IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
CASE NO: 7559/2024
In the matter between
JAYMAT ENVIRO SOLUTIONS CC APPLICANT
And
THE COMMISSIONER FOR THE SOUTH AFRICAN RESPONDENT
REVENUE
Date of hearing: 21 November 2024
Date of judgment: Judgment was handed down electronically by
circulation to the parties’ representatives by email
and released to SAFLII. The date for handdown is
deemed to be 13 December 2024
JUDGMENT
[1] This is a review application of a decision by the Commissioner of the South
African Revenue Service ( “SARS”). The applicant is seeking a judicial review of
SARS’s decisions dated 22 September 2021, 28 September 2021 and 27 September
2021 respectively. It is the applicant’s case that the decisions amount to a failure on
the part of SARS to record so-called ETI credits on the applicant’s statement of
account. On 15 August 2023, the applicant directed to SARS a notice per s11(4) of
the Tax Administration Act 28 of 2011(“the TAA”) . SARS re sponded on 15
September 2023, providing a comprehensive response on why the ETI credits were
not recorded on the applicant’s statement of account . The applicant does not seek
to set aside the decision recorded in SARS’s reply dated 15 September 2023, but
rather the decisions or , more precisely, the indecisions of 22 September 2021, 28
September 2021 and 27 September 2021.
[2] This review application presents certain distinct features, including the choice
of the applicant not to follow the procedure outlined in uniform rule 53, and the fact
that although the applicant is seeking the review of SARS’s decisions, it did not
object or appeal against SARS’s assessment, nor did the applicant approach the Tax
Court as stipulated in Chapter 9 of the TAA. The applicant contends that SARS did
not raise any objections to the (self) assessments it submitted. However, SARS
decided not to incorporate the assessments into the applicant’s statement of
account. This review application centres on SARS's choice to neither act upon nor
acknowledge the assessments submitted by the applicant. Although this application
presents its own distinct features, it represents yet another decision in the ongoing
series of rulings concerning the dual jurisdiction of the High Court and the Tax Court.
A RELIEF APPLIED FOR
[3] In its notice of motion the applicant applies for an order in the following terms:
[a] Reviewing and setting aside the respondent’s decisions dated 22
September 2021, 28 September 2021, and 27 September 2021 (“the
impugned decisions”) respectively.
[b] Declaring the impugned decisions to be unlawful, inconsistent with s
165(3)(f) of the Tax Administration Act 28 of 2011 (as amended) and invalid.
[c] To direct the respondent to capture the ETI Credits pursuant to the
revised EMP501 declarations in terms of s 165(3)(f) of the TAA, within five
business days of this order.
[d] To direct the respondent to amend the ETI claimed by the applicant for
1 March 2020 to 28 February 2021 to R3 097 135,94, as per the revised
EMP501 declarations.
[e] That the respondent be required to make full payment of the following
amounts due to the ap plicant pursuant to the revised EMP501 declarations
together with interest thereon at the applicable legal rate from the date of filing
to the date of final payment, within 21 business days of the date referred to in
paragraph [d] above:
Period Amount
2018/02 period R80 420,44
2019/02 period R763 821,05
2020/02 period R1 832 723,73
Total R2 676 965,22
[f] To confirm that the 180 -day period in terms of s 7(1)(b) of the
Promotion of Administrative Justice Act , 3 of 2000 begins to run from 15
September 2023.
[g] That the respondent be ordered to pay the costs of this application
including the cost of two counsel where so being employed, …’
[4] The Commissioner opposed the relief applied for and raised two preliminary
but critical issues. Firstly, in terms of s 105 of the TAA, the applicant, as a taxpayer,
can only bring an application of this nature in the High Court if they are able to
demonstrate “exceptional circumstances” for avoiding the “default route” of
approaching the Tax Court. It was submitted by Mr Sholto -Douglas SC on behalf of
the Commissioner that under s 105 of the TAA the High Court lacks jurisdiction to
hear this matter. It would also imply that the applicant has not used any of the
internal remedies outlined in Chapter 9 of the TAA. Secondly, and in the alternative,
the respondent contended that in accordance with s 7(1) of PAJA, proceedings for
judicial review must be initiated without unreasonable delay, and in any case, no
later than 180 days after the applicant is n otified of administrative action, or became
aware of the action and the reasons for it, or might reasonably have expected to
have become aware of the action and the reasons for it. It is uncontested that the
aforementioned period only commences after the applicant has exhausted all the
available internal remedies timeously . Accordingly, it was submitted on behalf of the
respondent that the applicant failed to exhaust its internal remedies and that the
delay in launching this application was manifestly unreasonable and exceeded the
180-day period provided for under s 7(1) of PAJA.
[5] Notwithstanding the dispute resolution provisions provided in Chapter 9 of the
TAA and the existence of the Tax Court, the High Court’s jurisdiction is not ousted.
