Commissioner for the South African Revenue Service v Sasol Chevron Holdings Limited

• Jurisdiction: South Africa
• Judge: XM Petse DP and Zondi JA, Mocumie JA and Hughes JA and Meyer AJA
• Judgment Date: 22 April 2022
• Docket Number: 1044/2020
• Hearing Date: 09 March 2022
• Court: Supreme Court of Appeal
• Citation: 2022 JDR 0978 (SCA)

Petse DP (Zondi, Mocumie and Hughes JJA and Meyer AJA concurring):

Introduction:

[1]

This is an appeal by the Commissioner for the South African Revenue Service (the Commissioner) against a decision of the Gauteng Division of the High Court, Pretoria (the high court) in favour of Sasol Chevron Holdings Limited (Sasol Chevron), the respondent in this appeal, delivered on 20 December 2019. In terms of its decision, the high court (per A J Louw AJ) reviewed and set aside the Commissioner's decision of 6 December 2017, namely that Sasol Chevron was not entitled to a refund of the Value Added Tax levied on the supply of the goods sold to Sasol Chevron as envisaged in

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Petse DP (Zondi, Mocumie and Hughes JJA and Meyer AJA concurring)

s 11(2)(a)(ii)(bb) of the Value Added Tax Act [1] (the VAT Act) read with regulation 6, Part One of the Export Regulations. [2] In addition, the high court remitted the dispute between the protagonists to the Commissioner for reconsideration. Costs followed the event.

Factual background:

[2]

The background facts are briefly as follows. Sasol Chevron is an incorporated joint venture company registered in accordance with the laws of Bermuda. In 2014, Sasol Chevron purchased certain movable goods [3] from Sasol Catalyst, a division of Sasol Chemical Industries (Pty) Ltd for exportation from South Africa to Nigeria. In line with the applicable statutory and regulatory framework, [4] the goods were supplied to Sasol Chevron on what is known as an 'ex-works' and 'flash title' basis. [5] Consequently, the goods were delivered by Sasol Catalyst to a warehouse at the Durban Harbour, from where they were sold to Sasol Chevron and then immediately on-sold to Escravos Gas-to-Liquids Project (EGTL) for export to Nigeria. The goods were specially manufactured for EGTL and could not be used in any other application.

[3]

Regulation 15(1) of the Export Regulations requires that goods sold for exportation must be exported within 90 days of the date of sale. The relevant tax invoices for the sale of the goods concerned were dated 20 August 2014,

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Petse DP (Zondi, Mocumie and Hughes JJA and Meyer AJA concurring)

22 September 2014 and 22 October 2014. Sasol Catalyst, the seller of the goods, elected as the vendor [6] to supply the goods to Sasol Chevron and levy tax at the zero rate in terms of s 11(1) [7] of the VAT Act.

[4]

For reasons not germane for present purposes, Sasol Chevron did not export the movable goods within 90 days of the date of the tax invoice as required by regulation 15(1). The goods were ultimately exported on 24 April 2015. Accordingly, Sasol Catalyst was, by operation of regulation 8(2) [8] of the

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regulations, required to levy value added tax at the standard rate on the supply of the goods to Sasol Chevron as prescribed in terms of s 7(1) [9] of the VAT Act.

[5]

Cognisant of the fact that value added tax would be payable in respect of the goods, Sasol Catalyst then addressed a letter to the South African Revenue Service (SARS) on 30 January 2015 in which it sought from SARS that the latter should issue a ruling in accordance with s 11(1)(a)(ii) [10] of the VAT Act read with regulation 15(1) extending the prescribed 90 day period within which the goods sold to Sasol Chevron were required to be exported to ECTL in respect of the tax invoices issued by the former during August, September, October, November and December 2014.

[6]

In support of its application, Sasol Catalyst stated:

'The delay in the exportation of the goods is as a result of various factors, including the delay in obtaining the required tax import clearance certificates from the Nigerian authorities; industrial action in Nigeria during November and December, delays in finalising contracts between the Nigerian entity and the freight forwarders.'

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[7]

And elaborating on this, it asserted in its founding affidavit, in support of the relief sought in the high court, that:

'The delay in exporting the goods from South Africa was mainly due to a delay in obtaining the required import clearance certificates from the Nigerian authorities which in turn caused delays in finalizing contracts between EGTL and the freight forwarders as well as industrial action being experienced in Nigeria during November and December 2015.'

