REPUBLIC OF SOUTH AFRICA
IN THE TAX COURT OF SOUTH AFRICA
(HELD IN JOHANNESBURG)
Case No.: IT 46233
In the matter between:
THE COMMISSIONER FOR APPLICANT
THE SOUTH AFRICAN REVENUE SERVICE
and
TAXPAYER TAT RESPONDENT
and
TAXPAYER TAT APPLICANT
and
THE COMMISSIONER FOR THE RESPONDENT
SOUTH AFRICAN REVENUE SERVICE
(1) REPORTABLE: YES / NO
(2) OF INTEREST TO OTHER JUDGES: YES / NO
(3) REVISED.
14 October 2025 _________________
DATE SIGNATURE
2
IN RE:
TAXPAYER TAT APPELLANT
and
THE COMMISSIONER FOR THE RESPONDENT
SOUTH AFRICAN REVENUE SERVICE
JUDGMENT
This Judgment was handed down electronically by circulation to the parties/their legal
representatives by email and by uploading to the electronic file on Case Lines. The date
for hand-down is deemed to be 14 October 2025
MALI J
Introduction
[1] This judgment concerns two interlocutory applications in the context of a pending
appeal designated as a test case in terms of section 106(6)(a) of the Tax Administration Act.1
The two applications are: (i) an application by the taxpayer, the appellant in the main appeal.
The application is in terms of rule 30 of the Uniform Rules of Court, seeking to set aside the
Respondent’s step in the amendment process as irregular; and (ii) a n application by the
Respondent (SARS) in the main appeal seeking leave to amend its rule 31 statement in
accordance with rule 35(2) of the Tax Court Rules.
[2] The appellant is a registered taxpayer and employer engaged in the manufacturing,
distribution, and re-treading of rubber tyres. During the tax periods in dispute, it ran a skills
development initiative in partnership with a training institution, which formed the basis of its
Employment Tax Incentive2 (ETI) claims.
1 28 of 2011 (“TAA”).
2 Act 26 of 2013.
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[3] With the appellant’s consent, this appeal was designated a test case involving similar
factual and legal issues arising in disputes between SARS and 408 other taxpayers.
[4] The questions of law raised in the appeal relate primarily to the interpretation and
application of sections 1(1) and 6 of the ETI Act.
[5] The appeal was set down for hearing on 14 April 2025. The present judgment deals
only with the preliminary applications, not the merits of the ETI claim.
Background
[6] The appellant entered a n agreement styled “Limited Duration Contracts of
Employment” with various employees for a period of 12 months. The terms of the agreements
pertained the employees’ specified work to be undertaken; and that the employees would be
able to study and obtain certification and work experience during the contract period. One of
the terms of the agreement was that eh employee must attend classes and complete
assignments, write examinations for the course and proved services to gain work experience
and skills.
[7] Tuition and training services were provided by College (Pty) Ltd under a separate
tuition agreement, while the appellant directed the employees to also perform services for a
third-party client, called iPeople. The services included market and survey related activities.
[8] The remuneration due to the employees under their contracts was paid directly to
College to offset the employees’ tuition obligations. According to the appellant the agreement
satisfied its remuneration obligations under the employment contract, thus qualifying the
appellant to claim ETI credits for tax deduction purposes.
[9] SARS disallowed the ETI claims on the basis that the individuals did not “work” for the
appellant and not remunerated by the appell ant as required by the ETI Act. In its original
rule 31 statement, SARS submitted that the appellant failed to discharge the onus of proving
that the individuals in question were “qualifying employees” as defined in the ETI Act.
that the individuals in question were “qualifying employees” as defined in the ETI Act.
[10] On 3 February 2025, SARS served the appellant with a notice of intention to amend
its rule 31 statement, affording the appellant 10 days to object or consent. On 28 February
2025, having received no consent from the appellant, SARS filed a formal application to
amend under rule 35(2), accompanied by a revised notice of amendment and a shorter period
of 5 days for objection. The appellant did not immediately object but wrote to SARS on 4 March
2025 alleging that the shorter period constituted an irregular step. SARS responded on
6 March 2025 by voluntarily extending the period by another 5 days. The appellant filed its
objection 15 days after the revised notice.
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[11] SARS’s application to amend rule 31 statement raises additional legal arguments and
statutory provisions, including invoking the definition of “work” under the Occupational Health
and Safety Act,3 due to the absence of such a definition in the ETI and Labour Relations Acts.
[12] Despite SARS having indulged the appellant , the appellant then launched an
application in terms of rule 30(2)(b) of the Uniform Rules, read with rule 42 of the Tax Court
Rules, seeking to set aside the Respondent’s amendment step as irregular on the basis that
SARS failed to comply with rule 35(2) and rule 52(7) of the Tax Court Rules.
