Page 788 - SAIT Compendium 2016 Volume1

CASE DIGEST 2014-2015
disallowed. In defending his input claims for these expenses, the taxpayer contended that all of his tax invoices and other supporting documents were given to SARS during the audit process and never returned, thus rendering him unable to properly present his case. This contention was disputed by SARS.
Outcome
The taxpayer lost in respect of most input amounts under dispute due but was free from liability in respect of penalties and interest. The taxpayer mainly failed in satisfying his burden of proof but was relieved of penalty and interest due to his partial success.
Core reasoning
The Tax Court held that the onus of proof rests on the taxpayer to show the viability of VAT inputs claimed. Although the taxpayer was admittedly at a disadvantage due to the lack of possession of the relevant invoices, vouchers and other supporting documents, the court held that the taxpayer was unable to show proper records that most of the VAT inputs were indeed valid claim. However, due to the procedural history of the matter and the taxpayer’s partial success, the Tax Court held that the penalties and interest levied by SARS had to be waived.
4. Mr A v Commissioner for SARS [2015] ZATC 3; GSJ (Tax Court) Case No: VAT 1129/2015 (5 August 2015) (SARS Website)
Issue
Input VAT – Section 20(4) of the VAT Act: At issue was whether the taxpayer was able to provide suf cient documentary evidence (ie copies of tax invoices) to claim input credits.
Posture of the case
The Tax Court sat as the court of rst instance with the taxpayer appealing SARS’s decision to reject his input claims.
The facts
The taxpayer operated a construction business requiring VAT registration. Once registered, he became liable for submitting VAT returns every two months. The taxpayer claimed input VAT for the VAT periods ending July, September and November 2011. These claims were disallowed due to the lack of appropriate documentary proof. The taxpayer only possessed the following documentary evidence: unstamped bank deposit slips, invoices issued to persons other than himself or his construction business, invoices not re ecting the name of the purchasers. The taxpayer only had invoices to himself for goods dedicated to private consumption (and not for goods supplied as part of his construction business).
Outcome
The Tax Court held in favour of SARS. The taxpayer was not able to furnish any documentary evidence of proper invoices, other than his own testimony presented at the hearing.
Core reasoning
Vally J (with all sitting assessors concurring) held that the taxpayer failed to keep copies of invoices. None of the documents complied with section 20(4) of the VAT Act. It cannot be overlooked that the taxpayer’s claims were for a substantial amount. No reasonable businessman would fail to maintain invoices of more than R5 million. The taxpayer was also ordered to pay costs.
5. Ackermans Limited v Commissioner for SARS [2015] ZAGPPHC 684; GNP HC Case No: 16408/2013 (23 September 2015) (SARS Website)
Issue
Tax administration – Section 237 of the Constitution and section 79 of the Income Tax Act (now replaced by section 92 of the Tax Administration Act): The issue between the parties was whether section 237 of the Constitution can be read to narrow the allowable period of SARS assessments under section 79 of the Income Tax Act.
Posture of case
The North Gauteng Division (Pretoria) sat as the court of rst instance with the taxpayer bringing the application at issue. The overall case was still pending before the Tax Court.
Facts
The taxpayer contended that SARS took an unreasonable delay in issuing the additional assessments, having regard to section 237 of the Constitution. Section 237 provides that all constitutional obligations must be performed diligently and without delay. The judicial opinion does not disclose the actual timelines for assessment that are the subject of the dispute.
780 SAIT CompendIum oF TAx LegISLATIon VoLume 1