AB CC v Commissioner for the South African Revenue Service (VAT 1005) [2014] ZATC 4; 78 SATC 64 (9 December 2014)

AB CC v Commissioner for the South African Revenue Service (VAT 1005) [2014] ZATC 4; 78 SATC 64 (9 December 2014)

The court found that the appellant's services, including rectification, rehabilitation, and construction of new houses, were rendered in terms of the Housing Subsidy Scheme as contemplated by section 3(5)(a) of the Housing Act and supported by the National Housing Code 2000. The explicit VAT treatment clause in the contract between the appellant and C constituted an official declaration by a government department. The evidence showed inconsistency and ambiguity in the interpretation of the Housing Subsidy Scheme among government departments and SARS. Applying the contra fiscum rule, the court held that ambiguity in the VAT Act and Housing Act should be resolved in favour of the taxpayer....

Citation
[2014] ZATC 4
Parties
Appellant: AB CC; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
9 December 2014
Case Number
VAT 1005
Procedural Posture
Tax Appeal / Appeal Against VAT Assessment Disallowance
Outcome
Appeal upheld. SARS ordered to revise the VAT assessment and refund the appellant with interest.
Judges
N P Mali
Legal Topics
Value Added Tax, Housing Subsidy Scheme, Zero Rating, Statutory Interpretation, Contra Fiscum Rule
Tax Law Value Added Tax Housing Subsidy Scheme Zero Rating Statutory Interpretation Contra Fiscum Rule

Case Brief

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Parties

AB CC

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Appeal Against VAT Assessment Disallowance

Legal Issues

  1. 1 Whether the appellant's services rendered to C qualified for zero-rated VAT under section 11(2)(s) of the Value Added Tax Act.
  2. 2 Whether the rectification, rehabilitation, and construction of houses fell within the Housing Subsidy Scheme as referenced in section 3(5)(a) of the Housing Act.
  3. 3 Whether SARS's refusal to refund VAT was justified based on the interpretation of the Housing Subsidy Scheme provisions.

Ratio Decidendi

The court found that the appellant's services, including rectification, rehabilitation, and construction of new houses, were rendered in terms of the Housing Subsidy Scheme as contemplated by section 3(5)(a) of the Housing Act and supported by the National Housing Code 2000. The explicit VAT treatment clause in the contract between the appellant and C constituted an official declaration by a government department. The evidence showed inconsistency and ambiguity in the interpretation of the Housing Subsidy Scheme among government departments and SARS. Applying the contra fiscum rule, the court held that ambiguity in the VAT Act and Housing Act should be resolved in favour of the taxpayer....

Court Disposition

Appeal upheld. SARS ordered to revise the VAT assessment and refund the appellant with interest.

Orders

  • SARS is ordered to revise the assessment for the VAT periods from 07/2008 to 09/2010 and to refund the appellant the sum of R38,162,303.07 with interest at 9.0% from the date of this order.
  • Each party to pay its own costs.