Both the High Court and the Tax Court retain jurisdiction. The essential question fo r
decision in this matter concerns whether the relief claimed by the applicant
constitutes a review or appeal in terms of the TAA or a review in terms of the
Promotion of Administration of Justice Act 3 of 2000 (“PAJA”).
[6] At the commencement of the proceedings, the Court heard argument from
both parties about the convenience of addressing the mentioned preliminary points
first. The Constitutional Court held In the Competition Commission of South Africa v
Standard Bank of So uth Africa Limited 1 that when a Court is confronted with a
jurisdictional challenge, such a challenge must be decided by the court at the
outset.2 As a result, I determined that the parties would only present argument
regarding the preliminary objections , and the Court proceeded accordingly. The
difficulty with the afore mentioned approach is that isolating the contextual
1 Competition Commission of South Africa v Standard Bank of South Africa Limited;
Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition
Commission of South Africa v Waco Africa (Pty) Ltd and others 2020 (4) BCLR 429 (CC) para 200.
2 Id para 200 “Where the jurisdiction of the court before which a review application is brought is
contested, a ruling on this issue must precede all other orders. This is because a court must be
competent to make whatever orders it issues. If a court lacks authority to make an order it grants,
that order constitutes a nullity. Scarce judicial resources should not be wasted by engaging in fruitless
exercises like making orders which cannot be enforced.”
background from the preliminary points to be decided is not always practical .
Therefore, it will be necessary to provide a concise summary of the facts that were
uncontroversial, if not common cause, and that gave rise to this review application.
B THE EMPLOYMENT TAX INCENTIVE ACT 26 OF 2013 AND THE
APPLICANT’S ASSESSMENTS
[7] The Employment Tax Incentive Act 26 of 2013 (“the ETI Act”) seeks to
incentivise employers to employ young individuals between the age of 18 and 29 by
providing a tax incentive that enables employers to reduce the amount of
employment tax due by them in respect of qualifying employees.
[8] The Employment Tax Incentive Act 26 of 2013 came into effect on 1 January
2014 and the purpose of the ETI Act, as set out in the long title, is:
“To provide for an Employment Tax Incentive in the form of an amount by
which employees’ tax may be reduced; to allow for a claim and payment of an
amount where employees’ tax cannot be reduced; and to provide for matters
connected therewith.”
[9] The preamble to the ETI Act provides as follows:
“SINCE the unemployment rate in the Repub lic is of concern to the
government;
AND SINCE government recognises the need to share the costs of expanding
job opportunities with the private sector;
AND SINCE government wishes to support employment growth by focusing
on labour market activities, especially in relation to young workers;
AND SINCE government is desirous of instituting an employment tax
incentive,
BE IT THEREFORE ENACTED by the parlia ment of the Republic of South
Africa as follows:”
[10] The ETI is an incentive that eligible employers may claim and is aimed at
encouraging such employers to employ young persons between the ages of 18 and
29, and employees of any age in special economic zones and in any industry
identified by the minister by notice in the Government Gazette. Payment of the
incentive is contingent upon eligible employers being able to reduce the employees’
tax due by them by the amount of the ETI that they may claim, provided that they
meet the requirements of the ETI Act.
[11] The Fourth Schedule to the Income Tax Act 58 of 1962 (hereinafter referred to
as “the Fourth Schedule”) requires every employer to submit a monthly return to
SARS, which includes, among others details, the amount of employees’ tax
deducted or withheld from employees’ remuneration for that month. The ETI is
deductible from the total employees’ tax payable by the eligible employer and is
claimed by submitting a monthly EMP201 return. The employer is permitted to
include any amounts rolled over from previous months to the ETI for a current
month, subject to c ertain specific limitations outlined in s 9(4) of the ETI Act. In
terms of s 10(1) of the ETI Act, at the end of the period for which the employer is
required to render a return in terms of paragraph 14(3)(a) of the Fourth Schedule,
the employer can claim from SARS an amount (“the refund”) that corresponds to the
excess contemplated in s 9(1) of the ETI Act , in the form and manner prescribed by
SARS.
[12] In respect of the present matter, SARS prescribed that the refund must be
claimed by way of an EMP501 declaration, which was required to be submitted by 31
May 2018 in respect of the 2018/02 EMP501 declaration, by 31 May 2019 in respect
of the EMP501 2019/02 declaration and by 31 May 2020 in respect of the EMP501
2020/02 declaration. It is common cause that the EMP501 declarations are self -
assessments as defined in s 1 of the TAA . It is also common cause that the
applicant filed its EMP501 declarations (hereinafter referred to as “the original
declarations”) for the periods in question and claimed as follows:
[a] R6 259.00 – 2018/02 period;
[b] R nil – 2019/02 period; and
[c] R nil – 2020/02 period.
[13] During September 2021, the Applicant submitted revised EMP501
declarations in respect of the periods in question (hereinafter referred to as “the
revised declarations”) in terms of which it claimed:
[a] R80 420,44 – 2018/02 period ;
[b] R763 821,05 – 2019/02 period ; and
[c] R1 832 723,73 – 2020/02 period .
