Page 775 - SAIT Compendium 2016 Volume1

CASE DIGEST 2013–2014
‘The applicant did not exhaust the internal remedies when time still allowed it. Now he wants to circumvent the provisions of the Act by coming to the High Court in terms of a declaratory order which it contends will have the same effect as a review of the respondent’s decision under PAJA where the administrative action is reviewed and set aside. Our courts should discourage this kind of applications as they are tantamount to forum shopping.’
Held
It was held that the application could not be considered without going into the merits of the assessment, which must be considered by the Tax Court as set out in Van Zyl NO v Master and Another 1991 (1) SA 874 (E) at 877–878 (as set out in para 13 in this judgment). Once an assessment has been issued the parties fall within the jurisdiction of the Tax Court, in which Court they must exercise their rights. It was held that the High Court did not have the jurisdiction to hear the matter and that the dispute should have been pursued by an objection lodged with the Commissioner followed by an appeal to the Special Tax Court. The application was consequently dismissed with costs.
20. MTN International (Mauritius) Ltd v CSARS 275/2013 [2014] ZASCA 8 (14 March 2014)
Introduction
The North Gauteng High Court recently delivered a judgment in the matter between MTN International (Mauritius) and the Commissioner for the South African Revenue Service.
This matter was an appeal to determine whether a revised assessment raised on 31 March 2011 in terms of the Income Tax Act, 1962, by the Commissioner for the South African Revenue Service, to assess the appellant, MTN International (Mauritius), for the 2006 year of assessment, falls to be set aside.
Facts
MTN claimed interest on loans it incurred as expenditure in terms of the Income Tax Act, against its gross income for the 2006 year of assessment. The loans refer to a loan for the purposes of making investments in Nigeria – the interest expenditure on this loan was claimed for a number of years up to and including the 2006 year of assessment. There was another loan for the purposes of making investments in the Middle East – the loan was incurred from MTN’s holding company, MTN Holdings Limited. The interest expenditure on this loan was claimed for the rst time during the 2006 year of assessment.
SARS raised the revised assessment disallowing the interest expenditure, which resulted in an income tax liability by MTN, on 31 March 2011 the last day before the original assessment was due to prescribe in terms of s 79 (1) of the Act. When raising the assessment the relevant SARS of cial manually xed the ‘due date’ on the IT40 form to a day prior to the day on which the assessment was actually raised. Furthermore, the ‘second date’ and ‘process date’ were xed as 31 March 2011. SARS recovered the amount of the tax liability by setting it off against a tax refund due on MTN’s provisional tax account. On 2 April 2011, as intimated by the IT40 form, an IT34 was issued to MTN and re ected the due date as 1 May 2011 and the ‘second due date’ as 31 May 2011. Consequent to the receipt of the IT34, MTN applied to court to have the additional assessment withdrawn.
MTN argued that the manipulation of dates to meet SARS’ needs was irregular and unlawful that the additional tax assessment stood to be aside on that basis alone. SARS contended that it acted within its powers in terms of s 79 of the Income Tax Act, as the original assessment had not yet prescribed and the amount which was subject to tax and should have been assessed for tax had not been assessed due to the fact that the interest expenditure claimed by the applicant was erroneously allowed by SARS as a deduction when raising the original 2006 assessment and the xing of dates had no impact on the validity of the assessment.
Held
The court held that SARS assessed MTN within the prescriptive period allowed by the Income Tax Act and the assessment was sent to MTN on that day. It is not a requirement that an order for a noti cation should be dated for a determination by SARS to be a valid assessment. The fact that the due date had been incorrectly xed would be irrelevant. Furthermore, there appeared to be no logical or rational distinction that can be drawn between the error which underpinned the SARS of cial to deciding whether or not the assessment is valid. The appeal failed and was dismissed with costs.
21. Porritt & another v The NDPP & Others (978/13) [2014] ZASCA 168 (21 October 2014)
Introduction
This case was an appeal to the Supreme Court of Appeal by the rst and second appellants Gary Porritt (1st appellant) and Susan Bennet (2nd appellant) against part of the judgment delivered in the South Gauteng High Court in 2012. In those proceedings the appellants challenged the right of Mr Ferreira, the prosecutor, and Adv Coetzee, the legal counsel he appointed to assist, to conduct the criminal prosecution against them on behalf of the National Prosecuting Authoring (‘NPA’), which was also in respect of multiple tax offences.
Facts
The appellants were indicted in 2004 after being arrested in December 2002 and March 2003, respectively, on various charges of fraud, racketeering and tax offences. They appeared in the South Gauteng High Court on 5 March 2012. The senior prosecutor, Mr Ferreira, on the proposal of SARS, appointed Adv Ferreira to assist – he had previously assisted SARS with investigations against the appellants. SARS also paid for counsel to assist the NPA.
The appellants sought to demand acquittal on the charges in terms of a plea in terms of s 106 (1) (h) of the Criminal Procedure Act 51 of 1977 (‘CPA’), namely that the prosecutor had no title to prosecute, on the basis of two challenges. The rst ground to challenge the title to prosecute was that Adv Coetzee’s appointment did not conform to the requirements of s 38 of the NPA Act, namely that the appointment of suitably quali ed persons as prosecutors for speci c cases must
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