On March 18, the South African Revenue Service (Sars) published an information page on the institution of legal proceedings and the requirements in terms of the Customs and Excise Act, 1964, and the Tax Administration Act, 2011.

According to Sars, the institution of legal proceedings is a process whereby a taxpayer delivers court papers to Sars, requiring the commissioner of the organisation to appear and defend a matter in the High Court. Prior notice before the institution of the proceedings is required in some instances, particularly in matters involving the State. There are two different acts in terms of which the institution of legal proceedings relating to tax against the commissioner of Sars is governed. Although they have a similar purpose, the requirements are not identical.

Section 96 of the Customs and Excise Act prescribes the process in terms of which any legal proceedings against the State, the Minister, the commissioner or an officer are instituted. This may not be instituted before one month after the delivery of a notice informing the commissioner of Sars of the intended legal proceedings in the specific format and manner prescribed by the rules. The rules in Section 96 indicate that a notice in terms of this section must be delivered in a particular manner.

According to Sars, two new subsections were added to Section 11 of the Tax Administration Act, 2011, by the Tax Administration Laws Amendment Act, 2013, and read as follows: “(4) Unless the court otherwise directs, no legal proceedings may be instituted in the High Court against the commissioner, unless the applicant has given the commissioner written notice of at least one week of the applicant’s intention to institute the legal proceedings. (5) The notice or any process by which the legal proceedings referred to in subsection (4) are instituted, must be served at the address specified by the commissioner by public notice.” The public notice mentioned in subsection (5), once finalised, will be published in the Government Gazette, and will then be available under secondary legislation (public notices).

The information page indicates that experience has shown that most parties to a dispute would generally prefer resolution over litigation and it is, therefore, necessary to have these measures in place for the following reasons:

• to avoid unnecessary and costly litigation;
• if Sars receives prior notice of an intended court application, it will ensure that the matter is brought to the attention of an appropriate senior official;
•  the senior official can then use the prior notice period productively to investigate the merits of the intended application and, if appropriate, resolve the dispute before formal court proceedings;
• the compulsory prior notice is mitigated by the ability of a court on application by the intended applicant to waive formal compliance in extremely urgent cases; and
• the prior notice requirement will ensure that resolution is sought timeously, which would lessen the burden on the court system.

There are two ways in which the notices under the two different Acts should be instituted. Any notice or process in terms of which legal proceedings are instituted in accordance with the Customs and Excise Act, 1964, must be duly completed and signed by the litigant and any of these methods of delivery – fax, email, registered post and hand delivery – may be used. If delivered by fax or email, the original signed document must be handed in or sent by registered post within ten days.

A notice or any process in terms of which legal proceedings are instituted in accordance with the Tax Administration Act, 2011, must comply with the following: all notices must be served by email to HighCourtLitigation@sars.gov.za or by fax to (+27) 12 422 5194, and all applications must be served at the physical or electronic address in the applicable regions indicated on the information page.

Graphite Electrodes Tariff
On March 20, the International Trade Administra- tion Commission of South Africa (Itac) informed of the proposed reduction in the ‘general’ rate of customs duty on graphite electrodes, classifiable under tariff subheading 8545.11, from 10% ad valorem to free of duty.

The investigation was initiated by Itac, which argued that the existent Southern African Customs Union (Sacu) manufacturer is ceasing manufacturing operations. The customs duty will no longer serve the purpose of supporting domestic manufacturing, employment and investment in the relevant industry. The existence of a customs duty could place an undue cost burden on the downstream industry. Comment is due by April 17.

Stranded-Wire Tariff
Itac has informed of the proposed reduction in the ‘general’ rate of customs duty on stranded wire, or wire which is plated, coated, or clad with brass, classifiable under tariff subheading 7312.10.20, from 5% ad valorem to free of duty, through the creation of an additional eight-digit tariff subheading. The application was lodged by Apollo Tyres South Africa, which argued that there were no local manufacturers of the subject product in the Sacu region. There are costs involved in applying and administering rebate item 307.08/73.12/01.00 (Third Schedule) that would be eliminated. The administrative burden on government will also be reduced if the Third Schedule rebate item is cancelled. Describing the product in more detail would ensure that the tariff subheading is not used by unscrupulous importers to evade customs duties applicable on other products manufactured by the Sacu wire industry. Comment is due by April 17.

On November 22, 2013, Apollo South Africa applied for the amendment of the customs duty structure for certain pneumatic tyres of rubber, classifiable under tariff subheading 4011.10, 4011.20.15, 4011.20.22, 4011.20.24, and 4011.20.26. The investigation is still ongoing.

Cabinet Approves Sixth IPAP
At a post-Cabinet meeting briefing on March 20, it was announced that Cabinet had approved the sixth yearly iterative Industrial Policy Action Plan (IPAP) – for the periods 2014/15 and 2016/17 – for implementation. The fifth iteration of IPAP was published in April 2013.

Fruit and Vegetables Vat
On March 19, Sars published a value-added tax draft binding general ruling (DBGR) on the treatment of the supply and importation of fruit and vegetables. Comment is due by May 15.

Vat on Imported Potatoes
A Vat DBGR on the treatment of the supply and importation of various types of frozen potato products was published by Sars on March 12. Comment is due by May 15.