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If no tax debt, SARS must pay refund: notable judgment on Tax Administration Act's refund provisions
- 13 August 2018
- Tax Administration
- Louis Botha
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Louis Botha (Cliffe Dekker Hofmeyr for International Law Office)
Introduction
Taxpayers often claim that the South African Revenue Service (SARS) delays the payment of refunds. In light of this observation, the judgment in Top Watch (Pty) Ltd v The Commissioner of the South African Revenue Service is particularly notable.(1)
The judgment dealt with the pertinent and relevant issue of whether the respondent, SARS, was legally justified in refusing to pay certain value added tax (VAT) refunds to the applicant (the taxpayer) on the grounds that the he owed an income tax debt, which SARS alleged was due and payable.
The taxpayer claimed that VAT refunds were due to him in respect of the February 2014, July 2014, August 2014 and July 2017 VAT periods. However, in respect of the July 2017 VAT period, SARS alleged that no refund was due; instead, it held that the taxpayer owed an amount. Although SARS conceded that the VAT refunds for the February 2014, July 2014 and August 2014 VAT periods were due and payable, it refused to authorise payment of the refunds.
Pretorius, a legal specialist employed by SARS, deposed to an affidavit in which he alleged that the taxpayer had been assessed for an income tax liability of approximately R1.76 million, which far exceeded the refund amounts due to the taxpayer. To substantiate this allegation, Pretorius relied on the supporting affidavit of Oberholzer, a SARS operational specialist, who stated that he had:
- audited the taxpayer between 25 November 2016 and 8 March 2018 for income tax in respect of the March 2012 to February 2015 period; and
- concluded that the taxpayer owed approximately R1.76 million.
To substantiate this allegation, Oberholzer cited a document attached as POC1, which the court noted was almost illegible. During argument, the court was told that the document was an extract of SARS's accounting data system of which the heading read "Assessed account – remittance data view".
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This article first appeared on internationallawoffice.com.