S Company v Commissioner for the South African Revenue Service (IT0122/2017) [2017] ZATC 2; 80 SATC 159 (17 October 2017)

S Company v Commissioner for the South African Revenue Service (IT0122/2017) [2017] ZATC 2; 80 SATC 159 (17 October 2017)

SARS failed to provide a full, reasonable explanation for its delay in filing the answering affidavit and did not apply for condonation for the late filing of its Rule 31 statement. The explanation did not cover the entire period of delay and was inadequate. SARS’ conduct was found to be inexcusable, showing disregard for the administration of justice and causing prejudice to the taxpayer. The court found that SARS did not demonstrate good prospects of success, as it failed to engage with binding findings in previous judgments and merely incorporated its Rule 31 statement by reference. The jurisdictional point raised by SARS was dismissed, as the registrar had discretion to set the matter...

Citation
[2017] ZATC 2
Parties
Applicant: S Company; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
17 October 2017
Case Number
IT0122/2017
Procedural Posture
Tax Appeal / Application for Default Judgment and Condonation for Late Filing of Answering Affidavit
Outcome
The respondent’s application for condonation for late filing of its answering affidavit is dismissed. A final order is granted altering the disputed assessments in accordance with the applicant’s notice of appeal. Costs are awarded to the applicant, including costs of two counsel where employed.
Judges
J I Cloete
Legal Topics
Tax Administration Act, Income Tax Exemption, Recoupment of Allowances, Default Judgment, Condonation, Jurisdiction of Tax Court
Tax Law Civil Procedure Tax Administration Act Income Tax Exemption Recoupment of Allowances Default Judgment Condonation Jurisdiction of Tax Court

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Parties

S Company

Applicant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Application for Default Judgment and Condonation for Late Filing of Answering Affidavit

Legal Issues

  1. 1 Whether SARS has shown good cause for condonation for late filing of its answering affidavit.
  2. 2 Whether the Tax Court sitting in Cape Town had jurisdiction to hear the taxpayer’s application.
  3. 3 Whether the taxpayer is entitled to a final order altering SARS’ assessments for the 2005 to 2012 tax periods.

Ratio Decidendi

SARS failed to provide a full, reasonable explanation for its delay in filing the answering affidavit and did not apply for condonation for the late filing of its Rule 31 statement. The explanation did not cover the entire period of delay and was inadequate. SARS’ conduct was found to be inexcusable, showing disregard for the administration of justice and causing prejudice to the taxpayer. The court found that SARS did not demonstrate good prospects of success, as it failed to engage with binding findings in previous judgments and merely incorporated its Rule 31 statement by reference. The jurisdictional point raised by SARS was dismissed, as the registrar had discretion to set the matter...

Court Disposition

The respondent’s application for condonation for late filing of its answering affidavit is dismissed. A final order is granted altering the disputed assessments in accordance with the applicant’s notice of appeal. Costs are awarded to the applicant, including costs of two counsel where employed.

Orders

  • The respondent’s application for condonation for the late filing of its answering affidavit is dismissed.
  • A final order is granted under section 129(2)(b) of the Tax Administration Act 28 of 2011 altering the assessments issued by SARS on 2 November 2015 (tax periods 2005 to 2010) and 3 November 2015 (tax periods 2011 and 2012) as contemplated in the applicant’s notice of appeal dated 31 January 2017.