[14] On 9 November 2021, SARS conducted a verification of the 2019/02 revised
declaration. On 21 April 2022, they advised that the verification had been finalised
and that no adjustments had been made. The revised assessments do not reflect on
the applicant’s statement of account. On 15 August 2023, the applicant issued a
notice in terms of s 11(4) of the TAA, demanding that the ETI credits be reflected on
the applicant’s statement of account and that payment of the refunds due to the
applicant be processed.
[15] SARS responded on 15 September 2023, and the gist of its response is to the
effect that: First, by virtue of the provisions of s 9(4) of the ETI Act, the applicant was
precluded from submitting revised assessments; and , secondly, by virtue of s 9(4) of
the ETI Act, any ETI refunds that may have been due to the applicant were forfeited.
Under the circumstances, SARS contended that ‘the ETI will not be allowed as
SARS stand by our interpretation of Section 9(4) of the ETI Act ’. The aforementioned
statutory provisions and facts are un disputed. The primary dispute in the review
application revolves around the interpretation of the relevant provisions of the ETI
Act.
C THE TAX ADMINISTRATION ACT
[16] The TAA provides inter alia for the effective and efficient collection of tax, the
alignment of the administration provisions of tax acts as well as any related
processes. In generic terms , the TAA’s provisions in this review application are
procedural, whereas the ETI’s provisions are substantive.
[17] According to s 1 of the TAA , ‘“assessment” means the determination of the
amount of tax liability or refund, by way of self -assessment by the taxpayer or
assessment by SARS.’ Sections 91 to 95, in C hapter 8 of the TAA , provide for
‘original assessments ’, ‘additional assessments ’, ‘reduced assessments ’, ‘jeopardy
assessments’, and ‘estimated assessments ’. Section 91(2) provides that ‘“if a tax
Act requires a taxpayer to submit a return which incorporates a determination of the
amount of a tax liability, the submission of the return is an original self-assessment of
the tax liability” ’. It is sufficient to state that all other assessments provided for in s
91 to 95 of the TAA relate to SARS conducting an assessment rather than the
taxpayer.3 Furthermore, s91(2) relates to ‘the amount of a tax liability’, not a credit.
[18] Sections 104 and 105 of the TAA read as follows:
“104 Objection against assessment or decision
(1) A taxpayer who is aggrieved by an assessment made in respect of the
taxpayer may object to the assessment.
(2) The following decisions may be objected to and appealed against in the
same manner as an assessment:
(a) a decision under subsection (4) not to extend the period for lod ging
an objection;
3 ‘s 91 Original assessments
(1) If a tax Act requires a taxpayer to submit a return which does not incorporate a determination
of the amount of a tax liability, SARS must make an original assessment based on the return
submitted by the taxpayer or other information available or obtained in respect of the taxpayer.’
Section 92 provides for Additional assessments, s 93 for Reduced assessments, s 94 for Jeopardy
assessments and s 95 for Estimation of assessments.
(b) a decision under section 107 (2) not to extend the period for
lodging an appeal; and
(c) any other decision that may be objected to or appealed against
under a tax Act.
(3) A taxpayer entitled to object to an assessment or 'decision' must lodge
an objection in the manner, under the terms, and within the period
prescribed in the 'rules'.
(4) A senior SARS official may extend the period prescribed in the 'rules'
within which objections must be made if satisfied that reasonable
grounds exist for the delay in lodging the objection.
(5) The period for objection must not be so extended-
(a) for a period exceeding 30 business days, unless a senior SARS
official is satisfied that exceptional circumstances exist which gave
rise to the delay in lodging the objection;
(b) if more than three years have lapsed from the date of assessment
or the 'decision'; or
(c) if the grounds for objection are based wholly or mainly on a change
in a practice generally prevailing which applied on the date of
assessment or the 'decision'.
105 Forum for dispute of assessment or decision
A taxpayer may only dispute an assess ment or 'decision' as described in
section 104 in proceedings under this Chapter, unless a High Court otherwise
directs.’”
D FIRST POINT IN LIMINE - SECTION 105 AND JURISDICTION OF THE TAX
COURT
[19] Mr. Sholto-Douglas SC submitted that the court lacks jurisdiction to hear the
review application for two reasons. First, the applicant ought to have approached the
Tax Court as contemplated in s 105 of the TAA . Second, the applicant furthermore,
has not exhausted its internal remedies as required by s 7 of PAJA. However, the
applicant argues that SARS’s failure and re fusal to record what the applicant
contends to be final assessments in the applicant’s statement of account and
process payment of the refund allegedly due to the applicant constitutes a “decision”
as defined in s 1 of PAJA, subject to the review of the High Court.
