Below, please find issue 69 of ENSafrica's tax in brief, a snapshot of the latest tax developments in South Africa.
case law
- The Supreme Court of Appeal of South Africa I
Commissioner, South African Revenue Service v Glencore Operations
SA (Pty) Ltd (Case no 462/2020) [2021] ZASCA 111 (10 August
2021)
- The South African Revenue Service ("SARS") appealed against the decision of the Gauteng Division of the High Court in terms of which it overturned SARS' decision to disallow the taxpayer's ("Respondent") claim for diesel rebates in terms of the Customs and Excise Act, 1964.
- SARS disallowed the Respondent's refund claim on grounds that the activities in respect of which the claim was submitted did not constitute "primary production activities" in mining within the ambit of Note 6(f)(iii) of Item 670.04 in Part 3 of Schedule 6 to the Customs Act, but rather related to "secondary activities in mining" - which do not qualify for a refund in respect to the fuel levy paid.
- The Respondent contended that the activities concerned were squarely within the items listed in Note 6(f)(iii) of Schedule 6 to the Customs Act. In the alternative, the Respondent contended that on a proper interpretation of the word "include" located in Note 6(f)(iii), the list therein set out is not exhaustive.
- The Respondent appealed against the determination made by SARS to the High Court which found in its favour. The High Court held that the activities in note 6(f)(iii) are non-exhaustive activities forming part of (ie, included in) "own primary production activities in mining".
- On appeal from the High Court, the Supreme Court of Appeal
("SCA") considered, inter alia:
- whether the mining operations in which the diesel refunds were claimed in respect of had been carried on for the Respondent's own primary production in mining as contemplated in Note 6(f)(ii) and (iii) of Schedule 6 to the Act, and therefore qualify for a refund of levies.
- the interpretation of the word "include" located in Note 6(f)(iii) to determine whether the list of activities set out in Note 6(f)(iii) of Schedule 6 to the Act is exhaustive;
- The SCA held that the purpose of having a comprehensive list of inclusions such as the one found in Note 6(f)(iii) was to avoid uncertainties. Consequently, to hold that the list was meant to be non-exhaustive would lead to uncertainties in the implementation of the rebate item with which this case is concerned. In this regard, the SCA noted, to interpret the word "include" in the context in which it is used in Note 6(f)(iii) as indicative of a non-exhaustive list would not only be to ignore fiscal reality and the broader fiscal framework that informed the introduction of rebate Item 670.04 but also the object of the Act which, through the imposition of fuel levies, sought to broaden the government's revenue base.
- The SCA therefore upheld SARS' appeal.
- Find a copy of the judgment here.
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