The commissioner conducted a compliance check on the appellant and issued a letter dated 16th November 2017 indicating that VAT returns were filed late. The commissioner went on to disallow Input tax claims for January 2014 to April 2017 on grounds that they were time-barred.
Section 17(2) indicates that input tax is claimable within 6 months. The contention was how to interpret the 6 months, which to the commissioner meant six months from the date when the return is filed and payment made. This decision was upheld by the tribunal.
Aggrieved by the tribunal’s decision, the appellant proceeded to the high court, arguing that denying them input claim would mean no purchases were made between January 2014 and April 2017.
The court held that section 17(1) and (2) of the VAT Act, permits the taxpayer to claim input tax at any time provided the claim falls within 6 months from the period in which the supply or importation occurred notwithstanding that the VAT Return is filed late. In other words, the fact of late filing does not preclude a taxpayer from claiming input VAT and this claim ought to be allowed as long as the Return is filed and claimed within six months from the date of supply or importation.
In making this decision, the court highlighted that input tax is an integral link of the VAT scheme and that there is a direct and immediate link with the output.
The interpretation of this ruling is that, if a taxpayer is late in filing tax VAT returns, that does not deny the taxpayer’s right to claim input tax. If a return is late, input tax is still deductible provided its falls within six months from that late date.
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