Enquiring about inquiries in terms of the Tax Administration Act
22 February 2014
Posted by: Author: Danielle Botha
Author: Danielle Botha (Cliff Dekker Hofmeyer)
On 17 February 2014, judgment was handed down in the Western Cape High Court in the matter of GW van der Merwe & 12 Others v CSARS (unreported judgment, case number 1984-14). The first applicant was Gary van der Merwe (GVM), who is best known for his involvement in the helicopter industry. He ran the Huey Extreme Club which offered joyrides over the Cape Peninsula in a Vietnam-era Bell Huey chopper. GVM was arrested in 2004 in a joint operation between the South African Revenue Service (SARS) and the Scorpions and faced charges relating to the alleged fraudulent sale of shares in two companies, World On-Line Limited and Wellness International Network, respectively. Additionally, he faces charges relating to the alleged under-declaration of income and fraudulent VAT claims. These charges are still being disputed in court.
The present matter related to an authorisation that SARS had
obtained to hold an inquiry in terms of s50 of the Tax Administration Act, No
28 of 2011 (TAA). In terms
of s51(1) of the TAA, a judge may grant
authorisation for an inquiry, if he is satisfied that there are reasonable grounds to believe
that a person has:
(i) failed to comply with an obligation imposed under a tax Act; or
(ii)committed a tax offence; and
relevant material is likely to be revealed during the
inquiry, which may provide proof of the failure to comply or the
commission of the offence.
GVM, his daughter and 11
other applicants who were affected by the inquiry, brought an application requesting
a temporary interdict. The applicants sought an interdict preventing the
inquiry pending a review or declaration that
the provisions of the TAA, which
permit the authorisation of an inquiry nothwithstanding ongoing civil or criminal proceedings, are unconstitutional
and invalid. Additionally, the applicants
sought an order allowing them
access to the court file relating to the authorisation application by SARS, to
allow them to prepare for the requested review.
determining whether the
interdict against the inquiry
should have been granted on grounds of ‘pending’ civil or criminal proceedings,
the court looked at the meaning of ‘pending’ in s58 of the TAA. The court ruled
that the term meant that an inquiry must continue even during civil or criminal
On the second matter relating to access to the court file,
it was common cause that SARS refused to grant the applicants access to the
court file, subsequent to the granting of the inquiry application. The court found,
given that the applicants’ attack
on the constitutionality of the TAA provision turned on the interpretation of
the section and not the contents of the court file and given that the
interpretation contended for had no prospect of being upheld, the application
for the court file could not succeed.
Interestingly, this matter has drawn considerable press
attention, given that preservation orders have been served both on GVM and his
daughter, Candice van der Merwe (CVM),who is the
second applicant in this matter. It is alleged by SARS that certain monies and assets received by
CVM, allegedly for modeling pursuits,
may have been given to her by her father in an attempt to avoid the revenue
authorities. Time will tell whether the inquiry by SARS will yield the results they are hoping for.
This article first appeared cliffedekkerhofmeyr.com.