Hassim v Commissioner South African Revenue Services (438/01) [2002] ZASCA 140; [2003] 1 All SA 10 (SCA) (26 November 2002)

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[2002] ZASCA 140
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Hassim v Commissioner South African Revenue Services (438/01) [2002] ZASCA 140; [2003] 1 All SA 10 (SCA); 2003 (2) SA 246 (SCA); 65 SATC 119 (26 November 2002)

THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
Reportable
Case
No: 438/2001
In
the matter between:
Dr
I M Hassim
Appellant
and
The
Commissioner South African Revenue Services
Respondent
Coram
:
Howie,
Streicher, Farlam, Cameron, JJA, and Lewis, AJA
Heard
:
12
November 2002
Delivered
:
26
November 2002
Income
Tax Special Court - appeal – s 86A of the Income Tax Act 58 of 1962
– meaning of ‘any decision’.
J U D G M E N T
STREICHER, JA/
STREICHER
JA:
[1] The appellant appealed to the Natal Income Tax
Special Court against the disallowance of his objections to
assessments to tax
by the respondent in terms of the Income Tax Act
58 of 1962 (‘the IT Act’) and the Value-added Tax Act 89 of 1991
(‘the VAT
Act’). At the commencement of the hearing of the
appeals the appellant applied for an order compelling the respondent
to make discovery.
The court
a quo
held that such an order
could not be made as the appellant had failed to state the grounds of
his objection to the assessments made
by the respondent in clear and
definite terms. This finding of the court
a quo
led to its
granting to the appellant, of its own accord, leave to amend his
notices of objection and appeal. With the leave of the
court
a quo
the appellant now appeals against the judgment in terms of which the
court
a quo
granted such leave.
[2] Regulation
B3 of the regulations promulgated in terms of s 107 of the IT Act
requires the respondent to prepare, for submission
to the Income Tax
Special Court, a dossier containing a short statement of the case and
copies of the relevant assessment, the notices
of objection and
appeal and the correspondence relating thereto. The respondent
prepared such a dossier in respect of both the income
tax appeal and
the value-added tax appeal.
[3] According
to the dossier in respect of the value-added tax appeal the appellant
is a medical practitioner registered as a vendor
in terms of the VAT
Act. An investigation by the respondent in terms of the VAT Act
revealed that the appellant operated two undisclosed
bank accounts in
which money received from various medical aid schemes, during the
period June 1995 to February 1997, was deposited.
These receipts had
not been disclosed in the value-added tax returns furnished by the
appellant. As a result the respondent issued
an assessment, based on
those receipts, of the value-added tax and the additional tax payable
by the appellant.
[4] According
to the dossier prepared by the respondent in respect of the income
tax appeal an investigation into the appellant’s
income tax
affairs revealed that the appellant failed to disclose income
received by him during the 1996 and 1997 tax years. In due
course the
appellant was assessed to tax on the undisclosed income. Again the
assessment was based on the deposits made into the
undisclosed bank
accounts during the period June 1995 to February 1997.
[5] The
dossiers included copies of the relevant bank statements and deposit
slips.
[6] The
appellant objected to the value-added as well as the income tax
assessments. The court
a quo
summarized the objections as
follows:
The
respondent failed to apply his mind properly.
The
respondent’s ‘claim’ had ‘prescribed’.
The
respondent took account of irrelevant matters.
The
respondent acted
ultra
vires
.
The
respondent failed to consider the appellant’s representations.
The
respondent’s view that there was additional or undisclosed income
was ‘without any factual basis’ and the documents relied
on by
the respondent were capable of ‘various alternative
interpretations’ and were ‘not evidence of income derived’.
The
respondent failed to comply with the provisions of ss 32 and 33 of
the Constitution.
[7] The
respondent disallowed the objections whereupon the appellant appealed
to the court
a quo
. The matters were then consolidated, and
after postponements, set down for hearing on 17 April 2001. Shortly
before the date upon
which the matters were set down for hearing the
appellant notified the respondent that he required proper discovery.
The respondent’s
response was that discovery proceedings as
provided for under the Magistrate’s Court Act rules did not apply
but proposed that
a pre-trial conference be held at which discovery
and other relevant matters could be discussed. The proposal was not
acceptable
to the appellant who required that a full discovery be
made.