[20] The applicant argues that it submitted a revised (self) assessment, and since
SARS consequently did not issue any additional assessment, it (SARS) is bound to
accept, record and act upon the revised (self) assessment. The applicant does not
intend to dispute or appeal an assessment or decision as provided in s 104 of the
TAA. In this regard, the applicant relies upon the provisions of s 92 to the effect that
if at any time SARS is satisfied that an assessment does not reflect the correct
application of a tax Act to the prejudice of SARS or the Fisca l, it must make an
additional assessment to correct the prejudice. If SARS is dissatisfied with the
revised (self) assessment submitted by the applicant, it cannot simply ignore the
revised (self) assessment. It is statutor ily obliged to issue additional assessments if
it did not agree with the revised (self) assessment. Mr Wilkin , who appeared on
behalf of the applicant, submits that SARS’s conduct in refusing to give effect to the
revised (self) assessment does not trigger the provisions of s 104 read together with
105 of the TAA.
[21] The applicant relies upon the judgment in Taxpayer M v Commissioner of
South African Revenue Services IT 45585 an unreported judgment by Dippenaar J in
the Tax Court held at Megawatt Park, Johannesburg , in which the Tax Court held
that the taxpayer was entitled to recover an understated amount in terms of the ETI. 4
In paragraph 5 of Taxpayer M the following facts are recorded:
“. . . The appellant objected to its self -assessment and submitted a revised
EMP501 on 19 July 2018 (“the revised EMP501”), in ord er to correct the
determination of its tax liability or refund as contained in the original EMP501.
In the revised EMP501, the appellant included the understated amount of R1
413 130 and requested the respondent to refund that amount. The appellant
further requested a reduced assessment of the employees’ tax payable by it
for the relevant period in terms of section 93(1)(d) of the TAA . . . .”.
[22] In contrast hereto, SARS submits that s91(2) provides that if a taxpayer is to
submit a return which incorporates a determination of the amount of tax liability, such
a submission is an “original self -assessment of tax liability” . Only SARS has the
power to issue an additional assessmen t or a reduced assessment. A reduced
assessment, according to s 93, relates to instances where a taxpayer successfully
disputes the assessment under Chapter 9 . This reduced assessment reflects a
settlement or judgment pursuant to an appeal , or occurs when SARS is convinced
that there is a n obvious, undisputed error in an assessment. None of the provisions
of s 93 are applicable to the facts in this review application.
[23] If the applicant lodged an objection to compel SARS to accept the applicant’s
self-re-assessment, it could have been addressed on an evidentiary basis following
the usual verification process by SARS . The TAA does not allow a taxpayer to
revise an assessm ent independently. The applicant could not as a matter of law
revise assessments irrespective of the provisions of the ETI. In GB Mining and
Exploration SA (Pty) Ltd v Commissioner for South African Revenue Service 5 the
Supreme Court of Appeal held that:
“[22] A taxpayer my seek a reduction in the Commissioner’s assessment in
terms of s79A without objecting to the assessment in terms of s 81. The
4 Taxpayer M v Commissioner for the South African Revenue Service (IT 45585) [2022] ZATC 6; 85
SATC 53 (14 January 2022)
5 76 SATC 347
Commission’s powered to reduce the assessment exists “notwithstanding the
fact that no objection has been launched or appeal noted”. In a ddition, the
power of the Commissioner is not restricted to it's mero motu exercise,
because the error in the assessment has to be ‘proved to the satisfaction of a
commissioner’. To discharge this burden of proof, a taxpayer must place
information before t he Commissioner to substantiate the error relied upon. In
doing so, it may rely upon an error that it made in its return.
[23] The Commissioner may therefore act in terms of s 79A to reduce and
assessment in the absence of an objection in terms of s 81 of the Act and my
do so even where it flows from incorrect information provided in the taxpayers
return. Can the taxpayer who has been the cause of the incorrect assessment
by Commissioner instead claim to be “aggrieved” thereby and object to an
assessment in terms of the s 81?.
[24] The statement that the powers of the Commissioner under s79A can be
exercised “notwithstanding the f act that no objection has been made”,
suggests that an alternative route for the taxpayer to follow is by way of
objection, and, If necessary, appeal. That was the conclusion of Hurt. J in JTC
1785 67 SATC 98, where he said:
“… The fundamental object of t ax legislation is to exact from each citizen
his due. What is “due” is, in each case (questions of penalty aside) strictly
prescribed by statute and the amount of the taxpayer's taxable income
must, in the process of assessment, be accurately determined preparatory
to the calculation of the amount which he (or she) is required to hand over
to the fiscus. In that light, it is clear that a taxpayer whose taxable income
has been determined on an erroneous basis is always “aggrieved”, even if
a source of error is entirely attributable to him.”
[24] In Barnard Labuschagne v CSARS 6 the Constitutional Court held that a tax
judgment was susceptible to rescission and that the High Court should have
6 2022(5) SA 1 (CC)
considered the rescission if a case for rescission was made out. At para [44] and [45]
Rogers, AJ, as he was then states:
‘…The question posed by this court’s directions focused not on disputes
concerning the initial tax liability but on disputes as to whether the tax liability
remained outstanding. In this case Sars evidently considered that the tax
liability had not subsequently been paid, hence the filing of the certified
statement, but BLI contended otherwise. If the payment dispute is not a matter
required to be dealt with by way of objection in terms of ch 9, it is one of those
“defences” which the court in Kruger II and Metcash had in mind as being
available to a taxpayer in rescission proceedings.
