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[1988] ZASCA 5
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Commissioner for Inland Revenue v NCR Corporation of South Africa (Pty) Ltd. (5/1988) [1988] ZASCA 5 (10 March 1988)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
THE COMMISSIONER FOR INLAND REVENUE
appellant
and
N C R CORPORATION OF SOUTH AFRICA
(PROPRIETARY) LIMITED
respondent
CORAM
: CORBETT, VILJOEN, SMALBERGER, VIVIER JJA, et NICHOLAS
AJA.
Date of Appeal
: 25 February 1988
Date of Judgment
: 10 March 1988
JUDGMENT CORBETT
JA:
This appeal concerns the proper interpretation of sec 88 of the Income Tax
Act 58 of 1962 ("the Act").
/ The
2
The respondent, the N C R Corporation of South Africa (Pty) Ltd, is a company
incorporated with limited liability in accordance with
the company laws of the
Re-public of South Africa and it has its principal place of business in
Johannesburg. During the fiscal years
1973, 1974, 1975 and 1976 the respondent
suffered certain losses in connection with loans granted to it by foreign
corpora-tions.
These losses were caused by adverse changes in the exchange value
of the rand in relation to the currencies of the loans between
the time when the
moneys were advanced and when they were repaid. These changes in exchange value
resulted in the respondent having
to pay substan-tially more (in rand) when
repaying the capital sums borrowed than it had received (in rand) when the loans
were initially
advanced to it. In
toto
the losses ex-ceeded R4
million.
In rendering its income tax return for the 1973
/
tax year
3
tax year respondent claimed the total amount of the foreign exchange losses
incurred in that year as a deduction from income. When
assessing respondent to
tax in respect of this year appellant, the Commissioner for Inland Revenue,
disallowed this deduction. Respondent,
in a letter dated 18 November 1975,
objected to the disallowance of this de-duction generally on the ground that
since the losses
had been incurred in the production of income and were not of a
capital nature they were properly deductible. The appel-lant responded
by
disallowing the objection, whereupon res-pondent lodged a notice of appeal
(dated 4 August 1976) to the Income Tax Special Court
in terms of sec 83 of the
Act.
The set-down of the appeal and the issuing of assessments in respect of
respondent's returns of income for the 1974, 1975 and 1976
tax years (in which
the foreign exchange losses suffered in each of those years were simi-
larly claimed as deductions)were delayed pending the final
/ outcome ,
4
outcome of another appeal in which, it was thought, the
same issue arose.
As regards the set-down of the appeal,
the appellant delayed the matter
initially with the con-
currence of the respondent and subsequently at its
request.
The other appeal in question was decided in favour of
the
Commissioner by the Transvaal Income Tax Special Court and
an appeal
to the Transvaal Provincial Division was dismissed
on 28 March 1979 (see
Plate Glass & Shatterprufe Industries
Finance Co (Pty) Ltd v
Secretary for Inland Revenue
1979 (3)
SA 1124
(T) ). Thereafter, on 1
December 1979, the appel-
lant issued assessments for the 1974, 1975 and 1976
tax
years in which respondent's claimed deductions in respect of
foreign
exchange losses were likewise disallowed. In the
1974 and 1976 assessments
normal tax was payable; but a
trading loss in 1975 resulted in a nil
assessment for that
tax year. Respondent objected to these assessments on
the
same grounds as had been advanced in its objection to
the
/1973..
5
1973 assessment. On 18 March 1980 appellant wrote to
the respondent asking
whether, in view of the Court's
decision in the
Plate Glass
case
(
supra
), it had decided
to withdraw its appeal. Respondent replied (on
2 May 1980)
that there was the likelihood of an appeal by the taxpayer
in the
Plate Glass
case and that it wished its appeal to be
kept
open pending the final outcome of the case. In the
end the predicted appeal
in the
Plate Glass
case did not
materialize, but in a letter dated 4
June 1980, sent in re-
ply to an enquiry from the appellant, respondent asked
that
appellant "pend the matter until further notice". There-
after discussions took place between respondent and an of-
ficial of the appellant's department; and eventually on
12 May 198l respondent notified appellant that it had deci-
ded to proceed
with the appeal. At the same time the ob-
jections to the assessments
relating to the 1974, 1975 and
1976 tax years were held in abeyance so that they could be
/ dealt
6
dealt with on the same basis as the appeal concerning the 1973
assessment.
Prior to the set-down of the appeal and at the request of the respondent it
was agreed between the parties that further proceedings
in respondent's appeal
would be deferred pending the outcome of another appeal to the Full Bench of the
Transvaal Provincial Division.
Judgment in this matter was delivered on 2
October 1981 (see
Commissioner for Inland Revenue v General Motors SA (Pty)
Ltd
1982 (1) SA 196
(T). The judgment was considered to favour res-
pondent's case in its own appeal. Further discussions took place between the
parties;
respondent furnished additional information in regard to the various
loans in question, in-cluding those relating to the losses sustained
in the
1974, 1975 and 1976 tax years; and ultimately, on 24 June 1983, the appellant
notified respondent that it had been decided
to concede respondent's objections
to the assessments for
/ the
7
the years 1973 to 1976 inclusive. On 8 July 1983 there
followed revised (and reduced) assessments for these years,
as a result of
which the respondent became entitled to a
refund of taxes overpaid in terms
of the original assess-
ments. Subsequently and during July 1983 the
appropriate
amounts were repaid to respondent; and respondent was
also
paid a sum representing interest on the amounts repaid, such
interest
being calculated, so appellant stated, in accordance with the provisions of sec
88 of the Act.
In the meanwhile respondent had been issued with assessments for the 1977 and
1978 tax years. No foreign exchange losses had been
incurred in these years and
no objections to the assessments had been raised by the res- pondent. At the
time of issue the assessments
were correct, but as a result of appellant's
concessions in re-gard to the 1973 - 1976 tax years and the revised assessments
issued
for those years the assessments for the 1977 and 1978
/ tax
8
tax years had also to be revised to allow for assessed losses carried forward
and for certain other adjustments which need not be
detailed. Such revised
assessments for the 1977 and 1978 tax years were in due course issued and the
excess tax paid in terms of
the original assessments was refunded to respondent.
No interest was, however, paid to respondent in respect of the amounts refunded.
The non-payment of such interest gave rise to one of thê disputes between
the parties.
The other dispute concerned the date from which interest payable upon refunds
of tax should be calculated. From time to time, and
as it was required to do in
terms of para 17 of the fóurth schedule to the Act, respondent made
payments of provisional tax,
which in the relevant tax years were set-off
against the normal tax payable by the respondent, as assessed by the appellant.
In all
the tax years under consideration, apart from 1978, the provisional
/ tax
9
tax standing to the credit of respondent was sufficient to discharge the
normal tax liability in full. In 1978 set-off left a balance
of normal tax
assessed which had to be paid by the respondent. Respondent contended that in so
far as the refunds related to excess
tax originally paid by way of provisional
tax the interest on the amounts refunded should be calculated as from the dates
upon which
the appel-lant received the relevant provisional tax payments;
where-as the appellant took the view that such interest was to be
calculated in
each case as from the date when the set-off took place, ie the date of
assessment.
