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[2018] ZAKZPHC 61
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Moosa N.O and Others v High Street Auction Company (Pty) Ltd (3691/2018) [2018] ZAKZPHC 61 (6 November 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 3691/2018
In
the matter between:
MOHAMMED
SHAAZ MOOSA N.O.
First
Applicant
MOHAMMED
SHUABE MOOSA N.O.
Second Applicant
JOSE
ALBERTO DELGADO
N.O.
Third Applicant
YASEERA
ABDUL KADER ESSACK N.O.
Fourth Applicant
YUSUF
ABDUL KADER ESSACK N.O.
Fifth
Applicant
ZAIBOON
NIZA ISMAIL ESSACK N.O.
Sixth Applicant
ABDUL
KADER MOHAMMED ESSACK N.O.
Seventh Applicant
and
THE
HIGH STREET AUCTION COMPANY (PTY) LTD
Respondent
JUDGMENT
Delivered:
06 November 2018
Mbatha
J
[1]
The applicants sought an order before this court that the respondent
be ordered to issue Value Added Tax invoices to the Mubaraak
Family
Trust IT1513/2007 and AKM Essack Family Trust IT754/2003 (the Trusts)
for auctioneers commission in the amounts of R860 000
and
R180 000 respectively.
[2]
The respondent’s stance was that it would abide by the decision
of the court as it has concerns in that the relief sought
by the
applicants’ prima facie amount to a contravention of the
Value-Added Tax Act
[1]
(the VAT
Act); that an order seeking to compel the vendor to take steps
pursuant to the VAT Act requires the joinder of the Commissioner
for
the South African Revenue Services (CSARS) and that the application
was riddled with technical irregularities.
[3]
On 25 February 2015 two immovable properties were sold to one
Mohammed Shuabe Moosa (Moosa), the deponent to the applicants’
affidavit, who signed the offer to purchase as MS Moosa, for and on
behalf of a nominee. The respondent acted as auctioneers in
the sale
of the properties. As auctioneers, the respondent issued a VAT
invoice to Moosa, for and on behalf of a nominee. In 2016
the
respondent was approached on behalf of the purchaser for a fresh
invoice, to be issued in favour of the Trusts. It is
common
cause that the sales of the two immovable properties were cancelled
and they are a subject of arbitration. This did not
preclude the
respondent from issuing a VAT invoice in respect of the
non-refundable commission to Moosa, for and on behalf of a
nominee.
[4]
The applicants’ case is that they nominated the Trusts as
purchasers of the two immovable properties before 2 March 2015
in
line with the law, ie on 28 February 2015 and February 2015
respectively. In the light thereof the applicants contend that the
respondent should issue a credit note in terms of s 21 of the VAT
Act, in respect of the Trusts and not Moosa, alternatively, the
respondent should pay the amounts due to the applicants as per VAT
invoices.
[5]
The respondent’s asserts that it has no difficulty with the VAT
invoice, save that it can alter the tax invoice only at
the direction
of the court or the CSARS. The respondent submitted that it was
precluded in terms of s 20(1)(i) read with s 58(k)
of the VAT Act to
just comply with the demand from the applicants as the provisions
make it an offence to issue more than one tax
invoice. Neither is
there a provision which empowers it to issue a second tax invoice,
under these circumstances or compelling
it to do so. The respondent’s
submission was that it is only the CSARS who could give such a
direction to it, to issue the
second tax invoice. In that regard, the
applicants ought to have exhausted the internal remedies contained in
ss 20 and 72 of the
VAT Act, before approaching the court. The
respondent pointed out that s 21 of the VAT Act provides for a system
of credits and
debits to be passed against previously rendered VAT
returns in order to rectify mistakes.
[6]
In the result the respondent submitted that the CSARS ought to have
been joined as a party in the proceedings. The non-joinder
of the
CSARS is therefore fatal to the proceedings before court, as the
entire issue before the court relates to the interpretation
of the
VAT Act, as the respondent is required to ‘correct’
something which is specifically unlawful in terms of the
Act.
Furthermore, the judiciary would be trampling in the terrain of the
CSARS.
[7]
The respondent also pointed out that the applicants’ case is
not as clear as they make it as there is an irregularity
in the
letter of authority which refers to the nominee as IPROTECT TRUSTEES
(PTY) LTD instead of reflecting the name of the Mubaraak
Family Trust
as nominee. The respondent pointed out that even the resolutions that
the applicants rely upon are not clear as to
whether they authorise
future conduct or ratify the previous conduct.
[8]
The first issue that needs to be determined is whether the CSARS
ought to have been joined as a party to the proceedings and
if the
court has the powers to grant an order directing the CSARS, ‘in
his absence’ to accept the directions of the
court.
[9]
The purpose of the application is for the applicant to get new value
added tax invoices made out in the name of the two Trusts.
The VAT
invoice was issued by the respondent on 31 March 2015 for its
non-refundable commission to Moosa or on behalf of the nominee.
The
applicants’ view is that the respondent failed to provide
correct invoices, which is denied by the respondent, and therefore
the respondent should ratify it. However the respondent has no
objection to the re-issue thereof, though it denies that it was
the
cause of any fault save that the direction has to come from the CSARS
as the respondent timeously complied with its mandate.
[10]
The applicants contended in the founding affidavit at para 30 ‘that
without the invoices the Trusts were not in a position
to claim a VAT
refund. The Trusts attempted to claim VAT refunds from the South
African Revenue Services (SARS). The claims were
rejected on the
invoice as it stands. Without the correct VAT invoices there is no
compliance with s 20(4)(c) of the Value-Added
Tax Act, 89 of 1991.’
