Two recent High Court judgments, in which the South African Revenue Service’s (Sars) powers came under close scrutiny, have delivered a clear message: despite the tax authority’s wide powers under the Tax Administration Act, No. 28 of 2011 (“TAA”), those powers are discretionary, but not unfettered.

When Sars exercises its statutory powers, it is bound not only by the wording of legislation, but by its own internal decision-making structures, its committees, and even the memoranda placed before those committees. Further, the processes that Sars itself has designed to ensure that decisions are taken lawfully, rationally, and fairly are also important.

Both judgments – Ferreira v CSars (2024/067035) [2026] ZAGPPHC 47 (“Ferreira”) and CSars v Muleya (48495/2020) [2025] ZAGPPHC (“Muleya”) – make it clear that where Sars cannot demonstrate that a decision was taken through a proper, informed, procedurally compliant process, in accordance with its own protocols, such decision becomes vulnerable to review under the Promotion of Administrative Justice Act, No. 3 of 2000 (“PAJA”).

Ferreira:  The ‘Pay Now, Argue Later’ Decision that Fell Apart Because a Sars Committee was not Properly Informed

The Ferreira tax dispute was not about whether the taxpayer owed over R500 million to Sars, or whether Sars could invoke the pay now, argue later rule under section 164 of the TAA. The issue before the court did not even relate to whether Sars was entitled to refuse the taxpayer’s Request for Suspension of Payment application.

Instead, the court examined how Sars arrived at the decision to refuse this Request for Suspension of Payment.

After Sars initially refused the taxpayer’s request to suspend collection steps, additional security was offered to the Tax Man, in the form of an 80 percent shareholding valued in excess of R1 billion. Notwithstanding this, Sars again refused to reconsider its decision in terms of section 9 of the TAA.

The High Court intervened in this case, because there was no evidence that the Independent Debt Committee was properly informed of this new, highly material security when the second decision was taken.

Despite this, Sars continued to justify its refusal on the basis of inadequate security, risk of dissipation of assets, and prejudice to Sars, reasons which simply did not align with the facts that were before it.

The problem was not the outcome. The problem was Sars’ internal decision-making process.

Muleya:  Studying Sars’ Internal Procedures and Evidentiary Approach

The Muleya dispute on the other hand deals with a different factual scenario, but the same procedural weakness in Sars’ internal decision-making processes.

In this case, the court in carefully reviewed how Sars officials exercised their powers, what information they relied on, and whether Sars’ own internal standards and procedures were adhered to when those powers were exercised.

The court made it clear that Sars officials cannot simply rely on broad powers in legislation, as a cover-all to ignore evidentiary and procedural protocols created by Sars itself through its internal frameworks and operating procedures.

Similarly, the focus was not on whether or not Sars might ultimately be correct. The Court’s focus was on the adherence by Sars to proper procedural processes entrusted to the Tax Authority, to ensure the proper administration of South Africa’s tax system.

An Important Shift: Courts Are Now Asking Procedural Questions

What these two judgments show is an important shift, in that Courts are no longer satisfied with Sars simply saying that it has a blanket discretion to make decisions under the TAA. Instead, Courts are asking:

• Was the correct information placed before the correct decision makers?
• Did the relevant committee actually consider the material facts?
• Did Sars follow its own decision-making pathway?
• Can Sars produce the record showing how the decision was reached?

If the answer to these questions is unclear, Sars’ decision is liable to be reviewed under PAJA.

Why the Ferreira and Muleya Cases Are Significant For Sars’ Discretionary Powers

Where Sars declines or revokes a taxpayer’s Request for Suspension of Payment under section 164 of the TAA, taxpayers may feel they have very little room left to manoeuvre.

However, the Ferreira and Muleya cases showcase that Sars’ far-reaching discretionary powers are not absolute when related to tax disputes and collection measures. Where Sars arbitrarily rejects taxpayer’s Requests under section 164 of the TAA, such decisions could be vulnerable to judicial scrutiny and review to test the administrative and procedural fairness thereof.

The same applies to many other Sars powers, not only collection steps, but further preservation steps, and other discretionary decisions taken through internal committees.

Sars’ protocols, committees, memoranda, and decision pathways are no longer invisible internal mechanisms. They are part of the evidentiary record that determines whether a decision is lawful.

Practical Implication for Taxpayers and Advisors

Both of these judgments change how requests to Sars must be approached.

A section 164 Request in respect of the TAA, or any request involving a discretionary Sars decision, should be drafted with a very deliberate purpose. The purpose is not only to persuade Sars, but to create a proper documentary and evidentiary record, to enable taxpayers to approach our Courts for intervention where Sars fails to administer cases fairly. 

That record must show, objectively, that Sars was provided with all relevant information and that, if Sars ignores that information, its refusal thereof becomes reviewable in Court.

This is no longer a polite engagement with Sars. It is a structured administrative process that anticipates how a court may later examine Sars’ decision.

Reframing Engagement with Sars

These judgments are not merely interesting academic developments. Rather, they serve as practical warnings to Sars and taxpayers alike.

Where taxpayers and tax practitioners are still approaching requests to Sars as informal motivations or polite engagements, real strategic leverage is likely being missed.

Every submission to Sars should be carefully prepared in the context that a judge may one day scrutinise and review such documentary records.

Every refusal by Sars should be analysed, not simply for the ‘fairness’ of the outcome or decision made, but for whether it reveals that Sars did not properly follow its own decision-making processes.

Taxpayers and their advisors should not simply accept refusals or rejections by the Tax Authority on face value, or as routine correspondence. By partnering with specialist and experienced tax practitioners who carefully consider whether Sars has adhered to its structured administrative processes, is critical to ensure that tax disputes in their entirety are handled correctly. 

Written by André Daniels, Head of Tax Controversy & Dispute Resolution at Tax Consulting SA; and Richan Schwellnus, Senior Tax Attorney at Tax Consulting SA