Sasol Chevron amplified this in its replying affidavit and stated that:

'The industrial action referred to in the applicant's founding affidavit paragraph 19, and which was a contributing cause in the delay of the exportation of the goods, was experienced during November and December 2014, and not 2015 as stated therein.'

[8]

In the interim, and presumably in anticipation that its request for an extension would be acceded to, Sasol Catalyst issued new and revised tax invoices in substitution of those previously issued in August, September, October, November and December 2014 thereby substituting the initial zero-rated tax invoices with new tax invoices in which value added tax was levied at the standard rate of 14% that was operational at the time. Sasol Chevron, in turn, duly paid the value added tax levied by Sasol Catalyst in respect of the latter's replacement tax invoices.

[9]

On 6 July 2015, Sasol Catalyst applied to SARS for the extension of the period within which to submit an application to the Vat Refund Authority (VRA) for a refund of the value added tax paid in respect of Sasol Catalyst's revised tax invoices. In a comprehensive letter of 7 November 2016 to Sasol Catalyst's attorneys, SARS responded to Sasol Catalyst's request and declined the application for an extension of the 90 day period for the exportation of the goods sold in terms of the tax invoices issued in August, September and October

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2014. However, SARS acceded to Sasol Catalyst's request in relation to the tax invoices issued in November and December 2014.

[10]

Undaunted by this setback, Sasol Catalyst made further representations to SARS to 'reconsider the application by Sasol Chevron to submit the application for a refund of the South African VAT paid by Sasol Chevron on the goods sold by Sasol Catalyst'. However, in a letter dated 6 December 2017, SARS was not prepared to budge and reiterated its unwavering stance that Sasol Chevron was not entitled to a refund of the value added tax levied on the supply of the movable goods sold to Sasol Chevron. SARS' response seemingly failed to convince the non-fatigable Sasol Catalyst that SARS too was unrelenting. Further correspondence was exchanged between the parties, culminating in a letter dated 26 March 2018 from SARS to Sasol Chevron in which SARS reaffirmed its previous stance, consistent with what it had earlier communicated to Sasol Catalyst's attorneys in its letter of 7 November 2016.

Before the high court:

[11]

Some five months later, on 21 September 2018, and with a stalemate having arisen, Sasol Chevron instituted a review application under PAJA seeking, inter alia, an order to review and set aside SARS' decision of 6 December 2017. [11]

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[12]

It is common cause between the parties that the review application papers were served on SARS on 25 September 2018. Thus, SARS asserted that by then the 180 day period provided for in s 7(1) of PAJA, reckoned either from 7 November 2016 or 6 December 2017, had long expired. Accordingly, in argument before the high court, SARS contended that absent an application for an order that the 180 day period be extended in terms of s 9(2) of PAJA, the review application fell to be dismissed on that ground alone without consideration of the merits of the review application itself. I pause here to observe that it is common cause between the parties that Sasol Chevron did not bring any application for the extension of the 180 day period in terms of s 9(2) of PAJA.

[13]

In the event, the high court dismissed the preliminary objection raised by SARS and thereafter proceeded to determine the substantive merits of the review. The high court then upheld the application and, in the result, granted an order in the terms foreshadowed in paragraph 1 above. The present appeal, with the leave of the high court, is directed against that order.

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[14]

Insofar as the issue of delay is concerned, the high court, in essence, held that as the Commissioner provided his reasons for his decision of 6 December 2017 only on 26 March 2018, this meant that the 180 day period commenced to run from 27 March 2018. And, having regard to the fact that the 'review application was issued on 21 September 2018 . . . [on] the 179th day after the reasons were provided on the 26th March 2018', it followed that 'the review application was timeously instituted within the prescribed 180 day period' as required in s 7(1) of PAJA. With this procedural obstacle now out of the way, the high court then – as stated above – proceeded to consider the merits of the review application. The high court's conclusion on the issue of delay raises the question whether the high court was right to reach such a conclusion. Therefore, it is necessary to first determine this antecedent question, for if it is answered against Sasol Chevron, that result would be determinative of the outcome of this appeal, thus rendering it unnecessary to enter into the substantive merits of the review application.

Statutory framework:

[15]

Section 7(1) of PAJA provides as follows:

'Any proceedings for judicial review in terms of section 6(1) must be instituted...