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

2.3 A CONSTITUTIONAL BALANCE OF SARS’ POWERS AND THE ‘ADMINISTRATIVE ACTION’ DEBATE

2.3.1 Introduction
As submitted in this thesis, the exercise of public power68 by SARS to request
information, documents or things, in terms of ss 74A and 74B, is a decision69 that amounts to ‘conduct’ in terms of s 2 of the Constitution. If such conduct transgresses the constitutional obligations placed on SARS set out in this thesis, the conduct is inconsistent with the Constitution and is invalid. This gives the taxpayer the opportunity to approach the High Court through s 172(1) of the Constitution. Relying on the interpretation that the decision is ‘administrative action’ it will be subject to judicial review in terms ofss6(1), 6(2), 7 and 8 of PAJA;70 failing that, it will be subject to review in terms of the principle of legality on the basis that the decision is unlawful, unreasonable or procedurally unfair.71 It also gives taxpayers an opportunity to raise the ‘just cause’ defence in refusing to participate in an inquiry and audit instigated by SARS, as analysed in section 2.8 below.

Next:  Chapter 2.3.2 – Administrative Action

In accordance with Circular 230 Disclosure

******************
Footnotes

68 In Glen Anil Development Corporation Ltd v SIR 1975 (4) 715 (A) at 727A to 728A the court held that Revenue’s powers should not unnecessarily be restricted by interpretation. But this is now subject to scrutiny under the
Constitution.
69In Bhugwan v JSE Ltd 2010 (3) SA 335 (GSJ) Williams R C The Concept of a “Decision” as the threshold requirement for Judicial Review in terms of the Promotion of AdministrativeAct PER/PELJ2011(14)5
http://www.ajol.info/index.php/pelj/article/viewFile/70039/58153 (last accessed 30 March 2013), Williams states: ‘… It is arguable that the reason why the legislation includes a decision “proposed to be made” in the statutory definition of a “decision” was to prevent an administrative decision-maker from remaining outside the scope of PAJA by the stratagem of saying to the affected party something along the lines of – we have resolved to take view x of the matter unless and until you persuade us otherwise. If the definition of “decision” were not wide enough to encompass such a provisional or prima facie decision, a decision-maker could ensure that his response remained outside the scope of PAJA indefinitely, or at least for a protracted period, as each supply of further information by the affected person was deemed inadequate to persuade the decision-maker to alter his provisional view.’
70 William R C et al Silke on Tax Administration Lexis Nexis (April 2009) at para 3.4 states: ‘The Constitution now protects the institution of judicial review of administrative power from legislative interference and provides individuals
with justiciable rights to claim relief from the effects of unlawful administrative action (Currie, I and de Waal, J, The Bill of Rights Handbook, 5th ed, 643). The supremacy of the Constitution is as applicable to tax legislation as to any
other legislation. As the Constitutional Court has observed ‘even fiscal statutory provisions, no matter how indispensable they may be for the economic well-being of the country – a legitimate governmental objective of undisputed high priority – are not immune to the discipline of the Constitution and must conform to its normative standards.’ First National Bank of SA Ltd t/a Wesbank v C: SARS 2002 (4) SA 768 (CC) at 787B at para [31]’.
71 For an analysis of the principle of legality see section 2.4 infra; Hoexter (2012) at pages 121-5.