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[2012] ZAGPJHC 14
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Rossi and Others v Commissioner of the South African Revenue Service (A5022/2011, 34417/201009) [2012] ZAGPJHC 14 (21 February 2012)
IN THE SOUTH GAUTENG HIGH
COURT JOHANNESBURG
Case Nos. A5022/2011
(Appeal case number)
34417/201009
(Motion Court case
number)
DATE:21/02/2012
In the matter of the
appeal of:
PIETRO
ROSSI
...................................................................................................................
First
Appellant
ANTONIO
PERA
.................................................................................................................
Second
Appellant
P & R CONSTRUCTION
CIVIL ENGINEERING CONTRACTORS
..............................
Third
Appellant
and
THE COMMISSIONER OF THE
SOUTH AFRICAN REVENUE SERVICE
..................
Respondent
______________________________________________________________
JUDGMENT
WILLIS J:
[1] In the court below
(
per
Satchwell J), the appellants’ application was
dismissed with costs. The appellants had sought an order declaring
that a letter
from the respondent to the third respondent did not
constitute an assessment in terms of the Income Tax Act, No. 58 of
1962, as
amended (‘the Act’); that the amount determined
by the respondent to payable in terms of that letter was not payable,
as a matter of law and that the appellants were entitled to a refund
of the amounts collected by the respondent, consequent upon
the
aforesaid letter. The appellants also sought an order that the
respondent pay interest and costs. The court below granted leave
to
appeal to this court. The judgment of the court below was delivered
on 15 March, 2011.
[2] In the applicants’
founding affidavit they allege that during October 1999 officers of
the South African Revenue Service
(‘SARS’) inspected the
third applicant’s business premises for the purposes of
conducting an audit. SARS held
the third applicant to be liable for
several hundred thousand rand in each of the respective tax years
from 1 March 1998 to 28
February 1999 and from 1 March 1999 to 28
February 2000. This liability appears in a letter dated 19 October
1999 addressed by
the respondent to the third applicant. The third
applicant is a partnership in which the first and second applicants
are the partners.
[3] In paragraph 29 of
the founding affidavit the applicants alleged that the letter of 19
October 1999 did not constitute an assessment
because,
inter alia
,
there was not a ‘notice’ in terms of section 77(5) of the
Act and the applicants were not informed of their rights
to object to
the respondent’s claim.
[4] In the founding
affidavit the applicants go on to allege that:
The third applicant,
through one of its employees, a certain Mrs U Lang, in the meantime
entered into negotiations with the respondent
(under the incorrect
assumption that the letter dated 19 October 1999 constituted an
assessment), explaining that the respondent
had erred and requested
that the respondent’s Employees Tax claim be waived, but in the
process failed to file a formal written
objection, as is required
under section 81 of the Act.
[5] The applicants claim
that they were lulled into a false sense of security, thinking that
the matter had been resolved. They
received no further communication
from the respondent for almost seven years.
[6] In response to an
email received by the third applicant from SARS on 7 March 2007,
Meintjies, Vermooten & Partners, the
attorneys acting for the
applicants at that time, sent a letter, dated 16 May 2007, to the
respondent in which they said the following:
We hereby request, if we
can be allowed, at this late stage that the assessment on 03/98, can
be revised or that the Receiver and
the client can come to an
understanding on the amount excluding penalties and interest to be
paid.
[7] In the answering
affidavit, the respondent pertinently alleges that the third
applicant was assessed by him on 20 October 1999,
and relies on a
document, separate and distinct from the letter of 19 October 1999,
as the revised ‘assessment’. The
respondent annexed this
document as ‘PO1’ to the answering affidavit. The
respondent alleges that the third applicant
neither objected to this
revised assessment nor lodged an appeal. The respondent contends that
the applicants’ claim had
prescribed by the time the
application was brought in 2010.
[8] In the replying
affidavit, the applicants responded to these allegations by the
respondent as follows:
The notices attached as
‘PO1’ to the answering affidavit do not constitute proper
‘assessments’ , for the
simple reason that they have
never been issued and served on the applicants, and therefore do not
constitute assessments in terms
of the Act as explained in paragraph
29 of the founding affidavit.
[9] Quite apart from the
submissions made, as a matter of law, as to whether or not the letter
of 19 October 1999 constitutes an
‘assessment’ in terms
of the Act, there is a dispute of fact as to whether annexure ‘PO1’,
alleged by the
respondent to have been issued on 20 October 1999, was
indeed served on any of the applicants and whether it can be
considered,
ex facie
the document itself, to be an
‘assessment’. It is common cause that, during the hearing
in the court below, no application
was made to refer the dispute or
fact for the hearing of oral evidence or to trial.
