Below, please find issue 88 of ENSafrica's tax in brief, a snapshot of the latest tax developments in South Africa.
case law
- North Gauteng High Court, Pretoria | SACS (Louis
Trichardt) (Pty) Ltd v CSARS (40420/2020; 17064/2021)
- The parties have been engaged in extensive litigation since 2007, which has required the attention of at least 10 judges
- The applicant, SACS (Louis Trichardt), brought two applications
in which it sought relief against the South African Revenue Service
(“SARS”) on the following grounds:
- an order declaring that SARS is precluded both from auditing, assessing, or “performing tax computations” in respect of its tax liabilities for the 2013 to 2016 tax years, and is precluded from disallowing an exemption claimed for the 2013 to 2019 tax years; and
- an order declaring that SARS is precluded from raising additional assessments in respect of the applicant's tax liabilities for the 2013 to 2016 years since the period of limitation for the issuance of additional assessments, as contemplated in section 99 of the Tax Administration Act, 2011 (“TAA”), has expired.
- Additionally, the respondent (SARS), challenged the jurisdiction of the court, stating that the dispute should be raised in the Tax Court, rather than the High Court. The court however found that section 21(1)(c) of the Superior Courts Act, 2013, confers jurisdiction on the High Court to consider the application. Furthermore, an agreement between the parties recorded their consent to the jurisdiction of the Gauteng North High Court in the case of any dispute arising therefrom.
- As regards the first application, the respondent claimed that it has reassessed its understanding and therefore wished to disallow various exemptions claimed in sections 10(1)(zl), 11(g), and 8(4)(a) of the Income Tax Act,1962 (the “Act”). The court stated that there is nothing in the law that precludes SARS from doing so, and SARS is therefore entitled to adjust future assessments in line with what it believes is the correct legal position, and apply the same facts to what it now believes is the correct legal position.
- Regarding the second application, the court found that an oral agreement had been concluded between the parties and therefore, since section 99(1)(c) of the Tax Administration Act, 2011 allows for extension upon agreement, without prescribing any method by which the extension should be agreed upon, it is not possible for the court to hold that the period of prescription had expired by effluxion of time.
- To this end, the court dismissed both applications with costs following the result in accordance with the agreement concluded by the parties.
- Notably, however, the court stated that “It has to be said that applicant was only able to bring the rule 56 applications because of SARS' conduct – acts or omissions – which has fallen woefully short of what is required of it in terms of sub-sections 195(1)(a) and (b) of the Constitution of the Republic of South Africa Act, 108 of 1996(the Constitution). It has failed dismally in its duty to comply with the rules of the Tax Court and with court orders. If its version of the tax liabilities of an applicant is correct, then it has by virtue of its acts or omissions concerning the 2005 to 2012 tax years caused the fiscus to lose a considerable amount of money. Its operations constitute the lifeblood of public affairs of the country. Apart from breaching its obligations as set out in section 195 of the Constitution, SARS' conduct has caused significant harm to the public interest, which by definition is intense. It is for this reason that I believe that this matter should be brought to the attention of its head, the Commissioner, who it is hoped will take personal charge of the matter and ensure that it is properly and efficiently attended to and that it is finalised with the expedition.”
- Find a copy of the judgment here.
- North Gauteng High Court, Pretoria | Kapeel Bechan and
Another v SARS Customs Investigations Unit and Others (19626/2022)
[2022] ZAGPPHC 525
- This is an application for leave to appeal against the dismissal of an application for an order granting the restoration (a mandament van spolie application) of certain computer equipment seized by the respondents pursuant to the execution of a warrant issued by the same court.
- The court referred to the test for the granting of leave to appeal, as contained in section 17(1)(a) of the Superior Courts Act, 2013.
- The application for leave to appeal was brought on the basis that the court erred in adopting a restrictive interpretation of the warrant. Instead, the applicant argued that the court should have utilised an interpretation taking into account various rights enshrined in the Constitution of the Republic of South Africa.
- However, this argument was not advanced when the main case was heard. Instead, the argument was confined within the ambit of the mandament van spolie and was based upon the alleged unlawful dispossession of certain computer equipment that was previously in the applicant's possession.
- The court thus found that the requirements of section 17(1)(a) were not met, and dismissed the application.
- Find a copy of the judgment here.
legislation and draft legislation
- National Treasury and SARS published the following 2022
draft tax bills and explanatory memoranda:
- 2022 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill;
- 2022 Draft Revenue Laws Amendment Bill;
- Draft Explanatory Memorandum on the 2022 Draft Revenue Laws Amendment Bill;
- 2022 Draft Taxation Laws Amendment Bill;
- Draft Explanatory Memorandum on the 2022 Draft Taxation Laws Amendment Bill;
- 2022 Draft Tax Administration Laws Amendment Bill; and
- Draft Memo on objects of the 2022 Draft Tax Administration Laws Amendment Bill.
- The due date for public comment is 29 August 2022.
- Find copies of the draft bills here.
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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.
