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[2016] ZASCA 158
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CSARS v Marshall NO and Others (816/2015) [2016] ZASCA 158; 2017 (1) SA 114 (SCA); 79 SATC 49 (3 October 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 816/2015
In
the matter between:
THE
COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE
SERVICE APPELLANT
and
ALAN
GEORGE MARSHALL
NO FIRST
RESPONDENT
RENE
PIETER DE WET
NO SECOND
RESPONDENT
KNOWLEDGE
LWAZI MBOYI
NO THIRD
RESPONDENT
JOHN
ANDREW DE MARTIN
NO FOURTH
RESPONDENT
RAY
SIPHOSOMHLE SITHEMBELE
MSENGANA
NO FIFTH
RESPONDENT
KOVIN
SHUNMUGAM
NAIDOO SIXTH
RESPONDENT
SAMSON
MAKHUDU
GULUBE SEVENTH
RESPONDENT
(in
their capacities,
nomine officii
, as current and duly
authorised trustees of the SA RED CROSS AIR MERCY SERVICE TRUST)
Neutral
Citation:
CSARS
v Marshall NO
(816/2015)
[2016] ZASCA 158
(3 October 2016).
Coram:
Navsa, Bosielo,
Dambuza and Van der Merwe JJA and Makgoka AJA
Heard:
26 August 2016
Delivered:
3
October 2016
Summary:
Value Added Tax:
whether actual supply of goods and services by a designated entity to
a public authority and a ‘deemed’
supply of services
under s 8(5) of the Value Added Tax Act 89 of 1991: whether
payment received by a designated entity from
a public authority in
respect of such supply is zero-rated under s 11(2)
(n)
of
the Act : section 8(5) of the VAT Act does not apply to actual
supply of services : payment received is not zero-rated under
s 11(2)
(n)
.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Pretorius J, sitting as court
of first instance):
1 The appeal is upheld with costs,
such costs to include the costs consequent upon the employment of two
counsel.
2 The order of the court a quo is set
aside and replaced with the following:
‘
The
application is dismissed with costs’.
JUDGMENT
Dambuza JA (Navsa, Bosielo, Van der
Merwe JJA et Makgoka AJA concurring):
[1]
This appeal involves the interpretation of certain provisions of the
Value Added Tax Act 89 of 1991 (the VAT Act). The question
at the
heart of this appeal is whether the aero-medical services supplied by
the respondent to provincial health departments, the
details of which
are set out later, are a ‘deemed supply’ of services in
terms of the provisions of s 8(5) of
the VAT Act and whether
payments received in respect thereof thus qualify to be zero rated in
terms of s 11(2)
(n)
of the VAT Act. The Gauteng Division
of the High Court, Pretoria (Pretorius J), granted an order declaring
that such payments qualified
for a zero-rating. This appeal is with
leave of the court a quo.
[2]
The appellant is the Commissioner for the South African Revenue
Services (the Commissioner). The respondents are the seven trustees
of the South African Red Cross Air Mercy Service Trust (the Trust)
which is a non-profit organisation that is an approved public
benefit
organisation (PBO) in terms of s 30 of the Income Tax Act 58 of
1962 (the Income Tax Act). Its receipts and accruals
are exempt from
income tax in terms of s 10(1)(cN) of the Income Tax Act. It is
registered for value added tax (VAT) as a
vendor in terms of the VAT
Act.
[1]
[3]
The Trust provides an aero-medical service within the country. This
service, which it has rendered since 1994, consists of a
flying
doctor and rural health outreach service, an air ambulance service,
and a rescue service. In 2006 the Trust concluded a
written agreement
(the aeromedical contract) with the Department of Health of the
Western Cape Provincial Government. It also concluded
similar
agreements with other provincial government health departments within
the country. In terms of these agreements the Trust
renders, on
behalf of the provincial health departments, a ‘comprehensive
aero-medical service’. The service entails
providing, amongst
other things, specialised intensive care, support and transfer of
patients to and from hospitals, medical rescue
services, air
ambulance services and training and support to health workers.
