About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2016
>>
[2016] ZAKZPHC 33
|
|
Thuthungani Contractors (Pty) Ltd v Commissioner of South African Revenue Service (13812 / 2014) [2016] ZAKZPHC 33 (17 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION,
PIETERMARITZBURG
CASE
NO: 13812 / 2014
DATE:
17 FEBRUARY 2016
REPORTABLE
In
the matter between:
THUTHUGANI
CONTRACTORS (PTY)
LTD
..............................................................
APPLICANT
And
THE
COMMISSIONER OF SOUTH AFRICAN
REVENUE
SERVICE
....................................................................................................
RESPONDENT
JUDGMENT
Delivered
on 17 February 2016
MOODLEY
J:
[1]
This is an appeal in terms of s 47(9)(e) of the Customs and Excise
Act 91 of 1964 (the Act) against a determination and demand
for the
repayment of fuel levy refunds made by the Commissioner of the South
African Revenue Service (the Commissioner) by virtue
of the
provisions of s 47(9)(a), (10) and (11) of the Act, read with s
44(11)(a) thereof.
[2]
The applicant (Thuthugani) seeks an order setting aside the decision
of the Commissioner to disallow refunds in the sum of R849
232.19 for
diesel (distillate fuel) purchased by Thuthugani during the period
April 2011 to May 2013, and directing the South African
Revenue
Service (SARS) to pay the costs of the appeal. Thuthugani contends
that it qualified for the refunds because it was, at
the relevant
time, a ‘user’ carrying on forestry activities for ‘own
primary production’ as contemplated
in Sub-Note 6(g)(iii) of
Schedule 6 / Part 3 of the Act.
[1]
[3]
The appeal is opposed by the Commissioner who disallowed the diesel
refunds on the basis that although Thuthugani was registered
as a
‘user’ as contemplated in the Act,
[2]
and undertook qualifying forestry activities in terms of the Act as a
contractor for Mondi Limited (Mondi), it did not use the
diesel for
‘own primary production activities’.
Factual
Matrix
[4]
Thuthugani operated a forestry or silviculture services business in
terms of a written Silviculture agreement entered into with
Mondi in
May 2011. The services provided by Thuthugani included land
preparation, planting and maintenance of trees cultivated
for timber
in forests owned by Mondi, but excluded harvesting or felling of the
trees. It is common cause that such silviculture
services constitute
‘forestry’ activities as contemplated in the Act.
[5]
In the course of providing silviculture services to Mondi, Thuthugani
purchased diesel to be utilized for diesel powered engines
and
equipment. Thuthugani was registered in 2011 for Value-Added-Tax
(VAT) purposes and for diesel refunds in accordance with the
requirements in the Act. Thuthugani claimed diesel refunds as a
‘user’ of diesel in terms of s 75 of the Act from April
2011 until May 2013, which were allowed by SARS.
[6]
At field audits subsequently conducted by SARS in June and July 3013,
the following facts were noted:
6.1
Thuthugani was registered for diesel refund purposes with forestry as
its stated primary
production.
6.2
Thuthugani was employed by Mondi as a contractor to provide
silviculture services to Mondi
which entailed tending to the
forestry, after harvesting up to the point of next harvest.
6.3
Thuthugani did not own any forests and did not undertake any forestry
activities in its
own capacity.
[7]
Arising from the facts noted, the Commissioner determined that
Thuthugani did not comply with the diesel refund provisions because
it conducted a non-eligible activity and did not qualify to claim
diesel rebates because it is a
contractor
whose services are utilised by a
user
viz Mondi (my emphasis). In a letter dated 20 September 2013, the
Commissioner advised Thuthugani of his determination, referring
to
Note 6(e)(i)(bb)(A) of Schedule 6 / Part 3,
[3]
and demanded repayment of the refunds which Thuthugani had been paid
but was not entitled to.
