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IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case No: 15899/2023
In the matter between:
KERBYN CAPE 2 (PTY) LTD Applicant
and
THE COMMISSIONER: SARS Respondent
Neutral citation: Kerbyn Cape 2 (Pty) Ltd vs The Commissioner: SARS
(15899/2023) [2025] ZAWCHC (11 July 2025)
Coram: MANTAME J
Heard: 11 March 2025
Delivered: 11 July 2025
Summary: The applicant brought a review application under PAJA to challenge
SARS' refusal to condone the late filing of tax objections relating to VAT
(April 2011-February 2014 audit period) and Corporate Income Tax audits
(2012 – 2014 audit period). In its opposition, SARS raised two points in
limine: that the tax matters are exclusively reserved for Tax Court, and
that the applicant has failed to exhaust internal remedies as contemplated
in section 7 (2) (a) (b) and (c) of PAJA. The High Court lacked jurisdiction
over tax disputes governed by the Tax Administration Act (TAA), and that
the applicant should have exhausted internal remedies contemplated in
Chapter 9 Dispute Resolution mechanism of the TAA . Tax disputes
should first be resolved through the objection and appeal process in the
Tax Court which has exclusive jurisdiction - unless the High Court
expressly directs otherwise under section 105 of the TAA. The applicant
argued that internal remedies were no longer available due to the lapse of
time but failed to apply for such a directive or prove exceptional
circumstances justifying its circumvention of the Tax Court process. The
Court upheld the points in limine and found that the appli cant had not
properly exhausted internal remedies, and that the High Court lacks
jurisdiction to hear the matter. Consequently, the application for review
was dismissed in its entirety.
ORDER
1 The respondent’s points in limine succeeds.
2 The review application is dismissed
3 The applicant is ordered to pay costs on Scale B.
(DRAFT)JUDGMENT ON 08 JULY 2025
___________________________________________________________________
MANTAME J
Introduction
[1] The applicant brought a review application in terms of the Promotion of
Administration Justice Act 3 of 2000 (PAJA) for the refusal of the South African
Revenue Services (SARS/ respondent) to condone the late lodgement of an
objection relating to VAT and Corporate Income Tax audits for April 2011 – February
2014 audit period . The applicant asserted that the respondent’s refusal of an
application for condonation was said to be irrational, unreasonable and procedurally
unfair in terms of PAJA.
[2] The respondent opposed this application and raised two points in limine that,
(i) tax matters are generally reserved for the exclusive jurisdiction of the tax court;
and that (ii) the applicant has failed to exhaust internal remedies as contemplated in
section 7 (2) (a) (b) and (c) of PAJA. The applicant was required to exhaust internal
remedies under Chapter 9 of the Tax Administration Act 28 of 2011 (the TAA).
Further, if the applicant relied on the provision of Section 105 of TAA, it has to seek a
direction that the High Court “otherwise directs”, which then would enable this Court
to deal with the impugned decision.
Background Facts
[3] On 20 October 2015, SARS selected the applicant for an audit and issued
notices in terms of Section 40 read with Section 42 of the TAA for both Value Added
Tax (VAT) and Corporate Income Tax (CIT). This became a long, drawn-out process
that resulted in a series of disputes.
VAT Audit and Objections
[4] The VAT audit covered the periods April 2011 to February 2014. Following a
Letter of Audit Findings issued on 11 December 2015, SARS finalised its audit on 5
February 2016 and issued additional assessments, including understatement
penalties and interest. Due to the applicant’s director being overseas during the
relevant period’s, critical documents relevant in the lodgement of an objection w ere
not immediately obtained as it was stored in the director’ s residence in Cape Town.
The director was the sole director of the applicant and no other person had access to
his premises. The absence of the applicant’s director resulted in the applicant’s
inability to file its objection within the 30-day period. The necessary documents were
retrieved upon his return and he then sought expert tax advice.
