Butani Exports Limited v. Commissioner General of Inland Revenue – CA TAX/0004/2010-2022

In the case between Butani Exports Limited (Plaintiff/Appellant) and Commissioner General of Inland Revenue (Defendant/Respondent), the court examined whether the transfer of imported fabric by Butani Exports Limited to affiliated subsidiaries for the manufacture and export of garments constituted local supply subject to Value Added Tax (VAT), or qualified for VAT exemption/zero-rating under Section 2(3)(b) and Section 7(1)(a) of the VAT Act. It was determined that, under the statutory framework and prevailing Board of Investment (BOI) agreements, such transfers were exempt from VAT, provided that sufficient evidence had been produced as established by the statutory requirements. The principle reaffirmed is that tax exemptions provided under clear statutory and regulatory provisions cannot