Commissioner for South African Revenue Service v British Airways Plc (141/2004) [2005] ZASCA 20; 2005 (4) SA 231 (SCA); 67 SATC 167 (29 March 2005)

Commissioner for South African Revenue Service v British Airways Plc (141/2004) [2005] ZASCA 20; 2005 (4) SA 231 (SCA); 67 SATC 167 (29 March 2005)

The Supreme Court of Appeal held that British Airways is not liable to pay value-added tax at the ordinary rate on the portion of its international fares that constitutes recovery of the passenger service charge levied by Airports Company Limited. The court found that the airport services for which the passenger service charge is levied are supplied by Airports Company Limited, not by British Airways. The charge is a cost incurred by British Airways in operating its carrier service, similar to landing and parking charges, and its recovery from passengers does not constitute a separate supply of airport services by British Airways. Section 8(15) of the Value-added Tax Act does not apply...

Citation
[2005] ZASCA 20
Parties
Appellant: Commissioner for South African Revenue Service; Respondent: British Airways Plc
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
29 March 2005
Case Number
141/04
Procedural Posture
Civil Appeal / Appeal From the Tax Court
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
Howie, Streicher, Nugent, Van Heerden, Ponnan
Legal Topics
Value Added Tax, Zero Rating, Passenger Service Charge, Composite Fare, Apportionment of Tax, Vendor Liability
Tax Law Civil Procedure Value Added Tax Zero Rating Passenger Service Charge Composite Fare Apportionment of Tax Vendor Liability

Case Brief

Summary, issues, holding and outcome

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Parties

Commissioner for South African Revenue Service

Appellant

British Airways Plc

Respondent

Procedural Posture

Civil Appeal / Appeal From the Tax Court

Legal Issues

  1. 1 Is British Airways liable to pay value-added tax at the ordinary rate on the portion of its international fares that constitutes recovery of the passenger service charge levied by Airports Company Limited?
  2. 2 Does section 8(15) of the Value-added Tax Act 89 of 1991 apply to apportion the tax rate to the passenger service charge element of the composite fare?
  3. 3 Are airport services supplied by British Airways to its passengers for VAT purposes, or are they supplied by Airports Company Limited?

Ratio Decidendi

The Supreme Court of Appeal held that British Airways is not liable to pay value-added tax at the ordinary rate on the portion of its international fares that constitutes recovery of the passenger service charge levied by Airports Company Limited. The court found that the airport services for which the passenger service charge is levied are supplied by Airports Company Limited, not by British Airways. The charge is a cost incurred by British Airways in operating its carrier service, similar to landing and parking charges, and its recovery from passengers does not constitute a separate supply of airport services by British Airways. Section 8(15) of the Value-added Tax Act does not apply...

Court Disposition

Appeal dismissed with costs, including the costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.