The 15-year sentence handed down to a business owner found guilty on charges of fraud has sent a clear message to taxpayers that the South African Revenue Service (Sars) will “relentlessly pursue those with criminal intent”.
In September 2021, police arrested Anwar Gaffor, the owner of Ceiling and Partitioner Installers (Pty) Ltd, on three counts of fraud. At the time, it was said the arrest followed intensified efforts by Sars to clamp down on tax fraud and non-compliance.
Last week, the Johannesburg Specialised Commercial Crimes Court sentenced the 41-year-old to 45 years of direct imprisonment for three counts of fraud. The court ordered that the sentences imposed on counts two and three must run concurrently with the sentence on count one, resulting in an effective term of imprisonment of 15 years.
Gaffor and his Gauteng-based company were accused and found guilty of submitting fictitious value-added tax 201 returns to Sars during the period 9 September 2019.
Phindi Mjonondwane, the National Prosecuting Authority’s spokesperson for the Gauteng Local Division, said Gaffor unduly benefited from VAT refunds worth more than R2.9 million.
As Mjonondwane explains it, any person who carries on any enterprise is compelled under certain conditions to register for VAT with Sars. Once registered, the entity is referred to as a VAT vendor, and as such VAT must be collected from suppliers of goods and services. This is referred to as output tax.
The VAT vendor can deduct VAT on a variety of expenses, including capital and operating costs, if they are necessary to advance the business and are permitted under the VAT Act. This is referred to as input tax. Every second month, the vendor must submit to the Commissioner VAT returns referred to as VAT 201, accounting for output and input tax.
“Sars relies on the integrity and honesty of each VAT vendor when it comes to administering the amount payable to Sars or refundable to VAT vendor. Gaffor used false or fictitious tax invoices that were purported to be from different entities, to substantiate or support the claims for VAT refunds,” said Mjonondwane.
He added that he hoped the sentence given would dissuade people from evading tax liability through criminal conduct.
Sars Commissioner Edward Kieswetter echoed this sentiment. He warned taxpayers that it would relentlessly pursue those who wilfully transact with the organisation with the view to defrauding Sars.
