Page 802 - SAIT Compendium 2016 Volume1

Case digest 2014-2015
grounds of review
ackermans’ argument
ackermans contended that the circumstances did not allow saRs to issue an additional assessment in terms of section 79 of the act as there was no fraud, misrepresentation or non-disclosure of material facts.
it further contended due to the ve years that passed without any communication from saRs with regards to the agreements that the decision to issue additional assessments was therefore procedurally unfair. it further contended that saRs did not have any reason for the delay as it provided saRs with all of the necessary information to make a decision, which saRs failed to do. it contended that this failure to take a timeous decision was in contravention of section 237 of the Constitution that holds “all constitutional obligations must be performed diligently and without delay”. it submitted that saRs’ contravention of section 237 of the Constitution is a breach of the constitutional principle of legality.
it was also contended that saRs’ decision was materially in uenced by an error of law, in that it did not consider all of the relevant considerations of the agreements and that the decision therefore was unreasonable. Lastly ackermans contended that the delay in raising the additional assessments can potentially prejudice a taxpayer in that the documents relevant to its defence may have been lost or destroyed and that the memories of witnesses may fade.
saRs’ argument
saRs contended that the High court does not have jurisdiction to decide on the matter due to the complexity of the issue in dispute that requires the expertise of the tax Court. saRs further submitted that the tax Court has powers of review for the relief sought by ackermans and alternatively that ackermans has not exhausted its internal remedies before the tax Court and that its review application in terms of the PaJa should therefore not be entertained by the High court. it also contended that there are disputes of fact which should be resolved by the tax Court. in defence to the ve year period between the second noti cation in July 2006 and the letter of ndings in November 2011, saRs contended that it had to wait for the outcome of CSARS v NWK (2010) ZasCa 168 as the case had a bearing on the legal principles involved in the issuing of additional assessments under these circumstances. it further held that it acted within its prescription period of 30 years to recover taxes due.
Outcome
the application was dismissed. each party was ordered to pay its own costs.
Reasoning
in dealing with the jurisdiction of the High court, Mothle J at paragraph [17] and [18] referred to itC 1866 (2012) 75 satC 268 and Metcash Trading Ltd v Commissioner SARS and Another 2001 (1) sa 1109 (CC) as authority for the fact that a review application in terms of the PaJa must be heard by a High court. saRs’ contention that the High court does not have jurisdiction accordingly failed.
at paragraph [11] Mothle, J made it clear that ackerman’s application is “...not about the merits or demerits of the Additional Assessments, but rather about the review and setting aside alternatively the constitutional legality of the decision of SARS to issue the Additional assessments”.
given the fact that section 237 of the Constitution does not state what period would be considered an unreasonable delay, the court turned to section 79 of the act to determine if the six years delay by saRs in issuing additional assessments was unreasonable. section 79 of the act before its repeal held that an additional assessment may not be issued after three years of the date of assessment unless there was fraud, misrepresentation or non-disclosure of material facts. Whether there was misrepresentation or non-disclosure of material facts depends on whether the transaction was in fact a simulated loan. in this regard, the following was held by Mothle J at paragraph [35]:
“[35] There is clearly a dispute of fact on this part of the evidence, which is relevant in deciding whether, apart from other explanations, the delay in raising Additional Assessments falls or does not fall within the proviso to subsection (1)(c)(i) paragraph (aa) of section 79. If it is concluded on the resolution of the disputed facts, that there was misrepresentation or non-disclosure of material facts on the part of Ackermans, the delay by SARS will be covered by the proviso in paragraph (aa) and will thus be reasonable. If, however, it is found that there were no misrepresentations and there was a disclosure of the material facts, the delay from 2006 to 2012 when Additional Assessments were raised, would constitute an unreasonable delay in contravention of section 79(1)(c)(i)...”
the court held that the expertise of the tax Court is required for such a determination and that ackermans should therefore rely on the ordinary remedies provided by the act to dispute the assessments.
22. South Atlantic Jazz Festival (Pty) Ltd v Commissioner, South African Revenue Service 2015 (6) SA 78 (WCC); WCC HC Case No: A 129/2014 WC (6 February 2015)
Issue
Input VAT - sections 20(7) and 16(2)(f) of the Value Added Tax Act (No. 89 of 1991). at issue is whether a supplier’s failure to issue a tax invoice, despite being demanded by the vendor to do so, precludes that vendor from using other available documentation to claim an input tax deduction.
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