Cape Town - South African Revenue Service (Sars) was interdicted on Friday
by the Cape High Court from executing a judgment for arrears VAT payments
against four companies in the meat industry.
The constitutionality of the judgment, in terms of section 40 (2) (a) of
the Value Added Tax (VAT) Act, would first be determined in the High Court
before eventually being heard by the Constitutional Court.
Sarel Oberholzer, a member of Blaauwberg Meat Wholesalers, Insama
Investments, Grabouw Meat Traders and Groot Karoo Lamb, said after judgment
was taken against the companies their assets were attached and bank
accounts frozen.
Oberholzer said on June 10 he heard of Sars`` intention to proceed against
the companies for a judgment with respect to the assessment of VAT,
penalties, additional tax and interest totalling R43 million.
It intended executing the judgment by attaching the companies`` meat
supplies, trucks and trade supplies.
The attachment of the groups`` meat would effectively put the companies out
of business and have disastrous financial consequences, he said.
The companies disputed the correctness of the assessment and believed it
owed Sars R3 million.
The companies were entitled to object against the assessment. Should these
objections not be upheld, the companies were entitled to appeal to the
Special Tax Court, which could take up to a year.
The companies were not in a position to pay the R43 million.
Should Sars execute judgment it would result in the winding up of the
companies with the consequent loss of about 300 jobs.
The companies were all registered VAT vendors and rendered regular returns
and VAT payments. The companies said they acted as agents for Namibian meat
producers who imported and sold meat in South Africa.
Turnover was the commission earned in respect of the sale of meat on behalf
of the Namibian meat producers. It was on that commission earned that VAT
was paid to Sars.
Sars contended the companies were liable for VAT on the full selling price
of the meat.
Oberholzer said the companies traded successfully and had substantial
turnover of about R10 million a month and paid VAT amounts of about R500
000 each tax period (every two months).
In terms of the court order by Judge Deon van Zyl, Sars was interdicted
from executing the judgment pending a final determination of the companies``
objection and appeal against the assessment.
The court further ordered Sars to do everything that was necessary to
rescind the attachment of the companies`` assets and the appointment of the
companies`` debtors to collect amounts allegedly due to it.