The Rule 30 Application
[13] Rule 30(2)(b) of the Uniform Rules permits a party to apply to court to set aside an
irregular or improper step, provided it takes no further step and files the application timeously.
[14] The appellant's primary complaint is that SARS afforded it only 5 days (instead of 10)
to respond to the second notice of amendment and did not seek an order to shorten the period,
as allegedly required under rule 52(1) of the Tax Court Rules.
[15] SARS argued in response that: (i) the 10-day period under rule 35(2) had already run
from the initial notice of 3 February 2025; (ii) the second notice was not a fresh invocation of
rule 35(2), but a continuation of the same amendment process with clarificatory changes.
[16] Furthermore, SARS voluntarily extended the period upon receiving the appellant’s
complaint. The appellant objected outside the 10-day period. SARS made an application in
terms of rule 35 and, upon refusal of consent, applied under rule 52(7) for an order to amend,
as required.
Interpretation of the Rules
[17] Rule 35(2) permits a party to apply to amend its rule 31 statement if consent is not
forthcoming. Thereafter, rule 52(7) enables the court to consider such an application and
make an appropriate order. The appellant misconstrues rule 52(1), by stating that SARS must
make an appropriate order. The appellant misconstrues rule 52(1), by stating that SARS must
apply for leave to shorten any period not agreed upon. Rule 52(1) applies where a party fails
to obtain an extension and seeks condonation, not where a party offers a shorter period in the
context of amendment pleadings and voluntarily extends the period after objection.
[18] The correct subrule governing the amendment process is rule 52(7), which SARS
followed. There was no need for an application under rule 52(1), as there was no extension
required, warranting condonation.
3 85 of 1993 (“OHSA”).
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[19] The appellant’s construction of the rules is unduly formalistic. There is no requirement
in rule 35 or rule 52 that a party must re-issue a full 10-day period upon updating or correcting
its amendment notice, especially where the process is ongoing and no prejudice results.
[20] Moreover, the appellant acted upon the shorter period (by objecting and engaging),
accepted an indulgence of a further 5 days, and filed an objection outside the total 10 -day
period. This undermines the contention that any step by SARS was irregular or prejudicial.
No Prejudice Shown
[21] The appellant contends that the shortened period caused prejudice because the
appeal could not be ripe for hearing by 14 April 2025. This argument is unpersuasive. First,
the appellant failed to act within the initial 10 days. Second, when afforded an additional 5
days by SARS (without legal obligation), the appellant failed to utilise that time efficiently.
Third, the appellant thereafter extended its own time by another 5 days. Any resulting delay
or inconvenience was self -inflicted. The Court is satisfied that no procedural unfairness or
prejudice arose from SARS’s conduct.
[22] In conclusion it is found that SARS did not take an irregular step; it complied with
rule 35 and correctly proceeded under rule 52(7). There is no procedural unfairness, or
prejudice occurred to the appellant. In the result the appellant’s rule 30 application is without
merit and must not succeed.
The Amendment application
[23] The proposed amendment seeks to emphasise that the individuals did not “ work” for
the appellant, as contemplated in the applicable statutes , thus SARS’s a rgument is that the
term “work” must be interpreted by reference to legislation not previously relied upon in the
grounds of assessment. SARS further introduces a legal contention that payment of tuition to
College does not amount to “remuneration” under the ETI Act.
[24] SARS asserts that the amendment introduces only further points of law and will not
[24] SARS asserts that the amendment introduces only further points of law and will not
result in any new factual disputes. It further contends that rule 31(3) of the Tax Court Rules
permits the amendment and that it does not amount to a novation of its case.
[25] The appellant opposes the amendment, asserting that it introduces a new case not
previously pleaded in the assessment or the original rule 31 statement. The appellant further
argues that the introduction of new statutory provisions and legal grounds without notice to
the other 408 appellants (whose matters have been stayed pending the outcome of this “test
case”) prejudices those taxpayers and undermines the fairness of proceedings.
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Issues for Determination
[26] The core issues are:
(i) whether the proposed amendment amounts to a new case.
(ii) whether the amendment is permissible under rule 31(3)
(iii) whether the granting of the amendment would prejudice the appellant and/or the
other 408 taxpayers who elected not to participate based on the pleadings as they
stood and finally whether it is appropriate for the Court to allow the amendment in
light of the designation of this matter as a “test case”.