Section 20(4)(c) provides as follows:
‘
Except
as the Commissioner may otherwise allow, and subject to this section,
a tax invoice (full tax invoice) shall be in the currency
of the
Republic of South Africa and shall contain the following particulars:
(a)
…
(b)
…
(c
) the name, address and, where the recipient is a registered
vendor,
the
VAT registration number of the recipient;…’
The
words ‘shall contain the following particulars’ are
peremptory in nature. I accept the submission made by counsel
for the
respondent that one should give a purposive interpretation to the
wording of the subsec (4)(c), being to avoid fraud and
other illicit
dealings, if people were to issue or delete invoices on their own.
[11]
The provisions of s 20(4)(c) should not be read disjunctively from
the provisions of s 20(1) which provides that:
‘
Except
as otherwise provided in this section, a supplier, being a registered
vendor, making a taxable supply (other than a supply
contemplated in
section 8 (10)) to a recipient, must within 21 days of the date of
that supply issue a tax invoice containing such
particulars as are
specified in this section: Provided that-
(i)
it shall not be lawful to issue
more than one tax invoice for each taxable supply;
(ii)
if a vendor claims to have lost
the original tax invoice, the supplier or the recipient, as the case
may be, may provide a copy
clearly marked “copy”.’
[12]
The provisions of s 20 should be read with s 58(k) of the VAT Act,
which makes it an offence for any person who ‘wilfully
and
without just cause (the burden of proof of which shall be upon him)
fails to comply with the provisions of paragraph (i) of
the proviso
to section 20 (1) or paragraph (A) of the proviso to section 21
(3);…’
[13]
The VAT Act in s 72 provides for a solution to problems as follows:
‘
Arrangements
and decisions to overcome difficulties, anomalies or incongruities.-
If
in any case the Commissioner is satisfied that in consequence of the
manner in which any vendor or class of vendors conducts
his, her or
their business, trade or occupation, difficulties, anomalies or
incongruities have arisen or may arise in regard to
the application
of any of the provisions of this Act, the Commissioner may make an
arrangement or decision as to -
(a)
the manner in which such provisions shall be applied; or
(b)
… .’
The
applicants merely state that the tax invoice was rejected, by SARS
but have not given any kind of evidence to support that assertion.
The VAT Act is clear in s 20(1) where it states that the re-issue of
a tax invoice is impermissible. At the same time it provides
a remedy
in s 72(a) for any ‘difficulties, anomalies or incongruities’
that may have arisen in respect of any provision
of the VAT Act to be
directed to the Commissioner.
[14]
The word ‘anomaly’ in the
Oxford
Dictionary
,
[2]
refers to ‘something that deviates from what is standard,
normal or expected’ and ‘incongruity’
[3]
a noun, refers to a ‘discrepancy, inappropriateness and
mismatch.’ I am pointing out these definitions as they state
that the Commissioner by virtue of the provisions of s 72 has the
power to resolve any kind of problem relating to VAT issues.
Nowhere
do the applicants state that they have exhausted all the remedies
availed to them in the VAT Act or have complied with
s 72(a) of the
VAT Act.
[15]
It is my opinion that the applicants’ ought to have joined the
Commissioner, as the order which they seek falls within
the terms of
s 72. The non-joinder of the CSARS in these proceedings is fatal to
the proceedings. The test for joinder being ‘whether
a party
has a direct and substantial interest in the subject matter of the
litigation which may prejudice the party that has not
been
joined’.
[4]
[16]
The prejudice lies in that the applicants asserts that if the VAT tax
invoices are changed the Trusts will be entitled to claim
a higher
refund than the figure reflected in the original tax invoice. All
those issues fall within the purview of the Commissioner,
including
what should happen to the original tax invoice, the late request for
the second tax invoice and for him to consider the
merits of the
applicants’ application.
[17]
I reject the applicants’ contention that the qualified
concession to the order sought made by the respondent should
translate to the granting of an order in their favour. The respondent
merely stated that it was bound by the law, and if CSARS or
the court
authorises it, then it will comply. The respondent did not want to
breach the law.
[18]
In the result I find that the failure by the applicants to exhaust
the internal remedies provided in the VAT Act and the non-joinder
of
SARS to be fatal to their application.
[19]
Accordingly, the application is dismissed with costs.
Mbatha
J
Date
of hearing
: 09
October 2018 (H Court)
Date
delivered
: 06
November 2018
Appearances
:
For
the Appellant
: Mr AG Flemming
Instructed
by
: Carlos Miranda
273 Prince Alfred Street
Pietermaritzburg
For
the Respondent
: Mr C van der Spuy
Instructed
by
: Lanham-Love Attorneys
7 Northwold Drive
Cnr Jan Smuts Avenue
Saxonwold
Johannesburg
c/o Tomlinson Mnguni
James Inc
165 Pietermaritz Street
Pietermaritzburg
[1]
89 of 1991.
[2]
Oxford South African Concise
Dictionary
2 ed (2010).
[3]
Webster New World Rodgets A-Z
Thesaurus by Carton Laird and the editors of Webster’s New
World Dictionaries, 1991.
[4]
Absa Bank Ltd v Naude NO &
others
2016 (6) SA 540
(SCA) para 10;
Golden
Dividend 339 (Pty) Ltd & another v Absa Bank Ltd
(569/2015)
ZASCA 78 (30 May 2016).