The judgment deals with an application for rescission of a judgment by Barnard Labuschagne (Applicant), where SARS took judgment under the provisions of chapter 11 of the Tax Administration Act (TAA).
SARS filed a certified statement in terms of Section 172 of the TAA with the Registrar of the Court, setting out an amount of liquid debt due by the Applicant in respect of PAYE, VAT, UIF and SDL, and payable to SARS.
The Applicant is a law practice in the Western Cape and brought an application to rescind, based on various contentions. Over an extended time, the Applicant had various issues with incorrect allocations of taxes paid to the correct accounts. The dispute occurred over the years, and it was evident that the Applicant left this dispute unresolved. This occurred various times between 2009 and 2017. SARS had issued penalties and raised interest, and threatened judgment on various occasions. SARS even went as far as to make employees available to the Applicant, to allocate funds correctly. SARS eventually applied for judgment, based on a tax debt owed by the Applicant from the Applicant’s self-assessment.
The Applicant refused to object to the assessment, as it contended that SARS had not issued an objectionable assessment, and stressed that it was entitled to bring these proceedings, in terms of section 105 of the TAA, for a rescission of the judgment granted in terms of section 172 and 174 of the TAA. The Applicant further tested the constitutionality of the sections, if the Court did not find agreement with the Applicant, as these sections would then infringe his to approach a court for relief when a judgment is granted. SARS countered this, stating that the judgment in terms of these sections was not judicially granted, as it lacks determining characters of judicially issued judgments.
In its judgment, the Court refuted the Applicant’s constitutionality arguments, stating that they held no weight. The High Court further confirmed that there must be a civil judgment in existence and that sections 172 and 174 constitute law enforcement mechanisms. These statements can be filed irrespective of whether an objection or appeal is in play, or an amount has been suspended. The benefit to the Applicant. Though. is that it is not a formal civil judgment and cannot be accorded the status of such.
In finality, the Court found that as this is not a civil judgment ordered by a court, one could not follow this route to have the judgment rescinded and as a result dismissed the application for rescission of judgment, and declared that the relevant provisions are not unconstitutional.
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