[4]
As consideration for the services rendered the provincial governments
pays the Trust in terms of a schedule of tariff that specifies
a
‘monthly availability fee for three aircraft’ in the
amount of R900 000, a ‘kilometre rate of R8.26 for
[a]
fixed wing aircraft’ and an ‘hourly rate of R4 446 for
[a] rotary wing aircraft’ for each flight undertaken
as part of
the service rendered under the contract.
[5]
On 30 October 2012 the Trust applied to the Commissioner, in terms of
s 41B of the VAT Act
[2]
,
for a binding private VAT ruling to be issued, clarifying the class
of payments it received from the provincial departments of
health for
the services it rendered on their behalf. The Trust was of the view
that these payments qualified for a VAT zero-rating
under s 11(2)
(n)
of the VAT Act.
[3]
I deal with the relevant statutory provisions later in this judgment.
[6]
The reasoning of the Trust was that because it was a welfare
organisation as defined in s 1 of the VAT Act, and as such
was a
‘designated entity’, as also defined in s 1 of the
VAT Act, and because the services it rendered to the
provincial
health departments were in that capacity, it qualified for the
exemption provided for by s 11(2
(n)
of the VAT Act. The
logical conclusion, so it was contended, was that the services
supplied by the Trust were ‘deemed services’
under s 8(5)
of the VAT Act which qualified to be zero rated in terms of
s11(2)
(n)
.
[7]
The Commissioner took a different view. Pursuant to the application
by the Trust, referred to in para 6 above, he issued a binding
private ruling in terms of s 41B of the VAT Act, stating that
the services rendered by the Trust to the provincial health
departments were ‘actual’ services rather than ‘deemed’
services. They fell outside the provisions of s 8(5)
of the VAT
Act and were subject to VAT at the standard rate of 14 per cent in
terms of s 7(1)
(a)
of the VAT Act. The Commissioner
stated that the provisions of s 8(5) of the VAT Act providing
for the deeming of a supply
of services only applied to instances
where designated entities received payments which were not made in
consideration for the
actual supply of goods and services.
[8]
Before us it was common cause that before the ruling referred to in
the preceding paragraph was applied for, the Trust had paid
VAT on
the remuneration received from the health departments for services
supplied by it and had claimed deductions for VAT inputs
in relations
to those services. The services rendered by the Trust appear in the
list of activities published by the Minister of
Finance.
[4]
It was not in dispute that the Trust is a welfare organisation.
[9] Aggrieved at the ruling, the Trust
launched an application in the Gauteng Division of the High Court,
Pretoria, seeking a declaratory
order in the following terms:
‘
1.
1
Section 8(5) of the Value-Added Tax Act 89 of 1991 . . . applies
not only to services deemed to be rendered but also to actual
services rendered;
1.2
The services rendered by or on behalf of the SA RED CROSS AIR MERCY
SERVICE TRUST . . . to the various health departments
of
provincial governments situated within the Republic of South Africa
should be zero rated in terms of section 11(2)
(n)
of
the VAT Act; . . . .’
[10] The court a quo found in favour
of the Trust and granted the order sought. The following are the
important paragraphs in the
judgment of the court below:
’
35.
I have listened to and read all the arguments of both parties, but I
cannot find that I agree with the [Commissioner’s]
argument
that “deem” in section 8(5) means that this section does
not deal with actual services. The payment received
by the Trust from
the provincial governments, being public authorities as defined, are
received in the furtherance of the enterprise
activities of the
Trust, being a designated entity as defined. The payments received
from the provincial governments are subject
to VAT.
36.
Therefore I find that section 11(2)
(n)
of the Act applies as
the services rendered by the Trust qualify for the zero rate of VAT.
The services rendered by the Trust comprise
the activities listed in
paragraph 1
(e)
of Government Notice 112 which provides:
“
Welfare
and Humanitarian
(e)
The rescue or care of persons in distress”
37.
