This dissertation analyzes the interrelationship in particular between ss 1(c) and 237 of the Constitution of the Republic of South Africa ('the Constitution') (collectively referred to as 'constitutional obligations'); s 4(2) of South Africa. African Revenue Service Act 34 of 1997 (' SARS Act'); the Promotion of Administrative Justice Act 3 of 2000 ('PAJA'); and a decision of the Commissioner for the South African Revenue Service ('the Commissioner' or 'SARS'). "where applicable) 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 surrender 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 section 1 of PAJA, or alternatively is subject to the constitutional principle of legality The decision imposes an obligation on taxpayers to do something (to produce . or provide information, documents and thing) which taxpayers, without exercising that power, would not be required by law to do, because of taxpayers' privacy rights under section 14 of the Constitution, and entitle them to expect SARS to comply with its constitutional obligations. Non-compliance by taxpayers exposes them to criminal prosecution in accordance with section 75, subsection 1, letter b) of the Income Tax Act.
Furthermore, the power exercised by SARS is not subject to the normal objection and appeal processes of the Income Tax Act, limiting the ability of taxpayers to challenge such a decision under the Income Tax Act.
HYPOTHESIS
THE THESIS CONTRIBUTION TO KNOWLEDGE IN
THE CONTRIBUTION THAT THIS DISSERTATION WILL
RESEARCH OBJECTIVES, METHODOLOGIES AND
THEORETICAL FRAMEWORK AND HOW THE
THE THESIS CONTRIBUTION TO KNOWLEDGE IN TAXATION
The research area for this thesis focuses on the constitutional and administrative rights of taxpayers specifically in relation to the audit and investigation powers of the SARS (s 33 read together with s 1(c and 237). The emphasis in this study will be directed specifically at the taxpayers' right to fair administrative action in the context of these audit and investigative powers This analysis will draw on leading constitutional and administrative jurisprudence to support the hypothesis that taxpayers facing any SARS audit or investigation are subject to 'administrative conduct' as defined in PAJA, or in accordance with the constitutional principle of legality, and is entitled to question the public powers of SARS.
In any event, if SARS acts outside the scope of their powers, as analyzed, taxpayers have the right to refer that conduct of SARS to the Supreme Court for review.
THE CONTRIBUTION THAT THIS DISSERTATION WILL MAKE TO TAX LAW LITERATURE
This thesis aims to critically analyze the sections set out above as the basis of taxpayers' rights and their right to have SARS comply with their constitutional obligations. To date, there has been almost no scholarly literature and no judicial review of taxpayers' rights in relation to SARS powers to audit and investigate taxpayers' affairs. Research into the impact on taxpayers' rights in terms of both procedural and substantive law is important in determining the balance between SARS' powers and taxpayers' rights.
Likewise, research in this area should be beneficial to SARS in that they can also recognize the limits of their powers and not violate taxpayers' rights.
RESEARCH QUESTIONS AND HYPOTHESIS
RESEARCH OBJECTIVES, METHODOLOGIES AND POTENTIAL FINDINGS .1 Research Objectives
The legislature has introduced measures enabling SARS to obtain information, documents and things to assist in the assessment and collection of tax in terms of their powers under ss 74A and 74B. In the event that SARS conduct does not respect taxpayers' constitutional rights or meet constitutional standards, taxpayers are entitled to address the misconduct of SARS through a judicial review process, either under PAJA, or under the constitutional principle of legality. The current research analyzes and interprets the Constitution, together with relevant case law, and scholarly writings to identify a framework of taxpayer rights, and uses this framework to analyze, interpret and interpret the use by SARS of its ss 74A and 74B powers criticize.
Each issue raised in this dissertation is interconnected with other emerging issues in order to achieve the overall objective of this dissertation, which is to critically analyze the constitutional rights of taxpayers, and to determine when the SARS powers grant them by ss 74A and 74B infringe on those rights, and what remedy is available to those taxpayers.
