By Barbara Whittle
Earlier this year the Law Society of South Africa (LSSA) commented to the South African Revenue Service (SARS) on the draft rules to be promulgated under s 103 of the Tax Administration Act 28 of 2011.
The LSSA raised its serious concern with the fact that the taxpayer would be expected to file his or her grounds of objection first, whereas in the past SARS had to file its grounds of assessment first. The LSSA believed this to be unfair, particularly in light of the fact that the only documents available to the taxpayer to challenge an assessment or decision would be those that would have been obtained from the letter of findings in terms of s 42 of the Tax Administration Act, and the reasons requested from SARS after raising the assessment in terms of r 6.
The LSSA pointed out that, in CSARS v Sprigg Investment 117 CC t/a Global Investment [2011] 3 All SA 18 (SCA), ‘adequate reasons’ for an assessment had been interpreted by the Supreme Court of Appeal in a very restrictive manner. This, according to the LSSA, placed the taxpayer in a position where the case that must be answered would most likely be very vague, which in turn would be inconsistent with the provisions of s 34 of the Constitution.
‘Placing the taxpayer in this position may lead to constitutional challenges in respect of the rules in their current form. It is suggested that SARS should still prepare detailed grounds of assessment as the first step in the pleadings to the Tax Court, to which the taxpayer could then respond with his/her detailed grounds of objection. This process seems to have worked well in the past and we submit that there is no reason to change it now,’ stated the LSSA.
The LSSA also pointed out that there was no opportunity for the taxpayer to request reasons for SARS disallowing the objection pursuant to r 9. The LSSA noted: ‘The disallowance of the objection is an administrative action and should be subject to all the provisions of the Promotion of Administrative Justice Act [3 of 2000]. Failure to state this in the rules will cause unnecessary confusion and unnecessary litigation.’
Compiled by Barbara Whittle, communication manager, Law Society of South Africa, barbara@lssa.org.za
This article was first published in De Rebus in 2013 (June) DR 12.