Section 11(2)
(n)
further provides that to the extent that the
payment in respect of the services are made in terms of section 8(5)
it is deemed that
it is supplied to the particular provincial
governments. Therefore these payments received by the Trust for the
services should
be subject to VAT at zero per cent in terms of
section 11(2)
(n)
.’
[11]
Before us counsel for the Commissioner submitted that the provisions
of s 8(5) apply only in respect of unrequited or
gratuitous
payments made by a public authority
[5]
or municipality to a designated entity. These would be payments
received as donations, subsidies and grants. He submitted that
the
provisions of s 8(5) do not apply in respect of services
actually rendered by a designated entity and that payments received
by a designated entity from a public authority or municipality for
such services constitute ‘consideration’
[6]
for taxable supplies in terms of s 7(1)
(a)
of
the VAT Act. VAT was therefore payable at the standard rate.
[12]
Counsel for the Trust submitted that to limit the application of
s 8(5) to unrequited or gratuitous payments as contended
for by
the Commissioner militated against the clear wording of s 8(5),
particularly the words ‘any payment’ and
more
specifically the word ‘any’ as a word of ‘wide and
unqualified generality’. He argued that the legislature
must
have intended that the deeming provision (s 8(5)) be applicable
in respect of
all
payments received by a designated entity from a public authority or
municipality. He also submitted that the submission on behalf
of the
Commissioner misconstrued the definition of ‘consideration’.
Further, that if the legislature had intended to
limit the
application of s 8(5) to grants and subsidies, which are defined
in the VAT Act, it would have expressed itself
accordingly.
Underpinning the submissions on behalf of the Trust was the argument
that the purpose of s 8(5) was to enable
public authorities to
claim input tax under s 16(3)
(a)
of the VAT Act.
[7]
This purpose would be undermined if the argument on behalf of the
Commissioner is upheld.
[13]
The Trust also contended that s 8(5) was intended to dispel
possible confusion as to the end consumers of the services
rendered
by it. This argument is drawn from the definition of the word
‘recipient’ in the VAT Act which, ‘in
relation to
any supply of goods or services, means the person to whom the supply
is made’. The submission on behalf of the
Trust is that, on
this definition, the communities who are the ultimate beneficiaries
of the services rendered by the Trust could
be viewed as the persons
to whom the Trust renders the services. And should there be such
confusion the public authority could
be denied the deduction of input
tax. Section 8(5), so it was submitted, addressed this problem by
deeming the services to be supplied
by the designated entity to the
public authority or municipality and
not
to the communities.
[14] To further bolster its
submissions the Trust referred to the following explanatory
memorandum issued by SARS in respect of
the
Revenue Laws Amendment
Act 45 of 2003
:
‘
T
he
proposed amendment to
section 8(5)
places it beyond doubt that any
payment made by a public authority or local authority to a
“designated entity” in respect
of the taxable supply of
goods and services is a payment for the supply of services.
[8]
[15]
The Trust argued that in terms of
s 8(5)
, (i) services supplied
to persons in distress and (ii) goods actually supplied to a public
authority, are deemed to be
services
supplied to a public
authority. I may as well indicate, at this early stage, that in my
judgment the argument is flawed and self-destructive.
First, as I
have said, in this matter the services were rendered to the
provincial health departments themselves in terms of written
agreements. Second, there is no discernible reason for the actual
supply of goods to be deemed to be a supply of services. And
finally,
on the Trust’s own argument, services actually supplied to the
public authority, are not deemed to be anything other
than what they
actually are, and can therefore not be zero-rated in terms of
s 11(2)
(n)
.
[16]
It is necessary to set out the legal framework within which these
contentions by the parties should be viewed. VAT is a broad-based
indirect tax applicable in respect of a wide range of goods and
services supplied by vendors within the Republic. Unlike its
predecessor,
the general sales tax, which collected the tax at one
stage, when the commodity or service was supplied for final use or
consumption,
VAT is collected in instalments at each stage in the
production and distribution chain. The liability to charge VAT arises
each
time a taxable transaction is carried out by a vendor and does
not depend on the profitability or outcome of the transaction because
VAT is not a tax on business profits or turnover, but on
consumption.
