It appears from recent articles in the media that there may be a misunderstanding that the SARS has lost the "pay now, argue later" principle, established by the Constitutional Court in its Metcash judgment of March 2000, following the recent Supreme Court of Appeal ruling in the case of Anil Singh vs CSARS. This is not the case.
The Singh judgment dealt with a totally different issue, namely whether the Commissioner could commence actions to recover outstanding tax from a vendor by seeking judgment in terms of section 40 of the VAT Act, prior to giving the vendor notice of his assessment.
The constitutionality of the "pay now, argue later" policy was, therefore, not disturbed and the Singh judgment has no effect on it. The SARS must notify the taxpayer/vendor of his/her obligation and the taxpayer/vendor must pay within the period specified in the assessment. The obligation to pay the assessment amount arises with the issue of the assessment. If the taxpayer/vendor fails to pay within the specified period, the SARS can then start collection proceedings. In terms of the "pay now, argue later" policy, the obligation to pay the amount due or payable is not suspended by any objection or appeal against the assessment unless the taxpayer/vendor requests the Commissioner to exercise his discretion to suspend payment pending the finalisation of the objection and/or appeal.
The Supreme Court of Appeal, therefore, ultimately came to the conclusion that notification of the vendor/taxpayer of his assessment is a necessity contemplated by the legislation. It, therefore, found that the vendor should have been given notice of assessment before the vendor could be regarded as being in default of payment for purposes of taking judgment against him.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE