TAXPAYERS will have to fork out interest of more than R2-million after the Eastern Cape government refused to pay VAT when purchasing tuberculosis hospitals more than four years ago.
The Bhisho High Court yesterday ordered the provincial government to pay the interest after buying hospitals in eight towns from the South African National Tuberculosis Assocation (Santa) for R27-million in October 2009.
At the time of the transaction, the provincial government’s legal advisers argued the transaction was exempt from VAT but Santa’s lawyers argued it was not.
In July 2011, SARS demanded outstanding VAT of more than R4-million, penalties and interest from Santa. The association then sued the provincial government for the payment of VAT and interest.
The provincial government admitted liability for the outstanding VAT and made a partial payment of R1.79-million but refused to pay interest.
Acting Judge Thembekile Malusi ordered the provincial government to pay the outstanding VAT and just more than three years’ interest at a rate of 15.5%. – Estelle Ellis