Tax litigation jurisdiction reframed, reshaped, reset by UMK

The Constitutional Court (CC) in United Manganese of Kalahari (Pty) Limited v CSARS and Others (CCT 72/24) (31 March 2025) (UMK) has fundamentally reshaped the jurisdictional framework for High Court tax litigation in South Africa.

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The judgement replaced the current restrictive “exceptional circumstances” test in section 105 with a more flexible “good cause” standard, creating new strategic opportunities for litigants. Three subsequent decisions discussed below provide valuable guidance on the application of the new standard.

Core principles from UMK judgement

The unanimous UMK judgement established a new, pragmatic standard for applying section 105 of the Tax Administration Act (TAA). Section 105 requires tax disputes to be heard by the Tax Court, unless a High Court otherwise directs.

The CC's most significant finding in UMK was its unequivocal rejection of the “exceptional circumstances” test, noting the Legislature’s deliberate omission of the phrase from section 105. In its place, the CC instituted the more flexible “good cause” test. The central inquiry would be whether a sound justification exists for the High Court to exercise its jurisdiction.

The judgement clarifies that the High Court’s jurisdiction is “conditionally suspended,” with applicants required to motivate for a section 105 direction to lift the suspension at the threshold of proceedings, i.e. in the notice of motion and founding affidavit of the application to the High Court for relief.

Crucially, the CC also emphasised the “curative” effect of the Tax Court’s de novo appeal process, meaning the Tax Court can completely rehear matters and cure any procedural defects from the assessment process. The CC further expressed a strong aversion to “piecemeal adjudication” both of which serve as powerful factors against granting a High Court direction for standard assessment disputes. However, the Tax Court does not have jurisdiction to entertain the Promotion of Administrative Justice Act, 2000 (Act 3 of 2000) (PAJA) and legality reviews or grant declaratory orders and a High Court may, properly motivated, be the appropriate forum for such disputes.