SCA upholds Sars appeal
VAT: REVIEW APPLICATION DISMISSED
High Court set aside decision by Receiver that Sasol Chevron was not entitled to a refund.
The Supreme Court of Appeal (SCA), in a judgment handed down last week Friday, upheld an appeal by the South African Revenue Service (Sars) against an adverse high court judgment. The High Court in Pretoria 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.
Background
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, 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 20 August, 2014’ 22 September, 2014 and 22 October, 2014. Sasol Catalyst levied VAT at the zero rate.
Sasol Chevron however did not export the movable goods within the required 90day period; they were only exported on 24
April, 2015. This meant VAT should be levied at the standard rate.
Extension application
Sasol Catalyst had applied to Sars to extend the prescribed 90-day period on 30 January, 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 15 July, 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 7 November, 2016.
In a letter dated 6 December, 2017, Sars confirmed that Sasol Chevron was not entitled to a refund of VAT. Sars also informed Sasol Chevron, on 26 March, 2018, of its decision.
Five months later, on 21 September, 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 21 September, 2018, more than 180 days after Sars’s decision on 6 December, 2017.
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.