The Supreme Court of Appeal (SCA), in a judgment handed down on April 22, upheld an appeal by the South African Revenue Service (Sars) against an adverse high court judgment.
The North Gauteng High Court had set aside the decision made by Sars that Sasol Chevron was not entitled to a refund of value-added tax (Vat).
The SCA held that the high court should have dismissed Sasol Chevron’s review application on the basis that it was instituted outside the prescribed 180-day period.
Sasol Chevron is a joint venture between Chevron Corporation and Sasol Limited, and is registered in Bermuda. In 2014, it purchased movable goods from Sasol Catalyst, a division of Sasol Chemical Industries (Pty) Ltd, for exportation to Nigeria.
Sasol Catalyst supplied the goods to Sasol Chevron on an ‘ex-works’ and ‘flash title’ basis (‘flash title’ means a supply of movable goods by a vendor to a recipient who subsequently supplies those goods to another recipient, with ownership of the goods vesting in the first recipient only momentarily) – and delivery was made to a warehouse at the Durban Harbour.
The goods, which were specially manufactured for the Escravos Gas-to-Liquids (GTL) project, were then sold to Sasol Chevron and immediately on-sold to Escravos GTL for export to Nigeria.
In terms of export regulations the goods were to be exported within 90 days of the date of sale.
The relevant tax invoices were dated August 20 2014, September 22 2014 and October 22 2014. Sasol Catalyst levied Vat at the zero rate.
Sasol Chevron however did not export the movable goods within the required 90-day period; they were only exported on April 24 2015. This meant Vat should be levied at the standard rate.
Sasol Catalyst had applied to Sars to extend the prescribed 90-day period on January 30, 2015. In the interim, Sasol Catalyst issued revised tax invoices on which Vat was levied at the then standard rate of 14%.
Sasol Chevron accordingly paid the Vat levied per the replacement tax invoices.
On July 15 2015 Sasol Catalyst applied to Sars for an extension of the period within which Sasol Chevron could submit an application for a refund of the Vat paid in respect of the replacement tax invoices. Sars declined the request on November 7 2016.
In a letter dated December 6 2017, Sars confirmed that Sasol Chevron was not entitled to a refund of Vat. Sars also informed Sasol Chevron, on March 26 2018, of its decision.
Five months later, on September 21 2018, Sasol Chevron instituted a review application at the high court under the Promotion of Administrative Justice Act (PAJA), seeking an order to review and set aside Sars’s decision.
Discussion of judgment
The SCA outlined the relevant statutory framework:
- PAJA provides that any proceedings for judicial review “must be instituted without reasonable delay” and within the prescribed 180-day period.
- The 180-day period may be extended by agreement between the parties, or an application can be made to court to extend it.
The SCA noted that Sasol Chevron had not applied for the extension of the 180-day period.
The SCA held that:
- Where no application has been made for the extension of the 180-day period, the court has no authority to enter into the substantive merits of a review application brought outside the 180-day period.
- Sasol Chevron’s application for review was instituted only on September 21 2018, more than 180 days after Sars’s decision on December 6 2017. The SCA referred to Opposition to Urban Tolling Alliance and Others v The South African National Roads Agency Ltd and Others, in which Brand AJ opined that “… after the 180 day period the issue of unreasonableness is pre-determined by the legislature; it is unreasonable per se”.
- The high court should have dismissed the review application on the basis that Sasol had not instituted the review application within the 180-day period, and therefore the high court had no power to enter into the substantive merits of the review.
In conclusion, the SCA said it was unnecessary to determine the interesting questions of law, such as whether it is permissible for a vendor who has made an election to supply goods at a zero rate to migrate to the standard rate merely by issuing fresh invoices.
The SCA criticised the amount of time it took to hand down the high court decision on Sars’s application for leave to appeal. The application for leave to appeal was heard on May 15 2020, and the high court judgment granting leave to appeal to the SCA was only handed down six months later, on October 26 2020.
“An undesirable development appears to be taking root in some courts where applications for leave to appeal are invariably not dealt with and disposed of expeditiously. This is regrettable as delays in the disposition of applications for leave to appeal have a negative impact on the administration of justice.”