REPUBLIC OF SOUTH AFRICA
IN THE TAX COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION: CAPE TOWN )
Case No.: VAT 22558
In the matter between :
FUND Appellant
and
THE COMMISSIONER FOR THE Respondent
SOUTH AFRICAN REVENUE SERVICE
J U D G M E N T
(1) REPORTABLE: YES / NO
(2) OF INTEREST TO OTHER JUDGES: YES / NO
(3) REVISED.
11/02/202 5 _________________
DATE SIGNATURE
2
STEENKAMP AJ
Introduction and background
[1] This matter concerns the entitlement of the appellant ( Fund ) to deduct input tax in
terms of section 16(3) of the Value -Added Tax Act 89 of 1991 as amended ( VAT Act ), in
respect of the professional indemnity insurance premiums paid by the Fund to the Attorneys
(later the Legal Practitioners) Insurance Indemnity Fund ( Insurer ). The total input tax
deducted on the premiums amounted to R78 054 200 (claimed in 05/2018), R24 130 434.78
(claimed in 07/2018), R27 820 921.04 (claimed in 07/2019) and R27 820 921.04 (claimed in
08/2020).
[2] The respondent ( SARS ) had initially paid the amounts claimed for the first two periods
(05 and 07/2018), but in terms of subsequent audit findings SARS disallowed the amounts for
all four periods and issued additional assessments and adjustments accordingly. SARS
contended that the Fund was not entitled to claim the amounts as input tax inter alia because,
(a) no service was supplied by the Insurer to the Fund in the course of making taxable
supplies, (b) the consideration paid by the Fund was not in respec t of goods or services
supplied by the Insurer to the Fund, or the premiums paid by the Fund were not incurred while
making taxable supplies, and (c) the Fund could not claim input tax for failing to comply with
section 16(2) of the VAT Act, and for failing to produce “documentary proof ” that any service
was supplied by the Fund to the practitioners.1
[3] The Fund objected that the deductions should have been allowed. SARS on
21 September 2022 formally disallowed the objection. On 5 October 2022, the Fund lodged
an appeal to this court, against the disallowance.
[4] It is trite that, in terms of s ection 102(1) of the Tax Administration Act 28 of 2011 ( TAA),
the Fund (as the taxpayer) bears the burden of proof.
[5] The facts and the applicable legislative framework are largely common cause.
[6] The Legal Practice Act 28 of 2014 ( LPA) came into operation on 1 November 2018
with no retroactive application. As a result, insofar as the disputed assessments are
concerned, the Attorneys Act 53 of 1979 ( Attorneys Act ) applies to the input claims for
05/2018 and 07/2018, and the LPA applies to the claims for 07/2019 and 08/2020.
1 SARS final audit findings 57/1.1 to 60 (referring to Dossier p 57 paragraph 1.1 to Dossier p 60) .
3
[7] The Fund was established in terms of s ection 8 of the Attorneys Admission
Amendment and Legal Practitioners Fidelity Fund Act 19 of 1941. After the repeal of that Act,
the Fund continued to exist as a juristic person in terms of s ection 25 of the Attorneys Act as
the Attorneys Fidelity Fund. After the repeal of the Attorneys Act, the Fund continued to exist
as a juristic person in terms of s ection 53 of the LPA as the Legal Practitioners Fidelity Fund.
[8] One of the principal purposes of the Fund under both the Attorneys Act and the LPA
(the Acts ), is to reimburse members of the public who suffer pecuniary loss as a result of theft
by practitioners of money or property given in trust in the course of their practice.2
[9] The Fund is also empowered in terms of the Acts to collect contributions from
practitioners and to arrange group professional indemnity insurance cover ( insurance ) for
them, and for purposes thereof to enter into a contract with an insurer.3 The Fund is also
empowered by the Acts to pay the premiums payable under any such contract of insurance.4
[10] In terms of the Acts, practitioners conducting a trust account practice (including, under
the LPA, advocates contemplated in s ection 34(2)(a)(ii) of the LPA) are required to be in
possession of Fidelity Fund certificate s (FFCs) in order to practise and to receive or hold funds
or property in trust ( practitioners ). Practitioners were also required to apply to the Law Society
(Law Society ) or to the Legal Practice Council ( LPC) for such FFCs on an annual basis, at
the same time making payment to the Law Socie ty / LPC of the attendant contributions set by
the Law Society / LPC ( contributions );5 the latter having to remit6 the contributions to the
Board of the Fund ( Board ).7
[11] Practitioners are required to deposit funds received on trust into approved trust bank
accounts, and the interest earned on such funds is required to be paid to the Fund, and forms
part of the Fund’s revenue, together with inter alia income generated by in vestments of
the Fund,8 and the aforementioned contributions.9
2 Attorneys Act s 26, LPA s 55 and s 57(a).
3 Attorneys Act s 40A and s 40B, LPA s 77(1) and (2).
4 Attorneys Act s 45(d), LPA s 57(g).
5 Attorneys Act s 43, LPA s 74.
6 Attorneys Act s 43(7), LPA s 74(5).
7 The “board of control ” in terms of s 27 of the Attorneys Act, the “Board ” in terms of s 61 of the LPC.
8 Attorneys Act s 36(b), LPA s 54(d).
9 Attorneys Act s 36(a), LPA s 54(b).
4
The facts and issues raised in the pleadings
[12] It is admitted on the pleadings or undisputed that:
[12.1] The Fund owns a commercial property, situated at 28 Wale Street, Cape Town,
that it leases out part of the building and that it is registered as a VAT vendor.10
[12.2] During the periods under review, when the Attorneys Act was in force, the
practitioners were only required by the Law Society to pay initial contributions, and no
annual contributions were levied or paid.11 In this regard the Fund’s only witness
Mr Ndande testified that, after the advent of the LPA in 2018, the LPC commenced
levying the contributions payable by practitioners for FFCs on an annual basis.
[12.3] The initial contribution was a once off fee payable by practitioners applying for
FFCs for the first time.12 In respect of the non -levied annual contributions (before the
commencement of the LPA), the Fund claimed that the Attorneys Act granted the Fund
the discretion to waive the annual contributions when its reserves exceeded R1 million,
and that in terms of t his provision the Fund did in fact waive the annual contributions
during the tax periods in question. Apart from the initial contributions and the annual
contributions payable under the LPA, practitioners were not required to pay anything
further for the b enefits received from the Fund. The payment of the contributions was
a prerequisite for all practitioners to receive FFCs, without which they could not validly
practise as attorneys, nor access the other benefits (including the insurance cover)
arranged by the Fund.13
[12.4] The Fund could not present to SARS individual tax invoices and s ection 54(3)
statements from its collecting agents in respect of the levied contributions . In this
regard the Fund claimed that it had explained to SARS on numerous occasions that
the Fund had overlooked in the past that the initial contributions constituted
“consideration ” in terms of the VAT Act and that output tax should have been declared
thereon. The output tax was adjusted retrospectively, as per the relevant VAT returns
that were made available to SARS, as a result of which the output tax was fully paid
by the Fund to SARS.14
10 Rule 31: 153/4 (referring to rule 31 statement Dossier p 153 paragraph 4), rule 32: 183/58.
11 Rule 31: 160/21.2.1 - 3 and 161/21.2.5, rule 32: 186/66 -68 and 187/70.
12 Attorneys Act s 43(4), LPA s 74(2).
13 Rule 32: 172/16 -17.
14 Rule 31: 156/16, rule 32: 184 -5/62.
5
[12.5] The premiums paid by the Fund from time to time to the Insurer, were paid from
the revenue of the Fund, and all practitioners in possession of current FFCs qualified
for the insurance cover contracted by the Fund with the Insurer.15
[13] The Fund called one witness to give evidence, Mr Ndande , its finance manager,
whereafter it closed its case. SARS called no witnesses. It is common cause and the parties
argued the matter on the basis that the master insurance policy introduced into evidence as
TB 299 -315 ( policy ),16 contained the terms whereon the Fund had contracted with the Insurer
from time to time to provide the insurance cover to the practitioners.
[14] Against the aforementioned factual and statutory background, SARS pleaded (in its
rule 31 statement) that the VAT on the premiums were not deductible as input tax, on
essentially the same bases as were relied upon by SARS in its final audit findings,17 being
essentially that:
[14.1] The Insurer rendered no services to the Fund. The Insurer rendered the
provision of indemnity insurance directly to the practitioners. The “tri-partite ”
arrangement between the Fund, the Insurer and the practitioners, did not create a
basis for the Fund to claim input tax. Input tax could not be claimed if no service (as a
quid pro quo for the premium) was consumed, used or supplied to the Fund, in the
course of making taxable supplies.18
[14.2] The VAT on the premiums paid by the Fund were not deductible as input tax,
because they were not consideration for the supply of goods or services by the Insurer
to the Fund. Alternatively, the premiums were not incurred whilst making taxable
supplies. There was no suppl y of a service by the Fund to the practitioners for which
consideration was received.19
[14.3] The Fund, notwithstanding s ection 16(2) of the VAT Act, could not produce any
documentary proof that any service was supplied to the practitioners by the Fund.20
The Fund never provided any supporting documentation (including tax invoices and
section 54(3) statements), apart from schedules containing figures extracted from
annual financial statements of amounts ostensibly paid over as premiums, nor tax
invoices issued to the practitioners.21
15 Rule 31: 154/13, rule 32: 184/59.
16 Trial bundle pages 229 -315.
17 See n 1 above, and rule 31: 1 59/21.1 – 162/21.3.
18 Rule 31: 159/21.1 – 160/21.1.3.
19 Rule 31: 161/21.2.8.
20 Rule 31: 161/21.2.9.
21 Rule 31: 156/16.
6
[14.4] There was a direct causal link between the interest income of the Fund and the
issuing of the FFCs. If the supply of the insurance was the service rendered, to which
the practitioners became entitled for holding FFCs, and provided the Fund could prove
that the contributions were the consideration received and that it is entitled to claim
input tax, then the service would have been acquired by the Fund to make taxable
supplies (the contributions), and partly to make non -taxable supplies (the interest).
