Part E
Appeal against tax court decision
Category: Chapter 9 – Dispute resolution (TAA)
Section 145 (TAA) – Circumstances where settlement is inappropriate
145. Circumstances where settlement is inappropriate
It is inappropriate and not to the best advantage of the State to ‘settle’ a ‘dispute’ if in the opinion of SARS-
(a) no circumstances envisaged in section 146 exist and-
(i) the action by the person concerned that relates to the ‘dispute’ constitutes intentional tax evasion or fraud;
(ii) the ‘settlement’ would be contrary to the law or a practice generally prevailing and no exceptional circumstances exist to justify a departure from the law or practice; or
(iii) the person concerned has not complied with the provisions of a tax Act and the non-compliance is of a serious nature;
(b) it is in the public interest to have judicial clarification of the issue and the case is appropriate for this purpose; or
(c) the pursuit of the matter through the courts will significantly promote taxpayer compliance with a tax Act and the case is suitable for this purpose.
Section 133 (TAA) – Appeal against decision of tax court
133. Appeal against decision of tax court
(1) The taxpayer or SARS may in the manner provided for in this Act appeal against a decision of the tax court under sections 129 and 130.
(2) An appeal against a decision of the tax court lies-
(a) to the full bench of the Provincial Division of the High Court which has jurisdiction in the area in which the tax court sitting is held; or
(b) to the Supreme Court of Appeal, without an intermediate appeal to the Provincial Division, if-
(i) the president of the tax court has granted leave under section 135; or
(ii) the appeal was heard by the tax court constituted under section 118(5).
Section 146 (TAA) – Circumstances where settlement is appropriate
146. Circumstances where settlement is appropriate
The Commissioner may, if it is to the best advantage of the state, ‘settle’ a ‘dispute’, in whole or in part, on a basis that is fair and equitable to both the person concerned and to SARS, having regard to-
(a) whether the ‘settlement’ would be in the interest of good management of the tax system, overall fairness, and the best use of SARS’ resources;
(b) SARS’ cost of litigation in comparison to the possible benefits with reference to the prospects of success in court;
[Paragraph (b) substituted by section 55 of Act 23 of 2015 effective on 8 January 2016]
(c) whether there are any-
(i) complex factual issues in contention; or
(ii) evidentiary difficulties,
which are sufficient to make the case problematic in outcome or unsuitable for resolution through the alternative ‘dispute’ resolution procedures or the courts;
(d) a situation in which a participant or a group of participants in a tax avoidance arrangement has accepted SARS’ position in the ‘dispute’, in which case the ‘settlement’ may be negotiated in an appropriate manner required to unwind existing structures and arrangements; or
(e) whether ‘settlement’ of the ‘dispute’ is a cost-effective way to promote compliance with a tax Act by the person concerned or a group of taxpayers.
Section 134 (TAA) – Notice of intention to appeal tax court decision
134. Notice of intention to appeal tax court decision
(1) A party who intends to lodge an appeal against a decision of the tax court (hereinafter in this Part referred to as the appellant) must, within 21 business days after the date of the notice by the ‘registrar’ notifying the parties of the tax court’s decision under section 131, or within a further period as the president of the tax court may on good cause shown allow, lodge with the ‘registrar’ and serve upon the opposite party or the opposite party’s legal practitioner or agent, a notice of intention to appeal against the decision.
[Subsection (1) substituted by section 36 of Act 33 of 2019]
(2) A notice of intention to appeal must state-
(a) in which division of the High Court the appellant wishes the appeal to be heard;
(b) whether the whole or only part of the judgment is to be appealed against (if in part only, which part), and the grounds of the intended appeal, indicating the findings of fact or rulings of law to be appealed against; and
(c) whether the appellant requires a transcript of the evidence given at the tax court’s hearing of the case in order to prepare the record on appeal (or if only a part of the evidence is required, which part).
(3) If the appellant is the taxpayer and requires a-
(a) transcript of the evidence or a part thereof from the ‘registrar’, the appellant must pay the fees prescribed by the Commissioner by public notice; or
(b) copy of the recording of the evidence or a part thereof from the ‘registrar’ for purposes of private transcription, the appellant must pay the fees prescribed by the Commissioner in the public notice.
(4) A fee paid under subsection (3) constitutes funds of SARS within the meaning of section 24 of the SARS Act.
Section 147 (TAA) – Procedure for settlement
147. Procedure for settlement
(1) A person participating in a ‘settlement’ procedure must disclose all relevant facts during the discussion phase of the process of ‘settling’ a ‘dispute’.
(2) A ‘settlement’ is conditional upon full disclosure of material facts known to the person concerned at the time of ‘settlement’.
(3) A dispute ‘settled’ in whole or in part must be evidenced by an agreement in writing between the parties in the prescribed format and must include details on-
(a) how each particular issue is ‘settled’;
(b) relevant undertakings by the parties;
(c) treatment of the issue in future years;
(d) withdrawal of objections and appeals; and
(e) arrangements for payment.
(4) The agreement must be signed by a senior SARS official.
(5) SARS must, if the ‘dispute’ is not ultimately ‘settled’, explain to the person concerned the further rights of objection and appeal.
(6) The agreement and terms of a ‘settlement’ agreement must remain confidential, unless their disclosure is authorised by law or SARS and the person concerned agree otherwise.
Section 135 (TAA) – Leave to appeal Supreme Court of Appeal against tax court decision
135. Leave to appeal to Supreme Court of Appeal against tax court decision
(1) If an intending appellant wishes to appeal against a decision of the tax court to the Supreme Court of Appeal, the ‘registrar’ must submit the notice of intention to appeal lodged under section 134(1) to the president of the tax court, who must make an order granting or refusing leave to appeal having regard to the grounds of the intended appeal as indicated in the notice.
(2) If the president of the tax court cannot act in that capacity or it is inconvenient for the president to act in that capacity for purposes of this section, the Judge-President of the relevant Division of the High Court may nominate and second another judge or acting judge to act as president of the tax court for that purpose.
(3) Subject to leave to appeal to the Supreme Court of Appeal in terms of section 17 of the Superior Courts Act, 2013 (Act No. 10 of 2013), an order made by the president of the tax court under subsection (1) is final.
[Subsection (3) substituted by section 54 of Act 23 of 2015 effective on 8 January 2016]
Section 148 (TAA) – Finality of settlement agreement
148. Finality of settlement agreement
(1) The settlement agreement represents the final agreed position between the parties and is in full and final ‘settlement’ of all or the specified aspects of the ‘dispute’ in question between the parties.
(2) SARS must adhere to the terms of the agreement, unless material facts were not disclosed as required by section 147(1) or there was fraud or misrepresentation of the facts.
(3) If the person concerned fails to pay the amount due pursuant to the agreement or otherwise fails to adhere to the agreement, a senior SARS official may-
(a) regard the agreement as void and proceed with the matter in respect of the original disputed amount; or
(b) enforce collection of the ‘settlement’ amount under the collection provisions of this Act in full and final ‘settlement’ of the ‘dispute’.
Section 136 (TAA) – Failure to lodge notice of intention to appeal tax court decision
136. Failure to lodge notice of intention to appeal tax court decision
(1) A person entitled to appeal against a decision of the tax court, who has not lodged a notice of intention to appeal within the time and in the manner required by section 134, abandons, subject to any right to note a cross appeal, the right of appeal against the decision.
(2) A person who under section 134 lodged a notice of intention to appeal against a decision of the tax court but who has subsequently withdrawn the notice, abandons the right to note an appeal or cross-appeal against the decision.
Section 149 (TAA) – Register of settlements and reporting
149. Register of settlements and reporting
(1) SARS must-
(a) maintain a register of all ‘disputes’ that are ‘settled’ under this Part; and
(b) document the process under which each ‘dispute’ is ‘settled’.
(2) The Commissioner must provide an annual summary of ‘settlements’ to the Auditor-General and to the Minister.
(3) The summary referred to in subsection (2) must be submitted by no later than the date on which the annual report for SARS is submitted to Parliament for the year and must-
(a) be in a format which, subject to section 70(6), does not disclose the identity of the person concerned; and
[Paragraph (a) substituted by section 21 of Act 21 of 2021]
(b) contain details, arranged by main classes of taxpayers or sections of the public, of the number of ‘settlements’, the amount of tax forgone, and the estimated savings in litigation costs.