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Capstone 556 (Pty) Ltd v Commissioner SA Revenue Service and Another, Kluh Investments (Pty) Ltd v Commissioner SA Revenue Service and Another (26078/2010, 8274/11)  ZAWCHC 432 (20 September 2011)
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Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
Before: The Hon. Mr Justice Binns-Ward
CASE NO: 26078/2010
In the matter between:
CAPSTONE 556 (PTY) LTD …................................................................................Applicant
COMMISSIONER, SOUTH AFRICAN
REVENUE SERVICE ….................................................................................1st Respondent
THE MINSTER OF FINANCE …...................................................................2nd Respondent
CASE NO: 8274/11
In the matter between:
KLUH INVESTMENTS (PTY) LTD ….......................................................................Applicant
COMMISSIONER, SOUTH AFRICAN
REVENUE SERVICE ….................................................................................1st Respondent
THE MINISTER OF FINANCE …..................................................................2nd Respondent
JUDGMENT DELIVERED: 20 SEPTEMBER 2011
 In these matters the applicants seek leave to appeal against the judgment dismissing their applications for interim interdictory relief prohibiting SARS from taking any steps to enforce the payment of assessed tax pending the determination of their appeals to the special tax court; alternatively, pending the determination of applications to be instituted by them for the review and setting aside of the decisions by SARS denying them a suspension (or a continued suspension) in terms of s 88 of the Income Tax Act 58 of 1962 ('the IT Act') of their obligation to make payment of the assessed tax.
 The decisions by SARS which the applicants seek to impugn on review were made on 7 February 2011 in the matter under case no. 26078/10 ('Capstone') and on 29 March 2011, with reasons therefor provided on 4 April 2011, in the matter under case no. 8274/11 ('Kluh'). The application for interdictory relief was heard on an opposed basis on 26 May 2011 and the judgment against which the applicants now seek leave to appeal was delivered on 22 June 2011, during the first week of the court's winter recess. Difficulties with arranging a date on which all parties could be available for the hearing of the application for leave to appeal resulted in the shifting of two initially arranged dates (the second on account of my unavailability). As a result the application was heard only on 13 September 2011. Shortly before the hearing on that date, at a time when I was already engaged in reading voluminous papers for another matter due to be heard on 14 September, I was favoured with quite detailed heads of argument from the parties which I did not have time to consider then other than on a single and rather superficial reading; hence my decision to reserve judgment.
 I enquired of counsel for the applicants at the hearing on 13 September whether the contemplated review proceedings, on the determination of which the interim interdictory relief which had been sought was to be hinged, had been instituted. I was informed that they had not.
 It was common cause between the parties in the principal proceedings, and rightly so, that the decisions by SARS in terms of s 88 of the IT Act to refuse or withdraw a suspension of the applicants' payment obligations constituted administrative action. Any review of those proceedings would thus resort under the provisions of the Promotion of Administrative Justice Act 3 of 2000 ('PAJA'). Section 7 of PAJA requires that a review application must be brought without unreasonable delay, and not later than 180 days after the date upon which the applicant became aware, or might reasonably have been expected to have become aware, of the administrative action and the reasons for it. (A court does have the power to extend the aforementioned period of 180 days if the interests of justice so require.)
 The duty of a dissatisfied taxpayer to bring an application to review a decision by SARS in terms of s 88 of the IT Act to refuse a suspension with special expedition seems to me to be obvious if the 'pay now, argue later' scheme of the Act's provisions is not readily to be subverted. It follows therefore that by reason of the delay that has occurred the contemplated review proceedings in the current matters are in very real danger of not being entertained, whatever their merits might have been. It was not as if delay was not a matter to which the applicants' attention had not earlier been alerted. Counsel for SARS had pointed out during argument in the principal proceedings that had the contemplated review proceedings been instituted at the time the interim interdict applications had been launched they might well have been ripe for hearing on an agreed expedited basis by the end of May, thereby averting the necessity to determine the interdict applications. See also para 52 of the principal judgment. In my view the delay to which I have referred and the difficulties that it poses for the successful conduct of the contemplated review applications are material factors - quite apart from the ordinary ones concerning whether there might be reasonable prospects of success on appeal - bearing on whether the applications for leave should be granted. Cf. Chopra v Avalon Cinemas SA (Pty) Ltd 1974 (1) SA 469 (D).