These disputes being unresolved, respondent made application on notice of
motion to the Witwatersrand Local Division citing appellant
as respondent
(appellant having consented to the jurisdiction of that Court) and claiming
judgment in various sums of money (with
alternatives) and, in the alternative,
certain declaratory orders. The appli-
/ cation
10
cation was opposed by the appellant. When the matter came
to court (
coram
DANIELS J) the relief claimed was simpli-
fied and incorporated in a draft order prepared by the
respondent (after discussion with the appellant), which
was handed in to
the Court. DANIELS J appears to have
treated the draft order as an amendment
of the notice of
motion and in the judgment the relief sought by the
respon-
dent (apart from costs) was set forth as follows, viz
an order —
(a) Declaring that, in terms of Section 88 of the Income Tax Act No. 58 of
1962 as amended:
(i) The Applicant is entitled to
interest at the prescribed rate
in respect of taxes overpaid for
the
1973, 1974 and 1976 tax years
from the date of receipt of the
said
overpayments by the Respondent
to the dates on which the said
overpayments
were refunded
less such interest as has already
been paid by the
Respondent in
respect of the periods commencing
/ on
11
on the dates of settlement of assessment by set-off or payment. For this
purpose the phrase 'dates of receipt' means the dates (to
be established to the
satisfaction of the Respon-dent) when the relevant monies were actually received
by the Respondent, whether
or not received as provisional tax; and
(ii) the Applicant is entitled to interest in terms of Section 88 in respect
of taxes over-paid for the 1977 and 1978 tax years.
(b) The Applicant is entitled to interest at the prescribed rate (in terms of
Section 88) on the amounts of interest referred to in
prayer (a) above from the
dates (to be established to the satisfaction of the Respondent) on which the
relevant overpayments were
refunded to date of payment".
The Court a
quo
, having heard argument, granted an order in terms of
para (a)(i) and (ii) of the relief
sought and ordered appellant to pay the
costs of the appli-
/ cation
12
cation, including the costs of two counsel. The Court refused to make an
order in terms of para (b). Appellant appeals to this Court
(with leave of the
Court a
quo
) against the whole of the judgment and order of the Court a
quo
.
As I have indicated, the case turns on the
proper interpretation of sec 88
of the Act,
which at the time when the application in the matter
was
launched read as follows:
"88. The obligation to pay and the right to receive and recover any tax
chargeable under this Act shall not, unless the Commissioner
so directs, be
suspended by any appeal or pending the decision of a court of law under section
86 or 86A, but if any assessment is
al-tered on appeal or in conformity with any
such decision a due adjustment shall be made, amounts paid in excess being
refunded
with interest at the prescribed rate (but subject to the provisions of
section 89
quin
), such interest being calculated from the date proved to
the
/ satisfaction.
13
satisfaction of the Commissioner to be the date on which such excess was
received and amounts short-paid being recoverable with interest
calculated as
provided in section 89".
(This wording, which is also the current wording, differs slightly from the
wording of the section in 1973 and there were also amendments
in 1974, 1976 and
1982, but none of these differences is material to the issues now before the
Court. The provisions of sec 89
quin
are not relevant for present
purposes.)
The first question which falls to be determined is whether in terms of sec 88
the appellant was obliged to pay interest on the amounts
refunded to respondent
in respect of excess normal tax paid in the tax years 1973, 1974, 1976, 1977 and
1978. As appears from what
I have stated above, appellant did in fact pay
interest on the amounts refunded in respect of the 1973, 1974 and 1976 tax
years.
His reasons for doing so are set forth
/ in
14
in appellant's opposing affidavit, deposed to by Mr G Stoltz, the chief tax
advocate employed by the Department of Finance in its
Directorate of Inland
Revenue;
"17.5 In response to the Applicant's
aforesaid request for the payment of interest and in accordance with the
manner in which the Respondent in the past has treated similar
matters in which
appeals had been extrajudicially conceded, it was decided to pay interest on the
refund in respect of the 1973 income
tax year as if the appeal had been
upheld by a Court.
17.8 As regards the refunds for the
1974 and 1976 years, the Applicant's
case was considered and, in
the
light of a single precedent, it
was decided to pay interest on
the
said refunds, calculated as
envisaged by section 88. The
reason for the
decision was that,
/ by
15
by not disallowing the objections
and thereby giving the Applicant
the right to appeal, the Respondent
had effectively prevented interest
from accruing in terms of section
88 of the Act by denying the Applicant
such right of appeal".
(See further
Silke on South African Income Tax
, lOth ed,
p 1240,
where the departmental practice in such cases
is referred to.) As regards the
1977 and 1978 refunds,
appellant's attitude, as reflected in a letter
dated
18 November 1983, was that —
"(a)s no appeal was lodged against the relevant assessments there can be no
question of any interest payable in terms of section 88
of the Income Tax Act".
