Page 804 - SAIT Compendium 2016 Volume1

CASE DIGEST 2014-2015
24. Medox Ltd v Commissioner, South African Revenue Service [2015] ZASCA 74; 2015 (6) SA 310 (SCA); SCA Case No: (20059/2014) (27 May 2015)
Issue
Tax administration – the repealed sections 81 to 85 of the Income Tax Act. At issue is whether “incorrect” assessments made by the Commissioner can be declared by the High Court to be null and void, and thus set aside, even though the objections and appeals process was not followed by a taxpayer.
Posture of the case
This case is before the Supreme Court of Appeal with the taxpayer appealing the decision of the North Gauteng High Court.
Facts
Medox Limited’s (the appellant) 1996 and 1997 income tax returns re ected large assessed losses. Pro ts were made during the 2004, 2007, 2009 and 2010 years of assessment but the 1998 to 2009 income tax returns were submitted before the 1997 return.
The appellant never lodged an objection to the 1998 income tax return, which did not contain the balance of assessed losses arising out of prior years of assessment. Furthermore, it did not submit its 1997 income tax return until 2009. Given the fact that more than three years had passed since the 1998 income tax assessment was issued, Medox could not object thereto and the assessment became conclusive in terms of the repealed section 79 of the Income Tax Act (No. 58 of 1962) (hereinafter referred to as ‘the Act’). It only realised in 2009 and that the 1997 and 2003 income tax returns were not assessed and that the balance of assessed loss was not claimed.
Medox then took the view that the 1998 and subsequent income tax assessments were void as the Commissioner for the South African Revenue Service (‘the Commissioner’) had acted ultra vires by failing to set off its balance of assessed losses (as at 1996 and 1997) against the taxable income in respect of subsequent years of assessment. It approached the North Gauteng Division of the High Court, seeking an order declaring that all post-1997 income tax assessments issued to it by the Commissioner are null and void. The High Court dismissed the application with costs.
Outcome
The court held that the High Court was correct to dismiss the appeal for the declaratory order and consequently dismissed the appeal.
Core reasoning
The appellant’s contention was that by not taking the assessed losses into account per section 20(1)(a) of the Income Tax Act, the assessments were invalid. In response, Fourie J held the following at paragraphs [15] and [16]:
“On this argument virtually any assessment in which the Commissioner erroneously refuses to allow a deduction, rebate or exemption provided for in the Act, could be regarded as invalid and therefore not subject to the provisions of ss 81 to 83 of the Act. This would render the mechanisms provided in ss 81 to 83 for objections to and appeals against assessments nugatory and grant aggrieved taxpayers carte blanche to approach the high court in virtually every instance where they disagree with an assessment made by the Commissioner.”
“What counsel for Medox is effectively asking this court to do, is to read words into the Act by implication....the submission on behalf of Medox requires the word ‘assessment’ in s 81 of the Act, and in particular in subsecs 81(2)(b) and 81(5), to be read as being a reference to a ‘valid’ assessment. In my view there is no basis upon which it can be said that the reading in of the word ‘valid’ in s 81 is necessary to give effect to the section as it stands. On the contrary, I believe that this construction would be in con ict with the intention of the legislature as appears from the clear language of the subsections.”
25. Porritt and Another v National Director of Public Prosecutions and Others [2014] ZASCA 168; 2015 (1) SACR 533 (SCA); SCA Case No: 978 / 2013 (21 October 2014)
Issue
Criminal litigation – Section 106(1)(h) of the Criminal Procedure Act (CPA). The issues between the parties was what legal test is to be applied in terms of section 106(1)(h) or the common law for the removal of a prosecutor and secondly whether this test was properly applied by the South Gauteng High court.
Posture of case
This case is before the Supreme Court of Appeal with the taxpayers appealing the decision of the South Gauteng High Court.
Facts
The taxpayers 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
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