AB (Pty) Ltd v Commissioner for the South African Revenue Service (1132) [2014] ZATC 1 (18 November 2014)

Value-Added Tax (VAT)

AB (Pty) Ltd, a security services company registered for VAT, was assessed by the South African Revenue Service (SARS) for overstated input VAT during the 02/07 to 02/11 VAT periods. SARS imposed 200% additional tax, 10% penalties, and interest on capital amounts. The appellant abandoned its appeal against the capital amounts but contested the additional tax, penalties, and interest. The court set aside the 200% additional tax, directing SARS to remit it to nil due to insufficient evidence of fraud intent.

Whether the Appellant is liable for additional tax in terms of section 60 of the Value-Added Tax Act, particularly regarding the imposition of 200% additional tax due to the Appellant's failure to furnish required documentation and the Commissioner's inability to prove the correctness of this discretionary decision

The additional tax imposed upon the Appellant is set aside. The assessment is referred back to the Commissioner and it is directed that the additional tax be remitted to nil.

The court set aside the additional tax imposed on the Appellant and directed that it be remitted to nil. The assessment was referred back to the Commissioner for further action.

Input Vs. Output Vat

The court held that the Commissioner failed to discharge the onus of proving the correctness of the 200% additional tax imposition, as required by the law. This principle underscores that the burden of proof lies with the party initiating the claim (the Commissioner) to demonstrate its validity.

32427682.64

Value-Added Tax Act

1621484.12

5240.11