As all farmers know, a diesel fuel rebate is allowable in terms of the Customs and Excise Act. Yet many farmers have recently been hit with reversals or clawbacks of the rebate with accompanying penalties and interest. SARS auditors are focusing on the logbooks kept by farmers and rebates are being disallowed because of an insistence on slavish adherence to logbook ‘rules’.
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Up until recently, 20% of a rebate could be disallowed if record-keeping was not up to standard. In other words, some discretion was allowed, as per Part 3, Note 6(h)(vii), to Schedule 6 of the Customs and Excise Act. Now, however, the logbook is regarded as the sole document for ascertaining the diesel rebate. The question is: does the Commissioner still have the discretion to award the rebate in the face of alleged non-compliance?
Here’s what the note says: “This exception is applied at the discretion of the Commissioner for the period 1 November 2009 to 31 March 2013, whereafter only the required logbook information will be accepted as valid proof of eligible distillate fuel purchases.”
In other words, it no longer matters if a farmer has made every effort to comply; if his logbook is not up to standard, it will be disregarded, enabling the Commissioner to write back the rebate. In addition, penalties and interest charges will be levied.
This is a very harsh application of the law and one can question how reasonable it is.
According to SARS’ definition, a ‘logbook’ must contain a schedule with columns in which records of the activities that affect the claim are noted. The records must be such that an audit trail can be established between the supplier and the end-user.
A date of use is required, the equipment fuelled, the purpose of the fuel, the place where used, the consumption of the machine, and all of this must be supported by documentation, such as vehicle purchase records, service records and the like.
The note further states that the minimum requirements are as per the example of a logbook on the SARS website. However, it is just that – an example; one is not required to use this actual form.
The problem is that the SARS example has far more detail than the minimum requirements set out in the definition of ‘logbook’. It shows the storage unit, quantity, opening balance of fuel, opening and closing entries for engine hour meter or odometer, total fuel used, unused balance, whether any non-eligible activity is performed, and much else.
So which is correct? If the Customs and Excise Act wanted the exact information as per the example, it should have said so plainly. Of course, farmers would be advised to use the more detailed option as a guide, but why should those who have not done so be punished?
If the minimum requirements as per the Schedule Six definition of a logbook are met, the farmer should be entitled to his rebate – simple as that. An administrative glitch is no reason to penalise him. Penalities should apply only where dishonesty has been proved and excess rebates have been claimed.