This is an appeal against four amended income tax assessments number 20211442 for the year ending 31 December 2009; 20211443 for the year ending 31 December 2010; 202211446 for the year ending 31 December 2011; and 20211448 for the year ending 31 December 2012 that were issued against the appellant by the respondent on 27 June 2014….,.
On 25 July 2014, the appellant objected to the amended assessments in terms of section 62 of the Income Tax Act [Chapter 23:06]. On 22 October 2014, all the objections were disallowed save for a few relating to penalties.
The appellant gave notice of its intention to appeal on 30 October 2014 and duly filed the present appeal on 18 December 2014.
The appellant called the evidence of two witnesses, an independent tax consultant, LM, who worked for the respondent for the 16 years to 2006 and its Managing Director. In addition, it produced four voluminous documentary exhibits in excess of 500 pages, exhibits 1 to 4.
The respondent called its Chief Investigations Officer, OM, who has held that office since 2011 but with a total of 14 years experience, produced a 9 paged documentary exhibit, exhibit 5, and relied on the mandatory R11 documents.
Background
The appellant was incorporated on 29 September 1995 and underwent two name changes, on 24 April 1996 and 9 October 2014….,.
The second name change was precipitated by the acquisition of the South African registered sister company by the appellant's holding company on 1 June 2005.
Sometime in 2010…, the respondent commenced the tax compliance investigation on the appellant that resulted in the amended tax assessments that gave rise to this appeal. The appellant's main business activities in the four years in question were in the importation, distribution, and marketing of motor vehicles and spare parts of a specified brand….,.
The 1996 Distributor-Assembler Agreement
Initially, on 24 June 1997, the appellant entered into a detailed 53 article distributor-assembler three year agreement, the original agreement, with NML, a Japanese conglomerate engaged in the development, manufacture, and assembly and worldwide distribution and sale of an international brand of various models of motor vehicles and spare parts, retroactively from 1 April 1996….,.
The appellant had access to the conglomerate's trademarks, trade names, and engineering technology and was authorised to purchase, manufacture, assemble, market, distribute, and sell certain models of the brand, knocked down components, and spare parts through a network of dealers appointed by the appellant and approved by the conglomerate in Zimbabwe.
The ordering, production, shipment prices, and payment of the vehicles and components, in an amount sufficient to cover the price, was regulated by Articles 5 to 7 of exhibit 3….,.
The appellant met the full cost and expenses of the shipment and demurrage, and storage costs of the vehicles and spare parts. The risk for loss or damage passed to the appellant once the goods crossed the ship's rail at the port of shipment - but ownership and title of the goods was retained by the conglomerate until the payment obligation had been discharged.
It was discharged by payment into an L/C bank account opened in the name of the conglomerate by a bank acceptable to the conglomerate by irrevocable letters of credit at sight in favour of the conglomerate at which point the appellant simultaneously received the shipping documents for the relevant goods through that opening bank.
Because the timelines for ordering and the confirmation of the orders and payment preceded the production of the vehicles, ownership passed to the appellant on delivery of the vehicle FOB past the ship's rail at the port of shipment.
The appellant was solely responsible for securing Government licences and permits required to complete payments for and importation of the ordered goods….,.
The terms and conditions contemplated a cash before delivery sale.
The conglomerate could export and deliver to, and sell in Zimbabwe, brand vehicles in its own name through the agency of the appellant and pay the appellant for the services rendered.
The conglomerate played an active advisory role in the establishment of the appellant's business and was entitled to receive prescribed mandatory reports at specified periods and to inspect the appellant's operations.
The appellant undertook to maintain sufficient working capital and investment capital to enhance its business activities.
Each party was, in terms of Article 39-2, responsible for any and all expenditure incurred and assumed in the performance of its duties, obligations, and responsibilities.
Article 44 provided that:
“This agreement does not constitute either party as the agent or legal representative of the other party for any purpose whatsoever. Neither party is granted any expressed or implied right or authority to assume or to create any obligation or responsibility on behalf or in the name of the other party or to bind the same in any manner whatsoever.”
The appellant was also required to purchase a specified minimum number of vehicles, gain market share, and, in the event of a decline due to circumstances beyond its control, implement agreed counter measures to arrest the decline or risk termination of the agreement.
It appears to me, that, these were standard terms and conditions found in international contracts for the facilitation of international trade as demonstrated by their striking similarity with the conditions found in Lendalease Finance (Pty) Ltd v Corporacion de Mercadeo Agricola & Ors 1976 (4) SA 464 (A) especially in regards to the payment arrangements and the passing of both risk and ownership.
