Frank Sebatana, Senior Legal Tax Consultant, PKF Durban

SYNOPSIS - UNITED MANGANESE OF KALAHARI (PTY) LTD V CSARS

On 31 March 2025, the Constitutional Court (hereafter ‘the Court’) delivered a significant lengthy (152 page) judgment involving several consolidated applications (United Manganese, Rappa, Forge, Absa and Lueven) concerning the interpretation and application of a legislative mechanism that enables the High Court to grant declaratory relief circumventing the Tax Court’s (default) jurisdictional right to adjudicate matter(s) by way of dispute resolution proceedings under Chapter 9 of the Tax Administration Act 28 of 2011 (hereafter ‘TAA’). Section 105 of the TAA (hereafter ‘section 105’) briefly sets out the Forum for dispute of assessment or decision as follows:  

“- A taxpayer may only dispute an assessment or ‘decision’ as described in section 104 in proceedings under this Chapter, unless a High Court otherwise directs.”   

For the purpose of this article, what is of significance is the obiter dictum derived from the case of Absa Bank Limited v CSARS (hereafter ‘ABSA’) and the case of Lueven Metals (Pty) Ltd v CSARS (hereafter ‘Lueven Metals’), the Court set aside the exceptional circumstances test and introduced a broader test, enabling the High Court to circumvent the Tax Court’s jurisdictional right to adjudicate matter(s) when the taxpayer has shown ‘GOOD CAUSE’ for said declaratory relief.

DETERMINATION OF GOOD CAUSE || DISPUTES BASED WHOLLY ON A POINT OF LAW

The grounds for a good cause go beyond “exceptional circumstances” in that the declaratory relief application per section 105 must be purely limited to point(s) of law such that there should be no other (factual non-legal) ground(s) upon which the application is sought. The following salient points are stated “…if the dispute is entirely a dispute about a point of law, this sensibly justifies recourse to the High Court rather than following the route of a tax appeal.” and “…the High Court must consider whether the applicant impugns an assessment on other grounds that do not feature in the High Court litigation.”

The Court reinforced this secondary cumulative requirement, stating “If I were assessing the section 105 question at first instance, I would probably have declined to give a application, since the two alleged legal errors were not the only grounds on which the applicants attacked the assessments.”

The issue of what is a point of law (is often confused with a difference in fact), however the Court addresses the confusion and clarifies the position:  

“…The applicant’s case was that the two errors were errors of law emerging from SARS’ own statement of the facts,…”. The Con Court made the following example of a point of law, “…suppose a plaintiff formulates his particulars of claim without alleging fact X. The defendant takes an exception on the ground that fact X is an essential allegation to disclose a cause of action. The plaintiff can try to ward off the exception by arguing that he does not need to allege fact X, and the Court will then have to decide whether in law the plaintiff needs to allege fact X”

“In the present case, the applicants are contending that an essential ingredient of SARS’ case against them is their knowledge of the involvement of PSIC4 and D1 Trust and the transactions concluded by those entities, and that SARS has not alleged this essential ingredient. SARS’ riposte, evident from SARS’ own letters, is that SARS has not alleged this because it does not need to do so. A court can decide as a matter of law who is right.”

LUEVEN METALS CASE

The determination of a good cause was further confirmed by the Court as it held that the Supreme Court of Appeal (hereafter ‘SCA’) was incorrect in declining the application per section 105 as the issue was wholly a point of law, particularly, the Court stated “…A direction was appropriate because the parties required an interpretation of section 11(1)(f), the High Court had granted leave specifically to enable the parties to get an authoritative interpretation, and the correct interpretation was a matter of law and was dispositive of the disputes between the parties. There were no factual disputes impacting on the interpretation of section 11(1)(f)”

The Court further reinforced the secondary cumulative requirement, “…The only point of contention between the parties is whether Lueven’s supply of fully refined bars to Absa is zero-rated in terms of section 11(1)(f). That depends, in turn, on the interpretation of that provision, and in particular the phrase “which has not undergone any manufacturing process other than… A declaratory order will resolve this question one way or the other…”.

CONCLUSION

It is recommended that any taxpayer who disagrees with a decision or assessment first consider whether there may be good cause to request that the matter be heard in the High Court rather than the Tax Court. In certain situations, applying to the High Court under section 105 can be beneficial, as the High Court is bound by previous decisions (stare decisis), offering greater certainty and consistency. The Tax Court, by contrast, is not bound by prior judgments.

Whether good cause exists is a highly case‑specific question and depends on the particular facts, legal issues, and strategy involved. Our team can help you assess your position and determine the most effective way forward.

Should you require assistance, please contact your nearest PKF office.