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SARS wins court battle against delinquent taxpayer

SARS wins court battle against delinquent taxpayer

Tshwane, 24 July 2023– The Commissioner of the South African Revenue Service (SARS) has welcomed the Supreme Court of Appeal judgment, which dismissed with costs, two appeals against orders of the Gauteng Division of the High Court, Pretoria (case no 543/2021); and the KwaZulu-Natal Division of the High Court, Pietermaritzburg (case no 409/2022).

The first was an appeal against a winding-up order granted against the appellant, PFC Properties (Pty) Ltd (PFC), in favour of SARS, by the Pretoria High Court. The second appeal was against an order by the Pietermaritzburg High Court, in terms of which it dismissed an application to place PFC in business rescue.

The issue before the SCA was whether the conduct on the part of PFC and the De Robillard Family Trust’s trustees in launching the business rescue application, constituted an abuse of court process. The SCA held that that application should not have been considered by reason of its use in a scheme of abuse. The Court held that the business rescue application was a stratagem.

Consequently, the business rescue application could not suspend the liquidation application because the former was tainted by abuse. Apart from this, the De Robillard Family Trust’s trustees failed to make out a case that there was any prospect of rescuing PFC. All its assets had been sold-off and it had lost its substratum. The SCA further held that the liquidation order granted by the Pretoria High Court was unassailable. For these reasons, both appeals were dismissed with costs.

SARS acknowledges that business rescue is an effective mechanism to avoid the collapse of a viable trading company and maintain a healthy economy. In challenging economic times, business rescue becomes even more relevant.

SARS Commissioner Mr. Edward Kieswetter said “it was unfortunate that some taxpayers abuse the business rescue proceedings, to the detriment of creditors. In most instances, the fiscus is the main victim. SARS will continue to act firmly and decisively when business rescue proceedings are abused to the detriment of the fiscus. We will without any equivocation oppose such abusive applications”.

SARS will not stand idle when taxpayers abuse the mechanisms of the Companies Act by acting malignantly to deprive SARS what is due and payable to the fiscus. Any elaborate and carefully calibrated plans to withhold taxes will be resisted emphatically.

SARS will always work in the manner that supports the growth of the economy with concomitant job creation. Where, for whatever reason businesses do not perform optimally and they are unviable, every role player in the process is duty bound to act professionally and without fear, favour or prejudice against any creditors.

For further information, please contact [email protected]

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