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[2018] ZASCA 38
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Commissioner for the South African Revenue Service v Danwet 202 (Pty) Ltd (399/2017) [2018] ZASCA 38; 2019 (5) SA 63 (SCA); 81 SATC 91 (28 March 2018)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 399/2017
In the matter between:
THE
COMMISSIONER FOR THE SOUTH AFRICAN
APPELLANT
REVENUE
SERVICE
and
DANWET
202 (PTY) LTD
RESPONDENT
Neutral
citation:
C
SARS
v Danwet
(399/2017)
[2018] ZASCA 38
(28 March 2018)
Coram:
Lewis,
Majiedt and Mbha JJA, Davis and Mothle AJJA
Heard:
15
March 2018
Delivered:
28
March 2018
Summary:
Condonation
for late filing of an appeal against an assessment –
section
104(3)
of the
Tax Administration Act 28 of 2011
mandates a taxpayer
to object to a refusal by SARS to extend the period for lodgment –
failure by taxpayer to file an objection.
ORDER
On
appeal from:
Gauteng
Tax Court, Johannesburg (Masipa J sitting as a court of first
instance):
1
The appeal is upheld with costs including the costs of two counsel.
2
The order of the Tax Court is set aside and replaced with the
following:
‘
The
matter is struck from the roll.’
JUDGMENT
Davis
AJA (Lewis, Majiedt and Mbha JJA and Mothle AJA concurring):
[1]
This
case concerns three related issues: (1) whether a Tax Court has the
necessary jurisdiction to entertain and thereafter grant
an
application for condonation of the late filing of an appeal against
an assessment; (2) if so whether the appellant has a discretion
to
extend the period within which an appeal against an assessment may be
lodged beyond the prescribed period of 30 days as set
out in
s 107
of
the
Tax Administration Act 28 of 2011
and (3) if the answer to the
second issue is in the affirmative, whether good cause was shown by
the respondent to justify the
order in its favour.
The
Facts
[2]
In
2013 the appellant conducted an audit of the respondent’s
business. On 19 August 2013 it issued an additional assessment
for
the 2012 tax year in the amount of R1 208 919, which represented a
significant increase from the initial assessment of R19 915.
[3]
On
7 October 2013 the respondent objected to this additional assessment.
On 7 November 2013 the appellant responded to the objections
by
partially reducing the amount of the additional assessment. On 9
December 2013 Mr Jan Coetzee, a tax consultant representing
the
respondent, filed a notice of appeal against the partial disallowance
of the objection on the e-filing platform of the appellant.
Attached
to this notice of appeal was a document which set out the reasons for
the respondent’s appeal in some detail.
[4]
More
than six months passed without any attempt by the respondent to
enquire into the status of its appeal until 30 June 2014, when
Mr
Coetzee telephoned the appellant’s call centre to enquire about
the status of the appeal. He was advised that there was
no record of
the appeal on the appellant’s e-filing platform.
[5]
According
to Mr Coetzee, he telephoned Ms Ray-Anne van Schalkwyk at the
appellant’s office in Alberton, who advised him to
re-submit
the appeal. On 2 July 2014 he did so, together with a request for
condonation, explaining that he believed the notice
of appeal had
been correctly uploaded. In his explanation, he recorded that Telkom
ADSL lines had been water logged in the area
where his office was
situated, particularly during the first two weeks of December 2013.
He suggested that, in the process of submitting
the notice of appeal,
the Telkom ADSL line had stopped working, thereby preventing the full
transmission of the relevant documents
on appellant’s e-filing
platform. He justified his failure to initiate an earlier enquiry
into the status of the appeal on
the basis that, in his experience,
it could take appellant ‘up to 9 months to respond to the
lodging of an appeal’.
