A car parking management company has appealed a decision that the Revenue is entitled to some €1.7m in VAT for fees to have cars de-clamped in private car parks in places like apartment complexes, churches, schools and hospitals.

Nationwide Controlled Parking Systems (NCPS) appealed over a High Court decision last year that a Tax Appeals Commissioner erred in finding VAT was not chargeable on the fee.

NCPS on Tuesday asked a three-judge Court of Appeal (CoA) to overturn that decision.

The Revenue Commissioners opposed the appeal and argued the decision should stand.

The CoA has reserved judgment.

In 2014, NCPS appealed the refusal by Revenue of a repayment claim of €1.77m for VAT paid on clamping release fees between November-December, 2009, and September-October, 2013.

Revenue had refused the repayment claim on the basis the fees were subject to VAT under EU and Irish tax law.

A Tax Appeals Commissioner, who is independent of Revenue, overturned the refusal.

The commissioner determined clamping release fees comprise payments “in the nature of, or in lieu of, damages for trespass”.

The fees were not a “supply of services for consideration” which are subject to VAT, she said. She also said the fees were generated in the context of enforcement of parking against “trespassing motorists”. A motorist was considered a trespasser if they did not have a permit, pay the appropriate fee or were illegally parked.

Last July, the High Court found the Commissioner was incorrect in law

On Tuesday, Frank Mitchell SC, for NCPS, urged the CoA to overturn that decision.

He argued the Commissioner was correct on grounds including a motorist pays a fee as a result of “an anterior parking infraction” which meant de-clamping was not a supply of services such as would normally attract a VAT payment for the purpose of tax law.

It was a penalty payable as a result of the parking infraction, he said.

Grainne Clohessy SC, for Revenue, said clamping release fees were subject to VAT because under Irish and EU law, it was a payment for an economic activity.

Revenue also argued “supply of services” is a broad concept, objective in nature and applies without regard to the purpose or result of the transaction.

NCPS’s argument about about whether the clamping release fee was a penalty or not was irrelevant, Revenue said.