The Commissioner for the South African Revenue Service v Danwet 202 (PTY) LTD

In 2013, SARS conducted an audit of Danwet and issued an additional assessment for the 2012 tax year of R1,208,919 (significantly increased from initial assessment of R19,915). Danwet objected on 7 October 2013. SARS partially reduced the assessment on 7 November 2013. On 9 December 2013, Danwet's tax consultant filed a notice of appeal via SARS e-filing platform. After six months, on 30 June 2014, when enquiring about the appeal status, Danwet was informed there was no record of the appeal. The consultant re-submitted the appeal on 2 July 2014 with a condonation request, explaining ADSL transmission problems in December 2013 caused by waterlogged Telkom lines. SARS refused condonation on 12 February 2015, stating section 107(2) provides no discretion to extend beyond 75 days and the appeal was filed more than 75 days late. Danwet applied to the Tax Court for condonation, which was granted on 1 February 2017. SARS appealed.

• Whether the Tax Court had jurisdiction to entertain and grant an application for condonation of late filing of an appeal against an assessment
• Whether SARS has discretion to extend the period for lodging an appeal beyond the prescribed periods in section 107(2) of the Tax Administration Act
• Whether the respondent complied with section 104(3) requiring a taxpayer to object to SARS' decision refusing extension before approaching the Tax Court
• Whether good cause was shown to justify condonation

The appeal was upheld with costs including costs of two counsel. The order of the Tax Court was set aside and replaced with an order that the matter be struck from the roll.

Section 104(3) of the Tax Administration Act 28 of 2011 mandates that a taxpayer must first lodge an objection against a SARS decision (including a decision refusing to extend time for lodging an appeal under section 107(2)) before the Tax Court can exercise jurisdiction to hear an appeal against that decision. Failure to comply with this mandatory procedural requirement deprives the Tax Court of jurisdiction to entertain the matter. The Tax Court only has jurisdiction over tax appeals lodged under section 107 when the prescribed procedures, including the objection procedure under section 104(3), have been properly followed.

The court noted that while the Tax Court potentially has jurisdiction to grant condonation for late filing of appeals through the operation of sections 104(2), 107(2), 117(3) and 129(2) read with Rule 53 of the Tax Court Rules, this is subject to compliance with procedural requirements. The court also observed that section 104(3) is not absurd or pointless even where SARS may have no discretion to extend time beyond statutory limits, because in other circumstances (such as where SARS refuses extension based on insufficiency of grounds rather than lack of power), the objection process serves a meaningful purpose in allowing reconsideration. The court applied the presumption that statutes do not contain purposeless provisions. The court did not ultimately determine whether SARS has discretion to extend beyond the periods in section 107(2) or whether good cause existed, as the jurisdictional issue was dispositive.

This case establishes important principles regarding the procedural requirements for challenging SARS decisions under the Tax Administration Act. It confirms that strict compliance with the statutory objection procedure in section 104(3) is mandatory before approaching the Tax Court, even where the ultimate substantive outcome may appear predetermined. The judgment clarifies the jurisdictional requirements of the Tax Court and reinforces the importance of following prescribed administrative procedures in tax disputes. It serves as a warning to taxpayers and their representatives that failure to comply with statutory procedural requirements, even those that may appear formalistic, will result in loss of jurisdiction and rights of appeal.