negotiation table of the Conseil tribal Mamuitun mak Nutakuan (the CTMN) since January 2007. In support of her sworn statement, Ms. Aubin adduced the Agreement-in-Principle of General Nature (hereafter referred to as the APGN), which was ratified by the CTMN and the governments of Canada and Quebec in 2004.
[75] The CTMN is made up of the Innu communities of Essipit, Mashteuiatsh and Nutakuan. The purpose of the APGN is to establish the structure, the general direction and the general principles that shall guide the drafting of a comprehensive land claims agreement and a treaty within the meaning of sections 25 and 35 of the Constitution Act, 1982.
[76] The CTMN is currently the only negotiating table in Quebec to have reached the treaty negotiation stage. The APGN does not create legal obligations binding the parties, nor does it infringe on the obligations or existing rights of the parties.
[77] The APGN has 19 chapters, a third of which have been the subject of ongoing negotiations since 2007. Chapter 12 deals with taxation and provides for the following:
12.1 The Treaty shall provide that the legislative assemblies of the First Nations shall have the power to enact laws in the matter of direct taxation according to the provisions to be set out in the Treaty or complementary agreements.
12.2 The Treaty or complementary agreements shall provide for the tax treatment of the Innu tshishe utshimaut and their public institutions. This tax treatment may be expressed by mean of immunities, exemptions or tax refunds, in the manner which shall be determined prior to the signing of the Treaty.
12.3 The Parties shall conclude complementary agreements on the sharing and collection of taxes. The tax burden of taxpayers and administrative expenses shall be taken into account in the negotiation of such agreements.
12.4 The Treaty shall determine the rules of transition between the tax regime provided for by section 87 of the Indian Act and the introduction of an Innu tax regime.
Analysis
[78] The issues fall under the following five subject areas:
(a) The Aboriginal right to the fur trade and Aboriginal self-government;
(b) Inconsistency between the Indian Act and the Goods and Services Tax Act;
(c) Procedural fairness;
(d) Limitation and penalties; and
(e) Section 15 of the Canadian Charter of Rights and Freedoms.
[79] Before embarking on an analysis of the issues, it is important to recall some of the principles underlying the ETA. Every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for the purposes of Part IX of the ETA (subsection 240(1)). The person required under subsection 240(1) to be registered must apply to the Minister for registration before the day that is 30 days after the day the person first makes a taxable supply in Canada, otherwise than as a small supplier, in the course of a commercial activity engaged in by the person in Canada (subsection 240(2.1)). The application for registration is to be filed with the Minister in prescribed manner and is to be made in prescribed form containing prescribed information (subsection 240(5)). In the present case, the appellant never filed an application for registration with the Minister, but on October 22, 2003, the Revenu Québec auditor had the Minister issue a GST/HST registration number, effective June 1, 1993, for the appellant in order to be able to assess him as of 1993. The reporting period assigned to the appellant is a monthly reporting period, with the first period covering the June 1, 1993, to June 30, 1993 period.
[80] According to the evidence, the appellant did not file any tax returns during the period in issue, nor did he claim any input tax credits on his purchases. The appellant did not produce any supporting documents allowing him to claim input tax credits on his purchases. However, it should be mentioned here that property delivered on an Indian reserve is not subject to GST given that, under section 87 of the Indian Act, Indians are exempt from paying taxes on what they purchase within their reserves.
[81] Every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate then in effect on the value of the consideration for the supply (subsection 165(1)). Every person who makes a taxable supply shall, as agent of Her Majesty in right of Canada, collect the tax under Division II payable by the recipient in respect of the supply (subsection 221(1)).
[82] Every person who is required to file a return under Division V shall, in the return, calculate the net tax of the person for the reporting period for which the return is required to be filed (subsection 228(1)). Where the net tax for a reporting period of a person is a positive amount, the person shall, in respect of the reporting period, remit that amount to the Receiver General (subsection 228(2)).
[83] During the period in issue, the appellant did not collect the tax payable by recipients of taxable supplies, that is, taxable supplies made at his business on the reserve to non-Indian purchasers. In addition, the appellant did not remit to the Receiver General the positive amount of his net tax for each reporting period during the period in issue.
Aboriginal right to the fur trade
[84] The appellant is challenging the constitutional validity and applicability of Division V entitled "Collection and Remittance of Division II Tax" (sections 221 to 251 of Part IX of the ETA) and, more specifically, and without limiting th