THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case no: 264/2019
In the matter between:

COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE

APPELLANT
and
UNITED MANGANESE OF
KALAHARI (PTY) LTD

RESPONDENT

Neutral citation: C:SARS v United Manganese of Kalahari (Pty) Ltd
(264/2019) [2020] ZASCA 16 (25 March 2020)
Coram:
CACHALIA,
WALLIS,
MBHA,
DAMBUZA
and
SCHIPPERS JJA

Heard:
13 March 2020
Delivered: 25 March 2020

Summary: Mineral and Petroleum Resources Royalty Act 28 of 2008 –
royalty calculation based on gross sales determined in terms of s 6(2)(b),
read with s 6(3)(b) of the Royalty Act – gross sales to be determined
without regard to any expenditure incurred in respect of transport,
insurance and handling of mineral – meaning of ‘without regard to any
expenditure’.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Meyer J,
sitting as court of first instance):

Paragraph 1 of the order of the High Court is altered to read as
follows:
‘1
The applicant is entitled to calculate its gross sales (in terms of
subsections 6(2) and 6(3) of the Mineral and Petroleum Resources
Royalty Act 28 of 2008 (the Royalty Act)) in respect of manganese
transferred by it in the 2010 and 2011 years of assessment, by deducting:
1.1
any expenditure incurred by it in respect of transport, insurance and
handling of the manganese after the manganese had been brought to the
condition specified in Schedule 2 of the Royalty Act; as well as
1.2
any expenditure incurred by it in respect of transport, insurance and
handling to effect the disposal of the manganese;
irrespective of whether, in the price charged by it to purchasers of
manganese, any amount was separately specified for expenditure incurred
by it in respect of transport, insurance and handling under either of
paragraphs 1.1 or 1.2.’
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel.

JUDGMENT

Wallis JA (Cachalia, Mbha, Dambuza and Schippers JJA
concurring)

[1] In exchange for the right to extract portion of South Africa’s
mineral wealth from our soil and dispose of it for their own profit, mining
companies pay royalties to the National Revenue Fund in terms of s 2 of
the Mineral and Petroleum Resources Royalty Act 28 of 2008 (the
Royalty Act). The royalty payable is determined in accordance with the
formula in s 4(2) of the Royalty Act. One of the elements in calculating
the formula is the mining company’s gross sales. These are to be
determined in accordance with s 6 of the Royalty Act. This appeal
concerns the proper method of determining a mining company’s gross
sales in accordance with that section as it stood in 2010 and 2011.

[2] The respondent, United Manganese of Kalahari (Pty) Ltd (UMK),
is the fourth largest manganese miner in South Africa. It conducts its
mining operations in the Northern Cape and sells manganese as an
unrefined mineral resource both locally and overseas. In respect of local
sales purchasers take delivery of the manganese at the mine and no issues
arise in relation to such sales. Its sales to foreign purchasers are made on
either an FOB1 or CIF2 basis. These sales give rise to the present dispute
between UMK and the appellant, the Commissioner, South African
Revenue Service (SARS).

1 Free on board.
2 Cost, insurance, freight.

[3] UMK rendered royalty returns to SARS in respect of the 2010 and
2011 tax years. In 2012 SARS commenced an audit of those returns
during the course of which it appeared that UMK and SARS had different
approaches to the determination of the amount of UMK’s gross sales for
the purpose of calculating the royalties due by UMK. In September 2016
UMK approached the Gauteng Division of the High Court, Pretoria,
seeking declaratory relief in regard to the proper method of determining
the amount of its gross sales. Meyer J granted a declaratory order and
refused leave to appeal. Such leave was granted on application to this
court.

[4] In its opposing affidavit, in argument before the high court, and in
its heads of argument in this court, SARS argued that UMK’s application
was premature as the audit process had not yet been finalised. It
contended that UMK should have awaited the outcome of that process
and then pursued its internal remedies under the Tax Administration Act
28 of 2011, by way of objection and appeal against any assessment with
which it did not agree. Alternatively, it contended that it was
inappropriate for UMK to seek relief by way of a declaratory order.
However, after the parties’ attention was drawn to a recent judgment of
this court3 dealing with a similar argument, we were informed that SARS
no longer persisted with these points and would confine its arguments to
the legal issue raised by UMK concerning the proper interpretation of the
relevant provisions of the Royalty Act.

THE DISPUTE

3 Commissioner for the South African Revenue Service v Langholm Farms (Pty) Ltd [2019] ZASCA
163; [2019] JOL 46353 (SCA) paras 7-10.

