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[2016] ZAGPJHC 58
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Mathote Modular BLDG. Systems (Pty) Ltd v Commissioner for the SA Revenue Service (0038/2015) [2016] ZAGPJHC 58 (4 March 2016)
IN
THE SOUTH GAUTENG TAX COURT
HELD
IN JOHANNESBURG
ITC
Case number: 0038/2015
DATE:
04 MARCH 2016
In
the matter between:
MATHOTE
MODULAR BLDG. SYSTEMS (PTY)
LTD
.....................................................
Appellant
And
THE
COMMISSIONER FOR THE SA REVENUE
SERVICE
.......................................
Respondent
JUDGMENT
SATCHWELL J:
INTRODUCTION
This
judgment is concerned with discharge of the onus to prove
“exceptional circumstances” as required in terms of
section 104
of the
Tax Administration Act 28 of 2011
when seeking
extension of the period allowed to a taxpayer for objection to an
assessment.
The
taxpayer was audited by SARS in May 2014, audit findings were
furnished in August 2014, representations were made by the taxpayer
in November 2014 and assessments raised against the taxpayer in
December 2014 in respect of Unemployment Insurance, Skills
Development Levy, Employees Tax, Secondary Tax on Companies, Income
Tax and Value Added Tax.
The
taxpayer lodged an objection against these assessments on 5
th
June 2015 which objections were disallowed on the grounds that ‘no
exceptional reasons had been furnished’. The taxpayer
appeals
against that finding.
Section 104 of
the Tax Administration Act 28 or 2011 (the TAA)
Section
104
of the TAA permits a taxpayer to object to an assessment within
the period prescribed in the rules,
[1]
viz.
30 days, which period may be extended but not for a period exceeding
21 business days “unless a senior SARS official is
satisfied
that exceptional circumstances exist which gave rise to the delay in
lodging the objection.”
It
is common cause that appellant should have objected by 2
nd
March 2015 (30 days from date of assessment plus the
dies non
period of the Christmas recess). It is common cause that appellant’s
objection was only lodged on 5
th
June 2015 and was
therefore out of time by 65 business days.
The
provisions of
section 104(5)
are peremptory. They are clearly
expressed. The period for objection “
must not
be
extended” [my underlining]. That is the framework within which
this appeal for relief is sought.
The
onus is therefore on appellant to satisfy this court that
“exceptional circumstances exist which give rise to the delay
in lodging the objection”. This means that unusual facts must
be proven which have a causal connection to the delay which
resulted.
Extraneous
argument
Counsel
for the taxpayer made a variety of submissions, some of which had no
relevance to the enquiry into the existence of exceptional
circumstances and their causal relation to the 65 business day
delay.
Firstly,
that the 65 days delay is not a long period of time when viewed in
the context of the period of 3 years which elapses
before
prescription results. There is no merit in this proposition –
what is required is proof of certain facts which occasioned
the
delay.
Secondly,
that the audit findings of August 2014 were so little different from
the assessment of December 2014 that the intervening
correspondence
from the taxpayer in November 2014 could be regarded as an
objection. There is no merit in this submission because
there was no
assessment in August and, in any event, the documents are not the
same.
Thirdly,
that the relevant SARS official failed to consider the reasons which
motivate for exceptional circumstances before making
the decision of
22
nd
June 2015. There is no merit in this submission
because no facts or argument adverting to exceptional circumstances
were ever
tendered prior to 22
nd
June 2015.
Fourthly,
that the appeal is not against the decision of 22
nd
June
but the letter of 3
rd
August 2015 which is subsequent to
appellant furnishing a motivation on 25
th
June. There can
be no merit in this argument since the letter of 3
rd
August did no more than confirm the decision already made on 22
nd
June and restated that, at that time, no exceptional circumstances
had been tendered.
Finally,
that appellant had been invited to resubmit an amended objection in
the letter of 22
nd
June advising of the decision to
refuse to consider such objection and therefore the subsequent
communication from appellant
on 25
th
June should have
been properly and reasonably considered and adjudicated in the 3
rd
August communication. There is no merit in this suggestion since
there is no indication of an invitation to submit an amended
objection and, in any event, the provisions of
section 104
of the
TAA would not permit this to be done.
Much
of this argument or many of these submissions were not contained in
the written heads of argument and were made off the cuff
by counsel
appearing for appellant and should not have been presented in such
fashion.
Much
time was spent by appellant’s counsel on reference to the
finding of an ‘invalid’ objection in the SARS
communication of 22
nd
June 2014. In fact, the notice of
motion asked this court to make a finding that this objection was
‘valid’ which
suggests that this court should make a
determination as to the merits of the objection. I find that this
concern about validity
or invalidity is not of relevance when I am
required to make a determination as to discharge of the onus in
terms of
section 104
of the TAA.
