The Commissioner for the South African Revenue Service v African Bank Limited

African Bank Limited, a registered VAT vendor engaged in the provision of credit, makes both exempt and taxable supplies and therefore incurs mixed expenses. Under s 17(1) of the Value Added Tax Act 89 of 1991 (VAT Act), such mixed expenses require apportionment of input VAT according to a ratio determined by the Commissioner for the South African Revenue Service (SARS) through a ruling. In September 2020 African Bank applied for a binding VAT ruling seeking approval to continue using a modified transaction-based apportionment method previously approved. In September 2021 the Commissioner issued a ruling that did not approve the requested transaction-based method, but instead imposed a varied turnover-based method of apportionment. African Bank objected, contending that SARS had refused to approve the method it requested. The objection was disallowed and African Bank appealed to the Tax Court. SARS raised a special plea that the Tax Court lacked jurisdiction because it had not refused to approve a method, but had instead approved a different method. The Tax Court dismissed the special plea. SARS appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The Tax Court’s jurisdiction to hear African Bank’s appeal was confirmed.

The case clarifies the scope of appealable VAT decisions under s 32(1)(a)(iv) of the VAT Act and affirms a purposive interpretation that protects taxpayers’ access to statutory objection and appeal remedies. It confirms that SARS cannot avoid Tax Court scrutiny by approving an alternative method instead of the one requested. The judgment strengthens the role of the Tax Court as the primary forum for resolving substantive VAT apportionment disputes and aligns VAT jurisprudence with broader principles governing tax dispute resolution under the TAA.