CHIGUMBA J: “Pay now, argue
later”, is a pithy phrase that is used as a different expression of the
biblical injunction to “render unto Caesar what belongs to Caesar”. Put
differently, it means that the obligation to pay tax is inviolable, one cannot
escape from that obligation, and, one is required to discharge the obligation
first, and then raise objections after paying. This case concerns a taxpayer
who has approached the court for relief, after its bank accounts were garnished
by the revenue authority, on the basis that the effect of the garnishee is to
force it into liquidation. The question that arises for determination is
whether the circumstances are such that, this court can intervene and accede to
the relief that is sought, in the face of certain statutory provisions that
appear to give the tax collector absolute power to impose and collect taxes.
This is an urgent chamber application for a provisional order in which the
applicant seeks the following interim relief:
INTERIM RELIEF GRANTED
1.
That the respondent uplifts the garnishee order, and/or letter of appointment
of agency placed/served to applicant's bank, FBC bank, immediately and
forthwith.
2.
That respondent revoke and /or withdraw the appointment of applicant's FBC bank
as its agent in terms of section 58 as read with s 59 of the Income Tax Act [Cap
23:06] immediately and forthwith.
3.
That the respondent shall not unlawfully interfere with applicant's business
operations and day to day activities, including the placing of its officers or
agents at applicant's business premises.
The Applicant is a Private Limited company, duly registered and operating in
terms of the law of Zimbabwe. The respondent is the Zimbabwe Revenue
Authority, an administrative authority established in terms of s 3 of the Revenue
Authority Act [Cap 23:11] and tasked with collecting revenues
due in terms of the Value Added Tax Act [Cap 23:12] (hereinafter
referred to as the VAT Act). The Finance Minister is mandated to administer VAT
Act.
The applicant is a registered
operator in terms of the VAT Act. The country's value added tax system is
embodied in the VAT Act. The system involves the imposition of value added tax
at each step in the chain of manufacture and distribution of goods and services
that are supplied to the country in the course of business; and it is
calculated on the value that will have been added at each step of the supply
process, at a specified rate. The revenue collection system is based on a self
assessment system by registered operators. The VAT Act provides a detailed
mechanism for vendors to keep certain kinds of records and to calculate,
account, and pay value added tax to the Taxing Commissioner. Respondent does
not have the capacity or manpower to effectively monitor every transaction
liable to value added tax that is why registered operators have to assess
themselves. In order to ensure compliance, the respondent carries out periodic
investigations and audits the operators to ensure full compliance by the
operators, of the obligation to declare and remit in full, any value added tax
that will be due.
Applicant has approached this court
because sometime at the end of April in 2014, Respondent carried out a tax
investigation and audit of its affairs. It is common cause that
Respondent's officers removed and took possession of certain documents from
applicant's operations, in terms of s 60 of the VAT Act. In its founding
affidavit, applicant avers that respondent advised it to make a voluntary
declaration to enable tax which was due to be assessed. It was alleged that the
voluntary declarations were done under duress and extortion, an allegation
which was vigorously denied by respondent's Chief Investigations officer Oppah
Zinhumwe. Applicant complied with the request, and attached copies of the
voluntarily declared figures, to its founding affidavit. Applicant attached a
schedule which stated that it opened its branches as follows, Mvuma in
September 2010, Angwa in May 2013, Slice Groceries in December 2012, and Speke
in December 2013. According to annexure 1 to the founding affidavit, in 2010
applicant's total sum of declared tax was US$522 012-95, in 2011 it was USD$ 2
323 234-06, in 2012 it was USD$3 510 189-01, and in 2013 it was USD$6 952
536-43.
On realising that there were some
significant discrepancies between its self assessed figures and those of the
respondent, applicant wrote to the respondent on 4 April 2014, (annexure B),
and confirmed that, in terms of its proposal to respondent, it was
paying USD$2000-00 per day, to respondent, as a compromise and as a sign of its
intention to cooperate fully with respondent's investigations. Copies of the
tax assessment schedules are attached to the notice of opposition as E1 to E4.
