Commissioner for the South African Revenue Service v Candice-Jean van der Merwe

SARS raised an additional income tax assessment against the respondent for the 2014 year of assessment following settlement negotiations concerning a large foreign ‘donation’. The parties’ attorneys agreed in writing to an assessment under s 95(3) of the Tax Administration Act 28 of 2011, in terms of which part of the amount was treated as taxable income. The respondent paid R44 million pursuant to the agreement, and related litigation was withdrawn. More than two years later, the respondent lodged a late objection to the agreed assessment, asserting that it was not provided to her and that tax was paid on a ‘pay now, argue later’ basis. SARS initially granted condonation but later withdrew it, treated the objection as invalid, and maintained that the assessment was not subject to objection or appeal. Despite this, the respondent filed a notice of appeal and then sought default judgment in the Tax Court under rule 56 for SARS’s alleged failure to file grounds of assessment. The Tax Court dismissed the application with punitive costs. The High Court upheld an appeal limited to interlocutory issues. SARS appealed to the Supreme Court of Appeal.

The appeal by SARS succeeded with costs, including the costs of two counsel. The High Court’s order was set aside and replaced with an order dismissing the taxpayer’s appeal from the Tax Court with costs, including the costs of two counsel.

The judgment clarifies the procedural architecture of objections, appeals, and default judgments under the Tax Administration Act and Tax Court Rules. It affirms that agreed assessments under s 95(3) are final and immune from objection or appeal, and that strict compliance with jurisdictional prerequisites is required before invoking rule 56. The case underscores the limits of default judgment in tax litigation and reinforces certainty and finality in tax settlements.