Are civil judgments susceptible to rescission?

On 11 March 2022, the Constitutional Court (CC) of South Africa granted leave to appeal and set aside an order from the High Court of South Africa (HC), Western Cape Division. The issue before the court in Barnard Labuschagne Incorporated v SARS was whether a certified statement filed by SARS that is treated as a civil judgment is susceptible to rescission.

On 15 December 2017, SARS filed a certified statement in terms of section 172(1) of the Tax Administration Act, No. 28 of 2001 (TAA) with the Registrar of the HC, in which it recorded that Barnard Labuschagne Incorporated (BLI) owed SARS R804 747. The certified statement in this regard followed from BLI’s self-assessments of its value-added tax, employees’ tax, unemployment insurance fund contributions, and skills development levies.

BLI’s complaint was not that its self-assessments were wrong but rather that the certified statement was wrong, as BLI made payments which SARS failed to appropriate to the relevant assessed taxes. In terms of section 174 of the TAA, a certified statement should lawfully be treated as a civil judgment given in the relevant court in favour of SARS (“tax judgement”). BLI, to this end, brought an application to rescind the tax judgment followed by SARS’s main ground of contention being that a tax judgment is not susceptible to rescission.

Throughout the judgment, reference was made to the Kruger judgments, in which the court confirmed the rescindability of a tax judgement in terms of common law. In these cases, the courts found that a tax judgment is, in principle, susceptible for rescission. Despite the “conclusive evidence” section of the Income Tax Act, there is a wide field of defences available to a taxpayer in rescission proceedings. The court in Metcash also confirmed that a tax judgment is capable of rescission.

From the judgment, the court held:

“It follows that the High Court should have found that the tax judgment was susceptible to rescission, and should have considered whether BLI had made out a case for rescission in terms of common law.

This Court recently repeated the well-known requirements: first, the applicant must give a reasonable and satisfactory explanation for its default; and second, it must be shown that on the merits it has a bona fide defence which prima facie carries some prospect of success.

Because the procedure for taking a tax judgment does not call for a procedural response from the taxpayer, the focus inevitably falls on the second of these requirements.”

To this end, a tax judgment is indeed susceptible to recission.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.