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Other SA cases

In this part we provide a condensed version of decisions in South African courts other than the Supreme Court of Appeal and the Constitutional court.

A High Court may decide any matter not assigned to another court (through an Act of Parliament), as well as any constitutional matter not assigned to the Constitutional Court or another court of a similar status as that of a High Court. On the principle of precedent (also referred to as stare decisis) the ratio decidendi of High Court judgments would be law that is binding on lower courts and of persuasive value in respect of High Courts of similar status. Such judgments must be applied by taxpayers and SARS in matters that are materially similar. A judgment of a full bench of the High Court would be binding on a judgment of an High Court comprising a single judge.

Kluh Investments (Pty) Ltd v CSARS

This is a successful appeal against the dismissal by the tax Court (Judge Davis sitting with two assessors) of an appeal brought in that court against an additional assessment levied by SARS. The dispute was, in essence, whether the amount accrued to Kluh Investments (Pty) Ltd as a person carrying on farming operations. SARS said yes, Kluh Investments said no.

Capstone 556 (Pty) Limited v CSARS

This is a longish decision, but makes worthwhile reading. In it Judge Griesel deals with the approach to be followed in determining the capital nature of a receipt. In the case report the Judge makes important comments regarding the burden of proof in this regard, for instance "even if the objective facts suggest that the amount in question is prima facie of a revenue nature, the taxpayer may be able to provide an explanation to rebut such inference.”

Capstone 556 (Pty) Limited v CSARS

This is a longish decision, but makes worthwhile reading. In it Judge Griesel deals with the approach to be followed in determining the capital nature of a receipt. In the case report the Judge makes important comments regarding the burden of proof in this regard, for instance "even if the objective facts suggest that the amount in question is prima facie of a revenue nature, the taxpayer may be able to provide an explanation to rebut such inference.”

CSARS v Miles Plant Hire (Pty) Ltd
(1 Comments - Last one made: Tuesday, March 11, 2014 01:25 PM)

An interesting judgment was handed down in the North Gauteng High Court on 3 October 2013 in the matter of Commissioner for the South African Revenue Service v Miles Plant Hire (Pty) Ltd (case no 23533/2013). At issue in this case was whether, in terms of section 177(3) of the Tax Administration Act, there must first be an application for leave to institute winding up proceedings, and secondly, if leave is granted, whether there must be a further application for the actual winding up of the taxpayer.

VAT Case No. 759 (Computek v C:SARS)

For both taxpayers and VAT vendors the grounds of objection filed with the objection or notice of appeal to SARS is of utmost importance as going forward in the dispute such taxpayer or vendor will be bound by the scope of the grounds of objection/ appeal. In this Tax Court case it was once again confirmed by the court that it is not possible for a taxpayer or vendor to change the grounds after a period of three years has already lapsed.

Kirsten and Thomson CC t/a Nashua East London v CSARS
(0 Comments)

This case illustrates the importance for taxpayers to realise that payment by cheque is inherently risky. If a taxpayer pays SARS by cheque, and SARS loses the cheque (or someone at SARS steals the cheque), the taxpayer's tax liability may very well not be discharged, despite the fact that the cheque is cloned and presented for payment at a bank by a fraudster. To recover any monies lost in respect of such fraud, it is essential to carefully analyse the facts and the law and institute a claim against the correct party and on the correct basis.

Gaertner, PLM and Two Others v Minister of Finance & CSARS: and 9 others
(0 Comments)

This High Court case dealt with the constitutionality of section 4(4) – (6) of the Customs & Excise Act, No. 91 of 1964 (‘the Customs Act’). The judgement effectively amends section 4(4) – (6), which the court found to be unconstitutional and therefore invalid. According to the judgement, the changes effected by the judgement will apply until the legislature has had an opportunity to amend the offending provisions so as to make them constitutionally valid.

MTN International (Mauritius) Limited and CSARS
(0 Comments)

This case deals with a review application brought in terms of section 6 of PAJA, 2000, in an attempt to set aside additional income tax assessment on procedural and administrative grounds. In it Judge Thlapi considers a number of issues, such as a legitimate expectation by the taxpayer and the administrative justice question was whether the alleged 'manipulation of the 'due date' and 'second date' by SARS was mala fide and therefore invalidated the additional assessment raised by them.

Capstone 556 (Pty) Ltd vs SARS and The Minister of Finance
(0 Comments)

In terms on the Income Tax Act, No. 58 of 1962, an objection or appeal does not suspend the obligation on a taxpayer to pay outstanding taxes. This is known as the ‘pay now, argue later' principle. SARS does have the discretion to suspend a payment obligation depending on the facts and circumstances as presented by the affected taxpayer. This case, which was heard in the High Court of South Africa, dealt with the refusal of the taxpayers' requests for a suspension of the obligation to pay assessed tax. Although the case was heard in 2011, the principles set out therein are always relevant especially in light of the additional assessments being raised by SARS, in some instances, in terms of the new IT14SD form.

Russouw v Reid and another
(0 Comments)

In this instance the South Gauteng High Court dealt with the entitlement of a person to recover the tax on an amount paid in terms of a divorce settlement from a retirement fund to a former spouse. In this instance the divorce took place on 25 August 2006 and the former spouse made use of an amendment in the Pensions fund Act to withdraw the amount before the retirement of the member.

The court agreed with the member that the tax that resulted from this early withdrawal had to be recovered from the former spouse.

Zikhulise Cleaning Maintenance and Transport CC v CSARS and the Minister of Finance
(0 Comments)

This court application received wide media coverage and were made available on the SARS web site late on 5 June 2012. The case report is marked as "Reportable No".

CSARS v Werner von Kets
(1 Comments - Last one made: Friday, October 5, 2012 02:29 PM)

The question before the court was whether the exchange of information provision in a treaty caters for a third party (in the RSA) who may have information with regard to income profits or gains of a resident of Australia in circumstances where the income, profit or gain could be sourced anywhere in the world. .

CSARS v Professional Contract Administration CC
(0 Comments)

In this case the meaning of the proviso (ii) to paragraph (c) of the definition of gross income was considered. The wording (which has not been amended) reads as follows:

"Provided that any amount received by or accrued to or for the benefit of any person in respect of services rendered or to be rendered by any other person shall for the purposes of this definition be deemed to have been received by or to have accrued to the said other person".

In this case SARS argued "that, wherever services are rendered by a member of a body corporate, those services are not rendered by the body corporate, but by the member in person" for purposes of paragraph (c) of the definition of gross income. The same line of thought was also taken in Van Heerden and Others v the State (the Garth le Roux case) and the decision in CSARS v Professional Contract Administration CC in this regard was accepted as correct.

Metropolitan Life Limited v CSARS
(0 Comments)

CSARS adopted the view that Metropolitan Life Limited had received "imported services" as defined in section 1 of the Act and thus raised assessment for VAT on such services to the extent that the services were used or consumed in the Republic otherwise than for the purpose of making taxable supplies.
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