This article is based on tax law for the year ending 28 February 2021.
A taxpayer operated a coal mine on behalf of the mining right owner. The taxpayer has been denied a diesel refund by SARS as it is not the owner of the mining right nor has it taken cession of the mining right. All other requirements (logbooks etc.) are compliant.
Should the taxpayer be the holder or cessionary of the mining right in order to claim a diesel rebate?
If so, when was this requirement introduced?
Part 3 of Schedule 6 to the Customs and Excise Act deals with rebates and refunds of the fuel levy and road accident fund levy (generally referred to as the diesel rebate).
Paragraph 6(f) of the Schedule contains the detailed rules governing the diesel rebate for users conducting mining activities on land.
Paragraph 6(f)(ii) of the Schedule reads as follows:
“The mining activities which qualify for a refund must be carried on –
(aa) for own primary production by the user or by a contractor of the user who is contracted on a dry basis;
(bb) unless otherwise specified, at the place where the mining operation is carried on; and
(cc) by a person who is in possession of the necessary authorisation granted in terms of the Mineral and Petroleum Development Act, 2002 (Act No. 28 of 2002).”
The requirements contained in Paragraph 6(f)(ii) of Part 3 of Schedule Six of the Customs and Excise Act have remained unchanged since the introduction of Part 3 to Schedule 6 on 1 January 2011.
Further webinar commentary on Customs Series: SARS Customs Internal Dispute Resolution - 2020 can be accessed here.