Fast (Pty) Ltd v Commissioner for the South African Revenue Service (IT 14305) [2023] ZATC 13 (24 August 2023)

Fast (Pty) Ltd v Commissioner for the South African Revenue Service (IT 14305) [2023] ZATC 13 (24 August 2023)

The court held that the Commissioner’s amendment to his rule 31 statement does not constitute a novation of the whole factual or legal basis of the assessment, as the primary ground remains unchanged and the alternative ground merely responds to contentions raised by FAST. The introduction of new evidence by Dr Emann is permissible as it does not alter the facts of the tested transaction but provides additional comparators. The prohibition in sub-rule 31(3) is not triggered because the amendment does not replace the original obligation. Regarding FAST’s application to amend its rule 32 statement, the court found that amendments connected to the original objection are permissible, but...

Citation
[2023] ZATC 13
Parties
Appellant: Fast (Pty) Ltd; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
24 August 2023
Case Number
IT 14305
Procedural Posture
Interlocutory Application / Application for Leave to Amend Rule 31 and Rule 32 Statements Prior to Appeal Hearing
Outcome
The Commissioner is granted leave to amend his rule 31 statement as proposed. FAST is granted leave to amend its rule 32 statement in respect of paragraphs 1,2,4,5 and 7, but refused leave for paragraphs 3 and 6. Each party is to pay its own costs.
Judges
Vally
Legal Topics
Transfer Pricing, Income Tax Act Section 31, Tax Court Rules Amendment, Arms Length Principle, Benchmarking Study, Procedural Fairness
Tax Law Civil Procedure Transfer Pricing Income Tax Act Section 31 Tax Court Rules Amendment Arms Length Principle Benchmarking Study Procedural Fairness

Case Brief

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Parties

Fast (Pty) Ltd

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Interlocutory Application / Application for Leave to Amend Rule 31 and Rule 32 Statements Prior to Appeal Hearing

Legal Issues

  1. 1 Whether the Commissioner may amend his rule 31 statement to introduce an alternative ground based on new evidence without novating the whole factual or legal basis of the assessment.
  2. 2 Whether FAST (Pty) Ltd may amend its rule 32 statement to introduce new grounds of appeal not raised in its original objection under rule 7.
  3. 3 How the interplay between Tax Court Rules 10(3), 10(4), 32(3), and 33(2) affects the ability of parties to amend their statements and introduce new grounds.

Ratio Decidendi

The court held that the Commissioner’s amendment to his rule 31 statement does not constitute a novation of the whole factual or legal basis of the assessment, as the primary ground remains unchanged and the alternative ground merely responds to contentions raised by FAST. The introduction of new evidence by Dr Emann is permissible as it does not alter the facts of the tested transaction but provides additional comparators. The prohibition in sub-rule 31(3) is not triggered because the amendment does not replace the original obligation. Regarding FAST’s application to amend its rule 32 statement, the court found that amendments connected to the original objection are permissible, but...

Court Disposition

The Commissioner is granted leave to amend his rule 31 statement as proposed. FAST is granted leave to amend its rule 32 statement in respect of paragraphs 1,2,4,5 and 7, but refused leave for paragraphs 3 and 6. Each party is to pay its own costs.

Orders

  • The respondent is granted leave to amend his rule 31 statement of grounds of assessment as per the proposed amendments served on 2 February 2023.
  • Each party is to pay its own costs in respect of the Commissioner’s application.