[8]
In response Thuthugani objected to the decision in a letter dated 21
October 2013 from its auditors, Marwick & Company Inc,
who in
turn referred the Commissioner to Sub-Note 6(g)(iii) of Schedule 6/
Part 3, which provides that in order to qualify for
the refund either
the user must carry on forestry activities as described in Sub-Note
6(g)(ii) for its own primary production in
forestry, or the
contractor of the user, who is contracted on a dry basis, must carry
on the qualifying forestry activities. The
auditors submitted that as
Thuthugani carried out the majority of the activities listed under
forestry in Sub-Note 6(g)(ii) which
met the definition of ‘own
primary production’, it qualified for the diesel refund as a
‘user’ under the
former basis.
[9]
Thuthugani proceeded with an internal administrative appeal dated 7
October 2013. By way of a letter dated 25 November 2013,
the
Commissioner advised Thuthugani that the Appeal Committee had
disallowed the appeal because it did not qualify to claim diesel
refunds as a ‘user’, more specifically because it
conducted ‘activities in forestry as a contractor for Mondi
Limited, which contract was also regarded to be a ‘wet
contract’ in terms of Schedule 6’.
[10]
Thuthugani duly submitted a notice in terms of s 96(1)(a) of the Act
prior to the proceeding with this appeal. In its cause
of action as
set out in the notice, Thuthugani claimed an entitlement in terms of
s 75(1A) and Schedule 6 / Part 3 of the Act on
the following grounds:
10.1
it had purchased and used diesel in accordance with the provisions of
s 75(1A) and Schedule 6 and was registered
for both VAT and the
diesel refund in compliance with s 75(1A)(b) (ii);
10.2
it was therefore a ‘user’ as defined in the Act as it was
registered for VAT and the diesel rebate
and made eligible purchases
of diesel for use in its own primary production activities in
forestry.
10.3
the fact that its business operations were conducted on land owned by
Mondi, did not preclude Thuthugani’s
entitlement to the rebate.
The
issues
[11]
By the time the matter served before me on the opposed motion roll,
it was not in issue that Thuthugani undertook qualifying
forestry
activities. It was also not in dispute that it was not relevant to
the determination by the Commissioner to disallow the
diesel refunds,
that Thuthugani was not the owner of the land on which the forests
were cultivated. Further Thuthugani had already
grounded its dispute
on being a ‘user’ and not as a ‘contractor of the
user who is contracted on a dry basis’.
[4]
At the hearing Mr
Harcourt
SC
,
who represented Thuthugani advised that he no longer pursued the
argument that SARS had ‘misconceived its non-entitlement
to
impose a penalty’ and imposed an incompetent penalty.
[12]
Consequently, although there were initially several issues in
dispute, there is only one crisp issue for determination: whether
the
activities undertaken by Thuthugani during the relevant period
constituted ‘own primary production activities’
in
forestry as contemplated in terms of Sub-Note 6(g)(iii) of Schedule 6
/ Part 3.
[13]
Mr
Harcourt
submitted that Thuthugani was registered as a
‘user’ for VAT and diesel refunds and the diesel
Thuthugani purchased
was used by it to undertake forestry services,
which constituted qualifying primary production activities in
forestry. In the performance
of its obligations in terms of the
silviculture agreement with Mondi, the activities were fully
sustained and carried out by Thuthugani.
Therefore, albeit within the
context of the contractual relationship between Thuthugani and Mondi,
Thuthugani’s activities
constituted ‘own’ primary
production activities, and were not carried out as activities of a
contractor to a user
(my emphasis), whether on a wet or dry
basis. Consequently the distillate fuel purchases by Thuthugani
qualified as ‘eligible
purchases’ for the purposes of the
refund claimed by Thuthugani and the appeal should succeed.
[14]
Mr
Harcourt
argued further that the interpretation by SARS of the relevant
sections of the Act and Notes and its contention that “it
could
never have been the intention of the legislator that ‘
own
primary production’
activities may be activities entirely outsourced” lead to an
unbusinesslike and unreasonable result, having regard to the
objective of the rebate viz the compensation of the user (consumer)
of the fuel for payment of levies raised to finance expenditure
incurred in the use of roads when the identified forestry user
(Mondi) does not use the roads.