[5] When UMK rendered its 2010 and 2011 returns, s 6 read in
relevant part as follows:
‘(2) Gross sales in respect of an unrefined mineral resource transferred─
(a) as mentioned in paragraph (a) of the definition of ‘transfer’ in section 1 in the
condition specified in Schedule 2 for that mineral resource is the amount received or
accrued during the year of assessment in respect of the transfer of that mineral
resource …
…
(3)(b) For purposes of subsection (2), gross sales is determined without regard to any
expenditure incurred in respect of transport, insurance and handling of an unrefined
mineral resource after that mineral resource was brought to the condition specified in
Schedule 2 for that mineral resource or any expenditure incurred in respect of
transport, insurance and handling to effect the disposal of that mineral resource.’

[6] Some aspects of this were not in dispute. Thus, both parties
correctly accepted that the expression ‘received or accrued’ in s 6(2)(a)
bore the same meaning as the corresponding expression in the definition
of ‘gross income’ in s 1 of the Income Tax Act 58 of 1962.4 Accordingly
gross sales included every amount actually received by UMK, or to which
UMK became entitled, in each of the years with which we are concerned.
UMK and SARS also agreed at what point the manganese ore was
brought to the condition specified in Schedule 2 of the Royalty Act.5

[7] The focus then turned to the expression ‘without regard to any
expenditure incurred in respect of transport, insurance and handling’ after
the manganese ore was brought to the specified condition. The dispute
related to the proper meaning and effect of that provision in determining
UMK’s gross sales for royalty purposes. By the end of the hearing in this

4 Lategan v Commissioner for Inland Revenue 1926 CPD 203 at 207-210; Commissioner for Inland
Revenue v People’s Stores (Walvis Bay) (Pty) Ltd 1990 (2) SA 353 (A).
5 Schedule 2 dealt with the grade of the ore and its required and permitted chemical components.

court, the difference between the parties in that regard was narrow. SARS
contended that where the price charged by UMK to its customers
specified separate amounts for transport, insurance and handling (TIH
costs) of the ore in arriving at the global price to be paid, the amounts so
specified should be deducted in determining the amount of gross sales on
which royalties would be paid. UMK said that it was irrelevant whether
the TIH costs were specified as separate line items in the determination of
the price. What mattered was not the price charged to customers, but
whether such costs had in fact been incurred by UMK in either of the
circumstances described in s 6(3)(b). If they had been incurred, then a
deduction fell to be made for such costs in calculating its gross sales for
royalty purposes.

DISCUSSION
[8] It is unnecessary to rehearse the established approach to the
interpretation of statutes set out in Endumeni6 and approved by the
Constitutional Court in Big Five Duty Free.7 It is an objective unitary
process where consideration must be given to the language used in the light
of the ordinary rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directed and the
material known to those responsible for its production. The approach is as
applicable to taxing statutes as to any other statute.8 The inevitable point of
departure is the language used in the provision under consideration.

6 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 4 SA 593
(SCA) para 18.
7 Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 33; 2019
(5) SA 1 (CC) para 29.
8 Commissioner for the South African Revenue Services v Bosch and Another [2014] ZASCA 171;
2015 (2) SA 174 (SCA) para 9.

[9] No difficulty arose in determining the amounts received or accrued
by UMK from sales of manganese in the condition specified in Schedule
2 to the Royalty Act.9 This was its income from disposing of the minerals
it extracted. The problem lay with the requirement to ‘have regard to any
expenditure incurred in respect of transport, insurance and handling’ of
the mineral. An immediate difficulty arose because TIH costs are expense
items, not part of the receipts or accruals constituting gross sales.
Receipts and accruals and expenditure on TIH costs fell on opposite sides
of the ledger. Despite this, s 6(3)(b) directed the taxpayer to determine its
gross sales without regard to these three items of expenditure. This was
not optional. It was part of the section’s prescription of the manner in
which gross sales were to be determined for royalty purposes. It could not
be disregarded. How then was the taxpayer to have regard to TIH costs in
determining its gross sales?

[10]  The answer, as SARS accepted, was that, when disregarding the
specified expenditure, the taxpayer was obliged to make a deduction from
the receipts and accruals constituting its gross sales. Mr du Plessis, who
deposed to the answering affidavit on SARS’ behalf,10 said:
‘The words ‘without regard to’ must correctly be understood to mean that a taxpayer
must disregard any costs actually spent after the point at which the mineral reaches
the condition specified. In other words, if the taxpayer spent any money on transport,
insurance or handling after the point of condition specified, it is required to disregard,
or not take into account, such costs in calculating gross sales.’

