SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 053180/2022
1. REPORTABLE: NO
2. OF INTEREST TO OTHER JUDGES: NO
3. REVISED: YES
DATE: 21 January 2025
SIGNATURE OF JUDGE:
In the matter between:
SANDBAKEN BOE RDERY (PTY) LTD Applicant
and
COMMISSIONER FOR THE SOUTH AFRICAN First Respondent
REVENUE SERVICE
THE SOUTH AFRICAN REVENUE SERVICE Second Respondent
JUDGMENT
Woodrow, AJ:
INTRODUCTION :
[1] The applicant is Sandbaken Boerdery (Pty) L td (“Sandbaken ”). Sandbaken
conducts a mixed farming operation , comprised of livestock and crop
farming, on a number of farms in Mpumalanga.
[2] The first respondent is the Commissioner for the South African Revenue
Service (the “ Commissioner ”), and the secon d respondent is the South
African Revenue Service (“ SARS ”).
[3] Sandbaken is a registered vendor for purposes of the Value Added Tax Act,
Act 89 of 1991, and is also registe red for diesel refund purposes as
contemplated in section 75(1A) and (4A) of the Custo ms and Excise Act, Act
91 of 1964 (the “ Customs Act ”).
[4] Sandbaken uses diesel in its farming operation s and for farming purposes.
Sandbaken utilised the provisions of section 75(1A)(a) and (b) , read with
item 670.04 of Schedule 6, Part 3 of the Customs Act, to recoup the fuel levy
on its fuel purchases and fuel usage in conducting its farming operations,
(commonly referred to as ‘diesel rebat es’).
[5] On 31 March 2021, the Commissioner made a determination (the
“determination ”) disallowing the diesel rebate claims of Sandbaken in the
sum of R711,223.08 in respect of the tax period from December 2018 to
October 2020 (the “relevant tax period ”). As a result of the disallowance of
the diesel rebate claims, the Commissioner further levied interest in the
amount of R56,699.20.1
[6] Sandbaken seeks inter alia to set aside the determination . Sandbaken has
brought a statutory appeal in terms of section 47(9)(e) of the Customs Act .2
[7] Sandbaken claims the following relief in its notice of motion :
1. That the First Respo ndent's decision to refuse the Applicant's refund of
the fuel levy and Road Accident Fund levy leviable on distillate fuel
and/or on diesel purchases in accordance with the provisions of section
75(1A) of the Customs and Excise Act, 91 of 1964 (“ the Act ”) and
Rebate Item 670.04 of Schedule 6, Part 3 to the Act, to the extent
stated in the said Rebate Item, dated 31 March 2021 be set aside;
2. That it be declared that the Applicant is entitled to the refunds of the
fuel levy leviable on distillate fuel a nd/or diesel in terms of section
75(1A) of the Act in accordance with the provisions of section 75 of the
Act and in accordance with Rebate Item 670.04 of Schedule 6, Part 3
to the Act, to the extent stated in the said Rebate Item, in respect of the
2018/1 2 to 2020/10 tax periods (both periods inclusive);
3. That the First Respondent's decision to impose penalties and/or
interest, in respect of the aforesaid disallowed claim for a refund to the
Applicant in respect of the aforesaid tax periods, be set asid e;
4. That the First and/or Second Respondent(s) be ordered to pay the
amount of R711,223.08 to the Applicant, in respect of funds received by
the First and/or Second Respondents which are due and owing to the
Applicant;
1 The determination is contained in the ‘letter of demand’ (“ SB7” to the founding affidavit), the content
of which is dealt with more fully under the heading “Factual Background” later herein.
2 Section 47(9)(e) of the Customs Act provides: “ (e) An appeal a gainst any such determination shall lie
to the division of the High Court of South Africa having jurisdiction to hear appeals in the area wherein
the determination wa s made, or the goods in question were entered for home consumption. ”
5. That the First and/or Second Respondents be ordered to pay the costs
of this application, inclusive of the costs of two counsel.”
THE CUSTOMS ACT :
[8] The long title to the Customs Act describes its purpose as :
To provide for the levying of customs and excise duties and a
surcharge; for a fuel levy, for a Road Accident Fund levy, for an air
passenger tax, an environmental levy and a health promotion levy; the
prohibition and control of the importation, export, manufacture or use of
certain goods; and for matters incidental thereto.
[9] The purpose of the fuel levy is to raise revenue for the fiscus:
The primary taxing provision – the fuel levy – has as its purpose to
raise revenue for the State. The rebate scheme, which was introduced
later, has as its purpose to grant a financial indu lgence to firms
engaged in certain forms of primary production.3
[10] A fuel levy and Road Accident Fund levy (“RAF levy ”) are payable on all
distillate fuel ( which includes diesel)4 manufactured or imported into the
Republic on entry or deemed entry for home consumption thereof.5
Accordingly, when purchasing diesel, included in the price of such diesel is
(a) a fuel levy and ( b) a RAF levy.
3 Commissioner, South African Revenue Service v Glencore Operations SA (Pty) Ltd (Case no
462/2020) [2021] ZASCA 111 (10 August 2021) par [57].
4 Section 75(1C)(b)(ii) provides that:
“(b) For the purposes of this section and the said item of Schedule 6 -
(i) …
(ii) 'distillat e fuel ' includes diesel and ' diesel ' includes distillate fu el.”
5 Section 47(1) of the Customs Act reads as follows: “ Subject to the provisions of this Act, duty shall
be paid for the benefit of the National Revenue Fund on all imported goods, all excisab le goods, all
surcharge goods, all environmental levy goods, all fuel levy goods and all Road Accident Fund levy
goods in accordance with the provisions of Schedule 1 at the time of entry for home consumption of
such goods … ”
[11] Section 75(1)(d) of the Customs Act6 provides that a refund of the fuel levy
and the RAF levy levied on fuel may be gran ted by the Commissioner under
certain conditions :
(1) Subject to the provisions of this Act and to any conditions which the
Commissioner may impose -
…
(d) in respect of any excisable goods or fuel levy goods manufactured
in the Republic described in Sch edule 6, a rebate of the excise
duty specified in Part 2 of Schedule 1 or of the fuel levy and of the
Road Accident Fund levy specified respectively in Part 5A and
Part 5B of Schedule 1 in respect of such goods at the time of
entry for home consumption the reof, or if duly entered for export
and exported in accordance with such entry, or a refund of the
excise duty, fuel levy or Road Accident Fund levy actually paid at
the ti me of entry for home consumption shall be granted to the
extent and in the circumsta nces stated in the item of Schedule 6
in which such goods are specified, subject to compliance with the
provisions of the said item and any refund under this paragraph
may be paid to the person who paid the duty or any person
indicated in the notes to the said Schedule 6:
Provided that any rebate, drawback or refund of Road Accident Fund levy as
contemplated in paragraph (b), (c) or (d), shall only be granted as expressly
provided in Schedule 4, 5 or 6 in respect of any item of such Schedule.
[12] Section 75(1 A)(a) and (b) of the Customs Act provide that:
(1A) Notwithstanding anything to the contrary contained in this Act or any
other law -
6 Section 75 is headed “ Specif ic rebates, drawbacks and refunds o f duty ”
(a)(i) a refund of the fu el 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 reg istration 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 purpo ses on compliance with
the requirements determined by the Commissioner for the
purposes of th is Act and the Value -Added Tax Act;
[13] It is common cause that Sandbaken is duly registered as contemplated by
section 75(1A)(b)(ii) of the Customs Act.7
[14] Rebate it em 670.04 is for “ Distillate fuel purchased for use and used for the
purposes specified in, an d subject to compliance with Note 6. ”
7 See also: Section 75(1C)(b) (i) and Note 6(a)(vii) of Schedule 6, Part 3 the Customs Act.
Section 75(1C)(b) (i) provides that:
“(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); ”
[15] The refund in the present matter is calculated on ‘eligible purchases’ and
may be claimed on 80% of the total eligible purchases.8
[16] The payment of the refund is deemed to be provisional. Section 75(1A)(e) of
the Cust oms Act provides:
(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 a pplication for a diesel refund; and
(ii) used in accordance with the provisions of this section and the said
item of Schedule 6;
[17] The Commissioner is entitled to investigate any application for a refund.
Section 75(1C)(a) of the Customs Act provides:
(1C) (a) Notwithstanding the provision of subsection (1A), the Commissioner
may investigate any application for a refu nd of such levies on distillate
fuel to establish whether the fuel has been -
(i) duly entered or is deemed to have been duly entered in ter ms of
this Act;
(ii) purchased in the quantities stated in such return;
(iii) delivered to the premises of the user and is being stored and used
or has been used in accordance with the purpose declared on the
application for registration and the said ite m of Schedule 6.
8 Schedule 6, Part 3, note 6(b)(i)
[18] Section 75(1C)( d) of the Customs Act contains certain deeming provisions in
respect of the cons equences of a user failing inter alia to provide the
Commissioner with a declaration in such form and supported by such
documents as may be pre scribed in the notes to item 670.04 :
(d) (i) Any user who has been granted such a provisional refund shall,
in relation to the purchase and use by him of the fuel concerned,
furnish the Commissioner at such times as may be prescribed in the
notes to item 670.04, with a declaration in such form and supported by
such documents as may be prescribed in such notes.
(ii) Any user who fails to comply with the provisions of
subparagraph (i) shall be deemed to have used such fuel for a purpose
or use other than the purpose or use stated in the said item of
Schedule 6 and the amount of such refund shall be deemed to be a
refund not duly payable to such user and shall be recoverable in terms
of section 76A.
[19] Section 75( 4A) of the Customs Act provides as follows :
(a) Any person who registers for a diesel refund as contemplated in
subsection (1) shall be deemed to have regis tered in addition for the
purposes of section 59A.
(b) (i) Any return for refund of such levies shall be in such form and shall
declare such particulars and shall be for such quantities and for such
periods as may be determined by the Commissioner.
(ii) Any return for refund of such levies shall be submitted within two
years from the date of purchase of such fuel.
(c) Any seller of s uch fuel shall furnish such user with an original invoice
reflecting the particulars, and shall keep a copy of such invoi ce for such
time, as may be prescribed in the notes to item 670.04.
(d) Any user shall complete and keep such books, accounts and
docu ments and furnish to the Commissioner at such times such
particulars of the purchase, use or storage of such fuel or any other
particulars as may be prescribed in the notes to item 670.04.
(e) (i) Notwithstanding anything to the contrary in this Act contained, any
user of distillate fuel who has been granted such refund and who fails
to-
(aa) keep any such invoice;
(bb) complete and keep such books, accounts and documents; or
(cc) forthwith furnish any officer at such officer's request with such
invoice and the books, accounts and documents required to be
completed and kept,
shall, in addition to any other liability in curred in terms of this Act in
respect of the fuel to which such failure relates, be liable, as the
Commissioner may determine, for paym ent of an amount not
exceeding the levies refunded on such fuel, unless it is shown by the
user within 30 days of the da te of any demand for payment of such
amount in terms of this section that the fuel has been used in
accordance with the provisions of th e said item of Schedule 6.
(ii) Any amount for which any person is liable in terms of this section
shall be payable upo n demand by the Commissioner.
(f) …
(g) …
(h) …
(i) The Commissioner may by rule prescribe any form or procedure or
condition reasonab ly required for the effective administration of such
refunds.
[20] Section 75(7A) of the Customs Act provides:
(7A) Any person to whom a refund of levies has been granted on any
distillate fuel in terms of the provisions of item 670.04 of Schedule 6, as
the case may be, and who has disposed of such fuel or has applied
such fuel or any portion thereof for any purpose or u se otherwise than
in accordance with the provisions of such items and the use declared in
the relevant application for registration shall pay on demand to the
Commissioner the full amount of any refund granted to him in respect
of such fuel or such portion thereof, failing which such amount or such
portion shall be recoverable as if it were a duty payable under this Act.
[21] Section 76A(1) of the Customs Act provides:
(1) If the Commissioner, purporting to act under the provisions of section
75 or 76, pays t o any person by way of a refund or drawback any
amount which was not duly payable to that person under those
provisions or which was in excess of the amount due to that person by
way of a refund or drawback under those provisions, that amount or the
excess , as the case may be, shall be repaid by the person concerned
to the Commissioner upon demand, failing which it shall be recoverable
in terms of this Act as if it were the duty or charge concerned or part of
such duty or charge, as the case may be.
