Gauteng High Court Blows R531m Hole In SARS Tax Claim After Businessman Challenges Payment Refusal

The Gauteng High Court has delivered a sharp rebuke to the South African Revenue Service (SARS), ruling that the tax authority acted unfairly when it refused to suspend payment of a disputed R531 million tax assessment.

At the centre of the case is a businessman who offered shares worth R1.25 billion in TMM Holdings as security for the alleged debt. SARS rejected the proposal, citing concerns over possible asset dissipation and risks to recovering the tax.

However, the court found that SARS failed to properly consider key facts, including the substantial value of the shares put forward as security. Instead, the revenue service relied on what the court described as “irrational and unreasonable” assumptions.

“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.”

Gauteng High Court Suspends R531m Tax Payment Pending Dispute Outcome

In its order, the court suspended the businessman’s obligation to pay the disputed tax while the matter proceeds.

“The applicant’s obligation to pay the disputed tax and the respondent’s right to receive the disputed tax or to recover the disputed tax is suspended pending the outcome of the dispute between the parties regarding the applicant’s liability for the payment of the disputed tax, subject to the applicant delivering a pledge of his 80% shareholding in TMM Holdings (Pty) Limited within five days of receipt of this order.”

The ruling effectively pauses SARS’s ability to enforce collection of the R531 million until the underlying dispute over tax liability is resolved, provided the businessman delivers the required pledge.

SAIT Welcomes Judgment as Win for Fair Tax Administration

The South African Institute of Taxation (SAIT) has welcomed the judgment, saying it strengthens fair tax administration and reinforces the need for evidence-based decision-making.

SAIT Head of Technical Practitioner Relations & Support, Gert Van Heerden, described the outcome as significant.

“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.” Van Heerden said.

YOU MAY ALSO LIKE: South Africa Secures Duty-Free Export Access To China In Landmark Economic Partnership Deal

According to SAIT, the judgment carries important implications for both taxpayers and the revenue authority:

• SARS’s discretion must be grounded in clear, evidence-based reasoning, rather than formulaic rejections that ignore relevant facts such as over-collateralised security.

• Courts are prepared to intervene decisively where administrative decisions contradict established evidence, placing limits on the “pay now, argue later” principle.

• Taxpayers facing substantial assessments may have stronger grounds to seek suspension of payment during Tax Court appeals, reducing the risk of undue financial prejudice.

The decision marks a notable development in the ongoing tension between SARS’s enforcement powers and taxpayer rights, particularly in high-value disputes.