The Gauteng High Court has ruled against the South African Revenue Service (SARS) in a significant SARS tax dispute involving a R531 million bill. The court found that SARS acted unfairly by refusing to suspend payment of the disputed amount. A businessman offered shares worth R1.25 billion in TMM Holdings as security, but SARS rejected this due to concerns over asset dissipation and risks to tax recovery, according to the judgment.

The ruling highlighted how SARS ignored crucial facts, such as the value of the offered shares, and based its decision on irrational assumptions. The court stated: "Accordingly, I find further that the respondent based the second decision on incorrect facts rather than on the correct facts, and the second decision was so unreasonable that no reasonable person would have made it." It suspended the businessman's payment obligation pending the dispute's outcome, provided he pledges his 80% shareholding in TMM Holdings within five days.

Broader Impact on Tax Fairness and Appeals

This SARS tax dispute underscores key issues in tax administration, where revenue authorities must balance collection efforts with procedural fairness. The court's intervention challenges the "pay now, argue later" approach, emphasizing the need for rational, evidence-driven decisions. Experts note that such rulings prevent undue hardship on taxpayers during appeals.

Gert Van Heerden, Head of Technical Practitioner Relations & Support at the South African Institute of Taxation (SAIT), welcomed the outcome. He said: "This decision is beneficial for fair tax administration and the development of law, and no taxpayer should face ruin over irrational decisions. SARS must be able to show that decisions match facts, and courts will step in if it cannot." SAIT highlighted implications, including demands for evidence-based discretion from SARS, judicial readiness to counter unreasonable rejections, and enhanced leverage for taxpayers in massive assessments to avoid prejudice.

Party Responses and Next Steps

SARS has not issued a public response to the ruling as of publication. No attempts to contact SARS for comment were detailed in available reports. The businessman has not provided statements beyond the court proceedings. SAIT expressed support, stressing protection against boilerplate decisions that ignore facts like over-collateralized security.