Rennies Travel (Pty) Ltd v The Commissioner for the South African Revenue Services (VAT/1715) [2020] ZATC 23 (11 December 2020)

Rennies Travel (Pty) Ltd v The Commissioner for the South African Revenue Services (VAT/1715) [2020] ZATC 23 (11 December 2020)

The court found that the supplementary commission paid to the appellant by the airlines was not for the arranging of transport or transport of passengers, but rather for the successful marketing and promotion of international airline ticket sales. The agreements between the appellant and the airlines established that the incentive was triggered by meeting sales targets, not by the supply of transport services. The services of marketing and promotion do not fall within the zero-rating provisions of section 11 of the Value Added Tax Act. Therefore, the supplementary commission is subject to VAT at the standard rate of 14%. The appeal was dismissed, and each party was ordered to pay its own...

Citation
[2020] ZATC 23
Parties
Appellant: Rennies Travel (Pty) Ltd; Respondent: The Commissioner for the South African Revenue Services
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
11 December 2020
Case Number
VAT/1715
Procedural Posture
Tax Appeal / Final Judgment
Outcome
Appeal dismissed.
Judges
Twala, Xaba, Nhleko
Legal Topics
Value Added Tax, Zero Rating, Interpretation of Contracts, Supply of Services, Marketing and Promotion, Additional Tax Assessment
Tax Law Commercial and Corporate Value Added Tax Zero Rating Interpretation of Contracts Supply of Services Marketing and Promotion Additional Tax Assessment

Case Brief

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Parties

Rennies Travel (Pty) Ltd

Appellant

The Commissioner for the South African Revenue Services

Respondent

Procedural Posture

Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether the international supplementary commission or incentive paid to the appellant is subject to VAT at the standard rate or at zero percent under the Value Added Tax Act.
  2. 2 Whether the services rendered by the appellant in marketing and promoting airline ticket sales constitute arranging transport or transport of passengers for purposes of section 11 of the Act.
  3. 3 Whether the respondent established a proper basis in law and fact to levy output tax at the standard rate on the supplementary commission.

Ratio Decidendi

The court found that the supplementary commission paid to the appellant by the airlines was not for the arranging of transport or transport of passengers, but rather for the successful marketing and promotion of international airline ticket sales. The agreements between the appellant and the airlines established that the incentive was triggered by meeting sales targets, not by the supply of transport services. The services of marketing and promotion do not fall within the zero-rating provisions of section 11 of the Value Added Tax Act. Therefore, the supplementary commission is subject to VAT at the standard rate of 14%. The appeal was dismissed, and each party was ordered to pay its own...

Court Disposition

Appeal dismissed.

Orders

  • The appeal is dismissed.
  • Each party to pay its own costs of the appeal.