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Decisions of South Africa’s courts are an essential source of law. The courts uphold and enforce the Constitution and develop common law that is consistent with the values of the Constitution, and the spirit and purpose of the Bill of Rights. In a taxation context, court decisions assist in how legislation must be interpreted or confirm the rights and obligations of taxpayers and the South African Revenue Service alike. One therefore cannot appreciate the tax landscape, without having regard for the decisions of our courts.

Recently, one Joseph Nyalunga (the Applicant) brought an application to review and set aside two decisions made by the Commissioner for SARS five years ago. The first relates to a decision on an audit finding letter and the second appears in a finalisation of audit letter, from September 2013 and February 2014, respectively.

The Applicant failed to submit tax returns to SARS and failed to lodge an objection in respect of the assessments as a result of his incarceration. During this time, SARS delivered a notice of its intention to audit the Applicant due to possible under declaration of income tax. The Applicant initially failed to respond to audit finding letters, but when he was able to, conveyed that he would not be able to respond as he could not obtain any documents as he was in prison and that he would not be in a position to object, based on this fact. As soon as he was released, he would cooperate with SARS. SARS served a finalisation of audit letter, which served as a final assessment of the Applicant. All the letters were handed to the Applicant personally while incarcerated.

The Applicant was released on 24 March 2014, and (in agreement with SARS) had until 8 May 2014 to file an objection. SARS issued a final demand on 24 February 2014 and took a judgment against the Applicant on 23 June 2014 in the amount of R15 166 511,89. A warrant of execution was issued on 21 January 2016 and the sheriff was instructed to execute on 2 February 2016. The executions were futile as the Applicant conveyed that he did not own any movable assets. The sheriff was eventually able to attach assets.

The Applicant sought condonation for late filing of the written submissions. SARS did not oppose the condonation as they sought a finalisation of the review matter once and for all. Condonation was granted to the Applicant.

The Applicant argued that, due to his incarceration, he was unable to participate as a normal taxpayer. He further contended that the procedure followed by SARS was unfair in its procedural irregularities; that the audit calculations were incorrect and finally that the decision taken by SARS was unconstitutional and infringed upon his rights and the rule of law.

SARS argued that the review application was out of time, by some four years. SARS further contended that the court did not have jurisdiction to hear the matter and that only the tax court did. SARS further contended that the time frames for objection had passed, and the Applicant was notified of these periods, and as a result, had been prescribed. SARS further contended that the relief sought had no practical effect.

The court’s ruling was found in favour of SARS, holding that finality of the assessment was reached and the time period to raise an objection had come and gone. In this matter. Four years had passed and thus, the assessment had prescribed. The court further agreed with SARS’ argument that the relief sought by the Applicant was not competent, as the relief sought did not set aside the court order and writ of execution previously granted. The court dismissed the Applicant’s application with costs.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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