SARS WINS R1-BILLION TAX EVASION CASE

Pretoria, Thursday, 28 November 2019 – The South African Revenue Service welcomes the judgment of the Supreme Court of Appeal (“the SCA”) that ended the protracted dispute with Africa Cash & Carry.
 
Some of the key legal principles that the SCA pronounced on, included the powers of the Tax Court to alter assessments under section 129(2)(b) of the Tax Administration Act, 28 of 2011 (“the TA Act”) as opposed to the power to remit the assessment back to SARS in terms of section 129(2)(c) of the TA Act and an interpretation of what SARS’ onus is when it is required to prove that an estimated assessment is reasonable.
 
The judgment of 21 November 2019 comes after an investigation by SARS into the use of sale suppression systems and the manual manipulation of books of account.  The investigation revealed the under declaration of sales and the manipulation of stock figures and resulted in estimated income tax and VAT assessments, which were disputed by the taxpayer.  The Tax Court altered the assessments and the taxpayer exercised its right of appeal to the SCA. 
The SCA upheld the Tax Court order, which inter alia altered the assessments and confirmed SARS’ imposition of 200% additional tax.  The SCA dismissed the taxpayer’s appeal and issued a cost order in favour of SARS.
 
SARS is committed to combat intentional tax evasion. SARS is concerned with the compliance levels within the Cash & Carry industry with a particular focus on “Ooplang” schemes involving “Ghost Exports”, non-recording of the sale of cell-phone airtime, manipulation of loan accounts, claiming fraudulent invoices for VAT and Income Tax purposes, utilisation of intermediary shell companies to create invoices and sales suppression systems.
 
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