Executive Summary: Key Legal and Evidentiary Issues

• The Crown sought to strike the appellant's amended notice of appeal in its entirety, or alternatively, specific paragraphs deemed non-compliant with the Tax Court of Canada Rules (General Procedure).

• Numerous paragraphs were found to improperly incorporate a reply to the response within the amended notice of appeal, circumventing mandatory deadlines under Rules 45 and 50.

• References to pre-trial examination transcripts violated the implied undertaking of confidentiality governing discoveries under Rule 111(2) and established jurisprudence.

• Allegations concerning the conduct of tax authority representatives were struck as irrelevant, since the Court's jurisdiction is limited to determining the validity of the assessment, not the process behind it.

• The appellant's request for interest cancellation and reimbursement of advance payments exceeded the Court's statutory competence under the Excise Tax Act.

• Costs of $1,000 were awarded to the Crown due to the appellant's disregard for Court-ordered timelines and Procedural Directive No. 14.

The underlying tax dispute

9231-3303 Québec Inc. (the "appellant") appealed an assessment issued under Part IX of the Excise Tax Act by the Minister of National Revenue, through the Agence du revenu du Québec, dated October 5, 2020. The assessment covered periods from October 1, 2012 to June 30, 2019, and involved adjustments to the appellant's reported net tax totalling $322,382.60. These adjustments related to input tax credits that the Minister denied on the basis they were obtained without entitlement. The Minister also imposed penalties of $80,595.57 under section 285 of the Act and interest of $98,405.67 under section 280.

Procedural history and repeated delays

The original notice of appeal was filed with the Tax Court of Canada on August 12, 2021. The Court issued a scheduling order on August 25, 2022, followed by a second scheduling order on January 30, 2024, after a show cause hearing held on November 2, 2023. A third scheduling order, dated March 7, 2025, directed the appellant to file and serve an amended notice of appeal by March 15, 2025. Despite this clear deadline, the amended notice of appeal was only filed on August 5, 2025 — nearly five months late — without any accompanying motion or sworn declaration seeking a time extension as required by Procedural Directive No. 14. The appellant's counsel had previously been informed of this Directive by the Court registry.

The Crown's motion to strike

On August 12, 2025, the Crown filed a motion seeking either the complete striking of the amended notice of appeal or, in the alternative, the striking of numerous specific paragraphs under Rules 45, 53, 100(1), and 111(2) of the Tax Court of Canada Rules (General Procedure). The Crown argued the pleading was riddled with deficiencies: it improperly included a reply to the response, disclosed confidential discovery content, contained irrelevant allegations about the conduct of tax auditors, advanced impermissible legal arguments, and sought remedies beyond the Court's jurisdiction.

Improper inclusion of reply elements

The Court agreed that several paragraphs constituted an unauthorized reply to the Crown's response. The Rules specifically prescribe the format and timing for a reply under Rules 45 and 50, and the pleadings had been closed since March 28, 2022. The appellant had not been granted leave to file a reply, and embedding reply material within an amended notice of appeal was an impermissible attempt to circumvent the procedural requirements.

Breach of discovery confidentiality

Multiple paragraphs referenced, and in some cases quoted from, pre-trial examination transcripts of the Agence du revenu du Québec auditors. The Court held that these references violated the well-established implied undertaking rule governing discovery material, which remains confidential until introduced at trial. The Federal Court of Appeal confirmed this principle applies to proceedings before the Tax Court of Canada, and Rule 111(2) explicitly restricts when such transcripts may be filed.

Allegations about conduct of tax authorities and damages claims

The appellant included paragraphs detailing the alleged misconduct of tax authority representatives and the resulting damages to its business. The Court struck these allegations, reaffirming the longstanding principle — confirmed most recently by the Supreme Court of Canada in Iris Technologies Inc. v. Canada (Attorney General), 2024 SCC 24 — that the Tax Court's mandate is to determine the validity and merits of the assessment based on the applicable statutory provisions and relevant facts, not to review the process by which the assessment was made. Claims for damages arising from audit conduct fall outside the Court's jurisdiction.

Requests for interest cancellation and reimbursement

The appellant sought an order annulling interest on the basis of alleged abuse by the Crown. The Court struck this claim, noting that the discretionary power to reduce or cancel interest belongs to the Minister under section 281.1 of the Excise Tax Act and is subject to judicial review by the Federal Court, not the Tax Court. Similarly, the request to order reimbursement of all amounts paid in advance was struck because section 309(1) of the Act limits the Court's remedial powers to dismissing the appeal, vacating the assessment, or referring it back for reassessment.

The ruling and its outcome

Justice Dominique Lafleur of the Tax Court of Canada granted the Crown's motion in part. The amended notice of appeal was struck in its entirety due to the severity and breadth of its deficiencies, though the Court declined to strike it without leave to amend, finding that the appeal was not entirely futile and retained at least some trace of a legitimate cause of action. The appellant was ordered to file a new compliant amended notice of appeal by January 9, 2026, conforming to Form 21(1)(a) of the Rules. A critical condition was imposed: should the new filing reproduce any of the struck allegations, the appeal would be automatically dismissed without further motion from the Crown. Costs in the form of a lump sum of $1,000 were awarded to the Crown (the successful party on the motion), payable immediately regardless of the ultimate outcome of the appeal, reflecting the Court's disapproval of the appellant's casual disregard for court-ordered deadlines and procedural rules. The exact amount that may ultimately be at stake on the merits of the underlying appeal — involving the $322,382.60 in net tax adjustments, $80,595.57 in penalties, and $98,405.67 in interest — cannot be determined at this procedural stage.