JOHANNESBURG, Gauteng — The Johannesburg High Court has delivered a landmark ruling stating that the South African Revenue Service (SARS) cannot use taxpayer confidentiality to withhold records when its decisions are under judicial review. The judgment mandates the disclosure of information behind a refused payment suspension, clarifying the legal boundaries of the Tax Administration Act and reinforcing transparency in tax disputes.
The ruling stems from a specific dispute involving a taxpayer facing an approximately R1.9-billion tax assessment, which included penalties and interest. The taxpayer applied to SARS for a suspension of payment under Section 164 of the Tax Administration Act. When SARS subsequently refused the request, the taxpayer sought a judicial review. Crucially, the dispute before the court did not debate the correctness of the R1.9-billion assessment itself, but rather focused on whether SARS was obligated to disclose the complete record of its decision-making process regarding the refusal.
At the heart of the legal battle was whether Section 68 of the Tax Administration Act could justify SARS withholding documents that would otherwise form part of the review record.
André Daniels, Head of Tax Controversy and Dispute Resolution at Tax Consulting SA, explained that SARS often relies on taxpayer confidentiality to withhold information, particularly concerning public figures or high-profile entities where public interest is high. However, the court drew a strict legal distinction between confidentiality and legal professional privilege.
“Taxpayer confidentiality is intended to be a shield protecting taxpayers, not a sword SARS can indiscriminately use against that taxpayer,” Daniels noted. The court found that SARS had not properly identified or substantiated a genuine privilege claim over the documents in question, ruling that the revenue service cannot simply declare information “confidential” to avoid disclosure.
The judgment builds on the precedent set by the landmark Delin Cash and Carry case, reinforcing that SARS cannot use confidentiality provisions as a blanket shield to hide internal deliberations. While this significantly shifts the power dynamic during dispute reviews, Daniels cautioned that it does not grant taxpayers unrestricted or carte blanche access to all internal SARS files.
“The context is in respect of a judicial review under Rule 53, and the touchstone is the relevance to the impugned decision,” Daniels explained. He emphasized that genuinely privileged material can still be legitimately withheld if properly established, meaning SARS is not forced to hand over its entire internal file for every dispute.
Ultimately, the ruling underscores a principle of mutual accountability under the law. Just as taxpayers are bound by the provisions of the Tax Administration Act, so is SARS. While the judgment specifically addresses the judicial review process, Daniels pointed out that the Act contains other mechanisms allowing taxpayers to request reasons for a SARS decision on a case-by-case basis, ensuring transparency without compromising legitimate legal privileges.