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E d i t o r i a l

C o s t s I n T h e T a x C o u r t

Costs in the Tax Court are governed inter alia by section 130(1) of the Tax Administration Act, 28 of 2011, as amended, (‘the TAA’), subsections (a) and (b) of which provide that the Tax Court may, in dealing with an appeal and on application by an aggrieved party, grant an order for costs if –

‘(a) the SARS grounds of assessment or “decision” are held to be unreasonable; (b) the “appellant’s” grounds of appeal are held to be unreasonable’. The first point to note is that these provisions only apply to tax appeals. They do not govern the interlocutory or procedural applications contemplated in section 117(3) of the TAA.

However, Rule 50(5)(a) of the Tax Court Rules provides that:

‘The tax court hearing an application under this Part may – (a) make an order as referred to in this Part, together with any other order it deems fit, including an order as to costs; …’ Thus whereas the Tax Court hearing an appeal may grant an order for costs only on application and if the opposing party’s grounds are held to be unreasonable, the Tax Court hearing an application on notice under Part F of the Rules – Rules 50 to 64 – is not so constrained, and is empowered by Rule 50(5)(a) to make ‘any … order it deems fit, including an order as to costs’.

In ITC 1876 2015 Taxpayer 7, 77 SATC 175, a judgment of the Tax Court, Cape Town, handed down on 8 December 2014, Rogers J had the following to say at para 41:

‘It follows for the reasons I have given that the application to amend must be refused and the counterapplication to strike out must succeed. In regard to costs, Rule 50(5)(a) of the new Tax Court Rules, which govern these interlocutory proceedings, states that the Tax Court hearing an application under Part F of the rules may make an order as referred to in that part, together with any other order it deems fit, including an order as to costs. Although, when it comes to the substance of the tax dispute, costs are generally not awarded unless there has been a frivolous use of power or an unreasonable basis of opposition, in interlocutory matters it is my experience that costs have generally followed the result, unless it would appear unjust to order costs on that basis.’ (Emphasis supplied) The position is thus that in the case of appeals under Chapter 9 of the TAA, costs are not awarded save where the SARS grounds of assessment or ‘decision’ are held to be unreasonable or where the taxpayer’s grounds of appeal are likewise held to be unreasonable, whereas in the case of interlocutory or procedural applications, costs generally follow the result unless it would be unjust for this to be done.

It should also be noted that if either party wishes to apply for an award of costs in its favour, this should either be pleaded in the Rule 31 or the Rule 32 grounds of the parties, in the case of a tax appeal, or claimed by the applicant in the notice of motion, in the case of an interlocutory or procedural application.

Finally, it should be noted that the provisions of section 103(1)(a) and (b) of the TAA refer to

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