We have increasingly and alarmingly been encountering instances where South African Revenue Service (“SARS”) officials and/or internal administrative appeal committees (“Appeal Committees”) are refusing to accept or hear appeals where taxpayers have elected not to be dealt with in terms of section 91 of the Customs and Excise Act 91 of 1964 as amended (“the Act”).

Section 91(1)(a) of the Act in pertinent part provides that if any person “has contravened any provision of this Act or failed to comply with any such provision…and agrees to abide by the Commissioner’s decision”.

(our emphasis)

As is clear from the above, section 91 of the Act is an election to be dealt with administratively and to abide by the Commissioner’s decision. It is not a prerequisite or requirement for an internal administrative appeal (“IAA”) to be accepted, heard or decided upon, provided the IAA is not against the amount of the section 91, but the facts leading to the section 91 amount being imposed (i.e., alleged contravention or non-compliance).

Section 77B(1)(a) of the Act, in pertinent part, provides that “Any person who may institute judicial proceedings in respect of any decision by an officer may… lodge an appeal to the Commissioner against a decision of an officer”. Rule 77H.10 of the Act provides that the appeal committee must deal with “An appeal against a decision of an officer or a SARS official”. Rule 77H.13 (1)(c) of the Act goes on to state that “An internal appeal committee… must consider any appeal referred to it”.

(our emphasis)

Nothing precludes an officer from accepting an appeal or an Appeal Committee from hearing an IAA if there is an amount owing or a taxpayer has elected not be dealt with in terms of section 91. A section 91 allows an election to be dealt with administratively and an election to be dealt with administratively is only appropriate if the taxpayer concedes that it has contravened the Act. If a taxpayer does not agree to be dealt with administratively, SARS cannot proceed to enforce collection steps against the section 91 deposit/penalty. However, not following the section 91 process leaves the door open for SARS to proceed criminally if the situation calls for such.

Any refusal by SARS to accept the taxpayer's election or to subsequently hear an IAA due to the taxpayer electing not to be dealt with in terms of section 91 is a failure to properly administer justice, making that failure to hear the IAA reviewable. Section 33 of the Constitution of the Republic of South Africa, 1996 (“the Constitution”) provides that everyone has the right to administrative action that is lawful, reasonable and procedurally fair. SARS officials and Appeal Committees are obliged to act in accordance with Section 33 of the Constitution

If you are faced with a similar issue, Shepstone & Wylie is uniquely positioned to assist.