COMMISSIONER GENERAL OF INLAND REVENUE

COMMISSIONER GENERAL OF INLAND REVENUE

Vs.

RANWELI HOLIDAY VILLAGE LTD

COURT OF APPEAL
DR. FERNANDO, J.
WIJERATNE, J.
CA/TAX/33/2019
TAC/VAT/14/2015
JULY 14, 2021

Tax Appeals Commission Act, No. 23 of 2011, section 11A-Case stated-Value Added Tax Act, No. 14 of 2002, section 8-Entitlement to VAT exemption for healthcare services-Ayurveda Act, No. 31 of 1961, sections 10(1), 55, 69(3) and 89

The respondent's Value Added Tax (VAT) return was rejected by the Assessor on the basis that the income derived from the Ayurvedic Centre that functioned in the respondent's hotel premises had not been declared by the respondent. The respondent claimed a VAT exemption on the same in terms of item (xii) of paragraph (b) of Part II of the First Schedule read with section 8 of the Value Added Tax Act, No. 14 of 2002, as amended. As the assessor was of the opinion that the respondent had not satisfied the conditions to avail itself of the exemption, the respondent appealed to the Commissioner General of Inland Revenue, who affirmed the decision of the assessor subject to a reduction of the amount payable. The respondent appealed to the Tax Appeals Commission (TAC), which overturned the decision of the Commissioner General of Inland Revenue and held that the respondent was entitled to the VAT exemption.

The Commissioner General of Inland Revenue moved the TAC to state a case for the opinion of the Court of Appeal in terms of section 11A of the Tax Appeals Commission Act, No. 23 of 2011 on the question whether the TAC erred in interpreting paragraph (b) (xii) of Part II of the First Schedule to the VAT Act.

Held:

1. Whilst the terms "medical institution", "professionally qualified persons" and "healthcare services" found in paragraph (b)(xii) of Part II of the First Schedule to the VAT Act have been left undefined, the rulings issued by the Department of Inland Revenue

have elaborated on them. Those definitions are mere guidelines, but a tribunal or court may considerthem in arriving at a conclusion.

2. The consideration whether the available facts are sufficient to arrive at a conclusion constitutes a question of law.

3. The absence of a valid registration in terms of the Ayurveda Act is immaterial to the determination of whether a VAT exemption is available.

4. In terms of paragraph (b)(xii) of Part 11 of the First Schedule to the VAT Act, the VAT exemption is available only if the healthcare services are provided by medical institutions or professionally qualified persons providing such care.

5. The respondent exercised significant control over the activities of the Ayurveda Centre including its doctors. However, the respondent was neither a medical institution nor a professionally qualified person providing such care in terms of paragraph (b)(xii) of Part II of the First Schedule to the VAT Act. Therefore, the TAC erred in holding that the Respondent could avail itself of the VAT exemption.

Cases referred to:

1. D.S. Mahawithana v. Commissioner of Inland Revenue 64 NLR 217
2. Stanley v. Gramophone & Typewriter Co Ltd 5 TC 358
3. CIR v. Samson 8 TC 20
4. Cape Brandy Syndicate v. CIR 12 TC 358
5. Mills v. John 14 TC 769
6. Cooper v. Stubbs 10 TC 29
7. J.G. Ingram and Son Ltd v. Callaghan 45 TC 151
8. Herbal Holiday Resorts (Pvt) Ltd v. Commissioner General of Inland Revenue (CA/TAX/07/2017, CA Minutes of 24.11.2020)
9. Massey v. Crown Life Insurance Co Ltd (1978) 2 All ER 576
10. Free Lanka Trading Co Ltd v. De Mel, Commissioner of Labour' and others 79 (II) NLR 158
11. Rumbles v. Kwa BAT Marketing (Pty) Ltd (D1055/2001) [2003] ZALC 57
12. Jamis Appuhamy v. Shanmugam 80 NLR 278

APPLICATION for an Opinion on a Case Stated by the Tax Appeals Commission.

Vikum de Abrew, A.S.G., with Dr. Charuka Ekanayake, S.C., for the Appellant.

Lakshmanan Jayakumar with N.S. Nishendiran for the Respondent.

cur. adv. vult.

November 2

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