[5]
[15]
Mr
Puckrin
SC
,
who represented the Commissioner, confirmed that it was not in
dispute that Thuthugani had operated a forestry services business
and
that the forestry activities undertaken by Thuthugani in terms of the
silviculture agreement with Mondi constituted forestry
activities as
contemplated in terms of Note 6(g)(iii) of Schedule 6 / Part 3. He
submitted however that the qualifying forestry
activities were not
undertaken by Thuthugani for ‘own’ primary production
activities as contemplated by the Act, as
there was no ownership by
Thuthugani of the products produced by the forestry activities and
Thuthugani merely rendered services
for a fee to Mondi, who derived
the benefit of the production activities. He contended that
consequently, although Thuthugani had
registered for VAT purposes and
for diesel refunds and is therefore described as a ‘user’
in terms of the Act, it did
not qualify for the refund because the
diesel was not used in compliance with the Act. He concluded that at
best, Thuthugani is
a ‘contractor’ on a wet basis to a
non-registered ‘user’ viz Mondi,
[6]
and the determination by the Commissioner consequently ought to be
confirmed as correct and the appeal dismissed.
Diesel
refunds in terms of the Customs and Excise Act
[16]
The Government levies a fuel levy and the Road Accident Fund levy on
diesel.
[7]
Section 75 of the Act provides for a refund of a percentage of the
levies for diesel
[8]
consumed by commercial users of equipment and machines powered by
diesel engines which are not used on public roads. This refund,
whether by way of payment or set-off against any VAT payable by an
‘user’, is deemed a ‘provisional refund’
subject to production by the ‘user’ of proof that the
diesel was purchased as claimed and used in accordance with the
provisions of s 75 of the Act and the item 670.04 of Schedule 6.
[9]
The
Customs and Excise Tariff and Thuthugani’s Claim for Diesel
Refunds
[17]
Thuthugani claimed diesel refunds for the forestry activities it
undertakes in terms of the Notes to Schedule 6 / Part 3
[10]
of the Customs and Excise Tariff read with Note A and H of the
General Notes to Schedule No 1, unless indicated otherwise by the
context.
[11]
[18]
Note 6 provides the following relevant sub-notes, for the purposes of
item 670.04 read with the provisions of s 75(1A) and
(4A):
18.1
The relevant definitions under Sub-Note 6(a) are:
18.1.1
Sub-Note 6(a)(iii): ‘eligible purchases’ means ‘purchases
of distillate
fuel by a user for use and used as fuel as contemplated
in paragraph (b)’;
[12]
18.1.2
Sub-Note 6(a)(v): “non-eligible purchases” means
‘purchases of distillate
fuel by a user not for use and not
used as prescribed in these Notes as fuel for own primary production
in farming, forestry or
mining on land …’;
18.1.3
Sub-Note 6(a)(vii): ‘user’ as defined in section
75(1C)(b)(i)
[13]
means, ‘according to the context and subject to any notes to
item 670.04, ‘a person registered for value-added tax
purposes
under the provisions of the Value-Added-Tax Act (Act No. 89 of 1991),
and for diesel refund purposes as contemplated in
section 75(1)(a)
and (4)(A)’;
18.1.4
Sub-Note 6(e)(i)(bb):
‘
(A)
Any person whose services are contracted by a user, is not entitled
to a refund in respect of distillate fuel used in any vehicle,
vessel, machine or other equipment to render such services.
(B)
Where a contract for such services is only on a dry basis, the user
who supplies the distillate fuel to the contractor may apply
for a
refund in respect of the fuel actually used in rendering the
services…’
18.1.5
Sub-Note 6(g):
‘
Forestry:
Refund of levies on eligible purchases of distillate fuel for
forestry as specified in paragraph (b) (i) to this Note.
(i)
In accordance with the definition of “eligible purchases”,
the distillate fuel must be purchased by the user for
use and used as
fuel for own primary production activities in forestry as provided in
paragraphs (g)(ii) and (g) (iii).