[11] UMK’s domestic sales were on FOR11 terms. Purchasers collected
the manganese from the mine and paid for it to be transferred from there,

9 Schedule 2 deals with unrefined minerals and specifies in relation to manganese that this is ore with a
manganese content between 37% and 48% and a silicon and aluminium content of less than 11%.
10 Vol 4, p 523, para 15.
11 Free on rail.

whether by rail or road. No TIH costs were incurred in relation to such
sales. The position was different in regard to international sales. UMK
incurred expenditure in relation to transport, insurance and handling of
the manganese because these sales were on either FOB or CIF terms. In
respect of FOB sales, UMK incurred the costs of arranging for the
transport of the manganese ore by road or rail to the ports of Durban or
Port Elizabeth and for it to be loaded onto ships in accordance with the
instructions of the purchasers. In the case of CIF sales, it was obliged to
secure appropriate vessels for the carriage of the cargo to its destination,
either by booking space on a bulk carrier or by way of the charter market;
to pay the freight or charter hire; to insure the cargo whilst in transit; and
discharge it at its destination. UMK sought to disregard these TIH costs
in determining its gross sales for royalty purposes, by deducting them
from the amounts it received or that accrued to it in the years in question.

[12] SARS accepted that UMK incurred expenditure in respect of TIH
costs. Purely linguistically therefore, it was difficult to understand on
what basis it contended that UMK was not entitled to deduct the TIH
costs it had actually incurred from its receipts and accruals. SARS said
that the expression ‘without regard to’ meant that they should be
‘disregarded’ by deducting them from the receipts and accruals. That
being so, it seemed to follow naturally from the words of s 6(3)(b) that
the TIH costs fell to be deducted from UMK’s receipts and accruals.

[13] SARS’ stance was described by Mr du Plessis in the passage from
his affidavit immediately following that quoted in para [10]. It read:
‘If, of course the taxpayer did not actually include such costs in the computation of
gross sales, there is no need for a deduction of these expenses. In other words, if the
sales price received by the Applicant from its customers was simply a market price

and was not based upon the costs, which were incurred in respect of transport,
insurance and handling, then such costs may not be deducted by the Applicant from
its gross sales.’
Later in his affidavit, Mr du Plessis said:
‘I point out that the relevant question is not whether the Applicant actually incurred
the costs, but rather whether the Applicant in fact incorporated those costs into the
gross sale price or not. … [T]he amount spent is irrelevant unless considered in
relation to the condition specified and whether the amount was incorporated into the
gross sale price as contemplated by the Royalty Act. Any expenditure for transport,
handling and insurance after the condition specified point must be disregarded for
purposes of calculating gross sales in terms of section 6(3) of the Royalty Act. To the
extent that the sales price, and thus gross revenue, has not been determined by having
regard to such costs, there is nothing to disregard.’

[14] It is impossible to find any basis for this qualification in the
language of s 6(3)(b). The section said that ‘any expenditure’ incurred in
respect of TIH costs should be disregarded. It said nothing about the
manner in which UMK should determine the prices to be paid by its
customers, much less did it require that those prices should specify
separately amounts to be charged for transport, insurance and handling of
the mineral. All it said was that expenditure incurred in respect of TIH
costs should be disregarded. That wording may have been clumsy and
inapt to perform the intended function, because it required expenditure to
be disregarded when dealing with receipts and accruals, but once it was
accepted, as SARS did, that this involved deducting the expenditure in
question from the receipts and accruals, any difficulty arising from the
wording evaporated.

[15]  SARS’ approach was not a sensible construction of the section. In
essence it was this. If UMK charged its customer in a CIF sale $6.00 per
ton, and specified in the contract that $1 of the price reflected the cost of

transport from the mine to the port; freight or charter hire for the voyage;
insurance; and loading and discharge costs, then UMK’s gross sales for
royalty purposes on that contract would be made at $5 per ton. If it
simply charged $6 per ton and incurred expenditure of $1 per ton on
those self-same costs, its gross sales on the contract would be $6 per ton,
not because it had not incurred the expenditure, but because it had not
specified it separately in its sales contract. No conceivable reason existed
for making that distinction.

