Income Tax Case No 1868 75 SATC 303
04 February 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
This matter was an appeal
against the decision taken by the respondent, in which the appellant’s objection to the assessments
issued, was limited to the objections as set out in the notice of objection, to the assessment in question.
The appellant, a company, had
been the subject of an audit carried out by the CSARS. The audit had revealed
that the appellant had under-declared and consequently, under-paid value added
tax to the respondent, in terms of Value Added Tax Act 89 of 1991(the VAT Act).
The respondent revised the
assessment and the appellant was thus assessed on tax that consisted of a
capital amount, being understated output tax, additional tax levied on the
capital amount in terms of s 60 of the VAT Act, a penalty levied on the capital
amount in terms of s 39(1)(a)(i) of the VAT Act and interest levied on
the capital amount in terms of s 39(1)(a)(ii) of the VAT Act.
The appellant, represented by
its sole member, had filed a notice of objection on the regulation form ADR 1,
however, the ADR 1 form was incomplete as the box that specifies that a
miscalculation on the assessment in that an amount(s) was taken into
account/not taken into account to determine the liability for tax’ was not ticked.
On the prescribed ADR 1,
nowhere was it mentioned that an objection has been raised against the merger
by SARS, of the appellant’s two entities, and therefore the capital amount and
the assessment itself were incorrectly calculated as the two entities were
treated as one.
The appellant’s first and
second objection, were
directed against the reduction of the additional tax, interest and penalties.
The respondent disallowed the
objection and stated the first reason for such disallowance, as follows:
'No objection to the quantum of
additional vat output raised suggesting your acceptance of these figures.
Revised additional vat assessments raised on the basis of vat invoices issued
and payments received for services rendered’.
Consequently, the appellant filed a
notice of appeal by way of form ADR2 in respect of the disallowance of the
objection and again, there was no mention in the ADR2 that the Appellant was
appealing against the method in which the capital amount had been determined by
SARS or the amount of the capital on which the assessment was based. SARS
argued in its grounds of assessment in terms of Rule 10 of the tax rules that
the appellant did not dispute liability for the capital amount, but the
only amounts of the assessment that the appellant objected to, and appealed ,
were the levying of additional tax , interest and penalty’.
In response, the appellant
filed a notice in terms of Rule 11 which, for the first time stated that, SARS
had included the turnover figures of a related, but different legal entity in
calculating its VAT liability.
court held that the Commissioner could not be ordered to revisit the assessment
in issue and the court in casu could not come to a decision which was contrary
to what the Supreme Court of Appeal had already decided. Where a new ground of
objection had been raised in the Rule 11 statement, which had no bearing on the
objections in ADR 1 and ADR 2 and which the Supreme Court of Appeal had already
ruled on, the court in casu could not refer the matter back to the
Commissioner. The provisions of s 33(3) of Act 89 of 1991 did not apply and
therefore the court in casu could not declare the assessment invalid. The
appeal was dismissed with costs.
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