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[2021] ZAGPPHC 134
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Medtronic International Trading SARL v Commissioner for the South African Revenue Service (33400/2019) [2021] ZAGPPHC 134; 83 SATC 281 (15 February 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG,
PRETORIA
CASE
NUMBER: 33400/2019
Reportable
Of
Interest to Other Judges
In
the matter between:
MEDTRONIC
INTERNATIONAL TRADING S.A.R.L
Applicant
And
THE
COMMISSIONER FOR THE SOUTH AFRICAN
Respondent
REVENUE
SERVICE
JUDGMENT
HUGHES
J
Introduction
[1]
Medtronic International Trading S.A.R.L,
the applicant, seeks to review two decisions taken by the respondent,
the Commissioner
for the South African Revenue Services (SARS). This
judicial review against the decisions of SARS is sought in terms of
the Promotion
of Administration of Justice Act 3 of 2000 (PAJA),
alternatively on the principle of legality, the common law and
section 33 of
the Constitution of the Republic of South Africa.
Significantly, aside from the review per se, the applicant seeks
declaratory
relief on a question of law.
[2]
The applicant seeks the following relief:
‘
1.
That it be declared that:
1.1. the provisions of
Chapter 16, Part B, sections 225 to 233 of the Tax Administration
Act, Act 28 of 2011 (" the TAA")
relating to voluntary
disclosure programmes ("VDFF') do not prohibit a request for
remission of interest in terms of section
39(7) of the Value-Added
Tax Act, Act 89 of 1991 (PVAT Act") notwithstanding a VDP
agreement having been entered into; 1.2
notwithstanding a prior VDP
agreement having been entered into, the respondent has a statutory
duty to consider, adjudicate and
decide on a request for the
remission of interest in terms of section 39(7)(a) of the VAT Act.
2.
That the following decisions of the
respondent be reviewed and set aside in terms of the Promotion of
Administrative Justice Act,
Act 3 of 2000 ("PAJA"),
alternatively the principle of legality, and remitted back to SARS
for reconsideration, namely:
2.1.
The decision set out in the respondent's
letter dated 1 November 2018, of which the applicant was informed per
e-mail on 20 November
2018, to refuse to consider the applicant's
request for remission of interest in terms of section 39(7)(a) of the
VAT Act;
2.2.
Alternatively, the respondent's decision
set out in its letter of 13 March 2019, of which the applicant was
informed per e-mail
on 28 March 2019, to refuse to withdraw its
decision referred to in paragraph 2.1 above and to decide that it
cannot consider the
request for the remission of the interest levied.
3.
That the respondent be ordered to consider,
adjudicate and decide on the applicant's request for remission of
interest in terms
of section 39(7)(a) of the VAT Act, dated 12
October 2018, and inform the applicant of its decision within 15 days
of the order
being granted. SARS' decision may not be contrary to the
declaratory relief as set out above;
4.
That in the event of the respondent
deciding not to remit the interest, that it provide detailed written
reasons as envisaged in
the VAT Act, read with the TAA and PAJA
within the same 15 days of the order being granted;
5.
That in the event of the respondent failing
to comply with paragraphs 3 and 4 above, that the applicant be
granted leave to approach
this Court on the same papers, supplemented
if necessary, for further appropriate relief;
6.
That the respondent be ordered to pay for
the costs of this application, including the costs occasioned upon
the employment of two
counsel.’
[3]
According to the parties this review essentially involves two
interrelated decisions.
The first being, the review of the decision
taken by the respondent refusing to consider the applicant’s
request for remission
in terms of section 39(7)(a) of the Value-
Added Tax Act (VAT Act). Additionally, the decision not to withdraw
such aforesaid decision
in terms of section 9 of the Tax
Administration Act 28 of 2011(Tax Act).
Brief
Background
[4]
During the course of June 2004 and May
2017, Ms Hildegard Steenkemp, who was employed by the applicant in
the Africa group, as an
accountant, embezzled an amount of
R537,236,176.00 from the applicant. Ms Steenkemp achieved this by
submitting false VAT 201 returns
to the respondent and she sought
reimbursements from the respondent in order to conceal her
embezzlement. Eventually, Ms Steenkemp
was arrested following
investigations and forensic audits having been conducted.
