Metcash Trading Limited v Commissioner for the South African Revenue Service and Another

Metcash Trading Limited, a large wholesaler and retailer, was assessed by the Commissioner for the South African Revenue Service for allegedly fictitious VAT transactions amounting to over R265 million, including additional tax, penalties and interest. In terms of sections 36(1) and 40(2)(a) and (5) of the Value-Added Tax Act 89 of 1991, Metcash was required to pay the assessed VAT immediately notwithstanding that it had lodged objections and intended to appeal. The Commissioner threatened to enforce payment through summary judgment procedures. Metcash challenged the constitutionality of these provisions, arguing that the so-called 'pay now, argue later' rule unjustifiably limited its right of access to courts under section 34 of the Constitution. The High Court declared the provisions unconstitutional and referred the matter to the Constitutional Court for confirmation.

The Constitutional Court refused to confirm the High Court order of constitutional invalidity. The application was dismissed, and sections 36(1) and 40(2)(a) and (5) of the Value-Added Tax Act were upheld as constitutionally valid.

This case is a leading authority on the constitutionality of the 'pay now, argue later' principle in South African tax law. It affirms the state’s power to enforce immediate payment of VAT assessments while preserving taxpayers’ rights to challenge assessments through statutory and judicial mechanisms. The judgment underscores the importance of efficient revenue collection and clarifies the scope of section 34 of the Constitution in the fiscal context.