There fore, only the part used to make taxable supplies would qualify to be claimed as
an input tax deduction, and an apportionment calculation would have to be done to
determine the allowable input tax that could be claimed.22 (Although SARS had here
pleaded, in the alternative, the need for such an apportionment calculation, at the
hearing, counsel for SARS disavowed the need for any apportionment in the matter.
In their written heads and supplementary heads of argument, moreo ver, neither party
submitted that there was, on the facts of the matter, any need for such an
apportionment.)
[15] In response, the Fund pleaded essentially that:
[15.1] The Fund supplied “services ” (as defined) to the practitioners, by what it did in
relation to the insurance procured by it and by making payment of the premiums for
the benefit of the practitioners, and the issuing of FFCs to them.23 In so doing, the Fund
carried on an “enterprise ” (as defined).24 The contributions paid to the Fund by the
practitioners constituted “consideration ” for the “services ” supplied by the Fund.25 The
interest which accrued to the Fund, was not “consideration ” for any service provided
by the Fund to the practitioners.26
[15.2] The premiums (which included VAT) paid by the Fund to the Insurer in respect
and for the inducement of the provision of the insurance cover by the Insurer to the
practitioners, constituted “consideration ” paid by the Fund for the “services ” provided
22 Rule 31: 162/21.3.
23 Rule 32: 174/28 – 175/30, 179 -180/46 and 180/49. In s 1 of the VAT Act, “services ” is defined (in
relevant part) as follows:
“ 'services' means anything done or to be done, including the granting, assignment, cession
or surrender of any right or the making available of any facility or advantage ... ”
24 Rule 32: 175/31. In s 1 of the VAT Act, “enterprise ” is defined (in relevant part) as follows:
“ ‘enterprise’ means –
(a) in the case of any vendor, any enterprise or activity which is carried on continuously
or regularly by any person in the Republic or partly in the Republic and in the course
or furtherance of which goods or services are supplied to any other person for a
consideration, whether or not for profit ... ”
25 Rule 32: 176/34.
26 Rule 32: 175/34 -36. In s 1 of the VAT Act, “consideration ” is defined (in relevant part) as follows:
“ 'consideration' , in relation to the supply of goods or services to any person, includes any
payment made or to be made ..., whether in money or otherwise, or any act or forbearance, whether
or not voluntary, in respect of, in response to, or for the inducement of, the su pply of any goods or
services, whether by that person or by any other person ... ”
7
by the Insurer to the Fund. These “services ” included the provision of insurance cover
by the Insurer to the persons nominated by the Fund under the policy (i.e. the
practitioners), at the request of the Fund and in compliance with the Insurer’s obligation
to the Fund to do so, and as quid pro quo f or the premiums paid. This enabled the Fund
to provide the practitioners with insurance cover as quid pro quo for their contributions.
As such, the VAT paid on the premiums falls within the definition of “input t ax” in terms
of the VAT Act.27
The hearing of oral argument, and the parties’ written submissions
[16] The hearing of evidence was concluded on 18 June,28 whereafter the matter was
adjourned for the parties’ exchanging of heads of argument on 19 June, and for the hearing
of oral argument on 20 June 2024.
[17] In SARS’ s heads of argument and oral submissions made on 20 June, certain issues
were raised which the Fund claimed were not foreshadowed in the pleadings, such as the
“ultra vires ” argument referred to below. Given that the parties had exchanged heads of
argument the day before the hearing of oral argument, as opposed to the normal situation,
where heads of argument are delivered in a staggered fashion, allowing the parties sufficient
time after the receipt of their opponent’s heads of argument a nd before the hearing to consider
the other’s heads of argument, and to avoid the risk of any prejudice to the parties in the
making of their submissions to the court, the court directed that the parties could deliver
supplementary submissions to address such issues as they deemed necessary: the Fund by
8 July, and SARS by 22 July 2024. Both parties duly delivered such additional submissions
together with additional authorities.
The issues for determination
[18] Arising from the aforegoing, the main issues for determination are the following:
[18.1] The first issue : Whether the Insurer, in the providing of indemnity insurance in
terms of the policy, was rendering “services ” to the Fund, in respect of which the Fund
27 Rule 32: 176/37 – 178/43, 180/47 and 181 -2/53. In s 1 of the VAT Act, “input tax ” is defined (in
relevant part) as follows:
“ 'input tax’ , in relation to a vendor, means —
(a) tax charged under section 7 and payable in terms of that section by —
(i) a supplier on the supply of goods or services by that supplier to the vendor;
...
where the goods or services concerned are acquired by the vendor wholly for the purpose of
consumption, use or supply in the course of making taxable supplies or, where the goods or services
are acquired by the vendor partly for such purpose, to the extent (as determined in accordance with
the provisions of section 17) that the goods or services concerned are acquired by the vendor for
such purpose. ”
28 Cf paragraph [13] above.
8
was entitled to deduct, as “input tax ”, the VAT component of the premiums paid to the
Insurer. Subsumed herein, is the question whether or not the Fund, in so doing, was
acting as principal, or merely as the agent of the practitioners ( agency argument ).
[18.2] The second issue : Whether SARS’ s ultra vires argument has any merit. SARS
in its heads of argument submitted that the Fund’s failure to act within the confines of
the powers expressly granted to it in the Acts, by not recovering (or waiving)
contributions from practitioners in respect of the costs o f the insurance as provided for
in section 43(1)(a)(i) of the Attorneys Act or s ection 74(1)(a)(i) of the LPA and, instead,
paying the indemnity insurance from its interest income, constitutes conduct ultra vires
the Acts which is a nullity, and that no rights and obligations can flow from such conduct
(ultra vires argument ).29
[18.3] The third issue : Whether SARS’ s “invoices ” argument has any merit. This is the
argument by SARS, made in its heads of argument and in oral argument,30 and which
was crystallised in its supplementary submissions, that the Fund had failed to comply
with the requirements of section 16(2)(a) of the VAT Act, therein that it had also not
furnished SARS with any invoices issued by the Insurer to the Fund at the time of
submitting the returns.31 The Fund was thus prohibited from claiming the input tax
deduction ( invoices argument ).
The first issue – “services ” and “input tax ”
The agency argument
[19] The Fund was clearly empowered in terms of the Acts to collect the contributions from
the practitioners and to arrange indemnity insurance cover for them with the Insurer.32 The
Fund was also expressly empowered by the Acts to pay the premiums in that regard.33
[20] It is common cause that the Fund, as a matter of fact and in terms of the Acts, in the
period under consideration, did so, and to that end had contracted with the Insurer for the
providing of such insurance on the terms stated in the relevant policy, and t hat the Fund had
29 SARS heads of argument paragraph 56, supplementary heads paragraph 8.
30 SARS heads of argument paragraph 78.2.
31 SARS supplementary heads paragraph 30 ff.
32 Attorneys Act s 40A and s 40B, LPA s 77(1) and (2).
33 Attorneys Act s 45(d), LPA s 57(g).
9
paid the premiums (including VAT) to the Insurer. The preamble to the policy, confirms the
arrangement, stating that:34
“The Attorneys Fidelity Fund, as permitted by the Act, has contracted with the Insurer to provide
professional indemnity insurance to the Insured , in a sustainable manner and with due regard
for the interests of the public ... ”
(Underlining supplied)
[21] The parties are agreed that (as it was stated by the SCA in Respublica ) the general
principle to be applied, is that the VAT consequences of a supply and the characterisation of
the attendant relationships must be assessed by reference, first and foremost, to the
contractual arrangements under which the supply is made, and t hen one has to consider
whether that assessment is vitiated by any relevant facts.35
[22] In the preamble to the policy, it is expressly stated that the “Fund, as permitted by the
Act, has contracted with the Insurer ”. As such, ex facie the policy, the contractual arrangement
in question and the main legal relationship is between the Fund and the Insurer, acting as
principals.
[23] In support of the agency argument, SARS in its heads of argument,36 made the
submission that the contract of insurance was entered into between the Insurer and the
practitioners, and not between the Insurer and the Fund, as principals.
[24] On the pleadings, however, it was common cause between the parties that the contract
of insurance was concluded between the Fund and the Insurer. SARS pleaded this in terms
in its rule 31 statement, stating that, “The Fund has contracted with the LPIIF to provide
indemnity insurance to its members. ” (SARS used the word “members ” but a reference to the
practitioners was intended).37 SARS also pleaded that, “The premiums for the indemnity cover
are paid by the Fund. ”.38
[25] SARS moreover in its pleadings described the contractual arrangement between the
Fund, the Insurer and the practitioners ( arrangement ), as a “ ‘tri-partite ’ arrangement ”,39 albeit
one, which according to SARS, did not create a basis for the Fund to claim input tax. In its
supplementary submissions, the Fund similarly submitted that the arrangement could fairly be
described as being a contract for the benefit of a third party , or a stipulatio alteri , concluded
34 TB 300.
35 CSARS v Respublica (Pty) Ltd [2018] ZASCA 109 paragraph s 12-13 (Fund supplementary heads
paragraph 102, SARS supplementary heads paragraph 27).
