XYZ CC v Commissioner for South African Revenue Service
| Jurisdiction | South Africa |
| Judge | Hiemstra AJ |
| Judgment Date | 07 June 2013 |
| Docket Number | VAT 889 |
| Court | Tax Court |
| Hearing Date | 06 June 2012 |
| Citation | 2013 JDR 0354 (Tax) |
Hiemstra AJ
This is an appeal against the decision of the respondent, the South African Revenue service (SARS), to dismiss the appellant's objection to the imposition of value added tax and a punitive levy of 200% on the appellant's tax liability.
2013 JDR 0354 p2
Hiemstra AJ
The appellant, XYZ CC, registered with the South African Revenue Service (SARS) as a Value Added Tax (VAT) vendor during October 2003. The sole member of the corporation is Mr A.
The appellant issued three tax invoices in January, March and April 2004 respectively to a close corporation, PQR CC (PQR), for the supply of seafood products. PQR duly paid the amounts invoiced. The appellant thereafter submitted a nil VAT return for the relevant VAT periods. PQR submitted an input tax claim to the respondent. Pursuant thereto the respondent conducted an audit to verify whether the suppliers listed in the schedules provided by PQR had accounted for the corresponding output tax, and found that the appellant had submitted a nil VAT return for the relevant VAT periods.
As a result of the appellant's failure to account for output tax in respect of the supplies allegedly made during the January, March and May 2004 VAT periods, the respondent raised additional assessments on 18 March 2005 in terms of s 31 of the Value Added Tax Act 89 of 1991 (the Act) and levied 200% additional tax against the appellant in terms of s 60 of the Act.
The appellant objected to the assessments and the punitive levies, but the respondent dismissed the objection. The appellant now appeals to this Court against the dismissal of his objection.
The appellant admitted that on the documentation received by the respondent, it was entitled to raise the additional assessments and to impose a 200% levy. However, Mr. A claims that the invoices were fictitious and that the appellant had supplied nothing to PQR.
At issue is whether the explanation given by Mr. A is credible, and if it is found to be, whether it exonerates the appellant from liability.
Mr. A is an accountant by profession and he admitted that he is fully acquainted with the provisions of the Act. He gave the following explanation: The members of PQR were Mr B and Mr C. They are related to a woman working in the office of his
2013 JDR 0354 p3
Hiemstra AJ
family business. Although he is not a close friend of the two men, they did meet socially from time to time. They...
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