The Johannesburg High Court has ruled against a businessman who sought to have a multi-million-rand tax assessment set aside, in part, on the basis that he was the victim of illegal surveillance by the so-called SARS 'rogue' unit.
Judge Pieter Meyer on Wednesday issued the judgement on the review application filed in 2015. Among the respondents listed include the SA Revenue Service and the ministers of finance, state security and the national director of public prosecutions.
Martin Wingate-Pearse is a shareholder in tobacco manufacturer Carnilinx and a member and director of various companies with interests in the clothing industry, according to the judgment.
The case stems from an investigation into Wingate-Pearse's tax affairs by SARS that commenced in 2002. After executing a search warrant in April 2005, the revenue collection agency estimated that he had grossly under-declared his taxable income for the years between 1998 and 2005. His tax affairs were found to be non-compliant as he did not declare all of his taxable income.
His tax liability increased from R350 000 to R41.7m, later reduced to R9.2m after he filed an objection.
Wingate-Pearse then applied for tax amnesty, and launched two review applications to have the assessment set aside. He also submitted a number of supplementary founding affidavits.
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According to Judge Meyer's ruling, among the measures of relief Wingate-Pearse initially sought was a declaratory order that the so-called SARS 'rogue' unit was unlawfully established and that it "abused its power and resources by engaging in activities it had no lawful authority to perform".
He later withdrew a request for this order.
In court documents the unit is referred to as the HRIU. Judge Meyer notes this is the same unit that has come to be known as the 'rogue unit' following a report in the in 2015. HRIU stands for High Risk Investigations Unit.
This is the same unit that Public Protector Busisiwe Mkhwebane recently found was established unlawfully. Judge Meyer's judgement does not mention the Public Protector's finding.
Public Enterprises Minister Pravin Gordhan, who was the head of SARS at the time of the HRIU's establishment, is seeking a review of the Public Protector's report. He has argued that Mkhwebane got the "facts and law" wrong, as Fin24 reported previously. He has also on numerous occasions defended the legality of the unit.
'Covert intelligence unit'
According to Wednesday's judgement, Wingate-Pearse argued he was the victim of the tax agency's "covert intelligence unit", also known as the Tiger Group or the HRIU. He claimed that the unit intercepted and monitored his communications, infringing on his Constitutional rights.
"He accuses SARS of having employed illegal intelligence gathering measures against him," Meyer noted.
But the judge stated that, when the tax agency conducted its investigation into Wingate-Pearse's tax affairs and carried out its search and seizure warrant, the investigative unit was not even in existence. It was only established in 2007, two years after the search warrant was executed.
Wingate-Pearse further argued that the search and seizure warrant from 2005 was illegal, and that all documents obtained after the warant was executed were illegal and should be discounted.
Wingate also referred to a report by a panel led by Adv Sikhakhane SC regarding the establishment of and activities at the HRIU; and a statement by SARS advisory board's Judge Kroon that the unit's establishment was unlawful.
Meyer pointed out that Judge Robert Nugent, who chaired the commission of inquiry into SARS, found that the Sikhakhane report did not provide evidence as to why the unit was unlawful. "Nugent made findings in [the] final report that supports SARS' stance that Wingate's allegations about the existence of the rogue unit within the ranks of SARS are without factual basis," the judgment read.
Meyer added that Wingate-Pearse's allegations of intercepted communications are also "without basis".
In its submission, SARS contended that it acted lawfully throughout the investigation of Wingate-Pearse's tax affairs.
"SARS refutes his claims it was a tainted process, a conspiracy full of malice and bias directed at him," Meyer said.
Meyer dismissed the review application with costs.