The 1 August 2007 Memorandum of Understanding
The appellant and the related party…, whom I shall refer in this judgment as the intermediary, signed a memorial of the procedures for importation of vehicles into Zimbabwe in the Memorandum of Understanding dated 1 August 2007.
The intermediary was required to place monthly production orders with the brand suppliers. The importation value of the consignment was reflected in a manual invoice issued by the intermediary to the appellant. The vehicles were imported into Zimbabwe and held in the appellant's bonded warehouse as consignment stock with the intermediary retaining ownership of the vehicles until payment was made. Once payment was made, the invoice was stamped by customs officials and duty and other imposts paid for the consignment by a clearing agent before ownership was transferred to the appellant. The appellant, in turn, invoiced and transferred the vehicles to an authorised dealer for sale.
The Distribution Agreement of 25 April 2011
On 25 April 2011, the appellant and the conglomerate entered into a “Distribution Agreement”…, consisting of 39 Articles with retroactive effect…, from 1 February 2007.
It appeared to be a reproduction of an incomplete Distribution Agreement dated 31 January 2007 that was only signed and initialled by the appellant's Managing Director….,.
It substituted the original agreement.
The preamble, structure, and, in most respects, the contents, mirrored word for word the original agreement. The noticeable change was the wholesale removal of the right to purchase knocked-down kits for assembling from and the transfer of technological assistance and assembly by the conglomerate to the appellant.
Articles 21, 22 and 23 mirrored word for word Articles 5, 6 and 7 of the original agreement in respect of the ordering, production, and shipment of the vehicles and spare parts.
Article 24, like Article 10 in the original agreement, dealt with the supply of spare parts whose purchase prices were computed on a cost, insurance and freight (CIF) or free on board (FOB) basis derived from a price list provided by the conglomerate.
The grounds for termination were generally similar to those in the original agreement.
The Memorandum on Sales and Purchase of the Conglomerate Vehicles of 25 April 2011
The appellant and the conglomerate entered into a memorandum on Sales and Purchases of brand vehicles with the intermediary, retroactive from 1 February 2007, soon after signing the Distribution Agreement.
The appellant appointed and the conglomerate approved the appointment of the intermediary as the intermediary for the sale and purchase of the vehicles from the conglomerate under the Distribution Agreement.
The three parties agreed that the intermediary would purchase the vehicles from the conglomerate and sell them to the appellant.
The parties all incorporated the ordering, pricing, and payment and supply of spare parts provisions in Articles 21, 23 and 24 of the Distribution Agreement. They further agreed that any violation or default of those provisions, by the intermediary, would be ascribed to the appellant.
The Management Services Agreement between the Appellant and the Intermediary of 2 March 2009
On 2 March 2009, the appellant and the intermediary entered into a Management Services/Technical Services Agreement which was governed by the laws of Zimbabwe and took effect on 1 March 2009.
They were motivated by the introduction of the multi-currency financial regime in Zimbabwe. It was to run for an indefinite period. The intermediary undertook to:
“Provide administrative services, financial services and support and logistical services and support to help appellant achieve its goals in terms of gaining market share, growth and profitability…, ensure that new developments and systems will be properly communicated together with appropriate facilitation of technical support, system materials and training…, (and) be available to provide help and guidance on any aspect of the business mentioned, at the request of appellant.”
In regards to the computation of the fees, the parties agreed that:
“The intermediary will calculate the fees based on both the turnover reported by appellant and also the level of input that has been provided in terms of this agreement. The fees to be provided for shall be 2% of turnover; however, this will not necessarily be the amount finally invoiced. The amount finally invoiced shall not exceed 4% of turnover.”
And, in respect of payment, they agreed that:
“Payment of the management fees shall ordinarily be made in the year following that on which the fees have been based on receipt of an invoice from the intermediary. For cash flow purposes, it will be permissible to make part payments, but, at least two half-yearly payments will be required.”
The implementation and operation of the agreements
The evidence of the appellant's Managing Director was that the intermediary, a Mauritian registered short-term credit financier interposed between the conglomerate and the appellant in the purchase of the vehicles and spare parts destined to Zimbabwe.
Customers in Zimbabwe would place an order on the brand model of their choice, either to the appellant or an approved dealer appointed by the appellant. The appellant would group the orders and submit a bulky order of the required stock of vehicles, four (4) months in advance, to the intermediary, which, in turn, placed orders with the conglomerate.
