Mediamec The Supreme Court of Appeal has ruled against an attempt by the South African Revenue Service to significantly expand a diesel tax rebate dispute involving Glencore and its mining joint venture partner.
The court found that SARS went beyond its legal authority when it attempted to escalate the disputed amount from approximately R5 million to nearly R83 million during the appeal process, representing an increase of more than 1,500 percent.
The case relates to a mining joint venture in Mpumalanga where diesel fuel refunds were claimed under a government rebate scheme designed for primary production activities in mining.
SARS had initially disallowed part of the refund claims after an audit, arguing that the diesel in question did not qualify under the relevant provisions. However, as the dispute progressed through internal appeals, the amount under contention was substantially increased, prompting legal challenge from the mining group.
The court ruled that the appeal process does not allow tax authorities to effectively create a new assessment or introduce entirely new grounds that were not part of the original determination.
Judges emphasised that an internal tax appeal must remain confined to reviewing an existing decision, rather than becoming a platform for a completely revised assessment.
As a result, the court set aside the expanded claim, reinforcing limits on how far tax authorities can extend disputes once a matter is already under appeal.
The ruling provides clarity on the boundaries of administrative tax appeals in South Africa and reinforces protections for taxpayers against retrospective escalation of claims during legal processes.