[45] In the Minister’s submissions the issue is said to be whether an objecti on
to a taxpayer’s own self-assessments is a grievance falling within the scope of
ch 9. Clearly the answer to that question is yes, but it is not the question which
this court asked the parties to address. The question framed by this court was
whether a g rievance to the effect that a certified statement disregarded
payments allegedly made in respect of self -assessment fell within the scope
of ch 9.’
[25] The finding that an objection to a taxpayer’s own self-assessments constitutes
a grievance falling within the scope of ch 9, maybe obiter, yet it parallels the findings
in GB Mining mentioned above. Furthermore, t he facts in this matter stand to be
distinguished from the judgment in Taxpayer M v The Commissioner SARS7 in which
it was common cause that there was a bone fide error and s 93(1) was relevant. Mr.
Sholto-Douglas SC argued that the applicant should have objected to its own
assessment and referred to paragraph 5 of the Taxpayer M judgment , in which it is
recorded that ‘ …The appellant objected to its self -assessment and submitted a
revised EMP501…’.
D(i) The default route
7 2019 JDR 2667 (TC) also referred to as 2017 Tax Court case 5493.
[26] In Forge Packaging (Pty) Ltd v Commissioner for the South African Revenue
Service8 Justice Binns -Ward with reference to the judgment in Absa Bank Limited
and another v Commissioner SARS,9 held as follows at para [36]:
‘As Sutherland ADJP pointed out in Absa Ban, the concurrent jurisdi ction of
the High Court is now confirmed in terms by the provisions of Part B of
Chapter 9 of the TAA. Those provisions, read with s 117 (which is in Part D of
the Chapter), establish that the Tax Court has jurisdiction only in respect of
tax appeals lodge d unders s 107. Appeals lodged under s 107 are appeals
against assessments or any of the “decisions” referred to in s 104(2). Section
105 of the TAA provides that [a]taxpayer may only dispute an assessment or
“decision” as described in section 104 in proce edings [in the Tax Court],
unless [the] High Court otherwise directs”. There does no seem to me to be
any cogent basis to question the validity of Sutherland ADJP’s construction of
s 105 to the effect that while the Tax Court is the “default route” for app eal
against assessment and “decisions” the High Court may direct otherwise if it
deems meet.’
[27] The High Court should deem it meet to ‘otherwise direct’ only when it is
evident that the ‘default route’ would be less appropriate. The current legislation
gives a stronger indication that the equivalent preceding provisions did, that resort to
the Tax Court in seeking redress when the setting aside of an assessment is sought
is the ordinarily indicated course. Good cause should be shown why an exception
should be allowed from the ordinarily indicated course. One such an exception case
would be when the question for determinations turns wholly on the point of law10.
[28] The applicant did not apply for a direction in terms of s 105 of the TAA for this
court to hear the matter . The applicant seeks relief in the form of an order to set
aside SARS’s decision, which it contends does not require the High Court to give a
direction as provided for in s 105. Binns -Ward, J in Forge held that the Court in the
Absa Bank matter did not regard it as necessary to file a substantive application in
8 [2022] JOL 54036 (WCC) at para [26]. Also see Forge Packaging ( Pty) Ltd v The
Commissioner for the South African Revenue Service 2022 JDR 1634 (WCC)
9 [2021] ZAGPPHC 127 (11 March 2021) 2021 (3) SA 513 (GP).
10 Forge ebit at [37]
terms of s 105 holding that such an application for a direction could be brought
concurrently with the application to the High Court for substantive relief. It is evident
from the judgments in ABSA and Forge that nothing in the TAA ousts the jurisdiction
of the High Court to decide tax matters, notwithstanding the establishment by the Act
of the Tax Court as a specialised court specifically to deal with them. This is further
founded upon the judgment by the Constitutional Court in Metcash Trading Limited v
Commissioner for the South African Revenue Services and another 11. It is quite
evident from these judgments that if a party wishes to have an assessment set aside,
an application for a direction in terms of s 105 is a jurisdictional factor to pursue in
order to prosecute proceedings to that end in any jurisdiction other than in the Tax
Court.12
D(ii) Exception Circumstances
[29] The words ‘exceptional circumstances’ appear both in s 105 of the TAA and s
7(2)(b) of PAJA. In Erasmus v Commissioner for South African Revenue Services13,
Sher, J held that PAJA does not define exceptional circumstances. The court in
Erasmus examined different authorities in which the term ‘exceptional circumstances’
was interpreted and concluded that:
“…Ultimately, and by way of summary, it has been held that what need s to be
shown is that the circumstances are out of the ordinary, such that they render
it inappropriate to require that the applicant should first exhaust any
alternative remedies that may be available to them and justify the intervention
of the Court rather than of an alternative, available forum.