(ii)
Own primary production activities in forestry include the
following:…
[14]
(iii)
The above activities only qualify for the refund if carried on for
own primary production in forestry by the user or by the
contractor
of the user who is contracted on a dry basis.’
Interpretation
of the Act and Notes to the Tariff
[19]
Section 47(8)
(a)
of the Act provides that the interpretation
inter
alia
of
any tariff item or fuel levy item or item specified in Schedule 6,
the general rules for the interpretation of Schedule 1, and
every
section note and chapter note in Part 1 of Schedule 1, shall be
subject to the International Convention on the Harmonized
Commodity
Description and Coding System done in Brussels on 14 June 1983, and
to the Explanatory Notes to the Harmonized System
[15]
issued by the World Customs Organisation from time to time.
But
although s 47(8)
(a)
requires the interpretation of the chapter notes to be in conformity
with the Brussels Notes, the provision does not mean that
the notes
are to be regarded as peremptory injunctions.
[16]
As held by Trollip JA in
Secretary
for Customs and Excise v Thomas Barlow & Sons Ltd
:
[17]
'…they
are not worded with the linguistic precision usually characteristic
of statutory precepts; on the contrary they consist
mainly of
discursive comment and illustrations'.
[20]
The special rules for the technical interpretation of Custom tariffs
which were restated in
Durban
North Turf (Pty) Ltd v Commissioner, SARS
[18]
did not prove helpful in this matter.
[19]
It was therefore more useful, as agreed by Mr
Harcourt
and Mr
Puckrin,
to
have recourse to the current approach to the interpretation of
documents as set out by Wallis JA in the following excerpt from
Natal
Joint Municipal Pension Fund v Endumeni Municipality
:
[20]
‘
The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary
rules of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred to one that leads to
insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against,
the temptation to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in
regard to a statute or statutory
instrument is to cross the divide between interpretation and
legislation; in a contractual context
it is to make a contract for
the parties other than the one they in fact made.
The
'inevitable point of departure is the language of the provision
itself', read in context and having regard to the purpose of
the
provision and the background to the preparation and production of the
document.
’ (my emphasis)
Does
Thuthugani qualify for diesel refunds as claimed?
[21]
As previously noted, it is common cause that Thuthugani was
registered as a ‘user’,
[21]
in that it was registered for diesel and VAT refunds. However the
meaning of ‘user’ in s 75(1C)(b)(i) is specifically
‘according to the context and subject to any notes to item
670.04’. Therefore registration for the refunds
per
se
does not make Thuthugani a user whose purchase of diesel makes the
purchase an
eligible
purchase
for refunds. The user must
purchase
and use
the fuel for
qualifying
activities
for
own
primary production
.
(My emphasis)
[22]
It is however also common cause that Thuthugani carried on qualifying
forestry activities,
[22]
which were rendered in terms of the contract which it has with
Mondi
[23]
and purchased diesel for use in its forestry activities. But it was
therefore a contractor on a wet basis as it supplied the diesel
for
the machinery and equipment utilised in the forestry activities,
[24]
and is consequently excluded from relying on the second leg of
Sub-Note 6(g)(iii), as correctly stated by its auditors.
[25]
Mr
Harcourt
properly did not persist with the submission that the
contention of SARS that the refund was not permitted because
Thuthugani was
a contractor on a wet basis was flawed, as there was
never any letting, hiring or chartering of any vehicle or machinery
on any
basis and Thuthugani had provided a composite service which
included the use of machinery for forestry purposes.
[23]
Therefore the final criterion with which Thuthugani had to comply is
that the qualifying forestry activities were undertaken
for ‘
own
primary production’
.
[24]
Although it was not in issue that forestry is a primary industry
[26]
and the dispute between the parties related to the word ‘
own
’
rather than the term ‘
primary
production
’,
I found it useful to consider the terms separately and as a
single phrase.
[25]
The New Shorter Oxford English Dictionary offers the following
special collocations under the word ‘
primary’
:
(i)
‘
primary production:
the production of raw materials for
primary industry’;
(ii)
‘
primary industry:
industry (such as mining, fishing,
agriculture, forestry etc) that provides raw materials for conversion
into commodities and products
for the consumer’.
