ConCourt Settles It: Recycled Gold Doesn't Get Zero-Rated

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Court Case: Lueven Metals (Pty) Ltd v CSARS (CCT 320/23) 

If you have a client in gold, scrap metal, or refining, this judgment closes a question that's been open for years. On 23 June 2026, the Constitutional Court handed down a unanimous ruling in Lueven Metals (Pty) Ltd v Commissioner for SARS, and SARS has welcomed it as a final word on how the VAT Act treats recycled gold.

What the dispute was about

Lueven Metals buys and refines second-hand gold, mostly scrap jewellery, and resells it as pure gold bars to a registered bank. For years, Lueven treated those sales as zero-rated under section 11(1)(f) of the VAT Act, which allows zero-rating for gold supplied to the South African Reserve Bank, the South African Mint, or a registered bank, provided the gold is in one of eight listed forms, such as bars, blank coins, or wire.

In 2021, SARS audited Lueven and found a problem. The gold Lueven supplied had previously been manufactured into something else first, jewellery, for example, before it was ever refined down again. SARS said that history disqualified it from zero-rating. Lueven disagreed, and the matter worked its way through the High Court, the Supreme Court of Appeal, and finally landed at the Constitutional Court for a decision on the merits.

The legal question, in plain terms

Section 11(1)(f) sets three conditions for zero-rating gold. The sale must go to one of the listed buyers (the Reserve Bank, the Mint, or a registered bank). The gold must be in one of eight prescribed forms. And the gold must not have gone through any manufacturing process other than refining or being shaped into one of those eight forms.

That third condition was the entire fight. Lueven argued that refining wipes out a gold item's previous form, so once it's refined and shaped into a qualifying bar, its history shouldn't matter. SARS argued the opposite: that gold which had previously been manufactured into a non-prescribed form, such as jewellery, remained disqualified from zero-rating even after refining.

How the court decided

The Constitutional Court sided fully with SARS. The court found that refining removes the gold's previous physical shape, but it doesn't erase the legal fact that the gold went through a manufacturing process before it ever reached prescribed form. As the judgment put it, recycled gold "previously underwent a disqualifying manufacturing process," and that disqualifies it from zero-rating no matter how pure it becomes afterward.

The court worked through the text, the context, and the purpose of the section, and landed on the same answer each time. Reading it any other way, the court said, would make part of the wording pointless, since the phrase about manufacturing history would never actually exclude anything. The appeal was dismissed, with costs, including the cost of two counsel.

What this means for your clients

If a client supplies gold that has ever passed through a prior life as jewellery, coins, ornaments, or any other non-prescribed form, that gold cannot be zero-rated when resold, even after refining. Standard rate VAT at 15% applies. This affects refiners, scrap gold dealers, and any business in the chain between informal gold sources and registered banks or the Mint.

This builds on other recent moves SARS has made to tighten the gold VAT space. As covered in CIBA's earlier piece on the gold loophole SARS just closed, the reverse charge rules for valuable metals have already been narrowed this year. Between that change and this judgment, the message to anyone trading in gold is the same: know exactly where your gold has been before you claim a VAT benefit on it.

Note: The judgment does not affect newly mined gold that follows the normal refining process into prescribed forms. The Court distinguished this from recycled gold that had previously been manufactured into non-prescribed forms.

What you should do

‍ Review any client selling refined gold to a bank, the Reserve Bank, or the Mint, and confirm whether the gold ever passed through a prior manufactured form before refining. If it has, the supply must carry standard rate VAT, not zero-rating. Where a client has historically zero-rated recycled gold sales, this judgment gives SARS solid legal ground to reassess past periods, so it's worth flagging the exposure now rather than waiting for a query.‍

‍👉 Join CIBA and we'll show you how to navigate SARS rulings like this with confidence, not guesswork.