The conglomerate would build the ordered vehicles for the intermediary.
The intermediary would purchase the vehicles, in its own name, from the conglomerate, and consign them directly to the appellant's bonded warehouse in Zimbabwe.
The intermediary retained ownership of the consignment in bond until it was paid.
Ownership vested in the appellant upon payment of the purchase price equivalent to the value for duty purposes.
Thereafter, the appellant would, where applicable, pay customs duty, surtaxes, and VAT based on the agreed value, through a clearing agent, before the consignment was released from the bonded warehouse and delivered to the approved dealer and end user.
The appellant used to import stock from a South African related party and the conglomerate under value rulings 18 and 29 of 2001 before the advent of the French holding company. These were replaced by value ruling 15 of 2007, on 5 November 2007, following upon protracted negotiations between the appellant and the respondent that commenced on 26 March 2006….,.
A sample of the documents used in the consignment of the vehicles from the intermediary to the appellant were captured on pp14 to 38 of exhibit 2 and pp1 to 9 of exhibit 5.
These were commercial invoices, telegraphic transfers, and Zimra certificates of origin, bills of entry, and customs clearance certificates.
These commercial invoices…, denoted the intermediary as the supplier and the appellant as the purchaser and consignee.
The vehicles were fully described by model, chassis and engine number, colour, and year of manufacture.
The order number, dates of issue and delivery, method of shipment, origin and destination together with the terms of payment, the free on board purchase price, the cost of freight, insurance and total CIF price, denominated in United States dollars, were also indicated.
The certificates of origin…, certified that each vehicle was manufactured by the supplier in South Africa and bore the same information contained in the commercial invoice in regards to the supplier, consignee, and description of the vehicle.
The bills of entry…, were completed by the clearing agent and identified the intermediary as the exporter or consignor.
They identified the country of supply and destination, the description, and total invoice value of each vehicle separately from the freight and insurance charges.
The customs clearance certificates…, for each vehicle were issued by Zimra.
They contained the full description of the vehicle shown in the commercial invoice. The cost, freight, and insurance price for each vehicle sold was captured in a combined invoice…, issued by the intermediary to the appellant, which the appellant submitted to its bankers with instructions to pay the intermediary by telegraphic transfer….,.
The sequence of dates on these documents showed that an advance payment by telegraphic transfer was made on 12 February 2007, the certificate of origin was presented on 15 April 2007 while the commercial invoice was issued on 24 April 2007 and the vehicle was cleared by a bill of entry at the port of entry on 9 May 2007. Thereafter, a customs clearance certificate was issued on 19 June 2007.
It was common ground, that, the intermediary's consignment was delivered to Zimbabwe and warehoused by the appellant in bond.
It was common cause, that, the appellant did not suffer any exposure to foreign currency risk or credit risk since the end users were required to make payment before the relevant vehicles were dispatched from South Africa…, in 2009 and 2010.
However, in 2011 and 2012, the appellant was exposed to foreign currency risk through the importation of inventory, the liability of which was settled in South Africa in a carrying amount of US$264,729 and US$294,956 respectively….,.
It was common ground that the appellant received vehicle prepayments in the sum of US$2,064,187…, in 2010 that was subsequently revised to US$4,693,512…, in the 2011 financial statements, US$3,086,165 in 2011…, and US$755,673…, in 2012.
Summary of the Tripartite Arrangement
The nature and scope of the tripartite arrangement between the parties was concisely set out by counsel for the respondent in paragraph 5 of his written heads of argument.
A customer placed an order to the appellant through an approved dealer appointed by the appellant. The appellant placed orders with the intermediary, which, in turn, procured the motor vehicles from the conglomerate.
The appellant received the motor vehicles in Zimbabwe and kept them in a bonded warehouse.
Ownership of the motor vehicles remained with the intermediary until duty had been paid by the appellant.
The purchase of a motor vehicle by a customer resulted in the payment of duty to the respondent by the appellant before the vehicle was released to the customer.
The intermediary was paid the transaction value of the motor vehicle, which, according to the letter of the appellant to the respondent, of 8 August 2007, included a 5% administration charge and interest of the selling price on the price list…, in which was incorporated its mark-up of between 7.5% and 10%.
The appellant was responsible for rentals, marketing expenses, and payment of duty.
It sold the vehicles to the dealers at a mark-up of 7.5% and the dealers sold the vehicle to the end customer.
