All litigants are equal, but some more equal than others

The “equity principle” in litigation

An essential feature of litigation is the equilibrium among the parties, particularly when the state is one of them. This is evident in criminal litigation, where the accused citizen is presumed innocent, and the state bears the burden of proving their guilt beyond a reasonable doubt. A similar dynamic underpins tax litigation in South Africa, where the taxpayer is likewise pitted against the state.

The rationale behind this lies in the inherent imbalance between the state and the citizen: the state has far greater resources and investigative powers, whereas the citizen may lack the means to prove their innocence. The system is designed this way to level the playing field and protect citizens from unjust convictions, going a step beyond the enshrined “equality before the law” principle and striving instead for “equity before the law”, so to speak.

Does the equity principle apply in tax litigation in South Africa?

Off the cuff, there is a basis for arguing that the equity principle should apply in tax litigation in South Africa, where the citizen, i.e., the taxpayer, is again pitted against the state, i.e. SARS—picture, for the moment, a natural person against an institutional SARS in a David-vs-Goliath scenario.

Tax litigation is, however, sui generis, with the taxpayer in a rather unique litigious position.

On the one hand, tax litigation is considered akin to civil litigation between two equal citizens, as seen in the Virgin Mobile judgment below. On the other hand, however, one of the parties (hint: the taxpayer) often bears a repute akin to that of an accused in criminal litigation. Perhaps the earliest (and, with hindsight, humorous) illustration of this is Conradie JA’s referral in a tax case to the taxpayer as “the accused” in a somewhat Freudian slip. Although now amusingly referred to, the irony is that an accused in criminal litigation is arguably a better‑off litigant. Not only does the taxpayer not benefit from a presumption of innocence, but instead suffers a “presumption of guilt” to some degree, with SARS being entitled to make an additional assessment based solely on its satisfaction that the taxpayer’s return (read: “version”) is incorrect.

Therefore, the equity principle does not appear to feature in tax litigation, which may explain the pro-fiscus trend in tax judgments in recent years.

The Virgin Mobile judgment

The recent Virgin Mobile judgment illustrates the above.

There, the Supreme Court of Appeal held that SARS need not apply for condonation for the late filing of its first pleading (often referred to as a “Rule 31‑statement”) in appeal proceedings before the Tax Court, where the taxpayer calls out the lateness (in what is, in turn, referred to as a Rule 56(1)-notice), and SARS then files the pleading within the prescribed period in response.

The court reasoned that a Rule 56-notice is akin to a notice of bar in civil litigation, in that it:

“assists an innocent party to advance the appeal, either by ensuring compliance or by securing a default judgment”.

The court further noted that the majority of the High Court in the court a quo found it irrational that “a party” (hold that thought) could ignore the Tax Court Rules and simply wait for a Rule 56(1)‑notice to comply with and so avoid applying for condonation. It then, however, followed through by simply stating:

“[this] is how the Rules were designed. They allow a party to play possum even beyond non-compliance with a Rule 56(1)-notice but before default judgment is granted”.

And then, somewhat confusingly, it concluded by stating:

“In an adversarial system such as ours… it is important for the innocent party to timeously invoke a Rule that is aimed at ensuring compliance with the Rules. The innocent party must be vigilant.”

Tax litigation is different from civil litigation

As observed by my esteemed colleague, Dr Albertus Marais, in his “Letter to the Editor” featured in The Taxpayer (Vol 75 Nos 1&2 Jan-Feb 2026), the problem with this approach is that it fails to appreciate the distinction between civil and tax litigation.

As outlined above, SARS is entitled to make an additional assessment unilaterally. Once it has done so, that assessment stands and has immediate effect. The taxpayer becomes liable for the tax debt reflected in that additional assessment, even though they likely believe (or worse, know) it to be incorrect. The taxpayer must then weigh the potential benefit of disputing the assessment against the cost of doing so, which usually involves incurring professional fees. This assumes, of course, that the taxpayer has the means to challenge the assessment in the first place. Should the taxpayer choose to engage the dispute process, it is true that they at least have the respite of a suspension request—but again, usually at a fee.

The practical imbalance

Furthermore, the notion that “a party” (implying the taxpayer or SARS, equally) is at liberty to play possum under the rules is, with respect, a stretch. In reality, that liberty belongs to SARS alone. To illustrate: if a taxpayer is late in filing their first pleading (often referred to as a “Rule 32‑statement”), SARS, as the innocent party in that instance, has no obligation nor incentive to advance the appeal. After all, the additional assessment is already in place.

The effect of the current approach, as a result of the Virgin Mobile judgment, is therefore the following:

• Where SARS is late in filing, it would be better off playing possum and waiting for a Rule 56(1)‑notice (a somewhat novus actus interveniens, if you will) to avoid applying for condonation.
• Where a taxpayer is late in filing, for whatever reason, they are hard-pressed to not only file as quickly as possible to overturn the status quo of SARS’s additional assessment, but must also always apply for condonation because SARS has no obligation nor incentive to file a Rule 56(1)‑notice to disturb the condonation requirement.

The practical consequence is that the procedural latitude described by the court operates almost exclusively in SARS’s favour.

At least equality before the law?

Lastly, one cannot unsee the paradox in the court’s suggestion that the obligation falls on the innocent party (which we now know will ironically always be the taxpayer) to call out SARS’s lateness timeously.

Surely equality before the law dictates that the emphasis rather be placed on each party’s obligation to observe the rules to begin with – particularly in the context of tax litigation in South Africa, where the balance between taxpayer and state remains under scrutiny?

Here is to hoping the matter is granted an audience with the Constitutional Court, where true equilibrium between taxpayer and state might yet be restored. A handful of recent tax judgments granted in the taxpayer’s favour leave me cautiously optimistic.