THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 399/2017
In the matter between:
THE COMMISSIONER FOR THE SOUTH AFRICAN

APPELLANT
REVENUE SERVICE

and

DANWET 202 (PTY) LTD

RESPONDENT

Neutral citation: CSARS v Danwet (399/2017) [2018] ZASCA 38 (28 March 2018)
Coram:        Lewis, Majiedt and Mbha JJA, Davis and Mothle AJJA
Heard:
15 March 2018
Delivered:  28 March 2018
Summary: Condonation for late filing of an appeal against an assessment – section
104(3) of the Tax Administration Act 28 of 2011 mandates a taxpayer to object to a
refusal by SARS to extend the period for lodgment – failure by taxpayer to file an
objection.

___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from: Gauteng Tax Court, Johannesburg (Masipa J sitting as a court of
first instance):

1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the Tax Court is set aside and replaced with the following:
‘The matter is struck from the roll.’

___________________________________________________________________

JUDGMENT
___________________________________________________________________
Davis AJA (Lewis, Majiedt and Mbha JJA and Mothle AJA concurring):

[1] This case concerns three related issues: (1) whether a Tax Court has the
necessary jurisdiction to entertain and thereafter grant an application for condonation
of the late filing of an appeal against an assessment; (2) if so whether the appellant
has a discretion to extend the period within which an appeal against an assessment
may be lodged beyond the prescribed period of 30 days as set out in s 107 of the
Tax Administration Act 28 of 2011 and (3) if the answer to the second issue is in the
affirmative, whether good cause was shown by the respondent to justify the order in
its favour.

The Facts
[2] In 2013 the appellant conducted an audit of the respondent’s business. On 19
August 2013 it issued an additional assessment for the 2012 tax year in the amount
of R1 208 919, which represented a significant increase from the initial assessment
of R19 915.

[3] On 7 October 2013 the respondent objected to this additional assessment. On
7 November 2013 the appellant responded to the objections by partially reducing the
amount of the additional assessment. On 9 December 2013 Mr Jan Coetzee, a tax
consultant representing the respondent, filed a notice of appeal against the partial
disallowance of the objection on the e-filing platform of the appellant. Attached to this
notice of appeal was a document which set out the reasons for the respondent’s
appeal in some detail.

[4] More than six months passed without any attempt by the respondent to
enquire into the status of its appeal until 30 June 2014, when Mr Coetzee telephoned
the appellant’s call centre to enquire about the status of the appeal. He was advised
that there was no record of the appeal on the appellant’s e-filing platform.

[5] According to Mr Coetzee, he telephoned Ms Ray-Anne van Schalkwyk at the
appellant’s office in Alberton, who advised him to re-submit the appeal. On 2 July
2014 he did so, together with a request for condonation, explaining that he believed
the notice of appeal had been correctly uploaded. In his explanation, he recorded
that Telkom ADSL lines had been water logged in the area where his office was
situated, particularly during the first two weeks of December 2013. He suggested
that, in the process of submitting the notice of appeal, the Telkom ADSL line had
stopped working, thereby preventing the full transmission of the relevant documents
on appellant’s e-filing platform. He justified his failure to initiate an earlier enquiry into
the status of the appeal on the basis that, in his experience, it could take appellant
‘up to 9 months to respond to the lodging of an appeal’.

[6] The appellant refused to grant condonation, on the basis of its interpretation of
s 107(2)(a) and 2(b) of the Act. In a letter of 12 February 2015, representatives of the
appellant, wrote:
‘Section 107(2) (a) or (b) of the TA Act provides that a senior SARS official may extend the
period within which an appeal must be lodged up to 21 days if reasonable grounds exist for
the delay or up to 45 days if exceptional grounds exist for the delay. No discretion is provided

to SARS to extend the period beyond 75 days. As the nature of appeal was delivered on 2
July 2014 it was more than 75 days late and accordingly Appellant has no discretion to
condone.’

[7] The respondent applied for condonation for the late filing of the appeal before
the Tax Court, Johannesburg (Masipa J), which granted an order on 1 February 2017
in terms of which leave was granted to the respondent to file its notice of appeal
against the disallowance of the objection of the assessment for the 2012 tax year
within ten days of the granting of the order.

[8] The appellant contends that the first issue is dispositive of the appeal in that
the Tax Court did not have the necessary jurisdiction to entertain the respondent’s
application for condonation.

