Inhlakanipho Consultants (Pty) Ltd v Commissioner for the South African Revenue Services (A333/2024) [2025] ZAGPPHC 1210 (25 November 2025)

Case Note

Inhlakanipho Consultants (Pty) Ltd v The Commissioner for the South African Revenue Service
Case No: A333/2024
Date: 25 November 2025

Reportability

This case is reportable as it addresses significant principles surrounding tax liability, agreements related to tax settlements, and the binding nature of such agreements under South African law. It highlights the importance of enforcing agreements made with the South African Revenue Service (SARS) and delineates the boundaries of the agency's discretion in allocating tax payments. The judgment underscores the necessity for SARS to uphold its contractual obligations, a ruling that reaffirms taxpayers' confidence in the stability and reliability of agreements reached with the revenue body.

Cases Cited

1. Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others, 2022 (1) SA 100 (SCA).
2. South African Nursing Council v Khanyisa Nursing School (Pty) Ltd and Another, 2024 (1) SA 103 (SCA).
3. Van Zyl NO v Road Accident Fund, 2022 (3) SA 45 (CC).
4. Trustees, Oregon Trust and Another v Beadica 231 CC and Others, 2019 (4) SA 517 (SCA).
5. Beadica 231 CC and Others v Trustees, Oregon Trust and Another, 2020 (5) SA 247 (CC).

Legislation Cited

1. Tax Administration Act 28 of 2011
2. Section 148 of the Tax Administration Act.
3. Section 166 of the Tax Administration Act.

Rules of Court Cited

1. Rule 23 of the Tax Court Rules.
2. Rule 24 of the Tax Court Rules.

HEADNOTE

Summary

The judgment in Inhlakanipho Consultants (Pty) Ltd v The Commissioner for the South African Revenue Service dealt with the enforceability of a tax payment agreement between the taxpayer and SARS. The core question was whether SARS was bound by the terms of the agreement after the taxpayer fulfilled its obligations. The court found in favor of the taxpayer, reinforcing the principle that agreements reached with SARS are binding unless influenced by undisclosed material facts or fraud.

Key Issues

The principal legal issues addressed by the court included the binding nature of agreements with SARS, the allocation of tax payments made under such agreements, and the interpretation of the relevant provisions of the Tax Administration Act regarding tax liabilities.

Held

The court upheld the appeal, declaring that the appellant was not indebted to SARS concerning the disputed amounts as per their agreement. It mandated SARS to render an account concerning any due interest, emphasizing that SARS must adhere to the terms of the settlement agreement.

THE FACTS

Inhlakanipho Consultants (Pty) Ltd, the appellant, entered into a settlement agreement with SARS concerning tax liabilities for specified periods. The agreement delineated the amounts due, including assessments and penalties, which the appellant complied with by making payment as stipulated. Post-payment, SARS contested the application of the agreement regarding the allocation of paid amounts, leading to the appellant seeking judicial relief to clarify the discharge of tax liabilities.

The appellant claimed that SARS had improperly allocated payments, thus failing to honor its obligations under the binding agreement. The initial court rejected the appellant's motions, leading to this appeal, where the appellant sought a declaration of non-indebtedness and clarity on how interest would be calculated post-agreement.

THE ISSUES

The court was tasked with resolving whether SARS was bound by the settlement agreement terms and if the allocation of payments made by the taxpayer had been properly executed according to the established agreement. The interplay between the Tax Administration Act's provisions and the agreed terms also required elucidation.

ANALYSIS

The court's reasoning hinged on a meticulous examination of the agreement terms and the implications of sections 148 and 166 of the Tax Administration Act. The court underscored that the parties had mutually agreed to a defined framework resolving their tax disputes, stating that once the appellant had complied with its payment obligations, SARS was bound to fulfill its side of the agreement.

The judgment emphasized the symmetry of obligations in taxpayer agreements, stressing that taxpayers should be able to rely on the commitments made by SARS. The court found that SARS's attempt to allocate payments contrary to the agreement was unfounded, leading to a ruling that reinstated the importance of maintaining integrity in tax agreements.

REMEDY

The court overturned the prior ruling of the lower court, issuing a declaration that the appellant was not indebted to SARS regarding the disputed amounts. The court ordered SARS to render an account concerning any interest owed and mandated that the parameters of tax liability must adhere strictly to the agreement reached between the parties.

LEGAL PRINCIPLES

The case illustrates several key legal principles, including:

1. The Binding Nature of Agreements: Once a settlement has been established, parties are expected to comply with its terms; this is fundamental in maintaining confidence in tax agreements with SARS.

2. Taxpayer's Rights: Taxpayers have the right to expect clarity and fairness regarding payment allocation and adherence to agreed-upon liabilities, crucial for the maintenance of trust in fiscal administration.

3. Discretion of SARS: While SARS has discretion in tax matters, it cannot contravene contractual obligations established through agreements without lawful grounds; any failure to comply could undermine the revenue agency's credibility.