Loading...
See More

Sars reeling under court judgment

May 29 2012 17:01 Xolani Mbanjwa, City Press

Related Articles

Sars to tackle construction tax fraud

Sars slaps firm with R136m tax bill

Sars mum on probe of men linked to Malema

Taxman serves R10m bill on Malema

Sars to clamp down on tax dodgers

Sars: Large companies avoiding tax in SA

 
Johannesburg - The South African Revenue Service (Sars) was today dealt a severe blow in what could be a precedent-setting judgment by the North Gauteng High Court.

The court ruled that it is unlawful for the taxman to invalidate tax clearance certificates without giving taxpayers an opportunity to defend themselves.

Durban businesswoman and multimillionaire Shauwn Mpisane – who is under investigation for alleged tax fraud – was granted an urgent interdict this afternoon preventing Sars from withdrawing a tax clearance certificate for one of her companies, Zikhulise Cleaning, Maintenance and Transport CC.

Mpisane, a close friend of suspended police commissioner Bheki Cele, argued that she was not given an opportunity to defend her company before Sars informed her that her clearance certificate had been withdrawn because of alleged non-compliance.

Judge Gregory Wright ruled that Sars acted “unlawfully” when it invalidated Mpisane’s tax clearance certificate for the period January 17 2012 to January 16 2013.

Mpisane’s lawyer, Rafik Bhana SC, said the interim judgment could have wide-ranging ramifications for the taxman – it could mean that all non-compliant taxpayers should be given an opportunity to defend themselves.

“This will mean that Sars may not just withdraw a tax clearance certificate and then inform the taxpayer later. This is a precedent-setting judgment because Sars can’t just arbitrarily take away the certificate,” said Bhana.

“Sars acted unlawfully in invalidating the certificate as it should have given Mpisane the right to be heard before taking a decision to withdraw the certificate.”

According to court papers, Sars withdrew the certificate on March 16 this year.

The certificate was issued on January 17 2012 to last a year and this would allow Mpisane’s company to bid for government tenders, conduct business and retain its compulsory registration with the Construction Industry Development Board and the National Homebuilders Registration Council.

Mpisane had argued that without the certificate her company would not be able to do any business, let alone be paid for work already done by her company.

“There is no explicit statutory provision or rule of any sort which grants Sars the power to issue so-called tax clearance certificates which Sars must take into account before issuing such certificates,” said Mpisane in court papers.

She argued that Sars had sought to regulate the issuing of such certificates using an unlawful policy.

The court agreed with Mpisane that Sars failed to act in a procedurally fair manner by giving Mpisane’s company adequate notice of the withdrawal.

“In fact Sars only advised Zikhulise of the decision which had taken approximately one month after it had taken the decision,” argued Mpisane in court papers.

Mpisane’s victory comes just days before she heads back to the Durban regional court where she is facing charges of tax fraud involving R2.4m for allegedly submitting false invoices to reclaim Value Added Tax.

A spokesperson for Sars said the organisation would respond to the outcome of today’s case at a later stage.

- City Press
taxpayers  |  sars
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
68 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...