THE RELEVANCE OF PAJA AND THE PRINCIPLE OF
ADVENT OF THE CONSTITUTION
The explanation of the right administrative action in the ACT derives from the provisions of ss 1(c) and 195(1) of the Constitution, read with s 33 of the Constitutional Bill of Rights. For the purposes of subsection (2), the Commissioner or any officer referred to in subsection (1), shall not enter any dwelling house or domestic premises (except any part thereof which may be occupied or used for the purpose of trading ) without the resident's consent. Therefore, an analysis of the term "administrative action" is important to the main conclusion reached in this thesis.
SARS must then comply with the provisions of s 5(1) and (2) of PAJA and provide sufficient reasons with reference to the principles set out in the decision of the Supreme.
THE RELEVANT CONSTITUTIONAL PROVISIONS .1 Foundational values
Any law that is contrary to the constitution34 is subject to judicial review read with section 172(1)(a) of the constitution.35. An example of the latter situation would be the conduct of SARS outside the jurisdictional facts50 of ss 74A and 74B. Law in this thesis (as already analyzed above) means the actual wording of §§ 74A and 74B, read with § 74 and § 75, para. 1, letter b) of the Income Tax Act.
All these statements are in accordance with the provisions of Article 33 of the Constitution and Article 3 of PAJA.
A CONSTITUTIONAL BALANCE OF SARS’ POWERS AND THE
This gives the taxpayer the opportunity to approach the Supreme Court through Article 172(1) of the Constitution. The extent of the restriction varies according to the nature of the power being exercised. In addition, before the arrival of the new Constitution, the Supreme Court of Appeal.
In conclusion, despite being preliminary and investigative in nature, it is submitted that a SARS decision within the meaning of ss 74A and 74B is "administrative action" provided for in section 33 of the Constitution and defined in PAJA.
THE RELEVANCE OF PAJA AND THE PRINCIPLE OF LEGALITY .1 Introduction
SARS (as a state organ) can only exercise those powers which are legally assigned to them as set out in s 41(1) of the Constitution. 117 Footnote at para [56] – see Dicey, Introduction to the Study of the Law of the Constitution 10ed. Although it is not set out in a specific provision, the principle of the rule of law is clearly a principle of our Constitution.'.
85]It is a requirement of the rule of law that the exercise of public power by the executive and other officials should not be arbitrary.
ADEQUATE REASONS .1 Introduction
Consequently, it can be argued that the constitutional legality principle has now come full circle and encompasses all of SARS's duties in terms of PAJA: the duty to act lawfully, reasonably and procedurally fair and, where appropriate, to give reasons. If the provisions of ss 3 and 5 of PAJA, by the definition of administrative action, do not apply to SARS when their powers are invoked in terms of ss 74A and 74B, then the constitutional principle, as set out above, will apply, giving taxpayers the opportunity The door is open for SARS to take action that is contrary to these constitutional principles and obligations of review. Sections 74A and 74B require an investigation or audit to take place 'for the purposes of carrying out this Act'.
GENERAL PROVISIONS WITH REGARD TO INFORMATION DOCUMENTS OR THINGS…
- THE STATUTORY PROVISIONS: SS 74A, 74B, 74 AND 75 64
- THE SARS INTERNAL AUDIT MANUAL
- REASONABLENESS
- PROCEDURAL FAIRNESS .1 Bias
- LEGITIMATE EXPECTATIONS
- MULTI-STAGED DECISION-MAKING 187
- INTRODUCTION TO SECTION 195(1), PAJA
- THE DUTIES OF SARS EMANATING FROM SECTION
- INTRODUCTION TO SECTION 195(1), PAJA AND THE PRINCIPLE OF LEGALITY
- THE DUTIES OF SARS EMANATING FROM SECTION 195(1) OF THE CONSTITUTION
The provisions of ss 74A and 74B must also be read together with the relevant sections of ss 74 and 75(1)(b) of the Income Tax Act. Information from the file of the tax consultant and/or accountant/external auditor of the taxpayer. Proper compliance with the jurisdictional facts of ss 74A and 74B will include the following: proper delegation of the relevant powers by the Commissioner to the SARS officials in terms of s 74 and s 3 of the Income Tax Act; ensure that the investigation is related.
