Zero-Rating Denied: Liquor Exporter Loses VAT Case Over Export Proof and Procedure

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Case: SARS v BLW CC [2025] ZATC JHB

The Background

BLW CC, a bonded warehouse in Johannesburg exporting liquor, found itself in trouble over VAT claims. They wanted to zero-rate their exports, but SARS pushed back, demanding proof that the goods had actually been exported, including sales contracts, delivery notes, customs papers, and transporter agreements.

What Was Disputed

BLW claimed it had already provided sufficient documentation and accused SARS of using the wrong legal process. Instead of following the Tax Court Rules, SARS relied on a High Court rule (Rule 30A) to demand further documents. BLW said this was inappropriate and that SARS’s request was premature and procedurally flawed. They also argued that SARS already had enough information to assess the exports and that further demands were an overreach.

The heart of the argument, however, was about what “export” really means. BLW believed that once goods were moved to a bonded warehouse or port for shipment abroad, they counted as exported. SARS disagreed, arguing that for zero-rating, the goods must physically leave South Africa and be delivered to a foreign destination. The court sided with SARS, affirming that “export” requires full proof that the goods exited the country.

The court also dealt with BLW’s complaint about SARS using Rule 30A, a rule typically applied in High Court proceedings. Despite BLW’s procedural objections, the judge ruled that SARS was entitled to use it in this context. Since the Tax Court rules didn’t explicitly bar its use, the request for additional documents was deemed valid and necessary.

The Ruling

The court sided with SARS. It said the tax office had every right to request full documentation and found that BLW’s objections to the procedure didn’t hold up. SARS’s requests were valid and necessary.

Takeaway for Accountants

If your clients are claiming zero-rated VAT on exports, they must have a bulletproof paper trail. This case makes it clear that without solid proof showing the goods left South Africa and were received abroad, SARS won’t approve the claim and the courts will back them.