[22] Schedu le 6, Part 3, Note 6 is relevant to the determination of this matter. The
relevant provisions thereof are not repeated here but dealt wi th in relevant
part when dealing with the findings in this matter.
ISSUES
[23] In terms of the joint practice note filed b y the parties, the court has to decide
upon four main issues:
a. Whether the invoices supplied to the respondents are in compliance
with Part 39 of Schedule 6 of the Customs Act?
b. Whether the record keeping of Sandbaken, with specific reference to
its logbo oks for diesel usage, are in compliance with Part 3 of
Schedule 6 of the Customs Act?
c. Whether the diesel storage records of Sandbaken are in compliance
with Part 3 of Schedule 6 of the Act?
d. Whether the diesel was used in the applicant's primary product ion
activities in farming?
[24] There are certain related issues th at are raised on the papers and in the
parties’ respective heads of argument that require adjudication. The question
ultimately is whether Sandbaken has met its onus in the present ‘wide
appeal ’ in respect of its claim for the refunds in respect of the relevant tax
period.
FACT UAL BACKGROUND
[25] I set out the background facts in order to provide some context to the issues
referred to above. I attempt to provide a syno psis in this regard. It is n either
9 The parties repeatedly refer to ‘Note 3’ in this sectio n of their joint practice note which appears to be
a mistake.
sensible nor feasible to rehash all of the background facts. I point out that
the exposition provided includes substantial reference to what has been
included in correspondence and documentation attached to the founding
affidavit. The founding affid avit in various instances does not deal in any
detail with such attachments.10
[26] On 12 January 2021, SARS directed a letter of engagement to Sandbaken
indicating that SARS intended “ … to conduct a diesel refund audit covering
tax period 12/2018 — 10/2020. ” (the “letter of engagement ”).11 In the letter
of engagement Sandbaken was requested to provide copies of the following
documents/information for each period under audit within 14 days as
follows :12
• Detailed descript ion of the following:
▪ Nature of the busine ss activities /operations on which the diesel for
the audit period was claimed
▪ Place where the business activities/operations on which the diesel
for the audit period was claimed.
• Type of accounting system used
• A plan (size of ground /map of the farm) indicating the size of land
utilised for mixed farming.
• An organogram (process flow) of how the farming process is done,
10 See, for instance, founding affidavit paragraph 8.5: “ [Sandbaken ] … responded on 25 March 2021,
providing further information regarding the issues as identified, and mentioned above. A copy of that
letter is annexed as Annexure "SB6" .”
11 “SB3” to the founding affidavit.
12 SARS pointed out that the listed information is not an exhaustive list, but that further documents /
information may be requested if necessary.
• Monthly diesel purchases. In this regard, you must provide a copy of
the purchase invoices a s well proof of payment thereof in res pect of
each month of the audit period.
• General ledger accounts for diesel purchases,
• Individual usage logbooks for each of the vehicles into which diesel
was dispensed.
• Indication of who is responsible for the transp ortation of your products
and where are they delivered.
• Confirmation on whether you employ any contractors and/or
subcontractors to perform any of the business activities /operations on
your behalf. If applicable, provide the following additional
informati on/documents:
▪ Contract entered i nto between yourself and each of the
contractors /subcontractors
▪ Invoices issued by each of the contractors /subcontractors for the
audit period.
• Records reflecting the storage and use of the diesel for the audit
period(st orage tanks), reflecting the fol lowing (distribution/and usage
logbook/records)
▪ The date or period of use;
▪ The quantity and purpose of usage;
▪ Full particulars of any diesel supplied on a dry basis to any
contractor or other person who renders qualifying services to you;
▪ The capacity of each tank in which diesel is stored and the receipt
and removal from such tanks;
▪ The quantity of diesel supplied to each vehicle and what the
vehicle was used for
▪ The closing balance of the diesel for the various periods.
• Proof of purchase of the asset or a copy of an agreement/contract if the
equipment/vehicle is contracted.
• Power o f attorney if communication will be presented by the
accountant /bookkeeper.
• List of assets on which diesel rebates are claimed.
• Copy of latest annual financial stat ements.
[27] On 3 February 2021, Sandbaken’s accountants, VDM chartered accountants
(“VDM ”) responded to the letter of engagement .13 In the response, VDM
briefly described the mixed farming operation and activities conducted by
Sandbaken, attached a map of the farms on which the operations take place
(being farms leased by Sandbaken) , stated the a ccounting system as
‘Pastel’, deferred to the director of Sandbaken in respect of the process flow
of how the farming process is done, stated that it “ … is practically impossible
for each of the vehicles into which diesel was dispensed to have an
individual logbook... ” but that there is a separate detailed logbook for each of
the diesel tanks “ … where the purpose of disposal as well as the vehicle into
which diesel was d ispensed is clearly indicated. ”, stated that the
transportation of goods by San dbaken “ … is limited to the transportation of
harvested crops from the lands to the storage facilities on the farm and
13 “SB4” to the founding affida vit.
occasionally to silos ...”, and that there are no contract ors or subcontractors
that perform any of the farming activities on behalf of S andbaken.
[28] On 5 March 2021, SARS issued a letter / notice of intention to assess
Sandbaken (the “ notice to assess ”).14 The notice to assess contained
certain prima facie audit f indings under three headings: “ Invalid invoices ”15,
“Distribution Logbook ”16 and “ Failure to provide supporting documentation ”17.
In the notice to assess , Sandbaken was informed that the Commissioner
was of the prima facie view that 6,451 litres18 of distillat e fuel was “non-
eligible purchases ” as Sandbaken did not comply with the provisions of
section 75 of the Customs Act and Note 6 to Part 3 of Schedule 6 thereof.
The aforesaid prima facie view was stated to be based on the following:
a. Invalid invoices: “All diesel claimed was considered non -eligible as
invoices were addressed to CJ Cronje and not Sandbaken Boerdery
as required in terms of Schedule 6 Part 3 Note 6(d)(cc) to the
[Customs] Act. ”
b. Distribution Logbook: The logbook provided by Sandbaken does not
meet the requirements of a logbook as certain information –
“opening and closing hour meter/odometer readings, distance,
duration of use, purpose of utilisation ” – is lacking or insufficient. In
14 “SB5” to the founding affidavit.
15 SARS stated that the diesel purchase invoice s supplied by Sandbaken were addressed to ‘PJ
Cron je and Seuns’ as the purchaser of the diesel and not Sandbaken, and that the invoices did not
reflect the address of the purchaser.
16 SARS stated that the distribution logbook “ … contains no details regarding hour meter or odometer
readings, kilometres travelled or running time.. ”, that no “ non-eligible usage was recorded ”, that the
descriptors of “ the purpose of the use o f diesel consist of generic descriptions ”, and that a sample of
(i.e. certain/so me of) the assets / vehicles identified in the logbook could not be traced to the asset
register of Sandbaken.
17 SARS stated that Sandbaken had failed to supply certain docume ntation as had been requested in
the letter of engagement, namely:
“• Process flow of how the farming process is done
• The number of tanks and the capacity of each tank
• Place where the business activities /operations on which the diesel for the aud it period was
claimed.
• Individual usage logbooks for each of the veh icles into which diesel was dispensed .”
18 See p aragraph 4 of the notice to assess. This number is clearly incorrect. Schedule A to the notice
to assess reflects the ‘non -eligible purch ases (Litres)’ as 262,511 litres. See also inter alia paragraph
A of the notice to assess, and the notice to assess read as a whole.
combination, the lack /insufficiency of such infor mation “ made it
impossible for the auditor to carry out basic tests in an attempt to
determine whether the litres allocated to the alleged activity could
reasonably have been so utilised. This is required per Schedule 6
Part 3 Note 6 paragraph (a)(xi). ” Further, only diesel usage relating
to primary production [may be claimed] and “ logbooks should specify
exactly what primary production was done and not general
activities. ” Further, there were no entries relating to non -eligible
usage but the Customs Act “ … requires that logbooks show a record
of both eligible and non -eligible diesel usage. ”
c. Failure [to] Provide Supporting Documentation: Section 75(1C)(d)(i)
and (ii) and Section 75(4A)(d) of the Customs Act have been
contravened due to failure to provide informatio n and documentation
specified above (under the provisional audit finding “Failure to
provide supporting documentation ”.19)
[29] In the notice to assess, the Commissioner proposed to make an adjustment
in the total amount of R767,922.28 , comprised on R711,223.08 in respect of
the diesel rebate claims of Sandbaken in respect of the relevant tax period
and R56,699.20 in respect of interest . Sandbaken was afforded an
opportunity to respond to the notice to assess, and its attention was draw n to
sections 101 and 102 of the Customs Act pointing out that the onus to prove
compliance with the Act rested upon Sandbaken.
[30] On 25 March 2021, VDM responded to the notice to assess and to the prima
facie findings20 in the notice to assess .21 VDM indica ted inter alia that:
a. Invali d invoices: The invoices are incorrectly made out to PJ Cronje
en Seuns (Pty) Ltd instead of Sandbaken Boe rdery (Pty) Ltd. The
supplier of the diesel neglected to change the name of the company
19 The documents are s et out under footnote 17 above.
20 From the response it is apparent that the response is to the prima facie audit findings of SARS
contained in par B.2 of the notice to assess.
21 “SB6” to the founding affidavit.
to be invoiced to Sandbaken. The main farming operations “move d”
from PJ Cronje en Seuns to Sandbaken. Sandbaken only started
claiming diesel refunds from the 2018/08 VAT period when the
farming operations moved from one company (PJ Cronje en Seuns –
in which the farming operations were previously performed ) to
Sandb aken. The tax invoices meet all the requirements of a valid tax
invoice but one – namely the name of the purchaser as explained .
b. Distribution Logbook :
i. In respect of what VDM referred to as “ Finding 1 - the
logbook contains no details regarding hour mete r or
odometer readings, kilometers travelled or running time ”,
VDM stated that the information that had been sought under
bullet point 10 of the lette r of engagement22 had been
supplied in two documents 'SANDBAKEN BOERDERY -
DIESEL STORAGE LOGBOOK' and 'SAN DBAKEN
BOERDERY - DIESEL USAGE LOGBOOK' sent via e -mail
on 3 February 2021 .23 VDM explained further that for each of
the four tanks “… there is a separate diesel usage logbook ”
and that the name of the tank from which diesel is disposed
of is contained on t he top of the page of the usage logbook.
These ‘diesel usage logbooks’ are co mpleted as and when
diesel is disposed of, are pre -printed and completed by the
staff members disposing of the diesel at the diesel tanks.
22 Quoted in paragraph [2 6] of this judgment above – the tenth ‘round’ bullet point .
23 It is unclear precisely what these documents are or what wa s contained therein. What is stated in
the founding affidavit regarding what was sent to SARS on 3 February 2021 is the following (at FA par
8.2): “ The applicant, through its accountants, Van Der Merwe Auditors (“the Auditors”), complied with
the notificat ion and provided relevant documents and information to SARS, on 3 February 2021, a
copy of which is annexed as Annexure "SB4" .” “SB4” to the founding affidavit has no attachments
attached to it bu t for a “ map of the farms ”. Sandbaken states in its founding affidavit that “ the Excel
documents ” were submitted on 29 September 2021 (FA, par 9.15). What is stated by Sandbaken in
the founding affidavit at par 8.2 is denied in the answering affidavit at inter alia par 95 – 96 thereof.
This is met in reply with a b are denial, and a statement that this is in any event a de novo hearing and
the court can ignore any failure to supply documents (which failure Sandbaken d enies) “ … and
adjudicate upon the application on the facts as it is before the Court at this stage. ” (RA par 75) Whilst
it is correct that the present matter is a wide appeal, the failure of Sandbaken to attach documents to
its affidavits does not assist i ts case in the wide appeal .
