The Supreme Court has rejected subway franchise claims that VAT is not liable on certain removable products, including tea, coffee and hot-filled sandwiches.
The appeal of Bookfinders Ltd., headquartered in Tuam, Co. Galway, also included consideration of whether bread sold on subway sandwiches was outside the legal definition of bread intended to nullify the VAT Act 1972.
A five-judge court ruled that bread in subway heated sandwiches fell outside that legal definition because the dough contains 10 percent sugar by weight.
Ingredients such as sugar, fat and bread improver should not exceed two per cent of the weight of the dough from the dough.
The clear purpose of the detailed definition of “bread” in the law is to distinguish bread as a “staple” food that should be rated at zero percent, and some other baked goods made from dough, said Justice Donald O’Donnell. .
He said it could not be called “food” for the purpose of the Second Schedule to the Act, as it does not contain “bread” as defined in subway heated sandwiches, such as hot meatball sandwiches.
Bookfinders’ business, which trades up to 70-80 per cent, is the result of a 2006 decision by the Revenue Commissioners to reimburse VAT payments made between early 2006 and late 2005.
Bookfinders claim a refund of 9.2 per cent compounded on the basis of VAT and the rate should be zero.
The company went to the high court after the Revenue Commissioner upheld the revenue directive.
It was lost there and appealed to the Court of Appeal, but the Supreme Court agreed to hear further appeals because of issues related to the enactment of the 1972 Act.
The case focuses on two paragraphs in the two schedules of the Act relating to the exemption of 21 per cent VAT on certain goods and services, subject to 13.5 per cent or zero per cent VAT in effect.
Bookfinders allegedly charged zero percent of most of its turnover.
Justice O’Donnell on Tuesday dismissed the appeal in a judgment delivered on behalf of the court.
Describing some of the arguments put forward for the bookfinders as “ingenuity”, the judge agreed with the Commissioner of Appeals that hot drinks and sandwiches, including tea and coffee, were under the Sixth Schedule of the 1972 Act and could therefore be taxed at a rate of 13.5. St.
He rejected the argument that hot brewed tea and coffee were at zero percent and that only hot and cold tea and coffee were cheaper at 13.5 percent.
While the legislature wants to zero in on tea and coffee when selling in retail settings, this applies to the VAT intermediate rate, for example, in the context of takeaway meals.
The Commissioner of Appeals correctly assessed that subway heated sandwiches are not subject to zero percent rate.
Based on them and other findings, the appeal was dismissed.