The fact that these payments of interest were made in respect of the 1973,
1974 and 1976 tax years and the reasons therefor cannot,
however, affect the
determination of
/ the
16
the question stated above, which turns solely on the proper interpretation of
sec 88.
Sec 88 consists of two portions. The first enacts that the obligation to pay
and the right to receive and recover any tax chargeable
under the Act is not
suspen-ded, unless the Commissioner so directs, by "any appeal" or "pending the
decision of a court law under
sec 86 or 86A". The second portion provides for
the refunding of excess tax paid, together with interest thereon, whenever
an assessment is altered "on appeal" or "in conformity
with any such decision". Precisely why it was considered
necessary to have
an enactment such as the first portion
of sec 88 is not clear. The section
has a long legislative
history and may be traced back to sec 85 of the
Income
Tax (Consolidation) Act 41 of 1917 (see also sec 59 of
the Income
Tax Act 40 of 1925 and sec 80 of the Income
Tax Act 31 of 1941). The common
law rule of practice
that generally the execution of a judgment is automatically
/ suspended
17
suspended upon the noting of an appeal (see
South Cape Corporation (Pty)
Ltd v Engineering Management Services (Pty) Ltd
1977 (3) SA 534
(A), at pp
544 H - 545 A) could hardly apply to an appeal noted to the Special Court
against the disallowance of an objection to
an assessment by the Commissioner,
though it might have been regarded as having relevance to further proceedings in
a provincial
division or the Appellate Division. On the other hand, in the
earlier Union Income Tax Act 28 of 1914 the position was more or less
the
converse: the obligation to pay and the right to receive and recover tax was,
"in the discretion of the Commissioner", suspended
by an appeal (see sec 27).
When this was changed by sec 85 of Act 41 of 1917 it may well have been thought
necessary to state explicitly
that there was no such suspension unless the
Commissioner so directed. Moreover, the section became the vehicle for
empowering the
Commissioner thus
/ to
18
to allow a suspension and this had to be expressed in the context of a
general negation of any such suspension.
As regards the wording of sec 88 it is note-worthy that the first portion of
sec 88 speaks of both an "appeal" and "the decision of
a court of law under sec
86 or 86A". The word "appeal" clearly has reference to an appeal to the special
court and, possibly, to
an appeal in terms of sec 86(5) or to an appeal to the
Appel-late Division against the decision of a provincial division given under
sec 86A. Since, however, the proceedings under sec 86A constitute an appeal in
the full sense (see
Hicklin v Secretary for Inland Revenue
1980 (1) SA
481
(A), at p 485 D - H) and even the procedure under sec 86 (which is now
obsolete), though restricted to questions of law upon a stated
case, is
described in the Act as an appeal (see eg. sec 86(1), (3) and (4) ), one wonders
why it was necessary to refer at all to
j / "the . .
19
"the decision of a court of law under sec 86 or 86A".
The explanation is
possibly historical. Similar wording
appeared in sec 85 of Act 41 of 1917,
the only difference
being that instead of the reference to sec 86 and
sec
86A, sec 85 spoke of "the decision of a court of law
under the next
two succeeding sections". The first
of these succeeding sections, sec 86,
empowered the special
court, whenever a question of law arose before it,
to
submit such question by way of a stated case to a provin-
cia1 or local
division for a ruling thereon. This procedure,
which could be resorted to
even during the hearing before
the special court (see Ingram,
The Law of
Income Tax
in South Africa
, p 249), was clearly not an appeal
in
the true sense. And the second, sec 87, which empowered
the
Commissioner to state a case for determination by
a provincial or local
division whenever a question of
law arose in regard to an assessment (ie even
before
/ the
20
the matter had reached the special court) equally did
not create an appeal
procedure. Hence the reference in sec
85 applied both to the situation where
there was an appeal
and to the situation where there was pending the
consider-
ation of a questionof law in terms of sec 86 or 87 of
the 1917
Act. In subsequent legislation the same wording
has been used despite changes
in the procedures which
may be followed in order to bring the matter before
a
provincial or local division or the Appellate Division
and perhaps
without a full appreciation of the impact
of these changes on this
wording.
Be all this as it may, the meaning of the first portion of sec 88 is, in my
opinion, clear. It enacts in effect that, subject to a
contrary direction by the
Commissioner, a taxpayer's obligation to pay tax to which he has been assessed
(and the Commissioner's
correlative right to receive and recover such tax) are
not suspended
/ by
21
by the fact that the taxpayer may have appealed to the special court against
the Commissioner's disallowance of an objection to the
assessment, or by the
fact that, the special court having given its decision concerning the
assessment, there is an appeal pending
in terms of sec 86 or sec 86A, at the
instance of either party, against the decision of the special court.
Turning to the second portion of sec 88, I am of the view that it provides
imperatively ("... a due adjustment shall be made....")
for a refund to a
taxpayer of the tax paid in excess of what was due where his assessment to tax
has been altered on appeal, ie by
the decision of the special court (and
possibly by the Appellate Division — see my remarks above) or has been
altered so as
to conform to the decision given by the court of appeal in terms
of sec 86 or sec 86A in regard to his assessment (such latter alteration
being
/ made.
22
made by the court of appeal itself or by the Commissioner, eg in a case where
the assessment is set aside by the court of appeal and
the matter remitted to
the Commissioner for re-assessment in the light of the Court's judgment). It is
in these circumstances, and
these circumstances only, that, in my opinion, the
Commissioner is obliged in terms of sec 88 to refund excess tax paid, together
with interest. There is admittedly another section of the Act, sec 102, which
also provides for the refunding of tax paid in excess
of the amount properly
chargeable, but this section does not make provision for the payment of interest
on the amounts refunded.
Consequently, respondent must perforce rely on sec
88.
Applying the above-stated interpretation of sec 88 to the facts of this case,
it is evident that none of the refunds of tax made fell
within the purview of
sec 88. As I have shown, sec 88 postulates in effect
/ that
23
that the taxpayer's objection to his assessment should have advanced at least
to a favourable judgment of the special court. This
did not occur here. At the
time when revised assessments which resulted in the refunds of tax were made an
appeal had been lodged
in regard to the 1973 assessment, but it had not come
before the special court; objections had been made in respect of the 1974 and
1976 assessments (there was no refund in respect of the 1975 assessment), but no
decision had been taken thereon by the Commissioner;
and in the case of the 1977
and 1978 assessments refunds were made without formal objections having been
lodged. Moreover, these
revised assessments did not result from any alteration
"on appeal" or any alteration to bring them into "conformity with a decision
of
a court of law" given in terms of sec 86 or 86A, as I have interpreted these
words in sec 88.
In argument before us respondent's counsel,
/ Mr
Swersky,
i
24
Mr
Swersky
, advanced different interpretations for the key words in
sec 88. He submitted, in the first place, that a "broad" or "wide" meaning
should be given to the phrase "on appeal"; that, inasmuch as an appeal is
ini-tiated by the taxpayer's letter of objection, once
an objection has been
lodged the matter is "on appeal", and that if the Commissioner alters the
relevant assess-ment while the matter
is thus "on appeal", the case falls within
the ambit of sec 88.
There is, in my view, no substance in this submission. Firstly, there is a
clear distinction drawn in the Act between objection and
appeal. A tax-payer
objects to an assessment in terms of sec 8l and the Commissioner is required to
deal with the objection either
by reducing or altering the assessment or
disallowing the objection (sec 8l(4) ). It is only a taxpayer entitled to make
an objection
and who is dissatisfied with the
/ decision .
25
decision of the Commissioner under sec 8l(4) who may appeal to the special
court "therefrom", ie from such decision. And it is only
when the taxpayer, so
quali-fied and so dissatisfied, duly lodges a written notice of appeal in terms
of sec 83(7) that the matter
could be said in any sense to be "on appeal".
