Introduction Facts Decision Comment
A number of recent cases have examined whether an interim order or decision which does not dispose of a case finally is appealable. The Constitutional Court recently had to consider this question in two separate cases: one involving the changing of street names in Tshwane and the other involving the National Credit Act (34/2005).
The issue also emerged within a tax context in a Supreme Court of Appeal case. In Wingate-Pearse v C:SARS ((830/2015) [2016] ZASCA 109, September 1 2016), a taxpayer wanted to appeal, among other things, the Tax Court's decision regarding the onus of proof and duty to adduce evidence first.
Wingate-Pearse, the taxpayer, disputed the annual assessments issued by the South African Revenue Service (SARS) for 1998 to 2005. He lodged an appeal with the Tax Court on August 1 2007, which was only set down for hearing on February 9 2015. Under Section 270(2)(d) of the Tax Administration Act (28/2011), the case had to be decided with regard to the act. When the hearing before the Tax Court commenced, the Wingate-Pearse's counsel raised a point in limine (ie, at the beginning of the proceedings) and argued that the onus of proof and duty to adduce evidence first was on SARS (and not Wingate-Pearse). The Tax Court ruled that the initial burden of proof lay with Wingate-Pearse to show that SARS's decision, against which he was appealing, was wrong, and that he had to adduce evidence first. Wingate-Pearse appealed this ruling to the Supreme Court of Appeal.
The Supreme Court of Appeal stated that the Tax Court is a body of statute, constituted under the Tax Administration Act. Therefore, the act must be considered when determining whether a Tax Court ruling on the onus of proof and the duty to adduce evidence first is appealable. Section 133(1) of the Tax Administration Act allows a taxpayer or SARS to appeal "a decision of the Tax Court under sections 129 and 130". In this case, the issue was thus whether the point in limine, being an interlocutory application, was a 'decision' under Section 129 of the act.
Section 117 of the act establishes the Tax Court's jurisdiction. Under Section 117(3), this includes hearing any interlocutory application or any application in a procedural matter relating to a dispute under Chapter 9 of the Tax Administration Act, which deals with disputes and appeals. Under Section 129(2), in the case of an assessment or decision under appeal or an application in a procedural matter referred to in Section 117, the Tax Court can:
- confirm the assessment or decision;
- order the assessment or decision to be altered; or
- refer the assessment back to SARS for further examination and assessment.
Wingate-Pearse raised two arguments in support of the contention that the Tax Court's decision was appealable:
- He argued that because Section 117(3) of the Tax Administration Act provides that the Tax Court has jurisdiction to deal with an interlocutory application and Section 129(2) contemplates a decision by the Tax Court under Section 117(3), the Tax Court's decision on the question of onus and duty to adduce evidence first was appealable. The Supreme Court of Appeal rejected this argument and held that the decision would be appealable only if the onus and duty to adduce evidence first was a 'decision' under Section 129 of the act. This ruling stemmed from the fact that Section 129(1) is concerned with a decision that finally resolves the point at issue (and not with interlocutory matters). Further, the question of onus and duty to adduce evidence first and any provision dealing with the Tax Court's powers in respect of interlocutory matters under Section 117(3) is conspicuously absent from Section 129(2).
- Wingate-Pearse also argued that decisions regarding an interlocutory matter and those regarding an application in a procedural matter referred to in Section 117(3) should be treated equally. The Supreme Court of Appeal rejected this argument, as Section 129(2) expressly includes a procedural matter referred to in Section 117(3), but excludes interlocutory matters. To support this finding, the Supreme Court of Appeal referred to the history of Sections 129(2) and 117(3) – both sections were slightly amended by the Tax Administration Laws Amendment Act (39/2013), most probably to clarify that decisions made by the Tax Court in resolving disputes under the rules of the Tax Court are appealable. As the amendment did not alter the position in respect of interlocutory applications, decisions in such cases are not appealable.
The Supreme Court of Appeal rejected the argument raised by SARS in its supplementary written argument that, in appropriate circumstances, a decision in an interlocutory application will be appealable. As an aside, the Supreme Court of Appeal also stated that even based on the conventional principles applicable to determine whether a decision is appealable, as set out in the Zweni v Minister of Law and Order 1993 judgment ((1) SA 523 (SCA)), the decision would not have been appealable, as it lacks the necessary requirement of finality and cannot dispose of any issue in the case.
The judgment is technical, but provides an important warning for taxpayers to consider the applicable legislation and whether an appeal is worthwhile carefully, especially considering the legal costs involved. The Supreme Court of Appeal struck the case from the roll after hearing the appeal, ordering Wingate-Pearse to pay SARS's costs – including the costs of two counsel – and only giving the reasons for its decision later. The Supreme Court of Appeal did not address the merits of the appeal and, as such, the Tax Court's decision was maintained. Under the Tax Court's decision, Wingate-Pearse had the initial burden of proof and had to:
- discharge the onus in terms of Section 102(1) of the Tax Administration Act in order to prove that SARS's decision was wrong; and
- adduce evidence first.
For further information on this topic please contact Louis Botha at Cliffe Dekker Hofmeyr by telephone (+27 115 621 000) or email ([email protected]). The Cliffe Dekker Hofmeyr website can be accessed at www.cliffedekkerhofmeyr.com.
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