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

9 November 2018

STATUS

Immediate

Sasol Oil v CSARS (923/2017) [2018] ZASCA 153 (9 November 2018)

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.

The Supreme Court of Appeal, by a majority of the court, today upheld an
appeal against the decision of the Tax Court (Johannesburg), in which it was
held that contracts between companies in the Sasol Group of companies, for
the supply of crude oil by a company in the Isle of Man to a group company in
London, and the on sale of the same crude oil to Sasol Oil (Pty) Ltd in South
Africa, were simulated transactions. As such, the Tax Court found that the
transactions should be disregarded by the Commissioner for the South African
Revenue Service, and that the Commissioner was entitled to issue additional
assessments for the 2005, 2006 and 2007 tax years.

On appeal, the SCA considered all the circumstances leading to the conclusion
of the impugned contracts, the terms of the contracts, the evidence of officials
of Sasol Oil, the time when the contracts were concluded (2001), and the period
when Sasol Oil may have become liable for the income tax that the
Commissioner asserted was payable by Sasol Oil (2005 to 2007). It held that
the uncontroverted evidence of the witnesses for Sasol Oil was that in 2001,
when the contracts were first concluded, the witnesses had proposed them not

in order to avoid tax (residence based tax introduced in mid-2001) but because
they had a commercial justification. In any event, the liability for residence
based tax would have arisen only when one party to the supply agreement,
resident in the Isle of Man, became a foreign controlled company in so far as
Sasol Oil was concerned. That had occurred only in 2004. A finding of
simulation would have entailed a finding that many individuals and corporate
entities, as well as several firms of auditors, were party to a fraud over a lengthy
period, for which there was no evidence at all.

The SCA thus found that the Commissioner was not entitled to issue the
additional assessments and that Sasol Oil’s appeal to the Tax Court against
the assessments should have been upheld.

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