Court name
Supreme Court
Case name
Du Preez v Minister of Finance
Media neutral citation
[2012] NASC 4
Judge
Mainga JA

























REPORTABLE


CASE
NO.: SA 20/2011


IN
THE SUPREME COURT OF NAMIBIA






In
the matter between:














GIDEON
JACOBUS DU PREEZ



APPELLANT











and


















MINISTER
OF FINANCE



RESPONDENT











Coram: MAINGA
JA, STRYDOM AJA
et
O’REGAN AJA


Heard
on: 04/11/2011


Delivered
on: 21/06/2012


___________________________________________________________________







APPEAL JUDGMENT


___________________________________________________________________





MAINGA
JA:




  1. This is an appeal against the
    decision of Parker J in the High Court.
    1
    Appellant, Mr G J Du Preez, had brought a review application in that
    Court in terms of Article 18 of the Constitution of the Republic of
    Namibia,
    2
    seeking to review and correct or set aside the decision by the
    respondent, the Minister of Finance, against the appellant in
    respect of the income tax years of assessment 2000 to 2008 claiming
    an amount of N$100 769,09 in respect of interest and N$51 339,22 in
    respect of arrear tax. Such a high claim of arrear interest is
    unfair and unreasonable, so maintained the appellant, and thus
    subject to review in terms of Article 18.








Factual background



[2] Appellant is a qualified
fitter who now lives in Windhoek.  The case concerns a dispute
he has with the Ministry of Finance that relates primarily to revised
tax assessments issue for the years 2000 – 2005.




[3] The dispute arose
partly from the fact that in about 2004 the appellant’s tax
adviser reopened his assessments for earlier years, and submitted
fraudulent information that resulted in a revision of the assessments
for those years. In about 2007/2008, the Ministry discovered that the
appellant and/or his tax advisor had been defrauding the tax
authorities and in April 2008, held a meeting with the appellant
where according to the Ministry the appellant admitted the fraud,
although in his replying affidavit the appellant denies he was aware
of the fraud.







[4] Subsequent to the meeting
of April 2008, revised assessments were produced and additional tax
was charged in respect of each year in terms of section 66 of the
Income Tax Act. That section provides for 200% additional tax in the
event of the filing of misleading information. Revised tax
assessments were issued in respect of the 2000, 2001, 2002, 2004 and
2005 tax years. Interest was calculated in terms of section 79(2) of
the Act at a rate of 20% per annum from the due date on the revised
assessments. In each case, the due date had been stipulated in the
revised assessment.  The total amount of interest was
N$111,492,97 which exceeded the principal amount due. At the time,
section 79(4) of the Act expressly provided that the interest could
exceed the principal debt.







[5] The appellant then asked
the Minister to reconsider the additional tax levied in terms of
section 66 which the Minister did in terms of section 66(2)(a) of the
Act and the additional tax levied for the years 2000, 2001, 2004 and
2005 was reduced from 200% of the tax originally payable to 20% of
the tax originally payable.  The tax assessments were then
revised again.   According to respondent, as at 21 April
2009, the cumulative amount outstanding was N$45 572, 34 plus
interest in an amount of N$111 492,97.







[6] The appellant did not
lodge an objection or appeal in terms of section 71 or 73 of the Act.
 Instead, on 3 March 2009, the appellant launched proceedings in
the High Court to review and set aside the decision by the Respondent
claiming N$100 769,09 in interest, as well as N$51 339,22 in arrear
tax. The basis for the review, according to the appellant, is the
fact that the claim for arrear interest was unfair and unreasonable
within the meaning of Article 18 of the Constitution.











High Court Judgment



[7] The High Court dismissed
the application with costs. In reaching this conclusion, it reasoned
that there was no legal basis on which it was alleged that the
respondent’s decision was unfair and unreasonable within the
meaning of Article 18. The High Court found that the appellant did
not even contend that the respondent was not authorised to make the
decision complained of and neither did the appellant prove that in
taking the decision complained of, the respondent acted outside the
authority conferred by the Income Tax Act, 1981 (Act No. 24 of 1981)
as amended (the Act). It then held that the appellant failed to
discharge the
onus
cast on him to satisfy the Court that good grounds existed to review
the decision of the respondent.







