In case of ambiguity, assessee must prove eligibility for tax exemption: SC

In a judgment that will benefit the revenue department, a Constitution bench of the Supreme Court on Monday said tax assessees will have to show clear proof to the Revenue Department that they are eligible for availing a tax exemption and the benefit of any ambiguity in exemption provision/notification would fall in the favour of the tax man.

The five-member bench, comprising Justices Ranjan Gogoi, NV Ramana, R Banumathi, Mohan M Shantanagoudar and S Abdul Nazeer, was constituted to look into what is the rule to be applied while interpreting a tax exemption provision or notification when there is an ambiguity.

The bench put responsibility on the assessee to prove a tax exemption where the guidelines aren’t clear and said he cannot claim the benefit of any such ambiguity in provisions.

While overruling a judgment in the Sun Export case that had held a contrary view, the bench, in an 83-pages judgement, said “exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification”.

South Africa accuses KPMG for withdrawing report implicating ex-minister

South Africa's tax agency on Monday accused KPMG of "unethical" and "unlawful" behaviour in withdrawing a report that suggested the former finance minister ran a rogue unit to spy on political leaders.

The global auditor is the latest international firm to become embroiled in factional battles within South Africa's political establishment. KPMG cleared out its South African leadership en masse on Friday after a damning internal investigation into work the firm did for businessmen friends of President Jacob Zuma.

In particular, it acknowledged "flaws" in a report for the tax service, completed last year, which implied that former finance minister Pravin Gordhan had helped set up the rogue unit in the service. Zuma sacked Gordhan in March.

On Monday, however, South African Revenue Services (SARS) commissioner Tom Moyane defended KPMG's original report and accused the firm of "abhorrent, unethical, and unprofessional conduct" in withdrawing it.

"I want to say the report by KPMG is not flawed. In fact the report from KPMG confirms conclusively, deeply so, that there is prima facie evidence of wrongdoing in this organisation (SARS)," he told a news conference.
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