Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution of The Republic of South Africa

CHAPTER 5 – JUDICIAL REVIEW WITH REFERENCE TO SS 74A AND 74B –

5.3 THE APPLICABILITY OF OBJECTION AND APPEAL

The fact that ss 74A and 74B are in the Income Tax Act, and that SARS may attempt to aver that the objection and appeal procedures in the Income Tax Act must be exhausted first as an ‘internal remedy’ in terms of s 7(2) of PAJA.

The provisions of s 7(2) of PAJA state:

… no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted.

It could be argued by SARS34 that the internal remedy in the case of ss 74A and 74B should be the objection and appeal process prescribed in the Income Tax Act. However, it is clear from the provisions of ss 74A and 74B, read with s 3 of the Income Tax Act, that there is no specific objection and appeal process applicable to these sub-sections. There is therefore no internal remedy35 that must first be exhausted in the Income Tax Act.

Furthermore, special remedies in the Income Tax Act do not limit the remedies available to taxpayers as all avenues of relief provided for in the Constitution and PAJA, including judicial review. In Metcash Trading Ltd v Commissioner, South African Revenue Service, and Another36 Kriegler J stated the following:

[33] …the Act nowhere excludes judicial review in the ordinary course. The Act creates a tailor-made mechanism for redressing complaints about the Commissioner’s decisions, but it leaves intact all other avenues of relief.

Furthermore, refer to the discussion and analysis on internal remedies in 5.4: Review Application directly to the Tax Court, below. The conclusion is reached that the Tax Court (through the process of objection and appeal) is not an internal remedy that must first be satisfied before a taxpayer can approach the High Court to review a decision. The Tax Court is not part of the administrative hierarchy of SARS. It is an independent specialist court that does not have, it is submitted, similar status to the High Court as contemplated in the definition of ‘court’ in PAJA, as Tax Court decisions are not subject to the stare decisis principle, and are not binding on the Commissioner in future matters.

Next:  5.4 REVIEW APPLICATION DIRECTLY TO THE TAX COURT

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Footnotes:

34 Opinions expressed by Advocates G J Marcus SC, J Stein and W Trengove SC acting for SARS on issues of administrative law stating the advice they would give SARS in defending a review application brought by a taxpayer in the light of an inquiry or audit in terms of ss 74A and 74B.
35 Croome B & Olivier L Tax Administration 2010 (Juta) at page 33 and pages 55-7; A relevant defence to avoiding internal remedies, if applicable, is exhausting internal remedies first have no merit because the officials concerned exhibit bias and the taxpayer is unlikely to receive a fair hearing, such as through the objection process: Gold Fields Ltd v Connellan NO and Others [2005] 3 All SA 142 (W) at page 170.
36 2001 (1) SA 1109 (CC).