Relevant provisions



[8] In order to appreciate the
appellant’s complaint, one must have some understanding how the
tax system works. By its nature “tax” or “taxation”
can be understood as:







  1. a
    compulsory and not an optional contribution;


  2. imposed
    by the Legislature or other competent public authority;


  3. upon
    the public as a whole or a substantial sector thereof; and


  4. the
    revenue from which is to be utilised for the public benefit and to
    provide a service in the public interest.
    3








[9] Section 2 of the Act
provides that the Minister shall be responsible for the carrying out
the Act’s provisions. Section 3 provides that the powers
conferred and the duties imposed by or under the Act, may be
exercised or performed by the Minister personally or by any officer
or employee carrying out the said provisions under the control,
direction or supervision of the Minister.







[10] Section 56 obliges a
taxpayer to furnish an income tax return by 30 June in the year
following the year of assessment and to pay any due tax. It reads as
follows:







56 Notice
by Minister requiring returns for assessment of taxes and manner of
furnishing returns and interim returns







  1. Subject
    to subsections (4), (5) and (16), every person who is personally or
    in a representative capacity liable to taxation under this Act in
    respect of a year of assessment, shall not later than the last day
    fixed by subsection (1A)-








  1. furnish
    a return of income in the prescribed form, which shall –








  1. be
    signed by the person or the duly authorized agent of the person; and








  1. include
    a computation of the taxable income of the person and of the amount
    of tax payable on that income, calculated in accordance with the
    rates of normal tax set out in Schedule 4; and








  1. subject
    to subsection (3), pay the amount of the tax due in accordance with
    that computation.








[Subsec
(1) amended by sec 9(1)(a) of Act 21 of 1999 and substituted sec
9(1)(a) of Act 7 of 2002.]







(1A)
The last day for the furnishing of a return of income and payment of
the tax due in terms of subsection (1) is-







  1. in
    relation to a taxpayer other than a person referred to in paragraph
    (b), the last day of June following the end of the year of
    assessment;








  1. in
    relation to a taxpayer-








  1. which
    is a company; or


  2. who
    derives income wholly or partially from business, any profession or
    farming carried on by the taxpayer,








the
last day of the 7
th
month after the end of the year of assessment. [Subsec (1A) inserted
by sec 9(1)(b) of Act 7 of 2002.]







[11] Section 66(1) provides as
follows:







66
Additional tax in the event of default or omission







  1. A
    taxpayer shall be required to pay in addition to the tax chargeable
    in respect of his taxable income-








  1. If
    he or she defaults in rendering a return in respect of any year of
    assessment, an amount equal to twice the tax chargeable in respect
    of his or her taxable income for that year of assessment, less any
    amount already paid in respect of such tax at the time when an
    assessment for that year of assessment issued; or [Para (a)
    substituted by sec 11(1) of Act 21 of 1999.]








  1. if
    he omits from his return any amount which ought to have been
    included therein, an amount equal to twice the difference between
    the tax as calculated in respect of the taxable income return by him
    and the tax properly chargeable in respect of his taxable income as
    determined after including the amount omitted;








  1. if
    he makes an incorrect statement in any return rendered by him which
    results or would if accepted result in the assessment of the normal
    tax at an amount which is less than the tax properly chargeable, an
    amount equal to twice the difference between the tax as assessed in
    accordance with the return made by him and the tax would have been
    properly chargeable.”








[12] Section 79 provided at
all relevant times for this case:






79
Appointment of day for payment of tax and interest on overdue
payments







  1. Subject
    to the provisions of section 80 any tax chargeable shall be paid on
    the due date for such payment as specified in section 56 of this
    Act. [subsec (1) substituted by sec 12(12)(a) of Act 21 of 1999.]





  1. If
    the taxpayer fails to pay any tax in full on or before the due date
    for payment of such tax as specified in the Act or any extension of
    such due date which the Minister may grant in terms of paragraph (a)
    of subsection (3) of section 56 as the case may be, interest shall
    be paid by the taxpayer on the outstanding balance of such tax at
    the rate of 20 percent per annum calculated daily as from such due
    date for payment and compounded monthly during the period which any
    portion of the tax remains unpaid.




[Subsec
(2) amended by sec 12(b) of Proc 10 of 1985 and substituted by sec
9(a) of Act 22 of 1995, and sec 12(1)(b) of Act 21 of 1999.)
4







  1. Any
    amount which on 1 February 1996 is owing by any taxpayer in respect
    of any tax, penalties or interest levied or accrued in terms of this
    Act before such a date, shall with effect from that date bear
    interest at the rate of 20 percent per annum, calculated daily and
    compounded monthly; and




[Subsec
(3) added by sec 9(b) of act 22 of 1995 and substituted by sec 23(a)
of Act 12 of 1996.]