[16] A consideration of the context of the Royalty Act and its provisions
in regard to payment of royalties points decisively away from the
construction advanced by SARS. A brief word about context in regard to
statutory interpretation may not be out of place in the light of a recent
suggestion in a minority judgment that:
‘Context is fact-specific and can be applied in the interpretation of contracts and like
documents, but not of statutes’.12
The judgment said that Endumeni had suggested,13 in reliance on a
passage from KPMG v Securefin,14 that there is ‘no distinction in the
interpretation of contracts, statutes and other documents’. That
misconstrues what was said in Endumeni. It summarised the general
approach to the interpretation of documents. The footnote reference to
Securefin was to the proposition that the rules of admissibility of
evidence in the interpretation of documents do not change depending on
the nature of the document, whether statute, contract or patent. That was
cited because, if common evidential rules apply to the interpretation of all
documents, it logically follows that the basic approach to interpretation

12 In the minority judgment in Commissioner of the South African Revenue Services v Daikin Air
Conditioning South Africa (Pty) Ltd [2018] ZASCA 66; 80 SATC 33 para 31.
13 Endumeni para 18, fn 14.
14 KPMG Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) para 39.

will not vary depending on whether they are contracts, statutes or other
documents. The latter proposition was not novel. In formulating his
‘golden rule’ of interpretation in Gray v Pearson,15 a case about the
construction of a will, Lord Wensleydale said the rule applied in
‘construing wills, and indeed statutes and all written instruments’.
Context is fundamental in approaching the interpretation of all written
instruments, but there are differences in context with different documents
including the nature of the document itself. Legislation is different in
character from contracts, and a contract formulated carefully by lawyers
after lengthy negotiations will differ from one scribbled by laypeople on a
page torn from a notebook.

[17] The difference in the genesis of statutes and contracts provides a
different context for their interpretation. Statutes undoubtedly have a
context that may be highly relevant to their interpretation. In the first
instance there is the injunction in s 39(2) of the Constitution that statutes
should be interpreted in accordance with the spirit, purport and objects of
the Bill of Rights. Second, there is the context provided by the entire
enactment.16 Third, where legislation flows from a commission of
enquiry,17 or the establishment of a specialised drafting committee,18
reference to their reports is permissible and may provide helpful context.
Fourth, the legislative history may provide useful background in
resolving interpretational uncertainty.19 Finally, the general factual
background to the statute, such as the nature of its concerns, the social

15 Gray and Others v Pearson and Others (1857) HL Cas 61.
16 Hoban v ABSA Bank Ltd t/a United Bank and Others 1999 (2) SA 1036 (SCA) para 20.
17 Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) at
562D-563B.
18 As occurred with the Labour Relations Act 66 of 1995. See Explanatory Memorandum by the
Ministerial Task Team 1995 ILJ 278 and Sidumo and Another v Rustenberg Platinum Mines Ltd and
Others [2007] ZACC 22; 2008 (2) SA 24 (CC) para 94, fns 100- 102.
19 Santam Insurance Ltd v Taylor 1985 (1) SA 514 (A) at 526I-527B.

purpose to which it is directed and, in the case of statutes dealing with
specific areas of public life or the economy, the nature of the areas to
which the statute relates, provides the context for the legislation. It
follows that context is as important in construing statutes as it is in
construing contracts or other documents and the contrary suggestion is
incorrect.20 In this regard, since drafting this, I have had the advantage of
seeing in advance a copy of Swain JA’s judgment in Telkom SA SOC
Limited v The Commissioner for the South African Revenue
Service  [2020] ZASCA 19, which is to be delivered today, and agree
with his analysis of Daikin in paras 10 to 17 thereof.

[18] The background to the Royalty Act is that South Africa is a
country with vast mineral wealth, which is exploited primarily by private
enterprise in a heavily regulated environment. The mining industry has
always formed a major part of the South African economy. Royalties are
payable in return for the right to exploit these mineral resources. As
emerges from the two schedules to the Royalty Act, while some
commodities are refined in this country, others are exported after only
limited beneficiation. Most of this is shipped in bulk.21 The sample
contracts put up by UMK, which were not suggested to be
unrepresentative of contracts for the sale of bulk minerals, reflect trading
denominated in an international currency, the US Dollar.22 These

