In a significant decision with implications for tax litigation practice, the Supreme Court of Appeal (SCA) in Commissioner for the South African Revenue Service v Virgin Mobile South Africa (Pty) Ltd [2025] ZASCA 77 (4 June 2025) provided authoritative guidance on the relationship between Rule 56 of the Tax Court Rules and the requirement for condonation under Rule 52. The court clarified that procedural fairness, not rigid formalism, must guide the application of these rules in the adjudication of tax disputes.
This decision is particularly relevant for litigants engaging the South African Revenue Service (SARS) in tax appeals, as it underscores that the objective of the Tax Court Rules is to advance resolution of disputes on their merits, rather than to penalise technical defaults that are swiftly cured.
Rule 31 of the Tax Court Rules requires SARS to file its statement of grounds of assessment and opposing appeal within 45 business days of receiving the taxpayer’s notice of appeal (Rule 10). Should SARS fail to comply within this timeframe, Rule 56(1)(a) empowers the taxpayer to issue a notice placing SARS on terms to comply within 15 business days, failing which the taxpayer may seek default judgment under section 129(2) of the Tax Administration Act 28 of 2011 (TAA).
In this case, SARS failed to comply with Rule 31 within the initial 45-day period but submitted its statement within the 15-day period provided in the Rule 56 notice. However, SARS did not simultaneously bring an application for condonation under Rule 52, which would ordinarily be required for late filings. The taxpayer contended that, absent such condonation, SARS’s filing was invalid and sought a default judgment.
The SCA rejected the taxpayer’s argument and found that once SARS had filed its statement within the 15-day grace period stipulated in the Rule 56 notice, it had remedied the procedural default and no condonation was necessary. The court held that Rule 56 constitutes a self-contained mechanism for curing non-compliance, analogous to Rule 26 of the Uniform Rules of Court, which allows a party to lift a bar by simply complying within the period stipulated in the notice.
To impose an additional requirement of condonation under Rule 52 in these circumstances would, according to the SCA, serve no substantive purpose and introduce an “unnecessary duplication of process.” The court reaffirmed that while procedural rules serve an important role in litigation, they must not be applied so rigidly as to obstruct the resolution of disputes on their merits.
The SCA acknowledged that the current rules may, at face value, allow a party to strategically delay compliance and “wait out” Rule 56. As noted by Musi AJA, “[t]he Rules allow a party to play possum.” However, the judgment suggests that such procedural gamesmanship can be avoided through vigilant enforcement by the opposing party. The onus lies on the aggrieved party to invoke Rule 56 promptly following non-compliance.
In adversarial proceedings, especially prior to litis contestatio, courts expect parties to protect both their procedural and substantive rights with equal diligence. The SCA stressed that “[t]he law assists those who are vigilant, not those who sleep on their rights.”
The Virgin Mobile judgment clarifies an important aspect of procedural tax law and offers valuable lessons for litigants and advisors. SARS and taxpayers alike must appreciate the practical significance of Rule 56: it is not merely a preliminary procedural step but a crucial mechanism for ensuring accountability without resorting to punitive technicalities.
Importantly, the judgment ensures that procedural default does not become an obstacle to substantive justice, a theme increasingly prominent in the jurisprudence surrounding the Tax Administration Act and Tax Court Rules.
The SCA’s ruling in Commissioner for SARS v Virgin Mobile South Africa provides welcome clarity on the operation of Rule 56 within the framework of tax litigation. It reaffirms that compliance mechanisms should be applied in a manner that upholds fairness and efficiency, rather than unduly privileging formalism.
For practitioners, the message is clear: act promptly, invoke procedural remedies timeously, and avoid overreaching in pursuit of technical defaults. Tax litigation, like all forms of litigation, must remain a vehicle for the just resolution of disputes, not a battleground for procedural gamesmanship.