  1. Notwithstanding
    anything to the contrary contained in any law or the common law, the
    amount that may be accumulated and be recovered in respect of
    interest levied in accordance with any provision of this section
    shall not be limited to, and may exceed, the amount of the principal
    debt due, whether such principal debt represents tax, penalties or
    interest, or a combination thereof. [Subsec (4) added by sec 23(b)
    of Act 12 of 1996.]












[13] Section 71 and 73
provides for objections and appeals that may be lodged against the
decision of the Minister. The relevant provisions read as follows:







71 Time
and manner of lodging objections







(1) Objections to any
assessment made under this Act may be made within 90 days after the
date of t
he issue of the
notice of assessment, in the manner and under the terms prescribed by
this Act by any taxpayer who is aggrieved by any assessment in which
he or she is interested.



[Subsec (1) substituted by sec 7 of Act 5
of 1997.]







(2) No objection shall be entertained by
the Minister which is not delivered at his office or posted to him in
sufficient time to reach him on or before the last day appointed for
lodging objections, unless the Minister is satisfied that reasonable
grounds exist for delay in lodging the objection.





(3) Every objection shall be in writing
and shall specify in detail the grounds upon which it is made.





(4) On receipt of a notice of objection to
an assessment the Minister may reduce or alter the assessment or may
disallow the objection and shall send the taxpayer notice of such
alteration, reduction or disallowance, and record any alteration or
reduction made in the assessment.







(5) Where no objections are made to any
assessment or where objections have been allowed or withdrawn, such
assessment or altered or reduced assessment, as the case may be,
shall, subject to the right of appeal hereinafter provided, be final
and conclusive.”







[14] Section 73:







73 Appeal to special court
against Minister's decision







(1) Any person entitled to make an
objection who is dissatisfied with any decision of the Minister as
notified to him or her in terms of section 71(4) may, subject to the
provisions of section 73A, appeal therefrom to a special court for
hearing income tax appeals, constituted in accordance with the
provisions of this section.







[Subsec (1) substituted by sec 5 of Act 4
of 2005.]







(2) Every court so constituted shall
consist of a judge of the High Court of Namibia, who shall be the
President of the court, an accountant of not less than ten years'
standing, and a representative of the commercial community: Provided
that in all cases relating to the business of mining, if the
appellant so prefers, such third member shall be a qualified mining
engineer.



[Subsec (2) amended by sec 10 of Act 8 of
1987 and substituted by sec 20(a) of Act 12 of 1996.]







(3) …







(4) Any court constituted or deemed to the
constituted under the provisions of this Act may, subject to the
regulations, hear and determine any appeal lodged under the
provisions of this Act or any previous income tax law.



(5) …







(6) …







(7)(a) Every notice of appeal shall be in
writing and shall be lodged with the Minister within a period of
thirty days after the date of the notice mentioned in section 71(4),
and no such notice, of appeal shall be of any force or effect
whatsoever unless it is lodged within the said period.



(b) …







(8) If an assessment has been altered or
reduced, the assessment as altered or reduced shall be deemed to be
the assessment against which the appeal is made.



(9) …







(10) …







(11) …







(12) The Minister or any other person
authorized by him may appear in support of the assessment on the
hearing of any appeal, and the appellant and any person who is
interested in such appeal may appear in person or by his counsel,
attorney or agent.







(13) Subject to the provisions of this
Act, the court may-



(a) in the case of any assessment under
appeal, order such assessment to be amended, reduced or confirmed, or
may if it thinks fit refer the assessment back to the Minister for
further investigation and assessment;







(b) in the case of any appeal against the
amount of the additional charge imposed by the Minister under section
66(1), reduce, confirm or increase the amount of the additional
charge so imposed;







(c) in the case of any other decision of
the Minister which is subject to appeal, confirm or amend such
decision.







(14) …







(15) Any matter of law arising for
decision before the court, and any question as to whether a matter
for decision is a matter of fact or a matter of law, shall be decided
by the President of the court, and the other members shall have no
voice in such decision.



(16) ...







(17) ...







(18) Any decision of the court under this
section shall, subject to the provisions of section 76, be final.”







