Nissan SA (Pty) Ltd v Commissioner for Inland Revenue

JurisdictionSouth Africa
JudgeMahomed CJ, Eksteen JA, Marais JA, Zulman JA, Farlam AJA
Judgment Date02 September 1998
Citation1998 (4) SA 860 (SCA)
Docket Number425/96
Hearing Date08 May 1998
CounselC Van Breda (with him S Botha) for the appellant J Campbell for the respondent
CourtSupreme Court of Appeal

Marais JA :

This is an appeal against a decision of the Special Income Tax Court for Gauteng presided over by Eloff JP. The taxpayer is a private company which carries on business as a manufacturer, distributor and G exporter of motor vehicles. In 1972, for reasons with which it is unnecessary to burden this judgment further than becomes essential, an exemption from liability to normal tax on certain income was created. It underwent a series of subsequent metamorphoses by way of amendments. The changes in the legislation loomed large in the arguments of counsel and it is necessary to list them chronologically. H

1972

Section 10(1)(zA) of the Income Tax Act 58 of 1962 was introduced by s 7(1)(f) of Act 90 of 1972 on 16 June 1972. It was deemed (s 7(2)(c)) to have taken effect as from the commencement of years of assessment ending on or after 1 October 1970. It read: I

'There shall be exempt from tax -

any amount by way of a rebate or other assistance in respect of the financing of the export of goods from the Republic, which is received by or accrues to or in favour of any person from the State under a scheme for the payment of such amounts to exporters, if the Minister of Finance has directed that the amounts payable under that scheme by way of such rebates or other assistance shall be exempt from normal tax.' J

Marais JA

1974 A

On 11 November 1974 it was replaced by s 10(1)(n) of Act 85 of 1974. The replacement was deemed (s 10(2)(c)) to have taken effect from the commencement of years of assessment ending on or after 28 March 1973. The new provision read:

'There shall be exempt from tax - B

any amount by way of a rebate or other assistance received by or accrued to or in favour of any exporter (as defined in s 11bis(1)) under any scheme for the promotion or financing of exports which is for the purposes of this paragraph approved by the Minister of Economic Affairs in consultation with the Minister of Finance.'

1990 C

On 28 June 1990 another version was introduced by s 10(1)(q) of Act 101 of 1990. It was deemed (s 10(2)(e)) to have come into operation as from the commencement of years of assessment ended or ending on or after 1 April 1990. It read: D

'There shall be exempt from tax -

any amount (other than interest) which is on or after 1 April 1990 paid by the State under any scheme for the promotion or financing of exports: Provided that where the person entitled to claim such amount from the State E has, under an agreement directly connected with the export trade carried on by him, agreed to pay the whole or any portion of such amount to any other person, the exemption under this paragraph shall also apply to the whole or such portion of such amount received by or accrued to such other person under the said agreement.'

1991 F

It is this version of the provision which is applicable in this case. On 27 June 1991 the words preceding the proviso were amended by s 12(1)(m) of Act 129 of 1991. Again the amended provision was deemed (s 12(2)(f)) to have come into operation as from the commencement of years of assessment ended or ending on or G after 1 April 1990. The provision now read:

'There shall be exempt from tax -

any amount by way of rebate or other assistance received by or accrued to or in favour of any exporter (as defined in s 11bis(1)) under any scheme for the promotion or financing of exports which is for the purposes of this H paragraph approved by the Minister of Trade and Industry and Tourism with the concurrence of the Minister of Finance, as well as any amount (including any interest paid in terms of the General Export Incentive Scheme introduced with effect from 1 April 1990 and which is calculated in respect of any period falling after 1 April 1991) which is paid by the State, on or after 1 April 1990, under any such scheme: Provided that where the person I entitled to claim such amount from the State has, under an agreement directly connected with the export trade carried on by him, agreed to pay the whole or any portion of such amount to any other person, the exemption under this paragraph shall also apply to the whole or such portion of such amount received by or accrued to such other person under the said agreement.' J

Marais JA

1994 A

On 16 November 1994 the provision was amended yet again by s 9(1)(g) of Act 21 of 1994. The subsection as amended came into operation (s 9(2)(c)) on 1 March 1995 and applied, and continues to apply, to B