36 SARS heads of argument paragraph 71.
37 Cf rule 32: 184/60.
38 Rule 31: 155/13.2 and 13.4.
39 Rule 31: 160/21.1.2, and cf the similar claims in earlier SARS correspondence at Dossier 59/1.3(i)
and 110/(i).
10
between the Fund and the Insurer as principals, for the benefit of the practitioners as the third
party. If that is a fair description of the arrangement, it must follow that the Fund and the Insurer
entered into the contract of insurance and acted in that arrangement, as principals.
[26] SARS also submitted in its heads of argument,40 that the attendant provisions of the
Acts (the Attorneys Act and the LPC), bear out that the Fund acts as agent to “arrange ” the
indemnity insurance on behalf of the practitioner, as principal , and that “the principal -agency
arrangement is created and established in legislation in terms of the Attorneys Act and the
LPA”.
[27] The court disagrees with the submission . The applicable provisions of the Attorneys
Act and the LPA empowering the Board of the Fund to enter into the contract of insurance, do
not bear out the “principal -agency arrangement ”. Quite the opposite. They rather affirm that
the intention of the legislator was that the Fund enter into the contract of insurance as principal.
[28] The attendant provisions state that the Board (of the Fund) is empowered to “enter into
a contract with any person or company carrying on fidelity insurance ”, and that such a contract
“shall be entered into in respect of practitioners generally ” (contract provisions ).41 In respect
of the payment by the Fund of the insurance premiums, the Acts state that, “the fund shall be
applied for the following purposes ... premiums payable in respect of contracts of insurance
entered into by the board of control in terms of sections 40 and 40B ”.42 There is no suggestion
in the language of any of these provisions that the Fund is empowered or required to enter
into the contracts as an agent for the practitioners.
[29] The two relevant instances where the Acts refer to the insurance “arranged ” by the
Fund, are in the provisions empowering the Board to fix the amount payable by the
practitioners as a contribution to the cost of the indemnity insurance ( premium contributions )
which the Board had “arranged ” in terms of the contract provisions.43 There is nothing in these
provisions to support SARS’ s argument that a “principal -agency arrangement is created and
established ” in terms of the Acts.
[30] On the facts and evidence before the court, the court is satisfied that the contract of
insurance was concluded between the Fund and the Insurer as principals, and that SARS’ s
agency argument to the contrary must fail, not least because the conclusion of the contract in
that manner has always been, and still is, SARS’ s pleaded case. This was also the basis on
40 SARS heads of argument paragraph 72.
41 Attorneys Act s 40(1) and (2) and cf s 40B, and cf the similar provisions in LPA s 76(1), (2) and
s 77(2).
42 Attorneys Act s 45(1)( d), and cf LPA s 57(1)( g).
43 Attorneys Act s 43(1)( a)(i), LPA s 74(1)(a)(i).
11
which the trial (excluding legal argument) was run. As such, no injustice is done to SARS if it
were to be held to its pleaded case.44
“Services ” and “input tax ”
[31] It is conceded by SARS,45 that the Insurer made a supply of insurance. Given that the
contract of insurance was entered into between the Fund and the Insurer as principals, it must
follow that in the making of such supply, the Insurer was rendering some sort of “services ” (as
defined)46 to the Fund, as principal. The definition of “services ” is in any event sufficiently
broad – “anything done or to be done, including the granting, assignment, cession or surrender
of any right or the making available of any facility or advantage ”47 – to envelop what the Insurer
undertook to or did under the policy such as the providing of insurance cover to the
practitioners in terms of the policy, at the behest of the Fund and as quid pro quo for the Fund’s
payment of the attendant premiums from ti me to time.
[32] SARS had also pleaded that the Fund could not claim input tax in respect of the
premiums, inter alia because no services (as a quid pro quo for the premium) were “consumed,
used or supplied by or to the Fund ”, and the premiums were not incurred, “in the course of
making taxable supplies ”.48
[33] The VAT Act in relevant part defines “input tax ” as follows:
“ ‘input tax’ , in relation to a vendor, means —
(a) tax charged under section 7 and payable in terms of that section by -
(i) a supplier on the supply of goods or services by that supplier to the vendor;
...
where the goods or services concerned are acquired by the vendor wholly for the purpose of
consumption, use or supply in the course of making taxable supplies …”
[34] LAWSA gives the following useful summary of the applicable principles and
authorities:49
“In Consol Glass (Pty) Ltd v CSARS 83 SATC 186 Unterhalter AJA pointed out that whether
the taxpayer was entitled to deduct as input tax the VAT paid on the services supplied to it by
local service providers depended upon whether these services were acquired by the taxpayer
for the purpose of consumption, use or supply in the course of making taxable supplies. This
44 Cf the comments of the SCA per Unterhalter AJA (as he then was) in Consol Glass (Pty) Ltd v
CSARS 83 SATC 186 paragraph s 43-48.
45 See SARS heads of argument paragraph 65.
46 See n 23 above.
47 Ibid.
48 Rule 31: 160/21.1.3 and 161/21.2.8.2.
49 LAWSA vol 22(2) part 2 (2nd ed replacement) paragraph 353 n 6.
12
enquiry, the court held, raised two issues. First, for what purpose did the taxpayer acquire the
services? Second, did the taxpayer do so in the course of making taxable supplies? The court
was of the view that the relationship between the purpose for whic h the services were acquired
and the use to which the services were put was the crux of the matter. See
also Commissioner , SA Revenue Service v De Beers Consolidated Mines Ltd [2012] 3 All SA
367 (SCA); Commissioner , SA Revenue Services v Pretoria East Mot ors (Pty) Ltd [2014] 3 All
SA 266 (SCA). ”
[35] In Consol the SCA had held in relevant part as follows:
“[14] Whether Consol was entitled to deduct as input tax the VAT paid on the services
supplied to it by local service providers depended upon whether these services were acquired
by Consol for the purpose of consumption, use or supply in the course of making taxable
supplies. That enquiry raised two issues. First, for what purpose did Consol acquire the
services? Second, did Consol do so in the course of making taxable supplies. The relationship
between the purpose for which the services were acquired and the use to whi ch these services
were put lies at the heart of the matter.
...
[28] The relevant part of the definition of input tax, quoted above, has these components.
The services must be acquired wholly or partly for the purpose of consumption, use or supply.
Acquisition for some other purpose will not do. Acquiring to consume, use or su pply will not
suffice if the purpose of the acquisition is not in the course of making taxable supplies. In this
case, this means in the course of manufacturing and selling glass containers. ...
[29] It is of limited assistance to make use of synonyms in order to understand the specificity
of the statutory formulation: in the course of making taxable supplies. Two observations assist
the interpretative exercise. First, the diversity of goods and services that may constitute taxable
supply in a modern economy and the complexity of the lines of supply that may be used in the
making of such goods and services should not be underestimated. An interpretation that is too
restrictive of what is required to make taxable supplies runs the risk of underestimating this
diversity and complexity.
[30] Second , since the purpose of acquisition is for consumption, use or supply, it is helpful
to consider how these attributes of the goods or services acquired have utility in the making of
the taxable supplies. It is this functional relationship that signifies. On e way of analysing this
relationship is to consider the following: for a given quantity of output, what inputs of goods or
services are consumed, used or supplied to make or produce that output. Some inputs will
clearly qualify. For example, in the making of glass containers, cullet (waste glass) is often used
as a raw material. Other goods and services will not qualify at all and others may require difficult
judgments in determining on which side of the line they fall.
...
13
[43] The issue that arises is whether the refinancing, by reason of these cost savings, may
be found to have a functional link to the manufacture by Consol of glass containers, and hence,
to the making of taxable supplies. ”
(Footnotes omitted)
[36] In its reasoning why, in that matter, the attendant services qualified, the SCA in
De Beers reasoned in relevant part as follows:
“[53] The question to be answered therefore is whether NMR ’s services were acquired for
the purpose of making ‘taxable supplies ’ in that ‘enterprise ’. The answer is clearly no. ... Such
services were not acquired to enable DBCM to enhance its VAT ‘enterprise ’ of mining, marketing
and selling diamonds. The ‘enterprise ’ was not in the least affected by whether or not DBCM
acquired NMR's services. They could not contribute in any way to the making of DBCM ’s ‘taxable
supplies ’. They were also not acquired in the ordinary course of DBCM ’s ‘enterprise ’ as part of
its overhead expenditure as argued by DBCM. They were supplied simply to enable DBCM ’s
board to c omply with its legal obligations. ”
[37] With reference to these authorities, the question to be answered is:
[37.1] With reference to Consol : whether the services acquired have utility in the
making of the taxable supplies; whether there was a “functional link ” between the
payment of the premiums for the insurance, and the making of taxable supplies by the
Fund.
[37.2] Employing the considerations proffered in De Beers : whether the services were
acquired to enable the Fund to enhance or affect its VAT “enterprise ”; contributed in
any way to the making of taxable supplies; were acquired in the ordinary course of the
Fund’s enterprise as part of its overhead expenditure; or whether they were simply
supplied to enable the Fund to comply with unrelated legal obligation s.
[38] It is common cause that, in respect of the contributions paid by the practitioners during
the relevant period, output tax was adjusted retrospectively per the relevant VAT returns, and
which output tax was fully paid by the Fund to SARS. That VAT was, in t erms of s ection 7(1)( a)
of the VAT Act, levied and paid as taxable supplies in the course or furtherance of the Fund's
related VAT enterprise ( enterprise ).
