The Commissioner for the South African Revenue Service v Absa Bank Limited and Another

Absa Bank Limited and its wholly owned subsidiary, United Towers (Pty) Ltd, participated in a complex investment scheme involving preference share subscriptions and interlinked transactions within the Macquarie Group structure. The scheme generated dividends ultimately funded through interest earned on loans invested in Brazilian government bonds, producing tax-free income under a double taxation agreement. SARS investigated the scheme and issued audit notices under the Tax Administration Act, followed by notices in terms of s 80J of the Income Tax Act indicating an intention to apply the General Anti-Avoidance Rule (GAAR). Absa and United Towers requested withdrawal of the s 80J notices under s 9 of the TAA, which SARS refused. While a legality review of that refusal was pending in the High Court, SARS issued additional assessments under s 80B applying GAAR. The taxpayers amended their application to also review and set aside the assessments. The High Court set aside both the refusal to withdraw the s 80J notices and the assessments. SARS appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The orders of the High Court were set aside and substituted with an order dismissing the application with costs.

The judgment clarifies the non-reviewability of interlocutory steps in the GAAR process, particularly refusals to withdraw s 80J notices, and reinforces the primacy of the statutory tax dispute resolution mechanisms. It affirms that High Courts lack jurisdiction to review tax assessments unless exceptional circumstances exist, and that disputes involving GAAR generally entail factual determinations unsuitable for direct High Court review. The case strengthens the interpretation of s 105 of the Tax Administration Act and limits premature legality reviews in tax matters.