Commissioner: South African Revenue Services, Gauteng West v Levue Investments (Pty) Ltd

Levue Investments (Pty) Ltd purchased the decommissioned Eskom town of Kragbron for R25,650,000, paying R2,565,000 in transfer duty. Levue was a registered VAT vendor and claimed a VAT refund of R2,581,317 (transfer duty plus R16,317 for taxable supplies) on the basis that it acquired second-hand goods (fixed property) for making taxable supplies through selling individual properties after township establishment. SARS disallowed the claim on 22 April 2005, arguing the properties related to exempt supplies (dwelling supplies). Levue faced financial difficulties with Investec Bank demanding R5m and the municipality demanding R617,210.24 for water. After SARS refused payment despite objections, Levue launched urgent proceedings and obtained an order from Victor AJ in the Johannesburg High Court compelling SARS to pay the refund unconditionally. SARS obtained leave to appeal but failed to file the appeal record timeously, resulting in the appeal lapsing.

• Whether condonation should be granted for late filing of the appeal record despite good prospects of success on appeal
• Whether the explanation for delay was adequate
• Whether a party can rely solely on prospects of success to obtain condonation
• The appropriateness of ordering unconditional payment of a disputed VAT refund pending resolution of the dispute

The application for condonation of the late filing of the record was refused with costs. The appellant (SARS) was ordered to pay the respondent's (Levue's) costs of appeal, including costs of two counsel.

A party seeking condonation for late filing of an appeal record cannot rely solely on good prospects of success. Where there has been a flagrant breach of the Rules of Court and no acceptable explanation for periods of delay, condonation should not be granted whatever the prospects of success may be. An unconvincing and inadequate explanation for delay, coupled with flagrant disregard of the rules, will result in refusal of condonation despite excellent prospects of success on the merits.

The Court observed that the order granted by the High Court was extraordinary and unprecedented - ordering a debtor to pay a disputed debt to a creditor pending resolution of the dispute. Even if made subject to security, such an order should only be granted in exceptional circumstances, if at all. The balance of convenience, which must be considered in applications for interim relief, had not been addressed at all in the court below. The Court also noted that the attitude adopted by SARS officials towards the court order and the appeal was inexcusable, with evidence suggesting deliberate delay to cripple Levue financially.

This case is significant in South African civil procedure for reinforcing that good prospects of success on appeal cannot alone justify condonation for non-compliance with court rules. It emphasizes the importance of compliance with procedural rules and the need for convincing and adequate explanations for delay. The case serves as a warning that flagrant disregard of rules will not be tolerated regardless of the merits of the case. It also demonstrates the courts' approach to State litigants who fail to properly prosecute appeals. The case also touches on important VAT law issues regarding refunds and the appropriateness of interim relief in tax disputes, though these were not ultimately determined due to the procedural dismissal.