On 8th March 2007, the respondent communicated to the applicant wherein it demanded payment of Value Added Tax and documents which allegedly related to supplies which had been made more than 5 years before the assessment. Unilever contended that it only requires a tax payer to keep tax records for a period of 5 years, whereas the assessment in question related to the period of 1996 – 1999, 7 to 10 years before the date of the assessment
The court held that it is clear that the statutory provisions only require the taxpayer to keep records for up to a period of five years. Where therefore the term lapses and the Tax Authorities don’t demand taxes, a legitimate expectation is raised on the part of the taxpayer that the taxes in question are not payable.
The court further held that it would be unfair to demand documents from a taxpayer who has been legally allowed by statutory provisions to dispose of the documents. The court observed that the reason for the five-year limit is due to financial volatility in business transactions.
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