United Manganese of Kalahari (Pty) Ltd v Commissioner for the South African Revenue Service

SARS conducted an audit into United Manganese of Kalahari (Pty) Ltd (UMK) for the 2011–2013 income tax years. Following requests for information and interviews, SARS issued a letter of audit findings under s 42 of the Tax Administration Act 28 of 2011 (TAA), proposing additional assessments. After UMK responded, SARS finalised the audit and issued substantial additional income tax, dividend withholding tax, understatement penalties, and interest, amounting to over R350 million. Instead of pursuing the objection and appeal procedures under the TAA, UMK approached the Gauteng Division of the High Court seeking to review and set aside the additional assessments, to obtain a declaratory interpretation of the term “managed or controlled” in the Income Tax Act, and to be exempted from exhausting internal remedies or to have the High Court adjudicate the matter under s 105 of the TAA.

The appeal was dismissed with costs, including the costs of two counsel.

The case confirms and reinforces the strict interpretation of section 105 of the Tax Administration Act, clarifying that tax disputes must ordinarily proceed through the statutory objection and appeal process and be heard by the Tax Court as court of first instance. It underscores the limited and exceptional circumstances in which a High Court may intervene in tax assessment disputes.