[6]
The
appellant refused to grant condonation, on the basis of its
interpretation of
s 107(2)(a)
and
2
(b) of the Act. In a letter of 12
February 2015, representatives of the appellant, wrote:
‘
Section
107(2)
(a)
or
(b)
of the TA Act provides that a senior SARS official may extend the
period within which an appeal must be lodged up to 21 days if
reasonable grounds exist for the delay or up to 45 days if
exceptional grounds exist for the delay. No discretion is provided to
SARS to extend the period beyond 75 days. As the nature of appeal was
delivered on 2 July 2014 it was more than 75 days late and
accordingly Appellant has no discretion to condone.’
[7]
The
respondent applied for condonation for the late filing of the appeal
before the Tax Court, Johannesburg (Masipa J), which granted
an order
on 1 February 2017 in terms of which leave was granted to the
respondent to file its notice of appeal against the disallowance
of
the objection of the assessment for the 2012 tax year within ten days
of the granting of the order.
[8]
The
appellant contends that the first issue is dispositive of the appeal
in that the Tax Court did not have the necessary jurisdiction
to
entertain the respondent’s application for condonation.
Jurisdiction
[9]
The
jurisdiction of the Tax Court is set out in s 117 of the Act which,
to the extent relevant to this case, provides that the tax
court has
jurisdiction over tax appeals lodged under s 107. Section 107 reads
as follows:
‘
Appeal
against assessment or decision – (1) After delivery of the
notice of the decision referred to in section 106 (4), taxpayer
objecting to an assessment or “decision” may appeal
against the assessment or “decision” to the tax board
or
tax court in the manner, under the terms and within the period
prescribed in this Act and the “rules”,
(2)
A senior SARS official may extend the period within which an appeal
must be lodged for 21 business days, if satisfied that reasonable
grounds exist for the delay; or up to 45 business days, if
exceptional circumstances exist that justify an extension beyond 21
business days.’
[10]
The
word ‘decision’ as contained in s 107 is defined in s 101
as meaning a decision referred to in s 104(2) of the Act
which
provides that:
‘
The
following decisions may be objected to and appealed against in the
same manner as an assessment:
(a)
a
decision under subsection (4) not to extend the period for lodging an
objection;
(b)
a
decision under section 107 (2) not to extend the period for lodging
an appeal; and
(c)
any
other decision that may be objected to or appealed against under a
tax Act.’
Section
129(2) of the Act sets out the powers of the tax court as follows:
‘
In
the case of an assessment or “decision” under appeal or
an application in a procedural matter referred to in section
117 (3),
the tax court may
–
(a)
confirm
the assessment or ‘decision’;
(b)
order
the assessment or “decision” to be altered; or
(c)
refer
the assessment back to SARS for further examination and assessment.’
[11]
In
the present case, the Tax Court granted condonation for the late
filing of an appeal against the revised assessment. The appellant
interpreted s 107(2) to justify its refusal of an extension for the
lodging of an appeal; that is beyond the periods prescribed
in the
section, the appellant had no power to grant an extension.
[12]
A
decision in terms of s 107(2) of the Act is ‘a decision’
for the purposes of s 104(2) and s 129(2). It follows
that,
irrespective of the merits of the interpretation of s 107(2) as
contended for by appellant, a decision not to extend the
prescribed
period falls within the definition of ‘decision’ for the
purposes of s 129(2). Thus, the Tax Court
,
subject
to compliance with the procedures set out in s 104(3), had the
jurisdiction to determine an application for condonation
for the
failure by a taxpayer to lodge an appeal timeously.
[13]
Had
the respondent objected to the decision to refuse an extension of
time, as it was obliged to do by s 104(3), the Tax Court would
have
had the power to order that an extension should be granted in terms
of s 117(3) of the Act read with Rule 53. Rule 53 confers
on the Tax
Court the power to grant condonation and allow an extension of time
in which to lodge a notice of appeal.
