Most Read Contributor in South Africa, September 2016
In an unreported decision, Jen-Chih Huang and 13
others v Commissioner of SARS and others with case number:
SARS 4/2013 and dated 18 November 2013 ("the Unreported
Judgement"), Tuchten J of the North Gauteng High Court handed
down an important judgment in relation to information and
documentation obtained by the South African Revenue Service
("SARS") in terms of Part D of the Tax Administration Act
No. 28 of 2011 ("the TAA").
The UnreportedJudgment concerned an inquiry in terms of Part C
of the TAA that had been convened to begin on 11 November 2013 and
which had been preceded by a successful application by SARS for a
search and seizure warrant. Prior to the commencement of the
inquiry but after the search and seizure had been carried out, the
applicants in the Unreported Judgement brought an application to
have the granting of the search and seizure warrant reconsidered
("the reconsideration application"). Pending the outcome
of the reconsideration application, the applicants applied to the
court on an urgent basis seeking the postponement of the inquiry
proceedings and the prevention of the use of documents and
information obtained in the search and seizure from being used in
the examination of any witness in the inquiry proceedings.
In deciding whether to grant the urgent relief sought by the
applicants, the court considered the status of information obtained
under a search and seizure warrant which may potentially be
declared invalid, as well as the powers of a presiding officer in
an inquiry under the TAA in relation to unlawfully obtained
information and documentation.
Status of information obtained under a search and seizure
warrant which may potentially be declared invalid
The court confirmed that, although SARS has broad powers under
sections 59 to 64 of the TAA to search premises for and seize
relevant material (as defined), such a search and seizure can only
take place under the authority of a warrant issued by a judge. In
this regard, the court held that an ex parte application
for a search and seizure warrant is a judicial proceeding to which
special procedural rules apply. In particular, any person affected
by an order made ex parte may apply for the
reconsideration thereof. Such a reconsideration application will
essentially involve a rehearing of the application with additional
material, usually in the form of a reply to the relevant
allegations, provided by the persons bringing the reconsideration
To the extent that a reconsideration application is successful,
and the search and seizure warrant is set aside, the court setting
aside a search and seizure warrant may direct that some or all of
the seized material be returned to the applicants. However, such an
order is not inevitable, as section 66(4) of the TAA empowers the
court to allow SARS to retain the seized material (or copies
thereof) in the interests of justice. In considering whether or not
to grant such an order in terms of section 66(4) of the TAA, a
court may have regard to whether the material seized is material
which the taxpayer ought under the TAA, to have been made available
to SARS on request.
Powers of a presiding officer in an inquiry under the
TAAin relation to unlawfully obtained information and
Tuchten J held that the powers of a presiding officer in an
inquiry under the TAA relate only to the imposition of criminal
sanctions for the failure to give evidence or produce documents or
things at the inquiry and do not extend to the evaluation of the
success of challenges relating to unlawfully obtained information
and documentation. The court further held that a presiding officer
may not exercise discretion under section 66(4) of the TAA, as this
discretion is vested only in the courts.
The court noted that it was not required to consider the
prospects of success of the reconsideration application and, having
regard to the fact that SARS would suffer little prejudice should
the applicants be granted the relief sought (as the inquiry
proceedings would continue and the evidence process merely be
postponed until such time as the outcome of the reconsideration
application is decided) held that the applicants should be excused
from providing evidence at the inquiry proceedings. The court
further held that no documents or information obtained by SARS in
terms of the search and seizure warrant could be used in the
examination of any witnesses at the inquiry. The court clarified
that this order would not prevent SARS from making use of any
document or information obtained from a source other than the
search and seizure.
This judgment is an example of the provisions of the TAA at work
and serves to indicate that it remains open to a taxpayer to
challenge SARS' exercise of its wide powers to seize
information and documentation, where appropriate.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Effective collaboration amongst government agencies, automation of processes and capacity building by tax authorities have always been identified by stakeholders as strategies for achieving an efficient tax system.
In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).