Marshall N.O. and Others v Commission For The South African Revenue Service (39219/2014) [2015] ZAGPPHC 304; 77 SATC 395 (6 May 2015)

Marshall N.O. and Others v Commission For The South African Revenue Service (39219/2014) [2015] ZAGPPHC 304; 77 SATC 395 (6 May 2015)

The court found that section 8(5) of the Value-Added Tax Act applies to both deemed and actual services rendered by a designated entity, such as the SA Red Cross Air Mercy Service Trust, to public authorities. The Trust, as a welfare organisation approved under the Income Tax Act, provides qualifying services to provincial health departments, which are public authorities. The payments received by the Trust for these services are in the furtherance of its enterprise and constitute consideration for services supplied. Section 11(2)(n) of the VAT Act does not restrict zero rating to deemed supplies only; it applies to services supplied by a welfare organisation to a public authority,...

Citation
[2015] ZAGPPHC 304
Parties
Applicant: Alan George Marshall N.O.; Applicant: Rene Pieter De Wet N.O.; Applicant: Knowledge Lwazi Mboyi N.O.; Applicant: John Andrew De Martin N.O.; Applicant: Ray Siphosomhle Msengana N.O.; Applicant: Kovin Shunmugam Naidoo; Applicant: Samson Makhudu Gulube; Respondent: Commissioner for the South African Revenue Service
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
6 May 2015
Case Number
39219/2014
Procedural Posture
Declaratory Application / Judgment
Outcome
Application granted. Declaratory order issued in favour of the applicants.
Judges
C Pretorius
Legal Topics
Value Added Tax, Zero Rating, Statutory Interpretation, Public Benefit Organisation
Tax Law Administrative Law Value Added Tax Zero Rating Statutory Interpretation Public Benefit Organisation

Case Brief

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Parties

Alan George Marshall N.O.

Applicant

Rene Pieter De Wet N.O.

Applicant

Knowledge Lwazi Mboyi N.O.

Applicant

John Andrew De Martin N.O.

Applicant

Ray Siphosomhle Msengana N.O.

Applicant

Kovin Shunmugam Naidoo

Applicant

Samson Makhudu Gulube

Applicant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Declaratory Application / Judgment

Legal Issues

  1. 1 Whether section 8(5) of the Value-Added Tax Act applies to both deemed and actual services rendered.
  2. 2 Whether services rendered by the SA Red Cross Air Mercy Service Trust to provincial health departments should be zero rated under section 11(2)(n) of the VAT Act.
  3. 3 Whether payments received by the Trust from provincial health departments qualify for zero rating under the VAT Act.

Ratio Decidendi

The court found that section 8(5) of the Value-Added Tax Act applies to both deemed and actual services rendered by a designated entity, such as the SA Red Cross Air Mercy Service Trust, to public authorities. The Trust, as a welfare organisation approved under the Income Tax Act, provides qualifying services to provincial health departments, which are public authorities. The payments received by the Trust for these services are in the furtherance of its enterprise and constitute consideration for services supplied. Section 11(2)(n) of the VAT Act does not restrict zero rating to deemed supplies only; it applies to services supplied by a welfare organisation to a public authority,...

Court Disposition

Application granted. Declaratory order issued in favour of the applicants.

Orders

  • Section 8(5) of the Value-Added Tax Act 89 of 1991 applies to both deemed and actual services rendered.
  • The services rendered by or on behalf of the SA Red Cross Air Mercy Service Trust to provincial health departments are zero rated under section 11(2)(n) of the VAT Act.