'(i)

any amount determined in terms of the General Export Incentive Scheme in respect of export sales (as contemplated in the guidelines for the General Export Incentive Scheme) which take place on or after that date; and

(ii)

any amount received by or accrued to or in favour of any person on or after that date under any other scheme.' C

It now reads:

'There shall be exempt from tax -

any amount by way of rebate or other assistance received by or accrued to or in favour of any exporter (as defined in s 11bis(1)) under any scheme for the promotion or financing of exports which is for the purposes of this D paragraph approved by the Minister of Trade and Industry with the concurrence of the Minister of Finance: Provided that where the person entitled to claim such amount from the State has, under an agreement directly connected with the export trade carried on by him, agreed to pay the whole or any portion of such amount to any other person, the exemption under this paragraph shall also apply to the whole or such portion of such amount received by or E accrued to such other person under the said agreement.'

Relying upon the exemption afforded by s 10(1)(zA) of the Income Tax Act 58 of 1962 (the Act) in its 1991 incarnation, the taxpayer sought to exclude from its taxable income amounts of R12 769 627, R38 944 544, R30 F 787 827 and R34 411 903 (R116 913 933 in all) in respect of the 1990 to 1994 tax years respectively. The Commissioner refused to accept that the taxpayer was entitled to the exemption claimed. The taxpayer's appeal to the Special Court failed but leave was granted by the President to appeal to this Court.

The background against which this provision evolved was explained in evidence in the Special Court. Stripped of G complicating detail it was this. South Africa's foreign currency reserves were in need of preservation and strengthening. To that end various schemes to promote and/or finance exports were evolved in collaboration with the relevant departments of State. Motor industry manufacturers in particular were large consumers of foreign H currency. The State set about encouraging them to reduce their foreign currency usage by using locally made components and to export vehicles and locally made components so as to earn foreign currency. This it did by providing incentives. The question which arises in this case is whether income received by the taxpayer under a State sponsored scheme known as Phase VI of the local content programme for motor vehicles is exempt from I tax. It is now common cause that the scheme was not approved by the two Ministers referred to in s 10(1)(zA) and it is also common cause that the 1991 version of the provision is the relevant version in this case.

The first issue is a narrow one. In order to qualify for the exemption from liability to tax must the scheme under which payments by the State J

Marais JA

have been made be one which is for the promotion or financing of exports and which has been approved by the A two Ministers concerned or does it suffice that the scheme is one for the promotion or financing of exports? This is purely a question of construction of the relevant provision. It is unnecessary to repeat yet again the guidelines which have been laid down so many times by the courts over the years as aids to interpretation. What B is beyond cavil is that one cannot come to the task with a priori assumptions as to what the Legislature is likely to have intended and that the primary and most important indication of its intention is the language which it has chosen to express it. Nor of course should one be astute to conjure up fanciful or overly subtle hypothetical considerations in order to create ambiguity where none really exists. C

The relevant section has two legs. The first reference to any scheme occurs in the first leg and it is accompanied by a description of what kind of scheme it is. It is 'any scheme for the promotion or financing of exports which is for the purposes of this paragraph approved by' the two Ministers. It is therefore not any scheme for the promotion or financing of exports which qualifies as a scheme of the kind contemplated by the Legislature in the D first leg of the...

