South African Social Security Agency (Sassa) will appeal a High Court order granting service provider Net1 permission to continue making deductions from beneficiaries' accounts, it said on Thursday.
Sassa had studied the judgment and intended taking the matter on appeal because of its "unimaginable unintended consequences", CEO Thokozani Magwaza said.
"We are convinced that a higher court will have a different view on this matter," he said.
On Tuesday, acting Judge Corrie van der Westhuizen made an order at the North Gauteng High Court in Pretoria that amendments to regulations governing the payment of social grants should not hinder deductions from being made from beneficiaries' bank accounts.
In May 2016, the department published amended regulations to stop deductions.
Net1 and some of its subsidiaries argued that the regulations be declared invalid. It wanted deductions and debit orders to continue being made from social grant beneficiaries' bank accounts.
The judgment involved four court cases between Net 1 Applied Technologies (Pty) Ltd against Sassa, the social development department, and others. All four cases were heard on October 17 and 18, 2016.
The Black Sash, as an intervening party, had argued that if the court ruled in Net1's favour, the social development minister be given the opportunity to amend the regulations to protect grant beneficiaries from exploitative practices.
Van der Westhuizen also ordered that the first three respondents - Magwaza, Sassa, and Social Development Minister Bathabile Dlamini - pay costs.
In a statement released on Thursday, Sassa said the deductions made by Net1's subsidiary CPS were working against government's programme of fighting poverty.
"Civil society together with the department of Social Development and Sassa have been inundated with beneficiary complaints regarding unauthorised deductions coming off their grants, and the new regulations were intended to cushion the vulnerable against the actions of unscrupulous financial service providers," it said.