| Receiver scores against Namsov in Supreme Court on VAT claim |
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| Written by Staff Reporters | |
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Namsov, the fishing company in the Bidvest stable that prevented the group’s listing on the Namibian Stock Exchange (NSX) last year, has just added another weight to its financial woes. This week, Namsov lost its claim for a substantial VAT refund after the Directorate of Inland Revenue successfully appealed against an earlier Tax Court ruling that allowed Namsov the deduction.
In their ruling, Supreme Court judges, Justice Strydom,
Justice Maritz and Justice Mtambanengwe argued Namsov cannot by any
stretch of the imagination be described as a company in the
“entertainment” business, a point in fact which Namsov’s legal council,
Advocate Enslie had tried to convince the court about.
Namsov’s claim for a VAT refund originated in January 2004 when the fishing company requested the Commissioner of Inland Revenue to allow a VAT claim on the expenses the company incurs when providing sustenance to its crewmembers while at sea. The Receiver rejected this claim. Then in May 2005, Namsov addressed itself to the Tax Court arguing that the provision of food and beverage falls within the definition of “entertainment” as envisaged by section 19 of the Value Added Tax Act (19 of 2000). The Tax Court voted in Namsov’s favour. This prompted the Commissioner of Inland Revenue, the dreaded Receiver, to lodge an appeal with the Supreme Court. Convinced of the its supposedly correct interpretation of the word “entertainment” in Section 19 of the Act, the Receiver was not going to let the case against Namsov lie. Appealing against the entire judgment of the Tax Court, Advocate Narib, representing the Receiver stated in his Heads of Argument that the learned president of the Tax Court erred in law and/or in fact by viewing Namsov as a company in the entertainment business and by allowing the VAT deduction for rations. The Supreme Court agreed. Going into long discussions of the exact meaning of Sections 18 and 19 of the VAT Act, and even bringing in the semantic expertise of two internationally recognised dictionaries, Justice Strydom found that “it would be far- fetched to describe the taxable activity of the respondent [Namsov] namely the catching and marketing of fish, as entertainment. The provision of food, in the context of Section 19, does not have the general and wide meaning ascribed to it by Mr. Emslie.” Just as an owner of a supermarket or a farmer are not in the business of entertainment and cannot claim VAT on rations as a deductible input, Namsov is in the same boat and also cannot claim a refund on food and beverage. Namsov has forfeited the VAT and it has to pay its own legal costs as well as those of the Commissioner of Inland Revenue. |
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