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If no tax debt, SARS must pay the refund: An interesting judgment about the TAA’s refund provisions
- 16 July 2018
- Tax Administration
- Louis Botha
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Louis Botha
It is often mentioned by taxpayers that in their opinion, the South African Revenue Service (SARS) delays the payment of refunds to taxpayers. In light of this observation, the judgment in Top Watch (Pty) Ltd v The Commissioner of the South African Revenue Service (Johannesburg Case No: 2017/4557 and Pretoria Case No: 2016/90099) (judgment delivered on 12 June 2018) is particularly interesting.
he judgment dealt with the very 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 (Taxpayer), on the grounds that the Taxpayer owed an income tax debt, which SARS alleged was due and payable.
Facts
The Taxpayer claimed that VAT refunds were due to him in respect of the 2014/02, 2014/07, 2014/08 and 2017/07 VAT periods. However, in respect of the 2017/07 VAT period, SARS alleged that no refund was due, but that the Taxpayer owed an amount that the Taxpayer had paid on 29 September 2017. It is common cause that even though SARS concedes that the VAT refunds for the 2014/02, 2014/07 and 2014/08 VAT periods are due and payable, it refuses to authorise payment of the refunds.
Pretorius, a legal specialist employed by SARS, deposed to an affidavit in which he alleges that the Taxpayer has been assessed for an income tax liability of approximately R1.76 million, which far exceeds the refund amounts due to the Taxpayer. To substantiate this allegation, Pretorius relies on the supporting affidavit of Oberholzer, a SARS operational specialist, who says that between 25 November 2016 and 8 March 2018, he audited the Taxpayer for income tax in respect of the March 2012 – February 2015 period and concluded that the Taxpayer owed the amount of approximately R1.76 million. To substantiate this allegation, Oberholzer cites a document attached as POC1, which the court noted is almost illegible. During argument, the court was told that the document is an extract of SARS’ accounting data system of which the heading read “Assessed account – remittance data view”.
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This article first appeared on cliffedekkerhofmeyr.com.