Absa Bank Limited and Another v Commissioner for the South African Revenue Service (2019/21825 [P]) [2021] ZAGPPHC 183 (1 March 2021)

Absa Bank Limited and Another v Commissioner for the South African Revenue Service (2019/21825 [P]) [2021] ZAGPPHC 183 (1 March 2021)

The High Court held that the refusal by SARS to withdraw the section 80J notices and the subsequent issue of letters of assessment were reviewable under the principle of legality, as the dispute was a pure point of law and exceptional circumstances existed. The court found that Absa was not a 'party' to the impermissible tax avoidance arrangement as defined by the Income Tax Act, since it did not participate with knowledge or intention in the broader scheme involving intermediary entities and offshore transactions. The factual premise relied upon by SARS—that Absa was ignorant of the intermediary transactions—undermined the legal basis for treating Absa as a participant in the...

Citation
[2021] ZAGPPHC 183
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
1 March 2021
Case Number
2019/21825 [P]
Procedural Posture
Review Application / High Court Judgment
Outcome
Application granted. SARS's refusal to withdraw section 80J notices and the issue of letters of assessment are reviewed and set aside. SARS ordered to withdraw the notices and assessments and pay costs.
Judges
Sutherland
Legal Topics
Impermissible Tax Avoidance, General Anti Avoidance Rule, Review of Administrative Action, Principle of Legality, Exceptional Circumstances, Tax Assessment Withdrawal
Tax Law Administrative Law Impermissible Tax Avoidance General Anti Avoidance Rule Review of Administrative Action Principle of Legality Exceptional Circumstances Tax Assessment Withdrawal

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Parties

Absa Bank Limited

Applicant

United Towers Proprietary Limited

Applicant

Commissioner, South African Revenue Service

Respondent

Procedural Posture

Review Application / High Court Judgment

Legal Issues

  1. 1 Is a refusal to withdraw a section 80J notice under the Income Tax Act reviewable by the High Court?
  2. 2 Was Absa Bank Limited a 'party' to an impermissible tax avoidance arrangement as defined by the Income Tax Act?
  3. 3 Did Absa Bank Limited procure a 'tax benefit' as contemplated by the general anti-avoidance regime?

Ratio Decidendi

The High Court held that the refusal by SARS to withdraw the section 80J notices and the subsequent issue of letters of assessment were reviewable under the principle of legality, as the dispute was a pure point of law and exceptional circumstances existed. The court found that Absa was not a 'party' to the impermissible tax avoidance arrangement as defined by the Income Tax Act, since it did not participate with knowledge or intention in the broader scheme involving intermediary entities and offshore transactions. The factual premise relied upon by SARS—that Absa was ignorant of the intermediary transactions—undermined the legal basis for treating Absa as a participant in the...

Court Disposition

Application granted. SARS's refusal to withdraw section 80J notices and the issue of letters of assessment are reviewed and set aside. SARS ordered to withdraw the notices and assessments and pay costs.

Orders

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