ABC (Pty) Ltd v the Commissioner for the South African Revenue Service
04 February 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
The Tax Court recently delivered its judgement in the matter between ABC (PTY) LTD and
the Commissioner for the South African Revenue Service.
This is an appeal in terms of the provisions
of section 33 of the Value
Added Tax Act, 89 of 1991 ("the VAT Act”). The issue in dispute is whether the
appellant should be allowed to deduct input tax in respect of supplies made to
it during the relevant periods of assessment, even though tax invoices were not
issued in respect of those supplies. The CSARS had disallowed the appellant’s
objection to the assessment raised.
The appellant carried on business as the owners and organisers of a
world acclaimed Festival. In the course of organising such events, the
appellant obtained sponsorships for its 2006 and 2007 edition of the festival.
In terms of the sponsorship agreements, the sponsors agreed to contribute and
did contribute to the organisation and bringing into fruition festivals for the
years 2006 and 2007 by providing the appellant with certain services and cash
payments. The sponsors did not charge VAT on the supply of goods and services
made or rendered to the appellant and no VAT was paid by the appellant on the
sponsorships so received. Further, the sponsors did not issue tax invoices to
the appellant in respect of the services they provided to the appellant. Consequently,
the appellant did not issue the sponsors with tax invoices in respect of the
services it provided to the sponsors in terms of the sponsorship agreements.
The appellant did not declare output tax on the value of the services supplied
to it by the sponsors in its VAT returns for the relevant periods of assessment
nor did it claim input tax on the value of the services supplied to it by the
sponsors in any of its VAT returns.
The appellant informed the respondent of the failure by the sponsors to
provide it with the required tax invoices, coupled with a demand that the
respondent, consistent with its responsibility to carry out the provisions of
the VAT Act, forces the sponsors to issue the appellant with the required tax
The respondent raised assessments and levied taxes based on an audit it
had conducted into the tax affairs of the appellant. In response, the appellant
objected to the assessments in dispute and to other assessments relating to the
disallowance of input tax claimed on certain entertainment expenses and rental
of passenger vehicles.
The appellant’s objections to the other assessments and the penalties
levied on theSponsorship’s output tax were allowed, but its objections to the output
tax on the sponsorship and interest levied thereon were disallowed.
The court held that, the fact that the sponsors did not issue the
appellant with a tax invoice did not leave the appellant without a remedy.
There is an obligation on registered vendors, which includes the appellant, to comply
with the provisions of the VAT Act. The appellant cannot, now that it failed to
comply with the provisions of the VAT Act in the first place, contemplate any
form of relief in terms of which the respondent is ordered to force the
sponsors to issue the appellant with the required invoices. The relief provided
for in section 20(7)(b) does not assist the appellant either. The appellant had
failed to make out a case for the relief it sought in this appeal. Therefore,
the appeal was dismissed.
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