Page 762 - SAIT Compendium 2016 Volume1

CASE DIGEST 2013–2014
(a) outstanding tax debt, excluding a tax debt contemplated in s 167 or 204 or a tax debt that has been suspended under s 164 or does not exceed the amount referred to in s 169 (4); or
(b) outstanding return unless an arrangement acceptable to SARS has been made for the submission of the return.’ (own emphasis).
The court highlighted the fact that a TCC should only be issued if a senior SARS of cial is satis ed that the requirements of the section are met. KNS had an outstanding tax debt of just below R12 million, which had not been suspended in terms of s 164 of the TAA at the time of application for a new TCC, which according to Grant Chittenden NO is not a debt as contemplated in ss. 167 (instalment payment agreement) and 204 (compromise of a tax debt) of the TAA.
It was common cause among the respondents and Baqwa, J, that a decision on the issuance of a TCC constitutes an ‘administrative action’ as de ned in s 1 of the PAJA and that the applicants may, if they are dissatis ed with the Commissioner’s decision and wish to challenge it, launch review proceedings provided for in s 8 of the PAJA. It was pointed out with reference to Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA) that in the absence of such review proceedings and pending the nalisation of such proceedings that the decision not to issue a TCC remains in place and is of full force and effect. It was also pointed out that the relief applied for by the applicants are nal, as s 256 (3) of the TAA does not provide for the issuance of an interim or provisional TCC.
The court held that should a TCC be issued to KSN, it would create a precedent that would negatively affect SARS’ tax administration, because every taxpayer whose application for a TCC has been denied would simply be entitled to approach the court for an order compelling SARS to issue a TCC without having to address the merits of the refusal. Baqwa, J made the following obiter at para 12:
‘Quite clearly that would cause chaos within the country and tax administration would come to a standstill.’
It was further pointed out that KSN did not take timely action to ensure that it obtains a new TCC as it waited eight months to apply for a new TCC.
Held
The court held that the fact that the non-issuing of a TCC is likely to cause KSN actual or impeding harm does not entitle them to a mandamus compelling the court or the CSARS to issue a TCC. It reiterated that KSN should have treated the TCC as a priority and should have addressed it at the time of the business rescue proceedings and that, as a result, the applicants failed to make out a case for the relief sought. The application was consequently struck off the roll with costs.
10. Coltrade International CC v CSARS WCHC 45213/2013 (9 September 2014)
Introduction
This case is an appeal to the Gauteng division of the High Court in Pretoria by the taxpayer, Coltrade International CC (‘Coltrade’), against a tariff determination made by SARS, in terms of s 47 (9) (a) of the Customs and Excise Act 91 of 1964 (‘Customs Act’), that the coconut milk, coconut cream and coconut powder imported by Coltrade were incorrectly classi ed. The parties have agreed that the dispute would apply to all three the products and if the taxpayer was not successful on appeal, SARS’ tariff determination would apply to all the goods in dispute. The court therefore had to determine which tariff heading would apply to the goods.
Facts
Coltrade is an importer of coconut milk, coconut cream and coconut powder into South Africa from Thailand. Coltrade received a determination from SARS in 2005 that the goods should be classi ed under tariff heading 20.08.19 as being ‘fruits, nuts and other edible parts of plants, otherwise prepared or preserved, not elsewhere speci ed or included’. In 2012, customs of cials of SARS East London conducted a post clearance audit on Coltrade and concluded that the goods should be classi ed under tariff heading 21.06.90.90 as ‘other food preparations not elsewhere speci ed or included in Part of Schedule 1’.
The taxpayer contended that the tariff heading 20.08.19 includes fruits, nuts and other edible parts of plants, otherwise prepared or preserved, which by name would also include coconuts. It contended that it did not fall under chapter 8 dealing with fruit and nuts because the product it imported was ‘otherwise prepared or preserved’ and the exclusionary note in that chapter speci cally classify fruits and nuts not preserved as in other chapters to fall under chapter 20. The taxpayer contended that the tariff heading used by SARS as a miscellaneous heading would only apply to the goods if no other more speci c tariff heading applied which it contended is 20.08. Furthermore, the explanatory note to the tariff forwarded by SARS, speci cally excludes goods which are preparations made from nuts as per tariff heading 20.08, if the essential character of the goods is given by such nuts, whereupon it remains to be classi ed under tariff heading 20.08.
The taxpayer presented two expert witness statements to support the taxpayer’s case that the products it imported did retain such essential character of coconuts. SARS did not offer any rebuttal evidence in this regard.
The rst witness addressed the question whether coconut milk and coconut cream retain the character of the original coconut meat having regard to the processes the coconut meat is subjected to. The witness stated that the products are produced by shredding the coconut meat and then extracting the resulting emulsion from the bres through crushing the pulp. In this process the emulsion retains all the aroma, avour and taste of the coconut meat. The addition of water and preservatives do not alter these characteristics but enhances it. The second independent witness con rmed the testimony of the rst witness as to the goods having retained the essential characteristics of coconuts constituent.
SARS agreed that the goods retained the essential characteristics of coconuts but maintained that the requirements for tariff heading 20.08 had still not been met by the taxpayer. SARS stated that tariff heading 20.08, read with the two explanatory notes, has two requirements and not just one as contended by the taxpayer, namely that the physical state of the goods has to be whole, in pieces or crushed and that it must retain the essential characteristics. It is the former requirement which SARS stated that the good did not meet as it has been processed to a state beyond being whole, in pieces or crushed.
754 SAIT CompendIum oF TAx LegISLATIon VoLume 1