VDM explained that these “ hand -written u sage logbooks
were transferred to excel, as complete as possible, but
merely for the fact to be able to use the excel function to
sum the diesel usage per month. ”, but that , as this was not
indicated as required in the letter of engagement, the
odometer /hour meter readings were not transferred to the
existing excel logbook. VDM e mphasised that this (the
odometer /hour meter readings) is part of the hardcopy usage
logbooks and can easily be added to the excel logbook.
ii. In respect of what VDM referred to a s “Finding 2 - no non -
eligible usage was recorded. ”, VDM stated as follows: “ The
diesel disposed of on the farm is only used for farming
purposes and thus there were no non -eligible liters for the
taxpayer to record. Please note that the majority of the
assets used are not even licensed, as they never leave the
farm. The licensed v ehicles that do leave the farm, do so in
order to perform farming activities such as purchasing parts,
feed, medicine, etc. Please also note that only 80% of the
eligible liters o n the logbook are allowed by SARS. Thus,
provision for non -eligible liters we re made. ”
iii. In respect of what VDM referred to as “ Finding 3 -
descriptions of the purpose of use of diesel consist of
generic descriptions, for example ‘daily farming activities’ ,
‘livestock activities’, ‘farm construction’ etc. ”, VDM stated that
the descriptors are “ … more of a summary of the activities
on which the disposed diesel is being spent rather than a
generic description. ” For example, ‘livestock activities’ “ ...
contain s all or most of the activities listed below and the
diesel usage logbook simply does not allow for this extensive
description. ” The ‘diesel usage logbooks’ remain at each of
the four tanks and do not “ travel with the drivers ”. Certain
activities, such as (a) checking and maintaining fencing and
(b) checking on livestock often happen simultaneously /on
the same trip, and it is not possible to attribute diesel used
for each activity hence the reason for the generic
descriptions. “ All of the activities as de scribed, although not
detailed enough, relates to the primary production of the
farming operations. ” VDM provided the following detail
regarding the descriptors used in the logbook:
“Farm construction — Creating and maintaining roads on the
farm, digging of ditches to lay electric cables and water
pipes, constructing of contour walls in lands , levelling of
lands, repairing and maintaining dam walls, creating water
ways to guide the water away from the lands, etc.
Livestock activities — Checking and maint aining fences,
check the wellbeing of the livestock and do stock counts of
livestock, transporting of feed to livestock, tending to ill
livestock, etc.
Daily farming activities — transporting of staff, checking
crops already planted, tending to breakdowns of farming
equipment, check ing up on work progress of lands being
worked, planting of crops, spraying and fertilizing of crops ,
harvesting of crops, managing the farming operation, etc. ”
iv. In respect of what VDM referred to as “ Finding 4 - a sample
of ass ets identified in the logbook was traced to the asset
register and the following could not traced to the asset
register: … [Lan d Cruiser; New Holland L B 90; MB 2624;
Ford 7600; Case 111] ”, VDM explained that the staff who
dispose of diesel to the vehicles do not know the description
of the vehicles as per the asset register, and insert the
registration number and/or a description of the vehicle . For
example , in respect of the vehicle referred to on the asset
register as “New Holland TLB 90” this is referred to in the
logbook as "NEW HOLLAND LB90”, “NH T LB 909”, “NH LB
90”, “LB 90”, “TLB”, or “TLB90". VDM provided explanations
in the same way for the further vehicles queried by SARS. In
essence, VDM explained the references in the hand written
logbooks (whic h were transferred to the excel logbooks) and
the nexus to the relevant vehicle in the Sandbaken asset
register.
c. Failure to provide supporting documentation: VDM reiterated that (as
previously indicated) the director of Sandbaken ought to be
contacted fo r purpose of the ‘process flow of how the farming
process is done’, stated that the ‘number of tanks and the capaci ty of
each tank’ had been provided in the document referred to as
'SANDBAKEN BOERDERY - DIESEL STORAGE LOGBOOK' and
further provided such inf ormation in respect of the four tanks, and
referred to their previous response and attached map in respect of
the p lace where the farming operations take place. VDM indicated
that there are no individual usage logbooks for each vehicle, and
explained again that “ … it is practically impossible for each of the
vehicles into which diesel was dispensed to have an individua l
logbook as most of the staff members are illiterate ... ” but that the
logbooks for each of the four diesel tanks where fuel is dispensed
indicate the vehicle into which diesel is dispensed and the purpose
of the disposal . VDM indicated that Sandbaken was prepared to
adjust the existing usage logbook to contain such information as may
be required.
[31] On 31 March 2021, SARS directed a letter of demand to Sandbaken (the
“letter of demand ”)24 demanding repayment of the refunds for the fuel levy
and RAF levy i n respect of the relevant tax period based on the fact that
Sandbaken “ … did not comply with the requirements of the diesel refund
24 “SB7” to the founding affidavit.
provisions as a result of which they were not entitled to the diesel refunds
paid to them. ” The letter of demand confirmed th e majority of the findings in
the notice to assess, and confirmed the adjustments referred to in the notice
to assess (as dealt with above). The letter of demand provided that the “ …
Commissioner is of the view that the distillate fuel that is the subject of the
present investigation is non -eligible purchases, as SANDBAKEN
BOERDERY (PTY) LTD did not comply with the provisions of Note 6 to Part
3 of Schedule No. 6. ” Under the heading “Explanation of the assessment ”
SARS stated as follows:
a) Invalid invoices
All diesel claimed was considered non -eligible as invoices were
addressed to CJ Cronje and not Sandbaken Boerdery as required in
terms of Schedule 6 Part 3 Note 6(d)(cc) to the Customs and Excise
Act.
b) Usage logbook
The logbook provided by the taxpayer does not meet the requirements
of a logbook as some information i.e. opening and closing hour
meter/odometer readings, distance, durati on of use, purpose of
utilisation is lacking or insufficient and in combination made it
impossible for the auditor to carry out basic tests in an attempt to
determine whether the litres allocated to the alleged activity could
reasonably have been so utilis ed. This is required per Schedule 6 Part
3 Note 6 paragraph (a)(xi).
Furthermore, only diesel usage relating to prima ry production as
required in terms of Schedule 6 Part 3 Note 6 paragraph (h) to the
Customs and Excise Act, thus descriptions per the log books should
specify exactly what primary production was performed and not general
activities.
There were no entries relating to non -eligible usage. However, the Act
requires that logbooks show a record of both eligible and non -eligible
diesel usage.
c) Failure to submit supporting documents
Section 75(1C)(d)(i) & (ii), Section75(4A)( d) of the Customs and Excise
Act have been contravened due to failure to provide information and
documentation specified above.25
[32] The letter of demand further contained a relatively detailed response to the
letter of VDM dated 25 March 2021 (“ SB6”). The decision contained in the
letter of demand constituted a ‘determination ’ which is subject to an appeal
as contemplated in section 47(9)(e) of the Customs Act .
[33] On 29 April 2021, VDM responded to the letter of demand .26 The response
from VDM repeated much of that which had been stated in the VDM
response dated 25 March 2021 (“ SB6”) and contains “… a list of all the
supporting documentation attached. ”27 I do not rehash the entir e content of
the correspondence but refer to certain portions below:
a. The response contained certain additional information regarding the
‘invalid [tax] invoices’ made out to PJ Cronje en Seuns (Pty) Ltd instead
of Sandbaken, such as that the two companies have the same
directors and shareholders, t hat Sandbaken (via the directors) made
payment of the purchase invoices for diesel even though the invoices
were made out to PJ Cronje en Seuns which is apparent from the proof
of payments and the financial state ments. Further, it appears that
invoices were generated from PJ Cronje en Seuns to Sandbaken
Boerdery and provided to SARS in addition to the original invoices to
25 The “information and documentati on specified above” is recorded in par 2(c) of the letter of demand
as follows: Process flow of how the farming process is done; Place where the business activities
/operations on which the diesel for the audit period was c laimed; Individual usage logbooks for each
of the vehicles into which diesel was dispensed.
26 “SB8” to the founding affidavit.
27 But which is not attached to “ SB8” in the application papers.
PJ Cronje en Seuns and the proof of payments. VDM stated as follows
inter alia in this regard : “The invoices made out from PJ Cronje en
Seuns to Sandbaken Boerdery reflects the exact same date, invoice
number and invoice details as the original invoice from Verco Energy
(Pty) Ltd [to PJ Cronje en Seuns]. The invoice was made out to
Sandbaken Boerd ery in order to move the expense in the accounting
records from the PJ Cronje en Seuns to Sandbaken Boerdery. ”
b. Under the heading “ Distribution Logbook ”, VDM again set out why the
logbooks met the requirements of bullet point 10 of the letter of
engagemen t, repeated the descriptors pertaining to “ Farm
construction ”, “Livestock activities ”, and “ Daily farming activities ” (as
already quoted above), and stated that the “ majority of the activities as
described, although not detailed enough, relates to the prim ary
production o f the farming operations ” and that the only secondary
farming activities listed in the descriptors “ is the transporting of staff. ”
c. Under the heading “ Process flow of how the farming process is done ”,
VDM stated as follows:28
Sandbaken Boerdery's farming activities are classified as mixed
farming, which consists of both livestock and crop farming. Activities
include:
• Crop farming (grains such as maize and soya beans): working the
lands in preparation for planting, planting, fertilizing, spraying
chemicals, topdressing, harrowing the fields and reaping grain.
• Fodder banks for animal feeding: preparing, fertilizing, cutting,
bailing and carting bales to central stock piles and eventually
carting them to different camps for animal feed .
28 In the present appeal proceedings, Sandbaken has attached a further document to its founding
affidavit which it contends constitutes “written confirmation of the process flow” (“ SB14 ”).
• Carting fodder and animals to different units and markets as
needed .
d. Under the heading “ Usage logbooks ”, VDM stated as follows :
As stated in the 'SANDBAKEN BOERDERY - RESPONSE TO
ENGAGEMENT', it is practically impossible for each of the vehicle s into
which diesel was dispensed to have an individual logbook as most of
the staff members are illiterate. There is however a separate detailed
logbook for each of the diesel tanks where the purpose of disposal as
well as the vehicle into which diesel wa s dispensed is clearly indicated.
It does however not reflect purported future use but rather actual
usage. The dispensing logbook at the diesel tank does not have a
column for the use of the disposed diesel. The details regarding the
disposal is only adde d at the end of the day, which makes the logbook
submitted to SARS a usage logbook instead of a dispensing logbook.
The staff members rep ort back to the farmer on what was done that
day and he adds the description to the Excel usage logbook. As was
explain ed earlier, the farm workers are illiterate and cannot write
detailed descriptions as they go. There physically are not individual
usage logbooks at my disposal to send to you and we were not going to
fabricate these logbooks for the audit. Please consider to accept the
global usage logbook instead.
[34] Sandbaken submitted an internal administrative appeal in terms of the
Customs Act on 30 April 2021. The first page of the appeal document is
attached to the founding affidavit .29
[35] On 30 August 2021, SARS communi cated to Sandbaken that its Internal
Administrative Appeal Committee convened to consider the matter and
provided its prima facie view regarding the insufficiency of the logbook
details to prove that the diesel was used in the primary activities of
29 “SB9” to the founding affidavit.
Sandbak en. Sandbaken states that the only prima facie view expressed for
alleging that Sandbaken did not qualify for the diesel refunds was for the
reason that “(t)he logbook p rovided is considered a dis pensin g logbook and
not a usa ge logbook. It shows a record of diesel dis posed. There is no
record o f the amount o f diesel used. Whether the diesel recorded as
disposed was all used or there was an y diesel le ft after the performance o f
an activity is not indicated. ”30
[36] The Committee requested Sandbaken to provide ful l submissions as to why
the prima facie view of the Committee should not be confirmed and the
diesel refund appeal be partially disallowed. VDM responded on 29
September 2021 .31 In the response letter , VDM in essence repeated its
explanation as had been set out under the heading “ Usage logbooks ” in the
VDM response letter of 29 April 2021 (“ SB8”) (addressed above); indicated
that the “ diesel disposed of on the farm is only used for farming purposes ”,
that most of the vehicles are unlicenced an d those that ar e licenced that
leave the farm “ do so in order to perform farming activities such as
purchasing parts, feed, medicine, etc. ”; referred to the descriptors that
appear in the submitted logbook and again stated that the “ … majority of the
activities as descri bed, although not detailed enough, relates to the primary
production of the farming operations. ”
[37] The hearing /appeal before the Committee constituted a de novo hearing. On
29 October 2021, the Committee communicated the outcome of the appeal ,
which was to confirm the letter of demand and to disallow the appeal in full .32
The outcome letter stated as follows in material part:
9. The following is specifically to be noted as set out in the Umbhaba
judgement, "Even if it were found that the activities for which the refund
claim has been submitted are all eligible activities, the claim still stands
30 The parties have not attached this communication to the papers.
31 “SB10 ” to the founding affidavit.