Finally, it should be pointed out that in endorsing the test espoused in MV Ais
Mamas both the Constitutional Court and the Supreme Court of Appeal
implicitly adopted two corollaries that flow from it (as is app arent in the extract
they quoted from it) viz that 1) whether or not exceptional circumstances exist
is not a decision which depends on the exercise of a judicial discretion, but it
11 2001 (1) SA 1109 (CC) at para 43 to 47.
12 Forge ibid at [32].
13 [2024] 1 All SA 153 (WCC)
is a matter of fact to be determined on the evidence and 2)where a statuto ry
provision directs that a fixed rule shall be departed from only in “exceptional
circumstances” effect will, generally speaking, best be given to the intention of
the legislature by applying a str ict rather than a liberal meaning of the phrase,
and by ca refully examining the circumstance relied upon as allegedly being
exceptional.’14
D(iii) Conclusion regarding joint jurisdiction.
[30] In the case of Commissioner, SARS v Rappa Resources (Pty) Ltd ,15 the
Supreme Court of Appeal similarly confirmed five key propositions. First, a taxpayer
cannot circumvent the appeal procedure under that TAA by bringing an assessment
on review to the High Court merely because the attack is directed to the legality of
the assessment. Second, a n appeal to the tax court entails a complete
reconsideration of the assessment during which the taxpayer may raise objections
on the grounds of any grievance of whatever kind. Third, the authority of the tax court
to revise assessments encompasses the ability to evaluate the legality of an
assessment based on review grounds. Additionally, the tax court may, in accordance
with section 105, address any legal issues that emerge from ta x disputes, including
the review of assessments or other decisions. Fourth, a deviation from s 105 will only
be permitted in exceptional circumstances , and the High Court lacks jurisdiction in
tax disputes unless it directs otherwise. Fifth, it is neither advisable nor possible to
establish precise rules or definitions as to what would constitute exceptional
circumstances. Each case must be decided based on its own unique facts.
[31] The Supreme Court of Appeal reaffirmed this in Commissioner, South African
Revenue Service v Absa Bank Ltd and Another 16 when the Court referred with
approval to the following as stated by Ponnan JA in Rappa:
“The purpose of s 105 is clearly to ensure that, in the ordinary course, tax
disputes are taken to the tax court. The High Court consequently does not
14 Erasmus ibid at [41] to [42]
15 2023 (4) SA 488 (SCA)
16 2024(1) SA 361 (SCA)
have jurisdiction in tax disputes unless it directs otherwise. In Wingate-
Pearse it was put as follows:
"Tax cases are generally reserved for the exclusive jurisdiction of the
tax court in the first instance. Bu t it is settled law that a decision of the
Commissioner is subject to judicial intervention in certain
circumstances. . . . In its amended form, s 105 thus makes it plain that
unless a High Court otherwise directs, an assessment may only be
disputed by means of the objection and appeal process.'
[32] It would lead to uncertainty and injustice if the applicant’s submission was
correct, suggesting that unless SARS raises an objection to, or issues, or provides
an additional assessment in terms of s 92, any self -assessment would automatically,
or by default, become final and binding in the absence of an additional assessment
issued by SARS. Moreover, this argument misses the point. Section 91(2) refers tax
liability and not a credit. On this basis, I cannot accept that the relief applied for in
this review application does not fall within the alternative dispute and appeal
procedure envisaged in the TAA.
[33] I enquired from both parties regarding the applicant ’s preference to pursue
relief in the High Court rather than the Tax Court. Mr . Sholto-Douglus SC submitted
that it could be argued that the procedure in the Tax Court is more protracted and
expensive compared to a review application before the High Court . He submitted,
however, that if an appeal to the Tax Court involves a matter of law only , the
president of th at court is required to make the decision independently . If the facts
are common cause there is no barrier preventing the Tax Court so constituted , from
dealing with the appeal on a stated case 17. If the applicant is correct that this review
relates only to a matter of law, the Tax Court can entertain the application as
expeditiously and effectively as the High Court. The nature of the dispute and the
relief applied for in the specific context of th e current matter is inappropriate for the
High Court. This is particularly so given that the applicant did not even use the
advantage afforded to an applicant in terms of r 53 of the Uniform Rules.
17 Section 118(3) of the TAA and Forge ibid at para [24] to [43]
[34] In South African Human Rights Commission v Standard Bank of South Africa
Ltd and Others18 the Constitutional Court held regarding the concurrent jurisdiction of
the High Court over matters that could also be heard in the Magistrate’s Court as
follows:
“[29] The assumption of jurisdiction should not be confused with the manner in
which a court decides to exercise its jurisdiction. There is no discretionary
power to decline the assumption of jurisdiction over a matter within the
jurisdiction of a court. B ut how a court decides to exercise the jurisdiction it
enjoys is a separate issue. That issue includes considerations as to whether
in exceptional circumstances jurisdiction is not exercised by reason of, for
example, abu se of process or the stay of procee dings pending some other
form of dispute resolution, or on grounds of comity. In certain special
circumstances, a South African court may take the view that considerations of
comity dictate that a matter is best left for adjudication by a foreign court
which has a closer connection to the matter.’
