CV v CSARS (A322/2019) [2020] ZAWCHC 140 (30 October 2020)

Facts

The South African Revenue Service, (“SARS”), raised an additional assessment on 17 February 2016 in relation to the appellant's 2014 year of assessment in terms of section 95(3) of the Tax Administration Act No 28 of 2011, (“the TA Act”).  The appellant, after registering on Efiling, received and considered the IT34 for the 2014 year of assessment on 3 September 2018. The appellant submitted a notice of objection on 10 September 2018 and on 21 September 2018 SARS wrote to the appellant informing them that the late submission had been allowed and that the dispute would be processed.

On 20 February 2019, the appellant delivered a notice in terms of Rule 56 of the Rules Promulgated under section 103 of the TA Act, (“the Rules”) notifying SARS that she would apply for a default judgement if SARS did not issue an outcome of objection within 15 days. On 22 February 2019, SARS withdrew the condonation for the late submission and issued a notice stating that the objection submitted on 25 September 2018 was invalid.

The appellant filed an application for a default judgment on 6 June 2019, and SARS was supposed to deliver its answering affidavit by 12 July 2019.  The answering affidavit was delivered on 19 July 2019 (five working days late). The matter was heard by the Tax Court on 30 August 2019 and a judgement dismissing the applicant’s application for a default judgement was delivered on 11 September 2019. During the proceedings, the appellant objected against the Tax Court’s decision to condone the late submission of SARS’ answering affidavit and also requested that portions in SARS’ answering affidavit, which were unsupported, be struck out as “hearsay evidence”.

Issues

As can be discerned from the aforegoing, the issues can be summarised as follows:

Issue 1: Whether the ruling or orders by the Tax Court in respect of the application for condonation and the striking out are appealable;

Issue 2: Whether the granting of the condonation to SARS was, on the facts justified; and

Issue 3: Whether the failure to have the striking out application properly ventilated impaired the legal validity of the proceedings.  

Finding

With regards to the first issue, SARS argued that the condonation of the late submission of the answering affidavit, as well as the appellant’s striking out application fall outside the scope of section 133(1) of the TA Act.  The argument was that section 133(1) of the TA Act only deals with a decision of the Tax Court under sections 129 and 130 of the TA Act, while interlocutory applications are dealt with in section 117(3) of the TA Act.  Even though it is trite that the general rule is that an interim order is not appealable, jurisprudence emanating from both the Supreme Court of Appeal and the Constitutional Court demonstrates that there is an overriding factor when considering whether or not an interim order is appealable or not.  (See Philani-Ma-Africa and Others v Mailula and Others 2010 (2) SA 573 (SCA) and City of Tshwane Metropolitan Municipality v Afriforum 2016 (6) SA 279 (CC)).  The Court was of the view that it would be a travesty of justice if the correctness of the interlocutory orders, which form part of the final judgement, were precluded from being considered on appeal and after the merits have been decided on.

With regards to the second issue, in considering whether or not the condonation granted by the Tax Court to SARS was rightly granted, the following jurisdictional facts must be met before the court’s discretion to allow the condonation can be exercised, namely, a good cause and a reasonable explanation for the delay.  Condonation is not granted simply when it is requested, but must also be accompanied by a detailed account of the delay.  Since SARS did not provide the cause and put forward a reasonable explanation for the delay, the Tax Court had no basis for exercising its discretion in favour of granting SARS’ condonation.

With regards to the third issue, the appellant contended that the failure of the Tax Court to properly adjudicate on the striking out proceedings, caused her to suffer prejudice.  The dismissal of an application for default judgement based on evidence from an answering affidavit that was not properly placed before the court resulted in the interest of justice, fairness and transparency being compromised.  The appellant was prejudiced to the extent that due process and procedures were disregarded.

The appeal was upheld and SARS was ordered to pay costs.

Find a copy of the court case here.

04/11/2021