TCT Leisure (Pty) Ltd v Commissioner for the South African Revenue Services (59/09) [2010] ZASCA 10; [2010] 3 All SA 325 (SCA); 72 SATC 187 (12 March 2010)

TCT Leisure (Pty) Ltd v Commissioner for the South African Revenue Services (59/09) [2010] ZASCA 10; [2010] 3 All SA 325 (SCA); 72 SATC 187 (12 March 2010)

The court held that the occupation rights supplied to members of the public were not an incident of share ownership but were discrete rights (points rights) separate from the shares in Leisure Holiday Club Ltd. The articles of association and sale agreements did not link the occupation rights to the shares, and certificates issued to members distinguished between share ownership and points rights. The commercial practice of selling shares and points together did not merge the rights. Therefore, the supply did not qualify as an exempt supply of equity securities under section 12(a) of the VAT Act, and the turnover from the sale of rights was subject to VAT. The appellant failed to...

Citation
[2010] ZASCA 10
Parties
Appellant: TCT Leisure (Pty) Ltd; Respondent: Commissioner for the South African Revenue Services
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
12 March 2010
Case Number
59/09
Procedural Posture
Civil Appeal / Appeal From Special Tax Court (durban)
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Harms, Cloete, Cachalia
Legal Topics
Value Added Tax, Exemptions Under Vat Act, Financial Services Definition, Equity Security Exemption
Tax Law Commercial and Corporate Value Added Tax Exemptions Under Vat Act Financial Services Definition Equity Security Exemption

Case Brief

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Parties

TCT Leisure (Pty) Ltd

Appellant

Commissioner for the South African Revenue Services

Respondent

Procedural Posture

Civil Appeal / Appeal From Special Tax Court (durban)

Legal Issues

  1. 1 Whether the supply of shares and points rights by the taxpayer after the 1995 restructuring qualified as an exempt supply of 'equity securities' under section 12(a) of the VAT Act.
  2. 2 Whether the occupation rights formed part of the bundle of rights attached to the shares in Leisure Holiday Club Ltd.
  3. 3 Whether the turnover from the sale of rights was subject to VAT.

Ratio Decidendi

The court held that the occupation rights supplied to members of the public were not an incident of share ownership but were discrete rights (points rights) separate from the shares in Leisure Holiday Club Ltd. The articles of association and sale agreements did not link the occupation rights to the shares, and certificates issued to members distinguished between share ownership and points rights. The commercial practice of selling shares and points together did not merge the rights. Therefore, the supply did not qualify as an exempt supply of equity securities under section 12(a) of the VAT Act, and the turnover from the sale of rights was subject to VAT. The appellant failed to...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs including the costs of two counsel.