The submissions



[15] Counsel for the appellant
submitted that the outcome of the respondent’s administrative
action to levy interest and backdate the same to the years 2000 –
2005 when the correct assessments were only done during 2008/2009
amounts to harsh, arbitrary and unjust consequences of a financial
nature for the appellant. Counsel submitted further that the
consequence is that the appellant is being required to pay exorbitant
and excessive interest which is unreasonable and in conflict with
Article 18 of the Constitution. Counsel also submitted that to the
extent the interest levied exceeded the principal amount of tax due,
it was in conflict with the
in
duplum
rule
and should be set aside. A further submission was that the quantum of
additional tax imposed was unreasonable, though during the hearing
counsel abandoned this argument. Counsel further submitted that a
reasonable person would not advocate such exorbitant interest that
far exceeds the actual tax due to the respondent and that the
administrative action should be reviewed and set aside. Counsel
further submitted that the Court
a
quo
erred
when it dismissed the application for review and that the
respondent’s decision to impose additional tax and interest
should have been set aside for being unreasonable.







[16] Counsel for the
respondent submitted that the appellant made out no case of the
respondent failing to apply her mind when she decided to reduce the
additional tax, neither did appellant make out a case that the said
decision was arbitrary, capricious, bias or
mala
fide
or that
the respondent did not comply with the requirements imposed upon her
by the relevant legislation or that the decision was
ultra
vires
as she
fully complied with the provision of section 66(2) (a). Counsel
further submitted that there was no evidence that the respondent’s
decision was unfair and grossly unreasonable and therefore in
conflict with Article 18 of the Constitution. Counsel further
submitted that interest and additional tax are charged by operation
of law and not as a result of a decision taken by the respondent or
any of his or her officials. Counsel also submitted that the Act
specifically permitted the quantum of interest to exceed the
principal debt. Finally, counsel submitted that appellant should have
filed an objection against the revised assessments or appealed the
respondent’s decision not to remit the whole of the additional
charge, which assessments became final and conclusive in terms of
section 71(5).







The issues in this appeal



[17] Four questions arise for
determination, namely:







  1. Was
    appellant entitled to seek relief from the High Court without first
    exhausting the procedures under sections 71 and 73 of the Act?


  2. Was
    it unreasonable or unlawful for the due date for the revised
    assessment to be set as at the date of the original tax payment
    should have been made even though the revised assessments were made
    many years later?


  3. Was
    the Minister’s decision in respect of the additional tax
    reviewable?


  4. Can
    the appellant rely on the
    in
    duplum
    rule
    to reduce the interest payment due?








[18] The four issues will be
considered in the order they appear above, the first question to be
decided being, was appellant entitled to seek relief from the High
Court without first exhausting the procedures under sections 71 and
73 of the Act. Section 71 provides for an objection procedure and
section 73 for an appeal to a Special Income Tax Court, where an
objector is dissatisfied with the outcome of an objection.







[19] The Special Income Tax
Court is an independent and impartial tribunal established to deal
with disputed tax cases.
5
It operates like an ordinary court and has extensive powers to amend,
reduce or confirm or refer the assessment back to the Minister for
further investigation and assessment or it may reduce, confirm or
increase the amount of the additional charge imposed under section
66(1).
6
Although the Act describes the proceedings before the Special Court
as an appeal, it is a full re-hearing of the issues.
7
The Court is presided over by a Judge of the High Court who sits with
an accountant of ten and more years standing and a representative of
the commercial community or in matters relating to a business of
mining if the appellant so wishes, a qualified mining engineer.
8
There is a right to legal representation, to adduce evidence and to
challenge or rebut adverse evidence on the issues raised in the
taxpayer’s notice of appeal.
9
There is a right of appeal from that Court to the Supreme Court.
10







[20] The Special Court has
been created to adjudicate upon objections and has been empowered to
ventilate factual disputes relating to tax assessments, interest and
additional tax that may be charged thereon. Disputes about the
correctness of assessments made by the Minister are likely to involve
complicated and contentious issues of fact. It is no doubt for this
reason that Parliament established the Special Court to determine
these difficult issues.







[21] In relation to the
question of whether this dispute should have been pursued in the
Special Income Tax Court, Counsel for the appellant argued that the
calculation of interest was a decision that could not be the subject
of an objection within the meaning of section 71. Counsel argued that
since the interest levied on the overdue payments is charged after
the assessment has been made the appellant’s complaint does not
fall within the purview of section 73(1) and could not be dealt with
by the Special Income Tax Court which deals with assessments.







