Page 97 - Q&A

Can administrative authorities make up
their own rules?

January 2020
“I recently discussed a certain tax approach applied by SARS with my auditors
and they informed me that the approach applied by SARS comes from an
Interpretation Note that SARS issued in respect of a specific section of the Value
Added Tax Act. I was taken aback that SARS could interpret the law and apply
it as they deem fit. Is this constitutional?”
It is quite common practice for administrative bodies that are established
and function by way of statute to from time to time issue guidelines and
interpretations in respect of legislation that governs them or which they are
required to enforce, collectively referred to as “Interpretative Documents.” The
question you rightly raise is to what extent these Interpretative Documents are
binding when it comes to the interpretation of relevant legislation.

Our Constitutional Court recently had an occasion to consider this exact
question. In general, the interpretation of legislation is the mandate of our courts
and any interpretive finding by our courts is binding, including on administrative
bodies. But, to what extent must the court take account of, or comply with,
Interpretative Documents issued by administrative bodies and can such notes
be considered valid evidence to be considered by our courts when deciding
on the correct interpretation?

In considering the question, it was found that any court’s interpretation of
legislation must always be objective and independent. However, in evaluating
whether to consider Interpretative Documents of an administrative body, the
following principle should be applied:
“When a legislative interpretation of an administrative authority is evidence of
a consistent and impartial interpretation over a prolonged period by all those
involved, then such administrative authority’s interpretation is persuasive authority
that a Court may take into account when objectively and independently
interpreting the meaning of legislation.” Litigation

Applying this principle, the court found that where a certain interpretation issued
by an administrative authority like SARS has been used over a prolonged period
of time, then the court may consider this interpretation and consider it as a valid
form of evidence. The court is however not confined to this interpretation and is
ultimately the most appropriate body to consider the interpretation of any Act.
What we can take from this is that Interpretative Documents are relevant and
can apply to the interpretation of legislation. However, although the Interpretative
Documents can be persuasive of a certain interpretation, ultimately our courts
have the final say.

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