Metcash Trading Ltd v Commissioner, South African Revenue Service, and Another

• Jurisdiction: South Africa

Metcash Trading Ltd v Commissioner, South African Revenue Service, and Another
2001 (1) SA 1109 (CC)

2001 (1) SA p1109

Citation	2001 (1) SA 1109 (CC)
Case No	3/2000
Court	Constitutional Court
Judge	Chaskalson P, Langa DP, Goldstone J, Kriegler J, Madala J, Mokgoro J, O'Regan J, Ngcobo J, Sachs J, Yacoob J and Cameron AJ
Heard	March 28, 2000
Judgment	November 24, 2000
Counsel	M J D Wallis SC (with P F Louw) for the applicant.; G J Marcus SC (with A R Bhana) for the respondents.

Flynote : Sleutelwoorde I

Revenue — Value-added tax — Collection and recovery of — Payment of tax pending appeal against assessment — Value-Added Tax Act 89 of 1991, ss 36, 40(2)(a) and 40(5) — Whether provisions in breach of right of access to courts in terms of s 34 of Constitution of the Republic of South Africa Act 108 of 1996 and not justifiable in terms of s 36 thereof — J

2001 (1) SA p1110

Taxpayer appealing against assessment — Relevant provisions providing that obligation to pay not suspended pending A any appeal or decision of Court unless so directed by Commissioner and further providing that Commissioner able to use methods outside normal judicial process to collect assessed amounts of tax, thereby excluding recourse to court of law and powers of Court to intervene in process of collection of amounts — Commissioner not suspending taxpayer's B obligation to pay pending finalisation of appeal — Local Division finding that relevant provisions unconstitutional and referring determination to Constitutional Court for confirmation — Section 36 not ousting jurisdiction of ordinary courts of law — Assessments and decisions by Commissioner administrative decisions subject to review — Vendor dissatisfied with assessment further able to lodge C objection against assessment and, failing that, note appeal to Special Court or board and, failing that, resort to ordinary court of law against decisions of Special Court — Section 36 not affording authority to circumvent courts but simply concerned with non-suspension of obligation to pay assessed tax — Common-law rule of judicial practice relating to automatic suspension of execution by noting appeal not D applicable to procedure created by Act which amounted to statutory form of revision of administrative decision according to special procedure and not appeal — Execution process created by s 40(2)(a) specifically proceeding via ordinary judicial institutions, employing ordinary civil process of execution and including by reference whole body of legal rules relating to execution — Section creating short-cut E but not authorising usurping of any judicial functions nor resort to self-help — Prohibition contained in s 40(5) narrowly focused on correctness of assessment, leaving vendor free to raise any challenge to assessment or s 40(2)(a) certificate falling outside purview of prohibition — Even if relevant sections of Act found to limit rights, fact that s 40(5) limited in scope, temporary and subject to F judicial review; that public interest in obtaining full and speedy settlement of tax debts significant; and that principle of 'pay now, argue later' accepted as reasonable in societies based on freedom, dignity and equality supporting finding that limitation justifiable within meaning of s 36 of Constitution — Order of Local Division G declaring relevant sections unconstitutional not confirmed.