Jurisdiction
[9] The jurisdiction of the Tax Court is set out in s 117 of the Act which, to the
extent relevant to this case, provides that the tax court has jurisdiction over tax
appeals lodged under s 107. Section 107 reads as follows:
‘Appeal against assessment or decision – (1) After delivery of the notice of the decision
referred to in section 106 (4), taxpayer objecting to an assessment or “decision” may appeal
against the assessment or “decision” to the tax board or tax court in the manner, under the
terms and within the period prescribed in this Act and the “rules”,
(2) A senior SARS official may extend the period within which an appeal must be lodged for
21 business days, if satisfied that reasonable grounds exist for the delay; or up to 45
business days, if exceptional circumstances exist that justify an extension beyond 21
business days.’

[10] The word ‘decision’ as contained in s 107 is defined in s 101 as meaning a
decision referred to in s 104(2) of the Act which provides that:
‘The following decisions may be objected to and appealed against in the same manner as an
assessment:
(a) a decision under subsection (4) not to extend the period for lodging an objection;
(b) a decision under section 107 (2) not to extend the period for lodging an appeal; and
(c) any other decision that may be objected to or appealed against under a tax Act.’

Section 129(2) of the Act sets out the powers of the tax court as follows:
‘In the case of an assessment or “decision” under appeal or an application in a procedural
matter referred to in section 117 (3), the tax court may –
(a) confirm the assessment or ‘decision’;
(b) order the assessment or “decision” to be altered; or
(c) refer the assessment back to SARS for further examination and assessment.’

[11] In the present case, the Tax Court granted condonation for the late filing of an
appeal against the revised assessment. The appellant interpreted s 107(2) to justify
its refusal of an extension for the lodging of an appeal; that is beyond the periods
prescribed in the section, the appellant had no power to grant an extension.

[12] A decision in terms of s 107(2) of the Act is ‘a decision’ for the purposes of
s 104(2) and s 129(2). It follows that, irrespective of the merits of the interpretation of
s 107(2) as contended for by appellant, a decision not to extend the prescribed
period falls within the definition of ‘decision’ for the purposes of s 129(2). Thus, the
Tax Court, subject to compliance with the procedures set out in s 104(3), had the
jurisdiction to determine an application for condonation for the failure by a taxpayer to
lodge an appeal timeously.

[13] Had the respondent objected to the decision to refuse an extension of time, as
it was obliged to do by s 104(3), the Tax Court would have had the power to order
that an extension should be granted in terms of s 117(3) of the Act read with Rule 53.
Rule 53 confers on the Tax Court the power to grant condonation and allow an
extension of time in which to lodge a notice of appeal.

[14] It follows that a decision to condone the late lodgement of an appeal is
appealable to this court in terms of s 129 read with s 133(1) of the Act. However,
counsel for the appellant based his argument on the qualification to which I have
made mention, namely he contended that the respondent  had failed to comply with
the requirements set out in s 104(3) and accordingly the tax court did not have
jurisdiction to hear the condonation application

The procedure to be adopted by a taxpayer in terms of s 104(3)
[15] Section 104(3) provides as follows: ‘a taxpayer entitled to object to an
assessment or “decision” must lodge an objection in the manner, under the terms,
and within the period prescribed in the ‘rules’. It is common cause that no objection
was lodged against the decision taken by the appellants’ representatives to invalidate
the appeal by refusing to extend the period within which the appeal could be brought.
Rule 7 of the Tax Court Rules1 provides that a taxpayer who may object to an
assessment under s104 of the Act may deliver a notice of objection within 30 days.
There is however no mention of an objection to a decision as provided for in s 104.
Rule 10(1)(b) provides that a taxpayer who wishes to appeal against an assessment
to the tax court must deliver a notice of appeal within 30 days after the delivery of the
disallowance or such extended period granted under s 107(2) of the Act.

[16] The Rules are therefore hardly a model of clarity when dealing with the
prescribed period within which a taxpayer must object to a decision such as a refusal
to extend the prescribed period. What is clear however, is that, in the event that a
taxpayer seeks to have such a refusal reversed, s 104(3) provides expressly that the
taxpayer is obliged to lodge an objection against the decision taken by a senior
SARS official acting in terms of s 107(2).

