M WEARE v COMMISSIONER FOR THE SARS

From : The Registrar, Supreme Court of Appeal

Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal dismissed an appeal from the Natal Special Income Tax Court which ruled that bookmakers who had overpaid VAT for a period of five years were in terms of the Value Added Tax Act entitled to recover only the overpayment made during the six month period immediately preceding the date on which their claims were first lodged. In dismissing the appeal the Supreme Court of Appeal held that the overpayment was refundable in terms of s 44(2)(a), and not s 44(1) of the Act. In terms of the Act a refund under s 44(2)(a) would be limited to the overpayments made in the 6 months preceding the claim if the payments were made in terms of a prevailing practice. The Court held that the payments of VAT by bookmakers had been made in terms of a prevailing practice which had arisen from the assumption that certain winnings received by bookmakers were required to be taken into account for VAT purposes when by reason of an omission in the Act there was no requirement to do so. The winnings in question were winnings which resulted from bets placed by bookmakers with other bookmakers in order to limit their risk exposure to punters.

The decision determined the outcome of claims amounting in total to a figure in the region of R180 million.