South African National Tubercolosis v Provincial Government of the Eastern Cape (581/12) [2014] ZAECBHC 3 (11 March 2014)

South African National Tubercolosis v Provincial Government of the Eastern Cape (581/12) [2014] ZAECBHC 3 (11 March 2014)

The court found that clause 4.3 of the sale agreement fixed the time for payment of VAT as the date of registration of the property, which occurred on 27 November 2009. As the respondent failed to pay VAT on that date, interest accrued from then. The exemption certificate obtained by the conveyancer did not exempt the parties from VAT but only from transfer duty, and the entry regarding VAT was made by the conveyancer, not SARS. The respondent's insistence that VAT was not payable caused the delay. The court rejected the argument that interest should only accrue from the date the respondent was informed of the SARS demand. The court also found no special circumstances justifying a lower...

Citation
[2014] ZAECBHC 3
Parties
Applicant: South African National Tubercolosis; Respondent: Provincial Government of the Eastern Cape
Court
Eastern Cape High Court, Bhisho
Jurisdiction
South Africa
Judgment Date
11 March 2014
Case Number
581/12
Procedural Posture
Civil Application / Judgment
Outcome
Application granted. The respondent is liable for interest on the VAT amount from the date of registration of the property at the prescribed rate.
Judges
T Malusi
Legal Topics
Value Added Tax, Contractual Interest, Sale of Immovable Property, Prescribed Rate of Interest Act, Mora Ex Re
Civil Procedure Tax Law Land and Property Value Added Tax Contractual Interest Sale of Immovable Property Prescribed Rate of Interest Act Mora Ex Re

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Parties

South African National Tubercolosis

Applicant

Provincial Government of the Eastern Cape

Respondent

Procedural Posture

Civil Application / Judgment

Legal Issues

  1. 1 Is the respondent liable to pay interest on the VAT amount from the date of registration of the property or only from the date it was informed of the SARS demand?
  2. 2 Does the sale agreement fix the time for payment of VAT, thereby triggering mora ex re?
  3. 3 Is the respondent entitled to pay interest at a rate lower than the prescribed rate due to special circumstances?

Ratio Decidendi

The court found that clause 4.3 of the sale agreement fixed the time for payment of VAT as the date of registration of the property, which occurred on 27 November 2009. As the respondent failed to pay VAT on that date, interest accrued from then. The exemption certificate obtained by the conveyancer did not exempt the parties from VAT but only from transfer duty, and the entry regarding VAT was made by the conveyancer, not SARS. The respondent's insistence that VAT was not payable caused the delay. The court rejected the argument that interest should only accrue from the date the respondent was informed of the SARS demand. The court also found no special circumstances justifying a lower...

Court Disposition

Application granted. The respondent is liable for interest on the VAT amount from the date of registration of the property at the prescribed rate.

Orders

  • The respondent must pay interest at the rate of 15.5% per annum on R4,168,927.73 from 27 November 2009 to 30 January 2013.
  • The respondent must pay interest at the rate of 15.5% per annum on R2,375,506.87 from 31 January 2013 to date of payment.