Two recent High Court judgments, in which the powers of the South African Revenue Service (SARS) came under close scrutiny, have delivered a clear message.
Despite the wide powers granted under the Tax Administration Act, No. 28 of 2011 (TAA), those powers remain discretionary. However, they are not unfettered. This marks an important instance of court scrutiny of SARS’ powers. In addition, court scrutiny of SARS’ powers has become a defining feature of modern tax litigation. Courts now focus less on outcomes alone and more on the legality of how decisions arise.
When SARS exercises its statutory powers, it must comply with the wording of legislation. It must also comply with its internal decision-making structures. These include committees and the memoranda submitted to those committees. Furthermore, SARS must follow the processes it designed itself. These processes aim to ensure lawful, rational and fair decision-making.
Both judgments – Ferreira vs CSARS (2024/067035) [2026] ZAGPPHC 47 (Ferreira) and CSARS vs Muleya (48495/2020) [2025] ZAGPPHC (Muleya) – confirm an important principle. If SARS cannot show that it followed a proper process, its decision becomes vulnerable to review under the Promotion of Administrative Justice Act, No. 3 of 2000 (PAJA).
The ‘pay now, argue later’ decision that collapsed due to procedural failure
The Ferreira tax dispute did not concern whether the taxpayer owed over R500 million to SARS. It also did not address whether SARS could invoke the “pay now, argue later” rule under section 164 of the TAA. Instead, the court focused on how SARS reached its decision. That distinction became central to the case.
SARS initially refused the taxpayer’s request to suspend collection steps. After this refusal, the taxpayer offered additional security. This security included an 80 percent shareholding valued at more than R1 billion.
Despite this new offer, SARS again refused to reconsider its decision under section 9 of the TAA. The court intervened. It found no evidence that the Independent Debt Committee received proper information about the new security. This omission proved critical. Even so, SARS justified its refusal. It cited inadequate security, risk of asset dissipation and prejudice to SARS. However, those reasons did not align with the actual information before it.
The problem did not lie in the outcome. Instead, it lay in SARS’ internal decision-making process. This aspect reflects growing court scrutiny of SARS’ powers.
Examination of internal procedures and evidence
The Muleya case involved a different factual background. However, it raised the same core issue. It exposed weaknesses in SARS’ internal decision-making processes.
The court examined how SARS officials exercised their powers. It also assessed what information those officials relied upon. Importantly, it tested whether SARS followed its own internal procedures and standards.
The court confirmed a key rule. SARS officials cannot rely solely on broad statutory powers. They must still comply with internal evidentiary and procedural frameworks. SARS itself created these frameworks. Moreover, the court did not focus on whether SARS reached the correct outcome. Instead, it examined whether SARS followed proper administrative procedures.
These procedures ensure the lawful administration of the tax system. This approach reinforces increasing court scrutiny of SARS’ powers in administrative tax decisions.
An important shift – courts now focus on process
These judgments show a clear judicial shift. Courts no longer accept SARS’ assertion of broad discretion under the TAA as sufficient. Instead, courts now ask structured procedural questions.
These questions include:
- Did the correct information reach the correct decision-makers?
- Did the relevant committee consider all material facts?
- Did SARS follow its own decision-making pathway?
- Can SARS produce a complete record of how it reached the decision?
If SARS cannot answer these questions clearly, its decision becomes vulnerable. Courts may review such decisions under PAJA. This reinforces deeper court scrutiny of SARS’ powers. This shift also increases institutional accountability within SARS. It ensures that discretion operates within structured legal boundaries.
Why Ferreira and Muleya matter for discretionary powers
Taxpayers often face significant limitations when SARS declines or revokes a Request for Suspension of Payment under section 164 of the TAA. At first glance, SARS appears to hold broad authority in such matters. However, Ferreira and Muleya demonstrate an important limitation. SARS’s discretionary powers are not absolute.
Where SARS rejects requests arbitrarily or without proper process, courts may intervene. Such decisions become vulnerable to judicial review. This reflects sustained court scrutiny of SARS’ powers in tax administration. This principle applies beyond collection decisions. It also applies to preservation actions and other discretionary determinations made through internal committees.
SARS protocols, committees, memoranda, and decision pathways no longer operate as purely internal mechanisms. Instead, they form part of the evidentiary record. That record determines whether a decision stands or falls under legal review.
Practical implications for taxpayers and advisors
These judgments significantly change how taxpayers must engage SARS. A section 164 request, or any request involving discretion, must serve a dual purpose. First, it must persuade SARS on the merits. Second, it must create a defensible evidentiary record.
That record must clearly show that SARS received all relevant information. It must also show how SARS should have engaged with that information. If SARS ignores or misinterprets that information, its decision becomes reviewable in court. This reflects intensified court scrutiny of SARS’ powers in practice.
Taxpayers must now treat these submissions as structured administrative records. They must anticipate judicial review from the outset.
Reframing engagement with SARS
These judgments carry practical and strategic implications. They do not represent abstract legal developments. Instead, they reshape how taxpayers and SARS interact. Where taxpayers treat submissions as informal engagements, they lose strategic advantage. Each submission should anticipate judicial scrutiny.
Every refusal by SARS requires careful analysis. The focus should not rest only on the outcome. It should also examine whether SARS followed proper procedures. Court scrutiny of SARS’ powers now influences how advisors assess each administrative step. It also shapes how disputes develop over time.
Taxpayers should not accept refusals at face value. Instead, they should assess whether SARS complied with its internal decision-making structures. Accordingly, taxpayers should engage experienced tax practitioners. These practitioners must evaluate whether SARS followed lawful administrative processes. This ensures proper handling of disputes from the outset.
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| Andre Daniels | Head | Tax Controversy and Dispute Resolution | mail me | | Richan Schwellnus | Senior Tax Attorney | mail me | |
| | Tax Consulting SA | | |
