“Clean hands” – Is this or a similar concept used by the courts to determine a taxpayer’s right to just administrative action?

Abstract

Virtually no battles have been won by taxpayers who have challenged fiscal legislation on the grounds that it breaches a fundamental right, as contained in the Bill of Rights in the Constitution (Constitution of the Republic of South Africa, 108 of 1996). On the other hand, taxpayers have won significant victories when challenging administrative decisions by the South African Revenue Service (SARS) (as distinct from challenging the underlying legislation) where one or more fundamental rights of the taxpayer have been violated. The objective of this article is to analyse, document and evaluate whether the South African courts, either impliedly or implicitly, apply the concept of “clean hands” or something similar when adjudicating a taxpayer’s application for relief from the administrative decisions, actions or conduct of SARS (in terms of section 33 of the Constitution) as a result of certain so-called draconian provisions contained in the Tax Administration Act (28 of 2011) being enforced. The conclusion reached is that, although the concept of “clean hands” has not been formally expressed as applying to taxation matters (as has been the case in the law of contract and labour law), the courts impliedly use the “clean hands” concept as a relevant factor to consider in tax matters, where a person’s fundamental rights generally, and the right to just administrative action specifically, have been infringed.

Keywords: Bill of Rights, Constitution, clean hands, due legal process, Income Tax Act, Promotion of Administrative Justice Act, right to just administrative action, Tax Administration Act, taxpayers’ rights