An analysis of challenging the commissioner's discretionary powers invoked in terms of Section 74A and 74B of the Income Tax Act 58 of 1962, in light of the Constitution of the Republic of South Africa 108 of 1996.
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Date
2013
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Abstract
This thesis deals with the relevant law up to 30 September 2012.
This thesis analyses the inter-relationship in particular between ss 1(c), 33, 41(1),
195(1) and 237 of the Constitution of the Republic of South Africa (‘the
Constitution’) (collectively referred to as ‘constitutional obligations’); s 4(2) of
the South African Revenue Service Act 34 of 1997 (‘SARS Act’); the Promotion
of Administrative Justice Act 3 of 2000 (‘PAJA’); and a decision by the
Commissioner for the South African Revenue Service (‘the Commissioner’ or
‘SARS’, as the case may be) to exercise his powers under ss 74A and 74B of the
Income Tax Act 58 of 1962 (‘ss 74A and 74B of the Income Tax Act’) by
requiring taxpayers to produce or provide information, documents and things at
the commencement of an inquiry or audit of taxpayers, and concludes that such a
decision constitutes ‘administrative action’ as defined in s 1 of PAJA, or,
alternatively is subject to the constitutional principle of legality. This conclusion
is reached on the basis that such a decision, of an administration nature made, or
leading to a further decision proposed to be made, or required to be made, to issue
revised assessments will:
· have been taken by an organ of State exercising a public power in terms of
legislation;
· involve the exercise of a discretionary power, where SARS determines
whether and in what circumstances it will require a taxpayer to provide
information, documents and things;
· adversely affect taxpayers’ rights, and has a direct, external legal effect.
The fact that the power in question is preliminary and investigative, and
that its exercise does not in itself determine whether any tax, penalties and
interest is payable, does not detract from the impending conclusion usually
made by the same SARS officials that tax, penalties and interest will most
likely become payable following from the preliminary investigation. The
decision imposes on taxpayers an obligation to do something (to produce
or provide information, documents and things) which, but for the exercise
of that power, taxpayers would not in law be obliged to do, due to
taxpayers’ privacy rights in terms of s 14 of the Constitution, and entitling
them to expect SARS to abide by its constitutional obligations. A failure
by taxpayers to comply exposes them to criminal prosecution under s
75(1)(b) of the Income Tax Act. Furthermore, the power exercised by
SARS is not subject to the normal objection and appeal processes in the
Income Tax Act, limiting the opportunity for taxpayers to challenge such a
decision in terms of the Income Tax Act.
Lastly, there is no relevant exclusion in the definition of ‘administrative action’
that removes this type of decision from that definition in PAJA.
Description
Ph. D. University of KwaZulu-Natal, Pietermaritzburg 2014.
Keywords
South Africa.--Income Tax Act, 1962., Income tax--Law and legislation--South Africa., Taxation--Law and legislation--South Africa., Constitutional law--South Africa., Theses--Law.