Concessions made at the commencement of the appeal hearing
At the commencement of hearing, the appellant confirmed the concession first made in the letter of 19 June 2014, that, it was remiss in failing to charge the intermediary a mark-up of 7% for transit services rendered in the sum of US$2,240 for 2009, US$2,505=87 for 2010 US$2,198=13 for 2011 and US$3,273=40 for 2012 in respect of vehicles exported by the intermediary to Zambia, Malawi and Tanzania.
Again, the appellant conceded, that, it paid management fees to the intermediary when such fees were not due in the sum of US$130,000 in 2009, US$140,000 in 2010, US$256,629 in 2011 and US$140,000 in 2012.
In the same vein, the respondent conceded, that, it wrongly raised notional interest at the rate of 24% in the sum of US$97,279=92 in respect of the 2012 loan to GS and in the sum of US$106,953=12 for 2010, US$266,879=52 for 2011 and US$124,666=80 for 2012 in respect of the loans availed to ADI.
Assessment of witnesses
The appellant acted in a devious manner in regards to management fees. Its conduct amounted to a deliberate act of transfer pricing which was done with intent to avoid tax.
The production of backdated agreements gave the impression that these were created as a response to the tax investigation.
This was apparent from the purported agreement of 31 January 2007 which had the appellant's signatures only that was rejected by the respondent and resulted in the production of duly signed agreement of 25 April 2011 backdated to 1 February 2007.
The Managing Director misled the court that the appellant provided functional analysis input under duress, contrary to his letter of 12 July 2013 in which he requested two weeks within which to provide the requested information, thus affording the appellant in excess of a month from the date of the initial request.
He disputed making prepayments to the intermediary yet the financial statements, in note 17 on p71 of exhibit 1, show that US$4,693,512 was paid in 2010 and US$3,086,165 in 2011 before the vehicles were exported in bond.
He falsely averred, and thus copied the evidence adduced by the Tax Consultant in his presence, that, the audits for his company commenced in November of each year in contradistinction to the timelines indicated in the audit engagement letter.
The tax consultant prevaricated on what the respondent's generally prevailing practice in regards to provisions was.
The chief investigations officer failed to demonstrate how he arrived at the apportionment ratio he used in his functional analysis. He testified that the appellant misled the respondent by claiming ownership of the consignment stock at the time he applied for the value ruling, contrary to the contents in the letters written by the appellant at that time.
The issues referred for determination
At the pre-trial hearing of 2 June 2015, the following issues were referred for determination. In view of the concessions made by the respondent at the commencement of trial, it is no longer necessary to outline in respect of the loans advanced by the appellant to GS and ADI.
Sharing of profits/transfer pricing
1. Whether or not the respondent is precluded from adopting its current stance on this issue on account of either:
1.1 The value ruling issued by it; or
1.2 The fact that duties and taxes were assessed and paid to it on a different basis.
2. Whether the respondent is entitled to invoke section 24 of the Act to deem income to have accrued to the appellant which was not actually received by it.
Expenses relating to Leave Pay and Audit Fees
1. Whether it was proper of the appellant and open to the appellant to make provision for the costs in question.
2. Whether the respondent was precluded from issuing amended assessments by virtue of the provisions of section 47 of the Act.
Penalties
1. What, if any, penalties are payable to the respondent.
I proceed to deal with each issue in turn....,.
Penalties
It was common ground that penalties are imposed by virtue of section 46 of the Income Tax Act, and, in the present matter, were derived from subsection (1)(b) and (c), (4) and (6) of section 46 of the Income Tax Act.
Initially, the respondent imposed 100% penalties, but, on objection, it reduced the penalty on the provisions to 50% and maintained the penalties in respect of the failure to deduct the correct amounts for marketing, promotion, and advertising in the purported profit sharing arrangement, the omission to levy interest on subsidiaries, and the deduction of management fees at 100%.
The argument advanced by counsel for the appellant, that, the obligation to pay tax only arose after the adjustments had been invoked under section 24 of the Income Tax Act was incorrect.
Section 24 of the Income Tax Act is invoked after the self-assessment, which is deemed to be the assessment by the Commissioner, has been filed.
The purpose of section 24 of the Income Tax Act is to determine whether the taxpayer paid the correct tax in the self assessment. Any shortfall disclosed by the invocation of section 24 of the Income Tax Act relates to the self-assessment and not to a new assessment.
In my view, the obligation to pay the correct tax arose when the self-assessment return was made and not at the time of re-assessment when the shortfall was discovered. Accordingly, the provisions of section 46 of the Income Tax Act cover the infractions committed by the appellant.
