Henque 3935 CC t/a PQ Clothing Outlet v Commissioner for the South African Revenue Service (846/2023) [2025] ZASCA 56 (12 May 2025)

Henque 3935 CC t/a PQ Clothing Outlet v Commissioner for the South African Revenue Service (846/2023) [2025] ZASCA 56 (12 May 2025)

The Supreme Court of Appeal held that the high court had jurisdiction to grant declaratory relief regarding the characterisation of tax liabilities in business rescue, as the dispute did not concern the correctness of an assessment or decision appealable to the tax court. The Court found that both the income tax...

Source-derived case information.

Citation
[2025] ZASCA 56
Parties
Appellant: Henque 3935 CC t/a PQ Clothing Outlet; Respondent: Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
12 May 2025
Case Number
846/2023
Procedural Posture
Civil Appeal / Appeal From the Gauteng Division of the High Court, Johannesburg
Outcome
Appeal upheld; high court order set aside and replaced with declaratory relief in favour of the appellant.
Judges
Zondi, Dambuza, Molefe, Koen, Dolamo
Legal Topics
Business Rescue, Income Tax Assessment, Vat Liability, Set Off, Companies Act Section 154, Tax Administration Act Section 105
Tax Law Commercial and Corporate Civil Procedure Business Rescue Income Tax Assessment Vat Liability Set Off Companies Act Section 154 +1 more

Source-derived case record

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 16 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Parties

Henque 3935 CC t/a PQ Clothing Outlet

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From the Gauteng Division of the High Court, Johannesburg

Legal Issues

  1. 1 Whether the high court had jurisdiction to grant declaratory relief regarding the tax liability of a company in business rescue.
  2. 2 Whether income tax liability arising from an additional assessment raised after commencement of business rescue is a pre- or post-commencement debt.
  3. 3 Whether SARS is entitled to set off VAT refunds due after commencement of business rescue against pre-commencement tax liabilities.

Ratio Decidendi

The Supreme Court of Appeal held that the high court had jurisdiction to grant declaratory relief regarding the characterisation of tax liabilities in business rescue, as the dispute did not concern the correctness of an assessment or decision appealable to the tax court. The Court found that both the income tax liability arising from the 2017 additional assessment and the VAT liability for the period ending 31 January 2018 were pre-business rescue debts, as the obligation to pay arose at the end of the relevant assessment period, not upon assessment or notification. The additional assessment merely quantified the existing liability. The VAT liability similarly arose on the supply of...

Court Disposition

Appeal upheld; high court order set aside and replaced with declaratory relief in favour of the appellant.

Orders

  • The appeal is upheld with costs, including the costs of two counsel.
  • It is declared that any liability for income tax in terms of the Income Tax Act 58 of 1962, in respect of a period of assessment which ended on or before 31 January 2018, is a pre-commencement claim.