The Constitution
5.3.6 Access to information
This section deals with the access to information and grants the right of access to any information held by the state and any information held by another person for the protection of any rights.
In the converse situation, it should not be possible for representatives of the Commissioner to be allowed to make use of information to his advantage to which the taxpayer may not have access.
It is not unknown for the representatives of the Commissioner to make use of unreported decisions of the Special Court to which he has access and the taxpayer does not.
M Walpole on page 118 The Taxpayer Vol 6 No 5 writes:
" I have noticed a disturbing readiness on the part of some of the Commissioner's officials to brandish unreported judgements at taxpayers when these support the Commissioner's case. I believe that occasionally the unreported judgement is produced as late in proceedings as in the course of an appeal in the Special Court. Taxpayers are therefore somewhat at the mercy of the Commissioner. They would certainly feel in such circumstances that any trust in 'fair play' is misplaced; and I have yet to hear of cases in which the Commissioner's representative has provided a taxpayer with a case that turned out in favour of the taxpayer. The practice smacks of unfairness and, I would submit, ought to be discouraged."
Corbett JA (as he then was) in Estate Dempers v SIR 39 SATC 95,involving this very issue, expressed the Court's view on the matter on pages 106 and
107:
"... The use in court by the Secretary's representative of unreported judgements, where the consent of the taxpayer has not been obtained, amounts thus, in my view, to a breach of section 4 of the Act either by the representative himself or, when he is not a member of the Department, by
the departmental member who briefed him.To the extent that this has become a practice in the court's dealing with income tax appeals, this court should, in my opinion, state that the practice is not in accordance with the abovementioned secrecy provisions."
I Wilson, a partner at Price Waterhouse Meyernel writes on page 140 of Tax Planning Vol 7 No 6:
" It is submitted that, when the Commissioner intends to place reliance on an unreported case in assessing or attempting to assess taxpayers, he is morally bound to ensure that taxpayers have access to the entire judgement in the case. As a party in every case, he is entitled to a copy of the judgement. But the taxpayer should be the only other party entitled to receive a copy of the unreported judgement. By resorting to unreported judgements the Commissioner denies the taxpayer the opportunity to determine whether the case in question is distinguishable or whether the extract or principle relied upon forms part of the ratio decidendi. Accordingly, in the interests of the proper dispensation of justice, this practice should be discouraged."
In light of the above opinions, it would seem that the practice adopted by the Commissioner's representatives would be contradictory to the spirit of section 32 and section 33 of the Constitution. Moreover, should the Commissioner find himself in the position where he has in his possession documents or information which relate to the taxpayer's affairs and are required by the taxpayer for the protection of his rights under the Constitution, then the Commissioner is required to give the taxpayer access to all the relevant information in his possession.
In Jeeva and Others v Receiver of Revenue, Port Elizabeth, and Others 57 SATC 187 the appellants were directors, shareholders and employees of two company's which had been placed in liquidation at the request of SARS. SARS had authorized a raid on the companies offices and directors' homes early in 1990 and had seized documents dating as far back as 1985. In the
meantime, the liquidators of the companies had applied to the Master of the High Court to hold a commission of inquiry into their affairs in terms of sections 417 and 418 of the Companies Act. At the time SARS was still in possession of all the documents from the appellants. Subpoenas were served on the appellants to attend the inquiry and to submit to interrogation. The appellants requested SARS to allow them access to the seized documents he had in his possession relevant to the inquiry. This request was denied by SARS and an urgent application was brought before the South Eastern Cape Local Division of the Supreme Court (now the High Court). The respondent argued that the appellants were not assisted by the Constitution as the documents were not required for the protection of any of their rights and in any event SARS were prevented from making the documents available because of the secrecy provisions in the Income Tax Act.
Jones J, in finding for the appellants had the following to say on pages 196 and 197 regarding their right to access to the information for the protection of their rights:
" Much of the relevant information which will form the subject of the interrogation deals with company affairs going back over the years. Some of it is contained in documents seized by the Receiver of Revenue in 1990.The applicants have not had sight of these documents since then. They cannot be treated equally and fairly at this interrogation if they do not have sight of these and other relevant documents before the hearing."
With respect to the refusal by the respondent to make the documents accessible to the appellants because of the secrecy provisions in the Income Tax Act he found as follows on page 210:
" There is nothing secret about this information as far as the parties are concerned. It is accordingly entirely artificial to seek to invoke the secrecy principle of tax legislation at this time and in these circumstances. What is the purpose of preserving so-called secrecy by precluding the persons who gave the information in the first place from now having access to it ? The secrecy
principle has no application to these facts. None of the parties concerned is a stranger to the taxpayers. They are intimately associated and there is no conflict of interest between them and the taxpayer."
This is an important judgement for the rights of the taxpayer as it sends a clear message to SARS that they cannot employ the secrecy sections of the revenue acts merely for their own convenience, nor to stack the deck against the taxpayer. If they wish to prevent access to information held by them they have to prove that the infringement of the individual's right to access is justifiable and fair.
In Ferela (Pty)Ltd and Others v CIR a dispute had arisen between the Lourenco and Baeta families. The Lourenco family had brought an Anton Pillar type order to obtain books of a company which was owned by the Baeta family. This order was executed but was subsequently set aside and the Lourenco family ordered to return the books. The Lourenco family appealed against this, but this appeal failed and they were then ordered again to return the documents. Before they could return the documents, the Commissioner obtained a warrant for the documents on the basis of an affidavit from a chartered accountant who stated therein that he had investigated the affairs of the Baeta family group of companies, at the request of the Lourenco family, and discovered certain irregularities including a tax liability of R 70 million. The Baeta family thereafter attempted to obtain a copy of the warrant issued in terms of section 74D of the Income Tax Act. They were denied access to the court file on the instructions of the Commissioner.
They then appealed to the High Court submitting that their rights in terms of section 32 of the Constitution had been infringed in that the Commissioner had allowed himself to get involved in the dispute between the two families and that his intervention was interpreted to indicate that he had allowed himself to be used to frustrate the effect of a court order. The Commissioner was ordered to return all the documents and also to pay the Baeta family's
legal fees.
This finding confirmed that the Commissioner is not permitted to simply join forces with a person when the taxpayer and that person have a dispute with each other. As far as the taxpayer is concerned, he cannot use the Constitution as a smokescreen to delay a trial in the Tax Court. This seemed to be the position in Alliance Cash & Carry (Pty) Ltd v CSARS 64 SATC 111. In this case the taxpayer was involved in a Special Court appeal against the Commissioner. It dealt with a dispute of whether certain goods had been sold to an export country and in such case would then be zero rated. The Commissioner required documentary evidence that the goods had in fact been exported. The taxpayer then applied to the High Court for an order requiring the Commissioner to make available certain documents that the taxpayer insisted were needed by him for the tax appeal. The High Court rejected the application stating that such matters were provided for in the rules of the Special Court and should have been argued there. The taxpayer then proceeded, with leave to appeal in the matter, to a Full Bench of the High Court where he argued that he had a constitutional right to have access to the documents and to be furnished with reasons for the disallowance of the VAT. The Full Bench of the High Court also rejected the application for the same reasons.
The importance of this case is that, where a right that is protected by the Constitution is adequately dealt with by other legislation or Court rules, the latter should be exhausted first and not the Constitution.