Form over substance: Supreme Court reverses Assessment Review Committee VAT ruling in Noodle Express
On 28 October 2025, the Supreme Court (SC) ruled in favour of the Mauritius Revenue Authority (MRA) in the Noodle Express case (SCJ 498).
Background:
Noodle Express Ltd (NEL), a subsidiary of Hyper Food Ltd (HFL), sold fast food at food courts of several shopping malls. The lease agreements for the rental of some outlets were drawn in the name of HFL. The rent was settled by HFL and subsequently recharged to NEL. The corresponding Tax Deduction at Source (TDS) was withheld by HFL and remitted to the MRA.
Although VAT invoices were issued to HFL, no credit for input tax was claimed by HFL. Instead, NEL claimed input tax in respect of VAT paid by HFL to the lessors. Following an audit conducted into the tax affairs of NEL, the MRA disallowed the input tax claimed by NEL. The assessment raised was maintained at objection level and NEL made representations to the Assessment Review Committee (ARC).
NEL contended that:
- The leased spaces were used for the advancement of NEL’s business;
- HFL functions merely as a conduit negotiating more favourable leasing terms for its subsidiaries;
- The existing arrangement did not result in any loss of revenue for the state;
- Although the invoices lack NEL’s name, they specify that portions of the rented space are designated for NEL; and
- Based on substance over form, NEL is the rightful claimant of the input tax on the lease which was used to make taxable supplies.
The MRA contended that:
- Input tax credit is permissible only if VAT invoices are issued in NEL’s name.
- NEL and HFL are separate and distinct legal entities, and the invoices were directed to HFL and not NEL; and
- HFL had the opportunity to submit an amended VAT return but did not exercise this option.
Assessment Review Committee level:
The ARC highlighted the importance of recognising the substance of the transaction over its legal form and determined that the input tax suffered must be allowed in line with the principle of VAT neutrality since the taxable supplies were made by NEL.
Supreme Court level:
The SC ruled that NEL is not eligible for the input tax claim since the VAT invoice was not issued in NEL’s name and did not contain details in respect of the actual space occupied by NEL and the amount of VAT charged thereon. The SC considered that there are two legal arrangements, the first involving HFL and Ascencia Ltd for the space leased and the second involving a sub-lease between HFL and its subsidiaries including NEL.
PwC's comments:
Internationally, tax courts have long grappled with the tension between legal form and economic substance. In the landmark UK case WT Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300, the House of Lords established that tax consequences must follow the commercial reality of a transaction rather than the formal legal steps taken to achieve it. While such “substance over form” principles have been embraced in many jurisdictions, the Noodle Express decision highlights that within Mauritius’ VAT framework, legal precision and proper invoicing remain paramount. The ruling therefore reflects a pragmatic balance; one that recognises substance but insists on documentary compliance as the foundation of tax credibility.
This case is a wake-up call for businesses relying on intercompany arrangements: ensure your VAT invoices are correctly issued, or risk losing your input tax claims. In the world of VAT, good intentions don’t override bad paperwork.
For more information please contact:
Yamini Rangasamy
Associate Director - Tax
yamini.rangasamy@pwc.com
Mobile: +230 5 472 7339 | Office: +230 404 5469
