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[2014] ZAGPPHC 51
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Chittenden N.O and Another v Commissioner of South Africa Revenue Services and Another (12795/14) [2014] ZAGPPHC 51; 76 SATC 397 (18 February 2014)
REPUBLIC OF SOUTH
AFRICA
NORTH GAUTENG
HIGH COURT
PRETORIA
(REPUBLIC OF
SOUTH AFRICA)
Case
no: 12795/14
DATE:
18 FEBRUARY 2014
In the matter of:
GRANT CHITTENDEN
N.O
......................................................................
FIRST
APPLICANT
KESTREL NETWORK
SOLUTIONS (PTY) LTD
...............................
SECOND
APPLICANT
And
THE COMMISSIONER
OF SOUTH
....................................................
FIRST
RESPONDENT
AFRICAN REVENUE
SERVICES
COMPANIES AND
INTELLECTUAL
............................................
SECOND
RESPONDENT
PROPERTY
COMMISSION
JUDGMENT
BAQWA J
[1] This application
arises from business rescue proceedings in respect of second
applicant which commenced on 27 May 2013 and to
which first applicant
was appointed as business rescue practitioner on 30 May 2013.
[2] At a subsequent
creditors’ meeting held on 23 August 2013 first respondent
voted against the business rescue plan prepared
and submitted by
first applicant.
[3] First applicant
launched an application in terms of the provisions of section
153(1)(a)(ii) read with section 153(7) of the
Companies Act number 71
of 2008 to have the first respondents vote set aside on the basis
that the vote was inappropriate. That
application is currently still
pending.
[4] The Department
of Defence in the meanwhile sent a letter to second applicant
notifying it that its tax clearance certificate
is due to expire on
22 February 2014.
[5] In response the
applicants lodged a formal application for a new tax clearance
certificate on or about the 5th of February which
was refused by
first respondent on 7 February 2014. Thereafter the present
application was lodged by the applicants on 13 February
2014.
[6] Counsel for the
respondents submits and I accept that a decision on the issuance of a
tax clearance certificate constitutes
administrative action as
contemplated by the Promotion of Administrative Justice Act 3 of 2000
(‘’PAJA’’).
Should applicants be dissatisfied
with the commissioner’s decision and wish to challenge same,
they should launch review
proceedings as provided for by section 8 of
PAJA. Absent the institution of such proceedings, and pending the
finalisation thereof,
the decision remains in place and is of full
force and effect.
A statement of the
law in this regard in the judgment of the Supreme Court of Appeal in
the matter of Oudekraal Estates (Pty) Ltd
v City of Cape Town and
Others 2004(6) SA 222 SCA (at 242 B-C) is apposite:
‘’The
proper functioning of a modern state would be considerably
compromised if all administrative acts could be given
effect to or
ignored depending upon the view the subject takes of the validity of
the act in question. No doubt it is for this
reason that our law has
always recognised that even an unlawful administrative act is capable
of producing legally valid consequences
for so long as the unlawful
act is not set aside.’’
[7] First respondent
further submits and I accept that the issuing of a tax clearance
certificate is governed by the provisions
of the
Tax Administration
Act 28 of 2011
(‘’the TAAA’’). Second
applicant has an outstanding tax debt of just under R12 million which
according
to first respondent is not a debt as contemplated by
section 167
and
204
of the TAA and has not been suspended in terms of
section 164
thereof.
Respondent submits
that neither the first respondent nor the court ought to order the
issuance of a tax clearance certificate in
these circumstances.
[8] It has to be
borne in mind that the relief sought by the applicants is not interim
but final.
Section 256(3)
does not provide for the issuance of an
interim or provisional tax certificate.
[9] The two matters,
namely the issuance of a tax certificate and first respondent’s
vote against first applicant’s
revised business plan should be
treated as two separate matters to be determined by different factual
and legal considerations.
[10] The fact is
that
section 256(3)
does not provide for the issuance of an interim
or provisional clearance certificate.
[11] The consequence
of granting the relief sought by the applicants would set a precedent
that would negatively impact on first
respondent’s tax
administration. Henceforth every tax payer whose application for a
clearance certificate had been refused
would simply be entitled to
approach the court and without having to address the merits of the
refusal obtain an order compelling
the first respondent to issue
him/her with the certificate.
[12] Quite clearly
that would cause chaos within the country and tax administration
would come to a standstill. Yet, this is what
the applicant in the
present case seeks an order for.
[13] The provisions
of
section 256(3)
of the TAA are peremptory in that they allow the
commissioner to issue a tax certificate ‘’only if
satisfied’’
that the requirements of the section are met.
[14] The fact that a
refusal of a tax clearance certificate is likely to cause the tax
payer involved actual or impending harm does
not entitle them to a
mandamus compelling this court or the first respondent to issue such
a certificate.
[15] Applicants
sought to have treated the tax clearance issue as a priority and
addressed it from commencement of the business
rescue proceedings.
They did not do so and only spring into action in this regard when
they were notified of the pending expiry
of their certificate. They
did not take appropriate action for a period of about 8 months.
[16] In the
circumstances I have come to the conclusion that the applicants have
failed to make out a case. They have equally failed
to make out a
case for the relief sought.
[17] In the result,
the following order is made.
The application is
struck off the roll with costs.
S.A.M BAQWA
(JUDGE OF THE
HIGH COURT)