[Value Added Tax Appeal HH 717-16]

May 22, 2015 and November 18, 2016


Revenue and public finance – Value added tax – Liability for – Transport services supplied in exchange for petroleum products – Whether such transport services liable to value added tax.

The appellant had, in terms of an agreement with a third party, rendered fuel transportation services to the third party in exchange for petroleum products. The appellant objected to the assessment of value added tax on the transportation services on the grounds that the transportation services constituted payment and not supply.

Held, that the transportation services constituted a supply of services in terms of the Value Added Tax Act [Chapter 23:12].

Held, further, that the payment arrangements could properly be regarded as either set-off or barter trade, both of which could not preclude the payment of value added tax.

Held, further, that the treatment of such a payment as a supply would not impose the spectre of double taxation as the provision of transport services was separate and distinct from the supply of fuel.

Cases cited:

Commissioner of Taxes v First Merchant Bank Ltd 1997 (1) ZLR 350 (S), applied

Commissioner for the South African Revenue Service v Brummeria Renaissance (Pty) Ltd and Others [2007] ZASCA 99; 2007 (6)
SA 601 (SCA); [2007] 4 All SA 1338 (SCA), not followed

Express Newspapers Ltd v McShane and Another [1980] AC 672 (CA); [1979] ICR 210; [1980] 1 All ER 65 (CA), referred to

Murowa Diamonds v Commissioner-General, Zimbabwe Revenue Authority 2011 (1) ZLR 37 (H), referred to

S (Pvt) Ltd v Zimbabwe Revenue Authority 2014 (2) ZLR 580 (H), applied

Strydom v Duvenhage NO en ’n Ander [1998] ZASCA 70; 1998 (4) SA 1037 (SCA); [1998] 4 All SA 1037 (SCA), referred to

XYZ CC v Commissioner for the South African Revenue Services (2007) SATC 7; ITC 1829; (2007) 70 SATC 106, applied

Legislation considered:

Customs and Excise Act [Chapter 23:02], s 172B

Fiscal Appeal Court Act [Chapter 23:05], s 10

Value Added Tax Act [Chapter 23:12], ss 2, 6 (1)(a)

Book cited:

Shorter Oxford English Dictionary

T Zhuwarara, for the appellant

NT Mbiriri, for the respondent


The issues referred on appeal at the pre-trial hearing of 3 February 2015 for determination were whether or not the fuel transportation services rendered by the appellant to a fuel supplying company, the third party, in exchange for petroleum products constituted a supply of services under s 6 (1)(a) of the Value Added Tax Act [Chapter 23:12] (“the VAT Act”) and whether or not the appellant understated its sales in respect of those transport services.

The appeal proceeded by way of a statement of agreed facts in which the parties agreed on the juristic facts and argued on the law pertaining to those facts.

The facts

The appellant is a duly incorporated local company, carrying on the business of fuel and transport operations in Zimbabwe.27 The fuel business consists of a service station, which dispenses fuel and petroleum products to the general public and to its own transportation service. The transport operations, which consist of 21 fuel tankers and trucks, is dedicated to the delivery of petroleum products to the third party. The appellant executed two agreements with the third party. The first, the “contract for the transportation of fuel”, exhibit A28, was concluded on
1 March 2010 while the second, the “memorandum of agreement for the supply of petroleum products”, exhibit B29, was concluded on 10 March 2010. The appellant was identified in each agreement as the “Transporter” and “the Service Station Dealer” while the third party was called “the Client” and “the Supplier.”

The tenure of the first agreement was five years and was subject to renewal for another five year period on three months’ notice given by the appellant. The “before value added tax” rates charged “in the course of its business during the term of the agreement” were set out by route, distance and size of the tanker and truck in clause 1. In terms of clause 3 (c), the transport charges were “due on presentation of invoice and payments not made when due” would bear a late administration penalty. In terms of clause 4, the third party was required to pay all levies, duty and any other imposts required by law in the transportation of fuel by the appellant. The remaining 10 clauses establish that the appellant operated the transportation service as a separate business unit to the service station.

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