Case Note: Barnard Labuschagne Incorporated v South African Revenue Service [2022] ZACC 8 (11 March 2022) – The rescindability of a certified statement filed in terms of section 172 of the Tax Administration Act

• Author: van Coller, A.
• DOI: https://doi.org/10.47348/JCCL/V7/i2a10
• Published date: 09 November 2022
• Date: 09 November 2022
• Citation: (2021) 7(2) JCCL&P 199
• Pages: 199-216

https://doi.org/10.47348/JCCL/V7/i2a10

199

BARNARD LABUSCHAGNE

INCORPORATED V SOUTH

AFRICAN REVENUE SERVICE [2022]

ZACC 8 (11 MARCH 2022) – THE

RESCINDABILITY OF A CERTIFIED

STATEMENT FILED IN TERMS

OF SECTION 172 OF THE TAX

ADMINISTRATION ACT

ARTHUR VAN COLLER*

Associate Professor – Nelson R Mandela School of Law,

University of Fort Hare

I INTRODUCTION

In 2017, the South African Revenue Services (SARS) filed a certified

statement in terms of section 172 of the Tax Administration Act 28

of 2011 (TAA) with the Registrar of the High Court of South Africa,

Western Cape Division, CapeTown (WCC) to recover a tax debt from

a firm of attorneys, Barnard Labuschagne Incorporated (the taxpayer)

(Barnard Labuschagne Inc v SARS & another(WCC), unreported case no

23141/2017, 15 May 2020) (Mantame J) para 2) (HC judgment). The

taxpayer maintained that a certified statement cannot be treated as

a tax assessment against which it could object and appeal to the Tax

Court. In the perceived absence of any other remedy, the taxpayer

approached the WCC for an order to rescind the certified statement.

SARS opposed the application and argued that a certified statement

is not susceptible to rescission. This prompted the taxpayer to claim,

in the alternative, that a finding in favour of SARS would render

ss 172 and 174 of the TAA unconstitutional. The constitutional

challenge caused the Minister of Finance (Minister) to be joined as

the second respondent (HC judgment para 2).

The WCC held that the certified statement was not susceptible

to rescission and dismissed the alternative constitutional challenge

* BA (Law), LLB, LLM, DMS, HDipTax, PGDHET, LLD (Admitted Attorney, South

Africa).

(2021) 7(2) JCCL&P 199

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200

(2021) 7(2) JOURNAL OF CORPORATE AND COMMERCIAL LAW & PRACTICE

https://doi.org/10.47348/JCCL/V7/i2a10

with costs. The WCC and the Supreme Court of Appeal (SCA) also

refused the applications for leave to appeal with costs. The taxpayer

then sought leave to appeal from the South African Constitutional

Court (CC). The CC noted its concern that the WCC did not apply

binding precedent and also expressed its frustration with the

‘unsatisfactory’ and ‘cursory dismissal’ of the taxpayer’s arguments

on the constitutionality of ss 172 and 174 of the TAA (HC judgment

para 31). The CC ultimately referred the matter back to the WCC

for the merits of the rescission application to be decided (Barnard

Labuschagne Incorporated v South African Revenue Service (CCT 60/21)

[2022] ZACC 8 (11 March 2022) paras 48 and 49) (CC judgment).

The judgments are noteworthy as the WCC and the CC dealt with

the legal nature of a certified statement with specific reference to

its form and effect. This note first provides a summary of the facts

of the dispute together with the legislative provisions relevant to

certified statements and applications for rescission. The CC made

some comments on judicial impartiality, which will be addressed

in passing only and only in as far as this may have influenced the

outcome of the HC judgment. The reasoning of the WCC and the

CC is also analysed with reference to the existing applicable case law.

The main aim is to make some suggestions for possible alternative

interpretations of the legal nature and effect of certified statements.

The constitutional validity of a certified statement is not explored in

detail as this issue is now effectively of no consequence after the CC

found that a certified statement is, in theory, susceptible to rescission.

II FACTUAL BACKGROUND AND RELEVANT LEGAL

POSITION

The taxpayer, over several years, submitted returns with a

determination of its tax liability for various different taxes in terms

of s 91(2) of the TAA. These assessments became final as no objection

was made (Section 100(1)(b) read with s 104 of the TAA). However,

a dispute developed between SARS and the taxpayer concerning the

subsequent tax by the taxpayer that was apparently not properly

allocated to the taxpayer’s accounts (HC judgment para 6; CC

judgment para 4). The parties initially made some efforts to resolve

the payment allocation issue but eventually reached an impasse due

to the taxpayer’s perceived failure to cooperate with SARS. SARS then

forwarded a letter of final demand to the taxpayer and later issued a

notice of third-party appointment to recoup the outstanding tax debt.

These actions were unsuccessful and SARS thus notified the taxpayer

of its intention to file a certified statement for a civil judgment with

a competent court setting out and certifying as correct, the amount

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