ABC (Pty) Ltd v Commissioner for the South African Revenue Service (1626) [2020] ZATC 9; 82 SATC 388 (3 March 2020)

ABC (Pty) Ltd v Commissioner for the South African Revenue Service (1626) [2020] ZATC 9; 82 SATC 388 (3 March 2020)

The court found that the appellant's branches supplied currency to customers for a commission, and the only consideration paid by customers was the commission, which is subject to VAT. The margin built into the exchange rate was not part of the contractual arrangement and was unknown to customers, thus not constituting consideration for VAT purposes. The respondent's insistence on the apportionment method was unfounded, as the facts established that all input VAT incurred by the branches was wholly attributable to taxable supplies. The appellant met its burden of proof under section 102 of the TAA, and the respondent's assessment was unreasonable. The appeal was upheld, and the respondent...

Citation
[2020] ZATC 9
Parties
Appellant: ABC (Pty) Ltd; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
3 March 2020
Case Number
VAT 1626
Procedural Posture
Tax Appeal / Final Judgment
Outcome
Appeal upheld. Assessment set aside. Costs awarded to appellant.
Judges
Maluleke
Legal Topics
Vat Input Tax Deduction, Direct Attribution Method, Apportionment Method, Financial Services Exemption, Commission as Consideration
Tax Law Vat Input Tax Deduction Direct Attribution Method Apportionment Method Financial Services Exemption Commission as Consideration

Case Brief

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Parties

ABC (Pty) Ltd

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether the appellant was entitled to apply the direct attribution method for VAT input tax deduction in respect of its branches.
  2. 2 Whether the commission charged by the appellant constitutes consideration under the proviso to section 2(1) of the VAT Act, thereby rendering the supply taxable.
  3. 3 Whether the respondent's assessment and insistence on the apportionment method was legally justified.

Ratio Decidendi

The court found that the appellant's branches supplied currency to customers for a commission, and the only consideration paid by customers was the commission, which is subject to VAT. The margin built into the exchange rate was not part of the contractual arrangement and was unknown to customers, thus not constituting consideration for VAT purposes. The respondent's insistence on the apportionment method was unfounded, as the facts established that all input VAT incurred by the branches was wholly attributable to taxable supplies. The appellant met its burden of proof under section 102 of the TAA, and the respondent's assessment was unreasonable. The appeal was upheld, and the respondent...

Court Disposition

Appeal upheld. Assessment set aside. Costs awarded to appellant.

Orders

  • The appeal is upheld.
  • The respondent is to pay the costs of the appellant, including the costs occasioned by the employment of counsel.