Sars finally wins battle to wind up Regiments Capital

The South African Revenue Service (Sars) was victorious in its legal battle to wind up Regiments Capital, a Gupta-linked company amid state capture.

Sars commissioner Edward Kieswetter in a statement on Friday said he welcomed the decision the Constitutional Court delivered last week.

The demise of financial advisory firm Regiments Capital occurred after it was revealed it had unlawfully paid substantial kickbacks to Gupta-linked front companies in exchange for deals at state-owned companies, mainly Transnet.

In 2018, the judicial commission of inquiry into allegations of state capture began public hearings into allegations of fraud and corruption including the Guptas.

Regiments was finally liquidated in 2020, which was legally contested.

Sars wanted the liquidation of Regiments Capital as it owed a N$700 million tax bill, was commercially insolvent and needed to pay several creditors.

However, Regiments’ owners fought the move.

Last week, the Constitutional Court refused the directors of the insolvent company leave to appeal a decision of the Supreme Court of Appeal (SCA), which upheld the winding up of Regiments Capital as had been argued by Sars on behalf of creditors in liquidation proceedings.

The Constitutional Court, after considering the application for leave to appeal, concluded that the matter did not fall within the jurisdiction of the court.

Consequently, leave to appeal was refused.

Earlier, Sars petitioned the SCA and appealed the judgement of the Gauteng division of the High Court in Johannesburg which set aside the winding up of Regiments.

Judgement of the SCA was handed down on 18 March, upholding the Sars appeal against the decision of the Gauteng division of the High Court, with the cost order of two counsels.

During this process, Sars raised an assessment amounting to N$690 million in terms of Section 42(5) of the Tax Administration Act.

The decision of the Constitutional Court confirms that liquidation proceedings should continue to benefit all tax-compliant creditors.

“Sars had 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 the government of scarce resources to provide basic services to the poor and the vulnerable.

“Non-compliant taxpayers need to take heed of Sars’ determination to make it hard and costly for those who wilfully and intentionally seek to use creative ways to abdicate their responsibility,” Kieswetter said. – IOL News

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