32 “SB11 ” to the founding affi davit.
to be rejected on the basis that there was no compliance with the
requirement to keep and maintain proper logbooks."
10. Further to the above, partial or unsat isfactory compliance by the
Appellant is not sufficient to validate such a diesel refund claim, due to
the prescriptive nature of Section 75, read with Note 6 of Part 3 to
Schedule 6 of the Act.
11. Compliant "logbooks" must provide sufficient details o f all the eligible
and non -eligible activities; where and when it was conducted, etc.
Further to that, all the entries must be supported by evidentiary
document ation that the Appellant must provide as part of the records.
12. The Committee therefore deci ded to confirm the letter of demand and
disallow the appeal in full based on the following:
a. The Appellant did not keep and /or provide compliant records to
substantiate the refund claims;
b. The Appellant did not provide supporting document ation for the
entries in the 'global usage logbooks’.
c. The Appellant's logbooks and recordkeeping did not meet the
prescribed requirements of Section 75, read with Notes 6(a)(xi)
and (q) of Part B to Schedule 6 of the Act; and
d. Therefore, the Appellant was not entitled to any of the refunds
submitted for the audit period of 12/2018 to 10/2020.
[38] I pause to point out that in the respondents’ answering affidavit they state
inter alia that the letter of demand (“ SB7”) and Appeal Committee outcome
letter (“ SB11”) should be read together as they constitute prop er grounds for
disallowing the diesel rebate claims, and they incorporate the content thereof
into the answering affidavit.
[39] On 29 November 2021, Sandbaken addressed correspondence to the
Committee rega rding the outcome of the internal administrative appe al.33
[40] Sandbaken’s request for alternative dispute resolution was not accepted by
the Commissioner. Sandbaken accordingly instituted the present tariff
appeal.
[41] In the present appeal, Sandbaken states th at the following documents
should also be considered by the court , copies of which it attaches to its
founding affidavit:
a. Copies of the original, handwritten logbooks marked “ SB13(A) ”.
b. Printouts of the logbooks electronically generated from the
informati on extrapolated from the handwritten logbooks marked
“SB13(B) ”.
c. The fuel purchase invoices marked “ SB13(C) ”.
d. Sandbaken’s VAT201 Returns marked “ SB13(D) ”.
e. Sandbaken’s financial statements [for the financial year ending
February 2021] marked “SB13(E) ”.
CERTAIN PRINCIPLES RELEVANT TO THE APPROACH TO THE APPEAL
An appeal in the wide sense
[42] The appeal is one in the ‘wide sense’. It “ … entails to the extent necessary a
re-hearing of the matter and if need be a fresh determination on the merits of
the matter. ”34
33 “SB12 ” to the founding affidavit.
[43] In Cell C (Pty) Ltd v Commissioner, South African Revenue Service ,35
Tolmay J refers to the characteristics of a wide appeal as follows:
a. “… in a wide appeal the court hears the matter de novo and is not
bound by the reasons given ”36
b. It “… is a complete rehearing and fresh determination on the merits,
with or without addi tional evidence or information… ”37 and “… allows
for a complete reconsideration. ”38
c. “It is therefore apparent that a wide appeal is fundamentally different
from an appeal in the strict se nse or a review, because the matter is
heard de novo. The court is not confined to the record and is in the
same position as the first -instance decision -maker. As a result the
record and reasons have very little value in a wide appeal. It follows
that a w ide appeal could, if evidence is led, be compared to a trial in
all material respects. ”39
d. “… the object of the de novo appeal is to permit a first -instance
hearing at which the applicant may seek reconsideration on
additional facts and grounds. … ”40
Onus
34 Umbhaba Estates (Pty) Ltd v The Commissioner for the South African Revenue Servic es
(66454/2017) [2021] ZAGPPHC (10 June 2021) (“Umbhaba ”) par [6] referring to Pahad Shipping v
SARS (529/08) [2009] ZASCA 172 (2 December 2009) (SCA) par [13] and [ 14]
35 2022 (4) SA 183 (GP) (“Cell C ”).
36 Cell C par [8] citing Acti-Chem SA (Pty) Ltd v Commissioner, South Afr ican Revenue Service
KZP 8540/2017 ([2019] ZAKZPHC 58, 15 August 2019) para 2; Distell Ltd v Commissioner, South
African Revenue Service 2012 (5) SA 450 (SCA).
37 Cell C par [9] referring to Tikly and Others v Johannes NO and Others 1963 (2) SA 588 (T).
38 Cell C par [9] referring to Levi Strauss SA (Pty) Ltd v Commissioner for the South African
Revenue Service GP 20923/2015 (2 May 2017)
39 Cell C par [10] excluding the footnote.
40 Cell C par [25] referring to Levi Strauss SA (Pty) Ltd v Commissioner for the S outh African
Revenue Service GP 20923/2015 (2 May 2017) para 41.
[44] Sandbaken bears the onus of convincing the court that the Commissioner's
determination should be set aside and the onus on its papers (being those
which had served before the Commissioner supplemented by those placed
before the court) that it is entitled to an order reflecting its entitlement to
diesel rebates in the specific amounts claimed. Should disputes of fact arise
on the papers, the ‘Plascon -Evans -rule’ applies.41
Interpretation of statutes
[45] In terms of the unitary exercise of interpretation, the i nevitable point of
departure is the language of the provis ion, understood in the context in
which it is used, and having regard to its purpose.42
[46] The matter necessitates the interpretation of a ‘tax statute’. The trite
principles of interpretation apply:43
[11] A statute must be interpreted in line with ordinary rules of grammar
and syntax taking cognisance of the context and purpose thereof. That
approach is equally applicable to a taxing statute.
FINDINGS
Whether the invoices supplied to the respondents are in compliance with Part
3 of Schedule 6 of the Customs Act?
[47] It is common cause that the original tax invoices (i.e. not those generated
later by Sandbaken /PJ Cronje en Seuns to “move the expense in th e
41 Canyon Resources (Pty) Ltd v Commissioner for South African Revenue Service 82 SATC
315 at par [9.10]. See also: Mbali Coal (Pty) Ltd v Commissioner for the South African Revenue
Services (81950/2019) [2023] ZAGPPHC 1792; 84 SATC 353 (5 October 2023) par [21] – [22]
42 Commissioner for the South African Revenue Service v Tunica Trading 59 (Pty) Ltd
(1252/2022) [2024] ZASCA 115 (24 July 2024 ) par [62]
43 Commissioner for the South African Revenue Service v Langholm Farms (Pty) Ltd
(1354/2018) [2019] ZASCA 163 (29 November 2019) par [11] (footnotes omitted).
accounting records ”44) do not contain the name of Sandbaken as the
purchaser but rather “ PJ Cronje en Seuns ”.
[48] The respondents contend that the tax invoices submitted are invalid as they
fail to comply with the requirements of Note 6(d)( i)(cc)45 read with Note
6(q)(ii)46 of Part 3 of Schedule 6 of the Cu stoms Act, as they fail to prove that
such diesel was bought by Sandbaken and that it was delivered at its
premises where the farming activities are conducted. The respondents place
emphasis on th e peremptory terms of the Notes.47
[49] Counsel for Sandbaken criticise the approach of the respondents , which they
describe as a “check list” approach. They contend in heads of argument that
“… a literal interpretation of the Act is not consistent with the purpose of the
Act and that substantial compliance with the req uirements of the Act is to be
regarded as sufficient for a rebate claim to be allowed. ”48 In oral submissions
before court , a nuance was placed on the submission (in my understanding)
namely th at strict compliance is required but such strict compliance is
achieved if the purpose of the provision is met. It was submitted that tax
invoice s were submitted and the fact that the wrong name (ie. PJ Cronje and
Seuns) appears on the invoice, does not re nder the invoice invalid. It was
44 PJ Cronje en Seuns did no t sell fuel to Sandbaken – see: replying affi davit , par 38. SARS was
informed by VDM that these invoices were “ made out to Sandbaken Boerdery in order to move the
expense in the accounting records from the PJ Cronje en Seuns to Sandbaken Boerdery. ” Whilst it is
not explained why the expenses would ha ve appeared in the ‘accounting records’ of PJ Cronje en
Seuns in the first place, nothing more n eed be said about these invoices as Sandbaken does not rely
on a sale of diesel by PJ Cronje en Seuns to Sandbaken.
45 Note 6(d)(1)(cc) provides:
“(d) The tax invoice
(i) For the purposes of section 75 (4A)(c), the invoice must be a tax invoice containi ng the
following information:
…
(cc) the name and address of the purchaser (if the invoice value is over R500);
…”
46 Note 6(q)(ii) provides:
“(q) Keeping of b ooks, accounts and other documents for the purposes of this item:
(i) …
(ii) Purchase documents must be in the name of the user.
(iii) …
(iv) …”
47 Answering affidavit, paragraphs 16.1 and 62 - 65.1
48 See also: par 11 of the replying affidavit.
submitted that the purpose of t he submission of an invoice is to show that he
who claims has purchased and paid for the diesel.
[50] In heads of argument, counsel for Sandbaken rely on Commissioner for
the South African Revenue Service v Glencore Operations SA (Pty) Ltd
2021 (4) All SA 1 4 (SCA) in support of their contention that “ … a purposive
interpretation should be followed when interpreting the Act and its
schedules… ”. In my view, the relevant part of the afo resaid decision relied
upon49 confirms the trite principles of interpretation of statutes entailing the
simultaneous consideration of the triad of language, context and purpose. It
is not authority for a proposition that purpose is to be elevated above
language or context .
[51] Counsel for Sandbaken further submit that the approach ado pted in
Commissioner for the South African Revenue Service v Glencore
Operations SA (Pty) Ltd 2021 (4) All SA 14 (SCA) is aligned with what the
Constitutional Court held in Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Offi cer of the South African
Social Security Agency and Others 2014 (1) SA 604 (CC) (“Allpay ”) at par
[30] regarding compliance with statutes. Counsel for Sandbaken submit that
in line with Allpay strict compliance is achieved if the purpose of a provision
is met. However, in my view , it is important to provide the context of Allpay
and to consider what was held in the paragraph relied upon by Sandbaken.
Allpay dealt with a PAJA review in the context of procurement in determining
whether the award of a tender w as constitutionally valid . It was in this
context that the Constitutional Court found that the “ … materiality of
compliance with legal requirements depends on the extent to which the
purpose of the requirements is attained. ”50 In essence , in this regard , Allpay
49 The pa ragraphs of the judgment relied upon by Sandbaken (par [19] – [22]) are contained in the
judgment penned by Petse DP, Mbha JA concurring.
50 Allpay par [22](b). At par 28 under the heading “ Materiality ” the Constitutional Court held:
“[28] Under the Constitution there is no reason to conflate procedure and merit. The proper
approach is to establish, factually, whether an irregularity occurred. Then the irregularity must be
legally evaluated to determine whether it amounts to a ground of review under PAJA. This legal
evaluation must, where appropriate, take into account the materiality of any deviance from legal
requirements, by linking the question of compliance to the purpose of the provision, before concluding
that a review g round under PAJA has b een established. ”
is authority for the point that in the legal evaluation of whether an irregularity
(whether procedural or substantive) amounts to a ground of review under
PAJA, such legal evaluation must, where appropriate, take into account the
materiality of any d evian ce from legal requirements by linking the question of
compliance to the purpose of the provision, before concluding that a review
ground under PAJA has been established. The findings in Allpay do not
support an argument that in the context of a claim for a diesel rebate in
terms of a tax statute substantial compliance will do , nor (with reference to
the submissions in court) that one considers whether the purpose of a
provision has been met in determining whether strict compliance has been
achieved .
