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

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

3.4 REASONABLENESS
In Bato Star Fishing (Pty) Ltd v The Minister of Environmental Affairs and Tourism,104 O’ Regan J set out a number of factors to be used in determining whether a decision is reasonable,105 namely:

(T)he nature of the decision, the identity and expertise of the decision maker, the range of factors relevant to the decision, the reasons given for the decision, the nature of the competing interest involved and the impact of the decision on the lives and well-being of those affected.106

In order to arrive at the points set out in the excerpt above, the rationality and
proportionality of the decision must be determined. The reasonableness standard was dealt with in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others,107 where Navsa AJ said in the context of s 6(2)(h) of PAJA, that a ‘judge’s task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution’.

In taking the constitutional obligation of reasonableness further, in ITC 1717,108 Davis J said:

However, I will assume in favour of appellant that at the time of the dispute, appellant was constitutionally entitled to a decision that was justifiable in terms of the reasons given. The question then arises as to the meaning of “justifiable”

…

In my view, justifiable must mean grounded in a rational justification. (Emphasis supplied)

As stated in LAWSA109 ‘there is no quantitative legal yardstick since the quality of reasonableness110 of the provision (or conduct) under challenge must be judged according to whether it arbitrarily or excessively invades the enjoyment of a constitutionally guaranteed right’. (Emphasis supplied)

Next:  3.4.1 Rationality

In accordance with Circular 230 Disclosure

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Footnotes

104 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC).
105 Croome B & Olivier L Tax Administration 2010 (Juta) at page 25.
106 Bato Star Fishing (Pty) Ltd v The Minister of Environmental Affairs and Tourism2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) at para [45].
107 2008 (2) SA 24 (CC) at page 59 and para [109].
108 64 SATC 32 at page 40.
109 LAWSA Volume 5(3) 2nd ed at para 165; See also Commissioner of Taxes v CW (Pvt) Ltd 1989 (3) ZLR 361 (S) at 370F-372C; Union Government (Minister of Mines and Industries) v Union Steel Corporation (South Africa) Limited 1928 AD 220 pages 236-7; and National Transport Commission v Chetty’s Motor Transport (Pty) Ltd 1972 (3) SA 726 (A).
110 See also American jurisprudence in this regard: Local 174 International Brotherhood of Teamsters v US, 240 F.2d 387 where ‘(i)n proceeding by revenue agents to compel union’s production of records relating to transactions with taxpayer-president, agents had burden to show that demand was reasonable under all circumstances and to prove that books and records were relevant or material to tax liability of taxpayer and that union possessed books or records containing items relating to taxpayer’s business’. (Emphasis supplied)