Motloung and Another v Commissioner for the South African Revenue Service and Others (5492/2021) [2022] ZAFSHC 327; 85 SATC 504 (21 November 2022)

Motloung and Another v Commissioner for the South African Revenue Service and Others (5492/2021) [2022] ZAFSHC 327; 85 SATC 504 (21 November 2022)

The court held that the imposition of an understatement penalty under section 222 of the Tax Administration Act is an administrative sanction aimed at promoting compliance and addressing shortfalls, not a criminal punishment. Section 235 criminalises intentional tax evasion and requires criminal prosecution, which is distinct from the administrative process. The constitutional protection against double jeopardy under section 35(3)(m) applies only to criminal proceedings and does not extend to administrative penalties. The processes, purposes, and burdens of proof differ between administrative and criminal sanctions. The applicants' challenge to the constitutionality of sections 222 and...

Citation
[2022] ZAFSHC 327
Parties
Applicant: Ketsise Motloung; Applicant: Reatlehise Development CC; Respondent: Commissioner for the South African Revenue Services; Respondent: Minister of Finance; Respondent: National Director of Public Prosecutions; Respondent: Minister of Justice and Constitutional Development
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
21 November 2022
Case Number
5492/2021
Procedural Posture
Constitutional Application / Judgment on Application for Declaratory Relief
Outcome
Application dismissed with costs.
Judges
N M MBHELE
Legal Topics
Tax Administration Act, Double Jeopardy, Understatement Penalty, Fair Trial Rights, Criminal Vs Administrative Penalties
Tax Law Constitutional Law Tax Administration Act Double Jeopardy Understatement Penalty Fair Trial Rights Criminal Vs Administrative Penalties

Case Brief

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Parties

Ketsise Motloung

Applicant

Reatlehise Development CC

Applicant

Commissioner for the South African Revenue Services

Respondent

Minister of Finance

Respondent

National Director of Public Prosecutions

Respondent

Minister of Justice and Constitutional Development

Respondent

Procedural Posture

Constitutional Application / Judgment on Application for Declaratory Relief

Legal Issues

  1. 1 Whether sections 222 and 235 of the Tax Administration Act 28 of 2011 are unconstitutional for permitting both administrative and criminal penalties for the same conduct.
  2. 2 Whether the imposition of an understatement penalty and subsequent criminal prosecution for intentional tax evasion constitutes double jeopardy under section 35(3)(m) of the Constitution.
  3. 3 Whether issue estoppel or res judicata precludes the present constitutional challenge.

Ratio Decidendi

The court held that the imposition of an understatement penalty under section 222 of the Tax Administration Act is an administrative sanction aimed at promoting compliance and addressing shortfalls, not a criminal punishment. Section 235 criminalises intentional tax evasion and requires criminal prosecution, which is distinct from the administrative process. The constitutional protection against double jeopardy under section 35(3)(m) applies only to criminal proceedings and does not extend to administrative penalties. The processes, purposes, and burdens of proof differ between administrative and criminal sanctions. The applicants' challenge to the constitutionality of sections 222 and...

Court Disposition

Application dismissed with costs.

Orders

  • The application to declare sections 222 and 235 of the Tax Administration Act unconstitutional is dismissed with costs.
  • Costs to include that of counsel.