Case Law - Medtronic International v CSARS (Case No: 33400/19)

Case Law - Medtronic International v CSARS (Case No: 33400/19)

• 28 February 2020
• Tax Administration
• SARS

Summary - record of review proceedings is still to be determined by relevance. Relevance is not dependant upon the pleaded issues in the initial review application. Relevance remains to be determined by the decision sought to be reviewed.

JUDGMENT

[1] The Applicant was the victim of a fraud perpetrated upon it by one of its employees to the approximate tune of some R460,000,000.00. This fraud has culminated in a preservation order against the perpetrator and related entities in terms of Section 26 of the Prevention of Organised Crime Act. An unfortunate effect of the fraud was that it placed the Applicant on the wrong side of the law vis-a-vis the respondent. In order to regularize its tax affairs, the Applicant applied for and was granted relief in terms of the Voluntary Disclosure Programme ("VDP") of the respondent as provided for in section 225 to 233 of the Tax Administration Act ("the TAA"). As a result of the granted relief in terms of the VDP, the parties entered into a written voluntary disclosure agreement dated 14 June 2018 ("the agreement").

[2] Subsequent to entering into the agreement, the applicant applied to the respondent for a remission of interest as provided for in Section 39(7)(a) of the Value Added Tax Act as read with the respondent's Interpretation Note 61 dated 29 March 2011. The request for the remission of interest liability was not acceded to by the respondent. An objection was raised on behalf of the Applicant on 10 December 2018 to the refusal to accede to the request for remission of interest liability, which objection was refused on 25 March 2019 on the basis that " .. . as the agreements entered into between the Commissioner and the respective Taxpayers remain in force, the Commissioner cannot consider the request for the remission of the interest levied."

[3] As a consequence of the aforesaid refusals, the Applicant launched review proceedings in terms of sections 6(2)(d), 6(2)(e)(iii), 6(2)(f)(ii), 6(2)(g) and 6(3) of the Promotion of Access to Justice Act7 ("PAJA"), alternatively the principle of legality, the common law and section 33 of the Constitution of the Republic of South Africa Act as read with Rule 53 of the Uniform Rules of Court ("the Rules"). Consequent upon the launching of the review application, the respondent's attorneys informed the applicant's attorneys on 6 June 2019 that the respondent had dispatched the record of proceedings ("the record") to the registrar of this court as contemplated by rule 53(1)(b) of the Rules. The applicant and its legal representatives, after having perused the record, formed the opinion that the record does not comply with rule 53(1)(b) of the Rules in that it "failed to contain the record of the proceedings relevant to [the respondent's] decision sought to be reviewed and set aside by [the applicant] in the main application, such as internal memoranda, directives, policy documents, records of deliberations and minutes of meetings."

[4] The respondent's attorneys informed the applicant's attorneys that he respondent is only "in possession of emails and other internal correspondence with its legal advisors relating to the issue of remission of interest. The purposes served by such emails and other internal correspondence was to provide legal advice to our client on the disputed issue." As a result, the respondent asserted its right to claim legal professional privilege in relation to the advice it received from its legal advisors. The respondent further adopted the stance that the documents constitute the respondent's confidential information as contemplated by Section 68(1)(b) and/or 68(1)(e) of the TAA.

[5] The deemed failure resulted in the applicant causing a rule 30A(1)10 notice to be served upon the respondent, calling upon the respondent to dispatch, in compliance with rule 53(1 )(b) of the Rules: 

"1. all records, including internal memoranda, directives, policy documents, records of deliberations, minutes of meetings and any other documents relating to its decision which are sought to be reviewed and set aside in this application; and

2. a detailed index of the documents sought to be excluded form the record of its discussions and such reasons as the respondent is required by law to give, or desires to make, to justify such exclusion."

[6] The respondent did not respond to the rule 30A(1) notice. The respondent contends that due to the fact that the respondent had not failed to comply with the provisions of rule 53(1)(b) of the Rules, there was no need to remedy any alleged noncompliance. The respondent's stance in this regard gave rise to the present Rule 30A(1 )(a) of the Rules application. The stance by the respondent gave rise to this Rule 30A(1 )(a) application to compel compliance with the provisions of rule 53(1 )(b) of the Rules.

[7] The applicant, fortified by the now locus classicus of what should be contained in a review record, persisted with the fact that the respondent must comply with the provisions of rule 53(1)(b). The stance on behalf of the applicant in this regard, during argument was that the respondent elected to i. provide an initial record and ii. allege that various emails exist which it had excluded from the record for reasons of legal professional privilege and confidentiality, and as such the record should be amplified by the respondent as contemplated by rule 53(1 )(b) as interpreted in the Helen Suzman-judgment. It was submitted on behalf of the applicant that it matters not that the respondent's decision is based on a question of law only. It was further submitted that I should "put on my record blinkers" and ignore the issue of whether the documents sought in terms of rule 30A will be relevant to the review application.

This judgment first appeared on sars.gov.za.

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