For the period January to June 2013, the VAT due was assesses at USD$1 856
837-14, for the period January to December 2012, the VAT due was assessed at
USD$3 489 955-17, for the period January to December 2011 the VAT due was
assesses at USD$1 585 356-69, for the period February to December 2010 the VAT
due was assessed at USD$ 321 441-92. It appeared that the assessment were a
result of calculating the VAT which was deemed to be due, subtracting the Vat
which was paid, and then imposing a 100% penalty.
Respondent wrote a letter attached
as annexure F1 to the opposing papers dated 4 April 2014, in which it advised
applicant that it had been penalised for gross under declaration of sales,
which had resulted in VAT underpayments, and that this information had been
gleaned from applicant's own documents. In that letter, the respondent advised
that:
“…the USD$5000-00 weekly payments
are not commensurate with the debt at hand and therefore not accepted”.
That letter also reminded the
applicant of its as yet unassessed obligation to pay Income Tax, and Pay as You
Earn (PAYE) for its employees. Applicant accepted, in its founding affidavit,
para 5 thereof, that according to its calculations, and its voluntarily
declared liability, an amount ofUSD$905 801-32 had not been paid
to the respondent. It stated that its decision not to pay any more money was
based on advice from its accountant, that respondent's tax assessments were
incorrect and highly exaggerated, for failure to take into account non taxable
products such as goat meat, beef, chicken, bread and other groceries.
Applicant stated that it has been advised that it does not owe the
respondent anything at all, and had taken the position that it has in fact,
overpaid the respondent and will be refunded some of the monies that it alleges
it has overpaid to the respondent. Applicant averred that it suspects the
hidden hand of its competitors who have lost a significant market share to it,
to be behind its perceived “persecution” by the respondent. Applicant alleged
jealousy and malice as the cause of the threats to close it down, and to deploy
respondent's employees to man its operations. Applicant cites, as an example of
mala fides and malice, the refusal by respondent to accept its payment proposal
when it had paid a total of USD$204 000-00 in terms of that proposal. On 2 May
2014, applicant wrote a letter to the respondent (Annexure C) in which it
raised objections to the tax assessments set out in Respondent's letter to it
of 4 April 2014. The merits of the objections need not detain us. They will
properly be assessed by the appropriate court. These objections were dismissed
in their entirety by the respondent, and this decision was communicated to the
applicant in a letter dated 12 June 2014 (Annexure D founding affidavit).
It is common cause that applicant
has appealed to the Fiscal Appeal Court [Cap 23:12] On 13 June
2014, it is alleged that respondent's officers, without any prior notice,
garnished the applicant's account held at FBC bank for the sum of twenty
million United States Dollars. Applicant alleges that respondent's officers
have advised it that officers are due to be posted to all its branches to man
them forthwith, Applicant alleges that it was told that it could no longer
transact as a result of the garnishee order. Applicant alleges that this
conduct on the part of the respondent is unlawful as its net effect is to close
down its business, by rendering it inoperable. Applicant alleges that
respondent's conduct is unconstitutional as the quantum of the garnishee order
is arbitrary, and was imposed without notice. Applicant alleges that the
quantum of the garnishee ought to be in the amount that it admitted to owing,
of about USD$900 000-00, because at law, the disputed amount is suspended by
the noting of the appeal.
Applicant alleges that it is facing imminent closure if it remains unable
to operate, it cannot pay its suppliers, or its workers, and is being force
marched into liquidation by the respondents. The welfare of its one thousand
plus employees is at risk, and is being ignored by the respondent, contrary to
the provisions of the Constitution. Finally, applicant avers that it has no
other remedy. Respondent denied that it acted unlawfully, maliciously,
capriciously or unconstitutionally. It averred that it was perfectly lawful for
it to impose the garnishee in the way manner that it did, and reiterated that
the applicant ought to have exhausted its domestic remedies first by
approaching the Commissioner for relief as provided for in the VAT Act, and the
Income Tax Act. It was submitted that this court lacked the power to consider
the merits of the tax assessment that was the exclusive purview of the Fiscal
Appeal Court. The question that is exercising the court's mind is whether
there are any circumstances in which this court can examine the rationality or
the reasonableness of the Commissioner of Tax's decision, specifically to place
a garnishee on the applicant's account, in circumstances where the effect of
the garnishee order is to render the applicant incapable of funding its
operations, forcing the applicant into insolvency, and ultimately
shooting itself in the foot by killing the goose that lays the golden egg?