Exceptional
circumstances which gave rise to the delay in lodging the objection
A
number of issues were argued. None were based upon documents or
proof. All were no more than argument but were, regrettably,
presented as though there were facts or evidence contained somewhere
in the papers before the court which (unfortunately) could
not be
found.
First,
that the assessments and the objections thereto involved complex
issues of law. No indication as to the nature of
such
complexities was ever indicated. It is correct that a
number of statutes are involved but I have received
no argument as
to the reason why tax on use of motor vehicles, PAYE not deducted
from employees or any other of the matters would
be considered
complex. I do not comment on whether or not there is any such
complexity – simply that I was given no indication
as to the
basis on which I could make such a finding.
Second,
the courts were closed over the December 2014/ January 2015 period.
I fail to understand what impact the existence of
the court recess
could have had on not attending to lodging an objection over the
period mid December 2014 (the assessment) to
March 2015 (due date).
There was no application to the court and neither the assessment nor
an objection thereto needed to be
brought to the attention of any
court official.
Third,
the taxpayer was busy in negotiations with SARS over the period
December to March 2015. When I pressed appellant’s
counsel for
details of such negotiations he claimed that SARS own answering
affidavit referred to a ‘series of meetings’.
I had no
recollection of such admission and pressed him for details. None
existed. At most was the existence of one visit by
appellant’s
auditor to the SARS offices on 19
th
January 2015. I am
most concerned that counsel should be so loose with the facts and
persist and persist
ad nauseam
as regards a ‘series of
meetings’ when no evidence of such exists.
Fourth,
appellant became dissatisfied with the capabilities of his auditor
and terminated use of his services. This supposedly
necessitated
delay in obtaining further professional advice. No indication has
been given as to why or when or how the auditor
was incompetent. He
is a CA (SA) and it is irrelevant that he is from Zimbabwe. There
are no facts upon which I can conclude
that this auditor was
incapable - after all the letters prepared by this auditor in
November 2014 are little different from the
opinion of counsel
(undated) contained in the papers which is apparently acceptable to
the appellant. It would appear that appellant
was dissatisfied with
the response of SARS and not doubtful about the expertise of the
auditor.
Fifth,
it apparently took appellant time to obtain new professional advice
– from a practitioner
based in
Florida. Only in April 2015 was appellant furnished with the name of
this representative who prepared
an undated opinion for
his client (portion of which is included in the papers). Since
appellant is based in Springs on the West
Rand, I see no reason why
this court cannot take judicial notice of the multiplicity of
attorneys’ firms operating all
along that stretch of the
Witwatersrand region and up into Sandton whence appellant may have
enquired, at any time subsequent
to the assessment in December 2014,
as to the tax expertise of such attorneys and advocates.
None
of these submissions persuade me of the existence of ‘exceptional
circumstances’. They are neither unusual nor
causally
connected to the delay.
Interpretation
Note 15 requires SARS officials to consider,
inter alia
, the
reasons for the delay, the length of the delay and the prospects of
success of the objection.
It
was submitted that the objection made by appellant enjoys good
prospects of success and I was referred to an opinion apparently
prepared by appellant’s current representative to his client.
This is not a document submitted to SARS prior to the decision
of
22
nd
June 2015. I regret that it is of little assistance to myself. It is
no more than advice to a client – it is not an affidavit
to
which are attached any relevant documents such as logbooks in
respect of vehicles, contracts with employees, contracts with
soccer
clubs and so on. Nothing is contained in this document which gives
this court any indication of the existence of a
prima
facie
case. There is no more than the “mere say-so” of
appellant’s counsel.
[2]
Conclusion
I
am sympathetic to any taxpayer who is confronted with an enormous
amount of tax to be paid in terms of an assessment where it
was the
ignorance of the taxpayer which led to his or her failure to comply
with the provisions of the TAA.
But
the taxpayer, whose assessed liability runs to millions of Rands,
should have taken its tax responsibilities seriously enough
to seek
tax advice from a firm of attorneys specializing in such matters as
soon as the assessments were levied in December 2014
when it became
apparent that the November 2014 representations of his auditor had
not been successful. The lapse of time from
mid December 2014 to
June 2015 is not satisfactorily explained – let alone
sufficiently to discharge the onus of proving
‘exceptional
circumstances’.
In
the result an order is made as follows:
The
appeal is dismissed with costs.
DATED
AT JOHANNESBURG 04
th
MARCH 2016
SATCHWELL
J
Representative
for Appellant: Adv CP Van Breda
No
attorney is on record as having briefed Adv van Breda
Counsel
for Respondent: Adv M Tjiana
Attorneys
for Respondent: The State Attorney
Dates
of hearing: 24
th
February 2016.
Date
of judgment: 04
th
March 2016.
[1]
Rule 7(1)
provides that a notice of objection must be delivered
within 30 days after the date of assessment.
[2]
See
ITC 1777 at page 334C.