Though this may seem uncontroversial, the judgment is important as it corrects a fundamental procedural misstep by the Tax Court and affirms the proper interpretation of section 129 of the TAA and Rules 44 and 46 of the Tax Court Rules. It underscores why procedural disengagement can backfire and how SARS could secure harsher relief in a taxpayer’s absence.

Background

The dispute originated in a capital gains tax appeal brought by the Lion Match Company (LMC), which was set down for hearing in November 2019. A month prior to trial, LMC’s longstanding attorneys of record withdrew. On the morning of the hearing, new representatives appeared solely to move for a postponement. When this was refused, they too withdrew.

Counsel for SARS proceeded to lead evidence in support of an upward adjustment to the original additional assessment. The Tax Court, however, declined to entertain the relief, holding that the withdrawal of LMC’s representatives had the effect of a withdrawal of the appeal, thereby ousting the Tax Court’s jurisdiction.

In reaching this conclusion, the Tax Court relied on section 116(1) of the TAA, which provides that the Tax Court hears appeals lodged under section 107, and section 129(1), which states that:

“…the tax court, after hearing the appellant’s appeal lodged under section 107 against an assessment or ‘decision’, must decide the matter…”.

The Tax Court interpreted these provisions together to mean that it could only exercise its powers under section 129(2) after hearing the appellant’s appeal, which, in its view, required the taxpayer’s active participation in the hearing. Once the appellant’s representatives withdrew, it considered there to be no “appeal” before it to be heard. The court further held that Rule 44(7) of the Tax Court Rules, which allows the Tax Court to decide a matter in a party’s absence, could not override sections 116 and 129(1) of the TAA.

Withdrawal must be express

On appeal, the High Court (Full Bench), squarely rejected the Tax Court’s approach. The High Court emphasised that Rule 46 of the Tax Court Rules governs the withdrawal of appeals and provides as follows: “A party who has lodged an appeal may withdraw it by delivering a notice of withdrawal to the registrar and to the other parties.”

No such notice was delivered by or on behalf of LMC. The High Court found the Tax Court’s interpretation “with respect wrong” and inconsistent with the principles outlined in African Cash & Carry (Pty) Ltd v C:SARS 2020 (2) SA 19 SCA. In the absence of compliance with Rule 46, there was no valid withdrawal of the appeal. The mere withdrawal of legal representatives or non-appearance at the hearing does not suffice.

Jurisdiction is retained

The High Court further held that the Tax Court remained fully empowered to decide the matter under section 129 of the TAA, read with Rule 44(7) of the Tax Court Rules.

Section 129(2) provides:

“In the case of an appeal against an assessment or ‘decision referred to in section 104(2)’, the tax court may – (a) confirm the assessment or decision; (b) order the assessment or decision to be altered; or (c) refer the assessment or decision back to SARS for further examination and assessment”

Rule 44(7) complements this, stating:

“If a party or a person authorised to appear on the party’s behalf fails to appear before the tax court at the time and place appointed for the hearing of the appeal, the tax court may decide the appeal under section 129(2) ...”

There is nothing in either provision that makes taxpayer participation a prerequisite for the Tax Court’s jurisdiction. Once an appeal is validly lodged under section 107, the Tax Court retains its full powers to determine the matter, including to alter an assessment upwards in SARS’ favour (if the revision is justified on pleadings and evidence) even if the taxpayer is not present to contest the evidence.

The SCA endorsed the High Court’s reasoning and upheld the High Court’s order that LMC’s additional assessments be increased accordingly.

Both the High Court and SCA in Lion Match confirmed that an upward adjustment by the Tax Court under section 129 must be grounded in the case before it, namely SARS’ pleaded grounds of assessment and supporting evidence. It is therefore clear that the Tax Court’s jurisdiction to adjust an assessment is not abstract or open-ended but anchored in the Rule 31 statement and supporting material.

In this regard, the earlier Tax Court interlocutory ruling in Lion Match Company (Pty) Ltd v C:SARS (IT13950 (30 January 2017)) underscores the procedural limits of SARS’ pleaded case. This judgment made it clear that while SARS may amplify an existing ground of assessment, it cannot substitute an entirely new factual or legal basis through its Rule 31 pleading, doing so requires a fresh additional assessment. Although the interlocutory ruling in Lion Match was not tested in the subsequent High Court or SCA appeals, this principle was reaffirmed in the more recent Tax Court judgment of C:SARS v SC (Pty) Ltd (case number 45840, 15 April 2025).

Read together with the SCA’s judgment, these authorities show the full picture. The Tax Court’s jurisdiction under section 129 is wide, even extending to upward adjustments in the taxpayer’s absence, but it is exercised strictly within the confines of SARS’ pleaded case. The rationale is to balance SARS’ ability to pursue higher liability where the evidence supports it, against the taxpayer’s right not to face a “moving target” in the form of shifting or entirely new grounds of assessment.

Conclusion

The Lion Match line of cases underscores both the reach and the limits of the Tax Court’s powers. Even in a taxpayer’s absence, the court retains full jurisdiction under section 129 to adjust assessments, including upwards, where SARS’ pleadings and evidence warrant it. But those powers are confined to the grounds of assessment actually advanced by SARS, they cannot be recast through its Rule 31 statement. This balance ensures that while SARS may seek harsher relief, taxpayers are shielded from facing a case that shifts beneath their feet.