A necessary offshoot of that question is whether this matter deserves to be
heard on an urgent basis.
COMPLIANCE WITH RULES
Counsel for the respondent raised a
point inlimine that the application before the court contravened the
provisions of r 241 of the High Court Rules 1971 by not having attached to it
the correct form of 29B, or of form 29. He relied on the case of Inyanga
Downs Orchards v Edward Buwu[1]
See also:[2]
And:[3]
Counsel for the applicant, implored the court to use its discretion in
applicant's favor, in the interests of justice. The court was referred to the
following[4]
and to [5]
I associate myself fully with these sentiments. Legal practitioners in this
jurisdiction increasingly appear to trawl through court documents with a
magnifying glass in search of the littlest anomaly in their opponent's papers.
Much time is wasted in court whilst they wax lyrical on a myriad “points in
limine” which are not conclusively dispositive of the matter. It is time to
curtail this practice, and to advocate that points in limine be raised only
where their resolution disposes of the issue under consideration. The court is
perfectly capable of defending its rules, or lack of compliance with them where
necessary. In this case I find that the effect of applicant's failure to comply
with r 241 is not fatally defective. The court can use its discretion in terms
of r 4C, and condone the lack of compliance, in the interests of doing justice.
URGENCY
In terms of Order 22 r 244, where a
chamber application is accompanied by a certificate from a legal practitioner
in terms of para (b) of sub-rule (2) of r 242 to the effect that a matter is
urgent, giving reasons for its urgency, the registrar shall immediately submit
it to a judge who shall consider the papers forthwith. In this case the
certificate of urgency was filed by Ticharwa Garabga, who stated that
applicant's business had literally been shut down and that the garnishee order
for twenty million dollars was for money which was not due to the respondent,
and was imposed arbitrarily.
Other reasons advanced for the
urgency of the matter were: “ applicant was set to lose one thousand workers,
in a country where the unemployment rate was 90% ,the threat to send
respondent's employees to man applicant's tills would send the wrong message to
applicant's investors and competitors, respondent's conduct would result in the
closure of applicant's business and this was counterproductive, especially
since applicant was cooperating fully with the respondent and had paid mote
that two hundred thousand dollars by way of daily installments since April
2014, the appeal to the Fiscal Appeal Court would be rendered nugatory.”
The test for urgency is objective. See Document support Centre P/L vT.F.
Mapuvire [6]
This case also found that, in some cases, even purely commercial interests
can be protected urgently in appropriate cases and considered the case of Silver's
Trucks & Anor vDirector of Customs & Exercise [7]
Counsel for the respondent submitted that this matter was not urgent, and
relied on the case of [8]
as its authority. See also: [9]Can
it be said that in the circumstances of this case, where the applicant has
averred that it cannot operate and is facing insolvency and liquidation, in
these current harsh economic times, a delay in the hearing of this matter would
not cause harm?
The court was urged to desist from
usurping the powers of the administrative agency, and referred to the following
cases[10]
The court should decide whether the threat of being forced into liquidation
constitutes a violation of some legitimate interest that applicant has, that
the obligation to discharge its tax liabilities to the respondent does not
result in the applicant closing its doors. Surely, by the respondent's own test
referred to in Triple C Pigs (Supra), if applicant is not heard
immediately, and is forced into liquidation, any relief given in future would
be a brutum fulmen, and there will be no applicant company to speak of.
Respondent sought to rely on the judgment of my brother Judge MAFUSIRE FairdropTrading
(Private) Limited vThe Zimbabwe Revenue Authority HH 68-14. With all
due respect to counsel for the respondent, that judgment was concerned with the
vicissitudes of s 69 on the Income Tax Act.
