Most Read Contributor in South Africa, November 2016
In terms of the current Tax Court rules published under the
Income Tax Act No. 58 of 1962, where the Commissioner for the South
African Revenue Service ("SARS") did not
comply with the prescribed time frames in respect of dispute
resolution, practically, there was little
that a taxpayer could do. This could change in terms of
the proposed new Tax Court rules
expected to come into force later this year.
To illustrate the current difficulty faced by the taxpayer
in having matters promptly dealt with, SARS,
in a fairly recent unreported case, sought condonation
for the late filing of a Statement in terms of rule
10 of the current Tax Court rules. In delivering its judgment in
favour of SARS, the court noted that it should be very careful to
place a threshold at so high a level that it would result in the
inability of SARS to prosecute what may well be a legitimate case
regarding unpaid taxes from a party such as the taxpayer, that the
public interest demands that all South African citizens pay their
due taxes and that technical arguments should be placed in proper
perspective. The court acknowledged that the purpose of the
condonation application was to introduce some nature of pragmatism
into the manner in which parties litigate and was of the view that
the taxpayer's insistence that the condonation application be
made, postponed the matter unduly. The court concluded that this
was not the kind of case where condonation should be refused and it
would be a significant 'overreach' of the scope of the
powers of the court to set aside SARS' assessment.
Had the court dismissed the condonation application, this would
have left the matter in limbo since it would not have been possible
for the next step of the dispute resolution process to be taken by
SARS. However the assessment would still stand. In this case, the
taxpayer would have been required to make yet a further application
to court to set the matter aside.
It appears that the draft new Tax Court rules, if promulgated,
will somewhat simplify this process.
Part F of the draft new Tax Court rules allow for
an application for default judgment in
the event of non-compliance with the rules by either the taxpayer
or SARS. If, for example, SARS is at fault, the
taxpayer may deliver a notice to SARS informing SARS
of its intention to apply to the Tax Court for a final order in the
event that SARS fails to remedy the default within 15
days of delivery of the notice. In the event that SARS
fails to remedy the default within the prescribed period
the taxpayer may apply, on notice to SARS, to
the Tax Court for a final order to the effect
that SARS' assessment or decision be
From a litigation point of view, for
example, careful consideration of issues such as
delays, requests for extensions and the granting of
extensions may become very important if an
application under this new proposed rule is to be brought.
The proposed new dispensation could thus prove to be favourable
to both the taxpayer and SARS where either party does not comply
with the prescribed time periods and obligations in the dispute
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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