20 See M Wallis ‘Interpretation Before and After Natal Joint Municipal Pension Fund v Endumeni
Municipality 2012 (4) SA 593 (SCA)’ (2019) PER/PELJ (22) 1 at 17-20.
21 See the description of iron ore exports at Saldanha in Transnet Ltd v The Owner of the Alina II
[2011] ZASCA 129; 2011 (6) SA 206 (SCA) para 2. As to bulk carriage of grain shipments see Afgri
Grain Marketing (Pty) Ltd v Trustees for the time being of Copenship Bulkers A/S (in liquidation) and
Others [2019] ZASCA 67; [209] 3 All SA 321 (SCA).There are specialised terminals for the loading of
bulk cargoes including a variety of minerals at Durban, Saldanha and Richards Bay.
22 The South African Mineral Industry Report 2017/2018 published by the Department of Mineral
Affairs Table 12, p26 reflects most mineral prices, including that for manganese, as being denominated
in
dollars,
the
principal
international
trading
currency.
See
https://www.dmr.gov.za/LinkClick.aspx?fileticket=PClz-cRGkyg%3d&portalid=0.

contracts were concluded on FOB or CIF terms and there is no reason not
to accept that this would be common practice. The choice of one or the
other allocates responsibility for transporting the mineral from country of
origin to the country of the purchaser. Prices are fixed in dollars per ton
FOB or CIF. Under such contracts the purchaser will not be interested in
the TIH costs to be incurred by the seller, but will want to fix a global
price to be paid for the minerals up to the point of delivery.

[19] This very basic information must have been known to those
responsible for this legislation, in particular the Department of Finance,
SARS and the Department of Minerals and Energy Affairs. The annual
South African Mineral Industry reports issued by the Department of
Mineral Affairs demonstrate that the Department is thoroughly familiar
with all mining activities and the basis upon which trade in minerals
occurs.  It is proper then to approach the interpretation of s 6 on the basis
that those responsible for drafting the legislation did so in the light of
their knowledge of common, if not invariable, trading patterns. It can be
accepted that they were aware that many contracts for the sale of minerals
would be concluded at fixed prices on FOB or CIF terms, without the cost
of transport, insurance and handling being separately specified. There is
nothing to indicate why then, in providing that expenditure on TIH costs
should be disregarded in determining the amount of gross sales, they
would have in mind only those contracts – potentially very few in number
– in which the price was divided into an amount for the mineral in
question and separate amounts for transport, insurance and handling. No
sensible reason existed, and none has been advanced in the affidavits or
argument, for distinguishing between the two situations.

[20] The purpose of the Royalty Act is to secure the payment of
royalties on the value of minerals extracted. Even if there are situations in
which mineral extraction and transfer to a third party, which is the event
attracting the royalty, occurs without incurring TIH costs, in very many if
not the vast majority of cases, such costs are incurred in order to dispose
of the minerals. The evident purpose of s 6(3)(b) was that the extractor
would not be burdened by paying royalties on amounts expended on TIH
costs and recovered as part of the price paid for the minerals. On SARS’
case that is what happens when these costs are specified as separate
components of the price of the mineral. It has provided no explanation for
interpreting the section as meaning that where the same minerals are sold
at the same global price, without a separate specification of TIH costs as
components of the price, those costs should not be deducted.

[21] Lastly, SARS’ contentions disregard the statutory history. In its
original form the section said that gross sales should be determined
‘without regard to any amount received or accrued for the transport,
insurance and handling’ of the mineral. That made little sense because
those were not revenue items and hence, they would not be received or
accrued in the same way as revenue items. They were expenses that
would be incurred. The section was amended to the wording before us
with effect from March 2010. Since then it has been further amended in
2019 by the deletion of the words ‘without regard to expenditure
incurred’ and their replacement by ‘after deducting any expenditure
actually incurred’. In argument SARS conceded that the effect of this was
that all TIH costs incurred would be deductible in determining the
amount of gross sales, irrespective of whether they had been separately
specified as components of the price.

[22] It is illuminating to consider the explanatory memorandum that
accompanied the Bill embodying this amendment dated 16 July 2018. It
read:
‘The proposed amendment in subsection (3)(b) seeks to clarify the original policy
intent. When the Mineral and Petroleum Resource Royalty Act was introduced in
2008, the policy intention was clear regarding the definition of the tax base. The tax
base was generally defined both in the legislation and the explanatory memorandum
as gross sales excluding the costs of transportation, insurance and handling of the final
product or mineral between the seller and the buyer as this would unintentionally
increase gross sales leading to a higher royalty tax payable. In 2009, additional
clarification was made in s 6(3) of the Mineral and Petroleum Resource Royalty Act
dealing with gross sales. The 2009 changes resulted in the policy intent regarding the
definition of gross sales not to be clearly expressed in the text of the legislative
provision even though the policy intent was clear in the explanatory memorandum.
In order to give certainty regarding policy intent, it is proposed that the meaning of
gross sales be clarified in the legislation to take into account the policy rationale
which is explained when the Mineral and Petroleum Resource Royalty Act was
introduced by reverting back to the original wording prior to the 2009 amendment.’