Applicable Legal Principles
[27] Rule 31 of the dispute resolution rules promulgated under section 103 of the TAA (“the
rule 31 statement”) deals with the filing of statement of grounds of assessment and opposing
appeal. The taxpayer files a statement of grounds of appeal in terms of rule 32 (“the rule 32
statement”); and SARS may file a statement of reply in terms of rule 33. Rule 34 provides that
the issues in an appeal to the Tax Court are those contained in the rule 31, rule 32 and rule 33
statements. Rule 31(3) limits what SARS may include in a rule 31 statement. It provides:
“SARS may include in the statement a new ground of assessment or basis for the partial
allowance or disallowance of the objection unless it constitutes a novation of the whole of the
factual or legal basis of the disputed assessment or which requires the issue of a revised
assessment”.
[28] Th e exercise involves identifying the factual and legal basis of the disputed (i.e. actual)
assessment and asking whether the proposed amendment departs materially from those
bases. Rule 31(3) permits the amendment of the rule 31 statement, provided the amendment
does not amount to a wholesale substitution of the factual or legal basis of the assessment.
[29] In Fisher v Ramahlele,4 the SCA confirmed that the exercise of the court’s discretion
to grant an amendment involves balancing the need to do justice between the parties, prevent
surprise, and avoid unnecessary delays.
surprise, and avoid unnecessary delays.
[30] While SARS attempts to characterise the amendment as merely raising additional legal
points, in substance, it introduces a materially new dimension to the case: it seeks to recast
the meaning of “ work” by importing statutory definitions not previously relied upon and
challenges the nature of the employment relationship by reference to new legal criteria.
4 2014 (4) SA 614 (SCA).
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[31] The appellant’s contention that this is a novation is not without merit. SARS is not
simply elaborating on existing arguments; SARS is shifting the interpretive framework of key
statutory terms which go to the heart of whether the ETI claims were validly made. Such
amendments should have been included in the assessment or at least in the initial rule 31
statement.
[32] Importantly, the present appeal is a “ test case,” designated under section 106(6) of
the Tax Administration Act and rule 12 of the Tax Court Rules. The other 408 taxpayers agreed
to be bound by the outcome based on the originally pleaded case. They have not been given
notice of the new issues and statutory provisions raised in this amendment.
[33] It would be fundamentally unfair; not in the interest of administration of justice and
potentially unconstitutional to bind those taxpayers to an outcome based on grounds they
were not afforded an opportunity to address. SARS cannot circumvent this by arguing that the
appellant has assumed responsibility for those taxpayers. Consent was given based on a
known case, not one materially changed at a later stage. Furthermore, if SARS is now of the
view that different or additional grounds should be advanced, it retains the option to issue
revised assessments.
Conclusion
[34] The amendment sought by SARS, though framed as a refinement of its legal case, in
effect introduces a materially new case, with reliance on new statutory provisions, a different
interpretive approach to “work” and “remuneration”, and a shift in the factual matrix relevant
to the ETI claims. This is exactly the mischief sought to be prohibited in rule 31(3).
[35] Furthermore, granting the amendment in the current context without notice to the other
affected taxpayers and without reopening their right to participate—would amount to an unfair
process and would offend the principles of administration of justice.
Costs
process and would offend the principles of administration of justice.
Costs
[36] The hearing of the tax appeal was set down in August 2024 for a period of eight days
being 14 – 25 April 2025. The appellant submitted that it warned SARS that the interlocutory
applications would not be ripe for hearing due to the late stage at which the interlocutory
applications were launched. SARS insisted on setting down the main appeal togethe r with
interlocutory applications.
[37] SARS’s argument was that the Court should hear the interlocutory applications and
grant orders instantly and proceed to the main appeal. The Court fully agrees with the
appellant, SARS displayed its unreadiness even in the manner the applications and their
annexures were filed on caselines. SARS did not exercise any care in filing and or uploading
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all the interlocutory applications. As a dominis litis in the amendment application SARS also
took it upon itself to upload the rule 30(b) documents. The filing was all over the place, difficult
to follow for the preparation for the hearing. Despite the Court standing down the proceeding
to allow SARS opportunity to address the misfiling problems, SARS failed to rise to the
occasion. A lot of time was lost due to SARS’s tardiness. In showing displeasure in the
conduct of SARS which led to the postponement of the main appeal, SARS must bear costs
for postponement and the dismissal of the application for amendment.
Order
1. The application in terms of rule 30 of the Uniform Rules of the High Court (“the rule 30
application”) is dismissed.
2. The appellant is ordered to pay the costs occasioned by the employment of three
counsel.
3. The application for leave to amend is dismissed.
4. The Respondent is ordered to pay the costs of three counsel on scale C, B and A
respectively, inclusive of the costs occasioned by the postponement on the 14th of April
2025, which costs were reserved.
________________________________
NP MALI
JUDGE OF THE HIGH COURT