Cape Town - Waste management service provider c has been successful in the Supreme Court of Appeal (SCA) against the SA Revenue Service (Sars) commissioner concerning tax laws applied in the processing of hazardous waste at landfill sites.
EnviroServ’s appeal related to a judgment by the Tax Court in the Western Cape High Court, which had disallowed depreciation claims by EnviroServ concerning excavation sites called “cells”, in which waste is treated.
The commissioner had argued the cells were “akin to dumps or reservoirs”, qualifying them as buildings under the Income Tax Act (ITA).
But EnviroServ argued the cells were used to convert hazardous solid material to waste safe for disposal, therefore classifying it as “plant” or “machinery”, which would allow it depreciation claims at the rate of 40% for the first year and 20% for every year thereafter.
EnviroServ collects and manages more than 10 tons of waste every month. It argued that in the cells, waste was treated with chemicals to remove the hazardous compounds.
SCA Acting President, Justice Nambitha Dambuza, found that the cells were not merely waste disposal sites.
“Contrary to the commissioner’s contention, the cells are not waste disposal assets. Neither are they ‘buildings’ as envisaged in S 13 of the ITA.
“The cells were constructed … to be used as plants wherein the extraction, collection and disposal of leachate (contaminated fluid) would occur, with a special drainage system for collection of leachate,” he said.
“The fact that the cells, in which leachate generation occurs, are also used to permanently store the non-hazardous material, does not detract from their use … The conversion of the collected hazardous solid waste material into waste that is safe for storage is the purpose of EnviroServ’s business.”
EnviroServ Waste Management chief executive Dean Thompson said the company noted the SCA judgment, which “provides clarity and finalisation to a long-standing tax dispute”.
Sars did not respond to a request for comment by deadline yesterday.