Taxpayer v Commissioner for the South African Revenue Service (VAT1558) [2018] ZATC 3; 81 SATC 390 (5 December 2018)

Taxpayer v Commissioner for the South African Revenue Service (VAT1558) [2018] ZATC 3; 81 SATC 390 (5 December 2018)

The court held that section 8(15) of the VAT Act applies where a single supply consists of both goods and services, and if separate considerations would have attracted different VAT rates, each part is deemed a separate supply. The appellant supplied a single advertising and promotional service to foreign brand owners, which included the distribution of promotional goods locally. The evidence showed that the cost of promotional goods could be separated from the total fee charged. The supply of promotional goods was a cognisable supply capable of notional separation and, by virtue of section 8(15), deemed a separate supply for VAT purposes. The local supply of goods was not exported but...

Citation
[2018] ZATC 3
Parties
Appellant: Taxpayer; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
5 December 2018
Case Number
VAT 1558
Procedural Posture
Tax Appeal / Final Judgment
Outcome
Appeal dismissed; additional VAT assessments for the periods 2009, 2010 and 2011 confirmed.
Judges
K M Savage
Legal Topics
Value Added Tax, Zero Rating, Deeming Provision, Supply of Goods and Services, Apportionment, Interpretation of Vat Act
Tax Law Value Added Tax Zero Rating Deeming Provision Supply of Goods and Services Apportionment Interpretation of Vat Act

Case Brief

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Parties

Taxpayer

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether section 8(15) of the Value-Added Tax Act 89 of 1991 applies to the appellant's supply of advertising and promotional services to foreign brand owners.
  2. 2 Whether the supply of promotional goods as part of the advertising and promotional service constitutes a separate supply for VAT purposes.
  3. 3 Whether the supply of promotional goods should be standard-rated or zero-rated under the Act.

Ratio Decidendi

The court held that section 8(15) of the VAT Act applies where a single supply consists of both goods and services, and if separate considerations would have attracted different VAT rates, each part is deemed a separate supply. The appellant supplied a single advertising and promotional service to foreign brand owners, which included the distribution of promotional goods locally. The evidence showed that the cost of promotional goods could be separated from the total fee charged. The supply of promotional goods was a cognisable supply capable of notional separation and, by virtue of section 8(15), deemed a separate supply for VAT purposes. The local supply of goods was not exported but...

Court Disposition

Appeal dismissed; additional VAT assessments for the periods 2009, 2010 and 2011 confirmed.

Orders

  • The appeal is dismissed and the additional assessments for the VAT periods 2009, 2010 and 2011 raised against the taxpayer by the Commissioner are confirmed.