Page 745 - SAIT Compendium 2016 Volume1

CASE DIGEST 2012–2013
The appellant’s objection to its assessment was disallowed by the respondent. The appellant went on to appeal against failure of the respondent to act in terms of s 20(7) of the VAT Act. The respondent, however, argued that the Tax Court did not have the powers to deal with an appeal against the decision taken by the Commissioner in terms of s 20(7).
Held
The court held that an application for review relating to the Commissioner’s decision could not be taken on review to the Tax Court, as relief based upon a review which can only be launched in terms of PAJA, is outside the powers of the Tax Court. It was therefore submitted that a review had to be brought before the High Court. The appeal was dismissed.
[Link: http://c.ymcdn.com/sites/www.thesait.org.za/resource/resmgr/2014_case_law/income_tax_case_no_1866_75_s. pdf]
13. Whether an objection by a vendor to an assessment was limited to the objections as set out in the ADR1 and ADR2?
[ITC1868 75 SATC 303 (Pretoria Tax Court – 3 May 2013)]
Introduction
This case was an appeal against a decision taken by the respondent in which the appellant’s objection to its assessments was limited to the objections as set out in the notice of objection.
Facts
The appellant, a company, had been the subject of an audit carried out by the CSARS. The audit had revealed that the appellant had under-declared and consequently, under-paid value-added tax to the respondent, in terms of Value-Added Tax Act 89 of 1991 (the ‘VAT Act’).
The respondent revised the assessment and the appellant was thus assessed on tax that consisted of a capital amount, being understated output tax, additional tax levied on the capital amount in terms of s 60 of the VAT Act, a penalty levied on the capital amount in terms of s 39(1)(a)(i) of the VAT Act and interest levied on the capital amount in terms of s 39(1) (a)(ii) of the VAT Act.
The appellant, represented by its sole member, had led a notice of objection on the regulation form ADR 1. The ADR 1 form was, however, incomplete as the box that speci es that a miscalculation on the assessment in that an ‘amount(s) was taken into account/not taken into account to determine the liability for tax’ was not ticked.
On the prescribed form ADR 1, nowhere was it mentioned that an objection had been raised against the merger by SARS, of the appellant’s two entities, and therefore the capital amount and the assessment itself were incorrectly calculated as the two entities were treated as one.
The appellant’s rst and second objections were directed against the reduction of the additional tax, interest and penalties.
The respondent disallowed the objection and stated the rst reason for such disallowance, as follows:
‘No objection to the quantum of additional VAT output has been raised, suggesting your acceptance of these gures. Revised additional VAT assessments raised on the basis of VAT invoices issued and payments received for services rendered.’
Consequently, the appellant led a notice of appeal by way of form ADR2 in respect of the disallowance of the objection and again, there was no mention in the ADR2 that the Appellant was appealing against the method in which the capital amount had been determined by SARS or the amount of the capital on which the assessment was based. SARS argued in its grounds of assessment in terms of Rule 10 of the tax rules that the appellant did not dispute liability for the capital amount, but the only amounts of the assessment that the appellant objected to, and appealed, were the levying of additional tax, interest and penalty.
In response, the appellant led a notice in terms of Rule 11 which, for the rst time, stated that SARS had included the turnover gures of a related, but different legal entity in calculating its VAT liability.
Held
The court held that the Commissioner could not be ordered to revisit the assessment in issue and the court in casu could not come to a decision which was contrary to what the Supreme Court of Appeal had already decided. Where a new ground of objection had been raised in the Rule 11 statement, which had no bearing on the objections in ADR 1 and ADR 2 and on which the Supreme Court of Appeal had already ruled, the court in casu could not refer the matter back to the Commissioner. The provisions of s 33(3) of Act 89 of 1991 did not apply and therefore the court in casu could not declare the assessment invalid. The appeal was dismissed with costs.
[Link: http://c.ymcdn.com/sites/www.thesait.org.za/resource/resmgr/2014_case_law/income_tax_case_no_1868_75_s. pdf]
14. Applications to rescind a judgment secured by SARS by way of ling a statement with the clerk or registrar of a court
[Kadodia v CSARS 75 SATC 313 (KwaZulu-Natal High Court – 5 April 2013)]
Introduction
The Kwazulu-Natal High Court heard the matter between Mohamed Essop Kadodia (‘applicant’) and the Commissioner for SARS (‘respondent’) on 2 April 2013. HA de Beer AJ delivered the judgment on 5 April 2013.
This matter was an application for rescission of a default judgment granted in favour of the respondent being the Commissioner of South African Revenue Services, against the applicant, Kadodia.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 737
CASE DIGEST 2012-2013