[5]
The applicant contends that it is a victim
as a result of the conduct of Ms Steenkemp and has suffered a
substantial loss. Hence,
on 13 December 2013, the applicant applied
to the respondent for Voluntary Disclosure Programme (VDP) relief in
terms of section
225 and 233 of the Tax Act. Around 29 March 2018,
during the VDP discussions with the respondent, the applicant sought
that the
respondent waives the interest. According to the applicant,
about 10 April 2018, the VDP unit responded by stating that SARS was
prepared to waive all understatement and late payment penalties, as
it did not have the authority to waive the interest arising
from the
underpayment of the VAT.
[6]
On 14 and 18 June 2018 the two VDP
agreements were concluded between SARS and the applicant. According
to these VDP agreements the
applicant was liable for the payment of
the capital VAT amount of R286, 464, 756.62 and interest of
R171,205,356.12, which the
applicant submits it paid. Having
undertaken to pay the capital and interest amounts, SARS contends
that it agreed with the applicant
that it would grant the applicant
relief in respect of the understatement and administrative
non-compliance penalties in the amount
of R172million. In addition,
SARS would not pursue any criminal action for any of the offences in
respect of the default.
[7]
The applicant contends that in terms of
section 39(7)(a) of the VAT Act read with interpretation note 61
(
IN61
) it
is entitled to a ‘waive’ of interest for the period. To
this request the respondent’s view is that the applicant
is
attempting to renegade on the VDP agreements reached in the face of
having been granted a reprieve of the R172million in penalties.
Hence, SARS concluded that the request made by the applicant was not
valid. In fact, SARS states that the applicant ought to have
submitted a notice of objection for the remittance of the interest.
The respondent went so far as to state that section 39(7)(a)
of the
VAT Act and to the extent of section 187(6) of the Tax Act applying,
do not apply to VDP agreements.
[8]
Lastly, to further qualify the above the
respondent advised the applicant that section 232 of the Tax Act
specifically excluded
assessments pursuant to a VDP agreement from
being subject to an objection and appeal. Hence, in the instance of
an assessment
pursuant to a VDP sections 39(7)(a) of the VAT Act and
187(6) of the Tax Act likewise do not apply. The applicant was told
to proceed
by way of an objection to the decision taken by SARS not
to accede to the request for the remission, by completing the
prescribed
Notice of Objection form.
[9]
The applicant having received SARS decision
requested that they withdraw same in terms of section 9(1) of the Tax
Act, as the existence
of the VDP agreements does not preclude them
seeking remission. The applicant further contends that the decision
not to remit the
interest is not subject to an objection in terms of
section 104(2) of the Tax Act, section 32 of the VAT Act and section
271 of
the Tax Act, as alluded to by SARS.
The
Law
[10] It is not in dispute
that the parties concluded two VDP agreements which complied with
section 230 of the Tax Act. Section
230 reads as follow:
‘
The
approval by a senior SARS official of a voluntary disclosure
application and relief granted under section 229, must be evidenced
by a written agreement between SARS and the qualifying person who is
liable for the outstanding tax debt in the prescribed format
and must
include details on-
(a)
the material facts of the 'default' on
which the voluntary disclosure relief is based;
(b)
the amount payable by the person, which
amount must separately reflect the understatement penalty payable;
(c)
the arrangements and dates for payment; and
(d)
relevant undertakings by the parties.’
[11] The request by the
applicant is in terms of section 39(7)(a) of the VAT Act which
states:
‘
Where
the Commissioner is satisfied that the failure on the part of the
person concerned or any other person under the control or
acting on
behalf of that person to make payment of the tax within the period
for payment contemplated in subsection (1)(a), (2),
(3), (4), (6),
(6A) or
(8) or on the date
referred to in subsection (5), as the case may be-
(a)
was due to circumstances beyond the control of the said person, he or
she may remit, in whole or in part, the interest payable
in terms of
section ....’
