Authored by Patrick Bracher.
The interpretation of the Value-Added Tax Act by the Constitutional Court in a judgment decided on 23 June 2026 gives a further indication of how courts will treat the three aspects of the statutory interpretative exercise is, namely text, context and purpose which are part of a unitary exercise and not dealt with in isolation. The facts regarding the dispute whether the supply of gold bars by the applicant was zero rated for VAT purposes are complicated and are unlikely to arise again so they need not detain us.
The court began with the textual reading and found that the text of section 11(1)(f) strongly favours the interpretation that in order to supply gold to qualify for zero rating, the gold must not have undergone a historical manufacturing process.
The court went on to look at the contextual reading including an explanatory memorandum for the Value-Added Tax Bill, the overall scheme of VAT and the treatment of zero-rated supplies, the binding class rulings, and comparable legislation. The court found that this context did not support the applicant’s interpretation of the section.
The court then turned to the possible purposive reading. The applicant submitted that the Act should support gold as a sustainable resource that should be preserved. SARS submitted that the purpose of the VAT Act is to raise revenue and that the interpretation was favourable to the gold mining industry. The court held that a purposive reading of section 11(1)(f) did not clearly support either party’s interpretation.
Therefore, on a holistic assessment of text, context and purpose, the court found that the textual reading was squarely against the applicant, that the contextual pieces did not render much assistance, and the purposive reading was ambiguous. The court therefore held against the applicant based on its view of the textual meaning.
Therefore, not in every case will context and purpose be used to decide the meaning of a text. The modern way of interpreting statutes does not give any useful rules as to what a court may decide, just indications.