Summary of ruling

• The Applicant specializes in real estate. The Applicant primarily purchases large chunks of land, sub divides them and sells them to various customers.
• The Respondent instructed the Applicant to charge VAT on the land and amend its returns.
• The Applicant contended that its not improved land hence not subject to VAT pursuant to paragraph 1 (e) of the 3^rd Schedule to the VAT Act.
• The Applicant had filed and remitted VAT to the Respondent despite the fact that the supplies were exempt. The Applicant filed for a VAT refund which was rejected on the basis that the refund should be made to the customers.
• The VAT burden was not passed on to the Applicant’s customers.
• Section 34 (5) of the VAT Act applies only to refunds that originate from overpayment of tax by a taxable person and the Applicant’s refund claim doesn’t fall within the ambit of Section 34. The Applicant’s refund claim arises from erroneous payment and not overpayment.
• Application allowed. The Respondent is ordered to refund the VAT within 30 days.