[12]
The explanatory as regards what constitutes
‘circumstances beyond a person’s control’ is to be
found in explanatory
note 61. The interpretation note,
IN61,
states that:
‘
circumstances
beyond a person' control are generally those that are external,
unforeseeable, unavoidable or in the nature of an
emergency, such as
an accident, disaster or illness which resulted in the person being
unable to make payment of VAT due.’
[13]
The last relevant section is that of
section 187 of the Tax Act as is set out hereafter:
‘
(1)
If a tax debt or refund payable by SARS is not paid in full by the
effective date, interest accrues, and is payable, on the
amount of
the outstanding balance of the tax debt or refund
....
(6)
If a senior SARS official is satisfied that
interest payable by a taxpayer under subsection (1) is payable as a
result of circumstances
beyond the taxpayer's control, the official
may, unless prohibited by a tax Act, direct that so much of the
interest as is attributable
to the circumstances is not payable by
the taxpayer.
(7)
The circumstances referred to in subsection
(6) are limited to—
(a)
a natural or human-made disaster;
(b)
a civil disturbance or disruption in
services; or (c) a serious illness or accident.
(8)
SARS may not make a direction that interest is not payable under
subsection (6) after the expiry of three years, in the case
of an
assessment by SARS, or five years, in the case of selfassessment,
from the date of assessment of the tax in respect of which
the
interest accrued.’
The
case at hand
[14]
The applicant contends that it was entitled
to seek a request in terms of a remittance for the interest imposed
as a result of the
default occasioned by Ms Steenkemp. The applicant
contends, they qualify for the remittance of the interest, as the
requirements
set out in section 39(7)(a) have been met. However, the
respondent refused to consider the applicant’s request and it
is
that decision which is the subject of this review application.
[15]
According to the applicant, the
respondent’s defence in this application places reliance on a
legal question, which is evident
from a concession made during
interlocutory proceedings and is evident in its answering affidavit.
This being ‘
whether SARS may
consider a request for the remission of interest in terms of section
39(7)(a) of the VAT Act once a taxpayer has
agreed to pay such
interest in terms of a voluntary disclosure agreement contemplated by
section 230 of the TAA’
.
[16]
In essence, this comes down to the
respondent or the applicant’s interpretation of section
39(7)(a) of the VAT Act and to
an extent section 187(6) of the Tax
Act. These are the same sections which the respondent contends that
they purport to deal with
‘remission of interest following a
taxpayer’s failure to make timeous payment of a tax debt.’
In the same breath
the respondent states that the provisions of
section 39 of the VAT Act were to be deleted by section 271 of the
Tax Act, however,
somehow section 39 is still in force as the
evolution of Chapter 12 of the Tax Act is still underway.
The
VDP agreement
[17]
It is common cause that the VDP agreements
are regulated by sections 225 to 233 of the Tax Act. In this case
section 230 being applicable.
Thus, disclosure was made by the
applicant, a prescribed agreement was concluded, which led to relief
being granted by the Commissioner
in terms of section 229. This all
took place prior to the applicant seeking the remission.
[18]
The VDP agreements were introduced by the
enactment of the Voluntary Disclosure Programme and Taxation Laws
Second Amendment Act
8 of 2010 (Act 8 of 2010). As regards the
relevant relief which would follow having made a voluntary
disclosure, section 6 of Act
8 of 2010 had applied. This section
reads as follows:
‘
Voluntary
disclosure relief
6. Despite the provisions
of any tax Act, the Commissioner must, pursuant to the making of a
valid voluntary disclosure by the applicant
and the conclusion of the
voluntary disclosure agreement under section 7—
(a)
not pursue criminal prosecution for any
statutory offence under a tax Act or a related common law offence;
(b)
grant 100 per cent relief in respect of any
penalty and additional tax (excluding a penalty imposed in terms of
regulation 5 of
the regulations issued under section 75B of the
Income Tax Act or in terms of a tax Act for the late submission of a
return or
for the late payment of tax); and
(c)
grant, in respect of a person described
in—
(i) section 3(1), 100 per
cent; or (ii) section 3(2), 50 per cent,
relief
in respect of interest otherwise payable, up to the date of
assessment described in section 9’
[19]
However, with the enactment of the Tax Act in 2011 the applicable
provision is section 229. The relief
that follows after making a
voluntary disclosure is:
‘
-
immunity from prosecution in respect of any tax offence arising from
the "default" in respect
of which the VDP application was made;
-
a reduction or waiving of the
understatement penalty that would ordinarily have been payable; and
-
the waiving of certain other penalties.’
