Federal Court to hear Iristel’s application for relief in legal battle with CRA

The Federal Court of Appeal has released a decision regarding the ongoing legal battle between Markham-based Iristel and the Canada Revenue Agency.

In a ruling on July 8th, the Appeal Court stated that it retains jurisdiction to review the CRA’s conduct during an audit of the company, and also dismissed Iristel’s motion seeking interim financial relief as too early.

“The motions judge rejected the Minister’s argument that the motion and underlying application were moot. The motions judge also dismissed the appellant’s request for interim relief,” the court decision reads.

The Federal Court is going to hear Iristel’s judicial review application this year to determine if Iristel is entitled to relief while the case works its way through Tax Court.

“Yes, we wanted interim relief but this is still a win because the Federal Court will hear our case and whenever the CRA uses these aggressive and intimidating tactics on other taxpayers, our case will be cited,” said Iristel CEO Samer Bishay, in a press release.

For context, the two parties have been battling over GST and HST refunds. Iristel says that the CRA owes it tens of millions of dollars in refunds for the period between September 2019 to February 2020.

Iristel previously requested that the CRA release the funds for the periods under audit, stating that its business may fail without access to funds to sustain its operations, but the agency refused to do so as it continued to audit the company.

The CRA accused Iristel of using a “carousel scheme” to claim refunds. The court decision outlines that “the audit was still in progress and no definitive findings had been reached.”

Bishay told the Globe and Mail last month that his company is not involved in fraudulent activity, and that the CRA does not understand the complexities of how Iristel operates.

The company seeked an interim court order for the CRA to refund $62,300,000 CAD in GST/HST refunds while the agency continued to perform its audit. Iristel notes that after it applied for relief in the Federal Court, the CRA argued that Iristel’s claims for relief are moot because the case should be decided by the Tax Court, and not the Federal Court.

As stated earlier, the court has now rejected the argument that the motion and underlying application were moot. The Appeal Court has also decided that the Federal Court retains jurisdiction to review the case.

In the press release, Bishay notes that during the pandemic and legal battle, his company has done what it can to keep Iristel operational, but that it has had to scale back its expansion plans to address the digital divide in remote parts of Canada.