Can a determination be reviewed?
The recent judgments of Cell C (Pty) Ltd v The Commissioner of the South African Revenue Service [1] and Tunica Trading 59 (Pty) Ltd v The Commissioner of the South African Revenue Service [2] has raised the question regarding a taxpayer’s remedies following decisions taken by the Commissioner of the South African Revenue Service and his delegated officials in performing their functions under the Customs & Excise Act 91 of 1964 (“the Act”).
The Act caters specifically for determinations to be issued by the Commissioner in respect of a tariff (section 47(9) of the Act), for example the tariff heading that applies to a product on importation into or exportation from the Republic. Section 65 in turn deals with valuation determinations to be issued to determine the transaction value on importation of products, (the transaction value is relevant as the duties and VAT are calculated with reference to the said value), while section 49 in turn authorises the Commissioner to issue origin determinations, which are relevant for purposes of whether a product on importation will qualify for a preferential duty in terms of trade agreements between South Africa and other countries.
Over and above the aforesaid provisions of the Act, officials in performing their duties take decisions, for example, whether an application to register as an importer / exporter or to license as a customs and excise warehouse, to mention a few, is approved or rejected. In addition, decisions are also taken whether a contravention of the Act occurred, whether goods must be detained, seized or declared forfeited to the State, or whether a contravention justifies the imposition of a forfeiture amount in terms of section 88(2) of the Act. These decisions fall outside the scope of determinations issued in terms of, for example, sections 47 or 65 which can be appealed against directly to the High Court, which has jurisdiction.
Regarding the other decisions taken by the officials in the execution of their duties, cognizance must be taken of the definition of “decision” in section 77A of the Act and the definition of “administrative action” in section 1 of the Promotion of Administrative Justice Act, 2000 (“PAJA”). Section 77A defines “decision” as
- any determination or other act of an administrative nature for the purpose of the Act;
- any amendment or withdrawal and making of a decision; and
- any refusal to take a decision.”
The relevant part of the definition of “administrative action” in PAJA defines it as,
“any decision taken, or any failure to take a decision by - (a) an organ of state, , which adversely affects the rights of any person and which has a direct, external legal effect, but does not include…”.
These decisions or actions are subject to a review in terms of section 6 of PAJA. In review proceedings a Court must decide with reference to the facts before the decision maker at the time the said decision was taken whether it was taken fairly and lawfully. On review in the High Court, as confirmed in the Tunica Trading judgment, the Court cannot go beyond the record, which must be furnished to the taxpayer in terms of Rule 53 of the High Court Rules. Therefore, the Commissioner cannot rely on new facts to defend the attack on whether the decision was fairly and lawfully taken. This differs from an appeal to the High Court against tariff or value or origin determinations.
In the case of a determination, the case law held that such an appeal to the High Court is a wide appeal and boils down to a de nova hearing of the matter. In addition, there is no obligation on SARS to make a record of proceedings available to a taxpayer in an appeal as is required in review proceedings. The effect thereof is that both sides can rely on new facts to bolster their respective cases. In the Cell C judgment, the Court held that where a taxpayer has a wide appeal for attacking a determination, the taxpayer cannot attack the determination by embarking on High Court review proceedings.
Although in the judgments of BCE Food Service Equipment (Pty) Ltd v Commissioner of the South African Revenue Services [3] and Richards Bay Coal Terminal (Pty) Ltd v Commissioner of the South African Revenue Service [4] the review of a tariff determination was held competent, in the recent Cell C case it was held that if a determination is attacked, a taxpayer is limited to a wide appeal under section 47(9) of the Act.
Therefore, the law is applied differently in the High Courts in KwaZulu-Natal, Gauteng and Western Cape. Legal certainty is required on whether review and/or appeal proceedings are competent in attacking a determination. It is understood that the Richards Bay Coal Terminal case is heading to the Supreme Court of Appeal, which will pronounce (and bring legal certainty) on whether a taxpayer is only limited to an appeal if it wants to challenge a determination or both appeal and review proceedings.
