This
is an appeal against a judgment of the High Court upholding a
preliminary point to the effect that the application before it was
premature for want of compliance with a statutory requirement.
The
appellant is a non-profit making organization duly registered in
terms of the laws of Zimbabwe. It has been operating in the country
as such since 1992. The first respondent is the Zimbabwe Revenue
Authority (“ZIMRA”), a body established in accordance with the
provisions of the Zimbabwe Revenue Authority Act [Chapter
23:11]
(“the Act”) with its primary function being the assessment,
collection, and enforcing payment of taxes on behalf of the State in
accordance with the provisions of section 4(1)(a) of the Zimbabwe
Revenue Authority Act [Chapter
23:11].
The
appellant applied for and was granted a rebate on duty in terms of
section 122 of the Customs and Excise (General) Regulations 2001 in
respect of goods imported by it for humanitarian purposes. The first
respondent formed the opinion that the appellant was abusing the
rebate and caused an investigation to be conducted. During the course
of the investigation the first respondent found reason to believe
that the rebate had been abused. As a result, it proceeded to seize
the appellant's goods comprising of wire rolls and barbed wire
which were located at the premises of the second respondent.
At
a meeting held between the parties it was established that the rebate
had been abused by an employee of the appellant. Accordingly, duty
was calculated in terms of the Customs and Excise Act in the sum of
USD219,437=67. In addition, the first respondent imposed a penalty
amounting to 100 per cent of the duty.
A
letter was subsequently addressed to the appellant advising it of the
duty and penalty imposed and demanding payment of both sums. Instead
of making payment as demanded, the appellant instructed its legal
practitioners to respond to the letter, denying liability both on its
behalf and that of its agent who had been accused of abusing the
rebate. Thereafter, the appellant filed an application with the High
Court in terms of which it prayed for the setting aside of the first
respondent's decision.
In
opposing the application the first respondent raised the following
preliminary points:
(i)
Firstly, that the appellant had not complied with section 196 of the
Customs and Excise Act; and
(ii)
Secondly, that it had not exhausted the domestic remedies available
to it under the relevant Act and that, as a consequence, it was
approaching the court with dirty hands.
The
High Court took the view that the first preliminary point was
critical to the determination of the dispute. The learned judge
formed the opinion that the other points could only be dealt with if
the court were to find that the appellant (applicant in the court
below) was properly before it. The court a
quo
went on to find that the appellant had failed to comply with section
196 of the of the Customs and Excise Act and that hence the
application was not properly before the court. It dismissed the
application with costs.
This
appeal is against that decision.
It
is contended that the court a
quo
erred in finding that there was no valid application before it. It
was further contended that the appellant did not, contrary to the
finding by the court, have an obligation to give notice in terms of
section 196 of the Customs and Excise Act as read with sections 6 and
7 of the State Liabilities Act [Chapter
8:14].
It
seems to me that a determination of this issue resolves the appeal.
The
appellant accepts that the State, a Minister, a Vice President or the
President or any officer of the State cannot be sued unless notice of
such suit has been given in terms of the State Liabilities Act. The
provisions of the State Liabilities Act that are pertinent to the
dispute read as follows:
“1
Short title
This
Act may be cited as the State Liabilities Act [Chapter
8:14].
2
Claims against the State cognizable in any competent court
Any
claim against the State which would, if that claim had arisen against
a private person, be the ground of an action in any competent court,
shall be cognizable by any such court, whether the claim arises or
has arisen out of any contract lawfully entered into on behalf of the
State or out of any wrong committed by any officer or employee of the
State acting in his capacity and within the scope of his authority as
such officer or employee, as the case may be.
6
Notice to be given of intention to institute proceedings against
State and officials in respect of certain claims
(1)
Subject to this Act, no legal proceedings in respect of any claim for
-
(a)
Money, whether arising out of contract, delict or otherwise; or
(b)
The delivery or release of any goods;
and
whether or not joined with or made as an alternative to any other
claim, shall be instituted against -
(i)
The State; or
(ii)
The President, a Vice-President or any Minister or Deputy Minister in
his official capacity; or
(iii)
Any officer or employee of the State in his official capacity;
unless
notice, in writing, of the intention to bring the claim has been
served in accordance with subsection (2) at least sixty days before
the institution of the proceedings.
(2)
A notice referred to in subsection (1) -
(a)
Shall be given to each person upon whom the process relating to the
claim is required to be served; and
(b)
Shall set out the grounds of the claim; and
(c)
Where the claim arises out of goods sold and delivered or services
rendered, shall specify the date and place of the sale or rendering
of the services and shall have attached copies of any relevant
invoice and requisition, where available; and
(d)
Where the claim is against or in respect of an act or omission of any
officer or employee of the State, shall specify the name and
official, post, rank or number and place of employment or station of
the officer or employee, if known.
