In a High Court of South Africa judgment, delivered on 23 March 2020 by Judge J. Mabusa, in the case of CSARS v Public Protector and Others, it was ordered that the South African Revenue Service (“SARS”) was permitted to withhold taxpayer information from the Public Protector. The Public Protector's subpoena powers do not entitle it access to taxpayer information relating to former President Jacob Zuma in contravention of SARS' obligation to keep taxpayer information confidential as required in terms of section 69(1) of the Tax Administration Act, 2011 (“TAA”).

The essence of the matter was whether SARS was permitted, under the provision of “just cause” contained in section 11(3) of the Public Protector Act, 1994 (“PPA”) read with section 69(1) of the TAA, to withhold taxpayer information and that the Public Protector's subpoena powers do not extend to access to taxpayer information.

Section 11(3) of the PPA provides that, “… any person who, without just cause, refuses or fails to comply with a direction or request under section 7(4) or refuses to answer any question put to him or her under that section or gives to such a question an answer which to his or her knowledge is false or refuses to take the oath or to make affirmation at the request of the Public Protector in terms of [s]ection 7(6), shall be guilty of an offence.” [our emphasis added]

It was acknowledged in the judgment that the issue in this matter was not complex and turned on the meaning of the term “just cause” in section 11(3) of the PPA. It was held that, the phrase simply means “valid grounds” or “reasonable grounds” or “valid reasons”. Accordingly, in the absence of valid reason, a person may not refuse or fail to comply with the direction or request or refuse to answer any question put to him or her by the Public Protector. Conversely, it means that a person who has a valid reason or reasonable grounds may refuse to provide information to the Public Protector.

In terms of section 69(1) of the TAA, “[a] person who is the current or former SARS official must preserve the secrecy of taxpayer information and may not disclose taxpayer information to a person who is not a SARS official”. “Taxpayer information” is defined, in section 67(1)(b) of the TAA, as “… any information provided by the taxpayer or obtained by SARS in respect of the taxpayer, including biometric information”.

Accordingly, in this case, SARS was prevented by the provisions of section 69(1) of the TAA from complying with the Public Protector's subpoena for taxpayer information. Accordingly, section 69(1) of the TAA constituted “valid grounds” or “just cause” and, as such, SARS has a basis on which it could refused to provide the taxpayer information to the Public Protector.

Judge Mabusa was scathing in his criticism of the Public Protector, stating that the “stance by the Public Protector is unsustainable, completely puzzling, disregards the law completely, and is reckless. It compels SARS to act contrary to the letter of the TAA. And to make matters worse the Public Protector is not without a remedy”.

The remedy available to the Public Protector (contained in section 69(2) of the TAA) entails the circumstances when taxpayer information may be lawfully disclosed to a person other than the taxpayer. This provision enables SARS to disclose taxpayer information:

  • to the SAPS or the NPA where a taxpayer is suspected of having committed a tax offence;
  • as a result of an order granted by the High Court; or
  • where the information constitutes public information.

The judgment, besides reaffirming the taxpayer's right to privacy and SARS' obligation to keep taxpayer information confidential, brings to the fore a number of interesting legal issues dealing with whether there was any inconsistency between the provisions of the Constitution of the Republic of South Africa, 1996 and the PPA and of the TAA as well as highlights the duty of care and professional responsibility of litigants.

Originally published 18 June, 2020

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