[22] It is a misunderstanding
of the Act to interpret the interest charged on arrear tax as not
falling within the mechanism created by the Act. The definition of
“tax” or “the tax” or “taxation”
means
any
levy
or tax
leviable under this Act … and includes interest. (The
underlining is mine.)




[23] Any Court constituted or
deemed to be constituted under the provisions of the Act, may hear
and determine
any
appeal

lodged under the provisions of the Act or the predecessor of this
Act.
11
(The underlining is mine.) The interest charged on the arrear tax or
the backdating thereof squarely falls under the income tax complaint
or appeal. Any matter of fact or a matter of law that may arise for
decision before the Court shall be decided by the President of the
Court who happens to be a Judge to the exclusion of the other two
members of the Court.
12
Therefore, to the extent that the appellant’s complaint is
directed at the interest levied, that decision is subject to an
objection within the meaning of section 71.







[24] The establishment of the
Special Income Tax Court does not entirely oust the jurisdiction of
the ordinary Courts. The South African Courts have held that the
ordinary courts retain their right of review, as well as the
jurisdiction to issue declaratory orders in appropriate cases.
13
In particular, courts retain the jurisdiction to determine legal
issues connected to the question of taxation where no questions of
fact arise.
14
The primary issue raised in this case is whether the imposition of
interest and additional tax was “unfair and unreasonable”
administrative action. I am prepared to accept for the purposes of
this case, that this is a legal question that the High Court may
determine. Given the outcome of this case, however, it is not
necessary to decide this question finally in this appeal.







[25] The second question is,
was it unfair for the due date for the revised assessment to be set
as the date the original tax payments should have been made even
though the revised assessments were made years later. In this regard
Counsel for the appellant argued that the Act makes no provision for
charging interest retrospectively and that to back date to a date
when the self-assessment was submitted and should have been paid is
nonsensical.







[26] It is clear from section
56(1A) of the Act, as set out above, that the Act stipulates that the
day for the payment of tax due is the last day of June following the
end of the year of assessment. Section 79(1) then provides that
interest runs from the due date as specified in section 56(1A). In
determining the date upon which the original tax payments were due,
the respondent therefore followed the statutory prescription that
interest ran from the date upon which the tax was due.







[27] The date from which
interest shall run is thus determined by the Act. Section 79
prescribes how and at what rate interest should be levied in the
event the taxpayer defaults. Interest is charged “as from the
day immediately following such due date for payment until day of
payment.”
15
The deponent on behalf of the respondent states that interest was
levied from the due date applicable to each tax year irrespective of
when the fraudulent representations made by the appellant and/or his
representative came to light. The statute prescribes that interest
should be calculated in this way.







[28] Thus,to attack the
interest figures as being unreasonable and thus reviewable is
misplaced. The appellant has failed to show, as the Court below
correctly pointed out, that the respondent acted outside the scope of
the Act. The Act does not afford any discretion in the determination
of interest. So the respondent had no lawful right to do anything
other than what the Act stipulates. Nothing unusual is prescribed by
the Act in regard to the levying of interest that defeats the
standard practices of charging interest; it runs a day immediately
following the due date. That is the practice; after all, “to-day
interest is the life-blood of finance”.
16







[29] It is common sense that
the fraud having been detected long after the tax years in question,
interest was correctly charged from the due date of the tax year in
question in accordance with the behests of the statute and the
respondent was entitled to the interest notwithstanding whatever
explanation was offered. To have levied interest at the time the
fraud was discovered would have been contrary to the provisions of
the Act and defeated the purpose of the Act, which is to avoid delays
in collection of tax as far as possible. It must also be remembered
that appellant benefited from the refunds for the fraud to which he
would ordinarily not have been entitled. Appellant’s
indebtedness does not originate at the time the fraud was detected it
has its origins in the years of assessments he should have submitted
correct tax returns and he should not be heard to complain about the
interest charged retrospectively more so that he admits to have been
correctly assessed. To hold otherwise would be to interpret the law
to benefit dishonest or recalcitrant taxpayers. That was never the
intention of the Legislature and I refuse to be misled by counsel’s
argument.







