Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
19 September 2018
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
C:SARS v Amawele Joint Venture CC
The SCA today upheld an appeal by the Commissioner for the South
African Revenue Service against a decision of the Gauteng Division of
the High Court, Pretoria, dismissing an appeal against a decision by the
Tax Court, Pretoria that certain construction services rendered to the
Department of Housing, KwaZulu-Natal, were to be zero rated for the
purposes of VAT.
Amawele had undertaken three contracts for the Department of Housing,
two for the revitalisation and rectification of houses built during the
period from March 1994 to 2002, and one to provide emergency relief in
respect of housing damaged by a storm in Emnambithi. This work was
undertaken in terms of two national housing programmes, the Emergency
Assistance Programme (EAP) and the Rectification and Revitalisation
Programme (RRP). The question was whether the supply of services
pursuant to these contracts were zero rated by virtue of s 11(2)(c), read
with s 8(23) of the VAT Act, because they were services supplied as part
of the Housing Subsidy Scheme identified in s 3(5)(a) of the Housing Act
107 of 1997.

The SCA analysed the history of sections 11(2)(c) and 8(23). It was
apparent from this history that when theses sections were introduced
neither the EAP nor the RRP were part of the Housing Subsidy Scheme,
because they were not in existence at that time. When they were
introduced in 2004 and 2005 they were constituted separately as national
housing programmes, separate and distinct from the Housing Subsidy
Scheme. In the circumstances the provision for zero rating of supplies
under the latter scheme was not applicable to the EAP and the RRP. The
ruling to the contrary by the Tax Court, upheld by the Full Court, was
accordingly set aside.