The imposition of penalties at 100% is done only where the appellant is found to have fallen foul of the provisions of section 46(6) of the Income Tax Act by omitting an amount which should have been included in the return or by rendering an incorrect statement or failing to disclose any relevant fact which results in the payment of less tax than would otherwise be due with intent to evade tax.
Where such an intention is missing, then, the Commissioner or the Court, on appeal, has a discretion on the quantum of penalty to impose.
Since this is an appeal in the wider sense, I am at large on penalty.
The appellant was generally a good corporate citizen which paid its fair measure of taxes. It co-operated with the respondent during the 4-year fatiguing and disruptive investigation which took its toll on management time and company resources. The objection letter and subsequent letters of 22 September 2014, 27 October 2014, and 14 November 2014 disclosed the financial stress the appellant experienced which contributed to the eventual loss of the franchise just before the objection was filed with the Commissioner.
The appellant's position on its relationship with two local related parties was only conceded by the respondent's counsel in his opening remarks at the commencement of the appeal hearing.
I am obliged to look into the interest of the wider community.
In Commissioner of Taxes v F 1976 (1) RLR 106 (AD)…, MACDONALD JP described tax avoidance in strong language as an evil.
The imposition of penalties in fiscal infractions is predicated on both individual and general deterrence. Every taxpayer is required to shoulder its fair share of the tax burden for the common good. The level of moral turpitude of the taxpayer is measured against its good points to arrive at an appropriate penalty.
In Elite Wholesale (Rhodesia) (Pvt) Ltd v Commissioner of Taxes, Southern Rhodesia (1955) 20 SATC 33 (SR)…,.; 1955 (1) SA 350 (SR) equated “an intention upon the part of the purchaser or seller to evade assessment or tax” with “something which shows a lack of good faith or the presence of “moral dishonesty in the taxpayer's mind.”
Management Fees
The appellant vehemently maintained and asserted throughout the investigations, and in the letter of 14 March 2011, 30 May 2012, 19 June 2014 and the objection of 25 July 2014, against all odds and the available evidence, that, the intermediary had provided management services in strategy setting, pooling funds, and purchasing power from Mauritius in behalf of head office senior management.
It only abandoned the claim on 14 November 2014.
In that letter, the Managing Director made three telling and disingenuous points:
(i) The first was that the intermediary was, through a legal oversight, substituted for the holding company in the management fees/technical fees agreement of 2 March 2009.
(ii) The second was that the management fees were remitted to the holding company through the intermediary.
(iii) The third, which was also reiterated during the cross-examination of the Chief Investigations Officer, was that the only management fees ever paid were in the sum of US$130,000 reported in the 2010 financial statements while amounts reflected in the other years were provisions which were written back in subsequent years without any prejudice to the fiscus.
The Managing Director failed to demonstrate, by any hard evidence, the management intervention that was undertaken by the holding company or to explain why the management fees remained a continuing obligation payable to the intermediary in the 2011 and 2012 financial statements.
These prevarications eclipsed the good points exhibited by the appellant over the four years that it was under investigation.
The concession, however, demonstrated that the appellant made an incorrect return in respect of claims for management fees in each of the affected tax years.
It seems to me, that, the unsupported persistent assertions maintained by the appellant, even after the concession of 14 November 2014, were indicative of both corporate moral dishonesty and a lack of good faith.
I therefore find, that, the appellant, through the mind of its management, evinced the intention to evade the payment of the correct amount of tax as contemplated by section 46(6) of the Income Tax Act by claiming the deduction of management fees paid to the intermediary who was not entitled to such fees.
The Court or the Commissioner have no option but to impose a 100% penalty.
The penalty imposed by the Commissioner is accordingly confirmed.
The wording of section 46(1)(b) and (c) of the Income Tax Act incorporates within its ambit the amounts adjusted under section 24 of the Income Tax Act on rentals, marketing, advertising, and promotion charges.
These would not have affected the appellant's tax position for the reason that the intermediary would have incorporated them in the CIP price and passed them to the appellant who would have been entitled to deduct them from his income.
There would not have been any moral turpitude attached to the appellant's deduction of the amounts representing 39% of the fair share of the intermediary's expenses.
In these circumstances, the imposition of any level of monetary penalty would be wholly unjustified. I would have waived it in full.