[9]
[17]
A registered vendor pays VAT, but the amount so paid is ultimately
passed on to the end consumer. Each time a vendor invoices
a
customer, the vendor claims a credit for the VAT previously invoiced
to it. The VAT paid by the vendor is deducted from the amount
of tax
charged and, ultimately, the vendor is liable only for the difference
between its output tax
[10]
and the consumer’s input tax.
[11]
[18]
The VAT Act regulates taxation in respect of the supply of goods and
services and importation of goods and services within
the
country.
[12]
The vast majority of transactions relating to supply, by a vendor, of
goods or services, fall within the scope of s 7(1) of
the VAT
Act. This is because the definition of ‘supply’ in s 1
of the VAT Act includes a very wide range of transactions.
[19]
Section 7(1)
(a)
of the VAT Act provides:
‘
7
Imposition of value-added tax
(1)
Subject to the exemptions, exceptions, deductions and adjustments
provided for in this Act, there shall be levied and paid for
the
benefit of the National Revenue Fund a tax, to be known as the
value-added tax-
(a)
on
the supply by any vendor of goods or services supplied by him on or
after the commencement date in the course or furtherance
of any
enterprise carried on by him;
.
. .
calculated
at the rate of 14 per cent on the value of the supply concerned or
importation, as the case may be.’
[20] Under s 1 of the VAT Act,
‘supply’ includes:
‘
performance
in terms of a sale, rental agreement, instalment credit agreement and
all other forms of supply, whether voluntary,
compulsory or by
operation of law, irrespective of where the supply is effected. . .
.’
It
is in terms of the exceptions or qualifications referred to in s 7(1)
that the Trust seeks zero-rating of payments received
by it from the
provincial health departments.
[21] Linked to the exemptions,
exceptions and deductions provided for in s 7, s 8 deems
goods or services to have been
supplied in certain circumstances. Of
relevance to this appeal is s 8(5) which provides that:
‘
For
the purposes of this Act a designated entity shall be deemed to
supply services to any public authority or municipality to the
extent
of any payment made by the public authority or municipality concerned
to or on behalf of that designated entity in the course
or
furtherance of an enterprise carried on by that designated entity.’
[22] Section 11(2)
(n)
of the
VAT Act provides for zero-rating of VAT payable in respect of certain
payments received for the deemed supply of services
provided for in
s 8(5). The section provides that:
‘
(2)
Where, but for this section, a supply of services . . . would be
charged with tax at the rate referred to in section 7 (1),
such
supply of services shall, subject to compliance with subsection (3)
of this section, be charged with tax at the rate of zero
per cent
where-
.
. .
(n)
the
services comprise the carrying on by a welfare organisation of the
activities referred to in the definition of 'welfare organisation'
in
section 1 and to the extent that any payment in respect of those
services is made in terms of section 8 (5) those services shall
be
deemed to be supplied by that organisation to a public authority or
municipality;’
[13]
[23]
Section 8(5) therefore is the gateway to a zero rating under
s 11(2)
(n).
Under s 11(2)
(n)
a zero-rating
will be granted if the services constitute the carrying on of
activities of a welfare organisation by a welfare organisation
and
the services are a deemed supply to a public authority in terms of
s 8(5).
[24]
As already stated, it was common cause that the Trust is a welfare
organisation. The issue was whether its supply of services
was a
deemed service under s 8(5). The principles applicable in the
process of ascertaining the meaning of legislative provisions
have
been repeatedly stated by this court. It is settled law that the
process entails attributing meaning to the relevant statutory
provision, in the light of the language used, the context in which
the provision is set, including the material known to the drafters,
and the purpose which the provision is intended to serve. These
factors are not mutually exclusive. See
Natal
Joint
Municipal Pension Fund v Endumeni Municipality.
