The South Gauteng High Court upheld an appeal in a judgement against the South African Revenue Service (Sars), on August 27, 2024, in the matter of TALT vs The Commissioner for The South African Revenue Services. Anyone dealing with Sars, South African tax, or who wants to know the temperature of the South African tax environment, would find this well-written judgement useful.
It is not clear whether Commissioner Kieswetter is concerned about his losing streak against taxpayers in the court systems. There has been an unprecedented loss ratio recently, and it is concerning that the Constitutional Court has had to step in, which was unthinkable a couple of years ago.
The Commissioner lost the Coronation Investment Management SA (Pty) Limited v Commissioner for the South African Revenue Service matter, which many tax specialists and academics feel is reflective of a healthy tax system, and where aggressive tax planning must be challenged. It will be interesting to see whether the National Treasury steps in to change the law after the Coronation case.
More damning for the Commissioner is the decision of Capitec Bank Limited v Commissioner for the South African Revenue Service, where the Constitutional Court expressly stated in paragraph 94: This judgment concludes that Sars should not have disallowed the objection in full. Sars, as an organ of state subject to the Constitution, should not seek to exact tax which is not due and payable.
As a large tax practice, we note that there is a definite hardening of Sars stance on matters. The most concerning ones are those where there is a delay on the part of Sars in resolving a matter, and a taxpayer cannot move forward without a Sars decision on a matter. Also concerning is Sars using the extensive powers granted to them under the Act to use classic delay tactics normally found in commercial litigation.