[35] There are no exceptional circumstances justifying a departure from the default
route. The subject matter and the relief applied for is best left for adjudication to the
Tax Court , which has a closer connection to the matter. I am further unconvinced
that the review exclusively deals only with a legal issue. The review does not
concern only an issue of legality. By submitting “replacement” returns, the applicant,
in effect, objected to its own self -assessment, which objection was not upheld by
SARS. If the correct default route had been followed, the usual objection and appeal
processes would have been triggered, the factual outcome of which we would never
know. In order to succeed, the applicant must , in addition, persuade the court of
exceptional circumstances that warrant the substitution of SARS decision with that of
its own. I will return to this aspect hereunder.
[36] This has two ramifications for the applicant. Its failure to have objected to its
own self assessment consequently means that it did not adhere to the internal
18 2023 (3) SA 36 (CC)
remedies provided for in the TAA. Secondly, there is no application or case made
out for any direction in terms of s 105. If the correct procedure had been to object to
its self-assessment, it would have been inescapably so that it would have formed the
subject of an assessment, objection or appeal as envisaged in terms of s 104 of the
TAA. Moreov er, t he applicant has not demonstrated the existence of exception
circumstances as envisaged in s 105 of the TAA or utilised the internal remedies as
provided for in the TAA and no relief is sought in terms of s 105 . Binns -Ward, J
refused the application in Forge for a direction in terms of s 105 of the TAA and
struck the application from the roll. I intend to grant a similar order.
SECTION 7(2) OF PAJA
[37] The second preliminary point must be resolved if I am mistaken in my
assertion that the High Court lacks jurisdiction. The applicant contends that SARS’s
letter of 30 January 2023 was not a final decision by SARS , since it is self-evident
from the letter that the applicant’s assessment was subject to an audit . On 15
September 2023, the applicant received a letter from SARS informing them of the
decision and reasons behind it. The applicant contends that t his was the first time
they had knowledge of the decision. SARS contended, however, that the onus fell
on the applicant to demonstrate that the application was launched within a
reasonable time. Despite the fact that the letter by SARS on 31 January 2023
referred to a different time period, the subject matter was related to a similar decision
based on the same reason ing. The applicant did not request any reasons in its s
11(4) notice , since it knew SARS’s reasons. This is evident from the fact that the
applicant relied on the judgement in the Taxpayer M matter in the s11(4), which,
according to the applicant, supports its contention on the merits of the review
application. Thus, the applicant had sufficient reasons to allow it to either file an
objection or launch review proceedings earlier.
[38] The applicant calcula tes the 180 -day period from the date on which SARS
responded to the applicant ’s s 11( 4) notice on 15 September 2023. On the other
hand, SARS submits that this contention is untenable for the reason that, as a matter
of logic, the applicant could not institute a s11 notice until it knew what relief it
intended to pursue and on the applicant’s version, it ought reasonably to have been
aware of the reasons.
[39] The Constitutional Court in Sasol Chevron Holdings Limited v C ,SARS19
quoted the following passage from the judgment of the SCA in the same matter, with
approval:
“[28] However, the counter-argument advanced by counsel for Sasol Chevron
and the reasoning of the [High Court] on this score must be tested with
reference to the following fundamental considerations. First, as was
submitted on behalf of the Commissioner, SARS’ letter of 26 March 2018 was
no more than a recapitulation of the position that SARS h ad consistently
adopted since 2016. The letter itself makes explicit reference to the earlier
decision – termed the ruling – made on 6 December 2017, as are virtually all
the subsequent letters from SARS to Sasol Chevron. SARS’ letter of 6
December 2017, in turn, makes reference to the ruling made on 7 November
2016 in which the background facts are comprehensively set out, Sasol
Chevron’s request summarised, the relevant statutory framework set out and,
finally, the decision (ruling) – supported with comprehensive reasons – is
articulated.
[29] In contending that the impugned decision was not taken on 26 March
2018, counsel for the Commissioner called into his aid the decision of this
Court in Aurecon South Africa (Pty) Ltd v City of Cape Town20 in which Maya
ADP said the following:
‘The decision challenged by the City and the reasons therefor were its
own and were always within its knowledge. Section 7(1) unambiguously
refers to the date on which the reasons for administrative actio n became
known or ought reasonably to have become known to the party seeking its
judicial review. The plain wording of these provisions simply does not
19 2024 (3) SA 321 (CC) at para [19].