[14]
[25]
The contention by the Trust that the words ‘any payment’
must be given a literal meaning to the exclusion of the
remaining
words of s 8(5) is untenable. It is inconsistent with the
established approach to interpretation of documents. It
ignores the
distinction between the
actual
supply of goods and services catered for by s 7(1)
(a)
and
the
deemed
supply of services as provided for in s 8(5). In
Chotabhai
v Union Government
,
[15]
this court said the following at 33:
‘
The
use of the word “deemed” was perhaps not a happy one,
because that term may be employed to denote merely that the
person or
things to which it relates are to be considered to be what they
really are not, without in any way curtailing the operation
of a
Statute in respect of other persons or things falling within the
ordinary meaning of the language used. If the word were so
employed,
the result would be artificially to extend the scope of the
expression referred to, without attempting to define it.’
As
contended by the Commissioner, the word ‘deemed’ is
primarily appropriate when it is intended to imbue a person or
thing
with features or qualities he or it does
not
, in reality,
have. The word is not appropriate when the person or thing actually
has
those features.
[26]
The supply of goods and services by the Trust to the provincial
health department constituted ‘performance’ in
terms of
the written agreement. The payments received were fees charged in
terms of the tariff set out in the agreement. As submitted
on behalf
of the Commissioner, it is only where a payment cannot be linked to
any performance on such basis that it becomes necessary
to ‘deem’
it to be provided in terms of s 8(5).
[27]
The use of the undefined word ‘payment’ in s 8(5) is
not coincidental. The legislature must have intended
to distinguish
the ‘payment’ contemplated in s 8(5) from
‘consideration’ which is defined s 1,
in relation to
a supply of goods and services, as including any payment made ‘in
respect of, or in response to, or for the
inducement of, the supply
of any goods or services’. The legislature must have intended
that the ‘payment’ contemplated
in s 8(5) would be
an unrequited payment such as a grant, subsidy or a donation to a
designated entity.
[28] Under s 1 of the VAT Act, a
grant is defined as:
‘
any
appropriation, grant in aid, subsidy or contribution transferred,
granted or paid to a vendor by a public authority, local authority
or
constitutional institution listed in Schedule 1 to the Public Finance
Management Act, 1999 (Act 1 of 1999), but does not include-
(a)
a
payment made for the supply of any goods or services to that public
authority or municipality, including all goods or services
supplied
to a public authority, municipality or constitutional institution
listed in Schedule 1 to the Public Finance Management
Act, 1999 (Act
1 of 1999) in accordance with a procurement process prescribed-
(i)
in
terms of the Regulations issued under section 76(4)
(c)
of the Public Finance Management Act, 1999 (Act 1 of 1999); or
(ii)
in
terms of Chapter 11 of the Local Government: Municipal Finance
Management Act, 2003 (Act 56 of 2003), or any other similar process;
or
(b)
A
payment contemplated in section 8 (23); . . . .’
[29] A ‘donation’ is
defined in s 1 of the VAT Act as:
‘
a
payment whether in money or otherwise voluntarily made to any
association not for gain for the carrying on or the carrying out
of
the purposes of that association and in respect of which no
identifiable direct valuable benefit arises or may arise in the
form
of a supply of goods or services to the person making that payment to
any other person who is a connected person in relation
to the person
making the payment, but does not include any payment made by a public
authority or local municipality.’
[30]
It will be seen that the common feature between these two terms is
the absence of a (commensurate) direct benefit. In using
the term
‘payment’, the legislature must have intended the
provisions of s 8(5) to be applicable in respect of
these sorts
of payment.
[31] The various aspects of the
argument made by the Trust are addressed in Interpretation Note 39,
issued by SARS on 8 February
2013. The Interpretation Note sets out
the VAT treatment of public authorities prior to and after April
2005. It explains the rationale
behind the current wording and
application of sections of the VAT Act. The Note says the following
about actual and deemed supply
of goods and services (para 2.1 at 5):
‘
When
a public authority or municipality acquires goods from a vendor, it
is normally quite clear that an actual taxable supply is
made in
terms of section 7(1)(a) and there is no need to apply any deeming
provision. However, when a third party becomes involved,
the position
becomes unclear. For example, when a public authority pays for a
specific supply of goods or services made by a vendor
to a third
party, a question arises as to whether the supply is made to the
person making payment, or the person receiving the
supply.’