[52] Counse l for Sandbaken refer to the Western Cape decision of Petroleum Oil
and Gas Corporation of South Africa (SOC) Ltd v Commissioner for the
South African Revenue Service and Another51 (“PetroSA WCC ”) where
the court held that material (i.e. substantial) c ompliance with the Rules of the
Customs Act, can be achieved by way of other means than with strict
compliance with the Rules. However, it is important to place context to the
findings. The paragraphs referred to relate to what is referred to in the
judgme nt as “ Finding 2 ” which constituted a determination in terms of section
47(9)(a)(i)(bb) of the Customs Act to the effect that PetroSA is not entitled to
a set-off (in terms of section 77 of the Customs Act) beca use “ Export
51 (8808/2020) [2024] ZAWCHC 3; [2024] 1 All SA 824 (WCC); 86 SATC 533 (18 January 2024)
(“PetroSA WCC ”) par [36] – [37].
In these paragraphs De Waal AJ held as follows:
“[36] In my view compliance, or at least material compliance , with the requirements of the Rules
were proven by PetroSA. This was done through provision of affidavits; the SAD500 and SAD502
documents; the CN1 and CN2 documents; as well as the delivery notes whi ch recorded that fuel had
been delivered in the countr y of destination. The purpose of the requirement, which is to provide
proof of removal or export, was achieved. In Allpay Consolidated Investment Holdings (Pty) Ltd
and Others v Chief Executive Office r of the South African Social Security Agency and
Othe rs (2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC), the Constitutional Court held as follows:
“[30] Assessing the materiality of compliance with legal requirements in our administrative law is,
fortunately, an exercise unencumbered by excessive formality. It was not always so. Formal
distinc tions were drawn between “mandatory” or “peremptory” provisions on the one hand and
“directory” ones on the other, the former needing strict compliance on pain of non -validity, and the
latter only substantial compliance or even non -compliance. That strict mecha nical approach has been
discarded. Although a number of factors need to be considered in this kind of enquiry, the central
element is to link the question of compliance to the purpose of the provision .” (my underlining)
[37] In the present in stanc e I am satisfied that there was material compliance with the
requirements in the Rules and the purpose of the requirements (to provide proof of removal / export)
was achieved. ”
acquittal documentation was absen t, inadequate or not provided in
substantiation of the account set -off.”52 The determination in the letter of
intent and letter of demand in respect of “Finding 2” was that “ PetroSA did
not submit a request for approval to the relevant excise office in orde r to
submit affidavits as proof of export in the absence of the relevant original
export documentation. ”53 De Waal AJ held that Rule 19A4.04(e) makes
provision for an affidavit to be provided in circumstances where a person
cannot produce a document contain ing a statement or declaration (a
procedure relied upon by PetroSA), and that prior approval is not required for
reliance on the Rule. PetroSA is accordingly distinguishable. Further, the
aforesaid decision was decided prior to the Supreme Court of Appeal
decision of Tholo Energy Services CC v Commissioner for the South
African Revenue Service54 which I deal with below .
[53] Finally, counsel for Sandbaken submit that “ … the approach in Allpay , as
adopted to compliance with the Act in [PetroSA WCC ], is aligned wi th the
pre-Constitutional approach followed in BP SA …”55 and cite the portion of
BP SA 1985 which reads as follows :56
The above submission in my view unjustifiably equates "subject to the
provisions of this Act" with "subject to compliance with" such prov isions.
As already stated, the latter phrase was employed in s 75 (d) and s 75
(5) (a) (i) of the Act and, had it been the Legislature's intention to m ake
the right to a rebate dependent on actual compliance with all the other
sections of the Act and also the regulations, it would no doubt have said
so. Consequently I have little doubt that it could not have been the
intention to grant a right to a rebat e subject to compliance with each
and every provision of the Act and the regulations, or at any rate such
provisions as have a bearing on the entry or disposal of goods under
rebate of duty.
52 PetroSA WCC par [9] and [30] – [37]
53 PetroSA WCC par [30]
54 (Case no 378/2023) [2024] ZASCA 120 (6 August 2024 )
55 Ie. BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise and Another
1985 (1) SA 72 5 (A) at 736A -D (“BP SA 1985 ”)
56 At 736A -D
[54] BP SA 1985 dealt with the interpretation of reg 410.04.04 of the Customs
Act, and the consequences of non -compliance with such regulation. At p
736E the Appellate Divis ion (as it then was) held as follows: (my emphasis)
If the phrase under consideration [the introductory phrase of s 75 (1)] is
read in conjunction wit h the operative provisions of s 75 it plainly
means that the rebates provided for in paras (a) to (e) are subject to
such other provisions of the Act (including the regulations) as may
further qualify the entitlement to a rebate. I have already pointed out
that reg 410.04.04 contains no such qualification . It does not provide,
either expressly or by implicati on, that a right to a rebate conferred by s
75 (c) is conditional on compliance with its provisions, or that a pre -
existing right to a rebate falls awa y in case of non -compliance.
The regulation falls to be contrasted with a number of other regulations
which indeed qualify the right to a rebate . I mention only the following
examples … [reg 608.01.01 read with item 608.01; reg 609.04.10;
609.04.20].”
[55] In my view, BP SA 1985 in fact supports the case of the respondents .
Section 75(1)(d) of the Customs Act contains the express terms – “… subject
to compliance with the provisions of the [item of Schedule 6 in which such
goods are specified] … ”. Note 6(c) read with Note 6(d) of Schedule 6, Part 3,
qualify the entitlement to a rebate. In terms thereof, a refund “may only be
applied for ” in respect of diesel purchased in and for use in the Republic and
“for which a duly completed tax invoice is issued as contemplated in [Note
6(d)]”.57
[56] The Customs Act read with the aforesaid Notes qualify the right to apply for a
refund .
57 Cf. JT International Manufacturing South Africa (Pty) Ltd v Commissioner for the South
African Revenue Service (29690/14) [2023] ZAGPPHC 2061 (10 October 2023) par [146]
[57] In the matter of Dankie Oupa Delwery CC v Commisioner of the South
African Revenue Services ,58 one of the issues to be decided was whether
a physical address (as opposed to a postal address) is a requirement for a
valid tax invoice. Ultimately, Ce ylon AJ held (in this regard) that the meaning
of address in t he relevant Notes to the Customs Act refers to the physical or
postal address (or both) of the purchaser.59 Dankie Oupa is of limited
assistance in the context of the present dispute regarding ta x invoices as the
decision contains no finding on what the co nsequence would have been of
non-compliance with Note 6(c) read with Note 6(d) of Schedule 6, Part 3.60
[58] However, the cases dealt with below support the case of the respondents.
[59] In Petroleum Oi l and Gas Corporation of South Africa (SOC) Limited v
The Commissioner for the South African Revenue Service ,61 Mabuse J
held:
… only once both the substantive and procedural prescripts and
requirements of the relevant rebate item and the provisions govern ing
the payment of refunds have been complied with does the participant
become entitled to the refund of duty. …
[60] In Graspan Colliery SA (Pty) Ltd v Commissioner for the South African
Revenue Service62 Collis J held: (my emphasis)
58 (39598/20) [2022] ZAGPPHC 898 (6 Septe mber 2022) (“ Dankie Oupa ”)
59 Dankie Oupa par [27]
60 The matter of Dankie Oupa was taken on appeal, which appeal was dismissed by a full court of this
Division - Dankie Oupa Delwery CC V Commissioner for the South African Revenue Services
(A216/2023) [2024] ZAGPPHC 1202 (14 November 2024) (“ Dankie Oupa appeal decision ”). The full
court found it unnecessary to make a finding on whether the lack of a physical address on the
relevant tax invoices was fatal to the rebate claim - Dankie Oupa appeal decision , par [4.1] read
with par [31].
61 (42716/15) [2018] ZAGPPHC 871 (6 November 2018) at par [37.2] – a review which dealt with a
claim for a refund on duty paid in respect of unmarked Kerosene and stated in the context of the “das”
[‘duty at source’] system.
62 (8420/18) [2020] ZAGPPHC 560; 83 SATC 10 (11 September 2020) par [25] and [30 ] (“Graspan ”).
As the case name suggests, this matter dealt with diesel refunds claimed by the applicant in the
mining sector (for rehabilitation activities) , under rebate item 67 0.04. Cf. also: BP Southern Africa
(Pty) Ltd v Commissioner for the South African Revenue Service (Case no 801/2022) [2024]
ZASCA 2 (12 January 2024) par [37] - [38].
[25] The legislative pu rpose of Section 75 of the Customs Act is therefore to
grant a refund in respect of applicants who purchased and used diesel
in strict compliance with the requirements as provided for in section 75,
Item 670.04 and note 6 thereto .
…
…
[30] It will thus follow that to the extent that an applicant for a refund cannot
provide SARS with the required record of proof for the refund claimed
or where the claim relates to activities which are not own production
activities of the applicant, the Commissioner cannot allow a refund and
where a provisional refund has been allowed, it will have to be
recovered by SARS .
[61] In Glencore Merafe Venture and Others v Commissioner for the South
African Revenue Service ,63 Coertzen AJ held:
A claimant for a refund of excise duty o r fuel levy must strictly comply
with the requirements for such refund. An appellant’s failure to comply
with a single requirement would justify the rejection of its refund claims
– Tholo Energy , 67.
[62] In Commissioner for the South African Revenue Service v Tunica
Trading 59 (Pty) Ltd ,64 the Supreme Court of Appeal held as follows:
[69] There is a deliberate use of the phrase ‘subject to compliance with’ in
s 64F(3)(a) and s 75(1) of the Act; rebate item 623.25; and Note 10.
This means that a claimant for a refund of duty must satisfy the
requirements of those provisions, failing which a refund may not be
granted.
63 (38144/22) [2024] ZAGPPHC 1196 (7 November 2024) par [84].
64 (1252/2022) [2024] ZASCA 115 (24 July 2024 ) par [69] . The ‘endnote’ at the end of this paragraph
is to BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Exci se and
Another 1985 (1) SA 725 (A) at 734B -E; 735H -I and 737A.
[63] In Tholo Energy Services CC v Commissioner for the South African
Revenue Service ,65 (dealing with a refund claim by a licence d distributor of
fuel), the Supreme Court of Appeal recently held as follows:66
[50] It must be emphasised that each of these requirements must be met,
failing which a refund of a fuel or RAF levy may not be grant ed. This is
because a rebate of excise duty (or a refund of fuel levy) is a privilege
and strict compliance with its conditions may be exacted from the
claimant. In BP v Secretary for Customs and Excise , approved by this
Court in Toyota South Africa , a full court held:
‘[T]he rebate of excise duty is a privilege enjo yed by those who
receive it. It has been stated that it is neither unjust nor inconvenient
to exact a rigorous observance of the conditions as essential to the
acquisition of the privilege conferred and that it is probable that this
was the intention of th e Legislature . .. Moreover, the provision is
obviously designed to prevent abuse of the privilege and evasion of
the conditions giving rise to such privilege and again this supports
the view that a strict complia nce with the requirements laid down is
necessary.’
[51] Consequently, the appellant’s submission that ‘[t]he right to a refund is
not dependent on actual compliance with all sections of the Act (and
the schedules), unless expressly stated’, is wrong. Mor eover, the above
statutory and regulatory provisions and in particular ss 75(1) and
64F(3) (a) of the Act are cast in peremptory terms. A refund ‘shall be
granted to the extent and the circumstances stated in the item of
Schedule 6’; and any refund of duty is expressly subject to compliance
with th e requirements specified in the Schedule 6 items and any rule
prescribing any requirement relating to the export of fuel.
65 (Case no 378/2023) [2024] ZASCA 120 (6 August 2024 ) (“Tholo SCA ”)
66 at par [50] – [52]. Footnotes are omitted however I point out that the footnote at the end of par [52]
in Tholo SCA is to BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise
and Another 1985 (1) SA 725 (A) at 734B -E; 735H -I and 737A.
See also: Umbhaba par [65](d) .
And rule 64F.06 (d) requires any load of fuel obtained from the licensee
of a VM to be wholly and directly removed (from the VM) for ex port,
before a refund may even be considered.
[52] In addition, the use of the phrase ‘subject to compliance with’ in
s 64F(3) (a) and s 75(1) of the Act; and rebate item 671.11, is
deliberate. This means that a claimant for a refund of duty must satisfy
the requirements of those provisions, failing which a refund may not be
granted.
