Medox Limited v The Commissioner for the South African Revenue Service

Medox Limited carried on business in South Africa and incurred a substantial assessed loss in the 1996 tax year. It failed to submit an income tax return for the 1997 tax year but submitted returns for subsequent years (1998–2010, excluding 2003). In those later returns, Medox did not claim the carry-forward of the 1996 assessed loss. SARS issued assessments for those years without setting off the loss. Medox did not object to any of the assessments within the statutory objection period. Years later, Medox sought a declaratory order from the High Court declaring the assessments for 1998 and subsequent years null and void, contending that SARS acted ultra vires by failing to apply the mandatory loss set-off under section 20 of the Income Tax Act 58 of 1962.

The appeal was dismissed. No order as to costs was made, despite the respondent’s success, due to the State Attorney’s serious non-compliance with the Supreme Court of Appeal rules.

The case affirms the finality of tax assessments where no objection is lodged and reinforces the exclusivity of the statutory objection and appeal procedures in tax matters. It confirms that taxpayers cannot circumvent these procedures through declaratory relief in the High Court and clarifies that the burden of claiming assessed losses rests on the taxpayer.