Seshin Naraidu v The State

Mr Seshin Naraidu, a tax practitioner, was charged together with others with fraud and statutory tax offences arising from a claim for a VAT refund submitted to SARS on behalf of Serghony’s Shoes Fashion CC (SSF). The claim, amounting to approximately R2.7 million, was supported by fictitious invoices. Mr Mbom, the sole member of SSF, was responsible for registering SSF as a VAT vendor and lodging the VAT returns. Mr Naraidu sent several emails to SARS querying delays in payment of the VAT refund and indicated that he had resubmitted supporting documents. The Regional Court convicted Mr Naraidu of fraud and sentenced him to six years’ imprisonment. His appeal to the High Court was dismissed. He then appealed to the Supreme Court of Appeal.

The appeal was upheld. The order of the High Court was set aside. Mr Naraidu’s conviction and sentence imposed by the Regional Court were set aside, and he was acquitted of all charges.

The judgment clarifies the evidentiary threshold for proving fraud in tax-related prosecutions, particularly the requirement of knowledge and intent. It confirms that reckless or negligent conduct by a tax practitioner, even where it facilitates a fraudulent claim, does not on its own establish criminal liability for fraud. The case also highlights difficulties surrounding prosecutions under repealed tax provisions and the continued operation of transitional provisions in the Tax Administration Act.