[20]
In
terms of section 232 of the Tax Act the respondent may issue an
assessment or make a determination to give effect to the VDP
agreement. Once the aforesaid has been issued it is not subject to an
appeal or objection.
[1]
[21]
Notably, in giving an effect to the VDP an
assessment or determination may be made. If, the respondent seeks to
issue an assessment
or determination, any one of these is not subject
to an objection or appeal in terms of section 232(2) of the Tax Act.
Thus, in
my view the respondent uses its discretion in both
instances. In terms of section 229, it further uses its discretion
when entering
the VDP agreement, with regards to what penalties to
waive or reduce.
[22]
Hence, the VDP agreement is binding between
the parties entering into same and final as regards the
understatement of the relevant
party. Pertinently, under the header
‘Whole Agreement’ at clause 11.1:
‘
The
parties agree that -
11.1.1
A variation to any part of this Agreement has no effect until the
variation is agreed to by the Parties, reduced in writing
and signed
by both Parties.’
[23]
The VDP agreement is governed by Part B of
Chapter 16 of the Tax Act. Critical is the fact that the
agreement makes provision
that the Tax Act will prevail if conflict
arises between the terms of the agreement and the Tax Act:
‘
Where
any term, obligation or benefit under this Agreement conflicts with
any provision of
Part
B of Chapter 16 of the TA Act, the provisions of the TA Act shell
prevail.’
[24]
Even so the statute cannot be ignored for
the benefit of the terms of the VDP agreement, as was stated by
Wallis JA in
President of the Republic
of South Africa v Reinecke
:
‘
The
correct view is that one cannot divorce a contract arising from the
performance of statutory functions and the exercise of statutory
powers from its statutory background. Sometimes the contractual
aspects will be crucial
and
sometimes the statutory. Which are the more important will depend
upon the facts giving rise to the dispute.’
[2]
(Footnotes omitted)
[25]
Of relevance in my view is clause 4 of the
VDP agreement. The facts permitting the conclusion of a VDP agreement
are not verified,
however, there is a calculation and evaluation
process conducted by the respondent on those facts, advanced by the
applicant in
good faith, in respect of the tax, interest and
penalties. Clause 4 relatedly reads:
‘
4
TAX, INTEREST AND PENALTIES ARISING FROM THE DEFAULT
4.1
Save for verifying the eligibility
requirements pertaining to and the validly of the VDP application,
the facts in relation to the
default have not been verified by SARS
during the VDP
evaluation process
in preparation for this Agreement.
4.2
The amounts of tax, interest and penalties
arising from
the default have been
calculated
with reference to the facts
disclosed in the VDP application.’ [My emphasis]
[26]
In the circumstances, the respondent
exercised its discretion, guided by the advances made by the
applicant in good faith to grant
a waiver of the penalties or
interest during its evaluation process.
Section
39(7)(a) remission request
[27]
Fundamental to this review application is
the legal inquiry whether a request in terms of section 39(7) of the
VAT Act is competent
after a VDP agreement has been concluded. The
respondent argues that the application of section 187(6) of the Tax
Act and likewise
section 39(7)(a) of the VAT Act are not applicable
to a situation where the VDP agreement is in play. Whist the
applicant argues
otherwise, that it is entitled to request a
remission in terms of section 39(7)(a).
