Page 794 - SAIT Compendium 2016 Volume1

CASE DIGEST 2014-2015
other respondents then entered in such notice on the 25th of August 2014. The matter was then, by agreement, extended to the 29th of September 2014 to be heard, but on condition that these respondents indicate to SARS by 5 September 2014 how they wanted the provisional order amended and that they le opposing af davits by 15 September 2015. On the 29th September 2014 the respondents led a motion to have the submission of the af davits extended to 9 February 2015, but SARS opposed the order seeking the order to be made nal.
Outcome
The court concluded that the matter would not be postponed but rather that the preservation order be con rmed and that SARS, as the successful party, is entitled to costs for the application.
Core reasoning
The court considered the postponement request on the basis that any such request is an indulgence for which various factors had to be considered though the list was non-exhaustive. These factors included whether the application was made timeously, the reasons for the application and the conduct of the parties, such as terminating legal representation to secure the postponement on the basis that they would be unrepresented.
The respondents contended that they had appointed a new legal counsel on 10 September 2014 and they required more time to prepare the documents. The court stated that the rules of court are there to be complied with and any indulgence of non-compliance therewith would have to be for satisfactory reasons. The court concluded that the new attorney should have known to have led such applications and had suf cient time to do so.
In respect of the replacement of the legal counsel, the court cited Erasmus Superior Court Practice as follows [at 12]:
“Mere withdrawal by a practitioner or the termination of a mandate does not ... entitle a party to a postponement as of right.”
The court concluded that the actions of the respondents fell within the ambit of the “old trick” of attempting to secure a postponement by merely changing legal counsel and that alone warrants refusal for a postponement.
In respect of the requirement of public interest, the court stated that it is in the public interest that SARS collects tax monies. In this respect a preservation order is not a collection mechanism but rather a means of preserving assets to avoid the frustration of the tax collection. To do this SARS must show that there is a material risk that the assets would without the preservation order not be available at execution in that the respondents, on a prima facie basis shown, are likely to dissipate the assets. In respect of the latter SARS had af davits indicating the intention of the respondents to dissipate the assets.
14. Director of Public Prosecutions, Western Cape v Parker (103/2014) [2014] ZASCA 223; 2015 (4) SA 28 (SCA); SCA Case No: 103/2014 (21 December 2014)
Issue
Non-payment of VAT - section 58(d) of the Value Added Tax Act (No. 89 of 1991). At issue is whether a vendor who has misappropriated an amount of VAT which it became liable to pay to SARS can be charged with the common law crime of theft.
Posture of the case
This case is before the Supreme Court of Appeal with the State appealing the decision of the Western Cape High Court.
Facts
The respondent is the sole representative of Step-in-Time Supermarket CC, a registered VAT vendor charged in the Bellville regional court for a number of counts under the Income Tax Act (No. 58 of 1962) and the Value-Added Tax Act (No. 89 of 1991) (hereinafter ‘VAT Act’) together with sixteen counts of common law theft for the failure to pay VAT to SARS between the period February 2001 to February 2006.
The respondent was found guilty of all charges and was sentenced to 5 years’ imprisonment in terms of sec 276(1) (i) of the Criminal Procedure Act (No. 51 of 1977) for the alleged ‘VAT theft’. However, the trial court granted the respondent leave to appeal to the Western Cape High Court against the sentence imposed in respect of the VAT theft. The Western Cape High Court held that the respondent did not commit VAT theft given the fact that the money in question belongs to the vendor and not SARS. The court consequently set aside the conviction and sentence which resulted in the state appealing the case to the Supreme Court of Appeal.
The State’s appeal resolved around the question as to whether a VAT vendor who has misappropriated an amount of VAT which it has collected and became liable to pay to SARS can be charged with the common law crime of theft. The motivation behind the State’s appeal was that the sanction imposed on the failure to pay VAT in terms of sec 58(d) of the VAT Act is a ne or imprisonment not exceeding two years which is too lenient and that a conviction of theft would lead to a sterner sanction.
In opposing the Western Cape High Court’s judgement, the State argued that the said court started out on the wrong premise by asking whether SARS became the owner of that money. Based on sec 7(1) of the VAT Act, paras 15 and 17 of Metcash Trading Ltd v Commissioner, South African Revenue Service 2001 (1) SA 1109 (CC) and the decision in Estate Agency Affairs Board v McLaggan2005 (4) SA 531 (SCA) it was argued that the vendor acts as an agent on behalf of SARS in a position of trust and that a vendor who therefore uses VAT for purposes other than to pay the Commissioner, misappropriates those funds and is therefore guilty of theft, despite the fact that the vendor may be the owner of that money. This argument is set out in para [7] of the judgement where the following was stated (emphasis mine):
786 SAIT CompendIum oF TAx LegISLATIon VoLume 1