[64] In Tholo SCA , at par [67] , the Supreme Court of Appeal reiterated that “ … a
claimant for a refund of excise duty or fuel levy must strictly comply with the
requirements for such refund. The appellant’s failure to comply with a single
requirement would justify the rejection of its refund claims. ” Further relevant
to the present enquiry is the finding in Tholo SCA at par [ 59]67 that: “Three
consequences flow from the appellant’s failure to comply with s 64F(1)(b) of
the Act, which also show that its appeal was correctly dismissed. First, …
Second, it could not produce an invoice issued to it by the licensee of the
VM, showing (i) th e rate and the amount of duty included in the pr ice to the
LDF (rule 64F.04(c)); and (ii) the licensed name and customs client number
of the licensee of the VM (the licensed warehouse), and the physical
address of the storage tank from which the fuel was o btained (rule
64F.04(a)(ii)) … ”
[65] Section 75(1)(d ) of the Customs Act expressly provides that the relevant
refund “ … shall be granted to the extent and in the circumstances stated in
the item of Schedule 6 in which such goods are specified… ” and “ … subject
to compliance with the provisions of the [item o f Schedule 6 in which such
goods are specified] … ”.
67 Read together with par [21](d), [43] – [44], and [49](c).
[66] Rebate item 670.04 is for: (my emphasis) “ Distillate fuel purchased for use
and used for the purposes specified in, and subject to compliance with
Note 6.”
[67] Note 6(c) of Schedule 6, Part 3, contains the heading “ Application for
registration and claiming of refunds ”. Note 6(c)(iv) provides that: (my
emphasis)
A refund may only be applied for in respect of distillate fuel purchased
in and for use in the Republic and for which a duly completed tax
invoice is issued as contemplated in paragraph (d) to this Note .
[68] Note 6(d)(cc) provides (as one of the eight requirements for a ‘duly
completed tax invoice’) that “ … the invoice must be a tax invoice containing
the following information … (cc) the name and addres s of the purchaser (if
the invoice value is over R500); ”.
[69] In my view, and considering that I am bound by the decisions dealt with
above, in terms of section 75(1)(d) of the Customs Act read with Rebate item
670.04 read with Note 6(c) read with Note 6(d) o f Schedule 6, Part 3,
Sandbaken was not entitled to apply for the refunds herein as it failed to
provide a “ duly completed tax invoice ” as contemplated in Note 6(d) in
respect of any of the fuel purchased. The clear language of a provision
cannot be ignore d merely because the result may be unpalatable.68
[70] For the reasons set out above, I cannot find that the Commissioner was
wrong.
[71] On this ground, Sandbaken’s appeal must fail.
68 Commissioner for the South African Revenue Service v Langholm Farms (Pty) Ltd
(1354/2018) [2019] ZASCA 163 (29 November 2019) par [17] citing City of Johannesburg v Cantina
Tequila & another [2012] ZASCA 121 par [8] .
[72] There are further reasons why, in my view, Sandbaken cannot succeed in
respect o f this ground. The respondents contend that a valid tax invoice
together with other documents serve to prove that Sandbaken has paid for
the fuel and that it has failed to discharge that onus.69
[73] Sandbaken has provided an explanation why the tax invoices ar e made out
to PJ Cronje en Seuns (Pty) Ltd instead of S andbaken. Such explanations
are set out under the heading “ FACTUAL BACKGROUND ” herein as
contained in the letters addressed by VDM. In the founding affidavit
Sandbaken repeats such explanations and add s that Sandbaken has
contacted the supplier of the diesel to rectify the invoices but this has been in
vain.70 Sandbaken contends in its affidavits that there has been “ substantial
compliance ” by Sandbaken and that it is not disputed at a factual level that
Sandbaken was the purchaser and user of the diesel .71
[74] The respondents level a number of criticisms regarding the allegations of
Sandbaken regarding its explanation for the incorrect tax invoices and
contend that Sandbaken has not met its onus . On my readi ng of the
answ ering affidavit , it is not correct that it is not disputed at a factual level
that Sandbaken was the purchaser and user of the diesel. The respondents
state inter alia that it is “ irreconcilable ” that Sandbaken allowed the supplier
to issue i ncorrect invoices for a period of almost two years and never raised
this issue with the supplier, that the allegation that the farming operations
“moved ” from PJ Cronje en Seuns to Sandbaken is not supported by any
proof of when this “purported m ove” took place and how it was effected , and
that a valid invoice together with other documents serve to prove that
Sandbaken has paid for the fuel and it has failed to discharge that onus.
Counsel for the respondents , in heads of argument , further point s out that
the delivery notes attached to the replying affidavit “ are also addressed to PJ
Cronje and en Seuns and not Sandbaken and were signed off as such
without any queries raised regarding the supposedly incorrect names ” and
69 Answering affidavit, paragraph 106.
70 Founding affidavit, par 9.11
71 Founding affidavit, par 9.12
that “ the reference on the proof of pa yment to Verco, indicates that these
payments were made with full appreciation that the invoices were issued to
PJ Cronje en Seuns ”.
[75] In my view, there are certain issues in respect of the version of Sandbaken
itself that cr eate problems in meeting its onus in this regard. In “ SB8” VDM
stated that Sandbaken paid the diesel purchase invoices from 1 July 2018
which is clear from “ … the proof of payments submitted as well as the fact
that the diesel is reflected as an expense to Sandbaken Boerdery (Pty) Ltd
and not to PJ Cronje en Seuns (Pty) Ltd on the financial statements. ” This is
repeated in the founding affidavit :72 “and the refunds claimed during the audit
period, is an expense to the applicant and not to PJ Cronje en Seuns as
reflected on the applicant's financial statements. ” The respondents challenge
this and state that the financial statements “do not support the allegations
that payment was made to either PJ Cronje en Seuns or Verco, who
supplied the diesel to PJ Cronje en Seuns. ”73 The parties do not provide any
proper assistance to the court in their affidavits with reference to the financial
statements (nor in fact with reference to a number of the further
attachments). However, the court is told that such financial statements must
be considered, and considering that the present is a wide appeal, I
accordingly turn to the financial statements.
[76] When one compare s the financial statements (“ SB13(E) ”) with the fuel
purchase invoices (“ SB13(C) ”), there appear to be certain contradictions that
impact upon the onus that rests on Sandbaken :
a. For the 2020 financial year (i .e. 1 March 2019 to 2 9 February 2020)
fuel and oil (“ Brandstof en Olie ”) is reflected on the financial
statements in the total sum of R810,380 .00.74 However, the sum
total of the purchases ove r the aforesaid period for which Sandbaken
claims and as reflected in the purchase invoices reflects an amount
72 Founding affidavit, par 9.8
73 Answering affidavit, par 111
74 Financial st atements par 9, CL01 -422
of R1,631,051.98 in respect of the same period.75 Even if one
deduct s the diesel refunds claimed over the aforesaid period as
reflected in the VAT 201 forms (in the total sum of R303,372.16 )76
from the total reflected i n the purchase invoices (R1,631,051.98) one
arrives at a figure of R1,592,487.82 ,77 which does not accord with
the expense/liability in the financial statements of approximately half
that amount (R810,380.00).
b. Doing the same exercise for the 2021 financial year (i .e. 1 March
2020 to 28 February 2021)78 also results in discrepancies , although
one is limited in this regard by the fact that the purchase invoices
submitted and the diesel ref unds (VAT 201 forms) are included only
up until October 2020 b eing the end of the ‘relevant tax period ’ (and
accordingly not for the full financial year) .
c. That which Sandbaken has called in aid in support of meeting its
onus, the financial statements, do not accord with the proofs of
payment.
[77] There is also a refer ence to an expense / liability in the financial statements
of a “ Deel Oes: PJ cronje en Seuns ” in the sum of R1,390,959.00 in respect
of the 2021 financial year.79 This is entirely unexplained by Sandbaken.
75 Invoice dated 3 April 2019, CL01 -320: R206,400 .00 +
Invoice dated 11 June 2019, CL01 -323: R372,373,36 +
Invoice dated 30 August 2019, CL01 -326: R350,500.00 +
Invoice dated 6 November 2019, CL01 -331: R359,764.39 +
Invoice dated 30 December 2019, CL01 -334: R170,774.23 +
Invoice dated 21 February 2020, C L01-337: R171,240.00 =
a TOTAL of : R1,631,051.98
76 April 2019, CL01 -371: R39,004.16 +
June 2019, CL01 -375: R42,587.38 +
August 2019, CL01 -379: R53,776.32 +
Octob er 2019, CL01 -383: R53,376.00 +
December 2019, CL01 -387: R76,064.14 +
February 2020, CL01 -391: R38,564.16 =
a TOTAL of : R303,372.16
77 R1,631,051.98 - R303,372.16 = R1,592,487.82
78 Fuel and oil (“ Brandstof en Olie ”) for this period is reflected on the financial statements in the total
sum of R1,390,959.00 (financial statements par 9, CL01 -422)
79 Financial statements par 9, CL01 -422
[78] In addition, in terms of the diesel storage records that Sandbaken relies
upon, as at 1 November 2018, the four diesel storage tanks contained a total
of 6,650 litres of diesel.80 Sandbaken has not attached a tax invoice (or any
other supportin g documentation or evidence) to meet its onus that it
purchased such diesel at all.81
[79] By virtue of Sandbaken’s broad and general approach adopted in its
affidavits, read together with the discrepancie s and contradictions on its own
version and in terms of the supporting documentation that it relies upon, and
that raised by the respondents in criticism, the court cannot simply reject the
version of the respondents that the supplier supplied the diesel t o PJ Cronje
en Seuns and not to Sandbaken. Further, cons idering the aforesaid, and that
dealt with above, Sandbaken has failed to meet its onus.
[80] For such further reasons the appeal of Sandbaken cannot succeed.
[81] In addition to the findings set out above , Sandbaken is required to show that
the diesel purchase s qualify as ‘eligible purchases’.82 In terms of Note 6
‘eligible purchases’ are defined as “ purchases of distillate fuel by a user for
use and used as fuel as contemplated in paragraph (b) ”. Note 6(h) contains
the heading “ Farming: Refund of levies on elig ible purchases of distillate fuel
for farming as specified in paragraph (b)(i) to this Note. ”. Note 6(h) (i)
provides: “ In accordance with the definition of "eligible purchases", the
distillate fue l must be purchased by the user for use and used as fuel for own
primary production activities in farming as provided in paragraphs (h)(ii)(cc),
(h)(iii) and (h)(iv) to this Note. ”. The findings detailed below are accordingly
relevant to whether Sandbaken has proven ‘eligible purchases’.
80 “SB13(B) ” at CL01 -221 – under the heading “ Totaal ” first line commencing “ 2018/11/01 …
Begin ”.
81 “SB13(B) ”, CL01 -221. The first tax invoice furnished by Sandbaken is dated 5 November
2018 – “SB13(C) ” at CL01 -313 to CL01 -314 – 25,000 litres of diesel delivered according to the
storage logbooks on 5 November 2018.
82 Answering affidavit, paragraphs 36.3.
Whether (a) the record kee ping of Sandbaken, with specific reference to its
logbooks for diesel usage , and (b) the diesel storage records of Sandbaken,
are in compliance with Part 3 of Schedule 6 of the Customs Act?
[82] I intend to deal with the second and third issues identified in t he parties’ joint
practice note together.
[83] Note 6 (a)(xi) of Schedule 6, Part 3, defines ‘logbooks’ as follows:
means systematic written tabulated statements with columns in which
are regularly entered periodic (hourly, daily, weekly or monthly) records
of all activities and occurrences that impact on the validity of refund
claims. Logbooks should indicate a full au dit trail of distillate fuel for
which refunds are claimed, from purchase to use thereof. Storage
logbooks should reflect details of distillate fuel purchases, source
thereof, how dispersed/disposed and purpose of disposal. Logbooks on
distillate fuel use should contain details on source of fuel, date, place
and purpose of utilisation, equipment fuelled, eligible or non -eligible
operations perfor med and records of fuel consumed by any such
machine, vehicle, device, or system. Logbook entries must be
substan tiated by the required source documentation and appropriate
additional information that include manufacture specification of
equipment, particu lars of operator, intensity of use (e.g. distance,
duration, route, speed, rate) and other incidents, facts and o bservations
relevant to the measurement of eligible diesel use. Example(s) of
minimum logbook record requirements are available on SARS website
at www.sars.gov.za.