Zn any event, however, the key words of sec 88 are "is altered on appeal".
These words can only mean, in my view, is altered on appeal
by the court. That
is the ordinary meaning of such words. Moreover their association, in the
alternative, with the words "or in conformity
with such decision" confirms that
this was the meaning intended. "Such decision" clearly refers back to "the
decision of a court
of law under sec 86 or 86A"in the first portion of sec 88.
Thus two alter-natives are postulated: (i) alteration on appeal, and (ii)
alteration in conformity with the decision of a
/ court
26
court of law under sec 86 or 86A. The fact that (ii) contemplates alteration
as a result of a court decision strongly suggests that
(i) also involves
alteration by a decision of a court, viz the special court, on appeal to it.
And, I might add, Mr
Swersky
was not able to cite any authority or
advance any cogent argument in support of his contention that the words "altered
on appeal"
meant, or could comprehend the meaning, altered by the Commissioner
while the matter is on appeal.
Secondly, Mr
Swersky
argued that the present case was covered by the
words "altered in conformity with any such decision". The argument, reduced to
its
essentials, was the following: (1) the assessments in this case were reduced
by the Commissioner as a result of what was decided
in the
General Motors
case (
supra
); (2) the decision in the
General Motors
case was a
decision of a court of law given, seemingly, under sec 86A of
/ the
27
the Act; and (3) consequently the assessments were altered in conformity with
the decision of a court of law under sec 86A. It was
this argument which found
favour with the Judge a
quo
, who stated in the course of his
judgment:
"The 1973 assessment was obviously al-tered, in
conformity with
the
General Motors decision, "a decision of a Court of Law under Section 86 and 86A"
as con-templated by the section. This to my
mind falls squarely within the ambit
of Section 88, which requires an assessment to be altered in conformity with a
decision of a
Court of Law. As I understand and interpret the section it is
exactly this situation which is also being catered for. The section
provides for
two even-tualities:
(a)
an assessment being altered
on appeal; and
(b)
an assessment being altered
in conformity with a decision by a court of
law.
The ordinary grammatical meaning of the word "conform" is defined,
inter
alia
, as "to bring into harmony or conformity; to adapt" and "conformity" is
defined as "action in accordance with some stan-dard; compliance,
acquiescence".
I
/do
28
do not understand the section to be limi-ted to the extent contended for by the
Respondent. The words "in conformity with" are broad
in their meaning and not
linked to a single assessment. To limit the ambit of section 88 to only those
cases where the assessments
themselves are overthrown (either on appeal or in
terms of a decision by a Court of Law) appears to me not to be justified on the
plain meaning of the words used. As poin-ted out by Mr. Swersky who appeared for
the Applicant, that interpretation would require
the interpolation of additional
words in Section 88."
I cannot agree
with this submission by counsel or,with respect, with the reasoning of the Court
a
quo
. It seems to me that the crucial point overlooked is that the
second portion of sec 88 speaks of "in conformity with any
such
decision"
(my emphasis). "Such decision" clearly refers, as I have stated, to "the
decision of a court of law under section 86 or
86A" alluded to in the first
portion of sec 88. And this latter decision, as I have held, is a decision
relating to the very assessment
/ in
29
in question. Inevitably, Mr
Swersky
was compelled to argue that the
decision of a court of law under sec 86 or 86A pending which the obligation to
pay an assessment
was not to be suspended (unless the Commissioner so direc-ted)
could be a decision in a matter totally unrelated to the taxpayer
concerned or
his affairs: in other words, for example, an appeal under sec 86A by some third
party. I find this suggested interpretation
unacceptable. I cannot think of any
reason why the Legisláture should have wished, or found it necessary, to
negate the suspen-sion
of an obligation to pay tax by reason of the fact that,
not the taxpayer, but some unrelated third party had appealed against his
own
assessment in terms of sec 86 or 86A. Nor was Mr
Swersky
able to suggest
any such reason. Although Mr
Swersky
initially conceded that "appeal" in
the first portion of section 88 meant an appeal by the taxpayer whose obligation
to pay tax is
/ not
30
not normally suspended, he later withdrew this concession and contended that
here too it could be an appeal by a third party. I find
this too a very unlikely
inter-pretation of the Legislature's intention, for the reasons already
given.
