South African Revenue Service commissioner Edward Kieswetter has welcomed the decision of the Supreme Court of Appeal (SCA) dismissing an appeal by Ketsise Motloung and Reatlehile Development CC.
Sars said the decision confirmed that submitting false tax returns may attract administrative penalties and criminal prosecution.
The case was brought before court after Sars concluded an audit of Reatlehile Development. The business was registered as a VAT vendor and for income tax.
Sars found the company submitted VAT returns for the period March 2014 to July 2018 and Corporate Income Tax (CIT) returns for the 2015, 2016 and 2017 tax years as zero returns, indicating it had generated no income and incurred no expenses.
Sars said this was not true as the company was trading and generating an income and incurring expenses.
It then imposed tax administrative penalties, which the company accepted.
On October 15 2020, Motloung and the company were criminally charged in the regional court in the Free State for intentional tax invasion, but they contested referral of the matter to be prosecuted criminally.
Motloung and the company contended this amounted to double jeopardy and held provisions of the Tax Administration Act were unconstitutional for permitting them to be charged twice — administratively and criminally — for the same offence.
The Bloemfontein high court found no merit in the argument and dismissed with costs their application to declare sections of the act unconstitutional last year. Their application for leave to appeal was also dismissed by the high court. They then petitioned the SCA.
Sars said on Wednesday in dismissing their appeal, the SCA held that there was no prospect of success.
“The SCA’s decision thereby upholds the earlier decision of the high court in favour of Sars, which confirms the ruling of the regional court regarding a case of intentional tax evasion against the applicants,” Sars said.
Kieswetter said many taxpayers abused the system by submitting nil or false returns, while masking the true activities of their business.
“The decision by the courts has confirmed that this intentional practice is in fact not only a civil offence, but a crime.”
He said this finding underpinned the meticulous investigations undertaken by Sars into tax evasion by taxpayers and that it had acted correctly to levy an understatement penalty for contravention and a subsequent referral to prosecution for criminal acts against the fiscus.
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False tax returns may attract penalties, criminal prosecution, says Sars
Image: Ruvan Boshoff
South African Revenue Service commissioner Edward Kieswetter has welcomed the decision of the Supreme Court of Appeal (SCA) dismissing an appeal by Ketsise Motloung and Reatlehile Development CC.
Sars said the decision confirmed that submitting false tax returns may attract administrative penalties and criminal prosecution.
The case was brought before court after Sars concluded an audit of Reatlehile Development. The business was registered as a VAT vendor and for income tax.
Sars found the company submitted VAT returns for the period March 2014 to July 2018 and Corporate Income Tax (CIT) returns for the 2015, 2016 and 2017 tax years as zero returns, indicating it had generated no income and incurred no expenses.
Sars said this was not true as the company was trading and generating an income and incurring expenses.
It then imposed tax administrative penalties, which the company accepted.
On October 15 2020, Motloung and the company were criminally charged in the regional court in the Free State for intentional tax invasion, but they contested referral of the matter to be prosecuted criminally.
Motloung and the company contended this amounted to double jeopardy and held provisions of the Tax Administration Act were unconstitutional for permitting them to be charged twice — administratively and criminally — for the same offence.
The Bloemfontein high court found no merit in the argument and dismissed with costs their application to declare sections of the act unconstitutional last year. Their application for leave to appeal was also dismissed by the high court. They then petitioned the SCA.
Sars said on Wednesday in dismissing their appeal, the SCA held that there was no prospect of success.
“The SCA’s decision thereby upholds the earlier decision of the high court in favour of Sars, which confirms the ruling of the regional court regarding a case of intentional tax evasion against the applicants,” Sars said.
Kieswetter said many taxpayers abused the system by submitting nil or false returns, while masking the true activities of their business.
“The decision by the courts has confirmed that this intentional practice is in fact not only a civil offence, but a crime.”
He said this finding underpinned the meticulous investigations undertaken by Sars into tax evasion by taxpayers and that it had acted correctly to levy an understatement penalty for contravention and a subsequent referral to prosecution for criminal acts against the fiscus.
TimesLIVE
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