Sars reeling under court judgment
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.
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informed her that her clearance certificate had been withdrawn because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.
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
“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.
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.
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
“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.
court agreed with Mpisane that Sars failed to act in a procedurally
fair manner by giving Mpisane’s company adequate notice of the
“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.
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