The Note continues (para 4.6 at 21):
‘
Part
of the uncertainty in regard to the application of section 8(5) was
that some vendors adopted the view that as long as the
payment came
from a public or local authority, the receipt was subject to VAT at
the zero rate. This view was contrary to the meaning
of a “transfer
payment” being unrequited financial support to cover the
capital and operational expenses of certain
businesses that make
taxable supplies which government regarded as worthy of this support,
or which was required by government
subsidy programmes. It was never
intended as a way of extending the zero-rating provisions of section
11.
’
In
terms of the agreement for the supply of aero-medical services, the
services were to be rendered to the provincial health departments.
That much is clear from clause 7 of the agreement under the heading
‘Obligations of the parties’.
[32] As to the VAT treatment of public
authorities and public entities on or after 1 April 2005 in relation
to the supply of goods
and services the Interpretation Note explains
that (para 2.2 at 6):
‘
Certain
public entities which conduct enterprises, as well as welfare
organisations and public private partnerships (PPPs) which
make
taxable supplies, fall within the definition of “designated
entity”. If a designated entity receives any payment
from a
public authority, municipality or constitutional institution, it is
deemed to supply a taxable service in terms of section
8(5) to that
entity (provided that there is no actual supply in terms of section
7(1)(a) to which that payment relates). The deemed
supply is
generally taxable at the standard rate, unless the payment is in
respect of exempt supplies (e.g. financial services).
This is to
ensure that entities in which government has an interest do not have
an unfair competitive advantage over other vendors
participating in
the market for the goods or services concerned. However, where a
designated entity receives a training grant from
a Sectoral Education
Training Authority (SETA), or where the grant recipient is a “welfare
organisation”, the deemed
supply to which that payment relates
is taxed at the zero rate.’
[33] The Interpretation Note says the
following regarding the position of welfare organisations (para 2.9
at 8):
‘
A
welfare organisation is also a “designated entity”, but
the zero-rate applies in this case to unrequited payments
which it
receives from any public authority, constitutional institution or
municipality, if it does not constitute consideration
for a taxable
supply in terms of section 7(1)(a).’
These
Interpretation Notes, though not binding on the courts or a taxpayer,
constitute persuasive explanations in relation to the
interpretation
and application of the statutory provision in question.
[16]
Interpretation Note 39 has been in circulation for years and has not
been brought into contention until now.
[34]
In summary, the scheme of the VAT Act is such that generally, the
supply of goods and services attracts an obligation to pay
VAT at the
standard rate of 14 per cent. In certain instances a zero VAT rating
is applicable where payment is not linked to an
actual supply of
goods and services. The deeming provision operates to create an
imagined supply of goods and services, which may
qualify for a zero
rating. Already, grants and subsidies provide a substantial
incentive for PBOs to supply goods and services
on behalf of public
authorities. Zero rating is the most favourable treatment for any
transaction in the VAT system. Vendors making
zero rated supplies are
usually owed refunds by SARS.
[17]
There is no conceivable reason why, where PBO’s engage in
commercial activities they should be treated differently from other
commercial entities.
[35]
It is clear from the above discussion that payment received by a
designated entity such as the Trust in this case, from a public
authority such as a provincial health department, for actual supply
of services taxable under s 7(1)
(a)
of the VAT Act, fall
outside the scope of s 8(5). Therefore the deeming provision is
not applicable to them and they do not
qualify for zero-rating under
s 11(2)
(n)
. To hold otherwise would be to do violence to
the fundamental architecture of the VAT Act, create uncertainty and
impact negatively
on the fiscus and its ability to assist the
government in service delivery.