20 Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; 2016 (2) SA 199
(SCA) (Aurecon) at para 16.
support the meaning ascribed to them by the court a quo, i.e. that the
application must be launched wit hin 180 days after the party seeking
review became aware that the administrative action in issue was tainted
by irregularity. That interpretation would automatically entitle every
aggrieved applicant to an unqualified right to institute judicial review on ly
upon gaining knowledge that a decision (and its underlying reasons), of
which he or she had been aware all along, was tainted by irregularity,
whenever that might be. This result is untenable as it disregards the
potential prejudice to the respondent ( the appellant here) and the public
interest in the finality of administrative decisions and the exercise of
administrative functions. Contrary to the court a quo’s finding in this
regard, the City far exceeded the time frames stipulated in section 7(1)
and did not launch the review proceedings within a reasonable time. In
that case, it clearly needed an extension as envisaged in section 9(1)(b)
without which the court a quo was otherwise precluded from entertaining
the review application.’”
[40] The relief applied for in this application is a “package deal” despite sp anning
more than three tax periods. The status of the assessments turns on the same issue
regarding SARS and the applicant’s different interpretation of s 9(4) and 10(3) of the
ETI Act. T he applicant was made aware of SARS’s reasons for the decision in
correspondence to the applicant dated 16 May 2022. SARS’s position and reasons
for it remained unchanged. Therefore, the delay in instituting the application is
manifestly unreasonable and, in any event, exceeds the maximum 180-day period
allowed as a maximum under section 7(1) of PAJA.
JUDICIAL REVIEW AND REMEDIES
[41] Section 8 of PAJA provides that the Court may grant an order that is just and
equitable. This includes the provision in s 8(1)(c)(ii)(aa) that allows for substitution or
variation of the administrative action correcting the defect arising from it, but only in
“exceptional cases”. The applicant does not address any exceptional circumstances
in its founding affidavit, but deals with this only superficially on the basis that should
this Court agree with its interpretation of the ETI , that it is a foregone conclusion that
relief should be granted.
[42] The SCA in Gauteng Gambling Board v Silverstar Development L td and
others21 held that a case was deemed exceptional when upon proper consideration
of all the relevant facts , a court was persuaded that a decision to exercise a power
had not to be left to the designated functionary. How that conclusion was reached
was not statutor ily dictated, but rather , it would depend on established principles
guided by the constitutional imperatives that administrative action had to be lawful,
reasonable and procedurally fair.
[43] The Constitutional Court in Trencon Construction (Pty) Ltd v Industrial
Development Corporation of South Africa Ltd and Another 22 held that even if
exceptional circumstances exist, substitution can only be ordered if it is deemed just
and equitable. This necessitates a consideration of the fairness of substitution to all
the parties involved. The applicant does not allege the existence of any exceptional
circumstances in the founding affidavit. In reply, the applicant alleges that the stance
adopted by SARS in its answering demonstrates that if the matter were remitted
back to SARS, the outcome would be a ‘foregone conclusion’.
[44] The court is not in as good position to determine the accuracy of the revised
EMP 501 returns , and thus, substitution relief would not be appropriate. First, this
court is thus unable to determine whether the revised EMP 5 01 reconciles with the
EMP 201 forms submitted for the relevant periods, particularly in circumstances
where the EMP 2 01 returns do not form part of the papers filed. Secondly, prayer 5,
the notice of motion, seeks an order for SARS to make payment of certain amounts
to the applicant. The relief goes beyond a mere declaration that the applicant should
be allowed to revise its EMP 501 returns . It presupposes that the amounts the
applicant wishes to submit in the revised EMP 501 are correct. The relief if granted,
would deprive SARS of the opportunity to audit and revise . The court simply lacks
the evidence required to arrive at such a conclusion.
21 2005 (4) SA 67 (SCA)
22 3025 (5) SA 245 (CC)
[45] Given that the matter only proceeded in respect of the preliminary points, I am
precluded at this stage from making any final determination regarding the applicant’s
entitlement to what is commonly referred to as a substitution order. However, t he
nature of the relief applied for is a releva nt and vital factor in deciding how the court
should exercise its jurisdiction. The relief applied for by the applicant is couched in
the form of a review application, but, in reality, the applicant seeks declaratory relief
and a monetary judgment. The relief that the applicant seeks , which aims to
substitute SARS’s decision, in as far as a decision was taken , falls within the
jurisdiction of the Tax Court. The complexity of the arguments raised be fore this
Court regarding the correct process of submitting re -assessments and raising
objections thereto and the consequence flowing from it only emphasises why this
application should have been brought before the Tax Court.
COSTS
[46] The parties were ad idem that the costs should follow the result. I believe that
the engagement of senior counsel was justified given the complexity of the matter,
the amount involved and the importance of the issues to be decided. A cost order on
scale C in terms of Rule 67A read together with Rule 69(3) is appropriate.
[47] Considering the aforementioned I therefore grant the following order:
(1) The application is struck from the roll for a lack of jurisdiction.
(2) The applicant is ordered to pay the costs of the respondent on scale C.
VAN DEN BERG AJ
Applicant Adv KD Williams
Pieterse Sellner Erasmus TRM TAX
Respondent Adv A R Sholto-Douglas SC
State Attorney, Cape Town