CSARS v Saira Essa Productions CC.docx

CSARSvSairaEssaProductionsCCTHESUPREMECOURTOFAPPEA1.0ISOUTHAFRICAJUDGMENTCaseno:162/10Inthematterbetween:THECOMMISSIONERFORTHESOUTHAFRICANREVENUESERVICEAppellantandSAIRAESSAPRODUCTIONSCC1stRespondentSAIRAESSA2ndRespondentMARKCOR1.ETT3rdRespondentNeutralcitation:TheCommissionerfortheSARevenueServicevSairaEssaProductionsCC(162/10)2010ZSCA154(30November2010)Coram:HARMSDP,NUGENT,C1.OETE,MYAANDTSHlQlJJAHeard:17November2010Delivered:30November2010Summary:SmallBusinessTaxAmnestyandAmendmentofTaxation1.awsAct9of2006whethertherespondentsweregrantedamnestyfromcriminalprosecutionwhethertheregionalcourtshouldhaveinterruptedcriminalproceedingspendingadeclarationorderbytheHighCourt.ORDEROnappealfrom:NorthGautengHighCourt,Pretoria(PotterillJsittingascourtoffirstinstance):1.Theappealisupheldwithcosts,includingthecostsoftwocounsel.2.Theorderofthecourtbelowissetasideandissubstitutedwiththefollowing:1.Theapplicationisdismissed.2.Theapplicantsareorderedtopaythecostsoftheapplicationonanattorneyandclientscale,includingthecostsoftwocounsel,jointlyandseverally.JUDGMENTTSHIQIJ(HarmsDP,Nugent,CloeteandMayaJJconcurring):1ThisisanappealagainstanorderintermsofwhichtheNorthGautengHighCourt,Pretoria(PotterillJ)declaredthattherespondentshaddulycompliedwiththeirobiigationsundertheSmallBusinessTaxAmnestyandAmendmentofTaxation1.awsAct9of2006(theAct)andwereaccordinglyexemptfromprosecutiononchargespendingagainstthemintheregionalcourt,Gcrmiston.TheapplicationwaslaunchedafterthecriminalproceedingsWerepostponed,byagreement,toenabletherespondentstoapproachtheHighCourtforadeclaratoryorderonwhethertherespondentsqualifiedforamnestyagainstprosecutionwithregardtothependingcriminalcharges.Theappealisbroughtwithleaveofthecourtbelow.2Thectcameintooperationon25July2006.ThepurposeoftheActwastoencouragesmal1businesseswhichwerenotregisteredfortaxandthosewhichwereregistered,butwherebusinessincomefortheyearsprecedingthe2006yearofassessmenthadnotbeendeclaredorwasunderstatedoroutstanding,todeclaretheirincomeandapplyforamnesty.Intermsofs8(c),taxpayerswereentitiedtoreiefforpaymentofanyVATintermsoftheVATActinrespectof(interalia)anysupplyofservicesduringthequalifyingperiodsieupto28February2006.Thereliefwas,however,subjecttocertainexclusionsintermsofss5(2)and10（八）oftheAct,whichprovideasfollows:5(2)TheCommissionermaynot,subjecttosubsection，approveanapplicationintermsofsubsection(1)iftheCommissioner,atanytimebeforethesubmissionoftheapplicationfortaxamnesty,deliveredanoticetothatapplicantorthatapplicant*srepresentativeinformingthatapplicantofanaudit,investigationorotherenforcementactionrelatingtoanyfailurebythatapplicanttocomplywithanyActinrespectofwhichapplicationfortaxamnestyismade.(Subsection5(4)isirrelevantforpresentpurposes.)10Thetaxamnestyreliefdoesnotapplyinrespectofanyamountoftax,levy,contribution,interest,penaltyoradditionaltax,totheextentthatit（八）hadalreadybeenpaidbeforethesubmissionoftheapplication3Intermsofs5oftheSecondSmallBusinessTaxAmnestyandAmendmentofTaxation1.awsAct10of2006(SecondAmnestyAct),anapplicantwhoseapplicationforamnestyhasbeenapprovedintermsofs5isdeemednottohavecommittedanoffenceintermsofanyActtowhichtheamnestyActrelates.Consequentlysuchapersonwouldnotbe1iableforcriminalprosecution.1Twopertinentissuesariseinthisappeal.ThefirstisajurisdictionalissueanditiswhetherthecriminalproceedingsintheregionalcourtshouldhavebeensuspendedpendingthedeterminationofthequestionoflawbytheHighCourt.Thesecondpertainstothemeritsoftheordergrantedbythecourtbe1ow.Ishal1dealwiththesecondquestionfirst.5Thesecondrespondent(MsEssa)andthirdrespondent(MrCorlett)arehusbandandwifeandjointmembersofthefirstrespondent,SairaEssaProductionsCC(theCO.MsEssaisanactressandproducerandusestheCCasavehicletocarryonbusiness,thebulkofwhichcomprisesofservicesrenderedtotheSouthAfricanBroadcastingCorporation.6InJuly2003,SRScommencedWithcriminalinvestigationsagainsttherespondentsfornon-paymentofPYE,underdeclarationofVTandnon-filingoftaxreturnsforthe2003/2004taxyears.On11August2004,therespondentsweredulynotifiedabouttheinvestigationsandwereaffordedanopportunitytoliaisefurtherwithSARSwithaviewtosubmittingalloutstandingreturnsandforadiscussionofpossiblecriminalchargesarisingoutoftheinvestigations.Inresponsetothisletter,therespondentssubmitiedtherelevanttaxreturns.TheysubsequentlybetweenAugust2004andSeptember2005paidthemoniesduetoSRSforVATandalsopaidadmissionofguiltfinesinrespectofPAYE.SRSproceededwithcriminalchargeswithregardtotheVT.Itisthesechargeswhichformedthesubjectmatteroftheapplicationinthecourtbelow.7From12September2005,therespondentsmadeatleastsevenappearancesintheregionalcourt,Germiston,beforetheproceedingswerepostponedpendingtheapplicationbeforetheHighCourt.ThemagistrateagreedtopostponethecriminalproceedingsbecausetheActhadinthemeantimecomeintooperationon25July2006.TherespondentslegalrepresentativereferredthemagistratetotheAct.ThemagistrateindicatedthatitwasnotcleartohimwhethertherespondentscouldrelyontheActtoescapeprose