A registered tax practitioner convicted of fraud for submitting false VAT refund claims has failed in his efforts to have his conviction overturned.
Sershin Nardaidu, a previous Sars employee working at Liberty Life, lodged an appeal against his conviction for trying to claim R5.4m in VAT refunds for a fashion house alleged to have purchased upmarket clothes worth millions, from what turned out to be a North West supermarket.
The fraud was uncovered by suspicious Sars investigator Khutso Lejeku, who drove to North West to check out the supplier of the expensive purchases for which Nardaidu wanted VAT refunds, only to find a small supermarket at the address of the upmarket supplier.
The Johannesburg high court found that in December 2013 an in-house investigator began looking into the matter after Nardaidu mailed Sars twice to enquire about delays on a VAT refund for Serghony Shoes Fashion CC, a company he claimed was a client.
The refunds he referred to were for July and September 2013 — R2.7m for each month.
Nardaidu’s email, dated December 3 2013, reads: “I want to query the delay for the VAT refund for period 2013/07 and 2013/09. Supporting documents have been submitted, bank details are correct and valid. I have followed up at the call centre and sent a PCC request with no success. According to the Sars e-filing, the audits for both periods have been finalised as per dashboard. Please assist, client is frustrated. I do not know what excuse to give the client any more.”
A PCC request is an application to a special Sars unit tasked with escalating queries.
Nardaidu claimed that supporting documents already loaded on the system were substantiation for the refund claim. These were printed out by the Sars investigator Lejeku, who found that they were two tax invoices supplied by Brother Discount Trading CC, allegedly for expensive clothes bought by Serghony Shoes Fashion. The first invoice was for R22m and VAT of R291,000. The second invoice was for R19m and VAT of R139,000. The invoices were dated June 12 and July 10 2013. The registered address of Brother Discount Trading CC was in Lichtenburg, North West.
The appellant is correctly convicted of fraud and the appeal should be dismissed.
— Johannesburg high court
Lejeku decided to check on the address, drove to Lichtenburg and found only a shop selling food and drinks on the premises.
Lejeku interviewed the manager and an employee, and both denied any knowledge of Brother Discount Trading CC. Lejeku then informed his seniors, who ordered that a stop barcode 4 be placed on Serghony Shoes Fashion to block the release of any funds to the business.
In January 2014 a Sars manager contacted Nardaidu telephonically to speak to him about another email he had sent in November requesting feedback on the delayed VAT refunds for Serghony Shoes Fashion.
The manager set up a face-to-face appointment, but Nardaidu failed to show up and gave no explanation.
Testifying at his trial, Nardaidu claimed he had been referred to the owner of Serghony Shoes Fashion and arranged to meet him at the Dros in Midrand in October 2013. There he met with a person he described as “the supposed owner” or “somebody from Serghony Shoes Fashion”, who was supposed to be the owner.
He claimed the “owner” asked him to institute queries on behalf of the business for VAT refunds for the two months and had handed over documents relating to the claim.
Nardaidu testified that he did not charge for the service rendered at the standard rate and had therefore not opened a file. However, he did undertake to follow up on the VAT refund and this was why he had emailed Sars on behalf of the business.
The court found that Sars had proven that the claim documents were fraudulent and that luxury clothes supplier Brother Discount Trading CC did not exist. Sars had also argued that an experienced tax practitioner would not assist a client without opening a file for them, and Nardaidu had therefore had to have been aware that the VAT refund claim documents were fraudulent.
This was further evidenced by the fact that Nardaidu stopped asking about the refund once he became aware of the investigation, and his deliberate avoidance of requested meetings at Sars offices.
“For these reasons, the appellant is correctly convicted of fraud and the appeal should be dismissed,” the Johannesburg high court found.
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