On 23 October 2024, the South African Revenue Service (SARS) announced the outcome of the Supreme Court of Appeal Judgement (SCA) in the case of Tholo Energy Services CC versus the Commissioner for SARS (CSARS) – on 6 August 2024.
The judgement related to an appeal against the tariff determination – refund claim for fuel and Road Accident Fund (RAF) levy by licensed distributor of fuel – fuel not obtained from stocks of licensee of customs and excise manufacturing warehouse envisaged in Section 64F(1)(b) of the Customs and Excise Act, 1964 – exported without permit – not manufactured in South Africa – not wholly and directly removed to country in customs union – not delivered by licensed remover of goods – determination correct – appeal dismissed.
The following summary was released for the benefit of the media in the reporting of this case and does not form part of the judgements of the Supreme Court of Appeal:
The High Court upheld a determination by the CSARS refusing the appellant’s claims for a refund of fuel and Road Accident Fund (RAF) levies under the Act, 1964 (the refund claims). The SCA dismissed the appeal with costs.
The appellant is a licensed distributor of fuel (LDF). In March 2017 it submitted the refund claims totalling some R4.25 million, related to 25 consignments of diesel exported to Lesotho.
The appellant bought and collected the fuel from the Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd (PetroSA) depots. The fuel was not transported to Lesotho by a licensed remover of goods as required by the Act, 1964.
The Commissioner disallowed the refund claims, essentially because the fuel was not obtained from stocks of the licensee of a customs and manufacturing warehouse (a refinery), also known as a ‘VM’; that the fuel was not wholly and directly removed from a VM to Lesotho; and that the fuel had been exported without an International Trade Administration Commission of South Africa (ITAC) permit, required in terms of the International Trade Administration Act, 2002 (the determination).
The appellant appealed the determination to an internal appeal committee of the SARS, which dismissed its appeal. The appellant then appealed to the High Court without success.
In upholding the High Court’s decision, the SCA held that an appeal under Section 47(9)(e) of the Act, 1964 was an appeal in the wide sense, involving a complete rehearing and determination of the merits of the matter. Consequently, contrary to the appellant’s submissions, the High Court was entitled to decide the appeal on additional grounds advanced by the CSARS for rejecting the refund claims.
The SCA found that the High Court had correctly dismissed the appeal. In terms of section 64F of the Act, 1964, its rules and the requirements of Schedule No.6, to claim a refund of the fuel and RAF levy, an LDF must obtain the fuel directly from stocks of a licensed warehouse (not a depot), and produce an invoice from the licensee of the VM to the LDF. The appellant obtained the fuel from PetroSA's unlicensed depots. The appellant also exported the fuel without an ITAC permit. The appellant also did not qualify for a refund on the additional grounds advanced by the CSARS. It failed to show that the fuel had been manufactured in South Africa. The fuel was not removed from a storage tank at a licensed warehouse. It was not wholly and directly removed from a VM to Lesotho. The fuel was not transported by a licensed remover of goods as required by Section 64D of the Act, 1964 and it was not delivered by an LDF in Lesotho in terms of Schedule No.6 to the Act, 1964.
As a result, the SCA dismissed the appeal with costs, including the costs of two Counsels.
The Judgement is accessible at: