CSARS v Marshall NO and Others (816/2015) [2016] ZASCA 158; 2017 (1) SA 114 (SCA); 79 SATC 49 (3 October 2016)

CSARS v Marshall NO and Others (816/2015) [2016] ZASCA 158; 2017 (1) SA 114 (SCA); 79 SATC 49 (3 October 2016)

The Supreme Court of Appeal held that section 8(5) of the VAT Act does not apply to payments made for the actual supply of goods and services under a contract. The payments received by the Trust from provincial health departments were for actual services rendered in terms of written agreements and constituted consideration for taxable supplies under section 7(1)(a). The deeming provision in section 8(5) is intended for unrequited payments such as grants, subsidies, or donations, where there is no direct benefit or identifiable supply of goods or services. Therefore, the payments in question do not qualify for zero-rating under section 11(2)(n), and VAT is payable at the standard rate. The...

Citation
[2016] ZASCA 158
Parties
Appellant: Commissioner for the South African Revenue Service; Respondent: Alan George Marshall NO; Respondent: Rene Pieter de Wet NO; Respondent: Knowledge Lwazi Mboyi NO; Respondent: John Andrew de Martin NO; Respondent: Ray Siphosomhle Sithembile Msengana NO; Respondent: Kovin Shunmugam Naidoo NO; Respondent: Samson Makhudu Gulube NO
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
3 October 2016
Case Number
816/2015
Procedural Posture
Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria
Outcome
Appeal upheld; order of the High Court set aside; application dismissed with costs.
Judges
Navsa, Bosielo, Dambuza, Van der Merwe, Makgoka
Legal Topics
Value Added Tax, Zero Rating, Public Benefit Organisation, Deemed Supply, Statutory Interpretation
Tax Law Value Added Tax Zero Rating Public Benefit Organisation Deemed Supply Statutory Interpretation

Case Brief

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Parties

Commissioner for the South African Revenue Service

Appellant

Alan George Marshall NO

Respondent

Rene Pieter de Wet NO

Respondent

Knowledge Lwazi Mboyi NO

Respondent

John Andrew de Martin NO

Respondent

Ray Siphosomhle Sithembile Msengana NO

Respondent

Kovin Shunmugam Naidoo NO

Respondent

Samson Makhudu Gulube NO

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria

Legal Issues

  1. 1 Whether payments received by the Trust from provincial health departments for aero-medical services are a 'deemed supply' under section 8(5) of the VAT Act.
  2. 2 Whether such payments qualify to be zero-rated under section 11(2)(n) of the VAT Act.
  3. 3 Whether section 8(5) applies to actual supply of services or only to unrequited payments such as grants, subsidies, or donations.

Ratio Decidendi

The Supreme Court of Appeal held that section 8(5) of the VAT Act does not apply to payments made for the actual supply of goods and services under a contract. The payments received by the Trust from provincial health departments were for actual services rendered in terms of written agreements and constituted consideration for taxable supplies under section 7(1)(a). The deeming provision in section 8(5) is intended for unrequited payments such as grants, subsidies, or donations, where there is no direct benefit or identifiable supply of goods or services. Therefore, the payments in question do not qualify for zero-rating under section 11(2)(n), and VAT is payable at the standard rate. The...

Court Disposition

Appeal upheld; order of the High Court set aside; application dismissed with costs.

Orders

  • The appeal is upheld with costs, including costs for two counsel.
  • The order of the court a quo is set aside and replaced with: 'The application is dismissed with costs.'