[5] On 26 October 2016 the applicant submitted the ‘first objection’ and requiring
an outcome to be delivered to the applicant by 07 December 2016. This objection
was in relation to the additional assessment raised for VAT for the period June 2011
VAT period (the first VAT objection). On 21 February 2017 SARS issued the
applicant with a notice of invalid objection in respect of the first VAT objection (the
first VAT notice of invalid objection).
[6] The applicant filed a ‘second objection ’ on 7 August 2017 (the second VAT
objection). SARS responded with a notice of invalid objection letter. On 29 August
2017, SARS issued a Late Submission of Objection Declined Letter, declining the
submission of the applicant’s second VAT objection.
[7] At this point, the applicant decided to escalate the dispute to the Office of the
Tax Ombud based on the SARS’s repeated failure to allow condonation for the late
filing of the objection. It does not appear that the Office of the Tax Ombud
entertained this complaint significantly other than to refer it back to SARS for its
attention. On 6 March 2019, the applicant filed a consolidated VAT/CIT objection.
SARS in its response, issued a late submission of Objection Declined letter informing
the applicant that exceptional circumstances were not demonstrated and that the
assessments had prescribed under Section 99 (1) of the TAA.
CIT Audit and Objections
[8] SARS audited the applicant for Corporate Income Tax and issued a letter on
20 October 2015 for the audit of 2012 to 2014 assessment years. As it happened
with the VAT audit, SARS issued its Finalisation of Aud it Letter on 5 February 2016
imposing additional assessments and understatement penalties. Essentially, the total
adjustments made amounted to R2 285 024.00 as the capital amount and
R172 732.00 as understatement penalties imposed. Certain CIT’s debts were raised
by the respondent.
[9] On 27 May 2016, and beyond the 30-day stipulated period the applicant
[9] On 27 May 2016, and beyond the 30-day stipulated period the applicant
submitted a notice of objection in respect of the additional assessments for CIT,
issued by SARS for the 2012 year of assessment (CIT’s first objection). The
applicant believed that SARS misdirected itself in relying upon Section 10 (4) of the
VAT Act 89 of 1991 and Section 22 (8) of the Income Tax Act 58 of 1962 (ITA) in its
reasons with regard to the assessment. On 30 June 2016 the applicant addressed a
letter to SARS providing reasons why an objection was no t timeously submitted. On
21 July 2016, SARS informed the applicant that the objection was invalid as the first
objection was lodge d outside the prescribed timeframe. The applicant continued to
file further objections and SARS rejected them on the basis that no exceptional
circumstances were provided.
[10] The applicant stated that i n October 2016 and by invitation from SARS to file
a further objection, the applicant proceeded to file a third objection, reiterating its
exceptional circumstances. SARS once more declined this objection on 21 February
2017. The applicant filed a fourth o bjection on 17 August 2017 following a further
invitation from SARS to object. Similarly, this was declined by SARS. On 21
September 2017 SARS issued a L ate Submission of Objection Declined Letter and
stated that the reasons provided for the condonation of late filing were not
exceptional.
[11] After the applicant submitted a complaint to the Office of the Tax Ombud in
June 2018 for both audits, the Ombud concluded that SARS should be provided 60
business days to conclude the applicant’s objection. In t he event the applicant not
receiving the response, a compla int be lodged with SARS Complaints Management
Office.
[12] As stated above, on 6 March 2019 the applicant submitted the VAT/CIT
consolidated objection. SARS declined the objection on the basis tha t the
exceptional circumstances were not demonstrated and that the assessments had
prescribed under Section 99 (1) of the TAA.
[13] Central to the objections raised by the applicant is the incorrect classification
of the scale of ERF 2[...] Constantia that was sold by the applicant for R13 million .
of the scale of ERF 2[...] Constantia that was sold by the applicant for R13 million .
