"…the law favours and assists those who timeously pursue their procedural and substantive rights, and not those who delay and neglect them" says the Supreme Court of Appeal ("SCA"), 4 June 2025
Very harsh but quite true at times.
In recent years, the Tax Administration Act is slowly but surely becoming the "Beyoncé" of the Tax Acts. The leading lady so to speak. We are seeing more judgments from the highest Courts in our land, being given which address purely procedural aspects of disputes more than they do the merits of a tax dispute. Perhaps it is time to go back to the basics, dust off our archive boxes and pick up where we may have left our Uniform Rules of Court handbooks. And should you find yourself litigating in the Tax Court, get acquainted with the Rules of tax disputes. Not doing so, can be quite humbling even to the most seasoned of us litigating legal professionals.
The SCA handed down a highly anticipated judgment on 4 June 2025. It is highly anticipated because various Tax Court rulings delivered conflicting views regarding the correct interpretation of Rule 56(1) of the Tax Court Rules. As such a higher Court's judgment was necessary for a number of reasons, but more so to create precedent.
Rule 56(1) functions similarly to a notice of bar as understood under the Uniform Rules of Court (in the High Court). In its simplest form, it assists a party aggrieved by the conduct of the opposing party, to coerce the 'misbehaving' party to behave or else face consequences. It is a warning shot! In this particular case, the South African Revenue Service (“SARS”) was in terms of the Rule 31 supposed to file a statement which provides grounds supporting and defending the additional tax assessments and opposing the taxpayer's appeal, within 45 business days after the notice of appeal was filed by the taxpayer. SARS did not do so. In comes Rule 56(1)(a), which puts SARS on terms to remedy the default, which is the failure to file a Rule 31 statement within 15 business days after receiving the Rule 56(1)(a) notice from the taxpayer.
However, what makes this case topical is that the taxpayer argued that the remedy is not only to file the Rule 31 statement. But to also make a formal application explaining why you (SARS) were late and asking the court to condone or forgive your (SARS) lateness (also known as a condonation application). The SCA has disagreed.
The SCA has ruled that the remedy that Rule 56(1)(a) speaks of is simply to do that which you did not do, that is to file the Rule 31 statement, nothing more. As displeasing as that may sound, the SCA said that is how Rule 56 is designed. If a condonation application was in addition required under Rule 56(1)(a) the rule itself would have spelt it out. The SCA discouraged and dismissed an interpretation that would lead to "reading-in" of words or sentence constructions that are simply not there in black and white as per the Act, and those that would lead to absurdity or be insensible (remember our daily bread, the Endumedi case!).
An important fact to remember, Rule 56(1) is not designed to protect one specific party over the other, i.e. the whole Goliath vs David narrative. This Rule is available for use by either party, the taxpayer or SARS. It just so happens this time around, this judgment led to a favourable outcome for SARS. It could've easily been the other way around, e.g. the taxpayer having failed to file a Rule 32 within 45 days after SARS filed the Rule 31 statement.
Another precedent creating case, once again schooling us to go back to the basics as disputes connoisseurs. A copy of the judgment can be found here.
Should you ever find yourself being dribbled by these Tax Court Rules, we are your partners in better understanding your tax dispute with the Revenue Authority. Reaching out, may just spare you a paracetamol or two.