 In related vein, I cannot overlook that the probability of any appeal against the refusal of the interdicts being heard before the pending appeals by the applicants against the income tax assessments in question is low. In the context of the delays already remarked on, it is difficult to conceive that any application by the applicants to the appeal court for an expedited hearing with promotion on the roll would be sympathetically entertained. The matter is therefore quite likely, save for costs, to have become moot before it could enjoy the attention of an appellate court.
 These considerations, by themselves, incline me to refuse leave to appeal. However, as I have little doubt that the applicants will pursue the matter on application to the Supreme Court of Appeal I shall proceed, nevertheless, to treat with the grounds on which the applications have been brought so as to determine whether, except for the difficulties to which I have referred, the applicants otherwise enjoy a reasonable prospect of success on appeal. I shall first deal with the Capstone application, and then, to the extent that it remains necessary to do so separately, with the Kluh application.
 The applicants contend that there is a reasonable prospect that another court might find on appeal that this court did not correctly construe s 88 of the IT Act; more particularly, by finding that there was no material difference between the import of the provision before and after the substitution effected in terms of s 13 of the Taxation Laws Second Amendment Act 18 of 2009. It will be recalled that the applicants' contention was that the old s 88 required SARS to consider the merits of the taxpayer's objection or appeal in determining whether or not to grant an application by the taxpayer for a suspension, whereas the current version of the provision does not. It was common cause in the principal proceedings that SARS did not consider the merits of the applicants' tax appeals at all in making its relevant decision. The omission of an express reference to this common cause fact in the judgment gave rise to one of the grounds of Capstone's application for leave to appeal.1 The supposed significance of the omission escapes me, however, and I do not consider that anything about the omission would assist towards the achievement of a different result on appeal.
 I am not persuaded that there is a reasonable prospect that another court will arrive at a different conclusion in respect of the construction of s 88 of the IT Act to that reached by this court. Neither version of s 88 requires SARS to consider the merits of the pending tax appeal in making its decision. The current version expressly provides that SARS may refuse to grant a suspension if it considers that that the appeal is frivolous or vexatious. I doubt very strongly whether another court would differ from this court's finding that even under the old version of the provision SARS would have been entitled to refuse a suspension request if it considered theappeal to be frivolous or vexatious. The absence of an express requirement under either version of the provision that SARS take into account the merits of the appeal is no cause for surprise. After all the very fact that an appeal arises under the IT Act after the consideration and rejection by SARS of the taxpayer's objection to an assessment is an inherent indicator that SARS has by that stage already adopted a view that the appeal should not succeed. To that extent the merits are a neutral factor. It is, however, only if SARS considers that the appeal is unarguable by the taxpayer that it will stigmatise it as frivolous or vexatious and, on the basis of such a conclusion on the merits, refuse the suspension request. For these reasons I am also unpersuaded that there is a reasonable prospect that another court might hold that this court erred in any sense that might be relevant by allegedly 'conf/afTj ng] the notion of a consideration [by SARS] of the merits of an appeal and...the notion of a consideration of whether an ...appeal is frivolous or vexatious'2
 Capstone's request for a suspension of its payment obligation was submitted to SARS during 2010, at a time when the old version of s 88 of the IT Act was in operation. The request was refused on 7 February 2011 after the current version of the provision had been substituted for the old. It was not in dispute that in making the decision SARS acted in terms of the current version of s 88. One of the contentions on behalf of the applicants was that the decision was invalid because, in terms of s 13(2) of the amending statute (Act 18 of 2009), the substituted provision applied to 'all amounts payable by or to the Commissioner on or after [1 February 2011]' and, so the argument went, because Capstone's request for a suspension had been submitted before 1 February 2011, but not yet determined on that date, the assessed tax was not 'payable' within the meaning of s 13(2) of Act 18 of 2009. They contend that the determination of the suspension request thus could not competently have been made under the current version of the provision. Of course, the point would lack sufficient materiality to merit success on judicial review unless the court were persuaded that there was a relevant difference between the considerations to which SARS had to regard under the old s 88 and the current version. Ex hypothesi it would be viable only if the issue already disposed of in para s  and , above, were determined favourably to Capstone. Notwithstanding my adverse determination in that regard I shall nevertheless treat with the argument.