While I accept that s 36 of the VAT
Act is similarly worded to s 69 of the Income tax Act, in my view the two tax
regimes are based on different premises, different methods of calculation and
an over-simplistic view of the similarities would set a dangerous precedent, as
each case must be decided on its own peculiar circumstances. The applicant
Fairdrop Trading did not cooperate with the respondent or make payment
proposals to discharge its liability to the respondent, that applicant denied
being indebted to the respondent at all. That distinguishes the circumstance of
that case from the case under consideration. I found this matter to be
urgent, not because I disapprove of the conclusion of the respondent to garnish
applicant's account, or because I wish to usurp the authority of the
respondent. I formed the view that the respondent did not carry out its
functions in a fair or reasonable manner, in arriving at the decision to
garnish applicant's account in the sum of twenty million dollars. I concluded
that previous decided cases, of persuasive authority, have set precedents that
allow a matter to be heard urgently, where applicant's commercial interest are
at risk, in circumstances where failure to hear the applicant urgently would
make it unnecessary for applicant to be heard at all in future, it would be a
futile exercise, because the harm that the applicant fears would have already
caught up with the applicant.
MERITS
The cannons of statutory interpretation are well established.
“It is a generally accepted rule of
interpretation that the use of peremptory words such as 'shall', as opposed to
'may' is indicative of the legislature's intention to make the provision
peremptory. The use of the word 'may' as opposed to 'shall' is construed as
indicative of the legislature's intention to make a provision directory. In
some instances the legislature explicitly provides that failure to comply with
a statutory provision is fatal. The difficulty arises where the legislature has
made no specific indication as to whether failure arises where the legislature
has made no specific indication as to whether failure to comply is fatal or
not” See[11]
Francis Bennion in his book Statutory Interpretation at p 21-22 writes
as follows:
“Where a duty arises under a
statute, the court, charged with the task of enforcing the statute, needs to
decide what consequences Parliament intended should follow from breach of the
duty. This is an area where legislative drafting has been markedly deficient.
Draftsmen find it easy to use the language of command. They say that a thing
'shall' be done. Too often they fail to consider the consequences when it is
not done…”
It has been suggested that breach of
a mandatory duty which is set out in a statute invalidates the thing done.
Section 36 of the Value Added Tax Act [Cap 23:12] provides that:
“36 Payment
of tax pending appeal
The obligation to pay and the
right to receive and recover any tax, additional tax, penalty or interest
chargeable under this Act shall not, unless the Commissioner so directs, be
suspended by any appeal or pending the decision of a court of law, but if
any assessment is altered on appeal or in conformity with any such decision or
a decision by the Commissioner to concede the appeal to the Fiscal Appeal Court
or such court of law, a due adjustment shall be made, amounts paid in excess
being refunded with interest at the prescribed rate (but subject to section forty-six)
and calculated from the date proved to the satisfaction of the Commissioner to
be the date on which such excess was received, and amounts short-paid being
recoverable with penalty and interest calculated as provided in subsection (1)
of section thirty-nine.” (my underlining for emphasis)
My reading of s 36 is that the liability to pay remains extant until the appeal
is finalised, or in the alternative, unless the Commissioner directs that the
obligation falls away pending appeal is finalised. Applicant in this matter has
not argued that the effect of the noting of the appeal is to extinguish its
obligation to pay. Section 33 of the VAT Act provides for the circumstances in
which an aggrieved person can appeal to the Fiscal Court, against the exercise
of discretion by the Commissioner. The right to appeal against the exercise of
discretion by the respondent's officers, to the Commissioner, is provided for
in terms of s 32 of the VAT Act. My reading of s 32 is that, when the
Commissioner notifies, in writing, a person who is liable to pay tax to the
respondent, of any decision or assessment made against that person, then that
person may lodge an objection, also in writhing, specifying the grounds of the
objection, to the Commissioner, within a specified time period. Section 32(1)
(a) (i), (ii), (iii), 32 (1) (b), and 32(1) (c) provide all the prescribed
circumstances where the Commissioner must give a decision in writing, which
decision must be objected to, in writing.
These circumstances include:
(a)
Refusal to register that person in terms of the VAT Act
(b)
Cancellation of that person's registration in terms of the VAT Act or refusal
to cancel registration.
(c)
Refusal to make a refund.
(d)
An assessment made in terms of s(s) 31,36,37
(e)
Any direction or supplementary action made by the Commissioner in terms of s
52(3), 52(4)
The applicant has appealed to the
Fiscal Court against an assessment made in terms of section 31 of the VAT Act.
