Commissioner for the South African Revenue Service v Tunica Trading 59 (Pty) Ltd

Tunica Trading 59 (Pty) Ltd (Tunica) is a licensed distributor of fuel (LDF) under section 60 of the Customs and Excise Act 91 of 1964 (the Act). In 2014, Tunica purchased diesel fuel from Masana Petroleum Solutions (Pty) Ltd (Masana), an intermediary supplier. Masana in turn obtained the fuel from BP Southern Africa (BP), a licensee of a customs and excise manufacturing warehouse. Tunica delivered the fuel to foreign-going vessels and applied to SARS for a refund of excise duty and fuel levy under the Act in respect of three consignments. On 1 April 2015, SARS rejected Tunica's refund application (Tun 068) on the ground that Tunica did not acquire the fuel directly from the licensee of a customs and excise manufacturing warehouse (BP), but from an intermediary (Masana). Tunica appealed this decision to an internal appeal committee, which dismissed the appeal on 28 September 2015. After providing a notice under section 96 of the Act of its intention to institute legal proceedings, and following correspondence with SARS, Tunica eventually brought an application to review SARS' decisions under PAJA. The High Court dismissed the application, but the Full Court overturned that decision, holding that SARS' interpretation of section 64F was erroneous and that fuel purchased from an intermediary could qualify for a refund. SARS appealed to the Supreme Court of Appeal.

• Whether SARS' response to a section 96 notice of intention to institute legal proceedings constitutes a 'decision' that is reviewable under the Promotion of Administrative Justice Act (PAJA)
• The proper interpretation of section 64F(1)(b) of the Customs and Excise Act, specifically the meaning of fuel being 'obtained from stocks of a licensee of a customs and excise manufacturing warehouse'
• Whether a licensed distributor of fuel (LDF) can qualify for a refund of excise duty and fuel levy if it purchases fuel from an intermediary rather than directly from the licensee of a customs and excise manufacturing warehouse
• Whether Tunica complied with the requirements of section 64F(1)(b) of the Act and the relevant rules for obtaining a refund

The appeal was upheld with costs, including costs of senior counsel. The Full Court's order was set aside and replaced with an order dismissing Tunica's application with costs, including the costs of two counsel where so employed.

The binding legal principles established are: (1) A response by SARS to a notice under section 96(1) of the Customs and Excise Act is not administrative action within the meaning of PAJA and is therefore not reviewable. The section 96 notice is a mandatory first step before instituting legal proceedings and falls outside the internal administrative appeal process under Chapter XA of the Act. (2) On a proper interpretation of section 64F(1)(b) of the Customs and Excise Act, a licensed distributor of fuel (LDF) must obtain fuel directly from the stocks of a licensee of a customs and excise manufacturing warehouse to qualify for a refund of excise duty and fuel levy under section 75(1)(d). The word 'stocks' means the inventory of goods kept at the warehouse premises of the licensee. (3) Fuel purchased from an intermediary, even if that intermediary obtained the fuel from a licensed warehouse, does not satisfy the requirement that fuel be 'obtained from stocks of a licensee of a customs and excise manufacturing warehouse'. The plain language of the statute, read with the relevant rules and Schedule 6, requires direct acquisition from the licensed warehouse. (4) This interpretation is consistent with the purposes of the Customs and Excise Act, which include controlling the importation, export, storage, and removal of excisable goods, and enabling SARS to exercise supervision over licensed warehouses. Allowing fuel to be obtained through intermediaries would undermine these control mechanisms. (5) A refund or rebate of excise duty is a privilege, and strict compliance with the statutory conditions may be exacted from a claimant. The doctrine of estoppel cannot be applied against SARS to confer a power it does not have or to give validity to an ultra vires act.

The Court made the following non-binding observations: (1) Interpretation of legislation is a matter of law, not fact, and is therefore a matter for the court and not for witnesses. (2) The fact that SARS may have for many years interpreted the Act in a manner favorable to applicants like Tunica is irrelevant to the proper legal interpretation of the statute. (3) Similarly, practical difficulties that small-scale distributors may face in purchasing fuel directly from licensees of customs and excise manufacturing warehouses, rather than through intermediaries, are irrelevant to the construction of the statute. The argument that SARS' interpretation renders section 64F nugatory for practical purposes does not assist in statutory interpretation when the plain language and purpose of the provision are clear. (4) When construing a taxing statute, a court will not presume in favor of any special privilege or exemption from taxation. (5) The Court indicated (without deciding, as it was unnecessary) that the Full Court's finding regarding fuel consumed by foreign vessels in South African waters was not determinative given the conclusions on the main issues. (6) The Court emphasized the self-assessment system created by the Customs and Excise Act, which functions similarly to the Income Tax Act and Value Added Tax Act, requiring entities to ensure strict compliance with provisions by rendering correct returns and keeping prescribed records to substantiate the correctness of returns and payments made.

This judgment clarifies important principles regarding administrative law and customs and excise law in South Africa. It establishes that: (1) A response to a section 96 notice of intention to institute legal proceedings is not a reviewable 'decision' under PAJA—it is merely a step in pre-litigation correspondence. (2) The judgment provides authoritative guidance on the interpretation of section 64F of the Customs and Excise Act, confirming that licensed distributors of fuel must obtain fuel directly from the stocks of licensed customs and excise manufacturing warehouses to qualify for refunds of excise duty and fuel levy. Purchasing through intermediaries does not satisfy the statutory requirements. (3) The decision reinforces the principle that refunds or rebates of excise duty are privileges requiring strict compliance with statutory conditions, consistent with established tax law principles. (4) The judgment emphasizes the importance of the control mechanisms in the Customs and Excise Act for supervising the storage and movement of excisable goods, and interprets provisions in a manner that gives effect to these control purposes. This case has significant implications for the fuel distribution industry and the administration of customs and excise duty refunds in South Africa.