 This court addressed the essence of the argument at para 28 - 29 of the judgment in the principal proceedings. The applicants take issue with the finding that Capstone's assessed tax was payable on 1 February 2011, albeit not exigible by SARS until the suspension request had been determined. They point out, correctly, that the word 'exigible' is not used in the IT Act and contend, in the context of the language actually employed by the legislature, that when the word 'payable', as distinct from 'chargeable', is used it means 'payable and exigible'. They say that because it would be farcical if SARS were able to enforce payment of an amount subject of an undetermined suspension request, the assessed tax of Capstone was not payable on 1 February 2011.
 I think that the rebuttal of this argument is well formulated in the note on argument put in by the respondent's counsel in respect of the applications for leave to appeal. I shall therefore borrow from that on this aspect quite richly.
 'Payability' in the context is determined by s 89(1) of the IT Act. Absent the suspension request, Capstone could not contend on any basis that the amounts in issue were not amounts payable on or after 1 February 2011 for purposes of section 13(2) of Act 18 of 2009. The IT Act (whether in its prior or current form) does not provide for a change in the 'payable' status of an assessed amount as a result of the delivery of an application for suspension. In Singh v Commissioner for the South African Revenue Service 2003 (4) SA 520 (SCA) at para 11, the SCA held that an assessed amount remains payable prior to the final determination of the dispute, even if it later transpires that it was not due at any time. All the Act makes provision for is a suspension of the obligation to pay an assessed amount, where the Commissioner so directs under s 88. While a s 88 suspension is in place, the amount remains payable, but the taxpayer's obligation to make the payment is unenforceable. This precludes collection by the Commissioner of a payable amount (i.e. it goes to its exigibility); it does not alter the statutory status of the assessed tax as payable. Hence the Act envisages only two possible categories of assessed tax: payable but suspended (and hence not immediately exigible), and payable and exigible. The legislature in s 13(2) of Act 18 of 20093 recognises this: it provides that the substituted provision applies to all amounts payable on the commencement date, and then makes special provision for amounts where payment was already suspended on that date. The use of the word 'and in s 13(2) is significant: in context it highlights that even in cases in which suspensions had already been granted the affected amounts were still 'payable', albeit not exigible. Section 13(2) was therefore clearly intended to cover comprehensively the field of payable amounts. It did notrecognise a 'twilight zone' of assessed amounts where payment was not suspended and which were also somehow not payable. Compare Motsepe v Commissioner of Inland Revenue  ZACC 3; 1997 (2) SA 898 (CC) (1997 (6) BCLR 692) at para 10. Capstone does not explain on what basis a suspension request by itself countermanded s 89(1) of the IT Act. Indeed, there is no provision in the IT Act to that effect.
 I am of the view that there is no reasonable prospect of another court finding differently. I should add that I do not consider that Capstone's reliance during argument of the application for leave to appeal on the provisions of clause 164(6) of the Tax Administration Bill4 currently under consideration by the legislature assists the argument advanced on its behalf. On the contrary, to the extent that it is relevant or permissible to have regard to the Bill (about which I refrain from expressing any view), the clause if anything confirms that an assessed amount remains payable, albeit in general not exigible, pending the determination of a suspension request. How else would SARS be able to exercise the discretionary power, notwithstanding an undetermined suspension request by the taxpayer, to nonetheless enforce recovery if it believed that there was a risk of dissipation of the taxpayer's assets?
 I am also not persuaded that another court might hold that, in the context of its
finding that the current version of s 88 of the IT Act was applicable, this court erred in
not holding Capstone's request for a suspension had been dealt with in a
procedurally unfair manner because it had not been afforded 'an opportunity to
adjust its request or make representations regarding the exercise of the
Commissioner's discretion in terms of the current [provision]'.5 The complaint was not one raised in Capstone's founding papers in the principal proceedings and in any event, as mentioned in the principal judgment,6 Capstone's request for a suspension was formulated with express reference to the provisions of s 88 of the IT Act in its current form.