The applicant stated that SARS incorrectly treated the sale as revenue receipt rather
than capital in nature resulting in an inflated tax liability. The applicant alleged that
SARS incorrectly stated that the Constantia property was a trading stock and that the
sale was part of a profit – making scheme when the decision to sell was based on
the failure of a rental agreement and the discovery of latent defects that rendered the
property unsuitable for its intended purpose.
Application for condonation for late filing of this review application
[14] The applicant made an application for condonation as it was patently clear
that this review application was woefully out of time. It was contended that this Court
has discretionary authority under Section 9 (2) of PAJA to extend the 180-day period
prescribed in Section 7 (1) of PAJA provided that the interest of justice warrants such
extension. The Court’s attention was drawn to Van Wyk v Unitas Hospital (Open
Democratic Advice Centre as Amicus Curia e)1 where it was stated that an
explanation must not merely set out the duration of the delay but must demonstrate
why the delay occurred, why it was unavoidable, and why it should be excused in the
interest of justice.
[15] The applicant contended that it has furnished an explanation why it was late in
its submission of its objection, there were constant engagements with SARS and at
some point, there were settlement negotiations . Should a condonation be granted
there is no pr ejudice to SARS and the interests of justice favoured the granting of
condonation, the applicant said.
[16] The respondent did not oppose this applica tion. Although the reasons for
lateness are not fully set out and this Court cannot gauge the degree o f lateness as
none has been put before this Court for consideration , this Court will condone the
unspecified timeframe for lateness for the reason that this matter was fully argued
before this Court for determination.
[17] Before proceeding to the main issues for determination, this Court will first
deal with the points in limine that were raised to the extent that they might be
determinative of the proceedings.
1 [2007] ZACC 24; 2008 (2) SA 472 (CC) at para 20; Nair v Telkom SOC Ltd and Others (JR 59/2020)
[2021] ZALCJHB 449 (7 December 2021) para 11
Points in limine
(i) Jurisdiction
[18] SARS submitted that the Tax Court is reserved for the exclusive jurisdiction of
tax matters. It is not open for the applicant to choose a Court where its dispute has to
be determined. Section 105 of the TAA provides as follows:
‘A taxpayer may only dispute an assessment or decision in section 104 in
proceedings under this Chapter, unless a High Court otherwise directs .”
[Emphasis added]
[19] The submission went on to state that reference to “ unless a High Court
otherwise directs ”, means first the im pugned decision may only be disputed by
means of the objection and appeal process as contemplated in Chapter 9 of the
TAA. Thus, a High Court will direct otherwise where exceptional circumstances exist
enabling it to do so. In the context of Section 105 of the TAA “exceptional
circumstances” means ‘unusual or different…markedly unusual or specifically
different.’2
[20] SARS contended that the applicant fa iled in this Court to seek direction that
the High Court “otherwise directs”, which would enable the High Court to deal with
the dispute pertaining to the impugned decision. As a result, the High Court has no
jurisdiction to entertain this application. On this ground alone it has to be dismissed.
(ii) Failure to exhaust internal remedies
[21] SARS argued that any party approaching the High Court for review in terms of
PAJA is bound to first exhaust his internal remedies. For instance, there is a synergy
between Section 105 of TAA and the applicant’s duty to exhaust its internal remedies
2 Commissioner for the South African Revenue Services v Rappa Resources (Pty) Ltd 2023 (4) SA
488 (SCA); Lueven Metals (Pty) Ltd v Commissioner for the South African Revenue Service 86 SATC
474 (8 November 2023) and Agenbach N.O. and Others v Commissioner fo r South African Revenue
Services 86 SATC 125 (23 October 2023)
as contemplated in Se ction 7 (2) (a), (b) and (c) of PAJA. Section 7 (2 ) (a), (b) and
(c) of PAJA provides as follows:
1. a party is duty bound to exhaust internal remedies in respect of administrati ve
action;
2. a court will not review an administrative action in terms of PAJA unless a party
has first exhausted his internal remedy;
3. a court may, if it is not satisfied that any internal remedy has been exhausted,
direct the party concerned to first exhaust such r emedy before instituting
proceedings in a court for judicial review in terms of PAJA; and
4. a court may, in exceptional circumstances and on application by the party
concerned, exempt such person from the obligation to exhaust an internal
remedy if the court deems it in the interest of justice.