[10] As to whether or not
annexure ‘PO1’ constitutes an ‘assessment’,
Mr
Mtshaulana
who, together with Mr
Molokomme
, appeared
for the respondent, relied on the following provisions of section
94 of the Act:
The production of any
document under the hand of the commissioner purporting to be a copy
or an extract from any notice of assessment
shall be conclusive
evidence of the making of such an assessment, and except in the case
of proceedings on appeal against the assessment,
shall be conclusive
evidence that the amount and all particulars of such assessment
appearing in such document are correct.
It is unnecessary to
consider the arguments that were presented to the court in regard to
the provisions of this section in the
Act. It is time-honoured
principles applied in our courts relating to disputes of fact in
motion proceedings which are dispositive
of the appeal.
[11]
In general terms, these principles applicable to resolving disputes
of fact in motion proceedings are well known: the facts as
stated in
the respondents’ affidavits together with the admitted or
undisputed facts in the applicants’ affidavits
form the basis
for application and where the application cannot properly be decided
on affidavit, then it should, in terms of Rule
6 (5) (g) of the
Uniform Rules of Court, be referred either to oral evidence or to
trial, whichever is more appropriate.
1
Where,
however, there is no real, genuine or
bona
fide
dispute
of fact, different considerations apply.
2
Where the allegations or denials of the respondents are far-fetched
or untenable, the court may reject them merely on the papers.
3
It cannot be said, merely from the papers in this case, that the
factual dispute is neither genuine nor tenable.
[12]
In
Joh-Air
(Pty) Ltd v Rudman
4
Myburgh
J, with De Villiers and Nestadt JJ concurring, held that although
there may be circumstances in which a judge could,
mero
motu
,
decide that a motion proceeding should be decided through the hearing
of
viva
voce
evidence,
it would generally be bold and indeed unwise for a court to do so. In
the appeal hearing, no criticism could be levelled
at the court below
for failing to decide that the dispute should be resolved through the
hearing of
viva
voce
evidence.
[13]
In the court below the application was decided on the basis that the
High Court did not have jurisdiction to decide the matter.
Learned
arguments were presented to this court, as they were in the court
below, by counsel for both sides on whether the Tax Court,
in terms
of the Act, had exclusive jurisdiction to decide this case. We were
referred,
inter
alia
,
to
Metcash
Trading Limited v Commissioner, SARS
,
5
Whitfield
v Phillips and Another
,
6
Friedman
and Others NNO v CIR
7
and
The
Oceanic Trust Co. Ltd N. O. V Commissioner, SARS
.
8
[14]
Again, the
Plascon-Evans
principles
9
make it unnecessary to traverse the potentially complex issue of
jurisdiction.
[15]
Although may be understandable why the respondent briefed two counsel
in this matter, Mr
Mtshaulana
fairly and correctly did not press for the costs of two counsel to be
awarded against the appellants.
[16] The order of this
court is as follows:
The appeal is dismissed
with costs.
______________________
N.P.WILLIS
JUDGE OF THE HIGH COURT
I agree.
______________________
C. G. LAMONT
JUDGE OF THE HIGH COURT
I agree.
_______________________
R.MONAMA
JUDGE OF THE HIGH COURT
Counsel for the
Appellants:
J. Truter
Counsel for the
Respondent:
P.M. Mtshaulana
S.C. (with him,
T. Molokomme
)
Attorneys for the
Appellants: Shepstone and Wylie
Attorneys for the
Respondent: The State Attorney
Date of hearing: 15
February, 2012
Date of judgment: 21
February, 2012
1
See, for example,
Stellenbosch
Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd
1957
(4) SA 234
(C),
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634I
and
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA)
.
2
See, for
example,
Petersen
v Cuthbert & Co. Ltd
1945
AD 420
at 428
,
Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949
(3) SA 1155
(T) at 1163-5
,
Da
Mata v Otto NO
1972
(3) SA 858
(A) at 882D-H
,
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
(
supra
)
at 635A-C
.
3
See, for
example,
Associated
South African Bakeries (Pty) Ltd v Oryx and Verenigde Bäckereien
(pty) Ltd en Andere
1982
(3) SA 893
(A) at 923G-924D,
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
(
supra
)
at 635A-C
.
4
1980 (2) SA 420
(T) at 428-9
5
2001 (1)
SA 1109
(CC)
6
1957 (3) SA 318
(A)
7
1991 (2) SA 340
(W)
8
Western Cape High Court case no. 22556/09, decided by Louw J.
9
So-called after the case of
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634I
.
See also paragraph [11] above
.