- The court finds that magistrates acted unlawfully by recusing themselves, restarting, and using the incorrect procedure.
- Fraud conviction and sentence against tax practitioner Shafiek Khan were completely set aside.
- The Director of Public Prosecutions may still prosecute the case again before a new magistrate.
The tax fraud prosecution of accountant and tax practitioner Shafiek Khan has collapsed after the High Court in the Western Cape found that a series of unlawful decisions by two regional magistrates fatally undermined the integrity of the trial process.
The court ruled that the proceedings were marred by gross irregularities, including an unjustified recusal, an unlawful order to restart the trial, and the improper invocation of Section 118 of the Criminal Procedure Act. Those defects, the court held, rendered the entire process a nullity, requiring both the conviction and sentence to be set aside.
“The subsequent proceedings… were a nullity,” Judge JD Lekhuleni, with Judge N Erasmus concurring, wrote. The judge ordered that the matter be remitted to the Bellville Regional Court to start afresh before a different magistrate, should the Director of Public Prosecutions still wish to pursue the charges.
The ruling follows an appeal by the state, which had initially challenged the sentence imposed on Khan as shockingly lenient, but instead exposed deep procedural failures that went to the heart of the fairness of the trial itself.
The appeal arose from a sentence imposed in January 2023 after Khan was convicted on five counts of fraud for underreporting his taxable income to the South African Revenue Service over five years.
A tax practitioner who misled the fiscus
Khan, an accountant and registered tax practitioner, was accused of consistently underreporting his income from 2004 to 2008, which caused SARS to lose over R1.1 million, a sum that with inflation, rose to more than R3.5 million.
In his original plea explanation, Khan admitted to purposely declaring a lower income to avoid paying tax. He also acknowledged that the information he provided to SARS was false.
The High Court noted that even while under audit, Khan led a lavish lifestyle, buying luxury vehicles and properties while neglecting his tax obligations. Judge Lekhuleni described his conduct as deliberate and sustained.
“The tax returns the respondent submitted were a distortion of the truth. They were, to the respondent’s knowledge, false,” the court stated. The court further noted that when applying for a home loan, Khan claimed an annual income of over R1 million while reporting only about R60 000 to SARS for the same years.
Sentence shockingly lenient, but the court was powerless to correct it
Regarding the sentence, the High Court made it clear that the punishment imposed by the regional court was far too lenient. “A wholly suspended prison sentence and correctional supervision were, in my view, a strikingly inappropriate sentence,” Judge Lekhuleni said. The court added that, but for the procedural defects, it would have imposed direct imprisonment.
“This was a ‘white collar’ crime committed by a registered tax practitioner over five years,” the judge noted, emphasising that such offences “have a corrosive impact on society” and undermine economic growth. The court rejected the regional magistrate’s finding that Khan had shown remorse.
“The fact that the respondent pleaded guilty does not automatically mean that he was genuinely remorseful,” Judge Lekhuleni wrote. “There was no basis for the previous court to find any remorse on the respondent’s part.”
Recusal, restart and wrong procedure render the trial a nullity
The central issue in the appeal was not the sentence itself but the manner in which the trial had unfolded. After Khan testified in mitigation and raised a defence, the original magistrate changed his plea from guilty to not guilty under section 113 of the Criminal Procedure Act. The magistrate then recused himself and ordered the trial to start afresh before another court.
The High Court found this course of action unlawful. “Once the plea of guilty was changed to not guilty, the Regional Magistrate was required to continue with the trial,” Judge Lekhuleni stated. “There was nothing to justify the recusal of the Regional Magistrate.”
The second magistrate then proceeded under Section 118 of the Act, despite evidence already having been led. That too was impermissible. “It was grossly irregular and impermissible for the Regional Magistrate to proceed with the trial under section 118,” the court ruled.
Both the prosecution and the defence conceded during the argument that the procedure adopted was legally untenable. The court accordingly concluded that “the subsequent proceedings were a nullity”.
Fresh trial now possible
The High Court set aside the entire process. “The conviction and sentence are hereby set aside,” Judge Lekhuleni ordered. “The matter is sent back to the regional court, Bellville, for trial before another Regional Magistrate, if the Director of Public Prosecutions still wants to pursue charges.”
The court warned that if Khan is prosecuted again and convicted, any sentence already served must be taken into account.
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