[30] The third question that
arises is whether the decision to impose additional tax was
unreasonable within the meaning of Article 18 and therefore
reviewable. Section 66(1) stipulates that a taxpayer who fails to
render a return shall be liable to additional tax in an amount of
twice the amount of tax payable in that year. That was the basis of
the original imposition of additional tax. Section 66(2) provides
that the Minister may remit the additional charge or any of part of
it if “he thinks fit”. Upon application, the Minister
reduced the amount of additional tax imposed from 200% of the actual
tax due, to 20%. This clearly was an administrative decision but the
appellant did not provide any basis for an assertion that this
decision by the Minister constituted unreasonable administrative
action. The appellant rightly abandoned the argument at the hearing.
Nothing further need be said in this regard.







[31] I now turn to consider
the final argument whether the appellant can rely on the
in
duplum
rule
to reduce the interest payment due. Simply put, the
in
duplum
rule
is a rule which originated in the Roman law that provided that the
interest paid on a debt may never exceed the capital sum. The
appellant submitted that the Act must be read subject to this rule as
it was set out in the matter of
Commercial
Bank of Zimbabwe Ltd v M M Builders and Supplies (Pvt) Ltd and Others
and Three Similar Cases.
17




[32] At the time that this
dispute arose, the provisions of section 79(4) provided as follows:







Notwithstanding anything to the
contrary contained in any law or the common law, the amount that may
be accumulated and be recovered in respect of interest levied in
accordance with any provision of this section shall not be limited
to, and may exceed, the amount of the principal debt due, whether
such principal debt represents tax, penalties or interest, or a
combination thereof.”
18







This provision expressly
contemplates that the interest charged may exceed the capital amount.







[33] Section 79(4) has since
been replaced by a rule which gives effect to the
in
duplum
rule.
The new provision came into effect on 1 April 2009, after the
relevant events in this case. Counsel noted that at the time of the
revised assessments, the amendment had been enacted but not yet
operative. Counsel argued that “it must have been the intention
of the Legislature not to charge interest over and above the capital
to apply the
in
duplum
rule
and that one can only accept that the amendment was brought about
because obviously there was a lacuna in the Act insofar as the
in
duplum
rule
was applicable.” This submission is undoubtedly correct, but it
cannot help Counsel as the new provision had not yet come into force
at the relevant time. Given the clear language of section 79(4) as it
existed at the time of the relevant facts in this case, it is not
possible to interpret the statute in any way other than as a
statutory exception to the
in
duplum
rule.
Nor did the appellant launch any constitutional challenge to the
validity of section 79(4) as it read before the 2009 amendment.







[34] Counsel referred to a
South African case of
Nedbank
Ltd and Others v National Credit Regulator and Another
19
where the Supreme Court of Appeal stated the following:







The following two aspects of the
common-law
in duplum
rule are relevant: first, where the total amount of arrear and unpaid
interest has accrued to an amount equal to the outstanding capital
sum, interest ceases to run, but any payment made by the debtor
thereafter will lead to the amount of interest decreasing after which
interest again starts to accrue to an amount equal to the outstanding
capital amount. The purpose of the rule is to ‘ensure that
debtors are not endlessly consumed by charges and also to ensure that
debtors whose affairs are declining should not be entirely drained
dry.’ Secondly, the
in
duplum
rule is suspended
pendente lite
, and the lis
is said to commence upon service of the initial process, whereafter
interest runs again. … The rule of interpretation is that a
statutory provision should not be interpreted so as to alter the
common law more than is necessary unless the intention to do so is
clearly reflected in the enactment, whether expressly or by necessary
implication…”






From
the point where counsel halted the quotation it continues to read:





[I]t
is a sound rule to construe a statute in conformity with the
common-law, save where and insofar as the statute itself evidences a
plain intention on the part of the Legislature to alter the common
law.”
20



Section 79(2) when read
together with subsection 4 as added by s 23(b) of Act 12 of 1996,
supra,
evidences a plain intention on the part of the Legislature to alter
the
in duplum
rule
in regard to
the payment of tax and interest in overdue payments.





