Consol Glass (Pty) Ltd v Commissioner for the South African Revenue Service (1010/2019) [2020] ZASCA 175; 83 SATC 186 (18 December 2020)

Consol Glass (Pty) Ltd v Commissioner for the South African Revenue Service (1010/2019) [2020] ZASCA 175; 83 SATC 186 (18 December 2020)

The court held that Consol was not entitled to deduct input tax on fees paid to local service providers, nor was it exempt from VAT on imported services. The refinancing transactions, including the substitution of Eurobond debt with local debt, were undertaken to maintain the funding structure for the reorganisation of the Consol group, not for the purpose of making taxable supplies. The services procured were not sufficiently linked to the manufacture and sale of glass containers to qualify as being in the course of making taxable supplies. The exempt supply submission by the Commissioner was rejected, as Consol was not a supplier of financial services but a manufacturer and seller of...

Citation
[2020] ZASCA 175
Parties
Appellant: Consol Glass (Pty) Ltd; Respondent: Commissioner for the South African Revenue Service
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
18 December 2020
Case Number
1010/2019
Procedural Posture
Civil Appeal / Appeal From the Tax Court, Gauteng
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
NAVSA, WALLIS, MAKGOKA, SUTHERLAND, UNTERHALTER
Legal Topics
Value Added Tax Act, Input Tax Deduction, Imported Services, Taxable Supply Definition, Exempt Supply, Financial Services
Tax Law Civil Procedure Value Added Tax Act Input Tax Deduction Imported Services Taxable Supply Definition Exempt Supply Financial Services

Case Brief

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Parties

Consol Glass (Pty) Ltd

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Civil Appeal / Appeal From the Tax Court, Gauteng

Legal Issues

  1. 1 Was the Commissioner entitled to disallow Consol's input tax deduction on fees paid to local service providers?
  2. 2 Was Consol obliged to declare and pay VAT on fees paid to non-resident suppliers for imported services?

Ratio Decidendi

The court held that Consol was not entitled to deduct input tax on fees paid to local service providers, nor was it exempt from VAT on imported services. The refinancing transactions, including the substitution of Eurobond debt with local debt, were undertaken to maintain the funding structure for the reorganisation of the Consol group, not for the purpose of making taxable supplies. The services procured were not sufficiently linked to the manufacture and sale of glass containers to qualify as being in the course of making taxable supplies. The exempt supply submission by the Commissioner was rejected, as Consol was not a supplier of financial services but a manufacturer and seller of...

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.