[84] It is common cause that Sandbaken does not have an individual ‘diesel
usage logbook’ for an y one of the vehicles in respect of which the rebates
were claimed.
[85] Sandbaken explains that the hand -written dispensing logbook for each tank
is used to draw up an excel ‘usage logbook’ in the following way:
a. A pre -printed, hard copy, logbook [at each o f the tanks] is completed
by its staff members by hand when the diesel is dispensed.
b. These hardcopy , handwritten dispensing logbooks are used to draw
up ‘usage logbooks ’ in electronic Excel format – this is done by staff
members report ing back to the farm er on what was done that day
and the farmer adds the description to the Excel ‘usage logbook.83
[86] The above modus operandi is employed according to Sandbaken as “ the
majority of the farm workers are illiterate and are thus unable to complete
diesel usage logbooks with [details] of the descriptions as the diesel is
used. ”84
[87] The respondents level various attacks in respect of Sandbaken’s ‘usage
logbooks’. I deal with certain of these in the findings addressed below.
[88] In my view, for the various reasons addressed , Sandbaken has failed to
provide diesel usage logbooks that accord with Note 6. I t is not possible from
the ‘logbooks’ furnished by Sandbak en to make a determination or a
verification of the correctness of the amount of e ligible and non -eligible
diesel usage. This is due to the following inter alia : the discrepancies
between the handwritten logbooks and the excel ‘usage’ logbooks; the
deficie ncies in the descriptors utilised; the fact that there are in fact no
individual usage logbooks, and that the reconstructed excel ‘usage logbooks’
are in fact not usage logbooks and do not com ply with the requirements of or
the purpose of usage logbooks. The ‘usage logbooks’ are in fact dispensing
records with descriptors inserted at the end of the day85 but in respect of
diesel dispensed rather than used.
83 Founding affida vit, paragraphs 9.13.
84 Founding affidavit, paragraphs 9.14. The modus operandi and the motivation for such modus is
comparable to that stated in Umbhaba at inter alia par [23]
85 According to Sandbaken.
[89] The respondents point out that the “ … information supposedly extracted by
Sandbaken from the original manual dispensing record does not accord with
the information populated in the reconstructed diesel usage logbook… ”86
[90] The respondents illustrate this point by means of an example – comparing
the “ dispensing records at annexure "SB13(A)" 2 [CL01 -104] and t he
reconstructed diesel usage logbook annexure "SB13(B)" 6 [CL01 -226 to
227]”. The discrepancies include inter alia : (a) original dispensing record : 33
entries versus reconstructed u sage logbook : 36 entries ; (b) additional entries
in the reconstructed usag e logbook that do not appear in the original
dispensing record; ( c) entries in the original dispensing record that reflect no
litres of diesel dispensed whilst the reconstructed usag e logbook reflects
litres having been dispensed; (d) entries regarding the litres of diesel
allegedly dispensed to some vehicles and equipment in the diesel usage
logbook exceeding the recorded litres in the original dispensing record.
Whilst Sandbaken pro vides its explanation, it ultimately concedes that it is
not entitled to a rebate for the litres not recorded in the manual logbooks.
[91] Unfortunately, however, the examples cited by the respondent s are not
isolated examples. Without being exhaustive in this regard:
a. The entire original dispensing record (“ SB13A ”) contains diesel litres
very often with fractions of litres recorded, whilst the reconstructed
usage logbook (“ SB13 B” at CL01 -226 onwards) contains only round
numbers, with not a single fraction recorded.
b. There are significant discrepancies between the original dispensing
record and the reconstructed usage logbook which are simply not
explained. I do not intend to deal with all of these but simply include
a few , apart from the example cited by the respondents, in order to
illustrate.
86 Answering affidavit, paragraphs 77.4.
c. A comparison between the original disp ensing record (at CL01 -113)
and the reconstructed usage logbook (at CL01 -230 to 231) reflects
the following discrepancies inter alia : (a) original dispensing record:
33 entries (although the last 2 entries are dated February 2019)
versus reconstructed usag e logbook: 34 entries; ( b) original
dispensing record reflects litres up to the fraction whilst the
reconstructed usage l ogbook contains only round numbers; (c) there
are discrepancies between the litres in the respective logbooks –
see, for example, the f irst entry 16,6 litres in the original dispensing
record v ersus 26 litres in the reconstructed usage logbook ; no entry
for litres at 29 January 2019 for vehicle B […], driver ‘Fliep ’, in the
original dispensing record v ersus 42 litres in the reconstruct ed usage
logbook ; (d) the reconstructed usage logbook contains an additional
entry for “spraying crops – chemicals/fertilizer” of 242 litres (but with
various details thereof not recorded) and which does not appear on
the original dispensing record at all; (e) if one adds up all of the litres
on the original dispensing record one arrives at a figure of
approxima tely 1,844 litres whilst the total diesel used as reflected in
the reconstructed usage logbook is 2,201 litres; et cetera .
d. A comparison between the original dispensing record (at CL01 -115)
and the reconstructed usage logbook (at CL01 -293) reflects entirel y
different litres.
e. A comparison between the original dispensing record (at CL01 -117)
and the reconstructed usage logbook (at CL01 -273) reflects th e
following discrepancies inter alia : (a) the reconstructed usage
logbook has an additional two entries; ( b) the original dispensing
record reflects litres up to the fraction whilst the reconstructed usage
logbook contains only round numbers; ( c) there are discrepancies
between the litres in the respective logbooks; ( d) if one adds up all of
the litres on the original dispensing record one arrives at a figure of
805,6 litres whilst the total diesel used as reflected in the
reconstructed usage logbook is 1,0 00 litres; et cetera .
[92] The ‘source documentation ’ provided by Sandba ken (the original dispensing
record) does not accord with the claims made by Sandbaken in the
reconstructed usage logbook. This, as illustrated briefly above, constitutes
an insurmoun table obstacle to Sandbaken in meeting its onus.
[93] In aggravation, the “generic” (as the respondents contend) or “summary” (as
Sandbaken contends) use of descriptors do es not enable an evaluation of
eligible and non -eligible usage and does not comply with Note 6 . Such
generic descriptors appear throughout the reconstructed usage logbook. As
has been addressed, Sandbaken provided the following explanation in
respect of what it contended the generic descriptors entailed:
Farm construction — Creating and ma intainin g roads on the farm,
digging of ditches to lay electric cables and water pipes, constructing of
contour walls in lands, levelling of lands, repairing and maintaining dam
walls, creating water ways to guide the water away from the lands, etc.
Lives tock act ivities — Checking and maintaining fences, check the
wellbeing of the livestock and do stock counts of livestock, transporting
of feed to livestock, tending to ill livestock, etc.
Daily farming activities — transporting of staff, checking crops alr eady
planted, tending to breakdowns of farming equipment, checking up on
work progress of lands being worked, planting of crops, spraying and
fertilizing of crops, harvesting of crops, managing the farming
operation, etc.
[94] Without being exhaustive, the fol lowing f laws are apparent from
Sandbaken’s own version :
a. Each of the generic descriptors concludes with the phrase ‘ et cetera ’
– id est , there are other unstated activities that are included in the
generic descriptions. It is not possible to ascertain what those o ther
activities are. This does not constitute compliance: “ Should the
eventual use not be stated or sufficiently indicated, the claim fails. ”87
b. The list of activities as set out in Note 6(h)(ii)(cc)(B)88 constitutes a
closed and exhaustive list.89 Include d in the list of activities that
Sandbaken provides for such generic descriptions are activities that
fall outside of the exhaustive /closed list of activities. Sandbaken
does not explain how each of these activities are activities that are
carried o n for own primary production in farming.90 In addition, it is
not possible to establish from the reconstructed usage logbook
precisely what activity Sandbaken claims it performed where the
generic descriptor includes one of a number of activities (which is in
fact further indefinite by virtue of the use of ‘ et cetera ’) in the
explanations. Such descriptors do not assist in identifying the actual
activity performed in relation to Note 6(h) and whether such activity
qualifies for a diesel refund .91
c. VDM in cor respondence claims that the majority of the vehicles do
not le ave the farm and that licenced vehicles that do leave the farm
“do so in order to perform farming activities such as purchasing
parts, feed, medicine, etc. ”. It is unclear which descriptor Sandb aken
uses for such activities. A further difficulty arises in this regard,
namely that eligible use in such context would only include
87 Canyon Res ources (Pty) Ltd v Commissioner for South African Revenue Service 82 SATC
315 at par [9.5]
88 The list included under the heading "own primary production activities in farming"
89 Umbhaba par [69].
In the context of ‘mining’ with reference to the same ques tion see: Graspan par [45] (dealing with the
list in the mining sector). See also, the Supre me Court of Appeal decision of Commissioner, South
African Revenue Service v Glencore Operations SA (Pty) Ltd (Case no 462/2020) [2021] ZASCA
111 (10 August 2021) p ar [51] - [54] (Judgement of Petse DP, Mbha JA concurring) read together with
the majority s eparate judgment par [71]
90 Note 6(h)(iii) .
91 The manner in which Sandbaken has presented its ‘usage logbooks’ and evidence leaves a gaping
factual void. Cf. Comm issioner, South African Revenue Service v Glencore Operations SA (Pty)
Ltd (Case no 462/2020) [2021] ZASCA 111 (10 August 2021) par [32] (Judgement of Petse DP, Mbha
JA concurring)
transportation by Sandbaken of “ farming requirements ” (as defined)
“from any place to the farming property. ”92
d. The re constructed diesel usage logbook further does not indicate th e
place where the diesel is used. Apart from being a requirement in
respect of a diesel usage logbook, this gains further significance by
virtue of the fact that the diesel tanks are on four of t he farms, and
Sandbaken alleges that it farms on thirteen far ms. It appears from
the map furnished by Sandbaken that not all of the farms are
contiguous to each other. For example, the farm referred to as
“Bosmanskrans (Bk 13) (313 ha)” does not appear to border any of
the other farms. There is no explanation of the manner in which
vehicles that are either on such other farms (if this is the case) are
refuelled, and there is no reference to vehicles travelling to farms on
which there are no diesel tanks. In addition, no indication is given of
places travelled to or f rom for purposes of obtaining ‘f arming
requirements’ or otherwise.
e. Certain of the descriptors inevitably involve an activity where labour
is an essential component of the activity but no transpo rtation of
employees is recorded.
[95] In my view the reconstruc ted diesel usage logbook presented by Sandbaken
does not comply with the requirements of Note 6. In fact, such ‘logbook’ as
presented does not constitute a usage logbook as envisaged in Note 6 at all.
This may be illustrated with reference to the logbook i tself, using the
following example . In respect of the vehicle with registration number “ H[…]”,
referred to as a “Toyota Hilux” , the following appears in the reconstructed
diesel usage logbook :93
92 Note 6(h)(iv)(cc)(B) . Cf. Umbhaba , par [74] – [78].
93 I provide the re ference to where the recordal is made in the reconstructed diesel usage logbooks in
the footnotes. I have used the kilometers travelled and the diesel used, as recorded by Sandbaken, to
calculate the kilometers travelled per litre of diesel in each footnot e – such figures are rounded to the
second decimal point and are inserted in square brackets. I also point out in the footnote where
Sandbaken has duplicated such recordals.
a. 23 November 2018 – 128 ‘litres used’ – “Daily farming activities” – no
reference under heading “Total km/hour meter/engine hour USED” –
filled from ‘Sandbaken 2’ tank.94
b. 9 January 2019 – 80 ‘litres used’ – “Daily farming activities” – 905
[km] under h eading “Total km/hour meter/engine hour USED” – filled
from ‘Welgezegend’ tank .95
c. 31 January 2019 – 128 ‘litres used’ – “Daily farming activities” –
1,737 [km] under heading “Total km/hour meter/engine hour USED”
– filled from ‘Sandbaken 2’ tank .96
d. 28 Ap ril 2019 – 130 ‘litres used’ – “Daily farming activities” – 1,188
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Sandbaken 2’ tank .97
e. 19 August 2019 – 138 ‘litres used’ – “Daily farming activities” – 615
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Welgezegend’ tank .98
f. 11 September 2019 – 140 ‘litres used’ – “Daily farming activities” –
720 [km] under heading “Total km/hour meter/engine hour USED” –
filled from ‘Welgezegend’ tank .99
g. 7 October 2019 – 103 ‘litres used’ – “Daily farming a ctivities” – 1,371
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Sandbaken 2’ tank .100
94 CL01 -270. It is not possible to calculate kilometres per litre by virtue of the missing information in
the logbook.