The Leave and Audit Fee Provisions
The Tax Consultant called by the appellant was aware that the respondent disallowed leave pay provisions and audit fees in the tax year that they were made. However, the evidence disclosed that the appellant accessed the Assessors Handbook and genuinely believed that the respondent allowed deductions of these provisions.
It clearly lacked the intention to evade tax and was thus eligible for remission of penalty.
The amounts involved in each of the 4 years were minimal. The moral turpitude of the appellant was minimal.
It seems to me that a penalty of 10% in respect of each year for each head is appropriate.
The Tax Amnesty
It was common cause, that, the tax amnesty was not raised in the letter of objection of 25 July 2014 for the reason that it had not yet come into existence at that time.
The appellant raised it in paragraph 72 of its case on 18 December 2014 and the respondent responded to it in paragraph 43 of the Commissioner's case.
It was promulgated under the authority of section 23 of the Finance Act (No.2) of 2014 in the Finance Act (Tax Amnesty) Regulations 2014, SI163 of 2014 on 21 November 2014.
It exempted errant taxpayers, whose applications were approved, from paying any additional tax, penalty, or interest on the amounts for which the amnesty was granted.
It was common cause that both section 19 of the Finance Act and section 8 of the tax amnesty regulations, S.I.163 of 2014 specifically precluded from their ambit any taxpayers who had paid tax or rendered a return or declaration or had been assessed.
It was again common cause, that, the appellant fell into the category of taxpayers who were excluded from the ambit of the tax amnesty, and, as a result, did not apply for the amnesty.
At the tail end of his oral submissions, counsel for the appellant moved the Court, in terms of the proviso to section 65(4) of the Income Tax Act, to consider the introduction of the tax amnesty argument, which had not been raised in the notice of objection, on two grounds:
(i) The first was that it was physically and legally impossible to raise it in the objection; and
(ii) The second was that such exclusion offended the appellant's constitutional right to equal treatment, protection, and benefit of the law enshrined in section 56(1) and (6) of the Constitution.
Counsel for the respondent opposed the application on the ground that the constitutional argument was constrained by the absence of evidence on the point.
In both his written and oral submissions, counsel for the appellant emphasized, that, the enactment of the tax amnesty under consideration was constitutional, but, that the denial of the tax amnesty benefit to certain categories of taxpayers was unconstitutional.
In paragraph 108 of his written heads, counsel submitted that “if the tax amnesty is to be treated as being constitutional, and the concession is repeated that it is within the terms of the Constitution permissible to grant such an amnesty, it must apply to the appellant, who therefore cannot be obliged to pay penalties and interest on any unpaid taxes raised in an amended assessment as in the present case.”
In the alternative, he urged this Court to exercise its sentencing discretion in favour of the appellant by extending the benefits embodied in the tax amnesty legislation to the appellant.
The submission is obviously raising the constitutionality of the tax amnesty.
As I understand it, the submission is really, that, the tax amnesty is unconstitutional to the extent that it fails to cover all taxpayers. Looked at from another angle, the submission is that any law that does not treat all people equally does not provide them equal benefit to the law and is therefore unconstitutional.
The fallacy of the submission becomes self-evident when viewed in this wider context.
It is simply, that, all laws that do not treat all citizens equally are unconstitutional.
But, that is not what the Constitution contemplates or even says. I think it has always been recognised that no Constitution in the world is able to provide absolute equality to all its citizens.
The test of constitutionality of an enactment is not measured against absolute rights.
I intimated in CRS (Pvt) Ltd v Zimbabwe Revenue Authority HH728-17…, that, in our law, the test of constitutionality of an enactment is measured against the provisions of section 86(2) of our Constitution.
That provision allows the enactment of laws, such as the tax amnesty or any laws which restrict such a fundamental right as section 56(1), as long as it is a law of general application which is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality, and freedom.
These constitutional imperatives are, in turn, measured against all relevant factors, including the six that are enumerated in section 86(2)(a) to (f) of the Constitution.
The submission made, as to the possible infraction of section 56(1) of the Constitution, fails to address these factors.
Counsel for the appellant did not attempt to address these factors in his application for leave to introduce and rely on this ground.
He failed to show good cause for its introduction into argument.
He has failed to demonstrate the existence of a possible breach of the right to equality and equal protection and benefit of the law against the appellant and those taxpayers who have been excluded in the tax amnesty.
It seems to me, that, since the Constitution itself allows for the enactment of the tax amnesty legislation, it cannot be unconstitutional for that enactment to treat taxpayers differently.
Accordingly, I decline, yet again, to allow the introduction of the tax amnesty argument.