[28]
The applicant contends that the manner in
which its remission in terms of section 39(7)(a) is sought ought to
be dealt with in terms
of
IN61
.
The applicant argues that as such it is not prohibited from seeking a
remission. It further argues that nowhere in the sections
relating to
the VDP agreement in the Tax Act does it prohibit a request in terms
of section 39(7)(a). It matters not whether the
request is subsequent
to the conclusion of the VDP agreement. Ultimately, they argue that
the respondent has a statutory duty to
consider, adjudicate and make
a decision as regards their request for remission.
[29]
The applicant persist that they do not seek
to amend the VDP agreement. In fact, they state that it is common
cause that they have
complied with same and the full amounts have
been paid over to the respondent, neither do they seek to renege on
their responsibilities,
having already fore filled same.
[30]
According to the applicant the explanatory
note
IN61
states that it will not consider remission of interest which was paid
five years ago, hence, the applicant contends that it is
implicit
that remission of interest may be considered after interest has been
paid. That being said the applicant request
of the respondent
to act in terms of their remedial legislative provisions in terms of
the VAT Act.
[31]
The respondent argues that the interest
which was due and payable was in terms of the VDP agreement and not
the VAT Act and that
the VDP agreement cannot be varied by waiving
the interest, as only in terms of section 231(1) can it be amended,
equally the VDP
agreement is not subject to an objection nor an
appeal.
[32]
It is pointed out by the applicant that the
aforesaid argument differed to the written response of 1 November
2018 initially received
from the respondent. Here the respondent
stated that the provisions of section 39(7) do not pertain to VDP
agreements, as objection
and appeal procedures are not permitted in
respect of a VDP agreement. Similarly, remission of interest does not
apply. The sole
purpose of the remission sought by the applicant is
to seek an amendment of the VDP agreement using section 39(7) as the
instrument
therefore, so the argument goes.
Analysis
[33]
An ideal starting point is to appreciate
the complex and sophisticated tax system in South Africa, when
addressing the legal determination
sought in this matter. As is
evident from the facts and submissions above various concept of our
tax system are at play: the Tax
and VAT Acts, VDP agreements and
remission of interest.
[34]
The remission of interest sought is in
relation to the VAT Act. Thus, I find it apt to point out the
legislative purpose of section
39(7). Firstly, interest is raised on
late VAT payments in terms of section 39(1) of the VAT Act. A
taxpayer is obliged to submit
his/her/their returns timeously. There
can be no doubt that the levy of interest in respect of VAT is in
terms of the VAT Act.
[35]
Failure
to do so empowers the respondent to levy interest in order to
compensate those who would have lost opportunity with productivity,
due to late or non-payment.
[3]
Hence, the levy of interest in terms of section 39(1) of the VAT Act.
[36]
In section 39(7) lies the reprieve a
taxpayer attains in respect of interest. This is only so if the delay
in making the payments
timeously were due to circumstances beyond the
taxpayers control.
4
[37]
Notably, the explanatory note
IV61
as set out above is descriptive of what
constitutes circumstances beyond one’s control. In the same
explanatory note clause
4.2 sets forth a cut off period which makes
provision for a taxpayer to receive this remission. The taxpayer has
five years from
the date of payment of the interest to claim the
remission reprieve. Which is not more than five years after the
interest has been
paid. I must point out that in terms of
IV61
the remission process is subject to an appeal and an objection, in
terms of clause 8 and 9 of the explanatory note.
[38]
Now
turning to the VDP agreement this process is not subject to an appeal
nor an objection. Factually, this is an agreement between
parties
governed by the prescripts of the Tax Act 225 to 233. Conspicuously,
these sections make provision and spell out that no
objection nor
appeal is permitted, however, it is silent on whether remission is
permitted, so the applicant advanced. Further,
if it is not
legislated and cannot be interpreted therefrom, then that could have
never been the intention of the legislature.
[4]
I am in agreement with these submissions and this is fortified by the
recent judgment of the Supreme Court of Appeal in
Commissioner,
South Africa Revenue Service v United Manganese of Kalahari (Pty)
Ltd
.
