Applicants in the matter of Mark Lifman and Others v SARS and Others (case number 5961/15; judgement delivered on 17 June) in the Western Cape Division of the High Court applied for an interdict to have various orders against them set aside. These were default judgements obtained by SARS under the provisions of Section 172 of the Tax Administration Act, and comprised warrants of execution and attachment of moveable goods.
The applicants also sought to halt any further action that might have been taken in terms of the default judgements. They had voluntarily declared various amounts of tax outstanding over a number of years. Payment plans had been agreed to, and security caveats registered against the applicants’ fixed properties.
SARS payment deadline
At a meeting in early March 2015, the applicants and their legal team were told that SARS intended to seek civil judgement against them if payment was not forthcoming by the end of the month.
The deadline came and went without payment, and SARS obtained the civil judgements in terms of Section 172 of the Tax Administration Act. It was this order that the High Court was called upon to set aside.
In terms of Section 172, a person who owes tax has to be given 10 business days’ notice before SARS files a certified statement that outlines the debt and states that the amount owed is accurate. In the High Court, counsel for the applicants maintained that SARS had not abided by this stipulation, and a warning letter issued before the March meeting did not constitute the required notice.
He stated that Section 172 had to be read in conjunction with Section 162(1), which provides that the tax must be paid either as a lump sum or in instalments at a place and time determined by SARS. Counsel iterated that the warning letter was insufficient notice and also relied upon the right to property enshrined in the Constitution.
It also was contended that the applicant’s rights under Section 3 of the Promotion of Administrative Justice Act had been breached. SARS countered by saying that the applicants had been fully aware of its demands for some time and that proper notice had indeed been given – not least because the letter of warning had outlined its intention to obtain civil judgement.
Furthermore, neither the form nor content of the notice cited by the Tax Administration Act was specified.
The judge agreed with SARS. The warning letter did constitute sufficient notice in compliance with the Tax Administration Act.
The application for the interim interdict setting aside the default judgement was dismissed.