BURS gets P78m tax claim
Mpho Mokwape | Monday May 9, 2022 06:00
The lower court judge at the time allowed the review of the tax claim after agreeing with the judicial manager that BURS acted in bad faith by imposing a re-assessment and penalties solely based on the bank statements of the company. But now the Court of Appeal justices, Isaac Lesetedi, Justice Daniel Brand and Acting Court of Appeal Justice Lot Moroka in a judgement read out by Justice Lesetedi said the tax agency was right to demand claim because the security company did not allege that there was any fundamental irregularity in the procedure followed in the assessment but the reason was that there had been a long delay by the commissioner dealing with the objection to the tax assessment. “Had that been the case of irregularity, the judicial manager would not have challenged the tax assessment by way of an objection to the commissioner under the tax legislation but would have filed an application for judicial review at that stage,” he said.
Justice Lesetedi explained that there was no doubt that the commissioner indeed took a long time to consider the objections lodged by the judicial manager and that the answer from the commissioner to the applicant’s concern was that she had a lot of other tax assessment objections before her which she had to deal with. He pointed out that there was no evidence before the lower court upon which the reasonableness of that explanation could be tested, let alone disputed. Justice Lesetedi emphasised that it was for the High Court to establish if the security company had exceptional circumstances for it to intervene by a way of judicial review when the decision being sought for review was itself subject to a pending objection. That also include when less radical remedies like an order to compel the commissioner to deal with and determine the objection one way or the other was available to unblock the delay in the utilisation of domestic remedies. “In my view this was a case in which the judicial manager had already chosen to utilise the domestic remedies available and by doing so he acknowledged that was where his remedy lays,” he said.
The judge lastly said BURS ought to have succeeded at the High Court because the taxpayer’s complaint in the final analysis being that he has been assessed to pay too much tax, rarely would a court exercise its judicial review powers when the law gave the tax unit wider powers. He explained that this was because of the comprehensive nature of the internal remedies, the specialised qualifications of the Board of Arbitrators, its wide powers, the inclusion of the High Court and the Court of Appeal in the appellate structures as well as limited nature of taxation appeals. Meanwhile, according to the backdrop of the case, a tax compliance investigation was commenced against Prevailing Securities in 2018 and the company failed to avail all the documentation for taxation.
According to BURS, the investigation ascertained that the company did not declare all the income deposited in the company bank accounts and thereby understated its taxable income over the relevant periods. “It was further established that the company’s income over the periods were understated in the tax returns for both VAT and Income Tax,” said BURS. However the security company denied the allegations saying it had provided all the requisite documents and that it never understated its income. The company then made an application before court after BURS imposed penalties including having to pay a tax amounting to over P56m.