[39] There can be little doubt that the Fund, inter alia in its collecting of contributions from
the practitioners for the issuance to them of FFCs, and in the arranging of the indemnity
insurance with the Insurer and the payment of the attendant premiums, was carrying on an
“enterprise ”.
[40] The payment of such contributions are a prerequisite and quid pro quo for the obtaining
by the practitioners of FFCs. The FFCs are a prerequisite to such practitioners being permitted
14
to practice, or to qualify for insurance cover under the policy. SARS accepted in its heads of
argument that the Fund, as one of its statutory functions in terms of the Acts, is enjoined to
collect contributions from practitioners and to arrange the insura nce.50
[41] In the premises, utilising the De Beers terminology, the services (insurance) acquired:
[41.1] Enhanced, affected or contributed to the Fund's enterprise or the making of
taxable supplies – the intrinsic value of the FFCs to the practitioners, was undoubtedly
enhanced by the insurance cover benefit thereby procured, i.e. over and above the
benefit of being entitled to practice.
[41.2] Were acquired in the ordinary course of the Fund's enterprise as part of its
overhead expenditure – it is common cause that the Fund paid the premiums. Indeed,
in terms of s ection 45(1)( d) of the Attorneys Act, s ection 57(1)( g) of the LPA, the
payment of such premiums by the Fund is expressly provided for, in mandatory terms.
[41.3] Were not acquired by the Fund merely to comply with legal obligations
unrelated to the enterprise – the statutory obligation to pay the premiums, was
functionally linked to the enterprise.
[42] In the court's view, the services acquired are functionally related or linked to the Fund's
making of taxable supplies, and as such, the VAT component of the premiums paid, qualify
as input tax in the hands of the Fund.
The second issue – ultra vires
Revenue source of premium payments
[43] SARS’ s formulation of the ultra vires argument (see para [18.2] above ), has as an
element, the submission that the Fund had as a matter of fact paid the premiums from its
interest income, and that this was ultra vires.
[44] On the facts before the court, however, the payment of the premiums was not only
from interest income. SARS had admitted on the pleadings that the Fund paid the premiums
from all of its income, in the following terms:51
“The insurance premiums are paid from the income generated by the investments of the fund;
the interest received from trust accounts and annual contributions (if any) charged by the
appellant to legal practitioners. ”
50 SARS heads of argument paragraph 11.
51 Admitted by SARS on the pleadings, rule 31: 161/21.2.5.
15
[45] That accords with the attendant provisions in the Acts, which confirm that the Fund's
revenue is diverse, and that it consists of inter alia the interest and the contributions (among
others).52 That accorded as well with the evidence of Mr Ndande , who confirmed that the
Fund's revenue included inter alia income from interest, investments, rental income and
contributions. In terms of the Acts, the purposes for which the Fund’s revenue is to be applied,
are equally diverse, making no distinction bet ween, nor placing any constraints upon, which
sources of revenue are to be utilised for the funding of which purposes or expenses of the
Fund.53
[46] It cannot therefore ever be suggested that, as a matter of fact, the premiums were paid
exclusively from interest income. They were paid from the Fund’s general mixed revenue
(including interest). The Fund's paying of the premiums (from its general mixed) is moreover
expressly authorised by the Acts in terms of the attendant provisions.54
[47] As such, on this basis alone, it cannot be said that the Fund's paying of the premiums
in the manner in which it was paid over the period in question, was in any way contrary to or
ultra vires the attendant provisions of the Acts. The court considers furth er below (para [52] ff)
the related submission (assuming it is proposed by SARS to be a self -standing one), that the
Fund by not recovering (or waiving) the premium contributions from the practitioners was in
and of itself ultra vires the Acts.
Link between interest income and FFCs
[48] It was also pleaded by SARS that there was a direct causal link between the interest
income of the Fund and the issuing of the FFCs, and that thus, the services would have been
acquired by the Fund to make taxable supplies (the contributions), and partly to make non -
taxable supplies (the interest). Therefore (so it was pleaded), only the part used to make
taxable supplies would qualify to be claimed as an input tax deduction, and an apportionment
calculation would have to be done to determine the allowable input tax that could be claimed.55
[49] SARS did not persist with this point in legal argument (and thus the alleged link was
not further reasoned or explained), and SARS’ s counsel also in legal argument disavowed
that there is any need for such an apportionment in this matter, so there may not be a need to
decide the point.
[50] The link between the interest income and the issuing of the FFCs, is alleged to arise
from the fact that (so it is pleaded), in terms of the Acts it is a requirement for the issuing of
52 Attorneys Act s 36, LPA s 54.
53 Attorneys Act s 45(d), LPA s 57(g).
54 Ibid.
55 Rule 31: 162/21.3.2.
16
the FFCs that the practitioners pay over the interest on their trust accounts, and that the
practitioners’ possession of the FFCs, in turn, entitle them to the insurance “services ” rendered
to the practitioners.56 In terms of SARS’ s disallowance of objection, SARS stated that the link
arose from the Commissioner’s view that, “the interest is consideration for the supply of the
insurance to the attorneys ” by the Insurer.57
[51] If the court was required to express a view hereon, it would have to be that, on the
evidence, and in terms of the Acts, there is no clearly evident “direct causal link ” between the
interest income and the issuing of the FFCs, not least because the attendant provisions of the
Acts do not bear out the premise on which the link is predicated. To wit, there is not in fact any
requirement in terms of the Acts that the payment of interest by the practitioners is a
precondition or requirement to their being issue d with FFCs. The provisions in the Acts
stipulating that the interest shall be paid over to the Fund make no reference to and do not link
that obligation in any way with the manner of obtaining or the entitlement to FFCs.58
“May”
[52] What remains of the ultra vires argument, is to consider whether SARS is correct in its
contention that the Fund, as a creature of statute, was legally obliged by the Acts to levy
premium contributions in terms of the attendant provisions,59 in such a way that its neglecting
to do so, amounted to ultra vires conduct, and which in turn disentitled the claim for input tax.
[53] In this regard, the Fund had submitted that the use of the word “may” in the attendant
provisions,60 being permissive language, conferred a discretion on the Board to decide
whether or not to fix and levy premium contributions, and that the provisions were non -
prescriptive and unqualified with regard to the amount so to be levied.
[54] In response, SARS argued that although the attendant provisions state that the Board
“may” levy premium contributions, and not that it “shall” do so, in the circumstances the
permissively framed power ( “may”) denotes a duty imposed by the Acts on the Board to levy
such contributions.61 In support of that submission, SARS relied on authorities such as King.62
56 Rule 31: 162/21.3.1 -2.
57 Dossier 117/1.4.9.2.
58 Attorneys Act s 78(3) states that the interest “shall be paid over to the fund by the practitioner
concerned at the prescribed time and in the manner prescribed ”, and cf LPA s 86(5).
59 SARS heads of argument paragraph s 23 - 56, supplementary heads paragraph s 5.4.5 - 21, with
reference to inter alia Attorneys Act s 43(1)(a)(i), LPA s 74(1)(a)(i).
60 Attorneys Act s 43(1)(a)(i), LPA s 74(1)(a)(i).
61 SARS supplementary heads paragraph s 15-20.
62 CIR v IHB King; CIR v AH King 1947 (2) SA 196 (A) 209, SARS supplementary heads paragraph 19.
17
[55] In King, the Appellate Division held in relevant part that:63
“And it is true also that the word ‘may' confers a power but in some cases the power given is of
such a nature that the person to whom that power is given is under a duty to use it. Whether
this is so must be ascertained from a consideration of a number of factors, which are set out in
a passage from the judgment of LORD CAIRNS in the leading case of Julius v The Bishop of
Oxford (5 A.C. 214) which was cited with approval in this Court by INNES, C.J., in Noble &
Barbour v SA Railways (1922 AD 527, at p. 540 ); see also per LORD BLACKBURN at p. 241,
and cf. per WESSELS, J.A., in Lynch v Union Government (Minister of Justice) (1929 AD 281
at p. 283). ”
(Underlining supplied)
[56] In Julius ,64 the Lord Chancellor (Earl Cairns), had in relevant part held as follows:
“The question has been argued and has been spoken of by some of the learned Judges in the
Courts below as if the words "it shall be lawful" might have a different meaning, and might be
differently interpreted in different statutes, or in different parts of the same statute. I cannot think
that this is correct. The words "it shall be lawful" are not equivocal. They are plain and
unambiguous. They are words merely making that legal and possible which there would
otherwise be no right or authority to do. They c onfer a faculty or power, and they do not of
themselves do more than confer a faculty or power. But there may be something in the nature
of the thing empowered to be done, something in the object for which it is to be done, something
in the conditions under which it is to be done, something in the title of the person or persons for
whose benefit the power is to be exercised, which may couple the power with a duty, and make
it the duty of the person in whom the power is reposed, to exercise that power when c alled
upon to do so . ... And the words "it shall be lawful" being according to their natural meaning
permissive or enabling words only, it lies upon those, as it seems to me, who contend that an
obligation exists to exercise this power, to shew in the circumstances of the case som ething
which, according to the principles I have mentioned, creates this obligation .”
