Absa Bank Limited and Another v Commissioner for the South African Revenue Service (2019/21825) [2021] ZAGPPHC 127; 2021 (3) SA 513 (GP); 83 SATC 401 (11 March 2021)

Absa Bank Limited and Another v Commissioner for the South African Revenue Service (2019/21825) [2021] ZAGPPHC 127; 2021 (3) SA 513 (GP); 83 SATC 401 (11 March 2021)

The High Court held that the refusal by SARS to withdraw the section 80J notice and the subsequent issue of letters of assessment were reviewable under the principle of legality. The court found that Absa was not a 'party' to any impermissible arrangement as defined in section 80L of the Income Tax Act, as there was no evidence of participation or intention to evade tax liability. The factual premise relied upon by SARS did not establish that Absa had knowledge of or participated in the intermediary transactions. The dispute was a pure point of law, justifying direct access to the High Court and bypassing internal remedies. The section 80J notices and letters of assessment were set aside,...

Citation
[2021] ZAGPPHC 127
Parties
Applicant: Absa Bank Limited; Applicant: United Towers Proprietary Limited; Respondent: Commissioner, South African Revenue Service
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
11 March 2021
Case Number
2019/21825
Procedural Posture
Review Application / Final Judgment
Outcome
Application for review granted; section 80J notices and letters of assessment set aside; costs awarded to applicants.
Judges
Roland Sutherland
Legal Topics
General Anti Avoidance Rule, Tax Benefit, Review of Administrative Action, Exceptional Circumstances, Party Definition, Income Tax Act
Tax Law Administrative Law General Anti Avoidance Rule Tax Benefit Review of Administrative Action Exceptional Circumstances Party Definition Income Tax Act

Case Brief

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Parties

Absa Bank Limited

Applicant

United Towers Proprietary Limited

Applicant

Commissioner, South African Revenue Service

Respondent

Procedural Posture

Review Application / Final Judgment

Legal Issues

  1. 1 Is the refusal to withdraw a section 80J notice reviewable by the High Court?
  2. 2 Is Absa a 'party' to an impermissible 'arrangement' under the Income Tax Act?
  3. 3 Did Absa procure a 'tax benefit' as contemplated by the GAAR provisions?

Ratio Decidendi

The High Court held that the refusal by SARS to withdraw the section 80J notice and the subsequent issue of letters of assessment were reviewable under the principle of legality. The court found that Absa was not a 'party' to any impermissible arrangement as defined in section 80L of the Income Tax Act, as there was no evidence of participation or intention to evade tax liability. The factual premise relied upon by SARS did not establish that Absa had knowledge of or participated in the intermediary transactions. The dispute was a pure point of law, justifying direct access to the High Court and bypassing internal remedies. The section 80J notices and letters of assessment were set aside,...

Court Disposition

Application for review granted; section 80J notices and letters of assessment set aside; costs awarded to applicants.

Orders

  • The review applications are appropriately before the court without requiring exhaustion of internal remedies.
  • The decisions by SARS to refuse withdrawal of section 80J notices are reviewed and set aside.