[35] There
is a legion of authorities that the Legislature does not intend to
alter
21
the existing law more than is necessary and it has been applied in
innumerable cases. In
Cornelissen
NO v Universal Caravan Sales (Pty) Ltd
22
Holmes JA referred to this presumption as a “sound rule”.
Its application facilitates legal certainty and the effective
administration of justice.
23
But as was stated in
Kruger
v Santam Versekeringmaatskappy Bpk
24
the common law does not constitute “impenetrable obstacles,”
there are numerous instances in which Courts (South Africa) have
interpreted statutes in which common law principles and precepts had
to yield to the enacted provisions.
25
The presumption is rebuttable. As the authors Lourens du Plessis and
G E Devenish correctly points out, the common law has had to bend a
knee to literalist-cum-intentionalist considerations.
26





[36] In
Glen Anil
Finance v Joint Liquidators, Glen Anil Dev
,27
Trengove JA cited with approval the principle above and went on to
say:





Now
it is clear from the authorities that in our law, as in English law,
the presumption that a statute alters the common law as little as
possible is to be relied on only in the case of ambiguity in the
statute and even then it may have to compete with our secondary
canons of construction…”
28





[37] In
Seluka v
Suskin and Salkow

Wessels J said the following with reference to this principle:
29







It is true that it is a canon of
construction that an Act must not be presumed to alter the common
law, but directly it is clear from the language of statute that the
very object of the Act is to alter or modify the common law, then
full effect must be given to this object.”






[38] In
the
Glen Anil
Finance
case
above, Trengove JA referred to the above extract in the
Seluka
v Suskin and Salkow

case with approval and consequently, the learned Judge of Appeal held
that “looking at the Sale of Land on Instalment Act 72 of 1971
as a whole, it is quite evident from its terms that Parliament
intended altering the existing law…”
30





[39] In
Casely, NO v
Minister of Defence
,31
the Court in reference to the presumption above stated:





But
here that presumption is rebutted by the manifest object and plain
intention of the Legislature in enacting the War Pensions Statutes in
1942 and 1967.”






[40] Applying
the above principles to the circumstances of this case, Ms van der
Westhuizen’s contention is untenable. Sections 79(2) and 79(4)
(before the 2009 amendment which provides for the interest not
exceeding the capital amount) they are clear and unambiguous and they
should be accorded their literal meaning. Counsel did not even
attempt to cite any absurdities that might exist in the provisions
that may warrant departure from the natural and ordinary meaning of
the provisions. The Act does not expressly state that the
in
duplum
rule
is excluded, but the provisions of s 79(2) and subsection (4), as
added by s 23(b) of Act 12 of 1996 were undoubtedly enacted with the
intention of excluding or altering the
in
duplum
rule
insofar as the amount that may be accumulated and be recovered in
respect of interest levied. As counsel correctly pointed out that the
in duplum
rule is clear and well-known, and given the provisions of s 79(4)
(Act 12 of 1996) the Legislature must have passed s 79(2) and (4)
with “the blast of the rule blowing in their ears”. The
reading of s 79 particularly the charging of interest at 20% together
with sections 80 to 86, 56 and 66 there can be no doubt that the
Legislature intended to create an effective taxation regime which
enhances voluntary compliance in the collection of taxes. That must
be seen in the light of the fact that tax is productive of some
revenue which is of the utmost for the performance of State functions
and the Act creates its own procedures including Courts and Tribunals
to recover tax. The fact that the Act or s 79(4) has been amended to
provide for interest charged not exceeding the original tax does not
mean there was a lacuna in the Act. The amendment could be attributed
to various reasons. The Act has its origins during the apartheid
South African Government when the Legislature was supreme. The
current Government could have reconsidered the then provisions of s
79(4) to bring them in line with the current practices in charging
interest.


[41] It
seems that, viewing the Act as a whole the Legislature by making such
formidable provisions in the Act for payment of tax and interest on
overdue payments must have intended to part from the common law
principle unless the contrary intention clearly appears. No such
other intention is apparent. Therefore, Ms van der Westhuizen’s
argument altogether overlooks the true function and effect of s 79(2)
and it sins against the evidence and plain meaning of s 79(2) and
(4). I refuse to be persuaded by counsel’s arguments and it
follows that they should be rejected.







[42] It is thus concluded that
this appeal has no merit and should be dismissed with costs.






[43] The following order is
made:






  1. The
    appeal is dismissed.


  2. The
    appellant is ordered to pay the legal costs of the respondent, such
    costs to include the costs of one instructed and one instructing
    counsel.












___________________


MAINGA
JA











I agree.











___________________



STRYDOM AJA







I agree.