(Underlining supplied)
[57] In Noble the Appellate Division had said:65
“The contention is occasionally advanced that ‘may’ in some cases means ‘must ’. That is an
inaccurate statement. As remarked by COTTON, L.J in Nickalls v Baker (44 Ch. D at p. 270)
‘may’ never can mean ‘must ’ as long as the English language retains its meaning. It merely
confers a power; but the question may arise as to when it becomes the duty of the person
entrusted with the power to, exercise it in favour of an applicant. ”
63 King 209.
64 Julius v The Bishop of Oxford 1880, 5 A.C. 214, 222 -223.
65 Noble & Barbour v SA Railways 1922 AD 527, 540.
18
[58] In Lynch the Appellate Division stated with reference to Julius :66
“He has relied strongly upon the principle laid down in the case of Julius v The Bishop of Oxford
(5 A.C. 214; 49 L.J.C.L. 577) and other similar cases that where a power is deposited with a
public officer for the purpose of being used in favour of persons who are specifically pointed
out, and where the Legislature has laid down conditions upon which they can call for its
exercise, that power ought to be exercised, and the Court will require it to be exercised. It is,
however, made quite clear in this decis ion that the principle can only be invoked when the
person who wishes to rely upon it can show from the language of the whole statute when
properly interpreted, from the nature of the thing empowered to be done, or from other relevant
circumstances, that t he Legislature intended to couple the power with a duty and intended the
person in whom the power is reposed to exercise that power when called upon to do so .”
(Underlining supplied)
[59] On these authorities, and in the context of the present matter, the words “may” (as
used in the attendant provisions) are according to their natural meaning permissive or enabling
words only. As such, the onus was on SARS to show that the legislator, in the circumstances
concerned, despite the use of these enabling or permissive word s, had the intention that the
words must have compulsory force ( compulsory intention ).67
[60] Using the Lynch phraseology (see para [58] above ), SARS had to show that a
compulsory intention arises from the language of the whole statute when properly interpreted,
from the nature of the thing empowered to be done, or from other relevant circumstances. In
terms of Julius (see para [56] above ), SARS would have to show that a compulsory intention
arises from something in the nature of the thing empowered to be done, in the object for which
it is to be done, in the conditions under which it is to be done and/or in the title of the person
or pers ons for whose benefit the power is to be exercised.
SARS’ s contextual factors
[61] SARS argued that there are several “contextual factors ” which indicate that it could not
have been the intention of the legislature that the Fund be given a discretion to “levy
premiums ”.68
[62] One such factor, according to SARS, is that the Attorneys Act after its 2003
amendment,69 no longer contained a provision entitling the Fund to waive premium
contributions, and that the LPA as well contains no such provision.
66 Lynch v Union Government (Minister of Justice) 1929 AD 281, 283 -284.
67 Lynch 283-284, and cf Hartley NO v the Master 1921 AD 403, 407 -408.
68 SARS supplementary heads paragraph 21.
69 In terms of Act 55 of 2002, promulgated in terms of Government Gazette vol 451 no 24277 dated
17 Jan 2023.
19
[63] What was taken away by the amendment, however, does not answer the real question,
namely whether the relevant provisions which were introduced by the amendment (including
section 40B and s ection 43(1)(a)(i) of the Attorneys Act), and the equivalent provisions in the
LPA, and the permissive words therein contained, on a proper interpretation, evinced a
compulsory intention.70
The provisions in question
[64] To answer that question, the starting point is text of the provisions and of the related
provisions which featured in argument. The sections read in relevant part as follows:
Attorneys Act s ection 43(1)( a)(i): “Subject to the provisions of this section, every
practitioner ... shall, annually when he or she applies for a fidelity fund certificate, pay to the
fund - (i) such amount as may be fixed by the board of control from time to time in respect of
the cost of group professional indemnity insurance arranged by the board of control pursuant
to the provisions of section 40B; ”
LPA s ection 74(1)( a)(i): “Subject to the provisions of this section, every attorney ... must,
annually when he or she applies for a Fidelity Fund certificate, pay to the Council - (i) the amount
as may be fixed by the Board from time to time in respect of the cost of group professional
indemnity insurance arranged by the Board pursuant to the provisions of section 77(2); ”
(Underlining and emphasis supplied)
[65] Two other provisions which also featured in argument, are the following:
Attorneys Act s ection 40A(c) : “The board of control may - ... levy premiums and fees for
the provision of such insurance or security, as the case may be. ”
LPA s ection 77(4) : “The Board may levy premiums and fees for the provision of any
insurance or security through any scheme established or public company administered by it in
terms of the provisions of this Act or legislation repealed by this Act. ”
(Underlining and emphasis supplied)
[66] When this court refers to the term, “premium contributions ”,71 and unless the context
indicates otherwise, it is meant as a reference to the Fund's power to levy “premium
contributions ” (speaking generically) in terms of all four sections, i.e. whether under the two
main sections in question (Attorneys Act s ection 43(1)(a)(i) and LPA s ection 74(1)(a)(i) –
fixing provisions ), or under the other two sections which also featured in the parties’ heads
of argument (Attorneys Act s ection 40A(c) and LPA s ection 77(4) – levying provisions ).
70 Cf Julius , Lord Chancellor 222, Lord Penzance 228 -229.
71 Defined in paragraph [29] above, albeit there defined only with reference to the fixing provisions.
20
[67] The parties argued the matter on the basis that it was primarily the fixing provisions
and not the levying provisions which apply to the facts before the court, as it was the Fund
(via the Board) which had “arranged ” the insurance through contracting with the Insurer, which
“arranging ” is specifically referenced in the fixing provisions:
[67.1] Attorneys Act s ection 43(1)( a)(i) expressly refers to the insurance arranged by
the Board “pursuant to the provisions of section 40B”, the latter section (s ection 40B)
being the section which expressly empowers the Board to enter into such a contract.
[67.2] LPA s ection 74(1)( a)(i) in the same way expressly refers to the insurance
arranged by the Board “pursuant to the provisions of section 77(2) ”, the latter section
(section 77(2)) being the section which expressly empowers the Board to enter into
such a contract.
[68] If this analysis is correct, the levying provisions would not apply to the present scenario
where the Board had elected to contract with the Insurer for the providing of insurance in terms
of the fixing provisions as referred to in para [67] above (contracting insurance scenario ).
Rather, the levying provisions would apply only to the scenario where the Board elects to
provide the insurance through the Insurer to the practitioners directly in terms of Attorneys Act
section 40A and LPA s ection 77(1) ( direct insurance scenario ), in respect whereof the
Board is empowered:
[68.1] Under Attorneys Act s ection 40A( c), to “levy premiums and fees for the
provision of such insurance ... ”, through the Insurer.
[69] Under LPA s ection 77(4), to “levy premiums and fees for the provision of any insurance
or security through any scheme established or public company administered by it ”, i.e. through
the Insurer.
[70] The distinction between the two scenarios are not essential or pivotal to the outcome
of this judgment. Put differently, if the above analysis is incorrect, and the Acts were to be
interpreted to mean that both the fixing provisions and the levying provisi ons apply in a
contracting insurance scenario, given that word “may” appear in all four provisions, on the
analysis of the authorities and facts which follows below, this court would have come to the
same conclusions that it does on the question of a compu lsory intention.
21
[71] In all four provisions, the relevant words are “may”. As it was stated by the
Lord Chancellor ( Julius 222)72 in respect of the words there used, and which applies equally
to the words “may” in question here, the words,
“... are not equivocal. They are plain and unambiguous. They are words merely making that
legal and possible which there would otherwise be no right or authority to do. They confer a
faculty or power, and they do not of themselves do more than confer a faculty or power .”
[72] As such, on a plain reading of the four provisions or prima facie, the power to levy
premium contributions is entirely discretionary and permissive, and not compulsory.
[73] It remains to be considered, however, whether any of the other contextual factors
referred to by SARS or any “other circumstances ” (or the factors referred to in para [60]
above ), indicate a compulsory intention.
[74] SARS submitted73 that it is not a purpose of the Fund to reimburse losses suffered by
the public caused as a result of the professional negligence of practitioners, and therefore (so
the argument goes) to contend that the Fund has a discretion not to levy premium
contributions, and thereby permit the Fund to pay the premiums from its interest income, is
inconsistent with the meaning and purpose of the Act.
[75] SARS is correct that the Acts did not expressly make it the purpose of the Fund to
reimburse such losses. The Acts did however empower the Fund, in express and mandatory
terms, to pay the premiums, and to do so from its own revenue, and which revenue inclu ded
interest income, among others.74 It is therefore not the non -levying of premium contributions,
which “permits ” the Fund to pay the premiums from its income (and which includes interest
income), it is the attendant provisions of the Acts which do so, in mandatory terms. The
payment of the premiums by the Fund per se, is therefore not inconsistent with the Acts.
[76] The SARS arguments that the premiums were paid by the Fund exclusively from
interest income or were so paid by the Fund as mere agent of the practitioners, have already
been addressed herein before,75 and will therefore not be repeated here. Because the court
held that the Fund had contracted with and paid the premiums to the Insurer as principal, and
not merely as agent of the practitioners, SARS’ s related arguments (to the contrary), made in
the context of the compulsory intention debate,76 cannot be sustained. There is in any event
72 And cf Lord Blackburn Julius 241.
73 SARS supplementary heads paragraph 21.1.
74 Attorneys Act s 45(1)( d), LPA s 57(1)( g).
75 Paragraph s [23]-[30] and 0-[48] above.
76 SARS supplementary heads paragraph s 21.4 -5.
22
nothing in those submissions, which are factors or circumstances clearly indicating a
compulsory intention.
