Date of hearing: 24 April 2020
Date of judgment: 29 April 2020
M M Lingenfelder A J
1. In this application the applicant asks for declaratory relief, namely that the respondent’s notice to appoint a third party in terms of the provisions of sec 179 of the Tax Administration Act, 28 of 2011, as amended be set aside and declared null and void; and that the respondent is ordered to repay to the applicant the amount of R1 261 007, 00 which was paid over by the third party to the respondent in terms of the notice together with interest.
2. The applicant relies on various grounds for the relief sought. The applicant contends that no letter of demand was delivered prior to the issue of the third party notice as required by sec 179 of the Act. If the court should find that such a letter or letters were delivered, the applicant contends that the letters were either pre-mature as the tax debt was not yet payable at the time, or the 10-business day period prior to the issue of the third party notice had not yet expired by the time that the notice was in fact delivered.
3. The respondent contends that a valid letter of demand as required by the Act was delivered. The respondent relies on the letter of demand dated 7 November 2019 as a final letter of demand that was delivered to the applicant.
4. The applicant is a well-established construction company who has been in business for 36 years and is a registered taxpayer with an e-filing profile. In June 2019 a tax assessment was issued in terms whereof the respondent owed the applicant a refund amount of approximately R1,6 million. The respondent then chose to verify the assessment and requested certain additional documents. These documents were never furnished, and as a result an additional assessment was then issued by the respondent in terms whereof the previous assessment was reversed, and the applicant was assessed to owe the respondent an amount of R1 233 231.00. This assessment was uploaded on the applicant’s e-filing profile, but due to no fault on the side of the respondent, it did not come to the applicant’s notice.
5. The additional assessment complied with the requirements set out in the Act and the validity of the assessment is not in dispute for purposes of this application. The date for payment of the amount by the applicant as required by sec 96(f) is reflected on the assessment as 30 September 2019.
6. The applicant’s accountant. Mr. Abrahamson, who is the deponent to the founding affidavit, states that he first became aware of the additional assessment on 6 February 2020. On this day the applicant informed him that Standard Bank had received notification to pay an amount of R1 262 007.00 over to the respondent from the applicant’s bank account. He then scrutinized the applicant’s e-filing profile and became aware of the additional assessment of 9 October 2019. There was no letter of demand to be found on the e-filing profile of the applicant, pursuant to the non-payment of the assessed amount. A copy of a screenshot of the applicant’s e-filing tax profile is annexed to his affidavit as Annexure DA 7. This annexure reflects the correspondence uploaded by the respondent on the applicant’s e-filing profile.
7. He immediately lodged an objection against the assessment, applied for condonation for the late-filing of the objection and applied for suspension of payment of the amount assessed until finalization of the objection. However, the funds had already been removed from the applicant’s bank account and paid over to the respondent.
8. Mr. Abrahamson managed to contact the SARS official whose name was reflected on the third party appointment letter to Standard Bank, Mrs. Tati, telephonically on 7 February 2019. She advised him that 3 letters of demand were sent before the third party appointment letter was issued, namely on 7 November 2019, 11 November 2019 and 22 January 2020. She forwarded copies of these 3 letters to Mr. Abrahamson on this day.
9. Upon an enquiry from Mr. Abrahamson as to where these letters can be found on the applicant’s e-filing profile, she stated that “the final demand show on the SARS e-filer view”. Mr. Abrahamson is adamant that none of these letters were sent to either him or the applicant or loaded onto the applicant’s e-file profile. What is of importance is that none of the 3 letters referred to by the respondent, appears on the e-filing profile Annexure DA 7.
10. The next day Mr. Abrahamson contacted a Mrs. Cambell, an employee of the respondent at their call centre, to ascertain where he could locate the letters on the applicant’s e-filing profile. Mrs. Cambell advised him that there was no letter of demand uploaded on the applicant’s e-filing profile. He was given a reference number for this call and challenged the respondent in the founding affidavit to obtain a transcription of this phone call, as he was aware that all calls to the call centre were recorded. The respondent does not deal with the telephonic discussion with Mrs. Campbell in its replying affidavit, safe for making the denial that the contents falls within the deponent’s personal knowledge.
11. The applicant approached its legal advisors and a letter of demand for repayment of the amount paid over by Standard Bank in terms of the third party notice, was sent on 10 February 2020. Nothing came of this demand and the application was launched, initially as an urgent application. The matter was found not to be urgent and postponed to the ordinary opposed motion roll.
SECTION 179 OF THE ACT
12. The notice issued to Standard Bank requiring it to make payment of the amount to the respondent from the applicant’s bank account, was done in terms of the provisions of section 179 of the Act. This section gives a senior SARS official the authority to issue a notice to a person who holds or will hold any money for a taxpayer, requiring the person to pay the money to SARS in satisfaction of the taxpayer’s outstanding tax debt.
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This article first appeared on sars.gov.za.
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