Challenges To The Constitutionality of Conduct by SARS And Its Officials
28 April 2010
Posted by: Author: Professor RC Williams
Challenges To The Constitutionality Of Conduct By SARS And Its Officials
One of the noteworthy events in the 2010 fiscal calendar is likely to be the enactment of the Tax Administration Act. At present, it is still at the stage of a draft bill awaiting public comment, for which the deadline is the end of February.
This legislation will focus attention on taxpayers’ constitutional and administrative law remedies, as distinct from their right to object to an assessment and take the assessment on appeal in order to contest it on the merits.The right of such objection and appeal is, of course,very significant.
However, no less important is the right to mount a constitutional challenge either to a provision of tax legislation itself or to the conduct of SARS when professing to act in terms of its statutory powers. Section 2 of the constitution is explicit, not only that the constitution is the supreme law of the Republic, but that law or conduct inconsistent with it is invalid.
As the Constitutional Court observed in First National Bank of SA Ltd t/a Wesbank v CSARS2002 (4) SA 768 (CC) at 787B – 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.
But even where the tax legislation itself is beyond constitutional reproach, the conduct of SARS and its officials in implementing that legislation may come under constitutional challenge.An important question in this regard is whether a challenge to the constitutionality of ‘conduct’ may be adjudicated in the Tax Court or whether the aggrieved taxpayer is obliged to incur the substantially greater expense (and probably delay) of bringing the challenge before the High Court. It has been held that the tax court has no power to rule on the constitutionality of an Act of Parliament. (ITC 1687 (1998) 62 SATC 474; Case VAT 304 (2005)).
The question whether the tax court has jurisdiction to determine whether conduct on the part of the Commissioner and his officials in a particular matter was unconstitutional and therefore invalid has not, to date, been considered by the courts.
There is nothing in the language of s 172(1)(a) of the Constitution that explicitly bars the tax court from adjudicating on the constitutionality of conduct” (other than the conduct of the President) as distinct from the constitutionality of an Act of Parliament.However, the tax court, as a creature of statute, has such powers only as are expressly or impliedly vested in it and it lacks the inherent jurisdiction of the High Court. It is submitted that the constitutionality of conduct is an issue that is outside the jurisdiction of the Tax Court.It is true that the Tax Court has the power to set aside a discretionary decision of the Commissioner on the established common law grounds of review (see Kommissaris van Binnelandse Inkomste v Transvaal se Suikerkorporasie Bpk 1985 (2)SA 668 (T) at 676B-C.).
However,such a review involves adjudicating on the validity of a decision by the Commissioner, whereas the constitutionality of conduct involves an issue entirely extraneous to such a decision and is (it is submitted) beyond the scope of s 83 of the Income Tax Act and the rules promulgated in terms of section 107A.
It follows that where a challenge is made to the constitutionality of conduct by SARS officials, the challenge must (it is submitted) be brought before the High Court,no less than a challenge to the constitutionality of legislation.
Source: By Professor RC Williams (Tax talk)