[22] The applicant it was argued did not attempt to address the basis upon which it
can be exempted from the aforementioned provisions of Section 7 of PAJA. For
those arises, it was submitted that the review application has to be dismissed.
[23] The applicant argued that the Tax Court is a creature of statute and its
jurisdiction is limited to what is expressly provided in the TAA and the Tax Court
Rules. It was therefore submitted that due to lapse of time the a pplicant was
procedurally barred from filing an appeal under Section 107 of the TAA. No valid
appeal existed, and the Tax Court had no jurisdiction to entertain this matter. If no
appeal exists under Section 107, the Tax Court cannot assume jurisdiction wh ere
none is granted by the statute.
[24] Rule 50(1) of the Tax Court Rules states that any application brought under
Part F must be instituted within 20 business days of the cause of complaint . Rule 52
deals with condonation applications that falls under P art F. Meaning, that
condonation applications under Rule 52 must be brought within 20 business days of
SARS refusal to condone the late objection. The timeframe has already lapsed.
[25] In Gold Kid Trading CC v Commissioner of SARS 3, it was said that the High
Court held:
‘The Tax Court does not have the power to consider whether an assessment
made by SARS, is reviewable on the basis of abuse of power and illegality, or
any reviewable grounds envisaged under PAJA or the common law.’
[26] It was submitted that the Tax Court does not have jurisdiction to hear review
applications such as this one.
[27] With regard to the allegation that the applicant has failed to exhaust internal
remedies, the applicant submitted that Section 107 (2) of TAA presents strict
deadlines for lodging an appeal. For instance it provides that an appeal must be filed
within 30 business days of the disallowance of the objection; SARS has limited
discretion to extend this by 21 business days if reasonable circumstances exist and
up to 45 business d ays in exceptional circumstances; and beyond the total of 75
business days, SARS has no legal discretion to extend the time period for filing an
appeal.
[28] It was submitted that in CSARS v Danwet4 the court dealt with whether SARS
had jurisdiction to decide an objection to a refusal by SARS to extend the period
within which an appeal may be lodged beyond the total of 75 business days. The
court stated as follows:
‘The appellant [SARS] would not have the legal power to uphold an objection to
a refusal to extend the time for the lodging of an appeal beyond the period
expressly provided for in s107(2)5.’
[29] The applicant submitted that all those time periods referred to in Section 107
were unachievable as the appeal period had already expired.
3 [2018] ZAGGPJHC 710 at para 64
4 (399/2017) [2018] ZACSA 38 (28 March 2018)
5 Ibid para 17
Discussion
[30] As already stated above, the notification of audit letter was issued on 20
October 2015 notifying the a pplicant that SARS would b e auditing the applicant for
VAT periods April 2011 to February 2014 and CIT periods 2012 to 2014 . On 11
December 2015, SARS issued a Letter of Audit Findings relating to VAT and
informed the applicant of its intention to raise additional assessments including
understatement penalties and interest. On 5 February 2016 SARS issued the
finalisation of Audit letter relating to VAT and CIT which informed the applicant of its
intention to raise additional assessments, including the imposition of understatement
penalties and interest.
[31] The audit process started on 20 October 2015 and was concluded on 5
February 2016. The director of the applicant merely stated that he was outside the
Republic during the periods that the objections were to be filed. He returned towards
the end of March 2016. On his return he provided his accountants with certain
documents that were contained in the safe at home and thereafter sought an opinion
from Professor Haupt. No proof or evidence that served before this Court that the
director of the applicant was overseas, no specific time was set out that he spent
overseas. No s pecific time was set out that the accountants worked on the
documents that were in the safe and at what time was Professor Haupt’s opinion
became relevant and was sought; when was Professor Haupt’s advice received.
