High Court Blocks SARS From Using RAF Levies to Pay Eskom

The South African Revenue Service (SARS) has been prohibited from deducting R5.1 billion from the Road Accident Fund (RAF) levies it collects to pay Eskom, following a controversial diesel refund settlement between the tax authority and the power utility.

The ruling, delivered by Judge Ronel Tolmay in the High Court in Pretoria, granted an interim interdict against SARS after the RAF challenged the deductions on an urgent basis.

The SARS-RAF Dispute Over Eskom’s Diesel Refunds

The dispute stems from a settlement agreement reached between SARS and Eskom on 17 October 2024, regarding diesel refunds claimed by Eskom under the Customs and Excise Act.

SARS determined that Eskom was not entitled to these refunds for a 30-month period between 2019 and 2021, which led to Eskom claiming R5.1 billion in a settlement deal.

SARS then attempted to recover this amount by deducting it from RAF levies, which sparked legal action from the RAF.

Key Findings of the Judgment

• SARS has been interdicted from deducting the R5.1 billion or any portion of it from RAF levies.

• The interim order will remain in place until the dispute resolution process under the Intergovernmental Relations Framework Act (IRF Act) is finalized (within 45 business days).

• If the dispute remains unresolved, the RAF can take further legal action to prevent SARS from making deductions.

• SARS was ordered to pay the RAF’s legal costs.

SARS Had Already Deducted R1.2 Billion

Despite the ongoing dispute, SARS had already deducted R1.2 billion from RAF levy payments by February 26, 2025.

Judge Tolmay criticized SARS for its lack of transparency, stating that the tax authority had refused to disclose the settlement agreement with Eskom to the RAF, despite a clause explicitly allowing disclosure.

Why the RAF Fought Back

The RAF argued that the deductions would cripple its ability to compensate motor vehicle accident victims, as the R5.1 billion represents 10% of its annual income.

RAF CEO Collins Letsoalo welcomed the ruling, saying the fund had secured critical relief from the court.

What Happens Next?

• SARS is still reviewing the judgment before making a formal response.

• The IRF dispute resolution process must be completed within 45 business days.

• If the matter remains unresolved, the RAF may take further legal action.

The ruling highlights tensions between state institutions over financial management and could have far-reaching implications for government funds and taxpayer money.

{Source BusinessTech}

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