Kadodia v CSARS 75 SATC 313
17 April 2013
Posted by: Author: SAIT Technical
Author: SAIT Technical
The Kwazulu-Natal High Court heard the matter between Mohamed Essop
Kadodia ("applicant”) and the Commissioner for SARS ("respondent”) on
2 April 2013. HA de Beer AJ delivered the judgment on 5 April 2013.
This matter was an application for rescission of a default judgement,
granted in favour of the respondent being the Commissioner of South African
Revenue Services, against the applicant, Kadodia.
Kadodia, the applicant, is a businessman who imports tobacco products
and cigarettes into South Africa.
The applicant wanted to import 70 cases of Remington Gold Cigarettes
from Zimbabwe into South Africa at the beginning of 2002. South Africa has a
trade agreement with Botswana, Lesotho and Namibia ("BNLS countries”) in
terms of which goods imported into South Africa only attract VAT and not
customs duty. Zimbabwe is not a signatory to this agreement.
The applicant was advised to route the intended
cargo into South Africa thereby avoiding customs duty.
When the applicant subsequently sought to import the goods from Namibia
into South Africa, the goods were seized and impounded at the Nakop Border
The applicant was requested the produce proof of payment of the duties
payable in terms of section 102 of the Customs and Excise Act before 12:00 on 8
SARS advised the applicant, in a hand-delivered letter, that there had
been an underpayment of VAT and customs duty amounting to R171 731.01.
The applicant’s attorney responded to the SARS letter on 4 May 2002 and
effectively admitted that the applicant had contravened the Act. The attorney
proposed that the goods be sold to offset the amounts claimed or to release the
goods the applicant so that he can dispose of it and thereafter pay the debt to
SARS replied on 15 May 2002 and rejected the applicant’s proposals as
the Act did not allow SARS to do so. The Act provides for various dispute
resolution mechanisms which the applicant did not use (in any event, the
applicant had admitted full liability for the SARS claim).
The matter went dormant for five years in which time neither party took
any further steps. During July 2007, SARS sent a final demand for the payment
of the outstanding VAT, duties and penalties. Attention was drawn to section
114(1)(a)(ii) which empowers SARS to file a statement with the Registrar of the
High Court and obtain a judgment in terms thereof.
The matter went dormant again for a period of four and a half years
until June 2012 when SARS lodged a statement in terms of 114(1)(a)(ii) with the
Registrar of the High Court.
In order to succeed, the applicant must establish the following:
(a) He must give a reasonable explanation for his default.
(b) His application must be bona fide.
(c) He must show that he has a bona fide defence to the claim of SARS
which, prima facie, has some prospect of success.
It was held that even if accepted that the applicant acted bona fide, it
does not amount to a bona fide defence in view of the applicant’s unequivocal
admission that he owes the amount to SARS.
In Saphula v Nedcor Ltd 1992 (2) SA 76, it was held that the object of a
rescinding judgment is to "restore a chance to air a real dispute”. It was
held that there was no dispute in the present matter.
The application was
dismissed with costs.
Please click here to download the full judgment.