Maumela and the Limits of Punitive Costs After SARS Reverses a Suspension Decision

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Maumela and the Limits of Punitive Costs After SARS Reverses a Suspension Decision

• 30 September 2026
• Tax Administration
• The Tax Faculty

Suspension of payment under section 164 of the Tax Administration Act and the distinction between ordinary and punitive costs.

At a glance

SARS's reversal of a refusal to suspend payment did not, without more, justify punitive costs. In Maumela v CSARS, the taxpayer recovered the costs of the urgent application on the ordinary scale, but failed to establish the exceptional basis for an attorney-and-client award. The distinction matters whenever administrative relief is conceded after a taxpayer has incurred litigation costs (Maumela v CSARS (2026/124143) [2026] ZAGPJHC 886 (30 July 2026), para 67).

The case also illustrates two separate exercises of discretion. A senior SARS official must evaluate the statutory factors governing suspension of payment. A court asked to award punitive costs must evaluate the conduct said to warrant its censure. Success in obtaining suspension does not determine the appropriate costs scale.

The dispute and the relief that remained

The taxpayer disputed an assessment of approximately R39.9 million, including penalties and interest. The South African Revenue Service (SARS) initially refused suspension. The taxpayer sought urgent judicial review; after being notified of that course, SARS granted the suspension. The taxpayer nevertheless pursued costs, having already incurred substantial legal expenditure.

The timing was contested. The taxpayer relied on the fact that SARS changed its position after notification of urgent proceedings. SARS attributed the reversal to its internal review processes and the volume of applications it was handling. The court's task on costs was therefore to assess whether the conduct established a basis for punishment beyond an ordinary costs award. The sequence of events did not, by itself, establish the exceptional basis for punitive costs.

Practice point: Where SARS concedes relief, preserve the correspondence and litigation chronology needed to address the remaining costs question. Identify the conduct relied upon for a punitive award separately from the fact that the original decision was reversed.

Suspension requires a supported application

Section 164(1) of the Tax Administration Act provides the starting point: an objection or appeal does not itself suspend the obligation to pay or SARS's entitlement to recover tax. The pay-now-argue-later principle explains why a taxpayer must address suspension separately from the merits of the underlying dispute. Suspension can mitigate hardship; it is not an automatic consequence of disputing a liability (Tax Administration Act, s 164(1)–(3)).

Section 164(2) provides the route for requesting suspension from a senior SARS official. The factors governing the exercise of discretion are discussed under section 164(3). Read together, these provisions require attention to the taxpayer's circumstances and the interests of the fiscus.

The evidence column translates the statutory factors into practical preparation steps. SARS initially relied on prima facie fraud and the taxpayer's failure to demonstrate irreparable hardship; security was also considered. The size of a demand cannot substitute for evidence of the statutory hardship requirement. An application must address the enquiry required by section 164 rather than rely solely on the amount demanded.

Practice point: For a client facing collection during a dispute, organise the application around each relevant statutory factor and the evidence supporting it. Filing the request should not be represented as securing suspension.

Administrative correction and punitive costs

The court's approach allows administrative self-correction. Section 9 of the Tax Administration Act was cited as permitting the withdrawal or correction of decisions in appropriate circumstances. Section 195 of the Constitution was invoked in support of accountable, responsive and lawful public administration. Voluntary correction can advance those requirements (Maumela v CSARS (2026/124143) [2026] ZAGPJHC 886 (30 July 2026), paras 38 and 44; Tax Administration Act, s 9; Constitution, s 195).

Paragraph 38 of the judgment reserves punitive costs for exceptional conduct: dishonesty, fraud, vexatious or frivolous litigation, recklessness, abuse of process, or conduct otherwise deserving marked judicial censure. The discretion is broad but must be exercised sparingly. Paragraph 44 explains why a change of decision after litigation should not automatically attract punishment: such an approach could discourage correction and encourage an institution to persist in error.

This reasoning did not absolve SARS from the costs of the urgent application. The court accepted that the taxpayer was justified in bringing it. Paragraph 67 distinguishes that entitlement from the unsuccessful demand for attorney-and-client costs.

Practice point: Advise separately on the prospects of recovering litigation costs and the prospects of a punitive scale. The decision supports an ordinary award on its facts while requiring additional justification for punishment.

Practitioner action checklist

The result was a qualified litigation success. The taxpayer obtained suspension and an ordinary costs award. The punitive claim failed because the conduct established in the case did not meet the exceptional standard described in the judgment.

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