CSARS v SAV South Africa (Pty) Ltd (SARSTC IT 25117)

Facts

The respondent, SAV South Africa (Pty) Ltd, (“SAV”), filed its appeal against additional assessments raised by the applicant, the South African Revenue Service, (“SARS”), for the 2014, 2015 and 2016 income tax years of assessment.  The applicant failed to deliver the rule 31 statement, as provided for in the Dispute Resolution Rules, (“rule 31 statement’), within a period of 45 days prescribed under rule 31 of the Dispute Resolution Rules.  On 2 September 2020, after approximately 12 months lapsed, the respondent addressed a letter to the applicant stating that; to date, they did not receive from SARS a request in terms of rule 4 of the Dispute Resolution Rules for an extension to deliver its rule 31 statement, before the expiry of the 45 days period in which the rule 31 statement had to be delivered; or received a notice from SARS’ intention to formally apply to the Tax Court for an order condoning its non-compliance with the Dispute Resolution Rules.  The applicant did not respond to the letter dated 2 September 2020.  The respondent proceeded on 13 October 2020 to serve a notice in terms of rule 56(1)(a) of the Dispute Resolution Rules, calling upon the applicant to remedy its default within 15 business days as prescribed in rule 56 of the Dispute Resolution Rules.  On 20 October 2020, the applicant delivered its rule 31 statement.  On 30 November 2020, the respondent, i.e SAV, launched an application for default judgement against the applicant, i.e SARS.  The respondent believed that since the applicant did not apply for condonation when they delivered its rule 31 statement, there is no rule 31 statement in existence.  On 14 December 2020, the applicant served a notice in terms of rule 30 of the Uniform Rules of Court, (“the Uniform Rules”).  The applicant stated that the filing of the default judgement by SAV is an irregular step since SARS did remedy the default as required by rule 56(1)(a) of the Dispute Resolution rules, within 15 business days.

Issues

As can be discerned from the aforegoing, the issue, in this case, is whether the application for the default judgement by the respondent is irregular.

Finding

In order to get to the answer, one must be in a position to decide whether there is a valid rule 31 statement filed by the applicant.  The delivery of the rule 31 statement occurred 310 business days after the expiry of 45 days.  As indicated above, SARS does not see why it should do, or had done something else, except to file the rule 31 statement within 15 days, in order to remedy its default.  In the present case, the applicant was aware that it did not comply with rule 4(2) of the Dispute Resolution Rules since no condonation for late filing of the rule 31 statement was submitted.  The court reminded all, that rule 4 of the Dispute Resolution Rules is equally applicable to all parties, and that rule 56 of the Dispute Resolution Rules must not be read in isolation, unless the applicant, i.e SARS is exempted from compliance with rule 4(2) of the Dispute Resolution Rules.  The fact that the respondent proceeded to ask the applicant to comply with rule 56 of the Dispute Resolution Rules must not be seen as a waiver of the provisions of rule 4(2) of the Dispute Resolution Rules.  A condonation request in terms of rule 4 of the Dispute Resolution Rules should have been submitted with the rule 31 statement.  With reference to Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development 2013 (2) All SA 251 (SCA), the court stressed that whenever an appellant realises that it has not complied with a rule of court, it should apply for condonation without delay.  Accordingly, SARS did not submit a valid rule 31 statement, since it did not comply with rule 4(2) of the Dispute Resolution Rules.  SARS was therefore still in default, and the door was still open to the respondent taxpayer to apply for a default judgement.

The application was dismissed with costs.

Find a copy of the court case here.

21/01/2022