Tax Court condones Sars’ tardiness

The South African Revenue Service (Sars) frequently fails to meet the required time limits prescribed in the rules promulgated under Section 103 of the Tax Administration Act (TAA).

In February, the high court considered the delays by Sars in providing a taxpayer with the grounds for additional assessments (Rule 31 statement) so egregious that it voided the assessments and costs were awarded against Sars.

But Judge Leoni Windell, in a different matter, handed down a Tax Court judgment on 10 May finding that missing a deadline by a month was “a short period” and condoned Sars’s failure to deliver the Rule 31 statement timeously.

The taxpayer had applied for a default judgment in terms of Rule 56(1) of the TAA, to have Sars’ understated penalty (USP) assessments set aside, after Sars had failed to deliver its grounds of assessment in opposing the taxpayer’s appeal. Sars had raised USP assessments of R175 million.

Sars in turn filed for a condonation of its failure to deliver the Rule 31 statement timeously.

The court found that Sars “was only in default for filing its Rule 31 statement for a short period of time”.

The delay was not as a result of any noncompliance on the part of Sars, but as a result of the conduct of Sars’s attorney and counsel. Counsel for Sars had tested positive for Covid on 28 June, 2021, and had difficulty in filing the Rule 31 statement electronically on 20 July, 2021.

The “court will be loath to close the doors of the court” to a litigant where the blame on the part of the legal representative is “slight” and the “prejudice to the litigant would be severe”.