Since the definition of "administration of this Act" in section 74, subsection 1, includes the power to investigate an offense committed by the taxpayer, that part of § 74, subsection (3)(j) of the Constitution. If SARS refuses to answer, or answers 'yes', the inquiry or audit will contravene s 35(3)(j) of the Constitution. The defense of "just cause" in Section 75, subsection 1 of the Income Tax Act. 1, letter b, will also be available to the taxpayer.
4595/02 in the High Court of the Provincial Division of Transvaal, brought by the taxpayer to prevent SARS from proceeding with an audit in terms of ss 74A and 74B, under the advice and guidance of the writer. 4595/02 in the High Court of the Provincial Division of Transvaal, brought by the taxpayer to prevent SARS from proceeding with an audit in terms of ss 74A and 74B; See also the Xstrata case in footnote 145 above. These constitutional obligations in terms of ss 1(c), 41(1) and 195(1) of the Constitution support the right of taxpayers to natural justice and the audi principle.
The SARS Code of Conduct reiterates that SARS officials must obey the provisions of the Constitution. This applies equally to SARS deciding to amend or vary its decision in terms of s 3(2) of the Income Tax Act. The grounds for review would apply to uphold the constitutional duties and obligations placed on SARS in terms of s 195(1) of the Constitution.
In Chirwa v Transnet Limited and Others5 the Constitutional Court held that the provisions of Section 195(1) of the Constitution do not create equitable rights like those in the Bill of.
FUNCTIONS
- REVIEW APPLICATION DIRECTLY TO THE TAX COURT 160
- PITFALLS IN BRINGING THE RULE 53 APPLICATION 194
- INTRODUCTION
- WHAT IS MEANT BY REVIEW?
- THE APPLICABILITY OF OBJECTION AND APPEAL
- REVIEW APPLICATION DIRECTLY TO THE TAX COURT
- REVIEWING UNCONSTITUTIONAL CONDUCT .1 Introduction
- SUPPORT FOR REVIEW OF SS 74A AND 74B
- PITFALLS IN BRINGING THE RULE 53 APPLICATION
The taxpayer's fair participation in the process started by ss 74A and 74B is also subject to the constitutional obligations imposed on SARS. This brings the non-compliance of SARS within the constitutional principle of legality. Any enforcement of a voluntary request by SARS would be a violation of the rule of law.
Here the grounds of revision will be part of the normal objection and appeal process in the Income Tax Act. If SARS in making a decision in relation to ss 74A and 74B of the Income Tax Act, acts contrary to its constitutional obligations (ss 1(c and 237 of the Constitution) as analyzed in this thesis, or fails to give notice appropriate as required in terms of s 3(2) of PAJA, and adequate reasons after making a decision under s 5(1) and (2) of PAJA, taxpayers will have legal remedies available within the meaning of s 6 , 7 and 8. as read with the codified grounds of review in s 6(2) of PAJA. The proper application for review shall be brought in terms of Rule 53(1) of the Uniform Rules of Court which provides:.
In relation to the constitutional principle of legality, SARS cannot act under its enabling provision in ss 74A and 74B, which means compliance with all jurisdictional facts. At the height of the media reports, the taxpayer receives notices under sections 74A and 74B relating to various entities in which the taxpayer is a shareholder and/or director. In addition, there must be one or more of the jurisdictional conditions listed in the definition of "the administration of this Act" in Section 74 of the Income Tax Act.
If these jurisdictional facts are not satisfied, the conduct of SARS will be unlawful, and contrary to the Constitution, and therefore void in terms of s 2 of the Constitution. Impartiality and impartial conduct by SARS are part of their constitutional obligations in terms of s 195(1) of the Constitution. Stroud Riley112 obligates SARS to exercise a discretion in favor of the taxpayer when the facts so warrant.
Legal consequences flow from the action, in that jurisdictional facts must be complied with, both in terms of the provisions of ss 74A and 74B, and in terms of the Constitution.