[77] SARS also argued that a relevant factor was the peremptory terms of
section 43(1)( a)(i) of the Attorneys Act (s ection 74(1)(a)(i) of the LPA). The use of the word
“shall” in those provisions is however equally plain and unambiguous. What is compulsory is
to pay the amount which the Board may fix from time to time. Obviously, if no amount is ever
fixed, no compulsory obligation to pay arises. The question remains whether the Fund (via its
Board) was obligated to fix an amount at all. Prima facie, the Board i s entitled to fix, or not to
fix, any amount from time to time. In this regard, the court agrees with the Fund’s submission
that, prima facie, the text of the provisions place no peremptory obligation on the Board to fix
any amount at all, nor an obligation to recover the full insurance cost from the practitioners.77
[78] There is nothing in SARS’ s submissions to the court at the hearing or in its heads of
argument which persuades the court that the legislator, despite the use of the (permissive)
word “may” in the attendant provisions, had a compulsory intention. On a conspectus of the
facts and the relevant provisions of the Acts, and with reference to the aspects considered
below, there are moreover no “other circumstances ” which indicate such an intention. To that
end, the court will consider in what follows if there is an indication of such an in tention in (a)
the nature of the thing empowered to be done, in the object for which it is to be done, or in the
conditions under which it is to be done;78 (b) the title of the person or persons for whose benefit
the power is to be exercised;79 (c) the language of the whole statute when properly
interpreted;80 or (d) any other relevant circumstances.81
[79] In the court's view, there is nothing in the nature of the thing empowered to be done
(the fixing of an amount as a premium contribution), in the object for which it is to be done (to
contribute to the cost of the insurance), or in the conditions under whi ch it is to be done (no
conditions appear to have been imposed), indicating a compulsory intention.
[80] The title of the person or persons for whose benefit the power is to be exercised
(beneficiary ), may be a material factor. Lord Blackburn in Julius (241-243) articulated the
salient aspects of this consideration, with reference to the words there in question, thus:
“I do not think the words ‘it shall be lawful ’ are in themselves ambiguous at all. They are apt
words to express that a power is given; and as, prima facie , the donee of a power may either
exercise it or leave it unused, it is not inaccurate to say that, prima facie, they are equivalent to
saying that the donee may do it; but if the object for which the power is conferred is for the
77 Fund supplementary heads paragraph s 60-62.
78 Julius 223.
79 Ibid.
80 Lynch 283.
81 Ibid.
23
purpose of enforcing a right, there may be a duty cast on the donee of the power, to exercise it
for the benefit of those who have that right, when required on their behalf . Where there is such
a duty, it is not inaccurate to say that the words conferring the power are equivalent to saying
that the donee must exercise it. ...
But there are cases in which the authority or power given is not to do a judicial act, and yet
there is a duty on the donee to exercise the power if it appears to be given to the donee for the
purpose of making good a right, and he is called upon by those who have that right to exercise
the power for their benefit . ...
The word ‘may’ does not occur in the 14 Car: 2 C.12, nor in the 23 Hen. 6 where in the Norman
French version the words are ‘lesseront hors de prison ’; and in the English version ‘shall let out
of prison ’; but both are apt illustrations of the rule that though giving a power is prima facie
merely enabling the donee to act, and so may not inaccurately be said to be equivalent to
saying he may act, yet if the object of giving the power is to enable the donee to effectuate a
right, then it is the duty of the do nee of the powers to exercise the power when those who have
the right call upon him so to do . And this is equally the case where the power is given by the
word ‘may’, if the object be clear. ...
The enabling words are construed as compulsory whenever the object of the power is to
effectuate a legal right. It is far more easy to shew that there is a right where private interests
are concerned than where the alleged right is in the public only, and in fact, in every case cited,
and in every case that I know of (where the words conferring a power are enabling only, and
yet it has been held that the power must be exercised), it has been on the application of those
whose private rights required the exer cise of the power . The personal liberty of the person
arrested by the sheriff, the rights of the creditors of the bankrupt to their debts, the rights of the
plaintiff who had recovered judgment to his costs, the right of the constable out of pocket to be
paid by the parish , the right of the creditor of the bank or of the local board to be paid, were all
private rights. I do not, however, question that there may be a right in the public such as to
make it the duty of those to whom a power is given to exercis e that power. ”
(Underlining supplied)
[81] In sum, the oft -quoted principle as formulated by Lord Blackburn,82 is that empowering
words are more readily construed as imposing a duty where private interests are concerned
than where the alleged right is in the public only, and in every cited case (considered by Lord
Blackburn) it was moreover so construed on application by those whose private rights required
the exercise of the power. Or as it was formulated by the Appellate Division with reference to
the Lord Chancellor’s dictum,
“... where a power is deposited with a public officer for the purpose of being used in favour of
persons who are specifically pointed out, and where the Legislature has laid down conditions
82 In several South African cases, inter alia Noble 540, King 209-210, Grosvenor Motors (Cape) Ltd v
Samson 1956 (3) SA 169 (C) 173E -174A.
24
upon which they can call for its exercise, that power ought to be exercised, and the Court will
require it to be exercised ”.
[82] When considering the wide range of similar cases evaluated in Julius ,83 and the South
African cases (referred to in this judgment, or by SARS) which referred to Julius ,84 it is evident
that in the vast majority of them, the person or interest sought to be served by the mandamus
or other relief sought (i.e. the beneficiary of the right), was also the applicant seeking the
enforcement or effectuation of that right ( the third party ), and which right was – according to
the statutory instrument in question – permissively reposed in the public officer (or his
equivalent) in question ( the donee ).
[83] In Julius , the beneficiary and third party was the appellant (Dr Julius), who had lodged
a complaint and who wished to compel the Bishop of Oxford to issue a commission of inquiry.
In Lynch , that person was the plaintiff, claiming that he was entitled as of right to be re -admitted
into the Public Service as a first -class sergeant in the South African Police. In Noble , that
person was the appellant who was a public servant seeking to compel the respondent to grant
him leave. In all three matters, however, the courts found that the legislator did not have a
compulsory intention.
[84] Lord Blackburn stated85 that this was the distinguishing feature of every case that he
knew of where the courts found in favour of a compulsory intention, namely that they were
cases on the application of a third party beneficiary whose private rights required the exercise
of the power: the personal liberty of the person arrested by the sheriff, the rights of the creditors
of the bankrupt to their debts, the rights of the plaintiff who had recovered judgment to his
costs, the right of the constable out of pocket to be paid by the parish, the right of the creditor
of the bank or of th e local board to be paid, were all private rights.
[85] Lord Blackburn did not,86 however, rule out that there may be a right in the public such
as to make it the duty of those to whom a power is given to exercise that power. In King, the
Appellate Division with reference to Lord Blackburn’s approach, preferred, therefore, to draw
no inference from the fact that the Commissioner, in exercising his power under the attendant
section in that case, was acting in the public interest. Havin g regard, however, to the factors
mentioned in the Julius case, it seemed to the Appellate Division that “all considerations of
justice and expediency ” nevertheless required the court to say that in the relevant section, the
word “may” also imported a duty to exercise the power given to the Commissioner.
83 Julius 223-225, 230 -231, 241 -246.
84 See also Hartley 407-408.
85 Julius 244.
86 Ibid.
25
[86] In South African Railways & Harbours ,87 after a thorough analysis of Julius , the
Appellate Division held as follows:
“These passages show, in my opinion, that the most weighty consideration, from which a legal
duty may be implied in a permissive power, is that the object of the power is to effectuate either
a private or a public right – a right requiring that the power conferred shall be exercised and
therefore capable of enforcement. ...
It is difficult to conceive under what circumstances a permissive power conferred for the sole
benefit of the donee, can be accompanied by legal duty or a right in another to exact
performance of that duty. ”
[87] In the matter before this court, what is notably absent, is the existence of a third-party
beneficiary, seeking the effectuation of some private or public right. Here, we have only the
donee, the Fund, who is the repository (and sole notional beneficiary) of the permissive power
to fix premium contributions (whether under the fixing provisions or under the levying
provisions).88
[88] Ex facie the attendant provisions, the permissive power was conferred by the legislator
on the Fund as donee for its own sole benefit. In the words of the Appellate Division forecited,
it is difficult to conceive under what circumstances the power so conferred cou ld or should be
accompanied by a legal duty or a right in another to exact performance under the provisions.
The Fund's contextual considerations
[89] The Fund in their legal submissions raised several factors and “contextual
considerations ” which it was submitted mitigated against a compulsory intention. In this regard
it was submitted, inter alia , that:
[89.1] If it was the intention of the legislator to require the Fund to recover the full cost
of the insurance it would have legislated to this effect, which it could easily have done
by (a) including a provision stating that the Fund must do so, and (b) referrin g, for
example, to the amount contemplated in s ection 43(1)(a)(i) of the Attorneys Act and
section 74(1)( a)(i) of the LPA as the “full amount ” of the expense incurred by the Fund.
[89.2] The permissive language used in the levying provisions ,89 and that
section 43(1)( a)(i) of the Attorneys Act and s ection 74(1)( a)(i) of the LPA (the fixing
87 South African Railways and Harbours v Transvaal Consolidated Land and Exploration Co Ltd 1961
(2) SA 467 (A) 504E -G, followed and approved in Schwartz v Schwartz 1984 (4) SA 467 (A) 473I -
474D.
88 See the discussion at paragraph s [66]-[70] above.
89 Attorneys Act s 40A( c), LPA s 77(4) of the LPA.
26
provisions) must be read in the context of the levying provisions , and that if this is done,
there can be no suggestion of a compulsory intention.
[89.3] Paying premiums in respect of contracts of insurance entered into in terms of
section s 76 and 77 of the LPA is an express purpose of the Fund in terms of
section 57(1)( g) of the LPA.
[89.4] The Insurer is a non -profit company established by the Fund specifically and
only for purposes of providing the insurance to the practitioners.
[89.5] The Fund's revenue is exempt from liability to income tax in terms of
section 53(1) of the Attorneys Act and s ection 60(1) of the LPA.