These
meanings accord with the reference to ‘
eligible
purchases’
in Sub-Note 6(a)(iii), read with Sub-Note 6(b), and ‘
non-eligible
purchases’
in Sub-Note 6(a)(v),
[27]
as the primary industries referred to in those notes are ‘
farming,
forestry or mining on land’
.
[26]
In the New Shorter Oxford English Dictionary:
(i)
‘
own
’
as an
adjective
,
is defined as:
'of, or belonging to
oneself or itself; used to emphasize possession or ownership
’.
(ii)
‘
ownershi
p’ is defined as ‘
noun
:
the
state or fact of being an owner; legal right of possession;
proprietorship
’.
[27]
Therefore the term ‘
own primary production
’ within
the context of Note 6 of Schedule 6 / Part 3 connotes ‘
possession
’,
‘
ownership
’ or ‘
proprietorship
’
of the production of the ‘
raw material
’
produced for the forestry industry.
Thuthugani
undertook the forestry activities pursuant to the silviculture
agreement with Mondi – it rendered a service to
Mondi for a
fee. As a contractor, it had no claim to the timber/logs produced, as
the timber belonged to Mondi (i.e. the
ownership of the product
of the forestry activities, as distinguished from the
ownership of
the forest or the land
on which the forest is established).
Further
the services by Thuthugani entailed tending to the forestry after
harvesting up to the point of next harvest. It therefore
did not
include felling or debarking or other production activities necessary
to provide the raw material, i.e. the timber, to
the secondary
sector
[28]
for conversion into
a commodity or product for the consumer.
[28]
I am therefore in agreement with Mr
Puckrin
who, having
referred to the definition of the word ‘
own
’ in:
(i)
the Collins Thesaurus as a
determiner ‘= personal, special,
private, individual, particular, exclusive
’; and
(ii)
the Oxford Concise Dictionary as ‘
belonging or relating to
the persons specified – done or produced by the person
specified – particular to the
person who is specified;
individual
’,
submitted
that there should be some ownership of the product produced by the
activities in order for the activities to qualify as
‘
own
primary production’
and a concomitant benefit.
[29]
This argument accords with the general rule that the owner of
property also owns the economic benefits of that property.
Thuthugani’s
economic benefits were derived from Mondi through
the Silviculture agreement, and not from the products of the forestry
activities
it undertook. It could not, therefore, have undertaken the
forestry activities for ‘own primary production’.
Thuthugani
was a contractor on a wet basis.
Mondi
may not have registered as a ‘user’ or purchased diesel
or used the roads, but none of those factors render
Thuthugani’s purchase of diesel eligible for refund in terms of
the Act.
[30]
I am of the view that there is no need to extrapolate the notes on
‘
primary production activities
’ in respect of
mining, fishing and farming in order to reach a proper interpretation
of ‘
own primary production
’ in respect of
forestry, as proposed by Mr
Harcourt
.
[31]
In the premises, I am unable to find that the provisions of the Act
relied on by Thuthugani sustain the contention that the
determination
by SARS is wrong because it is:
(i)
based on a factual misconception;
(ii)
not supported by the technical definition in Note 6 of Part 3 of
Schedule 6 to the Act;
(iii)
inconsistent with ordinary grammatical language and syntax; and
(iv)
an unreasonable and unbusinesslike interpretation of Note 6 of Part 3
of Schedule 6.
[31]
To the contrary, I am satisfied that although Thuthugani was
registered as a ‘user’ in terms of the Act, the purchases
of diesel on which the refunds were claimed were not ‘eligible
purchases’ for the purposes of Sub-Note 6(g) as the
diesel was
not used in forestry activities carried on by Thuthugani for ‘own
primary production’ in forestry as stipulated
in Sub-Note
6(g)(iii).
Consequently
the purchases of diesel did not qualify for refund under the
provisions of s 75(1A) and Schedule 6 / Part 3 as claimed
by
Thuthugani, and in my view, the determination by the Commissioner to
disallow the refunds was correct.