Constitutional law — Human rights — Right of access to courts in terms of s 34 of Constitution of the Republic of South Africa Act 108 of 1996 — Value-added tax — Payment of tax pending appeal against assessment — Value-Added Tax Act 89 of 1991, ss 36, 40(2)(a) and 40(5) — Whether provisions in breach of right of access to courts in terms of s 34 of Constitution and not justifiable in terms of s 36 thereof — Taxpayer appealing against assessment — Relevant provisions providing that obligation to pay not suspended pending any appeal or decision of Court unless so directed by Commissioner and further providing that Commissioner able to use methods outside normal judicial process to collect assessed amounts of tax, thereby excluding recourse to court of law and powers of Court to intervene in process of collection of amounts — Commissioner not suspending taxpayer's obligation to pay pending finalisation of appeal — Local Division finding that relevant provisions unconstitutional and referring determination to Constitutional Court for confirmation — Section 36 not ousting jurisdiction of ordinary courts of law — Assessments and decisions by Commissioner administrative decisions subject to review — Vendor dissatisfied with assessment further able to lodge objection against assessment and, failing that, note appeal to Special Court or board and, failing that, resort to ordinary court of law against decisions of Special Court — Section 36 not affording authority to circumvent courts but simply concerned with non-suspension of obligation to pay assessed tax — Common-law rule of judicial practice relating to automatic suspension of execution by noting appeal not applicable to procedure created by Act which amounted to statutory form of revision of administrative decision according to special procedure and not appeal — Execution process created by s 40(2)(a) specifically proceeding via ordinary judicial institutions, employing ordinary civil process of execution and including by reference whole body of legal rules relating to execution — Section creating short-cut but not authorising usurping of any judicial functions nor resort to self-help — Prohibition contained in s 40(5) narrowly focused on correctness of assessment, leaving vendor free to raise any challenge to assessment or s 40(2)(a) certificate falling outside purview of prohibition — Even if relevant sections of Act found to limit rights, fact that s 40(5) limited in scope, temporary and subject to judicial review; that public interest in obtaining full and speedy settlement of tax debts significant; and that principle of 'pay now, argue later' accepted as reasonable in societies based on freedom, dignity and equality supporting finding that limitation justifiable within meaning of s 36 of Constitution — Order of Local Division declaring relevant sections unconstitutional not confirmed.

Headnote : Kopnota

The question to be considered by the Court was whether ss 36(1), 40(2)(a) and 40(5) of the Value-Added Tax Act 89 of 1991 (the Act) unjustifiably limited the right of access to courts protected H by s 34 of the Constitution of the Republic of South Africa Act 108 of 1996 (the Constitution). Section 36(1) of the Act provided that upon assessment by the Commissioner, and notwithstanding the noting of an 'appeal', a taxpayer was obliged to pay the assessed tax immediately, I possible adjustments and refunds being left for later dispute and determination. The other two subsections complained of empowered the Commissioner to exact summary payment of the assessed amounts, allowing the Commissioner to file a statement at Court having the effect of an exigible civil judgment for a liquid debt in the event of payment of an assessed amount being overdue and putting the correctness of an assessment beyond challenge in such execution. A Local Division had found that the relevant sections of the Act infringed the fundamental right of access to courts afforded by s 34 of the Constitution and, in addition, J

2001 (1) SA p1111

that such sections were neither reasonable nor justifiable under s 36 of the Constitution. The order of constitutional invalidity A was referred to the Constitutional Court for confirmation in terms of ss 167(5) and 172(2) of the Constitution.

The Commissioner and the Minister of Finance, the second respondent, opposed the confirmation of the Court order, contending that the Judge had erred in finding that the provisions in question infringed s 34 of the Constitution. They argued that the 'pay now, argue later' rule in B s 36(1) of the Act did afford the taxpayer sufficient opportunities for a hearing on the assessment as it allowed for an objection to the assessment; asking the Commissioner to grant an extension of the time for payment; asking a court to set aside on review any refusal by the Commissioner for such extension; and appealing to the Special Court against the assessment. It was submitted that the discretion conferred C upon the Commissioner by s 36(1) of the Act had to be interpreted in the light of s 39(2) of the Constitution in a fashion that would promote the right of access to court and the protection of the right to administrative justice. As the exercise of that discretion would constitute administrative action as contemplated by s 33 of the Constitution, a refusal to accede to a request for the suspension of the obligation to pay would be reviewable before a Court. They D argued further that, even if there was an infringement, the quick, reliable and predictable recovery of VAT was of vital national importance and that the relevant provisions were saved from invalidity by s 36 of the Constitution which permitted limitations of protected rights in particular circumstances. As a final argument, the respondents contended that, if the provisions were invalid, the order of invalidity should be suspended for three years to enable E Parliament to draft the appropriate substitute legislation. The applicant, in turn, contended that the opportunities for protest seen by the Commissioner in s 36 of the Act were illusory or inadequate. They contended further that the relevant sections permitted self-help, ousting the jurisdiction of the courts in breach of the principle entrenched in s 34 of the Constitution and that there were less F invasive ways of protecting the national interest in insuring speedy and dependable receipt of VAT.

Held, that the Act provided a detailed...