It is clear that the applicant correctly appealed to the Fiscal Court against
the dismissal of its objection, in terms of s32 (1) (d). The respondent itself
advised the applicant to appeal to the Fiscal Appeal Court if was dissatisfied
with the dismissal of its objection to the tax assessment. In terms of section
32(4) of the VAT Act the Commissioner, on receiving an objection is entitled
to:
(4)
After having considered the objection, the Commissioner may—
(a) alter any decision
pursuant thereto; or
(b) alter or reduce any
assessment pursuant thereto; or
(c)
disallow the objection
In this case the Commissioner
exercised his discretion and disallowed the objection to the tax assessment, in
terms of s 32(4) (c). So which exercise of discretion by the Commissioner is
being challenged by the applicant in this application? It appears as if the applicant
is challenging the Commissioner's appointment of agents in terms of s 48 of the
VAT Act, and the consequences that flowed from such appointment, the imposition
of a garnishee order on applicant's account. The Commissioner's power to
appoint agents is found in s 48 of the VAT Act:
“48 Power to
appoint agent
(1)…
(a) …
(b)…
(c)…
(d) …
(2)
The Commissioner may, if he thinks it necessary, declare any person to
be the agent of any other person, and the person so declared an agent shall be
the agent of such other person for the purposes of this Act, and, notwithstanding
anything to the contrary contained in any other law, may be required to pay any
amount of tax, additional tax, penalty, or interest due from any moneys in
any current account, deposit account, fixed deposit account or savings account
or any other moneys—
(a)
including pensions, salary, wages or any other remuneration, which may be
held by him…
(b)
…” (my underlining for emphasis)
My reading of s 48 of the VAT Act is
that the Commissioner of Taxes has a discretion to declare any person to be
respondent's agent, and that once such a declaration is made, the proposed
agent has no choice but to pay any amount of money held on behalf of the
applicant, to the respondent, as long as it is required for purposes of
fulfilling tax obligations, and must even pay to respondent money that will be
held in an account for wages.
This obligation on the part of the
appointed agent is not subject to any other law except s 48. Section 48
overrides anything that is contrary to it which may be set out in any other
law. In my view s 48 of the VAT Act does not override the Constitution,
and the discretion exercised by the Commissioner is reviewable because of the
use of the word 'may' which is not peremptory. I hold the firm view that the
intention of the legislature was that s 48 protect designated/appointed agents
of the respondent from litigation in terms of other laws for the act of
forwarding money in their client's accounts to the respondent. Its purpose is
to absolve the designated agents from liability if their act of forwarding
their client's money to the respondent results in loss or prejudice to their
clients the account holders. I hold the respectful view that it could not have
been the intention of the legislature to put the exercise of discretion by the
Commissioner beyond the reach of the law. However, I respectfully decline to
accede to the relief sought by the applicant, to direct the respondent to
revoke the appointment of FBC bank as its agent. There is no evidence before me
that the discretion exercised by the Commissioner in making the appointment,
violated any of the tenets by which the exercise of administrative justice
ought to be guided.
I accept the argument proffered by
counsel for the respondent that the act of designating an agent was lawfully
done by the respondent as provided by the law, section 48. What I find
difficulty with, is whether that exercise of discretion which resulted in a
garnishee order being placed over applicant's account, is reviewable, for
compliance with the tenets of administrative justice. Section 14 of the
Fiscal Appeal Act provides that:
“14
Suspension of tax on noting of appeal
Where any person has given notice of
intention to appeal in accordance with section eleven or thirteen payment
of so much of the tax which he has been called upon to pay as would not be
payable by him if the appeal were allowed shall be suspended until the appeal
has been decided, unless the Commissioner whose decision is the subject of
the appeal otherwise directs.”
My interpretation of this act is
that applicant in this case should not be required to pay the twenty million
dollars that respondent has garnished its accounts for. I hold the considered
view that, the noting of the appeal suspended actual payment of only
that portion of the twenty million dollars that applicant is disputing
liability for. This interpretation is subject to the rider: “…unless the
Commissioner…otherwise directs”. It is arguable that, by directing that a
garnishee order in that sum be imposed, the Commissioner has directed that the
full amount of the tax assessed be paid. In my view however, the Commissioner
is required to expressly say this, and to reduce his direction to writing, and
notify the applicant of his direction, in writing, which was not done in this
case. In the circumstances, I maintain that, only the approximately one million
dollars that the applicant admitted to owing in its founding papers would, on
the face of it, remain payable until the appeal to the Fiscal Court is
finalized.