[89.6] The policy considerations which underpin the relevant legislative provisions are
designed to produce / result in a benefit to the public and specifically all persons who
make use of legal services.
[89.7] There is no general commercial, profit -making objective or purpose that can be
attributed to the Fund and no such purpose is stipulated in the Acts.
[89.8] The Fund’s minimising of the cost of FFCs and insurance to practitioners in a
manner that diminishes the Fund revenue, is consistent with the Acts and their
underlying policy considerations.
[90] The court is in agreement that the contextual considerations aforementioned, mitigate
against a compulsory intention rather than for it . To these can be added or supplemented, the
following .
[91] In respect of the legislator's chosen wording in the scheme of the Acts, the legislator
was careful in the wording of the various sections in both the Attorneys Act, and in its
successor, the LPA, to spell out when a power of the Fund was to be mandatory ( “shall”), and
when merely discretionary ( “may”). The Fund's payment of the premiums was made
compulsory. In respect of the Fund's discretion to recover the cost of the insurance, the
legislator chose markedly different wording, “such amount as may be fixed by the board of
control from time to time in respect of the cost ”.90 If the legislator had in mind that the Fund
must be compelled to from time to time to fix the premium contribution payable in respect of
the insurance cost, or to fix it in an amount equal the premiums paid from time to time, very
different wording would have been required.
90 Attorneys Act s 43(1)(a)(i), LPA s 74(1)( a)(i).
27
[92] Even if one uses the word “shall” instead of “may” in the fixing provisions, as SARS is
suggesting one must, that will not achieve the goal SARS is contending for, to wit, a mandatory
recovery of the full insurance cost from time to time ( the insurance cost ), in order to avoid
the “subsidising ” of the premium cost with interest income. By way of example, LPA
section 74(1)(a)(i) would read in relevant part that,
“every attorney ... must, annually when he or she applies for a Fidelity Fund certificate,
pay to the Council - (i) the amount as shall be fixed by the Board from time to time in
respect of the cost of group professional indemnity insurance ”.
(Emphasis supplied)
[93] Even with that amendment, the section would still read as if a discretion were given to
the Board to fix an amount, and that it shall fix the amount from time to time . But neither the
amount nor the time periods (for fixing the amount) are prescribed. That wording would
therefore still envelop a discretion as to what the amount should be (as the amount could
notionally be set at any, or even a nominal, level), and how often it is to be set. Such
amendment would not, in and of itself, ensure that the amount fixed equates proportiona lly91
to the full insurance cost. To achieve that, one would have expected wording such as, for
example, the following :
“Every attorney ... must, annually when he or she applies for a Fidelity Fund certificate, pay to
the Council - (i) the amount as shall be fixed by the Board from time to time to ensure the
recovery of the full in respect of the cost of group professional indemnity insurance .”
(Deleted words struck through, added words underlined)
[94] If the words “in respect of the cost ” are not deleted or altered, the section, even with
the word “shall”, still gives the Board the notional discretion to fix the premium contribution in
any amount, or even in a nominal amount, or fix it at zero. The retaining of the words “from
time to time ” moreover, leaves it in the discretion of the Board as to when or how often to fix
the amount . As such, even if “shall” were substituted for “may”, discretionary language
remain s.92
[95] The scheme of the Acts was clearly to leave the vast majority of these types of matters
pertaining to its own administration, within the permissive discretion of the Board / the Fund
or the LPC. And where the legislator meant to make a thing compulsory or discretionary, as
91 I.e. in the proportion which each practitioner has to contribute, to ensure the recovery of the
insurance cost, given that in the nature of the profession, the total number of the practitioners so
contributing will be constantly changing in every success ive years, as practitioners cease to
practice, or new ones commence doing so.
92 Cf Hartley 408.
28
the case may be, suitable wording was used to make it so, as is apparent from the various
related provisions of the Acts referred to in this judgment.
[96] The court agrees with the Fund that the fact that the legislator also used the word
“may” in the levying provisions in respect of the levying of “premiums and fees ” for the
provision of insurance,93 is an indicator against a compulsory intention. As is the fact that the
making of the payment of the premiums are clearly compulsory, whilst making their recovery
permissive in all four of the related sections of the Acts.94
[97] In the same way, when the Acts provided for the Board to levy annual or other
contributions in respect of the issuing of FFCs, or other annual amounts, the Acts stipulated
that they were in the amounts as “may be fixed ” by the Board from time to time (i.e. permissive
language) .95 The discretionary power to fix the amount of the FFC contributions, is a further
indicator against a compulsory intention in the fixing provisions.
[98] Having regard to the factors mentioned in the Julius case, and those referred to in the
South African cases referred to in this judgment, the considerations of justice and expediency
require this court to say that in the attendant sections, the word “may” do not import a duty on
the Fund to exercise the power given by the sections. There is , moreover, also no self -evident
“absurdity or injustice ” which would follow the court giving the permissive words their natural
discretionary meaning.96 The court finds that in the attendant provisions there is no compulsory
intention, and to the extent that a burden rested on SARS to show otherwise, it failed, and as
such, the ultra vires argument also in this respect cannot succeed.
[99] Whether SARS is correct on its invoices argument, and whether on that basis alone
the court can or should find that the Fund’s input tax claims are disentitled, or the appeal must
fail, is considered in the following section of this judgment.
The third issue – the invoices argument
[100] SARS’ s invoices argument was to the effect that the Fund had failed to comply with
the requirements of s ection 16(2)( a) of the VAT Act, therein that it had not furnished SARS
with any invoices issued by the Insurer to it in respect of the Fund’s premium payments to the
Insurer, at the time of the submitting of the VAT returns. The Fund was thus prohibited from
claiming th e related input tax deduction.97
93 Attorneys Act s 40A( c), LPA s 77(4).
94 Attorneys Act s 40A( c) and s 43(1)(a)(i), LPA s 74(1)( a)(i) and s 77(4).
95 Attorneys Act s 43(1)( a)(ii) and s 43(4), and LPA s 74(1)( a)(ii), or “may determine ” in terms of LPA
s 74(2) and s 74(3).
96 Cf Lord Penzance Julius 230, Lynch 285.
97 SARS supplementary heads paragraph 31 ff.
29
[101] Section 16(2)( a) of the VAT Act provides in relevant part as follows:
“(2) No deduction of input tax in respect of a supply of goods or services ... or any other
deduction shall be made in terms of this act, unless —
(a) A tax invoice ... in relation to that supply has been provided in accordance with
section 20 or 21 and is held by the vendor making that deduction at the time
that any return in respect of that supply is furnished; ”
[102] The Fund submitted, also with reference to Pretoria East Motors ,98 inter alia that:
[102.1] SARS had never placed in dispute the validity or the quantum of the payments
made by the Fund to the Insurer for the insurance cover.
[102.2] SARS never requested copies of the invoices issued by the Insurer to the Fund
in respect of the Fund's premium payments to the Insurer ( Insurer premium
invoices ), but at all times insisted that the Fund provide it with copies of the invoices
which SARS contended the Fund should have issued in relation to the receipt of the
contributions paid by the legal practitioners ( contribution invoices ).
[102.3] Mr Ndande had testified that the Insurer issued invoices to the Fund in relation
to all payments made by the Fund to them (i.e. the Insurer premium invoices). SARS
had not adduced any evidence to contradict this, nor had it made any allegations in its
rule 31 statement or its heads of argument to suggest otherwise.
[102.4] The Fund had therefore discharged the burden of proof with reference to the
dispute as framed in the rule 31 and rule 32 statements. It had demonstrated that it
was subject to VAT, that it did not issue and had no obligation to issue the
documentation inco rrectly requested by SARS, and that all the requirements under the
VAT Act necessary to entitle the Fund to claim the input tax in fact claimed have been
met.
[102.5] It bore emphasis that SARS had previously subjected the Fund to a verification
in relation to the same input tax claims that form the subject matter of this dispute. The
Fund provided the documentation requested by SARS on that occasion and after
consider ing same , SARS conceded the appeal in full pursuant to alternative dispute
resolution proceedings (referring to the rule 32 statement paras 10-11).
[102.6] The fact that the Fund did not discover or otherwise provide copies of the
invoices issued to it by the Insurer in terms of these proceedings is therefore no reason
to penalise the appellant and certainly does not mean that the Fund failed to discharge
98 CSARS v Pretoria East Motors (Pty) Ltd 2014 (5) SA 231 (SCA) paragraph s 13 -14 (Fund
supplementary heads paragraph s 8-9, 116 -122).
30
the burden of proof it bore with reference to the scope and ambit of the dispute set out
in SARS’s rule 31 statement (referring to Pretoria East Motors paras 13-14).
[103] In Pretoria East Motors the SCA held in relevant part, as follows:
“[6] ... The present appeal must therefore be approached on the basis that the onus was on the
taxpayer to show on a preponderance of probability that the decisions of SARS against which
it appealed were wrong ( Commissioner for Inland Revenue v SA Mutual Unit Trust
Management Co Ltd 1990 (4) SA 529 (A) at 538D). That, however, is not to suggest that SARS
was free to F simply adopt a supine attitude. It was bound to set out the grounds for the disputed
assessments and the taxpayer was obliged to respond with the grounds of appeal, and these
would serve to delineate the disputes between the parties.
...
