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G.W. van der Merwe (and 12 others) v CSARS

05 March 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical


The Western Cape High Court delivered its judgement in the matter between GW van der Merwe (and 12 others) v CSARS on the 17th of February 2014. The applicant made an application to the High Court for a temporary interdict to be issued to prevent the respondent (the South African Revenue Service) from commencing with an inquiry in terms of Part C of Chapter 5 of the Tax Administration Act (No. 28 of 2011) (hereinafter referred to as ‘the TAA’) pending the final outcome of an application to have the inquiry order set aside, or alternatively, to declare the relevant provisions of the TAA which may authorise such an inquiry notwithstanding the fact that civil and/or criminal proceedings having commenced, being declared unconstitutional and invalid.


A joint operation between SARS and the Scorpions, have led to the arrest of GW van der Merwe in 2004 for eleven counts of fraud for the fraudulent sale of shares in two companies. Subsequently, SARS applied for an inquiry order in terms of Chapter 5 Part C of the TAA which was granted by Davis J in terms of a court order made on the 11th of December 2013. In addition GW van der Merwe is facing charges relating to tax evasion in the form of an under-declaration of income and fraudulent VAT claims.

Section 51(1) of the TAA provides the following:

‘(1)     A judge may grant the order referred to in section 50(2) if satisfied that there are reasonable grounds to believe that-

                 (a)     a person has-

                          (i)      failed to comply with an obligation imposed under a tax Act; or

                          (ii)     committed a tax offence; and

                (b)     relevant material is likely to be revealed during the inquiry which may provide proof of the                                   failure to comply or of the commission of the offence.’

In deciding whether an interdict should have been issued against the inquiry order on the grounds of ‘pending’ civil or criminal proceedings, the court had to consider the meaning of ‘pending’.

The applicant argued that the word ‘pending’ means ‘about to happen’ and does not include proceedings which have in fact commenced. The court however referred to the definition of ‘pending’ in the Shorter Oxford English Dictionary as ‘Remaining undecided, awaiting settlement’ which definition is similar to the definition provided in various other dictionaries.

Subsequent to the granting of the inquiry application SARS refused to give the applicants access to the court file. The applicant has also attempted to attack the constitutionality of section 58 of the TAA which holds the following:

‘… Unless a court orders otherwise, an inquiry relating to a person referred to in section 51 (1) (a) must proceed despite the fact that a civil or criminal proceeding is pending or contemplated against or involves the person, a witness or potential witness in the inquiry, or another person whose affairs may be investigated in the course of the inquiry.’


The court held that the word ‘pending’ should not be viewed in isolation and should be considered having a regard to the section as a whole.  The court held that ‘pending’ in terms of section 58 of the TAA means that an inquiry must continue even during civil or criminal proceedings unless a court orders otherwise. The court held that the answer to the applicant’s application is two-fold: firstly the attack on the constitutionality of the provision turns on the interpretation of the section and not on the contents of the court file; and secondly the interpretation contended for has no prospect of being upheld. In consequence, the application for access to the court file cannot succeed.

The application was dismissed with costs for which the applicants will be liable jointly and severally for the respondent’s costs and such costs are to include the costs of the two counsel.

Please click here to access the full judgement


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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