[23] The Bill was not finalised in 2018 and when it returned to
Parliament it embodied the amendments described in para [20]. The
explanatory memorandum dated 17 January 2019, said:
‘These amendments seek to provide clarity to both taxpayers and SARS regarding the
meaning of the tax base for purposes of calculating the royalty (the tax base is gross
sales after deducting expenditure actually incurred in respect of transport, insurance
and handling of the disposed unrefined mineral resource or the disposed refined
mineral resource).’

[24]    Where Parliament has clearly shown by later amending
legislation what was meant by the earlier legislation under amendment
and the amending legislation is passed explicitly for the purpose of
clarifying that meaning, it is permissible as an aid in interpretation to

have regard to the meaning ascribed by the later legislation to its
predecessor.23 That is not to say that the court is not exercising its proper
function of interpreting the legislation. Counsel for SARS correctly said
that if the prior version of s 6(3)(b) could not bear the meaning ascribed
to it in the explanatory memoranda quoted above then it was not open to
this court to remedy the legislature’s earlier deficiencies. However, given
that, without referring to the memoranda, I have arrived at the conclusion
that the section must bear that meaning, the subsequent amendment lends
force to that conclusion.

[25] For those reasons the appeal must fail. However, there was a
difficulty with the wording of the declaratory order granted by the high
court and it is necessary to alter it to reflect correctly the court’s finding.
In the result the following order is granted:
‘1
Paragraph 1 of the order of the High Court is altered to read as
follows:
‘1
The applicant is entitled to calculate its gross sales (in terms of
subsections 6(2) and 6(3) of the Mineral and Petroleum Resources
Royalty Act 28 of 2008 (the Royalty Act)) in respect of manganese
transferred by it in the 2010 and 2011 years of assessment, by deducting:
1.1
any expenditure incurred by it in respect of transport, insurance and
handling of the manganese after the manganese had been brought to the
condition specified in Schedule 2 of the Royalty Act; as well as
1.2
any expenditure incurred by it in respect of transport, insurance and
handling to effect the disposal of the manganese;
irrespective of whether, in the price charged by it to purchasers of
manganese, any amount was separately specified for expenditure incurred

23 Patel v Minister of the Interior and Another 1955 (2) SA 485 (A) at 493 A-D, approved and followed
in National Education Health and Allied Workers’ Union v University of Cape Town and Others
[2002] ZACC 27; 2003 (3) SA 1 (CC) para 66.

by it in respect of transport, insurance and handling under either of
paragraphs 1.1 or 1.2.’
The appeal is otherwise dismissed with costs, such costs to include
those consequent upon the employment of two counsel.’

______________________________
M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
C D Loxton SC (with him N Rajab-Budlender)
Instructed by:
Klagsbrun Edelstein Bosman De Vries Inc, Pretoria;

Symington de Kok Attorneys, Bloemfontein
For respondent:
J J Gauntlett SC (with him P A Swanepoel SC)

Instructed by:
Edward Nathan Sonnenbergs Inc, Johannesburg;
McIntyre Van der Post, Bloemfontein.
Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
25 March 2020
Status:
Immediate

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

C:SARS v United Manganese of Kalahari (Pty) Ltd (264/2019) [2020]
ZASCA 16 (25 March 2020)

The SCA today dismissed an appeal against the decision of the Gauteng
Division of the High Court, Pretoria, granting the respondent declaratory
relief in regard to the interpretation of s 6(3((b) of the Mineral and
Petroleum Resources Royalty Act 28 of 2008. The dispute between the
parties was whether the taxpayer was obliged to deduct the transport,
insurance and handling expenditure it incurred in disposing of manganese
from its mine, after that manganese had been brought to a statutorily
specified condition from its receipts and accruals arising from such
disposal.
SARS contended that a deduction was permissible where these items of
expenditure formed specific components of the price at which the
manganese was disposed of, but not when the expenditure was not
expressly included as separate components in the price. The taxpayer
contended that the section provided that expenditure incurred, irrespective
of whether it was separately set out as part of the price had to be deducted.

The court upheld the latter argument and held that no reason existed for
distinguishing between the two situations. Neither the language of the
section, nor relevant contextual considerations, justified such a
construction of the section. The section was clarified by way of an
amendment in 2019 that made it clear that the taxpayer’s contentions were
correct.