It should be emphasized that my
reading of section 14 is that the obligation to pay is not suspended, otherwise
that would result in conflict with s 36 of the VAT Act. Theobligation /liability
to pay is not suspended by the noting of the appeal. The appeal will establish
whether the taxpayer is indeed liable to pay the assessed sum. What is
suspended is theactual payment of the assessed sum, in full. I am
fortified in my view by certain orbiter dicta in the case of Metcash
Trading Limited vThe Commissioner for the South African Revenue Service
& The Minister of Finance[12]
At p 104, para 71 of that judgment the South African Constitutional Court
stated that:
“…that does not mean that a court is
prohibited from hearing an application for interlocutory relief in the face of
a pending VAT appeal, or from granting other appropriate relief. Nor does it
mean that the jurisdiction is theoretically extant but actually illusory”.
For this reason the court must
examine whether the exercise of discretion by the Commissioner of Taxes, in
directing its designated agents, to garnish applicant's accounts in the full
sum of twenty million dollars, when s 14 of the Fiscal Appeals Act provides
that payment of the disputed sum is suspended until the appeal is finalized by
the Fiscal Appeals Court, is reasonable, or rational, or procedural.
I propose to start by looking at what the highest law in this land has to say
about the exercise of discretion by an administrative body. Section 68 of
the Constitution of Zimbabwe provides that[13]
Section 3 of the Administrative Justice Act provides as follows[14]
Section 2 provides for Interpretation and application[15]
Respondent by its own description in para 5 of its notice of opposition is an
administrative authority. My reading of the interpretation section of the
Administrative Justice Act is that any action taken by the respondent or any of
its employees, is administrative action, and that in exercising discretion in
any administrative action, the conduct must be reasonable, and substantively
and procedurally fair. Applicant has not denied that the respondent's actions
were lawful. It has not sought to challenge the powers of the respondent to act
in the manner that it did. My understanding of applicant's contention is that
the exercise of discretion by the respondent was not reasonable, in the sense
of violating the provisions of s 3(1) (a) of the Administrative justice Act,
and s 68 of the Constitution, in the sense that the exercise of discretion was
not reasonable, or proportionate, or both substantively and procedurally fair
to it.
Applicant contended that it has been rendered unable to operate, and
consequently unable to discharge its tax obligations to the respondent.
Applicant contended that respondent is shooting itself in the foot, which
indicates that its decision is irrational. The argument is that respondent ought
to cooperate with the applicant so that if applicant remains a going concern,
it is likely to discharge its tax obligations in full, now and in the future.
Applicant has contended that it stands to lose its workforce of over 1000
workers. Applicant has contended that the prevailing economic conditions, where
at least ten companies every month are being liquidated, make it irrational and
unreasonable of the respondent to order a garnishee of twenty million dollars
when it is clear that the effect of that directive will be to force the
applicant into liquidation. Applicant's contention that its right to
administrative action that is fair and reasonable has been violated can be
examined further.
Irrationality, in relation to the exercise of discretion by an administrative
body had been defined as a decision that is so outrageous in its defiance of
logic or of accepted moral standards that no sensible person who had applied
his mind to the issue to be decided would have arrived at it. See CCU vMinister
for the civil Service[16][17].What
has come to be known as “Wednesbury unreasonableness” was described, by Lord
Greene, as follows:
“When an executive discretion is
entrusted by Parliament to a body such as the local authority in this case,
what appears to be an exercise of that discretion can only be challenged in the
courts in a strictly limited class of cases”.
Counsel for the respondent
sought to argue that applicant has not exhausted its domestic remedies and
therefore should not be heard by this court, it should instead appeal to the
Commissioner, and thereafter to the Fiscal Appeals Court. With all due respect
to counsel, that argument failed to find favor with me, for the reason that s
32 of the VAT Act does not mention the directive to issue a garnishee order as
one of the issues that an aggrieved taxpayer can object to. Section 32
mentions: the refusal to register that person in terms of the VAT Act,
cancellation of that person's registration in terms of the VAT Act or refusal
to cancel registration., refusal to make a refund, an assessment made in terms
of ss31, 36, 37, any direction or supplementary action made by the Commissioner
in terms of s 52(3), 52(4). None of these areas cover the discretion to place a
garnishee order over the taxpayer's account. It is my respectful view that s 48
does not oust this court's inherent power of judicial review of an
administrative body, to scrutinize the exercise of discretion by that body, at
any time and to ensure, on the limited grounds provided in s 68 of the
Constitution and s 3 of the Administrative Justice Act, that there has not been
any element of “Wednesbury unreasonableness”.