[32] Importantly, the objection was filed on 26 October 2016; i.e. the first objection.
That SARS issued a notice of invalid objection on 21 February 2017, in my view was
the proper time for the applicant to escalate the dispute to the next level – of
exhausting internal remedies , rather than filing multiple objections that were
inconsequential.
[33] In fact SARS submitted correctly that it was incumbent upon the applicant to
[33] In fact SARS submitted correctly that it was incumbent upon the applicant to
challenge the first notice of invalid objection by (i) objecting to it in terms of S ection
104 (2) of TAA; (ii) and should the objection be disallowed it was supposed to have
lodged an appeal to the Tax Court in terms of Section 107 (1) of TAA; (iii) should an
appeal be disallowed, it was supposed to proceed to launch an application in te rms
of the old Tax Court Rules for an order in terms of Section 107 (2) of the TAA
extending the period within which an objection had to be lodged by it, and/or
generally had to follow the provisions of Chapter 9 of TAA. It was not permitted or
open to it to file numerous notices indefinitely from 22 July 2016 to 6 March 201 9.
The applicant seems to be the author of his misfortunes as he allowed time to lapse
without achieving any joy with SARS.
[34] In Koyobe v Minister of Home Affairs6, the Constitutional Court held that:
‘[47] Although the duty to exhaust defers access to courts, it must be
emphasised that the mere lapsing of the time period for exercising an internal
remedy on its own would not satisfy the duty to exhaust, nor would it
constitute exceptional circumstances. Someone seeking to avoid
administrative redress would, if it were otherwise, simply wait out the specified
time – period and proceed to initiate judicial review. That interpretation would
undermine the rationale and purpose of the duty. Thus, an aggrieved party
must take reasonable steps to exhaust available internal remedies with a view
to obtaining administrative redress.’
[35] In any event, the applicant was wrong when it computed the time -frames
using the new Tax Court Rule s that came into effect 10 March 2023. The rules
cannot apply retrospectively to include this matter that dates back to October 2015.
Surely the old Tax Court Rules apply in this regard (Rules published on 11 July
2014). To the extent that the applicant rel ied heavily on Section 105, in
Commissioner for South African Revenue Services v Rappa Resources (Pty) Ltd 7,
the SCA clarified that a High Court may not consider a review application without a
taxpayer first having applied for the High Court’s direction. The SCA held that:
‘An order under s105 it bears noting, i s not simply to be had for the asking. A
case has to be made out for the High Court to authorise a departure from the
case has to be made out for the High Court to authorise a departure from the
default rule in the proper exercise of its discretion on a conspectus of all of the
facts before it. It cannot be, as it seems to be suggested, that the mere say so
6 2010 (4) SA 327 (CC) para 47
7 ZASCA 28 (2023); 2023 (4) SA 488 (SCA) para 24
of the taxpayer that the dispute is not one contemplated by s104 or over
which the tax court lacks jurisdiction can, without more, simply carry the day.”
[36] The assertion by the applicant that Section 105 directive in this instance was
not required because Chapter 9 was alre ady closed when this application was
launched is flawed. If indeed it was inaccessible, it allowed it to be inaccessible. In
any event, in my view such assertion is misguided and/or misplaced. Th e SCA went
on to state that:
‘The current wording of s105 creates the impression that a dispute arising
under Chapter 9 may either be heard by the Tax Court or a High Court for
review. This section is intended to ensure that internal remedies , such as the
objection and appeal process and the resolution thereof by means of
alternative dispute resolution before the Tax Board or the tax Court, be
exhausted before a higher court is approached and that the Tax Court deal
with the dispute as court of first instance on a trial basis. This is i n line with
both domestic and international case law. The proposed amendment makes
the intention clear but preserves the right of a High Court to direct otherwise
should the specific circumstances of a case require it’8 [Emphasis added]
[37] The SCA re -enforced that section 105 is intended to ensure that internal
remedies such as the objection and appeal process are exhausted before
approaching a Tax Board, Tax Court or a higher court. And in these disputes the Tax
Court deals with these disputes as a court of first instance on a trial basis. Most
importantly, the High Court’s right to direct otherwise remain intact should the
specific circumstances of a case require.