6
[39]
In my mind it is evident that the interest
and penalties were added to the eventual amount attained in the VDP
agreement by virtue
of the application of section 39 (1) of the VAT
Act. That being the application, how then does one divorce this Act
from the VDP
agreement? The penalties and taxes employed could only
have been done so by virtue of the VAT Act. That being the case, it
cannot
then exclude the application of the said Act when a remission
or reprieve is sought in terms of the very same Act.
[40]
Turning to the VDP agreements. These
agreements are a by-product of the VDP program which is regulated by
Chapter 16, Part B, sections
225-233 of the Tax Act. Critically, this
voluntary disclosure programme, in my view, is succinctly set out in
the aforesaid provision.
These provisions cover who may qualify, what
is valid disclosure and what is not, the relief attainable, the VDP
agreement, the
withdrawal of the relief, the assessment and
determination to give effect to the agreement and lastly the
reporting of VDP agreements.
Notably, the legislature sets out step
by step what the voluntary disclosure programme entails and its
consequences. Likewise,
the necessary criteria of the VDP agreements
and giving effect thereto, with the relief one would attain.
[41]
In the VDP agreement it commences to place
emphasis on the purpose and the intention of these agreements. The
purpose of the VDP
agreement, in my view, is set out in the preamble
of the VDP agreement:
‘
1
PREAMBLE
1.1
The Applicant applied for relief afforded
by the Voluntary Disclosure Relief programme (the VDP) that is
administered by the South
African Revenue Service (SARS) in terms of
the Tax Administration Act (no 28 of 2011).
1.2
The Applicant
confirms
that
the
default
in respect of which relief is
granted—
1.2.1
was
disclosed
to SARS on a voluntary basis
;
1.2.2
has not occurred within five years of the
disclosure of a similar default;
1.2.3
involves a behaviour referred to in column
2 of the understatement penalty percentage
table in section 223 of the TA Act;
1.2.4
is a
disclosure
that is full and complete in all material respects
;
1.2.5
will not result in a refund by SARS
;
and
1.2.6
was applied for in the prescribed form and
manner.’ [My underlining]
[42]
Evidently from the above and as stated by
Fabricius J in
Purveyors South Africa
Mine
Services
‘
the
purpose of the VDP provisions is to incentivize errant taxpayers to
come clean.’
[5]
The VDP agreements entered into with the respondent are to cover all
taxes administered by the respondent, but for customs and
exercise.
As stated above the VDP agreement constitutes the entire agreement
and once a determination or assessment is made, it
is not subject to
an objection or appeal. Explicit from the terms set out in section
229, the respondent may determine which penalties
to reduce or
waive.
[43]
The respondent’s interpretation, into
the provisions dealing with VDP program and agreements, is that any
remission of interest
sought whether in terms of section 39(7) of the
VAT Act or section 187 of the Tax Act is not permissible once a
taxpayer has paid
such interest in terms of a VDP agreement.
[44]
Hence, it is my view, if remission requests
of interest were not intended to be sought in situations where there
was a VDP agreement,
either by way of section 187 of the Tax Act or
section 39(7) of the VAT Act, the legislature would have set this out
succinctly
in the provisions regulating the VDP agreement and
procedure. In this matter it cannot be discerned from the provisions
of the
relevant section and the explanatory note where the respondent
gleans its interpretation that yields the result sought.
[45]
The notion adopted by the respondent that
the applicant seeks to vary the VDP agreement through the back door
by seeking the remission
cannot stand muster. This is so because it
is common cause that the applicant has already complied with the VDP
agreement as it
has paid the interest sought. Thus, the parties have
both complied with the whole of the agreement already and in any
event any
variation must be agreed by the parties, reduced to writing
and signed by the parties.
[46]
The entire purpose of the VDP process
pertains to taxes and is regulated by Acts which are tax related with
the Tax Act being the
default position if there is conflict or
confusion. How then does one exclude that which is a self-prevailing
Act when dealing
with a process borne out in that same Act. Hence,
the analogy being that if section 187(6) can be applied then the
equivalent that
being section 39(7) of the VAT Act, most certainly is
applicable.
