Home Business Tribunal voids ERS’s E4.37m penalties on fuel retailer
Business

Tribunal voids ERS’s E4.37m penalties on fuel retailer

Share
Eswatini Revenue Service Commissioner General Brightwell Nkambule.(Courtesy pics)
Share

MBABANE – The Revenue Appeals Tribunal has set aside E4 377 104.84 in fuel tax penalties imposed by the Eswatini Revenue Service (ERS) on one of the country’s major fuel retailers.

This is after the tribunal found that the tax authority acted without lawful authority, relied on estimated figures, and misapplied key provisions of the Fuel Tax Act, 2022.

“The penalties imposed by the Respondent pursuant to section 6(1) of the Fuel Tax Act, 2022, being E3 220 644.84 for the 2023 tax year and E1 156 460 for the 2024 tax year, are hereby set aside as having been imposed without lawful authority,” read the tribunal’s judgement.

The tribunal not only nullified the penalties, but also barred ERS from imposing estimated assessments in circumstances where fuel tax has been paid on declared sales.

The tribunal further directed ERS to conduct a proper audit under section 10 of the Act and to base any future assessments strictly on verified, actual variances, unless deliberate tax evasion is proven.

Central to the ruling was a clear directive to ERS on how it must lawfully proceed.

The tribunal ordered ERS to conduct a proper audit pursuant to Section 10 of the Fuel Tax Act and to issue any assessment only on the basis of verified (actual) variances, rather than estimates.

Crucially, ERS was barred from invoking the penalty provisions of Section 6(1) unless and until it establishes that any underpayment was attributable to an intention to evade or postpone payment of tax.

In effect, the tribunal ruled that penalties are not automatic, and estimation powers cannot be used as a shortcut where a taxpayer has filed returns and made payments.

“The respondent (ERS) is directed, to conduct a proper audit pursuant to section 10 of the Act and to issue any assessment on the basis of verified (actual) variances rather than estimates, without recourse to the penalty provisions of section 6(1) unless and until it establishes that any underpayment was attributable to intent to evade or postpone payment of tax,” read the judgement.

The dispute originated from a fuel tax audit initiated by ERS after it identified variances between the fuel retailer’s monthly fuel tax returns and fuel import volumes recorded on the ASYCUDA customs management system.

For the 2023 tax year, ERS noted that fuel imports recorded on ASYCUDA totalled 94 714 593 litres, while declared fuel sales amounted to 91 714 593 litres, resulting in a variance of approximately three million litres.

ERS requested the fuel retailer to reconcile the figures and provide supporting documentation, which the retailer did.

The fuel retailer maintained that fuel tax liability under the Fuel Tax Act is determined solely on sales volumes, not import volumes.

It explained that variances naturally arise due to stock in transit at month-end, where fuel may be cleared through customs, but only recorded as sold in the following month.

The retailer further explained that fuel tax returns reflect opening stock and imports, information supplied by clearing agents, while the sales ledger, which records fuel sold to customers, is the statutory basis for calculating fuel tax payable.

*Full article available on Pressreader*

Revenue Appeals Tribunal Eswatini Registrar Nelsiwe Hlophe.
Revenue Appeals Tribunal Eswatini Registrar Nelsiwe Hlophe.

Share
Written by
Nhlanganiso Mkhonta

Nhlanganiso Mkhonta serves as Business Editor at the Times of Eswatini. He reports on business, economics, finance, investment, entrepreneurship and public policy, producing insightful coverage and analysis of the issues driving Eswatini’s economy and the wider African business environment.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Don't Miss

MaMkhize’s Bull faces police test

MBABANE – Shauwn ‘MaMkhize’ Mkhize’s Mbabane Highlanders AM face their sternest MTN Premier League test yet when they meet Royal Leopard at Mayaluka...

Hyundai Creta arrives with bold new attitude

Hyundai Eswatini has wel­comed the all-new Hyundai Creta to the local market, bringing a sharper look, upgraded technology and a choice of confident...

FNB demands over E14 million from two ex-employees

MBABANE – First National Bank (FNB) has instituted High Court proceedings against two of its former employees, seeking more than E14 million in...

King jets off to Taiwan after 2yrs

MANZINI – His Majesty King Mswati III left the country yesterday morning for Taiwan, more than two years after his last official visit....

Jehovah’s Witnesses can now donate blood cells

MBABANE - For decades, Jehovah’s Witnesses have refused blood transfusions, but thousands of members in Eswatini now face a significant change. The church...

Related Articles

Africa urged to turn seed summit into jobs

MBABANE - Africa has been urged to turn commitments made at the...

ESWACAA eyes E12bn investment, 20 000 jobs by 2037

MBABANE - Eswatini Civil Aviation Authority (ESWACAA) is targeting to attract E12...

Swati-owned Datamatics lands key role in E12bn airport strategy

MBABANE - Information technology and Geographic Information Systems (GIS) consultancy Datamatics Eswatini...

UNDP backs UniPod to build production for airport cargo

MBABANE - The United Nations Development Programme (UNDP) is supporting the development...