[14]
It
follows that a decision to condone the late lodgement of an appeal is
appealable to this court in terms of s 129 read with s
133(1) of the
Act. However, counsel for the appellant based his argument on the
qualification to which I have made mention, namely
he contended that
the respondent had failed to comply with the requirements set
out in s 104(3) and accordingly the tax court
did not have
jurisdiction to hear the condonation application
The
procedure to be adopted by a taxpayer in terms of s 104(3
)
[15]
Section
104(3) provides as follows: ‘a taxpayer entitled to object to
an assessment or “decision” must lodge an
objection in
the manner, under the terms, and within the period prescribed in the
‘rules’. It is common cause that
no objection was lodged
against the decision taken by the appellants’ representatives
to invalidate the appeal by refusing
to extend the period within
which the appeal could be brought. Rule 7 of the Tax Court Rules
[1]
provides that a taxpayer who may object to an assessment under s104
of the Act may deliver a notice of objection within 30 days.
There is
however no mention of an objection to a decision as provided for in s
104. Rule 10(1)(b) provides that a taxpayer who
wishes to appeal
against an assessment to the tax court must deliver a notice of
appeal within 30 days after the delivery of the
disallowance or such
extended period granted under s 107(2) of the Act.
[16]
The
Rules are therefore hardly a model of clarity when dealing with the
prescribed period within which a taxpayer must object to
a decision
such as a refusal to extend the prescribed period. What is clear
however, is that, in the event that a taxpayer seeks
to have such a
refusal reversed, s 104(3) provides expressly that the taxpayer is
obliged to lodge an objection against the decision
taken by a senior
SARS official acting in terms of s 107(2).
[17]
In
the context of the present case, an objection by the respondent to a
refusal to extend the period within which an appeal may
be lodged may
appear on the face of it to be a pointless exercise, in that s 107(2)
circumscribes the power of the appellant to
extend the period within
which the appeal is to be lodged. The appellant would not have the
legal power to uphold an objection
to a refusal to extend the time
for the lodging of an appeal beyond the period expressly provided for
in s 107(2).
[18]
The
question then arises as to whether s 104(3) is absurd or pointless in
this instance. There is a common law presumption that
a statute does
not contain purposeless provisions. If, however, the legislative
provision cannot be given a meaningful construction,
the presumption
is taken to be rebutted.
[2]
[19]
Notwithstanding
the present case dealing with a refusal to extend the period for the
lodgment of an appeal, there are cases where
the obligation to object
to a decision made in terms of s 107(2) serves a clear purpose. For
example, the appellant may refuse
to extend the period for lodgment
on the basis that it is not satisfied that reasonable grounds exist
for the delay. An objection
by a taxpayer would seek to rebut the
reasons given for this decision. There would be no legal impediment
to the appellant’s
reconsideration of its decision in the light
of the objection by the taxpayer. There is therefore no basis on
which to conclude
that s 104(3) is pointless or leads inevitably
to absurdity.
[20]
In
summary, s 104(3) obliged the respondent to object to the decision
taken by the appellant on 15 February 2015 to invalidate its
appeal.
It failed to do so. It follows that there was no valid application
before the tax court which, accordingly, did not have
jurisdiction to
hear the application.
[21]
For
these reasons, the following order is made:
1
The appeal is upheld with costs including the costs of two counsel.
2
The order of the Tax Court is set aside and replaced with the
following:
‘
The
matter is struck from the roll.’
___________________
D
Davis
Acting
Judge of Appeal
APPEARANCES
For
the Appellant:
N Snellenburg SC with D R Thompson
Instructed
by:
State Attorney, Bloemfontein
For
the respondent:
C Dreyer with A Saldulker
Instructed
by
Pierre Retief Inc., Bedfordview
Maree & Partners,
Bloemfontein
[1]
Tax Court Rules as
published in the Government Gazette No37819 on 11 July 2014
[2]
LC Steyn Die
Uitleg van Wette (5ed) at 119-124; LAWSA Vol 25 para 330 and cases
cited in footnote 8 thereof.