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29 practice notes
  • Commissioner, South African Revenue Service v Bosch and Another
    • South Africa
    • Invalid date
    ...24 ILJ 95; 2003 (2) BCLR 154; G [2002] ZACC 27): dictum in para [66] applied Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA): dictum at 870E – H applied Odendaalsrust Municipality v New Nigel Estate Gold Mining Co Ltd 1948 (2) SA 656 (O): referred to Palm Fifteen......
  • Democratic principles underpinning tax administration in SA
    • South Africa
    • Sabinet Business Tax and Company Law Quarterly No. 10-4, December 2019
    • 1 December 2019
    ...Taxpayers’ Rights in South Africa (2010) 249–253. 57 CSARS v Bosch 2015 2 SA 174 (SCA) at para 17. See also Nissan SA (Pty) Ltd v CIR 1998 4 SA 860 (SCA) 870E–H. However, in Marshall supra at para [10], the Court held that, in a constitutional democracy, a unilateral practice by C:SARS, an ......
  • Richtersveld Community and Others v Alexkor Ltd and Another
    • South Africa
    • Invalid date
    ...283): applied Mosii v Motseoakhumo 1954 (3) SA 919 (A): dictum at 930 applied Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA): dictum at 870C Oneida Indian Nation of New York State v Country of Oneida 414 US 661 (1974) (39 L Ed 2d 73): referred to G Re Southern R......
  • Chairman, Board on Tariffs and Trade v Volkswagen of South Africa (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...Investment Corporation (Pty) Ltd v Gouws NO 1965 (4) SA 373 (A) at 381A - D C Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA) (60 SATC Spier Properties (Pty) Ltd and Another v Chairman, Wine and Spirit Board, and Others 1999 (3) SA 832 (C) at 845F - 846J. Cur adv......
  • Request a trial to view additional results
26 cases
  • Commissioner, South African Revenue Service v Bosch and Another
    • South Africa
    • Invalid date
    ...24 ILJ 95; 2003 (2) BCLR 154; G [2002] ZACC 27): dictum in para [66] applied Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA): dictum at 870E – H applied Odendaalsrust Municipality v New Nigel Estate Gold Mining Co Ltd 1948 (2) SA 656 (O): referred to Palm Fifteen......
  • Richtersveld Community and Others v Alexkor Ltd and Another
    • South Africa
    • Invalid date
    ...283): applied Mosii v Motseoakhumo 1954 (3) SA 919 (A): dictum at 930 applied Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA): dictum at 870C Oneida Indian Nation of New York State v Country of Oneida 414 US 661 (1974) (39 L Ed 2d 73): referred to G Re Southern R......
  • Chairman, Board on Tariffs and Trade v Volkswagen of South Africa (Pty) Ltd and Another
    • South Africa
    • Invalid date
    ...Investment Corporation (Pty) Ltd v Gouws NO 1965 (4) SA 373 (A) at 381A - D C Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA) (60 SATC Spier Properties (Pty) Ltd and Another v Chairman, Wine and Spirit Board, and Others 1999 (3) SA 832 (C) at 845F - 846J. Cur adv......
  • Oudekraal Estates (Pty) Ltd v City of Cape Town and Others
    • South Africa
    • Invalid date
    ...Nguza and Others v Minister of Defence 1996 (3) SA 483 (Tk) at 486G - 487F C Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA) at 870E - H Northwest Townships (Pty) Ltd v Administrator, Transvaal and Another 1975 (4) SA 1 (T) at 8 D Olitzki Property Holdings v Stat......
  • Request a trial to view additional results
3 books & journal articles
  • Democratic principles underpinning tax administration in SA
    • South Africa
    • Sabinet Business Tax and Company Law Quarterly No. 10-4, December 2019
    • 1 December 2019
    ...Taxpayers’ Rights in South Africa (2010) 249–253. 57 CSARS v Bosch 2015 2 SA 174 (SCA) at para 17. See also Nissan SA (Pty) Ltd v CIR 1998 4 SA 860 (SCA) 870E–H. However, in Marshall supra at para [10], the Court held that, in a constitutional democracy, a unilateral practice by C:SARS, an ......
  • 2020 volume 2 p 369
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    • Juta Tydskrif van Suid Afrikaanse Reg No. , April 2020
    • 14 April 2020
    ...to appeal against the decision of the supreme court of appeal i n Commissioner, South African Revenue Service v Marshall NO (2017 1 SA 114 (SCA)) on the proper interpretation of sections 8(5) and 11(2)(n) of the Value-Added Tax Act 89 of 1991. The interpretation of these provisions is of se......
  • Case Notes: Is the supply of services in the duty-free area at an international airport in South Africa subject to VAT? Master Currency (Pty) Ltd v Commissioner for the South African Revenue Services
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    • Juta South Africa Mercantile Law Journal No. , September 2019
    • 25 May 2019
    ...(R v The Archbishop of Canterbury (1848) 11 QB 483 at 581;116 ER 557 at 593). In Nissan SA (Pty) Ltd v Commissioner for InlandRevenue 1998 (4) SA 860 (SCA) 870E-F, Marais JA held:‘Those doctrines rest upon two foundations. One is that there mustat least be room for the interpretation in the......

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