[8] At
the hearing of the appeal the appellant sought an order compelling
the respondent to make discovery of all documents which
related to
the appellant. In its judgment dealing with the application for
discovery the judge
a quo
referred to regulation B4
promulgated in terms of s 107 of the IT Act which provides as
follows:
‘Save as in these
regulations is otherwise provided, the general practice and procedure
of the Court shall be that of a magistrate’s
court in so far as
such practice and procedure are applicable.’
He
stated that discovery was a procedure which was available in the
magistrate’s court and that, in view of regulation B4, there
seemed
to him no reason why discovery should be excluded as a procedure
applicable in the Income Tax Special Court. He also stated
that there
were provisions in the Constitution ‘which, although not by means
of formal discovery, warrant the right of access to
documents’ but
considered it unnecessary to go into those provisions because he was
prepared to assume that formal discovery was
a procedure available to
a taxpayer and to the respondent in the Income Tax Special Court. On
that basis the court
a quo
was of the view that an order for
discovery could only be made in respect of such documents as were
relevant to the issues between
the parties because –
‘rule 23(1) of the
Magistrates’ Courts Rules, which would be the source of the Income
Tax Court’s power to make the order, provides
that the only
documents that must be discovered are those in a party’s possession
or under his control “which relate to the action
and which he
intends to use in the action or which tend to prove or disprove
either party’s case”.’
[9] In
the court
a quo
’s view the appellant failed to state his
objections to the assessments in clear and definite terms with the
result that it could
not be determined what the issues were and
consequently what documents needed to be discovered. As a result it
granted the appellant
leave to amend his notices of objection. The
appellant appealed against the whole of the court
a quo
’s
judgment while the respondent submitted that the matter was not
appealable.
[10] Section
86A(1) of the IT Act reads:
‘The appellant in
a special court or the Commissioner may in the manner hereinafter
provided appeal under this section against any
decision of that
court.’
The
words ‘any decision’ are also used in s 21 of the Supreme Court
Act 59 of 1959. In the case of s 21 it was held that the ‘decision’
referred to must be a decision of the same nature as a ‘judgment’
or ‘order’ in the sense in which those terms are used in
s 20 of
the Supreme Court Act (see
Law Society, Transvaal v Behrman
1981
(4) SA 538
(A) at 546E). A ‘judgment’ or ‘order’ referred to
in s 20 does in general not include ‘a decision which is not final
(because
the Court of first instance is entitled to alter it), nor
definitive of the rights of the parties nor has the effect of
disposing
of at least a substantial portion of the relief claimed in
the main proceedings’ (see
Zweni v Minister of Law and Order
1993 (1) SA 523
(A) at 536B).
[11] I
do not think that the phrase ‘any decision’ in s 86A should be
interpreted differently and neither of the parties contended
otherwise. To interpret the phrase literally would be at odds with
the generally accepted view that it is in general undesirable
to have
a piecemeal appellate disposal of the issues in litigation and that
it is advisable to limit appeals in certain respects
(see
Pretoria
Garrison Institutes v Danish Variety Products (Pty) Ltd
1948 (1)
SA 839
(A) at 866 to 871;
Guardian National Insurance Co Ltd v
Searle NO
1999 (3) SA 296
(SCA) at 301B-D). In
Pretoria
Garrison Institutes
Schreiner JA said (at 867-868):
‘A wholly
unrestricted right of appeal from every judicial pronouncement might
well lead to serious injustices. For, apart from
the increased power
which it would probably give the wealthier litigant to wear out his
opponent, it might put a premium on delaying
and obstructionist
tactics.’
In
Guardian National Insurance Co Ltd
Howie JA said (at 301C)
that it is generally desirable for obvious reasons that the issues in
litigation be resolved by the same
Court and at one and the same time
and added:
‘Where this
approach has been relaxed it has been because the judicial decisions
in question, whether referred to as judgments,
orders, rulings or
declarations, had three attributes. First, they were final in effect
and not susceptible of alteration by the
court of first instance.
Secondly, they were definitive of the rights of the parties, for
example, because they granted definite
and distinct relief. Thirdly,
they had the effect of disposing of at least a substantial portion of
the relief claimed.’
[12] The
appellant submitted that the appeal should succeed on two grounds. He
submitted firstly that, in terms of s 32 of the Constitution
read
with item 23(2)(a) of Schedule 6 thereto (the access to information
provision), he was entitled to all documents in the possession
of the
respondent in order to properly formulate his objection and that the
effect of the court
a quo
’s judgment was to refuse him such
entitlement. He submitted secondly that the court
a quo
in
effect prematurely dismissed some of the grounds of his objections.
