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ABC (Pty) Ltd v the Commissioner for the South African Revenue Service

Tuesday, 04 February 2014   (0 Comments)
Posted by: Author: SAIT Technical
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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 invoices.

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. 

Please click here to access the full case.



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