Commissioner for the South African Revenue Service v Marshall NO and Others (in their capacities as trustees of the SA Red Cross Air Mercy Service Trust)

The South African Red Cross Air Mercy Service Trust, a registered welfare organisation and VAT vendor, provided aero-medical services to various provincial health departments under written contracts. These services included air ambulance, rescue, and medical transfer services, for which the Trust received payments calculated according to agreed tariffs. The Trust applied for a binding VAT ruling contending that the payments received from provincial governments were zero-rated under s 11(2)(n) of the Value Added Tax Act 89 of 1991, on the basis that they constituted a deemed supply of services under s 8(5). The Commissioner for SARS ruled that the services were actual supplies subject to VAT at the standard rate. The High Court found in favour of the Trust, declaring the payments zero-rated. SARS appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Gauteng Division of the High Court, Pretoria, was set aside and replaced with an order dismissing the Trust’s application with costs.

This judgment clarifies the scope of s 8(5) and s 11(2)(n) of the VAT Act, confirming that zero-rating is confined to unrequited payments and does not extend to contractual payments for actual services rendered by welfare organisations. It provides authoritative guidance on the VAT treatment of payments by public authorities to designated entities and reinforces a purposive approach to statutory interpretation in tax law.