Joseph Nyalunga v CSARS (Case No: 90307/2018)

Joseph Nyalunga v CSARS (Case No: 90307/2018)

• 23 June 2020
• Tax Administration
• SARS

Heard: 06 February 2020
Delivered: 06 May2020

JUDGMENT

Hughes J

Introduction

[1] The applicant in these proceedings seeks to teview and set aside two decisions made by the respondent five years ago. The first relates to a decision rn an audit finding letter of 3 September 2013 being, 'the audit findings letter'. The second appears in a finalisation otaudit letter of 24 February 2014, 'the finalisation of audit letter'.

[2) The applicant seeks the. aforesaid relief" in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), in the alternative the applicant seeks the relief sought on the basis of legality and non-compliance with the Constitution of the Republic of South Africa (the Constitution).

Background

[3] The applicant a former warrant officer in the South African Police force who retired in 2010 was arrested during 2011 on the N4 Highway near Middelburg. Mpumatanga. At the time of his arrest he was driving his Range Rover Sport wherein a cash amount of R3 280 800.00 was found. The money was seized by the police and the applicant was charged for money laundering and later released on bail.

[4] The applicant was again arrested on 2 March 2012. In a police sting operation, the police searched premises belonging to the applicant and found a cash amount.of R5 846 400.00 in a trunk in his garage together with rhino horns and various weapons. The cash in the sting and two vehicles, a Toyota Fortuner purchased by the applicant at R290 000.00 and his Range Rover Sport purchased in cash for R640 000.00, were seized by the police.

[5] Having been arrested for the second time the applicant was refused bail and was eventually released on 24 March 2014, some two years later. The money and vehicles were forfeited to the state in terms of proceedings brought by the Assets Forfeiture Unit (AFU) in accordance with the Prevention of Organised Crime Act 121 of 1998 (POCA).

[6] On 3 April 2013 and whilst the applicant was still incarcerated an employee of the respondent (SARS) hand delivered a notification of Its intention to audit the applicant, known as an audit letter. This notification sets out which official of SARS, in this case Mr Tsumakf, would be conducting the audit and the scope of such audit. The scope narrated was for 'possible under-declaration of taxable income' to wit the tax period 2009 to-2012. The investigations into the tax affairs of the applicant commenced on 4 April 2013. An audit findings letter dated 3 September 2013 reflecting the tax period 2006 to 2012 was subsequently delivered to the applicant personally on 4 September 2013 by Mr Tsumaki. Relevantly, this audit finding letter sets out the following caution:

'Please note that this letter does. not constitute an assessment as contemplated In the Tax Administrative Act No. 28 of 2011(the MAct"). This letter merely notifies you of our intention to raise an assessment, and our reasons therefore. It also offers you a further opportunity to provide us with any relevant material ttiat may not have been avallable during the audit which could negate the necessity of issuing an assessment. However, if no further documentation is forwarded to this office withfn 21 business days from the date of delivery of this letter, we would proceed in raising the estimate assessment In terms of section 91 and 92 read with section 95 of the TA Act.'

[7] The applicant failed to respond to the notification of audit and even in light of the caution sounded in the audit finding letter. He also failed to provide cany relevant material which resulted In the finalisation of audit letter dated 24 February 2013 being delivered to the applfcant on the very same day. Critically, when the applicant confirmed receipt of this letter he endorsed it as follows:

'I won't be able to respond to SARS on the stated time because I am unable to get any documents because I am still al prison with no ball since March 2012, I will submit some receipts Immediately when I am out from prison. Objection of 30 days won't be made dus to the reason I mentioned.'

[8] The finalisation of audit letter advised the applicant that 'this letter constitutes an assessment as contemplated In the Tax Administration Act No. 28 of 2011(the "Act"), section 92 read with se.ction 95 of the TA Act forthe 2006, 2007 and 2009 years of assessment and section 91 read with section 95 of the TA Act for the 2008, 2010, 2011. 2012 and 2013 years of assessment' and that he had 30 business days to deliver his objection.

[9] It must be pointed out that all these letters, that is, the notification of audit, the audit finding and the finalisation of audit were handed to the applicant personally whilst he was incarcerated. As stated above he was released in 24 March 2014 and an objection was due to be filed by 8 April 2014. SARS submits that the 30-day period to file an objection commence from the applicant's release, then lhe.applfcant had until 7 May 2014 to fife an objection. 

[10] In terms of the recovery process instigated by SARS, a final demand for payment was issued on 24 February 2014, and on 23 June 2014 SARS obtained a tax judgment in terms of section 172 of the Tax AdministratJon Act No. 28 of 2011 for an amount of R15 166 511.89. Subsequently, warrant of execution was issued on 21 January 2016 and instructions to the sheriff to execute were given on 2 Febn,ia,y 2016.

[11] During the course of 2016, March and October specifically, the sheriff attempted to execute the warrant but was unsuccessful. On 14 June 2017 further final demand was sent via the applicant's postaJ address and eventually on 10 April 2018 the sheriff was able to serve the warrant of execution personally on the appllcant at 562 Swartpau Street Hazyview Mpumalanga, being an address where the applicant recorded he resides. However, the sheriff was not able to conduct an attachment.at the residence as he was informed that the movable goods did not belong to the applicant but to a Ms Mathumba.

[12] According to SARS after the sheriff's unsuccessful attachment they followed up with the applicant regarding his outstanding tax returns from August 2018, whence the applicant undertook to visit his nearest SARS office to submit the outstanding returns. Needless to say this did not materialise.

[13] Ultimately, on 18 September 2018 the sheriff successfully attached goods belonging to the applicant and proceeded to advertise a sale by public auction of these goods. This prompted the applicant to bring an urgent application to stay the auction. Hence this review application was launched.

Condonatlon

[14] The applicant sought condonatlon for the late filing of his 'written submissions outside the determined date as agreed upon'. This application was not opposed by SARS as they sought to have the review finalised once and for all.

This article first appeared on sars.gov.za.

Webinar Commentary

For an update on the latest legislative amendments and court rulings access our Monthly Tax Update webinar-on-demand presented by Prof Jackie Arendse here.

0 COMMENTS

LEAVE A COMMENT