Executive Summary: Key Legal and Evidentiary Issues

• Dispute over entitlement to Québec sales tax (TVQ) refunds for a non-registered residential property constructor.

• Timeliness of refund claims under the Loi sur la taxe de vente du Québec (LTVQ) and whether late claims extinguish the right to compensation.

• Application of statutory provisions regarding compensation between TVQ payable and refunds due.

• Interpretation of administrative law exceptions and the court’s approach to statutory deadlines.

• Determination of whether the ARQ’s refusal of late refund claims was lawful.

• Award of legal costs to the prevailing party.

Facts and outcome of the case

Background and facts

Agence du revenu du Québec (ARQ) appealed a lower court decision that favored Daniel Héroux, a non-registered builder who constructed several new residential properties in Sorel-Tracy, Québec, between 2014 and 2015. Héroux, acting as a non-registered constructor for purposes of the LTVQ, was required to self-assess and remit TVQ on the fair market value of the properties at the time of their first rental. He filed the required forms and refund claims for new rental property and construction costs in March 2018, more than two years after the relevant self-supply dates.

The ARQ accepted his TVQ declarations but refused the refund claims on the grounds that they were filed after the statutory two-year deadline. The main legal question was whether the late filing of refund claims prevented the application of compensation between TVQ payable and refunds, effectively extinguishing Héroux’s right to the refunds.

Legal issues and court’s analysis

The court examined the relevant provisions of the LTVQ and the Loi sur l’administration fiscale (LAF), focusing on whether the statutory deadlines for refund claims were strict and whether compensation could still be applied for late claims. The court analyzed the legislative intent, statutory language, and relevant case law, including federal analogues, to determine if the ARQ’s literal interpretation of the deadlines led to an illogical or unfair result.

The court found that while the law sets a two-year deadline for refund claims, the legislative scheme and related jurisprudence allow for compensation to be applied even if the refund claim is filed late, provided the taxpayer would have been entitled to the refund at the time the tax became payable. The court rejected the ARQ’s argument that the right to compensation was extinguished solely due to the late filing.

Outcome

The court dismissed the ARQ’s appeal, upholding the lower court’s decision in favor of Daniel Héroux. The court ordered that the ARQ must take into account the refund claims despite their tardiness, applying compensation as if the claims had been timely. Legal costs were awarded to Daniel Héroux as the prevailing party, but no specific damages were awarded.