According to him such refusal and dismissal constituted final
decisions which were appealable. I shall deal with the two grounds in
turn.
[13] In
my view there is no merit in the appellant’s contention that the
court
a quo
refused to order a disclosure of documents
required by the appellant to formulate his objection. The court
a
quo
never even addressed the question whether the appellant was
entitled to disclosure of all the documents in the respondent’s
possession
before properly formulating his objection. All the
indications are that the question referred to was not addressed by
the court
a quo
because it was not an issue before it.
[14] After
the matter had been set down for hearing in the court
a quo
the respondent wrote to the appellant:
‘[Y]our client has
baldly suggested that the bank statements and deposit slips . . . do
not reflect turnover or income, and are
“capable of different
interpretations as to value”. Despite request, your client advances
no facts (in particular, no records)
in support of these
suggestions.’
In
reply the appellant did not state that he required documents in order
to properly formulate his objection but stated that his grounds
of
appeal were in the notice of appeal. Shortly before the date on which
the matter was to be heard by the court
a quo
the appellant
requested the respondent ‘to make proper discovery’ and stated,
not that such discovery would enable him to properly
formulate his
objection but that it was ‘essential to enable argument on the
points of law and the merits’. In two subsequent
letters the
appellant reiterated that ‘discovery’ was required in order to
prepare for the hearing of the matter. From the correspondence
it is
therefore clear that the issue between the parties was not whether
the appellant was entitled to disclosure of all documents
in
respondent’s possession so as to enable the appellant to properly
formulate his objection. The issue between the parties was
whether
the appellant was entitled to discovery of documents in order to
prepare for the hearing of the matter. That was the issue
addressed
by the court
a quo
. In effect the court
a quo
decided
that a discovery order could not be made until such time as the
necessary detail had been provided in respect of the appellant’s
grounds of objection. In my view that decision is not a ‘decision’
within the meaning of that word as used in s 86.
[15] The
main dispute between the parties concerns the validity of the
assessments made by the respondent. The decision by the court
a
quo
regarding discovery is incidental to the main dispute between
the parties. It regulates the procedure to be followed in order to
determine that dispute. It is not a decision that disposes of any
issue or any portion of the issue in the main proceedings between
the
parties or, put differently, it does not preclude any of the relief,
which may be given at the hearing of the main dispute. It
is,
therefore, a purely interlocutory decision which may be corrected,
altered or set aside by the court
a quo
at any time before
final judgment (see
South Cape Corporation (Pty) Ltd v Engineering
Management Services (Pty) Ltd
1977 (3) SA 534
(A) at 549F –
551A;
Globe and Phoenix Gold Mining Co Ltd v Rhodesian Corporation
Ltd
1932 AD 146
at 163). It follows that the decision by the
court
a quo
in regard to discovery is not appealable.
[16] I
shall now deal with the submission that the court
a quo
in
effect dismissed some of the grounds of the appellant’s objections.
The court
a quo
said in its judgment:
‘[T]he only ground
that is relevant was the one contained in (f) above. All of the
others (save for the reference in (g) to section
32 of the
Constitution which relates to the taxpayer’s claim to access to
documents and which as such cannot in any event be a
proper ground)
depend for their validity upon the success of the ground in (f); in
other words they depend entirely on the fate of
the ground in (f).
For practical purposes the ground in (f) is therefore the only one
that requires consideration.’
The
validity of the grounds of objection was not an issue to be decided
by the court
a quo
and no order was made in this regard. The
statement simply formed part of the reasoning of the court
a quo
in respect of a non-appealable order and does not preclude the court
a quo
from changing its view in this regard. It does not
constitute a ‘decision’ let alone a final ‘decision’ by the
court
a quo
in respect of the validity of the grounds of
objection. The statement is, therefore, not appealable. See
Administrator, Cape, and Another v Ntshwaqela and Others
1990
(1) SA 705
(A) at 715D where Nicholas AJA said:
‘There can be an
appeal only against the substantive order made by a Court, not
against the reasons for judgment.’
[17] For
these reasons the appeal is struck from the roll with costs.
_________________
P
E Streicher
Judge
of Appeal
Howie JA)
Farlam JA)
Cameron JA)
Lewis
AJA) concur