Sars scores over Sasol Chevron

• Tax authority not willing to budge

The Constitutional Court has dismissed an appeal application brought by Sasol Chevron in its drawn-out dispute with the SA Revenue Service (Sars) over a VAT refund.

The Constitutional Court has dismissed an appeal application brought by Sasol Chevron in its drawn-out dispute with the SA Revenue Service (Sars) over a VAT refund.

The apex court on Tuesday found that the joint venture failed to bring its review application within the period of 180 days as prescribed by the law.

“The reasoning of the Supreme Court of Appeal is unassailable and is endorsed by this court. In a letter dated December 6 2017, the commissioner explained that the refund was denied because, in his view, Sasol Chevron was not entitled to a refund of the VAT levied on the supply of goods as it had not exported the goods within the time required by regulation 15(1)(a) and the commissioner had not granted an extension of this period,” the court stated in its unanimous judgment.

The dispute between the tax agency and the joint venture emanates from transactions that took place in 2014 when it bought movable goods from Sasol Catalyst, a division of Sasol Chemical Industries, for export to Nigeria from SA. The unspecified goods were delivered by Sasol Catalyst to a warehouse at the Durban Harbour, where they were sold to Sasol Chevron and then immediately on-sold to the Escravos Gas-to-Liquids Project for export to Nigeria.

SA’s tax laws require that goods sold for export must be shipped within 90 days of the date of sale.

APPLICATION DECLINED

Sasol Catalyst, the seller of the goods, elected as the vendor to supply the goods to Sasol Chevron and levy tax at the zero rate in terms of the VAT Act.

The relevant tax invoices for the sale of the goods were dated August 20 2014, September 22 2014 and October 22 2014.

However, the joint venture did not export the goods within 90 days of the date of the tax invoice as required by law, and the goods were ultimately shipped on April 24 2015. Sasol Catalyst on January 30 2015 applied to Sars for an extension of the prescribed 90-day period.

In anticipation that the request would be accepted, Sasol Catalyst issued new and revised tax invoices in substitution of those previously issued in August, September, October, November and December 2014 in which VAT was levied at the standard rate of 14% that was operational at the time. Sasol Chevron accordingly paid the VAT levied by Sasol Catalyst.

Sars later responded to Sasol Catalyst’s request, and declined the application for an extension, making it clear that it was not prepared to budge, and that Sasol Chevron was not entitled to a VAT refund.

Sasol Chevron approached the High Court successfully for an order to review and set aside Sars’ decision, but that was overruled on appeal at the Supreme Court of Appeal, a decision which has now been endorsed by the apex court.

Sasol Chevron was established in the early 2000s as a 50:50 joint venture to pursue commercial application of gasto-liquids technology for selected Chevron-held and Sasol-held reserves of natural gas, thirdparty gas reserves, and host countries seeking to monetise their gas reserves.

The joint venture is housed in Bermuda, making it a foreign company.

Sasol in 2020 said it will sell its indirect interest in the Escravos gas-to-liquids plant in Nigeria to Chevron for an undisclosed amount as the company accelerated its asset disposal programme to reduce its debt.

THE REASONING OF THE SUPREME COURT OF APPEAL IS UNASSAILABLE AND IS ENDORSED BY THIS COURT