Tholo Energy Services CC v Commissioner for the South African Revenue Service

The appellant, Tholo Energy Services CC, was a licensed distributor of fuel (LDF) under s 64F(1) of the Customs and Excise Act 91 of 1964. In March 2017, the appellant submitted four claims for a refund of fuel and Road Accident Fund levies totalling approximately R4.25 million in respect of 25 consignments of diesel exported to Lesotho. Between April and June 2016, 25 consignments of approximately 40,000 litres each were collected from depots of PetroSA for removal to Lesotho. The fuel was not obtained from PetroSA's licensed customs and excise manufacturing warehouse (VM) in Mossel Bay. Instead, 22 consignments were obtained from PetroSA's depot in Bloemfontein, two from Tzaneen, and one from TotalEnergies at Alrode. The appellant did not possess an export permit issued by the International Trade Administration Commission (ITAC) when the fuel was removed to Lesotho. On 20 July 2017, the Commissioner disallowed the refund claims under s 47(9)(a) on the basis that the appellant had not complied with the requirements prescribed by the Act and Rules. The appellant lodged an internal administrative appeal which was dismissed by the appeal committee. The appellant then appealed to the Gauteng High Court under s 47(9)(e), which dismissed the appeal. The appellant appealed to the Supreme Court of Appeal with leave.

• Whether the appellant obtained fuel from stocks of the licensee of a customs and excise manufacturing warehouse as required by s 64F(1)(b) of the Customs and Excise Act
• Whether an export permit issued by ITAC was required for removal of fuel to Lesotho, a BLNS country in the common customs area
• The nature and scope of an appeal under s 47(9)(e) of the Customs and Excise Act - specifically whether the Commissioner may raise additional grounds in defending the determination beyond those stated in the original determination
• Whether the appellant complied with the statutory requirements for a refund of fuel and Road Accident Fund levies under the Act, Rules and Schedule 6
• Whether the fuel was manufactured in South Africa as required by s 75(1) of the Act
• Whether the fuel was wholly and directly removed for delivery to Lesotho
• Whether the fuel was transported by a licensed remover of goods in bond

The appeal was dismissed with costs, including the costs of two counsel. The Commissioner's determination disallowing the refund claims was upheld.

The binding legal principles established are: (1) Section 64F(1)(b) of the Customs and Excise Act requires a licensed fuel distributor to obtain fuel directly from stocks of the licensee kept at the premises of a licensed customs and excise manufacturing warehouse (VM), not from depots or unlicensed premises. (2) An appeal under s 47(9)(e) of the Act is an appeal in the wide sense involving a complete rehearing of the merits, but remains an appeal against the determination; the Commissioner may defend on any legitimate ground including additional grounds not stated in the original determination. (3) A refund of excise duty or fuel levy is a privilege requiring strict compliance with all prescribed statutory requirements; failure to comply with a single requirement justifies rejection of a refund claim. (4) An export permit issued by ITAC is required for the export of diesel to BLNS countries, notwithstanding their membership in the Southern African Customs Union. (5) The plain language of the statute must be interpreted in light of its immediate context, the broader statutory scheme, and the purposes of the legislation including control of goods and prevention of fraud on the fiscus.

The Court made obiter observations about administrative fairness, noting that while the appellant argued the Commissioner's raising of additional grounds was administratively unjust and procedurally unfair, this argument had no merit given the nature of a s 47(9)(e) appeal as a complete rehearing. The Court also observed that it was unnecessary to deal with the ground that the appellant was not entitled to a refund because Tholo Lesotho (not the appellant) paid for the fuel, nor the challenge to the determination on grounds of reviewability under PAJA, given the conclusions reached on other grounds. The Court noted approvingly the principle from BP v Secretary for Customs and Excise that rebate provisions are designed to prevent abuse and evasion, supporting strict compliance with requirements. The Court expressed regret (citing Toneleria Nacional) that parties in tariff appeals sometimes fail to tender sufficient evidence, requiring courts to conduct their own research.

This judgment clarifies important principles regarding customs and excise refunds in South African law. It authoritatively interprets s 64F(1)(b) of the Customs and Excise Act to require that licensed fuel distributors must obtain fuel directly from stocks at a licensed manufacturing warehouse, not from depots or intermediaries. The judgment reinforces the principle that refunds of excise duty are privileges requiring strict compliance with all prescribed conditions. It clarifies the nature of appeals under s 47(9)(e) as appeals in the wide sense, allowing the Commissioner to raise additional legitimate grounds in defending a determination. The case provides important guidance on the interpretation of customs and excise legislation, emphasizing a purposive approach that considers the control and prevention of fraud objectives of the Act. The judgment also clarifies that export permits are required for removal of restricted goods (including diesel) to BLNS countries, despite their membership in the customs union.