Detour Ahead: When can Taxpayers skip the Tax Court? – The Constitutional Court clarifies the route through section 105 of the TAA.

Written by: Tebogo Maunye (Associate)

Supervised by: Veronica Vurgarellis (Director)

---

Section 105 of the Tax Administration Act 28 of 2011 provides that a taxpayer disputing an assessment or a decision in section 104 of the Tax Administration Act may only do so by following the dispute resolution mechanisms contained in the Tax Administration Act, unless a High Court directs otherwise. Courts and litigants alike have been grappling with the application and implementation of section 105, with several differing judgments having been delivered[1] regarding when the High Court may direct otherwise.

In a judgment penned by Rogers J with unanimous support, and spanning over 150 pages, it is this question that the constitutional court, addresses in the case of United Manganese of Kalahari (Pty) Limited v Commissioner of the South African Revenue Service and four other cases [2025] ZACC 2. In the judgment the court considered five separate tax-related cases, questioning when a High Court may direct that it and not the Tax Court ought to adjudicate the dispute.  

The Constitutional Court addressed this question by answering 8 pertinent questions which are addressed in summary below.

1.       Is a section 105 direction needed when a taxpayer applies to the High Court to have an appealable assessment or decision set aside on review, whether in terms of PAJA or the principle of legality?

• The court concluded that a section 105 direction is needed because such an application to set aside an appealable assessment or decision on review, regardless of whether its under PAJA or legality, could in substance constitute a dispute or attack of an assessment or decision as described in section 104 of the TAA. Therefore, the limitation in section 105 applies.

2.       Is a section 105 direction needed when a taxpayer applies to the High Court for a declaratory order on a question which, if answered in favour of the taxpayer, would show that an appealable assessment or decision is wrong?

• The court decided yes, a section 105 direction is needed. The court will look at the substance of the declaratory application. If the underlying purpose is to attack the correctness of an existing or imminent appealable assessment or decision, then it falls within the ambit of section 105, as a favourable declaratory order would likely be used to challenge or negate the assessment in subsequent proceedings.

3.       What is the effect of section 105 on the High Court’s jurisdiction prior to the granting of a direction?

• Section 105 imposes a conditional suspension of the High Court’s jurisdiction. Until direction in terms of the  section is granted, the High Court cannot exercise its review or declaratory jurisdiction to entertain disputes regarding appealable assessments or decisions.

• The High Court’s jurisdiction is not entirely ousted but held in abeyance pending the granting of the direction.

4.       When and how should directions in terms of section 105 be sought and adjudicated?

• Direction in terms of section 105 is only needed if an assessment has already been issued.

• It should be sought in the notice of motion and must be properly substantiated in the founding affidavit.

• The question of whether to grant the direction should be determined by the High Court before adjudicating the merits of the review or declarator application.

• The High Court must first resolve the jurisdictional question; however, this does not mean that a preliminary stand-alone application is needed.

5.       What test should the High Court apply when deciding whether to give a section 105 direction? In particular, is the test one of “exceptional circumstances”?

• The court found that the test is not one of “exceptional circumstances”. The heightened standard is not justified by the wording of section 105. Support for this finding is found in the fact that the “exceptional circumstances” test is used explicitly in other parts of the TAA, but not in section 105.

• Instead, the High Court should ask itself whether recourse to the High Court rather than the Tax Court is appropriate under the circumstances or whether there is justification for departing from the default remedy of disputing an assessment or decision through objections and appeals to the Tax Court.

• This involves considering whether there is a justification for departing from the default remedy of appeal to the Tax Court.

6.       What factors should the High Court take into account when deciding whether to grant a section 105 direction?

• It was held that the High Court has a wide discretion, and it is not possible to lay down exhaustive rules on how judges should exercise that discretion. However, the court suggested that the following factors ought to be considered:

§  Whether the taxpayer has lodged an objection to the assessment.

§  Whether the issue is a pure point of law.

§  The potential for piecemeal adjudication.

§  The adequacy of remedies in the tax court, including the ability to raise legal challenges and address procedural unfairness.

§  Avoiding undue delays.

§  Whether a review would be a hollow remedy, for example if the Tax Court process has already progressed significantly.

7.       What effect, if any, should section 105 have where a review or declaratory application is brought before an assessment is issued.

• The court found that section 105 is not directly applicable when a review or declaratory application is brought before an assessment is issued.

• Section 105 is triggered by the existence of an “assessment or decision as described in section 104”.

• The High Court, however, still retains a discretion to decline to entertain such an application if an assessment is imminent and the matter would more appropriately be dealt with through the objections and appeal process after the assessment.

8.       What is the nature of the High Court’s power to grant or withhold a section 105 direction? In particular, does it involve the exercise of a true discretion, in which case the grounds of appellate interference would be more limited than otherwise?

• It was found that the High Court’s power to grant or refuse a section 105 direction involves the exercise of a true discretion because it is procedural in nature (regulating access to the High Court), is of a kind where legitimate differences of opinion on the appropriate decision may occur, may be exercised at any time during the proceedings and not only at the end as part of a final judgment.

• This means it will only be interfered with by an appellate court if the discretion was not exercised judicially, was influenced by incorrect principles or misdirection on the facts, or resulted in an outcome that could not reasonably have been reached.

• Although it may be the end of proceedings if the direction sought is refused, if it is granted, it marks only the beginning of proceedings. It was found that it would be undesirable that such a direction should be subject to unrestricted attack on appeal.

WHY IT MATTERS

Ultimately, the judgment provides guidance on the appropriate forum for resolving tax disputes and the High Court’s discretion in issuing section 105 directions.  It maps out a clearer route for taxpayers navigating tax disputes, confirming that while the Tax Court remains the default route, a detour through the High Court is available, but only with permission – which can only be granted under very limited circumstances.

The judgment settles long-standing uncertainty and provides a flexible, principled approach that balances the taxpayers access to justice with procedural order and efficiency.

[1] See for example Agenback NO v Commissioner for the South African Revenue Services (15703/22) [2023] ZAGPPHC 2068; Erasmus v Commissioner for the South African Revenue Service (9706/21) [2023] ZAWCHC 215; Trustees of the CC Share trust v Commissioner for the South African Revenue Service (38211/21) [2023] ZAGPPHC; and Commissioner for the South African Revenue Service v Rappa Resources (Pty) Ltd (1205/2021) [2023] ZASCA 28.