Page 767 - SAIT Compendium 2016 Volume1

CASE DIGEST 2013–2014
of information and correspondence between DKR’s attorneys and the Commissioner, followed by the attachment of the books and documents of DKR as part of the investigation.
The Commissioner addressed a letter to DKR’s attorneys informing them that he had decided to seize the vehicle in terms of s 88 (1) (c) and advising them inter alia of the rights of an owner in terms of s 93 of Customs and Excise Act.
The Commissioner has cast doubt about the accuracy, completeness, and authenticity of the explanation and the various transactions in relation to the vehicle as furnished by DKR regarding the ownership of the vehicle. The Commissioner contended that DKR is not the owner of the seized vehicle and consequently lacks locus standi to bring the application.
Held
The case put up by DKR in support of its claim of ownership does not establish that it is in fact the owner. There is no evidence con rming DKR’s ownership of the vehicle and therefore it has accordingly not discharged the onus to prove its locus standi. Further, DKR has shown no suf cient, personal and direct interest in permitting it to claim the vehicle or to review the Commissioner’s decision to seize it.
The application was dismissed with costs.
15. GB Mining v Commissioner: SARS (903/2012) [2014] ZASCA 29 (28 March 2014)
Introduction
This case stems from disallowed and partially disallowed objections raised against revised assessments for the 2003– 2006 tax years of the appellant, GB Mining, where the matter went on appeal through the Pretoria Tax Court, which dismissed the appeal except for certain management fees which do not form part of the appeal to the SCA. This case clearly highlights the importance of supporting information submitted with a return and the burden of proof on the taxpayer when disputing an assessment.
Facts
The following three questions are answered in this case:
1. When can a reduced assessment be issued?
2. Can a taxpayer, who supplied incorrect information in a return which caused an incorrect assessment to be issued
by the CSARS claim to be ‘aggrieved’ by the assessment and consequently object thereto? 3. What burden of proof rests upon the taxpayer when contesting an assessment?
GB Mining, in its objections raised against the assessments, which included points 1, 2 and 3 of this summary’s facts (see below), contended that its tax returns contained incorrect information. The SCA determined whether it was allowed to object and appeal to the assessments rather than requesting a reduced assessment in terms of s 79A of the Income Tax Act 58 of 1962 (hereinafter referred to as ‘the Act’), which, before it was repealed, read as follow:
‘(1) The Commissioner may, notwithstanding the fact that no objection has been lodged or appeal noted in terms of the provisions of Part III of Chapter III of this Act, reduce an assessment—
(a) (b)
. . .
where it is proved to the satisfaction of the Commissioner that in issuing that assessment any amount which—
(i) was taken into account by the Commissioner in determining the taxpayer’s liability for tax, should not have been taken
into account; or
(ii) should have been taken into account in determining the taxpayer’s liability for tax, was not taken into account by the
Commissioner:
Provided that such assessment, wherein the amount was so taken into account or not taken into account, as contemplated in subparagraph (i) or (ii), as the case may be, was issued by the Commissioner based on information provided in the taxpayer’s return for the current or any previous year of assessment.’
The mirror provision of s 79A of the Act is s 93 of the Tax Administration Act 28 of 2011 (hereinafter referred to as ‘the TAA’).
The SCA held, in accordance with s 79A (1) of the Act, that a taxpayer may request a reduced assessment without objecting to the assessment in terms of s 81 of the Act (now contained s 104 of the TAA) and that the CSARS may reduce an assessment ‘... even where it ows from incorrect information provided in the taxpayer’s return’. The important principle that can be drawn from this case is at para [28], where it was held that the taxpayer requesting the reduced assessment would have the onus of satisfying the CSARS that a reduction in the assessment is justi ed. The SCA, at para [22] of the judgment, stated the following in this regard:
‘In addition, the power of the Commissioner is not restricted to its mero motu exercise, because the error in the assessment has to be “proved to the satisfaction of the Commissioner”. To discharge this burden of proof the taxpayer must place information before the Commissioner to substantiate the error relied upon.’
The SCA held that the part of s 79A (1), which reads as follow: ‘The Commissioner may, notwithstanding the fact that no objection has been lodged or appeal noted in terms of the provisions of Part III of Chapter III of this Act, reduce an assessment’ would imply that ‘an alternative route for a taxpayer to follow is by way of objection and, if necessary, appeal’. Swain AJA for the SCA consequently referred to and agreed with the conclusion of Hurt J in ITC 1785 67 SATC 98, where the following was Held
‘...the fundamental object of tax legislation is to exact from each citizen his due. What is “due” is, in each case (questions of penalty aside), strictly prescribed by statute and the amount of the taxpayer’s taxable income must, in the process of assessment, be accurately determined preparatory to the calculation of the amount which he (or she) is required to hand over to the scus. In that light, it is
SAIT CompendIum oF TAx LegISLATIon VoLume 1 759
CASE DIGEST 2013-2014