Sars welcomes ConCourt judgment in Regiments matter

The South African Revenue Services (Sars) has welcomed the decision by the Constitutional Court to refuse the directors of Regiments Capital leave to appeal a decision of the Supreme Court of Appeal (SCA) that upheld the winding up of the insolvent company.

The case was argued by Sars on behalf of creditors in liquidation proceedings against the Gupta-linked company.

The banking and advisory firm approached the ConCourt earlier this year after the SCA overturned the South Gauteng High Court’s decision that set aside the liquidation of Regiments Capital.

Ruling

The apex court on 17 August 2023, after considering the application for leave to appeal, concluded that the matter does not fall within the jurisdiction of the court and consequently the leave to appeal was refused.

Sars said the Constitutional Court’s decision confirmed that liquidation proceedings should continue to benefit all tax-compliant creditors.

Commissioner Edward Kieswetter welcomed the court’s decision.

Kieswetter said Sars has taken the decision to pursue this matter to its “logical conclusion because it believed that the company was acting to the disadvantage of its creditors”.

“Such taxpayers deprive government of scarce resources to provide basic services to the poor and vulnerable. Non-compliant taxpayers need to take heed of Sars’s determination to make it hard and costly for those who wilfully and intentionally seek to use creative ways remain to abdicate their responsibility,” Kieswetter said.

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Liquidation

Sars petitioned the SCA and appealed the judgment of the Gauteng Division of the High Court that set aside the winding up of Regiments.

Judgment of the SCA was handed down on 18 March 2023, upholding the Sars appeal against the decision of the of the high court, with the cost order of two counsel.

During this process Sars said it raised an assessment amounting to R690 million in terms of Section 42(5) of the Tax Administration Act.

Tax debt

Founded in 2004, Regiments provided services to government, state-owned enterprises and corporates. It owed Sars R280 million, excluding understatement penalties, statutory penalties and interest.

This related to an audit for income tax for 2014 to 2019 including value-added tax (Vat) for March 2013 to February 2016.

The case dates back to November 2019 when the National Director of Public Prosecutions obtained a provisional restraint order against Regiments’ assets.

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