Costs
[31]
There is no reason why costs should not follow the result.
I
am satisfied that the issues in the application warranted the
briefing of Senior Counsel. However I am not persuaded that the
applicant should bear the costs of two counsel,
[29]
even if the Commissioner deemed the employment of senior and junior
counsel necessary.
ORDER
The
appeal is dismissed with costs, including the costs of Senior
Counsel.
MOODLEY
J
COUNSEL
Counsel
for the plaintiff : Adv AWM Harcourt SC
Instructing
Attorneys : Lister & Co.
30
Old Main Road
Hillcrest
Ref:
JAL/bw/04T091001
c/o
Dawson’s Attorneys
271
Prince Alfred Street
Pietermaritzburg
Ref:
Mr Dawson/Rabia/thuthugani
Counsel
for the defendant : Adv CE Puckrin SC / Adv MPD Chabedi
Instructing
Attorneys : Viv Greene Attorney
241
Boom Street
Pietermaritzburg
Ref:
V Greene/cm/M01173
The
Commissioner, South African Revenue Service
Albany
House
61/2
Margaret Mncadi Avenue
Durban
Ref:
4210183010
299
Bronkhorst Street
Nieuw
Muckleneuk
Pretoria
Ref:
1/10A1/4/2/R102/13
Date
of hearing: 30 November 2015
Date
of Judgment: 17 February 2016
[1]
The
schedules appear in the ‘Customs and Excise Tariff’ (the
Tariff).
[2]
‘
User’
for refunds of fuel levies and Road Accident Fund levies is defined
in s75 (1C)(b)(i) read with Schedule 6 Part 3
Note 6(a)(vii) as: ‘a
person registered for value-added tax purposes under the provisions
of the Value-Added Tax Act,1991
(Act No. 89 of 1991), and for diesel
refund purposes as contemplated in section 75 (1A) and (4A)’.
[3]
Sub-Note
6(e)(i)(bb)(A) states: ‘Any person whose services are
contracted by a user, is not entitled to a refund in respect
of
distillate fuel used in any vehicle, vessel, machine or other
equipment to render such services’.
[4]
Note
6(g)(iii) of Schedule 6 / Part 3 of the Customs and Excise Tariff.
Thuthugani purchased and utilised the diesel to render
the forestry
services and was therefore a ‘contractor on a wet basis’.
[5]
Applicant’s
Heads of Argument para 7.
[6]
It
is common cause that Mondi was not registered as a ‘user’.
[7]
Part
5A and Part 5B of Schedule No 1 respectively.
[8]
Section
75 provides: ‘Specific rebates, drawbacks and refunds of
duty
(1A)
Notwithstanding anything to the contrary contained in this Act or
any other law-
(a)
(i) a refund of the fuel levy
leviable on distillate fuel in terms of Part 5A of Schedule 1; and
(ii) a
refund of the Road Accident Fund levy leviable on distillate fuel in
terms of Part 5B of Schedule 1; or
(iii) only
a refund of such Road Accident Fund levy,
shall
be granted in accordance with the provisions of this section and of
item 670.04 of Schedule 6 to the extent stated in that
item;
(b)
such
refunds shall be granted to any person who-
(i) has
purchased and used such fuel in accordance with the provisions of
this section and the said item of Schedule
6; and
(ii) is
registered, in addition to any other registration required under
this Act, for value-added tax purposes
under the provisions of the
Value-Added Tax Act, 1991 (
Act
89 of 1991
),
and for diesel refund purposes on compliance with the requirements
determined by the Commissioner for the purposes of this
Act and the
Value-Added Tax Act;
(c
) the
Commissioner may withdraw money from the National Revenue Fund for
refunding the
amount
of such Road Accident Fund levy as if it were a fuel levy leviable
and paid under this Act
and
refundable in terms of the said item of Schedule 6;
(d)
the
Commissioner may-
(i) pay
any such refund upon receipt of a duly completed return from any
person who has purchased distillate
fuel for use as contemplated in
the said item of Schedule 6;
(ii) pay
any such refund by means of the system in operation for refunding
value-added tax; and
(iii) for
the purposes of payment, set off any amount refundable to any person
in terms of the provisions of
this section and the said items
against any amount of value-added tax payable by such person;
(e)
any such payment or set-off by the
Commissioner shall be deemed to be a provisional refund for the
purpose of this section and
the said item of Schedule 6 subject to
the production of proof by the user referred to in subsection (1C)
(b)
at
such time and in such form as the Commissioner may determine that
the distillate fuel has been-
(I)
purchased as claimed on the application for a diesel refund; and
(ii)
used in accordance with the provisions of this section and the said
item of Schedule 6;
(f)
the
provisions of the Value-Added Tax Act, 1991 (
Act
89 of 1991
),
shall
mutatis
mutandis
apply in respect of the payment of interest on any amount of fuel
levy or Road Accident Fund levy which is being recovered as
it is in
excess of the amount due or is not duly refundable.
