Commissioner for South African Revenue Services v De Beers Consolidated Mines Ltd (503/11) [2012] ZASCA 103; 2012 (5) SA 344 (SCA); [2012] 3 All SA 367 (SCA); 74 SATC 330 (1 June 2012)

Commissioner for South African Revenue Services v De Beers Consolidated Mines Ltd (503/11) [2012] ZASCA 103; 2012 (5) SA 344 (SCA); [2012] 3 All SA 367 (SCA); 74 SATC 330 (1 June 2012)

The Supreme Court of Appeal held that the services rendered by NM Rothschild & Sons Ltd to De Beers Consolidated Mines Ltd were not acquired for the purpose of making taxable supplies in the course or furtherance of De Beers' enterprise of mining and selling diamonds. Instead, these services were obtained to comply...

Source-derived case information.

Citation
[2012] ZASCA 103
Parties
Appellant: Commissioner for the South African Revenue Service; Respondent: De Beers Consolidated Mines Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 June 2012
Case Number
503/11
Procedural Posture
Civil Appeal / Appeal From the Tax Court, Cape Town
Outcome
Appeal upheld with costs; cross-appeal dismissed with costs.
Judges
Navsa, Van Heerden, Leach, McLaren, Southwood
Legal Topics
Value Added Tax Act, Imported Services, Input Tax Deduction, Enterprise Definition, Taxable Supplies, Scheme of Arrangement
Tax Law Commercial and Corporate Value Added Tax Act Imported Services Input Tax Deduction Enterprise Definition Taxable Supplies Scheme of Arrangement

Source-derived case record

Summary, issues, holding and outcome

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Parties

Commissioner for the South African Revenue Service

Appellant

De Beers Consolidated Mines Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From the Tax Court, Cape Town

Legal Issues

  1. 1 Whether the services provided by NM Rothschild & Sons Ltd to De Beers Consolidated Mines Ltd constituted 'imported services' under the Value-Added Tax Act.
  2. 2 Whether the VAT paid on local advisory services qualifies as deductible input tax under the Act.
  3. 3 Whether the services were acquired for the purpose of making taxable supplies in the course or furtherance of De Beers' enterprise.

Ratio Decidendi

The Supreme Court of Appeal held that the services rendered by NM Rothschild & Sons Ltd to De Beers Consolidated Mines Ltd were not acquired for the purpose of making taxable supplies in the course or furtherance of De Beers' enterprise of mining and selling diamonds. Instead, these services were obtained to comply with statutory obligations in the context of a takeover transaction, which was too remote from the advancement of the VAT enterprise. The court found that the services were consumed in South Africa and thus constituted 'imported services' under the Value-Added Tax Act, attracting VAT liability. Furthermore, the VAT paid on local advisory services did not qualify as deductible...

Court Disposition

Appeal upheld with costs; cross-appeal dismissed with costs.

Orders

  • The appeal is upheld with costs, including the costs attendant upon the employment of two counsel.
  • The cross appeal is dismissed with costs, including the costs attendant upon the employment of two counsel.