[47]
Following the above conclusion, it must be
pointed out that on the respondent’s own admission they did not
consider the request
for remission of the applicant. As their
understanding of the legal position ‘that the provisions of the
relevant sections
do not apply to interest that is due (or has been
paid) in terms of a VDP agreement.’ Conspicuously, no decision
was taken
by the respondent to be reviewed. Together with the
conclusion, in the application to compel presided over by Thompson
AJ, where
he asserts that the respondent advanced a concession, as
set out in the judgment:
‘
for
all intents and purposes conceded that if the decisions taken are
wrong, such decisions constitutes material errors of law and,
on its
own, justify a review and setting aside of the impugned decisions on
the facts as established by this case…The decision
sought to
be reviewed is the interpretation accorded… on an issue of
law.’
[48]
To bolster the aforesaid conclusion reached
by Thompson AJ I deem it necessary to also state what the respondent
advanced in its
heads of argument with regards to the aforesaid:
‘
80
If SARS’s interpretation of the law is correct, the main
application must be dismissed. But if SARS has erred in this regard,
then the impugned decision ought to be reviewed and set aside, with
the matter being remitted to enable the Commissioner to consider
the
request for the remission of interest. In such circumstances, the
basis upon and /or the manner in which the impugned decisions
were
taken would not matter.’
[49]
Bearing in mind that the grounds of review
revolve around whether a request to remit interest in terms of
section 39(7)(a) of the
VAT Act is legally competent subsequent to
entering into a VDP agreement. The applicant has shown that the
impugned decisions taken
by the respondent were pertinently swayed by
errors in law, they were not authorised by any empowering provision
and lastly important
considerations as set out above were not
considered whilst irrelevant considerations were. In the result, the
applicant has succeeded
in demonstrating the following ground
allowing the review and setting aside of the decisions made by the
respondent. These being
section 6(2)(d), 6(2)(e)(i) and 6(2)(e)(iii)
of the PAJA.
[50]
In the premise, having come to the
aforesaid conclusion for the reasons set out above I do not deem it
necessary to consider the
other grounds raised by the applicant.
Relief
[51]
It is apparent from the papers of the
applicant that it seeks declaratory relief in terms of section
8(1)(d), 8(1)(c)(i) seeking
review and setting aside for onward
reconsideration and mandatory relief in terms of section 8(1)(a)(ii)
and 8(1)(b) of PAJA for
consideration, adjudication and advancement
of a decision. The respondent acknowledges that the impugned
decisions having been
reviewed and set aside the matter ought to be
remitted to the Commissioner to consider the request.
[52]
The respondent takes issue with prayer 4
sought by the applicant in its notice of motion. The crux of its
argument is that the applicant
pre-empts the decision of the
Commissioner not to remit
the interest and as such that order would be ‘intrusive’.
This is so, because after the Commissioner
takes a decision, in terms
of prayer 4, he is now ordered ‘to do something in the future
contingent upon the outcome of a
decision
…
yet
to be taken.’
[53]
The respondent contends that the applicant
has not made out a case for the relief it seeks in terms of prayer 4.
In fact, there
is no decision made as yet not to remit the interest
thus this relief cannot come into operation at this stage, so the
argument
goes. In addition, if the Commissioner does not give reasons
then the applicant has alternative relief in section 5 of PAJA.
[54]
On the other hand, the applicant submits
that it is entitled to the relief sought in prayer 4. I am in
agreement with the respondent
that the applicant has not laid out a
basis for the granting of prayer 4 at all, save to argue that a court
may grant that it sees
as just and equitable or ‘appropriate
relief, coupled with the court discretion to grant relief it deems
apposite. If the
remission of interest is not granted, the applicant
has an alternative in the provisions of section 5 of PAJA to attain
the reasons
if same are required.