 Finally, and despite it having no identifiable connection with any of the grounds of the application for leave to appeal, I shall nevertheless address the argument addressed by Capstone's counsel that the intended review proceedings enjoy a good prospect of success because the refusal of the suspension request was not rationally connected to the information to which SARS should have had regard. In this regard counsel referred to the fact that SARS had laboured under a misapprehension that Capstone had dissipated its assets in breach of the order made by Griesel J on 10 December 2010. Accepting the validity of this criticism of the reasons given by SARS for its decision, it does not necessarily follow, having regard to the total conspectus of the reasons given by SARS for its decision that the error would be regarded by a review court as a vitiating one. The demonstrated existence of an uncertain prospect of success in the intended review application is, moreover, in any event materially undermined by Capstone's failure for so long to institute the contemplated review application. Therefore, having regard to the considerations discussed at the beginning of this judgment, I do not believe the argument weighs sufficiently in the balance to warrant granting leave to appeal.
 Turning now to the application for leave to appeal in the Kluh matter. Many of the grounds of the application for leave to appeal in the Kluh matter replicate those already discussed in connection with the Capstone application and therefore fall to be disposed of on the same basis. I shall therefore proceed to treat separately only with grounds 9 -11 and 13 in"the application of Kluh.
 Grounds 9-11 are all directed essentially at asserting that there is a reasonable prospect that another court might hold on appeal that this court erred in holding at para 42 - 47 of the principal judgment that the Commissioner's power to direct that a taxpayer's obligation to pay any tax chargeable under the IT Act be suspended included a power to attach conditions or limitations to the suspension. I have carefully reconsidered the question and am not persuaded that there is such a prospect. Indeed, as observed in the principal judgment, the provisions of s 13(2) of the amending statute (Act 18 of 2009) confirm the correctness of this court's construction; for the reference therein to expiry dates of suspensions granted prior to the substitution of the current version of s 88 in place of the old version would not make sense if the Commissioner's power had been restricted to making a direction merely granting or refusing a suspension request without any qualification.
 Ground 13 of the Kluh application asserts that there is a reasonable possibility of another court holding on appeal that the finding by this court that the taxpayer was afforded sufficient opportunity to place whatever material before the Commissioner it might wish in order to persuade him against making any decision to revoke the suspension of payment obligation on review was wrong. I have not been persuaded that this is so. It will be recalled that a meeting between the parties' representatives was held on 23 February 2011 in the context of an indication by SARS that it was undertaking a review of its grant of a suspension in terms of s 88 of the IT Act. While what transpired at the meeting was a matter in dispute, it is not disputed that Kluh's finaicial statements were thereafter submitted to SARS on 15 March 2011 and that on 16 March SARS acknowledged receipt of the statements and stated 'the request for the suspension of the payment of tax will be reconsidered and you will be notified of the outcome in due course'. Kluh did not seek to add to the information already placed before SARS for the purpose of the review it knew that SARS was undertaking.
 In the result the following order is made:
The applications for leave to appeal in case no.s 26078/10 and 8274/11 are refused with costs, including the costs of three counsel.
The costs of three counsel allowed in terms of paragraph 1 of this order are to be taxed on a basis to give effect to the fee-sacrifice scheme described in para 59 of the judgment in the principal proceedings, amounting thus in total to no more than the fees that would ordinarily have been allowed on taxation had the first respondent been represented only by the senior counsel and first junior counsel instructed on behalf of the
Judge of the High Court
1See para 10 thereof.
2Para 7 of Capstone's grounds for its application for leave to appeal.
3Section 13(2) of Act 18 of 2009 is set out at para 7 of the principal judgment.
4Clause 164(6) reads as follows:
During the period commencing on the day that-
(a) SARS receives a request for suspension under subsection (2); or
(b) a suspension is revoked under subsection (5),
and ending 10 business days after notice of SARS' decision or revocation has been issued to the taxpayer, no recovery proceedings may be taken unless SARS has a reasonable belief that there is risk of dissipation of assets by the person concerned.
5See ground 11 of Capstone's application for leave to appeal.
6See para 31 of the principal judgment.