Lueven Metals (Pty) Ltd v Commissioner for the South African Revenue Service

Lueven Metals (Pty) Ltd, a registered VAT vendor trading and refining precious metals, purchased gold-containing material of lesser purity, refined it to between 80–90%, and deposited it with Rand Refinery for further refining to at least 99.5% purity. Rand Refinery co-mingled the gold with that of other depositors and delivered refined gold bars to Absa Bank, with whom Lueven had contracted to supply pure gold. For the 2018–2020 tax periods, Lueven zero-rated its supplies of gold bars to Absa under s 11(1)(f) of the VAT Act and claimed VAT refunds exceeding R51 million. SARS conducted a VAT audit and issued audit findings indicating that the gold supplied had undergone manufacturing processes beyond permitted refining, proposing to reclassify the supplies as standard-rated. Before any VAT assessment was issued, Lueven approached the High Court seeking declaratory relief on the interpretation of s 11(1)(f). The High Court dismissed the application, and Lueven appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel.

The case clarifies that declaratory relief in tax disputes is exceptional and reinforces the primacy of the Tax Administration Act’s dispute resolution mechanisms. It underscores that taxpayers may not bypass the statutory objection and appeal procedures by seeking declaratory orders in the High Court, particularly where factual disputes exist or internal remedies have not been exhausted. The judgment strengthens judicial reluctance to entertain premature tax litigation.