[14] ... Whilst there are disputes in tax appeals, such as the entertainment expenditure in the
present appeal, where the production of invoices or vouchers is called for if the taxpayer is to
discharge the onus of proof resting on it, that is not always the case. Everything will depend
upon the nature of the dispute between the parties as defined by the grounds of assessment
and the grounds of appeal. Where, for example, the SARS auditor has based an assessment
upon the taxpayer's accounts and records, but has misconstrued them, then it is sufficient for
the taxpayer to explain the nature of the misconception, point out the flaws in the analysis and
explain how those records and accounts should be properly understood. That can be done by
a witness such as D r Gouws who, as a qualified chartered accountant, is capable of giving such
an explanation after a full and proper consideration of the accounts. If there are underlying facts
in support of that explanation that SARS wishes to place in dispute, then it sho uld indicate
clearly what those facts are so that the taxpayer is alerted to the need to call direct evidence
on those matters. Any other approach would make litigation in the tax court unmanageable, as
the taxpayer would be left in the dark as to the leve l of detail required of it in the presentation
of its case. It must be stressed that SARS is under an obligation throughout the assessment
process leading up to the appeal, and the appeal itself, to indicate clearly what matters and
which documents are in dispute, so that the taxpayer knows what is needed to present its case. ”
[104] The Fund submitted that SARS had previously subjected the Fund to a verification in
relation to the same input tax claims that form the subject matter of this dispute; that the Fund
had provided all the documentation requested by SARS on that occasion and after having
considered that documentation, SARS had conceded the appeal in full pursuant to alternative
dispute resolution proceedings (referring to paras 10-11 of its rule 32 statement).99
[105] When regard is had to the paras of the rule 32 statement referred to, however, it is
apparent that the submission made by the Fund, only encapsulates two of the four VAT
99 Rule 32: 170/10 -11.
31
periods in question, namely the periods 05/2018 and 07/2018, and not as well the other two
periods which feature in this appeal, to wit 07/2019 and 08/2020.
[106] Aside for that discrepancy, the court is in agreement with the Fund's general
submissions made in this regard, and on the authority of Pretoria East Motors , forecited,100
further agrees that the Fund should not be non -suited in this appeal merely because the
premium invoices were not produced at the hearing. As the SCA said in Pretoria East Motors ,
it is not always the case that the production of invoices is called for if the taxpayer is to
discharge the onus of proof resting on it. Everything will depend upon the nature of the dispute
between the parties as defined by the grounds of assessment and the grounds of appeal.
[107] In the pleadings, SARS’ s main focus, insofar as it concerned the matter of invoices,
section 54(3) statements or related documentary evidence of the payments concerned
(documentation ), was twofold:
[107.1] First, such documentation in respect of the practitioners’ payment of the initial
and/or annual contributions to the Fund from time to time, and in particular, the
contribution invoices, if any, issued by the Fund to the practitioners.101
[107.2] Second, such documentation in respect of the practitioners’ payment of the
premium invoices issued to the practitioners by the Fund and/or by the Insurer (as the
agent of the Fund) from time to time, if any, in respect of premium contributions levied
with reference to the insurance cover arranged by the Fund with the Insurer
(Fund premium invoices ).102
[108] It will be recalled that, in respect of contribution invoices , it was the Fund's pleaded
case and the evidence of Mr Ndande , that such invoices were never issued by the Fund, as
100 And cf South Atlantic Jazz Festival (Pty) Ltd v CSARS 2015 (6) SA 78 (WCC) paragraph 19.
101 See rule 32: 156/16 , querying the documentation in respect of the “contributions received ”;
160/21.2.2 , querying the documentation “in relation to the initial contributions ”;
164/26.5 read with 122/1.10 -11, querying the documentation in respect of the “initial contributions ”;
165/30 read with 137/5.1 -2, querying the documentation in respect of the “initial contributions ”.
102 See rule 32: 156/16 , where SARS recognised that, in respect of the premiums, etc), there were
“schedules containing figures extracted from the annual financial statements, of amounts ostensibly
paid over as premiums ” – referring to the Fund's payment of premiums to the Insurer. Then the
pleading continues, stating that, “The appellant could also not confirm whether any tax invoices
were issued to practitioners .” (Emphasis supplied) – referring to the (non -existent) Fund premium
invoices;
161/21.2.9 , where SARS pleaded that, “The appellant, notwithstanding section 16(2) could not
produce any documentary proof that any service was supplied to the legal practitioners by the
appellant .” (Emphasis supplied) – again here raising the absence of the documentation or
Fund premium invoices evidencing the postulated or notional “insurance service ” rendered by the
Fund to the practitioners.
32
the monies were collected from the practitioners by the Law Society or the LPC, as agents of
the Fund.103
[109] It is clear from the pleadings and the evidence, that the Fund also never issued any
Fund premium invoices to the practitioners, as the Fund had waived or elected not to recover
premium contributions from the practitioners .104 It will also be recalled that such non -recovery
formed the heart of SARS’ s ultra vires argument.
[110] Further, as is also common cause, the Fund did account for and pay to SARS the
output tax in respect of its rental income and contributions income from time to time, while no
such accounting or payment was ever necessary or made in respect of any premium
contributions or premium invoices, as this was never levied, and thus no such invoices were
ever issued.
[111] The main focus of SARS invoices argument, as it was formulated in its heads of
argument, is however not the contribution invoices or the Fund premium invoices, which did
feature prominently in the pleadings, but rather, it is the Insurer premium invoices , which did
not, and to which there was only a slight reference in the evidence of Mr Ndande .
[112] As was the case in Pretoria East Motors , where the SARS auditor had based
assessments upon the accounts and records (such as they were) of the taxpayer, but has
misconstrued them or the applicable legal principles, it should be sufficient for the Fund , as
the taxpayer in this matter, to explain the nature of the misconception, point out the flaws in
the analysis and explain how those records and accounts and the attendant legal principles ,
should properly be understood and applied – as the Fund has done inter alia through a witness
such as Mr Ndande who explained various aspects of the Fund’s approach to and dealing with
the matters and issues at hand.
[113] If there were underlying facts or documentation in support of that explanation –
pertinently the Fund premium invoices – that SARS wished to place in dispute, then it should
have indicated clearly what those facts were – in their pleadings and in the cross -examination
of Mr Ndande – so that the Fund was alerted to the need to call direct or further evidence on
such matters.
[114] This was not done by SARS, during the evidence of Mr Ndande in respect of the
Insurer premium invoices or in respect of their physical absence from the proceedings, or at
least not pointedly. Mr Ndande confirmed under cross -examination that the Insurer had issued
tax invoices (i.e. Insurer premium invoices) to the Fund in respect of the premium payments.
103 Rule 32: 184 -185/62.
104 Rule 32: 172/16 -17 and 186/66 -68.
33
As far as the court recalls, to that SARS’ s counsel responded, as an aside, that these were
never seen and that there was no evidence of that, and whereafter the matter of the Insurer
premium invoices was not again revisited in Mr Ndande ’s evidence.
[115] As the Fund argued and pointed out, SARS had also never placed in dispute the
validity, or the quantum of the payments made by the Fund to the Insurer for the insurance
cover. Mr Ndande had testified that the Insurer issued invoices to the Fund in relation to all
payments made by the Fund to them. SARS had not adduced any evidence to contradict this.
[116] As the SCA held in Pretoria East Motors , SARS is under an obligation throughout the
assessment process leading up to and in the appeal, to indicate clearly what matters and
which documents are in dispute, so that the taxpayer knows what is needed to present its
case. Any other approach would make litigation in the tax court unmanageable, as the
taxpayer would be left in the dark as to the level of detail required of it in the presentation of
its case.
[117] Given that the input tax claims were previously vetted and approved by SARS, only to
be reversed in later updated assessments, without the apparent need or call for the production
by the Fund of the Insurer premium invoices, the obligation on SARS to call for them and call
for them clearly in these proceedings (in the pleadings and/or in the evidence) was,
respectfully, even more pronounced.105
[118] SARS’ s invoices argument was that the Fund was prohibited from claiming the input
tax deductions in question, and that the appeal should fail, for failing to comply with the
peremptory requirement of s ection 16(2)(a), in that it had not furnished SARS with any
invoices issued by the Insurer to it at the time of submitting the return.106 SARS’ s reliance on
s 16(2)(a) is new, and featured for the first time in its heads of argument. That was not the
basis on which it was pleaded by SARS, that the additional assessments were raised and the
deductions were disallowed.
[119] In respect of the factual and legal grounds which were pleaded by SARS, the Fund
has succeeded in showing on a preponderance of probability that the decisions of SARS
against which it appealed were wrong, and hence the appeal must succeed, and the
assessme nts must be set aside.107
[120] It goes without saying that SARS, in its reconsideration of the matter of the
assessments or otherwise, would be free to utilise such powers as are available to it under
105 Cf South Atlantic Jazz Festival paragraph 19.
106 SARS supplementary heads paragraph s 32-33.
107 Cf Pretoria East Motors paragraph 6.
34
fiscal legislation , to obtain such documents or related invoices from the Fund or the Insurer as
it deems fit.
Conclusion
[121] For all of these reasons I have concluded, and the other members of the court agree,
that the appeal must be upheld and the additional assessments set aside. Neither party sought
costs. I therefore make the following order:
[121.1] The appeal is upheld.
[121.2] The additional assessments raised for the 05/2018, 07/2018, 07/2019 and
08/2020 VAT periods, are set aside.
[121.3] There is no order as to costs.
___________________________
M Steenkamp
Acting Judge / President
Concur:
Y Mohamed (accounting member)
Adv M Titus (commercial member)
Coram: Steenkamp AJ
Accounting member, Mr Y Mohamed
Commercial member, Adv M Titus
Hearing: 18 and 20 June 2024 .
Further submissions: 8 and 22 July 2024
Judgment: 11 February 2025