Page 791 - SAIT Compendium 2016 Volume1

CASE DIGEST 2014-2015
Facts
The applicants were Mark Lifman and a number of his wholly-owned close corporations. During a SARS enquiry in terms of section 50 of the Tax Administration Act into the affairs of the applicants, it came to light that the applicants owed SARS approximately R13 million in tax.
In a warning letter to the applicants, SARS indicated that civil judgment (ie sequestration and liquidation proceedings) would be taken if payment was not made by the agreed date (31 March 2015). Certain assets were offered as security by the applicants. By 1 April 2015, the outstanding debt was not paid, and SARS proceeded to take civil judgment against the applicants.
Outcome
The taxpayer’s application was dismissed.
Core reasoning
The taxpayer argued that section 172 of the Tax Administration Act that SARS rst had to provide at least 10 business days’ notice to the taxpayer before judgment could be taken, and that SARS failed to give such notice. It was also argued that the letter from SARS dated 3 March 2015 did not constitute a valid notice (because no notice occurred after the 1 April 2015 agreed upon payment date).
Judge Mantame held that the purpose of giving notice was merely to allow the taxpayer to make preparations. The court held that these preparations already began when the agreement was entered into in November 2014 with the applicants agreeing to pay. The court did not speci cally answer the question as to whether the notice has to be provided in respect of the outstanding tax debt or whether notice must also be provided in terms of SARS’s intention to take judgment.
In addition, the court addressed the business rescue led by some of the applicants in terms of the Companies Act during April 2015. Section 33 of the Companies Act generally places a moratorium on legal proceedings once a company les for business rescue proceedings. In this matter, SARS obtained judgment on 1 April 2015 and the relevant applicants only led for business rescue subsequent to that date. The court noted that the moratorium does not apply retrospectively.
9. Fastjet Holdings (Pty) Ltd v Minister of Finance 2015 JDR 1345 (GP) (GNP HC Case No: 64901/2013, (25 June 2015) (SARS Website))
Issue
Section 76(2) (d) of the Customs and Excise Act: The legal issue is whether section 76(2)(d) covers situations where the goods (cigarettes) are not physically lost but where a party is deprived of the bene t of those goods.
Posture of case
Judge Kollapen was sitting in the capacity of the High Court rst instance with the taxpayer making the application.
Facts
The taxpayer purchase cigarettes from Fodya (PTY) Limited (Fodya) and imported those cigarettes from Zimbabwe. He subsequently paid customs duty on the cigarettes. The cigarettes were cleared by customs and released for home consumption. Immediately, thereafter they were seized and detained by SARS.
According to the taxpayer, the 800 cases of Mega Blue 2 were detained in November 2012 with SARS alleging that the cigarettes did not comply with the standards for manufacture or the Reduced Ignition Propensity requirements under Proclamation No R. 429 of 16 May 2011. In January 2013, further cases of Mega Blue 20 were also detained and seized. Proceedings are pending in Gauteng Division of the High Court, Pretoria where Fodya (PTY) Limited sought relief to declare and set aside as unlawful the SARS seizure of the cigarettes.
Outcome
The taxpayer’s claim for a refund was brought in terms of section 76 (2)(d) of the Customs and Excise Act. The taxpayer also argued for alternative remedies via unjust enrichment and by contract. The High Court dismissed the taxpayer’s application.
Core reasoning
The taxpayer argues that the phrase ‘irrevocably lost’ in terms of section 76(2)(d) of the Customs and Excise Act is capable of meaning not only physical loss but also circumstances where a party is deprived of the bene t of the goods. Judge Kollapen held to give the phrase ‘irrevocably lost’ the meaning that the taxpayer contends would be to render the scope and ambit of the section so wide as to conceivably permit all types of claims for refund.
In terms of the unjust enrichment claim, the court held that it could never be said that if there was any enrichment it was for the kind that was unjusti ed. Furthermore, in terms of the contract claim, the court held that when the contract that the taxpayer relies upon was entered into, there was not true meeting of the minds. This claim is only founded upon an e-mail correspondence between representatives of the taxpayers and a manager of SARS. The manager’s stance was that it was an error on the system that led him to believe that the application for a refund was approved as SARS was in the process of modernising its systems. Accordingly, the claim based on the contract must also fail.
SAIT CompendIum oF TAx LegISLATIon VoLume 1 783
CASE DIGEST 2014-2015