95 CL01 -293 – repeated / duplicate at CL01 -304. [11.31 km / litre] .
96 CL01 -271. [13.57 km / litre].
97 CL01 -275. [9.14 km / litre].
98 CL01 -294 – repeated / duplicate at CL01 -305. [4.46 km / litre].
99 CL01 -294. [ 5.14 km / litre].
100 CL01 -279. [13.31 km / litre].
h. 2 January 2020 – 60 ‘litres used’ – “Daily farming activities” – 548
[km] under heading “Total km/hour mete r/engine hour USED” – filled
from ‘Welgezegend’ tank .101
i. 15 January 2020 – 134 ‘litres used’ – “Daily farming activities” –
1,065 [km] under heading “Total km/hour meter/engine hour USED”
– filled from ‘Sandbaken 2’ tank .102
j. 6 March 2020 – 127 ‘litres used ’ – “Daily farming activities” – 939
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Sandbaken 2’ tank .103
k. 25 March 2020 – 80 ‘litres used’ – “Daily farming activities” – 935
[km] under heading “Total km/hour meter/engine hour USED ” – filled
from ‘S andbaken 2’ tank .104
l. 12 June 2020 – 139 ‘litres used’ – “Daily farming activities” – 827
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Sandbaken 2’ tank .105
m. 24 July 2020 – 133 ‘litres used’ – “Daily farming activities” – 1,102
[km] under heading “Total km/hour meter/engine hour USED” – filled
from ‘Sandbaken 2’ tank .106
n. 11 September 2020 – 97 ‘litres used’ – “Daily farming activities” –
887 [km] under heading “Total km/hour meter/engine hour USED” –
filled f rom ‘ Sandbaken 2’ tank .107
101 CL01 -297 – repeated / duplicate at CL01 -308. [9.13 km / litre].
102 CL01 -283. [7.95 km / litre].
103 CL01 -284. [7.39 km / litre].
104 CL01 -285. [11.69 km / litre].
105 CL01 -287. [5.95 km / litre].
106 CL01 -287. [8.29 km / litre].
107 CL01 -290. [9.14 km / litre].
[96] The reconstructed diesel usage logbook does not constitute a usage logbook
for purposes of Note 6 at all. The above example demonstrates that, at best
for Sandbaken, it has provided a dispensing document to the respondents.
For exampl e, it is practically impossible that the abovementioned vehicle
used 128 litres of diesel on 31 January 2019 to travel 1,737 kilometers. The
varying fuel consumption in respect of the figures provided by Sandbaken in
respect of the same vehicle – as addres sed in the footnotes – further
demonstrates that Sandbaken has not furnished a diesel usage logbook.
Further, the inadequacy of the descriptor “Daily farming activities” has
already been addressed.
[97] One cannot, on the information provided by Sandbaken, mak e any
determination or verification of the correctness of the amount of eligible
diesel usage. The logbooks do not indicate a full audit trail of distillate fuel for
which refunds are claimed, from p urchase to use thereof. The ‘reconstructed
usage logbooks ’ are in fact not logbooks of each of the individual items of
equipment or vehicles utilised in the alleged primary farming operations. At
best, these represent dispensing records. The logbooks do no t reflect with
any measure of certainty the volume of die sel utilised by each vehicle in
primary farming operations. The ‘reconstructed usage logbooks’ do not
qualify as a usage logbook as contemplated in Note 6.108
[98] The determination of the Commissioner in respect of the ‘diesel usage
logbook’ is not wrong:
The system adopted by the Plaintiff does not provide a full audit trial of
the fuel used from purchase to use as is required. While the dispensing
records exist they fall short in showing the usage to which the fuel was
put.109
[99] The appeal cannot succeed.
108 Canyon Resources (Pty) Ltd v Commissioner for the South African Revenue Service
(68281/2016) [2023] ZAGPPHC 1957 (30 November 2023) par [36] - [37].
109 Umbhaba , par [85].
[100] The respondents also challenge the ‘diesel storage logbooks ’ of Sandbaken.
The parties have listed this as an issue for determination in their joint
practice not e. Having arrived at my conclusion regarding the ‘usage
logbooks’ this is not an issue that is stri ctly necessary to be determined.
However, cognisant of the fact that this is a judgment a quo , I shall deal with
this issue briefly.
[101] Storage logbooks should reflect details of distillate fuel purchases, source
thereof, how dispersed/disposed and purpose o f disposal.110 Whilst the
storage logbooks do reflect the number of litres delivered (the total and the
number of litres to each of the relevan t tanks), and , using a bit of common
sense , one is able to trace the total fuel deliveries to each of the tax
invoices,111 by virtue of the deficiencies in the reconstructed diesel usage
logbooks (as addressed already) it is not possible to determine how th e
diesel was dispersed/disposed and the purpose of such disposal. The
storage logbooks themselves do not reflect the aforesaid. Accordingly, in my
view, such diesel storage logbooks also do not comply with the requirements
of Note 6.
[102] The records submitted , are not accurate or complete. The records do not
meet all of the peremptory requirements of the Customs Act . The c umulative
inadequate record keeping serves as a further reason that the appeal cannot
be upheld. As a result, further, Sandbaken has failed to properly quantify its
refund claim.112 Sandbaken has failed to demonstrate and discharge the
onus of proving that it is entitled to the diesel refund claimed.
Whether the diesel was used in the applicant's primary production activities in
farming?
110 Note 6(a)(xi) .
111 See storage logbook, CL01 -221 to 01 -225 read together with CL01 -314, 317, 320, 323, 326, 331,
334, 337, 341 (very slight discrepancy), 345 (very slight discrepancy), 350 (very slight discrepancy),
353, and 359.
112 Assmang Proprietary Limited v Commi ssioner for the South African Revenue Service and
Others (91960/2015) [2023] ZAGPPHC 2036 (18 December 2023) at par [56]
[103] As held in Commissioner, South African Revenue Service v Glencore
Operations SA (Pty) Ltd113 “… the rebate scheme (Item 670 .04 read with
Note 6 in Part 3 of Schedule 6) is meticulously detailed. The lawmaker was
at pains to circumscribe the activi ties which were entitled to benefit from the
scheme. … ”
[104] As has been addressed already, the list of activities as set out in Note
6(h)(ii)(cc)(B)114 constitutes a closed and exhaustive list.115
[105] In “SB12 ” to the founding affidavit, VDM on behalf of Sandbaken itself
concedes that not all diesel was used for eligible purposes. In this regard,
VDM stated as follows inter alia in the letter d ated 29 November 2021: “ As
the above -mentioned activities are a clos ed list, we do understand that all
entries in the global usage logbooks submitted do not qualify as eligible
liters. We do however kindly request that the following liters in the usage
logbooks be allowed as eligible liters to be claimed. The eligible lite rs in the
table below should qualify for the refund as it was carried on for own primary
production in farming by the user (Saudbaken Boerdery). ”
[106] I agree with the respondents that Sandba ken has again (in its founding
affidavit read with the attachments thereto) failed to account for every litre of
distillate fuel as it is required to do. Sandbaken’s papers provide very little
information about how ‘own primary production activities’ are c onducted.116
Sufficient evidence has not been tendered in order for Sandbaken to meet its
onus.117
113 (Case no 462/2020) [2021] ZASCA 111 (10 August 2021) par [58] (the majority separate judgment )
114 The list included under the heading "own primary production activities in farming"
115 Umbhaba par [69] .
In the context of ‘mining’ with reference to the same question see: Graspan par [45] (dealing with the
list in the mining sector) . See also, the Supre me Court of Appeal decision of Commis sioner, South
African Revenue Service v Glencore Operations SA (Pty) Ltd (Case no 462/2020) [2021] ZASCA
111 (10 August 2021) par [51] - [54] (Judgement of Petse DP, Mbha JA concurring) read together with
the majority separate judgment par [ 71]
116 cf. Comm issioner, South African Revenue Service v Glencore Operations SA (Pty) Ltd (Case
no 462/2020) [2021] ZASCA 111 (10 August 2021) par [60] (The majority separate judgment )
117 cf. Tholo SCA par [39])
[107] As addressed already, Sandbaken’s diesel refund claim has included
ineligible activities that fall outside of the list of activities as set out in Note
6(h)(ii) (cc)(B) .
[108] Further, the evidence presented by Sandbaken renders it impossible to
conclude that all of the diesel for which Sandba ken claims a rebate was
used in primary production activities in farming for purposes of rebate Item
670.04.118
[109] For such furthe r reason, the appeal cannot succeed.119
COSTS
[110] Counsel for Sandbaken submit in heads of argument that in the event that
the application is dismissed, the respondents should be disallowed a portion
of their costs based on the inclusion of irrelevant and unn ecessary
allegations and attachments , namely with reference to the budget speech of
the erstwhile Minister and the affidavit of Mr Moodley.
[111] The affidavit of Mr Moodley, the chairperson of the Appeal Committee and
part of the Appeal Committee that consider ed Sandbaken’s internal
administrative appeal , serves a purpose of inter alia confirming relevant facts
in the answering affidavit. There is nothing objectionable or unnecessary
about this affidavit. However, in respect of the budget speech of 21 February
2001 , I agree that this document is irrelevant to the determination of this
matter ,120 and it was unnecessary to attach the document. Very little is stated
about the budget speech in the answering affidavit. It was unnecessary to
attach this document . I agre e that the costs associated with this document,
118 cf. Commissioner, South African Revenue Service v Glenco re Operations SA (Pty) Ltd (Case
no 462/2020) [2021] ZASCA 111 (10 August 2021) par [32] (Judgement of Petse DP, Mbha JA
concurring) .
119 Cf. Umbhaba par [61] – [78].
120 See also: Commissioner, South African Revenue Service v Glencore Operations SA (Pty) Ltd
(Case no 462/2020) [2021] ZASCA 111 (10 August 2021) par [38] (Judgement of Petse DP, Mbha JA
concurring) read with par [57] (The majority separate judgment ).
“SARS1 ” to the answering affidavit , ought not to form part of the costs that
stand to be awarded.
[112] Apart from the aforesaid, there is no reason why costs ought not to follow the
result. The respondents seek costs consequent upon the employ of two
counsel. However, ther e is no evidence that two counsel were employed by
the respondents – Mr Kalipa appeared for the respondents alone and he is
the sole author of heads of argument for the respondents.
[113] Considerin g the relevant factors, including inter alia the complexity of the
matter and the importance of the matter to the parties, costs on scale C are
warranted.
CONCLUSION
[114] The appeal cannot succeed and stands to be dismissed.
[115] It follows that the further rel ief sought by Sandbaken, namely the declarator
sought, the setting aside of the decision to levy interest, and the claim for
payment, can also not succeed.
ORDER
[116] Accordingly, I make the following order:
a. The application is dismissed with costs on scale C.
b. The aforesaid costs are to exclude the costs associated with the
inclusion of the attachment to the answering affidavit marked
“SARS1 ” at CaseLines 01 -505 to 01 -523.
______________
WOODROW AJ
ACTING JUDGE OF THE HIGH COURT
This Judgment was hande d down electronically by circulation to the parties and or
parties’ representatives by e -mail and by being uploaded to CaseLines. The date and
time for the hand down is deemed to be 10h00 on this 21ST day of January 2025 .
Appearances:
Counsel for the Applicant : P A Swanepoel SC with R Ellis
instructed by: Cronje De Waal - Skhosana Inc
Counsel for the Respondents: L Kalipa
instructed by: VDT Attorneys Inc
Date of Hearing: 7 August 2024
Date of Judgment: 21 January 2025