Abstract
Section 164(3) of the Tax Administration Act 28 of 2011 (hereafter TAA) provides a senior South African Revenue Service official (hereafter, respectively, SARS and senior SARS official) with discretionary powers to suspend the payment of disputed tax or a portion thereof, having regard to relevant factors, if the taxpayer intends to dispute the liability to pay such tax. Exercising a discretion in terms of section 164(3) of the TAA constitutes administrative action. Section 33(1) of the Constitution of the Republic of South Africa, 1996 (hereafter Constitution) grants everyone the right to just administrative action that is lawful, reasonable and procedurally fair and the Promotion of Administrative Action Act 3 of 2000 (hereafter PAJA) was promulgated to give effect to this right. The objective of this article is to apply the right to just administrative action to the manner in which the discretion in terms of section 164(3) of the TAA is exercised. This is achieved by adopting an explanatory research approach and performing a literature review of the discretion process in terms of section 164(3) of the TAA and the constitutional obligations in terms of section 33 of the Constitution as given effect to in PAJA. As the discretion exercised by the senior SARS official is influenced directly by the right to just administrative action, it should be exercised in a lawful, reasonable and procedurally fair manner to ensure compliance with the Constitution and the PAJA. For the discretion to be exercised in a lawful manner, the senior SARS official must at least be authorised to exercise the discretion in terms of the TAA and comply with the procedures and conditions stated in section 164(3) of the TAA. For the decision to be considered reasonable, the decision must be, at the minimum, rational and proportional, and to ensure that the discretion is exercised in a procedurally fair manner, SARS should comply with at least the relevant compulsory elements in terms of section 3(2)(b) of PAJA. A decision in terms of section 164(3) of the TAA which fails to meet the requirements of lawfulness, reasonableness and/or procedural fairness will be subject to review on several grounds listed in section 6(2) of PAJA.
 
Highlights
For the decision to be taken in a lawful manner, the senior SARS official must at least be authorised to exercise the discretion in terms of the TAA and comply with the procedures and conditions stated in section 164(3) of the TAA
Section 164(1) of the Tax Administration Act 28 of 2011, known as the "pay argue later" rule,[1] in essence provides that the obligation to pay tax and the right of the South African Revenue Service to receive and recover tax will not be suspended by an objection or appeal, unless a senior SARS official otherwise directs in terms of section 164(3) of the TAA
In the case of unauthorised and unlawful administrative action, the decision would be reviewable in terms of section 6(2)(a)(i) or (ii) of PAJA in terms of which a court or tribunal has the power to judicially review an administrative action if it was taken by an administrator who was not authorised to do so by the empowering provision[42] or who acted under a delegation of power which was unauthorised by the empowering provision[43]
Summary
Section 164(1) of the Tax Administration Act 28 of 2011 (hereafter TAA), known as the "pay argue later" rule,[1] in essence provides that the obligation to pay tax and the right of the South African Revenue Service (hereafter SARS) to receive and recover tax will not be suspended by an objection or appeal, unless a senior SARS official otherwise directs in terms of section 164(3) of the TAA. At the time this research was undertaken, no such exemptions or permissions in respect of SARS had been granted, and PAJA applies to SARS as an organ of state and to its decisions which amount to administrative actions As it was accepted in the Metcash and Capstone cases that a decision by SARS regarding a suspension of payment is an administrative action as defined, a detailed discussion thereof is not required. All taxpayers have the right to a fair process when a suspension request is considered It has been confirmed by the Constitutional Court that this requirement should be interpreted as administrative action that has the capacity to affect legal rights.[16] In terms of a suspension request, the legal right can be seen as the taxpayer's right to have a suspension request fairly considered by a senior SARS official, as such a request is provided for in section 164(2) of the TAA. The process regarding a suspension request requires an analysis first (in paragraph 4 below) before the requirements of just administrative action can be considered and applied thereto (in paragraph 5 below)
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