Home » Media » Media Releases » 

Court confirms that false returns may attract administrative penalties and criminal prosecution

Court confirms that false returns may attract administrative penalties and criminal prosecution

11 October 2023 – The Commissioner for South African Revenue Service (SARS), Mr. Edward Kieswetter welcomed the decision of the Supreme Court of Appeal (SCA) to dismiss the appeal of Mr. Ketsise Motloung and Others, with cost.  The Court held that there was no prospect of success.

The matter was initially brought before the court after SARS concluded an audit of the business, which found that the applicants had intentionally submitted nil returns of both Value Added Tax (VAT) and Corporate Income Tax (CIT) for which it was registered with SARS, while they were actively trading and generating an income and incurring expenses.

The SCA’s decision thereby upholds the earlier decision of the High Court in favour of SARS, which confirms the ruling of the Regional Court regarding a case of intentional tax evasion against the applicants.

In the investigation of this matter, SARS found that the information submitted to by the taxpayer was false. SARS proceeded to communicate its findings to the applicants and subsequently issued tax administrative penalties.  The 2nd applicant accepted the findings and penalties communicated by SARS but contested referral of the matter to be prosecuted criminally. The applicants contended that this amounted to double jeopardy and the provisions of the Tax Administration Act were unconstitutional for permitting the applicants to be charged twice, administratively and criminally for the same offence. The courts found no merit in the argument and ruled in favour of SARS after which, the applicants then approached the SCA.

SARS Commissioner Edward Kieswetter has lauded the decision of the courts in this matter. “Many taxpayers abuse the system by submitting nil or false returns, whilst masking the true activities of their business. The decision by the courts has confirmed that this intentional practice is in fact not only a civil offence, but a crime.”     This finding underpins the meticulous investigations undertaken by SARS into tax evasion by the taxpayers and that it acted correctly to levy an understatement penalty for contravention and the subsequent referral to prosecution for criminal acts against the fiscus. SARS will continue to vigorously pursue those that continue to be willfully non-compliant with the tax laws. This will be done without fear, favour or prejudice.

For further information please contact SARS at [email protected]

To access this page in different languages click on the links below:

Share this page on: