Case note: Do taxpayers have to pay tax when SARS has not complied with sections 92, 95 and 96 of the Tax Administration Act? Nondabula v Commissioner: SARS & another explained

• Citation: (2023) 35 SA Merc LJ 94
• DOI: https://doi.org/10.47348/SAMLJ/v35/i1a5
• Published date: 27 February 2024
• Pages: 94-109
• Author: Maleka, M.
• Date: 27 February 2024

DO TAXPAYERS HAVE TO PAY TAX WHEN

SARS HAS NOT COMPLIED WITH SECTIONS

92, 95 AND 96 OF THE TAX

ADMINISTRATION ACT? NONDABULA v

COMMISSIONER: SARS & ANOTHER

EXPLAINED

MOSEKI MALEKA*

Senior Lecturer, Department of Mercantile Law,

University of South Africa

I INTRODUCTION

Section 3 of the South African Revenue Service Act 34 of 1997 (‘SARS

Act’) provides that the South African Revenue Service (‘SARS’) is

empowered to administer and collect taxes in South Africa. The

Commissioner for SARS (‘the Commissioner’) is empowered to invoke

the collection methods in terms of ss 164 and 179 of the Tax Administra-

tion Act 28 of 2011 (‘the TAA’). Section 164 provides that:

‘(1)Unless a senior SARS off‌icial otherwise directs in terms of subsection

(3) — (a) the obligation to pay tax; and (b) the right of SARS to

receive and recover tax, will not be suspended by an objection or

appeal or pending the decision of a court of law pursuant to an appeal

under s 133.

(2)A taxpayer may request a senior SARS off‌icial to suspend the payment

of tax or a portion thereof due under an assessment if the taxpayer

intends to dispute or disputes the liability to pay that tax under

Chapter 9.

(3)A senior SARS off‌icial may suspend payment of the disputed tax or a

portion thereof having regard to relevant factors, including —

(a) whether the recovery of the disputed tax will be in jeopardy or

there will be a risk of dissipation of assets; (b) the compliance history

of the taxpayer with SARS; (c) whether fraud is prima facie involved

in the origin of the dispute; (d) whether payment will result in

irreparable hardship to the taxpayer not justif‌ied by the prejudice to

SARS or the f‌iscus if the disputed tax is not paid or recovered; or (e)

* BIURIS LLB LLM (UNISA) HDIP TAX LAW (UJ) Advanced Diploma in Tax Procedural

Law (Thomas Jefferson School of Law, USA) LLD (UNISA)

94

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(2023) 35 SA Merc LJ 94

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whether the taxpayer has tendered adequate security for the payment

of the disputed tax and accepting it is in the interest of SARS or the

f‌iscus.’

This means that the taxpayer must pay the tax debt irrespective of

whether he or she has objected or appealed the assessment of the

Commissioner. However, the taxpayer may request postponement and

if granted, he or she is guaranteed that the Commissioner will not

continue with any collection measures for a certain period whilst the

objection or appeal application is being considered. Section 179 of the

TAA provides that:

‘(1)A senior SARS off‌icial may by notice to a person who holds or owes or

will hold or owe any money, including a pension, salary, wage or

other remuneration, for or to a taxpayer, require the person to pay

the money to SARS in satisfaction of the taxpayer’s tax debt.

(2)A person that is unable to comply with a requirement of the notice,

must advise the senior SARS off‌icial of the reasons for the inability to

comply within the period specif‌ied in the notice and the off‌icial may

withdraw or amend the notice as is appropriate under the circum-

stances.

(3)A person receiving the notice must pay the money in accordance with

the notice and, if the person parts with the money contrary to the

notice, the person is personally liable for the money.’

The Commissioner invokes s179 in addition to s164 of the TAA to

further his or her tax collection mandate. Section 179 empowers the

Commissioner to appoint a person as an agent and authorises him or her

to recoup an amount of tax debt to be paid over to the Commissioner.

The agent so appointed is normally a person in possession of monies

belonging to the taxpayer, such as a bank. Section 179(3) of the TAA

further provides that it remains the responsibility of the agent so

appointed to hand the required amount to the Commissioner and a

failure to do so will result in the agent being personally liable.

Cases that dealt with these provisions have been decided in favour of

the Commissioner. It will be clear from the discussion of the case in

Nondabula v Commissioner for SARS & another 2018 (3) SA 541 (ECM)

(‘Nondabula’) that the court decided against the Commissioner. The

court in this case did not deal with the constitutionality of the collection

methods in ss 164 and 179 of the TAA but the procedure before

collection takes place.

It is the purpose of this article to highlight the procedure that must be

followed by the Commissioner when invoking ss 164 and 179 of the TAA

as discussed in Nondabula. Further, the article shall demonstrate that,

https://doi.org/10.47348/SAMLJ/v35/i1a5

EXPLAINING NONDABULA v COMMISSIONER: SARS & ANOTHER95

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