The influence of Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others in shaping South African Tax Administration

• Citation: (2022) 34 SA Merc LJ 212
• DOI: https://doi.org/10.47348/SAMLJ/v34/i2a3
• Published date: 01 February 2023
• Pages: 212-228
• Author: Maleka, M.
• Date: 01 February 2023

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THE INFLUENCE OF BATO STAR FISHING

(PTY) LTD v MINISTER OF

ENVIRONMENTAL AFFAIRS AND TOURISM

AND OTHERS IN SHAPING SOUTH

AFRICAN TAX ADMINISTRATION

MOSEKI MALEKA*

Senior Lecturer, Department of Mercantile Law,

University of South Africa

I INTRODUCTION

Before the commencement of the constitutional state era (due to the

promulgation of the Constitution of the Republic South Africa, 1996

(‘the Constitution’)) in South Africa, taxpayers’ rights were not pro-

tected when taxpayers engaged with the revenue office, now known as

the South African Revenue Service (SARS). Taxpayers had no right to

just administrative action and could not challenge the exercise of SARS’

powers on administrative grounds.

Croome and Olivier argue correctly that during the pre-consti-

tutional era, taxpayers were entitled to expect that SARS would comply

with the general principles of administrative law, comprising the

principles of audi alteram partem (‘hear the other side’), nemo iudex in

sua propria (‘no one may be a judge in his own cause’) and the common-

law principles of judicial review of administrative acts (see Croome &

Olivier, Tax Administration (Juta 2010) 21).

Further, SARS was not obliged to provide reasons to taxpayers for

decisions taken by them as long as the decisions were reached in

accordance with its wide legislative powers (see Croome & Olivier, (Juta

2010) 21). This means that taxpayers did not have any ammunition to

challenge the exercise of SARS’ powers on administrative grounds prior

to the commencement of the constitutional era, where no reasons were

provided.

The position mentioned above has changed and SARS’ actions can

now be measured against the fundamental rights entrenched in Chapter

2 of the Constitution and the administrative principles laid down in the

* The case note was inspired by a paper presented by the author at the Tax Research

Network Conference held in Coventry, United Kingdom on 07–09 September 2011.

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212

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case of Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and

Tourism and Others 2004 (4) SA 490 (CC) (‘Bato Star Fishing’).

II STATE OF THE ART

It has been over two decades since South Africa became a constitutional

state. The rules governing tax administration are still cumbersome to

SARS officials, academics, tax practitioners, consultants and taxpayers.

It will become apparent in this case note how the general principles of

administrative law play a pivotal role and their importation into the tax

law field.

The administrative principles that are now part of tax administration

were discussed and crystallised in Bato Star Fishing. The case dealt with

an appeal to the Constitutional Court against the judgment of the

Supreme Court of Appeal (SCA). Although the case had nothing to do

with tax law principles and is not the only case decided on the subject of

administrative law, the case is worth noting because it dealt with a

number of important administrative principles which were subse-

quently imported into tax law to be applied by taxpayers in their dealings

with the Commissioner for SARS (‘the Commissioner’).

The principles to be discussed that form the bone of contention of this

case note, and discussed in Bato Star Fishing, are the right to just

administrative action, which includes the right to be provided with

reasons, and the judicial review of an administrative action. These

principles may be applied by individuals to challenge the actions of the

administrators if their rights have been infringed upon. Bato Star Fishing

also decided which law is applicable regarding the administrative

principles — the common law, Promotion of Administrative Justice Act

3 of 2000 (PAJA) or the Constitution.

The importance of Bato Star Fishing is that it dealt with these

principles and made them clearer to understand and apply in practice.

The case dealt with the allocation of fishing rights by the Minister of

Environmental Affairs and Tourism (‘the Minister’) and the decision to

award them. The crux of the matter in this case was the decision made by

the Minister regarding the allocation of fishing rights. There is also a

separate judgment by Ngcobo J dealing with the concept of transforma-

tion, which for the purpose of this case note has little significance in the

subject of tax administration. It should be noted that this case note does

not deal with the merits of Bato Star Fishing, but only with the extent that

it impacts on tax administration.

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SHAPING SOUTH AFRICAN TAX ADMINISTRATION 213

© Juta and Company (Pty) Ltd