[38] In these proceedings, the applicant suggested that this Court has jurisdiction
to determine this appeal as the internal remedies and the jurisdiction of the Tax
Court is no longer available. First, the applicant has failed to even allege that this
Court is no longer available. First, the applicant has failed to even allege that this
review a pplication was filed within a reasonable period. However, it made an
application for condonation without the satisfaction of this Court, or without properly
8 Ibid para 19
explaining the reasons for the delay, length of the delay (remained unknown) ,
prospects of success on the merits, prejudice to the respondent if a condonation is
granted, and any other relevant factor.
[39] As stated above, condonation was granted for purposes of finality to these
proceedings since the matter was argued to its finality – not that the applicant made
a proper case for the unknown period of lateness to be condoned. Condonation is
not for the mere asking. Since the applicant relied on Section 105, he ought to have
asked for this Courts’ directions as stated in Rappa.
[40] If regard is had to the changing legal landscape, the high court has jurisdiction
to hear and determine income tax cases turning on legal issues. In Lueven Metals
(Pty) Ltd v Commissioner for the South African Revenue Services 9 the SCA stated
that:
‘…it is important to recognise that the legislative landscape has changed
significantly since the deci sion of the Constitutional Court in Metcash. Prior to
the amendment of s105, the taxpayer could elect to take an assessment on
review to the High Court instead of following the prescribed procedure. That is
no longer the case. The amendment was meant to make clear that the default
rule is that a taxpayer had to follow the prescribed procedure, unless a high
court directs otherwise.” Emphasis added]
[41] Plainly, the procedure is clearly set out that a taxpayer has to exhaust internal
remedies, then approach the Tax Court for appeal or an order in terms of Section
107 (2) of the TAA extending the time in which the objection had to be lodged. A
taxpayer is not entitled to bring review proceedings at its peril without exhausting all
these procedures and/or without requesting this Court to “direct otherwise”. In Rappa
the SCA made it clear that the default rule is that a taxpayer may only dispute an
assessment by the objection – and – appeal procedure under the TAA and may not
assessment by the objection – and – appeal procedure under the TAA and may not
resort to the High Court unless permitted to do so by order of the court. The High
Court will only permit such a deviation in exceptional circumstances on which in this
9 86 SATC 474 para [21]
case do not exist. This much is clear from the language, context, history and purpose
of the section.
[42] Absent a court order or a directive in these review proceedings , this Court
does not have jurisdiction to hear the review application. Correctly put, in the same
vain this Court was not asked for an order to “direct otherwise.”
[43] The applicant seems to suggest that they do not have a redress at the Tax
Court since it is a creature of statute. Be that as it may, if a proper case can be made
out by the applicant for condonation, there is a condonation procedure similar to the
High Court one at the Tax Court. There is nothing preventing the applicant from
following this procedure.
[44] For these reasons, the points in limine raised by the respondent should
succeed. It would not be necessary to consider the main application as this Court
has no jurisdiction to do so.
[45] In conclusion, the following order is granted.
45.1 The respondent’s points in limine succeeds.
45.2 The review application is dismissed.
45.3 The applicant is ordered to pay the costs of this application on Scale B
including costs of Counsel.
___________________________
B.P. MANTAME
JUDGE OF THE HIGH COURT
APPEARANCES
For the Applicant: Adv KD Williams
Instructed by: Pieterse Sellner Erasmus
For the Respondent: Adv A Coetzee
Instructed by: Mathopo Moshimane Mulangaphuma Inc.