(3)
The court before which any proceedings referred to in subsection (1)
are brought may condone any failure to comply with that subsection
where the court is satisfied that there has been substantial
compliance therewith or that the failure will not unduly prejudice
the defendant.
(4)
For the purposes of this section, legal proceedings shall be deemed
to be instituted by the service of any process, including a notice of
application to court and any other document by which legal
proceedings are commenced, in which the claim concerned is made.”
The
appellant does not contend that the suit that it seeks relief on does
not fall within the category of suits to which notice is required to
be given under the State Liabilities Act. The contention made,
however, is that in the circumstances of this case, such notice is
not required by virtue of the first respondent's status as a
corporate entity. It is also argued that the first respondent, not
being “the State” by definition, there is no requirement for it
to be given notice in accordance with the provisions of the State
Liabilities Act.
The
appellant also accepts that, in terms of the Customs and Excise Act,
notice to institute proceedings is required and a failure to give
such notice would result in a would-be litigant being non-suited.
Section 196 of the Customs and Excise Act, which provides for the
notice, is in the following terms:
“196
Notice of action to be given to officer
(1)
No civil proceedings shall be instituted against the State, the
Commissioner or an officer for anything done or omitted to be done by
the Commissioner or an officer under this Act or any other law
relating to customs and excise until sixty days after notice has been
given in terms of the State Liabilities Act [Chapter
8:15].
[Subsection
amended by Act 17 of 1999]
(2)
Subject to subsection (12) of section one
hundred
and ninety-three,
any proceedings referred to in subsection (1) shall be brought within
eight months after the cause thereof arose, and if the plaintiff
discontinues the action or if judgment is given against him, the
defendant shall receive as costs full indemnity for all expenses
incurred by him in or in respect of the action and shall have such
remedy for the same as any defendant has in other cases where costs
are given by law.”
Despite
this acceptance of the law, the appellant contends that the court a
quo
erred in upholding the point in
limine
in that it accorded to the first respondent a protection it did not
enjoy in terms of the law.
The
first respondent's powers and functions are set out in the Zimbabwe
Revenue Authority Act [Chapter
23:11],
the pertinent provisions of which read:
“PART
II
ZIMBABWE
REVENUE AUTHORITY
3
Establishment of Zimbabwe Revenue Authority
There
is hereby established an authority, to be known as the Zimbabwe
Revenue Authority, which shall be a body corporate capable of suing
and being sued in its own name and, subject to this Act, of
performing all acts that bodies corporate may, by law, perform.
4
Functions and powers of Authority
(1)
The functions of the Authority shall be -
(a)
To act as an agent of the State in assessing, collecting and
enforcing the payment of all revenues; and
(b)
To advise the Minister on matters relating to the raising and
collection of revenues; and
(c)
To perform any other function that may be conferred or imposed on the
Authority in terms of this Act or any other enactment.
(1)
For the better exercise of its functions, the Authority shall have
the power, subject to this Act, to do or cause to be done, either by
itself or through its agents, all or any of the things specified in
the Second schedule, either absolutely or conditionally and either
solely or jointly with others.”
It
is not in dispute that the appellant applied for, and obtained, from
the first respondent, a rebate under section 122 of the Customs and
Excise General Regulations S.I. 154/01 in respect of certain items
imported by it on humanitarian grounds. Such rebate may be granted by
the Commissioner in terms of regulations made under Part XI of the
Customs and Excise Act. Section 120 of the same reads;
“PART
XI
REBATES,
REFUNDS AND REMISSIONS OF DUTY
120
Suspension, drawback, rebate, remission or refund of duty
(1)
Regulations in terms of section two
hundred and thirty-five
may
provide for -
(a)
The suspension of any of the duties appearing in the customs tariff,
the excise tariff or the surtax tariff;
(b)
The granting of a drawback, rebate, remission or refund of duty.
(2)
Any suspension, rebate, remission or refund referred to in subsection
(1) may be made or granted with retrospective effect if it is deemed
expedient so to do.
(3)
The Commissioner may, in his discretion -
(a)
Remit duty on any single consignment of goods where the free on board
value of the consignment does not exceed a prescribed amount;
(b)
Under such conditions as he may specify, remit all or part of the
duty due on goods temporarily imported in terms of section one
hundred and twenty-four
which
have been seriously damaged by accident or circumstances beyond the
control of the importer.”
The
appellant acknowledges that, in terms of the Regulations, the
discretion to afford a rebate is vested in the Commissioner. The
Commissioner is appointed in terms of the Zimbabwe Revenue Act,
specifically section 5 thereof which provides:
“5
Board of Authority
(1)
The operations of the Authority shall, subject to this Act, be
controlled and managed by a Board to be known as the Revenue Board.
(2)
The Board shall consist of -
(a)
The Secretary of the Ministry responsible for finance; and
(b)
The Commissioner-General; and
(c)
Not more than eight other members appointed, subject to subsection
(3), by the Minister after consultation with the President and in
accordance with such directions as the President may give him or her.
