Power of debt recovery abused
SARS: HIGH COURT JUDGMENT IN FAVOUR OF TAXPAYER
Taxman ordered to repay R1.3 million to plaintiff.
from the taxpayer’s bank account. On that day, the taxpayer lodged an objection and requested a suspension of payment until the objection had been finalised. However, the amount had already been taken from the taxpayer’s bank account.
In terms of the Tax Administration Act (TAA), a final letter of demand must be delivered to the taxpayer at least 10 days before the issue of a third-party notice.
However, according to the taxpayer, Sars had not issued any letter of demand. Not on eFiling, nor by e-mail, post or physical delivery. The taxpayer took a screenshot of their eFiling profile showing no letter of demand, which was rendered as proof to the court.
On calling the Sars employee whose name appeared on the third-party appointment letter to Standard Bank, the taxpayer was informed that Sars had sent three letters of demand. However, none of these letters of demand had been received by the taxpayer, nor had they been uploaded onto the taxpayer’s eFiling profile.
Judgment
In the judgment handed down by the High Court on 30 April, 2020, the court found that:
The Sars official’s account of how the final demand letters were sent varies in the affidavit she deposed. In one paragraph, she claimed she “sent” the letters of demand, in another she said these are system-generated.
Sars could not produce an affidavit deposed by any official who had personal knowledge that the letters of demand were on the taxpayer’s eFiling profile. All that Sars could show was that the letters of demand were created on the dates reflected, but not correctly submitted to the registered user and “delivered”, per the Rules for Electronic Communications issued in terms of the TAA.
Sars had not delivered a letter of demand to the taxpayer. The stated letter (which Sars in any event cannot show was delivered to the taxpayer) was issued before the final due date of payment.
Further, there was no outstanding debt on the day that Sars issued the so-called final demand.
The court found the paragraphs regarding who actually sent the letters were contradictory.
It should have been relatively simple for Sars to furnish proof that the letter of demand appeared on the eFiling system. But Sars didn’t.
The third-party notice issued to Standard Bank was unlawful and declared null and void.
Sars was ordered to repay the amount of R1.3 million to the taxpayer, together with interest, as well as the taxpayer’s costs.