Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

2.5 ADEQUATE REASONS

2.5.4 Conclusion

These judgments, read in conjunction with the views expressed by Hoexter, emphasizes the importance of SARS giving ‘adequate reasons’ when a decision in terms of ss 74A and 74B is made. These submissions must also be read with the arguments set out in section 4.2.5: Public Administration must be Accountable in this thesis. An administrator may deviate from supplying adequate reasons where reasonable and justifiable in terms of s 5(3) of PAJA.167 In De Freitas v Permanent Secretary of Agriculture, Fisheries, Lands and Housing 1998 3 LRC 62 the Privy Council, on the issue of what is ‘reasonably justifiable in a democratic society’ to limit a person’s fundamental constitutional rights, stated168: ‘1.Whether the legislative objective is sufficiently important to justify limiting a fundamental right? 2.Whether the measures designed to meet the legislative objective are rationally connected to it? 3.Whether the means used to impair the right or freedom are no more than is necessary to accomplish the objective?’

These principles would apply in the limited instances where SARS can prove that it was not necessary to furnish adequate reasons. The only instance in practice where SARS would be justified in not furnishing such reasons would be a case where the information is required as a matter of urgency. In an urgent situation the adequate reasons would be given after the fact. Otherwise, failure to do so would transgress PAJA and the constitutional principle of legality,169 where SARS would be required to account for its actions with reference to the facts and the law as to why the inquiry and audit was necessary; ensuring the audit is cost effective and efficient; that it is displaying a high degree of professional ethics; it is exercising its powers impartially, fairly, equitable and without bias; and in a transparent manner.170 Failure by SARS to give adequate reasons as analysed supra would constitute a transgression envisaged in s 5(3) of PAJA:

‘If an administrator fails to furnish adequate reasons for an administrative action, it must, subject to subsection (4) and in the absence of proof to the contrary, be presumed in any proceedings for judicial review that the administrative action was taken without good reason.’

Next:  CHAPTER 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

In accordance with Circular 230 Disclosure

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Footnotes

166 Supra footnote 168.
167 Corder H and Van der Vijver (eds) Realising Administrative Justice SiberInk 2002 at page 11: ‘No doubt the drafters of the PAJA will argue that such limitations on the availability of rights are justifiable and reasonable…for the ‘promotion of efficiency’…The matter has yet to be brought court.’
168 Cited with approval in Law Society of Zimbabwe and Another v Minister of Finance 61 SATC 458; See also Ferucci and Others v Commissioner for South African Revenue Service and Another65 SATC 47 at page 52 and pages 54-5.
169 Hoexter (2012) at pages 121-5.
170 Complying with its constitutional obligation in ss 195(1) and 237 of the Constitution, so as not to be criticised for conduct that is inconsistent with s 2 of the Constitution.