Tshwane, 23 June 2026 – The Commissioner for South African Revenue Service (SARS) Dr Johnstone Makhubu welcomes the unanimous judgment of the Constitutional Court in Lueven Metals (Pty) Ltd v Commissioner for the South African Revenue Service, which confirms SARS’ interpretation of section 11(1)(f) of the Value-Added Tax Act, 1991.
The judgment clarifies that the zero-rating of gold supplied to the South African Reserve Bank, the South African Mint Company (Proprietary) Limited, or a registered bank applies only where the gold is supplied in one of the prescribed forms and has not undergone any manufacturing process other than refining or the manufacture or production of those prescribed forms.
The court confirmed that the zero-rating of gold under section 11(1)(f) does not apply to second-hand or recycled gold that has already undergone prior manufacturing. This ruling provides clear legal guidance, puts an end to aggressive VAT interpretations, and reinforces SARS’ commitment to enforcing tax law in a principled manner. This judgement aims to protect the tax base and safeguard revenue for the benefit of all South Africans.
SARS Commissioner Dr Johnstone Makhubu said: “This judgment reaffirms a foundational principle of our constitutional democracy: that legislation must be applied as written, consistently, and fairly. The Constitutional Court has provided unequivocal clarity, and that certainty benefits vendors, financial institutions, the precious metal industry regarding the VAT treatment of gold supplied under section 11(1)(f).”
The matter arose from a dispute concerning the VAT treatment of refined gold supplied to prescribed purchasers such as registered banks. Lueven Metals, a buyer and refiner of second-hand gold, treated its sales of refined gold bars to a commercial bank as zero-rated, despite the gold originating from previously manufactured sources, such as scrap jewellery. Following an audit, SARS determined that these supplies did not qualify for zero-rating under the VAT Act. The High Court upheld SARS’ interpretation, and the Constitutional Court has now conclusively confirmed that position, dismissing the appeal with costs.
In its unanimous judgment, the Constitutional Court held that section 11(1)(f) sets out three cumulative requirements for zero rating: the supply must be to a prescribed purchaser; the gold must be supplied in one of the prescribed forms; and critically, the gold must not have undergone any manufacturing process other than refining or manufacturing into those prescribed forms. Gold that has previously been manufactured into non prescribed forms, such as jewellery or other fabricated items, falls outside the scope of the zero rating. The Court found that SARS’ interpretation gives proper meaning to the statutory text and avoids rendering key provisions redundant.
The Court was clear in its reasoning, stating: “While refining does eradicate the recycled gold’s previous form, it does not alter the fact that such gold previously underwent a disqualifying manufacturing process. Thus, on a purely textual reading, Lueven’s supply of recycled gold cannot benefit from zero-rating.”
Commissioner Makhubu states that this judgment provides long-awaited clarity for gold, refining, and banking sectors by confirming that recycled or second-hand gold remains subject to VAT at the standard rate, supporting compliant businesses and fair competition.
“Voluntary compliance is built on trust, and trust depends on certainty. This ruling removes ambiguity as it reinforces that when taxpayers know precisely where the law stands, they can comply with confidence,” said Commissioner Makhubu, adding that the judgment also aligns directly with SARS’ strategic intent of promoting voluntary compliance. This also helps to protect the tax base while ensuring that all revenue due to the State is collected.
“Fair tax administration means that no taxpayer gains an unintended advantage at the expense of others. This outcome ensures that compliant businesses are not undercut by aggressive practices that erode fairness and distort competition. As SARS, we have a constitutional and statutory responsibility to protect the revenue base for the benefit of all South Africans. Every rand improperly lost through misinterpretation or non-compliance is a rand unavailable for schools, healthcare, infrastructure and social protection. “
Commissioner Makhubu reiterated that SARS will continue to use all lawful tools available to it to promote compliance. “SARS respect the right of taxpayers to exercise their constitutionally enshrined right to litigate where they feel aggrieved. It is also equally important that the litigation route be followed by allowing the parties to a dispute to find clarity and certainty from the Court in areas where there are interpretive challenges, and this judgment represents such an opportunity.”
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