[36] In the result:
1. The appeal is upheld with costs,
such costs to include the costs consequent upon the use of two
counsel.
2. The order of the court a quo is set
aside and is replaced with the following:
‘
The
application is dismissed with costs’.
________________
N Dambuza
Judge
of Appeal
Appearances:
For
the Appellant:
A R Sholto-Douglas SC (and H Cassim)
Instructed by:
Mothle Jooma Sabdia
Inc, Pretoria
Webbers Attorneys,
Bloemfontein
For
the Respondents:
P J J Marais SC (and P A Swanepoel)
Instructed by:
Edward Nathan
Sonnenbergs, Sandton
Honey Attorneys,
Bloemfontein
[1]
In
terms of s
1(1)
of the VAT Act a vendor is any person who is or is required to be
registered under the VAT Act.
[2]
Under
s 41B the Commissioner may issue a VAT class ruling or a VAT
ruling which, in applying the provisions of Chapter 7
of the
Tax
Administration Act 28 of 2011
, must be dealt with as if it were a
binding class ruling, or a binding private ruling. (In the same
section “VAT class
ruling” is defined as a written
statement issued by the Commissioner to a class of vendors or
persons regarding the interpretation
or application of this Act, and
a “VAT ruling” is a written statement issued by the
Commissioner to a person regarding
the interpretation or application
of the VAT Act.)
[3]
Where
a taxable supply is taxed at the rate of 0%, no output tax is
charged, but the vendor obtains a full deduction for the tax
payable
by him on all goods and services acquired and utilised by him in
making the supply. (See Chris Beneke (ed)
Deloitte
& Touche: VAT Handbook
4 ed (1997) para 2.6.2.)
[4]
Determination
of Welfare Activities for Purposes of the Definition of ‘Welfare
Organisation’ in Section 1 of the Value-Added
Tax Act 89 of
1991, GN 112,
GG
27235,
11 February 2005.
[5]
A
public authority includes all departments or divisions listed in
schedules 1, 2 and 3 of the Public Service Act, 1994, and the
public
entities listed in Part A or C of Schedule 3 to the
Public Finance
Management Act 1 of 1999
, as well as entities designated by the
Minister for the purposes of the VAT Act as such.
[6]
Under
s 1 of the VAT Act ‘consideration’ in relation to
supply of goods or services to any person, includes any
payment made
or to be made (including any deposit on any returnable container and
tax), whether in money or otherwise, or any
act of forbearance,
whether or not voluntary, in respect of, or in response to, or for
the inducement of the supply of any goods
or services, whether by
that person or by any other person, but does not include any payment
made by any person as a donation
to any association not for gain.
[7]
Section
16 relates to the calculation of VAT payable in various instances.
[8]
Explanatory
Memorandum on the Revenue Laws Amendment Bill, 2003 at 109.
[9]
See
the title on ‘Revenue’ by G C Palmer in 22 (Part 2)
Lawsa
2
ed para 137.
[10]
‘
Output
tax’ is defined in s 1 of the VAT Act as the tax which is
levied when a vendor supplies goods and services in
the course of
conducting any enterprise.
[11]
Input
tax is the tax payable by a vendor when goods or services are
acquired by him wholly for the purpose of consumption, use
or supply
in the course of making taxable supplies (see s 1 of the VAT
Act).
[12]
Section
7 of the VAT Act.
[13]
Subsection
3 relates to keeping of documentary proof by a vendor where a zero
per cent rate has been applied to substantiate its
entitlement to
apply such a rate.
[14]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[15]
Chotabhai
v Union Government (Minister of Justice) and Registrar of Asiatics
1911
AD 13.
[16]
See
eg AP de Koker and RC Williams
Silke
on South African Income Tax
[Service Issue 57, 2016] at § 18.270; and David Meyerowitz
Meyerowitz
on Income Tax 2007-2008
(2008) para 3.4.
[17]
Chris
Beneke (ed) (supra) para 2.6.2.