Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd v Commissioner for the South African Revenue Service and Another

PetroSA, a licensee of a customs and excise manufacturing warehouse (VM) in Mossel Bay, manufactures fuel levy goods. Excise duty and fuel/RAF levies are payable when fuel leaves the VM. PetroSA sought refunds via set-off for fuel exported/removed during May 2015 to March 2017. SARS issued a letter of demand disallowing the refunds on two grounds: (Finding 2) export acquittal documentation was absent/inadequate; (Finding 3) fuel was exported from unlicensed facilities, contrary to Rule 19A4.04(a)(ii). PetroSA disclosed its business model to SARS in 2012, which involved exporting through unlicensed facilities like Tarlton, Bloemfontein, and Tzaneen, with no objection raised at the time.

• Whether SARS was entitled to introduce new justifications for its determinations in its answering affidavit beyond those in the letter of demand.
• Whether PetroSA materially complied with the acquittal/documentation requirements (Rule 19A4.04(b)(ii)(ff)) to substantiate its claim for a refund (Finding 2).
• Whether a 'practice generally prevailing' under section 44(11A) of the Customs and Excise Act existed, allowing refunds for fuel exports from unlicensed facilities, thereby precluding SARS's claim for underpayment (Finding 3).

The appeal was upheld. The determinations in the letter of demand dated 18 February 2020 were set aside. Certain paragraphs of SARS's answering affidavit were struck out. SARS was ordered to pay PetroSA's costs, including costs of two counsel, both in this appeal and in the related Gauteng suspension application.

In an appeal under section 47(9)(e) of the Customs and Excise Act, the respondent (SARS) may not introduce new and different justifications for its determination in its answering affidavit; the appeal is limited to the basis of the original determination. A 'practice generally prevailing' under section 44(11A) can be established where a taxpayer proves, on a balance of probabilities, that a specific practice regarding duty payment/refunds was consistently applied by various offices of SARS over a significant period, precluding subsequent claims for underpayment even if the practice was not legally correct.

The court noted that the interpretation of Rule 19A4.04(a)(ii) could have far-reaching implications, but declined to decide it given the finding on the 'practice generally prevailing' and the fact Tarlton had since been re-licensed. The court also expressed doubt about the merit of SARS's new allegations (e.g., fraud, non-export) but found it unnecessary to decide them finally. The court noted that a SARS determination constitutes administrative action under PAJA and that an appeal and review could theoretically be brought simultaneously for different aspects.

This case clarifies that in wide appeals under the Customs and Excise Act, SARS is bound by the original grounds of its determination and cannot introduce new justifications in its answering papers. It provides a leading application of the 'practice generally prevailing' doctrine under s44(11A) in the context of fuel levy refunds, demonstrating how a taxpayer can defeat a substantial tax claim by proving an established, though technically non-compliant, administrative practice. It reinforces the material compliance standard from Allpay in customs documentation requirements.