Case CCT 320/23
[2026] ZACC 24
Hearing Date: 13 November 2025
Judgement Date: 23 June 2026
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On 23 June 2026 at 9h30 the Constitutional Court handed down a unanimous judgment in an application for leave to appeal against the judgment and order of the Supreme Court of Appeal concerning the interpretation of section 11(1)(f) of the Value-Added Tax Act 89 of 1991 (VAT Act).
The applicant, Lueven Metals (Pty) Limited (Lueven), was in the business of trading in and refining precious metals, including gold. It was a registered Category C Value-Added Tax (VAT) vendor under the VAT Act. Lueven was a buyer and reseller of second-hand gold. The respondent was the Commissioner for the South African Revenue Service (SARS).
Lueven entered into an agreement with Absa Bank Limited (Absa), a prescribed purchaser under section 11(1)(f), to supply gold bars to it that have been refined to a purity level of at least 99.5%. To do so, Lueven would deposit its less pure gold scrap and gold bars with Rand Refinery, a refining and smelting complex. Rand Refinery would melt and refine the gold deposited by Lueven and other depositors before delivering the pure gold bars to Absa and other purchasers. For years, Lueven treated its sales to Absa as zero-rated, which effectively allowed Absa to buy the gold bars without paying VAT.
Lueven instituted proceedings in the High Court of South Africa, Gauteng Division, Pretoria (High Court), seeking a declaratory order regarding the correct interpretation of section 11(1)(f). Following an examination of the text, context and purpose of the provision, the High Court held that the proper interpretation of section 11(1)(f) is that gold, which has undergone a manufacturing process prior to the refining or manufacturing process required to turn it into the prescribed forms, does not qualify for zero-rating.
On appeal, the Supreme Court of Appeal primarily dealt with section 105 of the Tax Administration Act 28 of 2011. It held that the High Court had erroneously entertained an application for declaratory relief although it had correctly dismissed the application. The Supreme Court of Appeal therefore dismissed the appeal on a preliminary point.
When the matter was appealed, the Constitutional Court, in the Five Tax Cases, held that the Supreme Court of Appeal erred in dismissing the appeal on the basis of section 105 of the Tax Administration Act and confirmed the High Court’s decision to entertain the application on its merits. The legal issue on the interpretation of section 11(1)(f) stood over for later determination by the Court, which formed the basis of this judgment.
Leave to appeal had already been granted by the Court in the Five Tax Cases, and thus the sole issue before the Court was whether section 11(1)(f) of the VAT Act allows for the zero-rating of the supply of gold that was previously manufactured into a form other than the prescribed forms set out in that section.
In a unanimous judgment penned by Justice J (with Kollapen J, Majiedt J, Mathopo J, Mhlantla J, Nicholls AJ, Rogers J, Savage J and Tshiqi J concurring), the Constitutional Court considered the text, context and purpose of section 11(1)(f) in a unitary interpretative exercise.
When considering the text, the Constitutional Court found that statutory interpretation should give ordinary meaning to a statute’s language and avoid rendering words or phrases superfluous. So construed, section 11(f) imposes three requirements for the supply of gold to be zero-rated, namely: (1) the supply of gold is to a prescribed purchaser; (2) the supply of gold must be in one of the prescribed forms; and (3) the supply of gold must not have undergone any manufacturing process other than the refining of the gold or the manufacture or production of one of the prescribed forms.
Whereas the second requirement concerns the final form in which the gold is supplied, the third requirement focuses on the manufacturing process. The Court noted that the third requirement is structured to only permit two types of manufacturing processes: the refining of gold and the manufacturing of one of the prescribed forms.
The gold that Lueven supplied was recycled gold from sources including second-hand jewellery and scrap gold. In other words, the gold had undergone previous manufacturing processes into non-prescribed forms. The Court found that while refining does eradicate the recycled gold’s previous form, it does not alter the fact that the gold previously underwent a disqualifying manufacturing process. Thus, on a purely textual reading, Lueven’s supply of recycled gold could not benefit from zero-rating.
Lueven pointed to several pieces of context that supposedly supported its interpretation, including the overall scheme of VAT, the treatment of zero-rated supplies and SARS’ binding class rulings.
Lueven argued that the VAT scheme does not regulate the zero-rating of goods based on the forms the goods might have taken previously in the supply chain. Rather, since VAT is imposed on the current supply of goods, the VAT treatment of a particular transaction depends on the nature or type of goods being supplied. However, the Court found that this argument could not rescue Lueven. Zero-rating may be used for various policy purposes. Absent unequivocal evidence, it would be premature for the Court to impute policy rationales behind the zero-rating of other goods onto section 11(1)(f). In the Court’s view, generalised observations of the VAT scheme do not override the clear statutory language of section 11(1)(f).
Lueven also relied on the binding class rulings, which were issued by SARS, and submitted that SARS historically applied section 11(1)(f) in line with Lueven’s interpretation. It contended that SARS was bound by its previous class rulings. The Court’s view, however, was that the rulings did not provide any interpretative guidance to the content of section 11(1)(f). The binding class rulings were not directed at the interpretation of section 11(1)(f). They were concerned with the documentary difficulties created by the fact that, due to comingling at Rand Refinery, parties such as Lueven could not directly link the gold they deposited at Rand Refinery with the refined gold they received after processing by the Refinery. One would search in vain, in the rulings, for any discussion of what the Court identified as the third requirement contained in section 11(1)(f) and of the question as to what would constitute a disqualifying manufacture or production process.
Therefore, the Constitutional Court concluded that the binding class rulings were not conclusive of Lueven’s interpretation of section 11(1)(f).
Finally, regarding the purpose of the section, both parties ascribed opposite purposes to section 11(1)(f). On the Court’s reading of section 11(1)(f) and the VAT Act as a whole, neither party’s formulation of the section’s underlying policy considerations was clearly evidenced from the text. Both formulations were plausible, but neither could be readily derived from the VAT Act as read with any admissible parliamentary material.
Accordingly, a purposive reading of section 11(1)(f) did not clearly support either party’s interpretation. This conclusion brought the Court back to a holistic assessment of text, context and purpose. As the Court has found, the textual reading was squarely against Lueven, and the contextual pieces did not offer much assistance. The purposive reading was ambiguous, and Lueven could not escape the clear text of section 11(1)(f) by reference to its purpose.
Before concluding, the Constitutional Court addressed Lueven’s application for leave to file supplementary written submissions. It found that Lueven had had ample opportunities to present its case regarding the interpretation of section 11(1)(f) and the supplementary written submissions introduced no novel arguments on this issue. The Court thus held that Lueven must be refused leave to file such submissions, and costs must follow the result.
After considering the text, context and purpose of section 11(1)(f) of the VAT Act, the Constitutional Court concluded that the High Court’s interpretation of the section was correct: section 11(1)(f) of the VAT Act excludes the supply of second-hand gold (in other words, any gold that has undergone a historical manufacturing process other than refining or manufacturing into one of the eight forms) from zero-rating. Accordingly, the appeal fell to be dismissed with costs, including those of two counsel.
The Full judgment here