Commissioner, South African Revenue Service v Sasol Chevron Holdings Limited ( 1044/2020)

Facts

Sasol Chevron Holdings Limited (“Sasol Chevron”) purchased certain movable goods from Sasol Catalyst for exportation from South Africa to Nigeria.  The goods were delivered by Sasol Catalyst to a warehouse at the Durban Harbour, from which they were sold to Sasol Chevron, and then immediately on-sold to Escravos Gas-to-Liquids Project for export to Nigeria.  Sasol Catalyst, as the seller of the goods to Sasol Chevron, elected to supply the goods to Sasol Chevron and levy tax at the zero rate in terms of section 11(1) of the Value-added Tax Act no 89 of 1991 (“VAT Act”). However, Regulation 15(1) of the Export Regulations required that goods sold for export must be exported within 90 days of the date of sale. Sasol Chevron was not able to export the goods in time, and by operation of Regulation 8(2) of the Export Regulations, Sasol Catalyst was required to levy Value-added Tax (“VAT”) at the standard rate to Sasol Chevron in terms of section 7(1) of the VAT Act. Sasol Chevron then duly paid the VAT levied by Sasol Catalyst in respect of the new invoices issued.  However, industrial action in Nigeria, as well as certain delays in obtaining import clearance certificates, further delayed the export of the goods. On 6 July 2015, an application was submitted to SARS for an extension of the period within which to submit an application to the VAT Refund Authority (“VRA”), for a refund of VAT in respect of the amended tax invoices. On 7 November 2016, SARS declined the application. Representation was made to SARS and on 6 December 2017, SARS reiterated its unwavering stance that Sasol Chevron is not entitled to the VAT refund. Not willing to leave the matter, further correspondence was sent to SARS, which culminated in a letter dated 26 March 2018 from SARS to Sasol Chevron in which SARS reaffirmed its previous stance.  On 21 September 2018, Sasol Chevron instituted a review application under the Promotion of Administrative Justice Act No 3 of 2000 (“PAJA”), seeking inter alia, an order to review and set aside SARS’ decision of 6 December 2017.  The review application papers were served on SARS on 25 September 2018. SARS asserted that by then, the 180 day period provided for in section 7(1) of PAJA had long expired, and absent an application for and order that the 180 day period be extended in terms of section 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. The High Court upheld the application by Sasol Chevron, and it is against that order that SARS directed this appeal.

Issue

In order to determine whether or not the review application was timeously instituted by Sasol Chevron as required by section 7(1) of PAJA the following issues had to be determined

Issue 1: Whether or not the 180 day period commenced on 26 March 2018 or 6 December 2017; and

Issue 2: Whether or not the word ‘institute’ in section 7(1) of PAJA ought to be construed to mean that the court process initiating legal proceedings in a court must not only be issued by the court concerned but must also actually be served on the respondent.

Finding

Section 7(1) of PAJA requires that any proceedings for judicial review in terms of section 6(1) of PAJA must be instituted without unreasonable delay, and not later than 180 days after all internal remedies have been concluded, or on the date which the person concerned was informed of the administrative action, became aware of the action and the reasons for it, or might reasonably have been expected to have become aware of the action and reasons. Sasol Chevron argued that they only became informed of the reasons on 26 March 2018, while SARS maintain that they already provided Sasol Chevron with the reasons on 6 December 2017. This is important since Sasol Chevron did not request an extension in terms of section 9(2) of PAJA. If the proverbial clock started to tick from 6 December 2017, then absent an extension request, the court has no authority to entertain the review application. This principle was explained in Opposition to Urban Tolling Alliance and other v The South African National Road Agency Limited and others 2013 ZASCA. Basically, the decision has been “validated” by the delay.  If the 180 days started from 27 March 2018, then Sasol Chevron could have possibly started the judicial proceedings in time. However, in contending that the impugned decision was not taken on 26 March 2018, SARS relied on Aurecon South Africa (Pty) Ltd v City of Cape Town 2015 ZASCA, which was cited with approval by the Constitutional Court in City of Cape Town v Aurecon South Africa (Pty) Ltd, in which it was stated that the clock starts to run with reference to the date on which the reasons for the administrative action became known to the applicant.  Since the letter from SARS dated 26 March 2018 reaffirmed its previous stance detailed in the letter dated 6 December 2017, Sasol Chevron already knew the reason for the administrative action from 6 December 2017.  Therefore, even if further correspondence between the parties continued after 6 December 2017, the Court found that the impugned decision was taken on 6 December 2017. It, therefore, follows that Sasol Chevron’s review application was instituted outside the 180-day period prescribed in section 7(1) of PAJA, and that absent an application in terms of section 9(2) of PAJA, the high court should have dismissed the review application.

Issue two would have become relevant if the court ruled that the impugned decision was taken on 26 March 2018 and not 6 December 2017. However, it might be of some academic value to pause on this, since the court addressed it.  The court stated that section 7(1) of PAJA is a time limit provision. Accordingly, its object and purpose would not be served if the decision-maker is not made aware, that his or her decision is being challenged, whilst at the same time, the beneficiaries of the decision arrange their affairs on the acceptance that the decision concerned is beyond question because they are completely oblivious to the pending challenge. The court referenced AMB Motors v Minister of Minerals and Energy and others 2018 (5) SA, where it was stated that an application that has been issued but not served on the respondent can be taken not to have been made.

The appeal was upheld with costs, including the cost of two counsels, and the order of the high court was set aside.

Find a copy of the court case here.

12/05/2022