Constitutional Court dismisses Tholo Energy's R4.25m diesel refund appeal
A fuel distributor's claim for a R4.25 million diesel refund fails after the Constitutional Court finds it did not meet key requirements of the Customs and Excise Act.
The Constitutional Court has dismissed an appeal by Tholo Energy Services CC against a Supreme Court of Appeal (SCA) judgment that refused its claim for a R4.25 million diesel refund. In a judgment handed down on 16 January 2026, the Court found that Tholo did not comply with several requirements of the Customs and Excise Act 91 of 1964 (CEA) and therefore could not claim the refund.
The dispute dates back to 2016, when Tholo, a licensed fuel distributor, purchased and collected 25 consignments of diesel from PetroSA for direct removal to its customers in Lesotho. In March 2017, Tholo submitted four refund claims totalling R4.25 million to the Commissioner for the South African Revenue Service (SARS). The Commissioner disallowed the claims in July 2017, citing two main reasons: the fuel had not been obtained from a licensed manufacturing warehouse (VM) as required by the CEA, and Tholo lacked the necessary export permits from the International Trade Administration Commission (ITAC).
Tholo appealed internally and then to the High Court, which dismissed its application. The SCA confirmed the refusal, adding further grounds. Tholo then approached the Constitutional Court.
The Court’s findings
The Constitutional Court considered three main questions. First, it found that the Commissioner is entitled to lead additional evidence and advance additional grounds in support of his determination, but he cannot make a wholly different determination. Second, it found that Tholo did not obtain the fuel from a licensed VM. The consignments were collected from PetroSA’s storage tanks in Bloemfontein and Tzaneen and from a TotalEnergies depot in Alrode, none of which are registered as VMs. The Court noted that Schedule 6 Item 671.11 of the CEA requires fuel to be obtained from stocks of a VM, meaning stocks held at the licensed warehouse premises, not stocks belonging to an entity that holds a VM license for different premises elsewhere.
Third, the Court rejected Tholo’s argument that it did not need an export permit because of an alleged practice generally prevailing under section 44(11A) of the CEA. It found that section 6 of the ITA, read with Government Notice R92 of 10 February 2012, prescribes that certain goods, including diesel, may not be exported except under authority of a permit.
The Court also examined additional grounds. Evidence showed that Tholo did not use its own transport to move fuel to Lesotho. Instead, the transport was undertaken by Tholo Lesotho, an affiliated entity operating in Lesotho, using vehicles registered in Lesotho and driven by Lesotho nationals. Tholo Lesotho is neither a licensed distributor of fuel nor a licensed remover of goods in bond as contemplated in section 64D of the CEA. The Court held that the fact that related entities share common ownership and management does not satisfy the statutory requirement.
Furthermore, payment to PetroSA was made by Tholo Lesotho, not Tholo. While Tholo argued that payment by its affiliated entity should be accepted, the Court pointed to section 75(1)(d) of the CEA, which states that the refund may be paid to “the person who paid the duty”. Since Tholo did not make the payment, it cannot claim the refund, regardless of its relationship with Tholo Lesotho.
Why it matters
The ruling reinforces the strict requirements for diesel refunds under the Customs and Excise Act. It clarifies that fuel must be obtained from a licensed manufacturing warehouse, that export permits are mandatory for certain goods, and that refunds can only be claimed by the person who paid the duty. For businesses involved in fuel distribution and export, the judgment underscores the importance of complying with all statutory requirements to avoid losing refund claims.
The Court granted leave to appeal but dismissed the appeal, ordering Tholo to pay the respondent’s costs, including the costs of two counsel.
What happens next
The judgment brings finality to the dispute. It is unclear whether Tholo will seek any further legal recourse, as the Constitutional Court is the highest court in the land. The ruling serves as a precedent for similar cases involving diesel refund claims and the interpretation of the CEA.
According to the Constitutional Court’s post-judgment media summary, the full judgment is available at hdl.handle.net The summary itself is not binding on the Court.
