The Court of Appeal has dismissed Bookfinders Limited’s appeal over the VAT treatment of heated sandwiches, tea and coffee sold at its Galway food outlet. It upheld the High Court’s answers to six questions in a case stated, finding that the High Court judge had not erred in law.
The dispute followed Bookfinders’ decision in or about December 2006 to apply a zero VAT rate to heated sandwiches and hot tea and coffee. The company sought repayment for supplies made between January/April 2004 and November/December 2005. The Revenue Commissioners refused the claim, and an Appeal Commissioner ruled in Revenue’s favour.
The matter reached the High Court through a case stated under section 941 of the Taxes Consolidation Act 1997. The High Court answered all six questions in the affirmative, including whether the supplies were subject to the 13.5% rate. Bookfinders appealed those answers.
In its judgment, the Court of Appeal said the relevant VAT schedules should be read according to the ordinary meaning of their words. It rejected Bookfinders’ argument that “food and drink” in the legislation meant food and drink had to be supplied together before the 13.5% rate applied. The court said the wording also covered food or drink supplied separately.
The court held that heated tea and coffee in drinkable form fell within the Sixth Schedule’s 13.5% rate. It said tea and coffee, and their preparations, came within the Second Schedule’s zero rate when unheated, while the heated drinks covered by the Sixth Schedule did not.
It also upheld the finding that the dough used in Bookfinders’ sandwiches did not meet the statutory definition of “bread” eligible for the zero rate. The court accepted that the sugar content exceeded the limit in the definition. Because the bread was not “bread” as defined, the heated sandwiches fell within the 13.5% rate provision.
Bookfinders also argued that the different treatment of heated and cold products breached the principles of fiscal neutrality and legal certainty. The court upheld the High Court’s conclusion that there was no factual basis in the case stated to establish a fiscal-neutrality breach. It also found no error in the High Court’s rejection of the legal-certainty argument.
The appeal was dismissed. The court’s decision upheld the High Court’s answers to the questions referred; it did not itself make a new VAT assessment or order repayment.