Mobile Telephone Networks (Pty) Ltd v Commissioner for the South African Revenue Service

MTN sold pre-paid multi-purpose vouchers (commonly referred to as airtime vouchers) that carried a rand value and could be used to access a wide range of services on its mobile network. Historically, MTN treated the sale of these vouchers as falling under section 10(19) of the Value-Added Tax Act 89 of 1991 (VAT Act), meaning VAT was accounted for on sale of the voucher. In 2017 MTN sought a private binding ruling from SARS to instead treat the vouchers under section 10(18), which would defer VAT until the voucher was redeemed for services. SARS issued a private binding ruling in April 2019 rejecting MTN’s interpretation and confirming that section 10(19) applied. MTN approached the Gauteng Division of the High Court for declaratory relief to confirm that section 10(18) applied and to set aside SARS’s ruling. The High Court dismissed the application. MTN appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel where employed.

The case reaffirms the narrow scope for declaratory relief in South African tax matters and emphasises that such relief will generally only be granted where the facts are clear and uncontested. It underscores judicial deference to the statutory dispute-resolution machinery under the Tax Administration Act and cautions against using declaratory proceedings to obtain advance certainty on tax positions.