___________________



O’REGAN AJA






























Counsel
on behalf of the Appellant:



Ms
CE van der Westhuizen



Instructed
by:



Andreas
Vaatz & Partners











Counsel
on behalf of the Respondent:



Ms
C Potgieter



Instructed
by:



Government
Attorney





















1
See Gideon Jacobus
Du Preez v The Minister of Finance
,
Case No A 74/2009, judgment of the High Court, delivered on 25 March
2011 (per Parker J)









2
Article 18 provides: “Administrative bodies
and administrative officials shall act fairly and reasonably and
comply with the requirements imposed upon such bodies and officials
by common law and any relevant legislation, and persons aggrieved by
the exercise of such acts and decisions shall have the right to seek
redress before a competent Court or Tribunal.”








3
Nyambirai v National Social Security and
Another
1996(1) SA 636 ZSC at 643C-D;
1995 (9) BLLR 1221 at 1227J-1228B;
Carlson
Investments Share Block v Commissioner, South Africa Revenue Service

2001(3) SA 210 WLD at 231A-B.









4
The subsection
was further amended by sec 7(a) of Act 5 of 2007 which came into
operation on 1 April 2009. As this amendment was not operable at
the time the dispute in this case arose, the section is reproduced
in its form prior to the 2009 amendment.













5
Section 73 (1) of the Act. The reasoning in this
paragraph draws on the desciprtion of the Income Tax Court given by
the South African Constitutional Court in
Metcash
Trading Ltd v Commissioner, South African Revenue Service and
Another
2001(1) SA 1109 (CC) at
1137A-E. There is no material difference in legislative design
between the South African Special Income Tax Court and the Namibian
Special Income Tax Court.









6
Section 73(13)









7
Section 73 in general read together with ss 72 and 74









8
Section 73 (2)









9
Section 73 (12) read together with ss 72 and 74









10
Section 76









11
Section 73(4)









12
Section 73(15)









13
See Metcash Trading Ltd v Commissioner, South
African Revenue Service and Another
2001(1)
SA 1109 (CC) at paras 44 – 7 and authorities cited therein.









14
See Commissioner for Inland Revenue v Friedman and Others NNO
1993 (1) SA 353 (A).









15
Section 79(2)








16
Linton v Corser
1952 (3) SA 685 (A) at 695G;
LTA
Construction Bpk v Administrateur, Transvaal

1992(1) SA 437 (A) at 482G-H








17
1997(2) SA 285 (ZH)








18
This provision was repealed with effect from 1 April 2009, by
section 7(b) of Act 5 of 2007. It was replaced with the following
provision: “The amount that may be accumulated and be
recovered in respect of interest levied in accordance with any
provision of this section may not exceed the amount of the original
tax”.









19
2011(3) SA 581 SCA at 600A-C and 601E-602A









20
Id at 602A









21
Grgin v Grgin 1960(1) SA 824 (W) 827; Reek NO v
Registrateur van Aktes, Transvaal
1969(1) SA 589 (T) 594-595;
Joubert v Joubert 1966(3) SA 734 (O) 736; Mader v Mallin
Diamond Mines Ltd
1964(1) 572 (T) 576; Vrede Koöp
Landboumaatskappy Bpk v Uys
1964(2) SA 283 (O) 286









22
1971(3) SA 158 (A) at 175









23
G.E. Devenish, Interpretation of Statutes, 1996 at 159









24
1977(3) SA 314 (O) at 320G-H per Steyn J









25
Casely NO v Minister of Defence 1973(1) SA 630 (AD); Gordon
NO. v Standard Merchant Bank Ltd
1983(3) SA 68 (AD); Glen
Anil Finance (Pty) v Joint Liquidators, Glen Anil Development
Corporation Ltd (in liquidation)
1981(1) SA 171 (AD); Mphosi
v Central Board for Co-operative Insurance Ltd
1974(4) SA 633
(AD)









26
Lourens du Plessis, Re-Interpretation of Statutes, 2nd
ed, 2002 at 177-179; G.E. Devenish, supra at 159-161









27
See note 25, supra at 181H









28
Id at 182A, see also Gordon, NO v Standard Bank Merchant Bank
Ltd
, note 25, supra, at 91G-H where Corbertt JA, after
referring to the rule of construction above stated, “In my
opinion, the language of s 14(2) is, in this respect, plain and
there is no warrant for resorting to this rule of construction.”









29
Id letter “C”









30
At 183H









31
See note 25 above, at 640A