[17] In the context of the present case, an objection by the respondent to a refusal
to extend the period within which an appeal may be lodged may appear on the face
of it to be a pointless exercise, in that s 107(2) circumscribes the power of the
appellant to extend the period within which the appeal is to be lodged. The appellant
would not have the legal power to uphold an objection to a refusal to extend the time
for the lodging of an appeal beyond the period expressly provided for in s 107(2).

[18] The question then arises as to whether s 104(3) is absurd or pointless in this
instance. There is a common law presumption that a statute does not contain

1 Tax Court Rules as published in the Government Gazette No37819 on 11 July 2014

purposeless provisions. If, however, the legislative provision cannot be given a
meaningful construction, the presumption is taken to be rebutted.2

[19] Notwithstanding the present case dealing with a refusal to extend the period
for the lodgment of an appeal, there are cases where the obligation to object to a
decision made in terms of s 107(2) serves a clear purpose. For example, the
appellant may refuse to extend the period for lodgment on the basis that it is not
satisfied that reasonable grounds exist for the delay. An objection by a taxpayer
would seek to rebut the reasons given for this decision. There would be no legal
impediment to the appellant’s reconsideration of its decision in the light of the
objection by the taxpayer. There is therefore no basis on which to conclude that
s 104(3) is pointless or leads inevitably to absurdity.

[20] In summary, s 104(3) obliged the respondent to object to the decision taken by
the appellant on 15 February 2015 to invalidate its appeal. It failed to do so. It follows
that there was no valid application before the tax court which, accordingly, did not
have jurisdiction to hear the application.

[21] For these reasons, the following order is made:
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the Tax Court is set aside and replaced with the following:
‘The matter is struck from the roll.’

___________________

D Davis

Acting Judge of Appeal

2 LC Steyn Die Uitleg van Wette (5ed) at 119-124; LAWSA Vol 25 para 330 and cases cited in footnote
8 thereof.

APPEARANCES
For the Appellant:

N Snellenburg SC with D R Thompson
Instructed by:

State Attorney, Bloemfontein

For the respondent:

C Dreyer with A Saldulker
Instructed by

Pierre Retief Inc., Bedfordview
Maree & Partners, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

28 March 2018

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal.

The Commissioner of South African Revenue Service v Danwet 202 (Pty) Ltd (399/2017) [2018]
ZASCA 38 (28 March 2018)

Today the Supreme Court of Appeal (SCA) upheld an appeal against the judgment of the Gauteng
Tax Court, Johannesburg. The issues on appeal were (1) whether a Tax Court had the necessary
jurisdiction to entertain and thereafter grant an application for condonation of the late filing of an
appeal against an assessment; (2) if so whether the appellant had a discretion to extend the period
within which an appeal against an assessment may be lodged beyond the prescribed period of 30
days as set out in s 107 of the Tax Administration Act 28 of 2011(the Act) and (3) if the answer to the
second issue was in the affirmative, whether good cause was shown by the respondent to justify the
order in its favour. The tax court answered these questions in favour of the respondents.

The issues on appeal arose within the context of the following facts: The appellant conducted an audit
on the respondents business. The appellant later did a further assessment that represented a
significant increase from the initial assessment. The respondent then rejected the further assessment
however filed for the condonation late. The appellant refused to grant condonation on the basis of its
interpretation of s 107(2) (a) and 2(b) of the Act. The respondent applied for condonation for the late
filing of the appeal before the Tax Court, Johannesburg where leave was granted to the respondent to
file its notice of appeal.

The appellants argued before the SCA that the Tax Court did not have jurisdiction to entertain the
respondent’s application for condonation. The SCA held that had the respondent objected to the
decision to refuse an extension of time, as it was obliged to do by s 104(3) of the Act, the Tax Court

would have had the power to order that an extension should be granted in terms of s 117(3) of the
Act.
The SCA held that the Tax Court, subject to compliance with the procedures set out in s 104(3), had
the jurisdiction to determine an application for condonation for the failure by a taxpayer to lodge an
appeal timeously. It follows that had the respondent objected to the decision to refuse an extension of
time, as it was obliged to do by s 104(3), the Tax Court would have had the power to order that an
extension should be granted in terms of s 117(3) of the Act read with Rule 53.

The SCA thus concluded that s 104(3) obliged the respondent to object to the decision taken by the
appellant to invalidate its appeal. It failed to do so. It follows that there was no valid application before
the tax court which, accordingly, did not have jurisdiction to hear the application.