CDC (Pty) Ltd v CSARS (SARSTC 2020/95)

Facts

The South African Revenue Service, (“SARS”), raised an additional assessment disallowing an assessed loss of the appellant, CDC (Pty) Ltd, (“CDC”).  The additional assessment reduced the assessed loss of R38,587,720 carried forward from the 2011 year of assessment to Nil.  The appellant filed a notice of objection in response to the additional assessment by SARS.  SARS disallowed the objection.  The appellant sought to appeal the objection and attempted to file a Notice of Appeal, (“NOA”), on 22 July 2016 together with supporting documents.  SARS did not file a rule 31 statement in terms of the Dispute Resolution Rules. The appellant made an application for a default judgment to be granted to allow the assessed loss in terms of rule 56 of the Dispute Resolution Rules, on the premise that SARS defaulted on its obligation to file a rule 31 statement.  SARS made an application to file a supplementary affidavit to prove that the appellant did not deliver its grounds of appeal as envisaged under rule 10(2) of the Dispute Resolution Rules, or that the NOA was defective.  The appellant opposed the application to file a supplementary affidavit by SARS.

Issues

As can be discerned from the aforegoing, the issue can be summarised as follows:

Issue 1: Whether SARS could file a supplementary affidavit.

Issue 2: Whether or not the appellant had filed an NOA in compliance with rule 10(2) of the Dispute Resolution Rules, or if there is a valid NOA before SARS.

Issue 3: Whether the appellant is entitled to the final relief in the form of a default judgment because SARS did not file a rule 31 statement in terms of the Dispute Resolution Rules.

Finding

Regarding issue one, the respondent’s application for filing of a supplementary affidavit was successful.  The applicant, i.e CDC could not show any perceived prejudice.  SARS however did put forth an argument that if the supplementary affidavit is not admitted, it will not be in a position to ventilate its defence properly, and that might lead to it being prejudiced.  The prejudice also extends to the public at large.

Issue two hinged on whether or not the appellant filed an NOA, or whether there was a valid NOA before SARS.  After inspection of supporting documentation submitted by the appellant to SARS on 22 July 2016 as well as the correspondence between the appellant and SARS, it was found that the NOA  on 22 July 2016 did not contain the necessary information as stipulated in rule 10(2) of the Dispute Resolution Rules.  Rule 10(2)(c)(ii) of the Dispute Resolution Rules provide that a valid NOA should have detailed grounds for disputing the basis of the decision to disallow the objection.  Even though an undated document, named “Memorandum” was attached as “Annexure D” in the rule 56 application, the appellant could not prove that it was filed with the NOA submitted on 22 July 2016.  The respondent could however prove that the “Memorandum” with the detailed grounds was not submitted on 22 July 2016, and therefore correctly believed at all material times the appellant failed to deliver a valid NOA in the prescribed manner within 30 days after delivery of the notice of disallowance or within the extended period granted by SARS.

When the court addressed issue three, it concluded that the respondent had shown good cause that it had never defaulted by not filing rule 31 statement as provided for in the Dispute Resolution Rules, because there was no NOA before it. 

The application was dismissed with costs.

Find a copy of the court case here.

21/01/2022