It is this court's considered view
that the imposition of a garnishee order on applicant's accounts was an
exercise of discretion on behalf of the respondent, and that, in view of the
provisions of s 14 of the Fiscal Appeal Act, the figure of twenty million was
not proportionate, or reasonable, and was outrageous in its defiance of logic,
in the Wednesbury sense. The Fiscal Appeals Act, in s 14 clearly stipulates
that applicant is liable to pay the admitted amount which in this case is about
a million dollars. Its liabilityto pay the disputed amount of
nineteen million dollars was not automatically suspended by the noting of the
appeal in terms of s 14. What was suspended was the requirement to
make actual payment of the disputed nineteen million dollars (my
underlining for emphasis). To direct that the applicant's account be garnished
for the full twenty million dollars was grossly unreasonable. To infer that
applicant ought to beg the Commissioner to revise or reconsider an exercise of
discretion which was made in violation of its right to fair, reasonable and
proportionate administrative justice, is in my view, also grossly unreasonable.
This court is not agitating for the watering down of any powers that respondent
has in respect of various tax instruments to appoint designated agents, and to
direct that taxpayer's accounts be garnished. This court is merely reminding
the respondent, that as an administrative body, its power and discretion must
always be exercised reasonably and fairly, at all stages at all times,
particularly because, by the very nature of tax collection some of the action
that respondent is authorized to take may be considered necessarily draconian.
Respondent submitted that its
actions were not unlawful and relied on the case of Rudolph & Anor vCommissioner
of Inland Revenue & Ors[18]
[19]
This case begs the question of what happens where these lawful powers are
not exercised properly. It is not only unlawful exercise of power which may
establish a prima facie right for purposes of qualifying for an interim
interdict. Failure to take relevant principles into consideration may result in
the improper exercise of rights which are lawfully conferred on an
administrative body.In my view, the applicant has a prima facie right conferred
on it by s 68 of the Constitution, by s 3 of the Administrative Justice Act, by
the principle of 'Wednesbury unreasonableness, to administrative justice. This
means that it has the right to administrative conduct that is reasonable,
proportionate and both substantively and procedurally fair.
Imposing a garnishee order of twenty
million on applicant's account was not procedurally fair because s14 of the
fiscal Appeals Act stipulates that the disputed amount of the tax assessment be
suspended pending the determination of the appeal. It was not substantively
fair because there is no provision, in s 32 of the VAT Act for objection to the
Commissioner against the imposition of a garnishee order.
I find that the applicant's fear
that it will be forced into liquidation if the garnishee order remains in place
in its current form constitutes irreparable harm to it. By the time damages are
ordered to be paid, there will likely be no applicant to receive the damages,
because applicant is not likely to remain in business, at this time when our
economy is in freefall, under these circumstances The balance of convenience
favors granting an interim order that the directive to garnish twenty million
dollars on applicant's account be suspended. In my view there is no alternative
remedy that is effective. In the result the following interim order is granted
by the court.
IT IS HEREBY ORDERED THAT:
- The respondent uplifts and
suspends the garnishee order placed on applicant's accounts with FBC bank,
immediately and forthwith, until the appeal that is pending before the
Fiscal Appeals Court is finalised.
- The respondent shall
allow a period of seven working days to elapse after the up-liftment and
suspension of the original garnishee order, where-after it shall replace
it with a fresh garnishee order for the sum of USD$905 801-32 (nine
hundred and five thousand dollars eight hundred and one dollar and thirty
two cents), which shall remain in place until the appeal is finalized or
payment is made in full, whichever comes first.
- The respondent shall not
unlawfully interfere with applicant's business operations and its day to
day activities, including the placing of its officers or agents at
applicant's business premises.
Venturas
& Samukange,
applicant's legal practitioners
Kantor & Immerman,respondents' legal practitioners