Furthermore, it is difficult to see how an
assessment issued to taxpayer A
can be said to be altered in conformity with a
decision
given by a court
of law
under, say, sec 8óA in proceedings taken by taxpayer
B in
regard to his own assessment. In an appropriate
case the Commissioner may
consider that the principle
laid down by the court in B's case is applicable
to A's
assessment and alter it accordingly, but I doubt whether
such an
alteration is made "in conformity with" the decision
of the court in B's
case, which may, as in the
General
Motors
case, merely consist
of a decision to dismiss
the appeal.
/ Mr
Swersky
31
Mr
Swersky
sought to derive some support for his submissions from
theanomalies which, it is said, flow from the interpretation which I have
adopted. He pointed out that in terms of this interpretation no interest would
be payable on a refund of tax where the Commissioner
conceded the appellant's
appeal at the doors of the court or even after evidence had been led, but prior
to judgment. Similarly a
taxpayer would have to note an appeal and prosecute the
appeal to judgment notwithstanding the delivery of an authoritative judgment
on
the point in issue, if he wished to acquire the right to interest on the tax
refunded. And even if the parties wished to settle
the dispute extra-judicially,
the taxpayer would have to persist with his appeal to judgment in order to
become entitled to interest.
In practice these anomalies could be avoided by the
taxpayer insisting upon an order of court where the Commissioner concedes
/ the
32
the appeal at the last minute or by stipulating for the payment of interest
in any extra-judicial settlement reached with the Commissioner.
Nevertheless
anomalies they are, for I can see no reason in equity why, for example, a
taxpayer whose appeal is successful should
receive interest on his tax refund,
whereas a taxpayer whose appeal is conceded at the doors of the court must be
content to receive
a refund without interest. Moreover
the ordinary taxpayer
might well not be astute to the
need for obtaining an order of court or for stipulating
for interest when settling the matter with the Commissioner.
I do not think that these anomalies can affect in any
degree the plain
meaning of sec 88, but they are matters
which suggest that in the interests
of fairness the word-
ing of sec 88 should be reconsidered by the
Legislature.
In fact the appellant's practice in paying interest in
cases
not strictly covered by sec 88 indicates that the
/ wording
33
wording of the section is not satisfactory. It is desira-ble that practice
and the law be brought into conformity with one another.
It follows from the aforegoing that the respondent was not entitled under sec
88 to be paid interest on any of the refunds of tax
received by him.
Accordingly, the second question as to whether the interest should be calculated
as from the dates of the receipt
of the tax, irrespective of the fact that it
was received as provisional
tax, falls away. The Court a
quo
ought, therefore,
not to have made the declaratory order set forth in para (a)(i) and (ii) of
the draft and ought to have awarded appellant the costs
of the application.
Appellant's counsel, Mr
Du Toit
, asked that, in the event of the appeal
being successful, this Court should issue a decla-ratory order to the effect
that respondent
was not enti-tled to any further interest on the amounts
refunded
/ in
34
in respect of the 1973, 1974, 1976, 1977 and 1978 tax
years. There was,
however, no counter-application in
the Court a
quo
and there is,
therefore, no basis upon
which such an order can be made. The proper order
to
be substituted for that of the Court a
quo
is that
the
application be dismissed with costs; and since it would
appear that
the appellant was represented by two counsel
in the Court a
quo
, such
costs should include the costs
of two counsel.
The appeal is allowed with costs, including the costs of two counsel, and the
order of the Court a quo is altered to one dismissing
the application with
costs, such costs to include the costs of two counsel.
M M CORBETT
VILJOEN JA)
SMALBERGER JA) CONCUR. VIVIER JA) CONCUR.
NICHOLAS AJA)