[55]
In terms of explanatory note
IV61
to section 39, in the instance of remission of interest, the
Commissioner is obliged to issue a written notice with reasons for
the decision not to remit. Further, the applicant may raise an
objection in 30 days of the date of the decision and if the objection
is disallowed, written notice with reasons ought to follow. As
regards the final decision of the Commissioner in respect of the
aforesaid objection a taxpayer may appeal. Thus, the order sought in
prayer 4 does not marry with that provided for in section
39 read
together with its explanatory note
IV61
,
and will not be competent.
[56]
In the circumstances I make the order as is
set out below.
Order
1.
The provisions of Chapter 16, Part B,
sections 225 to 233 of the Tax Administration Act, Act 28 of 2011 ("
the TAA") relating
to voluntary disclosure programmes ("VDFF')
do not prohibit a request for remission of interest in terms of
section 39(7)
of the ValueAdded Tax Act, Act 89 of 1991 (PVAT Act")
notwithstanding a VDP agreement having been entered into;
(a)
notwithstanding a prior VDP agreement
having been entered into, the
respondent has a statutory duty to consider, adjudicate and decide on
a request for the remission of interest in terms of section
39(7)(a)
of the VAT Act.
2.
That the following decisions of the
respondent be reviewed and set aside in terms of the Promotion of
Administrative Justice Act,
Act 3 of 2000 ("PAJA"),
alternatively the principle of legality, and remitted back to SARS
for reconsideration, namely:
(a)
The decision set out in the respondent's
letter dated 1 November 2018, of which the applicant was informed per
e-mail on 20 November
2018, to refuse to consider the applicant's
request for remission of interest in terms of section 39(7)(a) of the
VAT Act;
(b)
Alternatively, the respondent's decision
set out in its letter of 13 March 2019, of which the applicant was
informed per e-mail
on 28 March 2019, to refuse to withdraw its
decision referred to in paragraph 2.1 above and to decide that it
cannot consider the
request for the remission of the interest levied.
3.
That the respondent be ordered to consider,
adjudicate and decide on the applicant's request for remission of
interest in terms
of section 39(7)(a) of the VAT Act, dated 12
October 2018, and inform the applicant of its decision within 15 days
of the order
being granted. SARS' decision may not be contrary to the
declaratory relief as set out above;
4.
That in the event of the respondent failing
to comply with paragraphs 3 above, that the applicant be granted
leave to approach this
Court on the same papers, supplemented if
necessary, for further appropriate relief;
5.
That the respondent be ordered to pay for
the costs of this application, including the costs occasioned upon
the employment of two
counsel.
W Hughes
Judge of the Gauteng
High
Court,
Pretoria
Virtually Heard: 15
October 2020
Electronically
Delivered: 15 February 2021
Appearances:
For the Applicant: Adv.
Snyman SC
Adv.
Craucamp
Adv.
Nee Van Niekerk
Instructed
by: Webber Wentzel
For the Respondent: Adv
Berger
Adv.
Jongani
Instructed by: Salijee
Govender Van der Merwe Inc
[1]
Section
232 reads:
"(1)
If a voluntary disclosure agreement has been concluded under section
230, SARS may, despite anything to the contrary
contained in a tax
Act, issue an assessment or make a determination for purposes of
giving effect to the agreement.
(2)
An assessment issued or determination made to give effect to an
agreement under section 230 is not subject to objection and
appeal."
[2]
President
of the Republic of South Africa and Others v Reinecke
2014
(3) SA 205
(SCA) at para [16].
[3]
Bellairs
v Hodnett and Another
1978 (1) SA 1109
(A) at 1145D-G.
4
Section 39(7)(a) of VAT Act.
[4]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
SCA at para [26].
6
Commissioner,
South Africa Revenue Service v United Manganese of Kalahari (Pty)
Ltd
2020 (4) SA 428
(SCA) 433 at para [8].
[5]
Purveyors
South Africa Mine Services (Pty) Ltd v The Commissioner for the
South African Revenue Service
2020
JDR 1830 (GP) at para [11.7].