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Kadodia v CSARS 75 SATC 313

17 April 2013   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Introduction

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. 

Facts

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 Post.

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 May 2002.

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.

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.

Held

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. 


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