SARS going after one of South Africa’s major petrol station owners for R2.7 billion

One of South Africa’s biggest fuel companies, Astron Energy, is going to court to challenge a R2.7 billion tax assessment from the South African Revenue Service (SARS). 

The dispute comes from a customs and excise audit SARS conducted on Astron between May 2015 and March 2017,  before Glencore took over the energy group.

SARS found five serious compliance problems during the audit. Based on those, it issued a letter of demand in October 2019, saying Astron owed exactly R2,714,001,723.73, including interest and penalties.

SARS claimed that Astron didn’t pay enough excise duties and fuel levies. It said Astron tried to cancel the debt by claiming refunds for other overpaid tax amounts, which SARS refused. SARS argues that Astron still had to pay the full amount.

However, Astron disagreed. The company believes the tax bill is wrong, both in terms of the facts and the law. 

It also argued that SARS unfairly refused to pay back refund claims that could have reduced or even cancelled the debt. Astron took the matter to the Western Cape High Court.

Astron asked the court to either overturn the SARS decision through a direct appeal or set it aside through a judicial review under the Promotion of Administrative Justice Act (PAJA).

Astron also argued that if the original letter of demand from SARS is overturned, the decision that followed from its internal appeal should also fall away. 

Judge Moosa agreed this could be possible and said that the legal consequence would be that Astron lacks access to the statutory appeal remedy. “The review… would be the only remedy then available,” he said. 

SARS tried to stop the case before it even began. It filed “exceptions,” a legal complaint that argued the other Astron’s case was defective and should be thrown out. 

SARS said Astron’s court papers lacked key facts, improperly mixed legal processes, and didn’t follow the correct order of appealing first before asking for a review.

SARS wanted the court to strike out a large part of Astron’s case and dismiss some of its main requests for relief. 

However, the judge rejected all of this. “No proper foundation for such relief has been established,” said Moosa. He added that SARS hadn’t shown how it was harmed by how Astron framed its case. 

“SARS is simply being called on to defend its decisions and/or determinations made internally in light of the same facts and law presented to it on behalf of Astron,” he said. 

He also questioned SARS’s motives, suggesting it was trying to delay the case. “The exceptions are designed purely as a delaying tactic.” 

He added that SARS had sat on its objections for over two years until Astron forced the issue. 

Court battle goes ahead

Judge Moosa dismissed SARS’ objections and allowed Astron’s whole case, both the appeal and the PAJA review, to proceed. 

“Astron’s stand-alone challenge to the Appeal Decision, regardless of the LOD’s fate, cannot be faulted,” said Judge Moosa. He also found that Astron had provided enough details in his legal papers.

Because the case involves big legal questions and both sides used senior lawyers, the judge also ordered SARS to pay legal costs on the highest scale, including the fees of two advocates.

The matter will now go to trial, where the court will decide whether Astron’s refund claims were valid and whether SARS’ internal decision counts as a legal “determination.” 

Most importantly, however, it will also decide whether Astron must pay the R2.7 billion or if SARS must refund the company. 

Astron Energy was established in 2018 after Glencore acquired American giant Chevron’s Southern African assets in 2017.

Since 2018, Astron Energy has operated the Caltex brand under a license agreement with Chevron.

However, in 2021, Astron Energy consolidated its operations under a single brand and announced the rebranding of over 850 Caltex service stations.

Astron Energy CEO Thabiet Booley said this is an important step in the group’s ambition to become the biggest fuel brand in South Africa.

In September 2022, Astron Energy unveiled its first new-look petrol station in South Africa. It said it was the start of becoming “the next biggest fuel brand” in the country.

Fast forward two years, and Astron Energy has reached the halfway mark by rebranding 400 service stations in South Africa.

The full judgement can be viewed below.