[9]
Section
75(1A)(e) supra.
[10]
‘
Rebates
and Refunds of Fuel Levy and Road Accident Fund Levy’.
[11]
Schedule
6 / Part 3 Note 3.
[12]
Sub-Note
6(b)(i) sets out the extent of refund for eligible purchases for
“forestry”.
[13]
Section
75(1C)
(b)
:’
For the purposes of this section and the said item of Schedule 6-
(I)
'user' shall mean, according to the context and subject to any note
in the said Schedule 6, the person registered for a diesel
refund as
contemplated in subsection (1A);…’
[14]
The
list of activities has been omitted because it is not in dispute
that Thuthugani carries out qualifying forestry activities.
[15]
The
Harmonized System means the nomenclature comprising the headings and
subheadings and their related numerical codes, section,
chapter and
subheading notes, and the general rules for the interpretation of
the Harmonized System.
[16]
International
Business Machines SA (Pty) Ltd v Commissioner for Customs and
Excise
1985
(4) SA 852 (A)
at
864.
[17]
1970
(2) SA 660 (A)
at
676C-D in respect of principles applicable to tariff classification,
but also relevant to interpretation of the explanatory
notes in the
schedules generally.
[18]
2011(2)
SA 347(KZP)
[19]
Applicant’s
Heads of Argument para 2
[20]
2012
(4) SA 593
(SCA) para 18 (footnotes omitted); See
also
Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport
(Edms) Bpk
2014
(2) SA 494
(SCA) para 12 499G-500A
[21]
Sub-Note
6(a)(vii).
[22]
Sub-Note
6(g)(ii).
[23]
The
Silviculture agreement No. 11314: Founding Affidavit pg 35-64.
[24]
Sub-Note
6(a)(ix) provides that “‘wet’ or ‘contracted
or hired on a wet basis’ means distillate
fuel is supplied
with the vehicle, vessel, machine or other equipment contracted or
hired as contemplated in the definition of
‘dry’”.
[25]
Pleadings
Volume 1 Annexure F Letter dated 21 October 2013 pg 80:
‘
The
above activities only qualify for the refund if carried on for own
primary production in forestry by the user or by the contractor
of
the user who is contracted on a dry basis”.
This
reference implies that you can qualify for the refund under two
different scenarios, either as a contractor or the user,
who is
contracted on a dry basis OR if you carry on the activities listed
for your own primary production in forestry.
Schedule
6 /Part 3 Note 6(g), lists activities in forestry that meet the
definition of Own Primary Production Activities. Thuthugani
carries
out the vast majority of these activities for its own primary
production and will therefore qualify for the Diesel Refund
under
this scenario’.
[26]
Wikipedia
provides the following information on ‘
Primary
sector of the economy
’:
‘
The
primary sector of the economy is the sector of an economy making
direct use of
natural
resources
. This includes
agriculture
,
forestry
,
fishing
and
mining
. In
contrast, the
secondary
sector
produces
manufactured goods, and the
tertiary
sector
produces
services.’
[27]
See
para 15 of the judgment.
[28]
See
footnote 24 supra.
[29]
AC
Cilliers Law of Costs 3
rd
ed para 13.21