(3)
Members referred to in subsection (2)(c)
shall be appointed for their knowledge of and experience in finance,
commerce, economics, taxation, human resource management or law.”
The
Commissioner General is undoubtedly an employee of the Zimbabwe
Revenue Authority and when he performs the functions bestowed upon
him by the various statutory provisions that govern the assessment
and collections of revenue on behalf of the State he does so as such
employee. The definition section of the Customs and Excise Act
defines the Commissioner in the following terms:
“'Commissioner'
means -
(a)
The Commissioner in charge of the department of the Zimbabwe Revenue
Authority which is declared, in terms of the Revenue Authority Act
[Chapter
23:11],
to be responsible for assessing, collecting and enforcing the payment
of duties in terms of this Act; or
(b)
The Commissioner-General of the Zimbabwe Revenue Authority, in
relation to any function which he has been authorised under the
Revenue Authority Act [Chapter
23:11]
to exercise.”
The
purpose of the Customs and Excise Act is to
provide for the imposition, collection and management of customs,
excise and other duties, the licensing and control of warehouses and
of premises for the manufacture of certain goods, the regulating,
controlling and prohibiting of imports and exports, the conclusion of
customs and trade agreements with other countries, and forfeitures,
and for other matters connected therewith.….,.
It
is not suggested, by the appellant, that the Commissioner-General,
upon whose discretion the appellant relies for the grant of the
rebate, is not appointed in terms of the Customs and Excise Act. From
the definition provided in the Customs and Excise Act itself it is
evident that the Commissioner is in charge of the “department of
the Zimbabwe Revenue Authority which is declared to be responsible
for the assessment, collection and enforcement of duties” in terms
of the Customs and Excise Act.
Clearly,
for purposes of performing its obligations under the various statutes
providing for the collection of revenue, the first respondent acts as
an agent of the State.
The
appellant accepts that position.
It
however contends that the first respondent is not an officer as
defined in the two impugned sections of the State Liabilities Act as
well as the Customs and Excise Act and that to that end the
protection availed to natural persons is not available to it.
Sections
3 and 4 of the Zimbabwe
Revenue Authority Act [Chapter
23:11]
clearly
establish the role that the first respondent plays in the collection
of revenue as an agent of the State. An agent, by definition, is a
party that acts on behalf of another and whose conduct binds the
principal. Once the appellant accepts that the Commissioner is the
person bestowed with the authority and power to grant or remove the
rebate in terms of the Regulations, the appellant must, by necessary
implication, accept the legality of the extension to the first
respondent of the protection afforded to the State and its officials
under section 196 of the Customs and Excise Act and the State
Liabilities Act.
It
would be absurd, in my view, to accord greater importance to the
position of the Commissioner than that of the Zimbabwe
Revenue Authority
itself. It matters not that it is not a natural person. When the
Commissioner does anything under the Customs and Excise Act, he so
does in terms of the authority bestowed upon him as an employee of
the first respondent.
I
am fortified in this view by the comments of GARWE JP…, in Tregers
Industries (Pvt) Ltd v Zimbabwe Revenue Authority
2006 (2) ZLR 62 (H)…, to the following effect:
“It
is the Authority which, in terms of s4 is charged with the
responsibility of, inter alia, collecting and enforcing the payment
of all revenues. In terms of s19 of the Revenue Authority Act, it is
the Board of the Authority which appoints the Commissioner-General of
the Authority. However, in terms of s3 of the Value Added Tax Act, it
is the Commissioner-General of the Authority who is responsible for
carrying out the provisions of the Act. Section 5 of the same Act
provides that the Commissioner-General may, subject to the Revenue
Authority Act, delegate functions to officers in the employ of the
Authority.
That
the Commissioner-General acts under the control of the Board of the
Authority there is no doubt.
Section
19(4) of the Revenue Authority Act provides that the
Commissioner-General shall be responsible, subject to the Board's
control, for supervising and managing the authority's staff,
activities, funds, etc. As already noted, s 5 of the Revenue
Authority Act provides that the operations of the authority shall be
controlled and managed by the Revenue Board and s19(40) makes it
clear that the Commissioner-General's position is akin to that of a
Chief Executive in a company. He is appointed by the Board of
Authority, which Board also appoints commissioners and other officers
and members of staff.
Although
there is specific reference, in the Value Added Tax Act, to the
Commissioner-General being responsible for carrying out the
provisions of the Act, it is clear that such responsibility is
subject to the control and management of the Authority through the
Revenue Board.
At
the end of the day, it is the Authority that is specifically given
the power to sue and be sued.”
The
conclusions reached by the learned judge in the above authority
accord with the provisions contained in the statutes that are
concerned with the fiscal arrangements provided for therein.
In
Machacha
v Zimra
HB186-11, NDOU J explained the reason for the need to give the
required notice of intention to sue. The learned judge stated:
“The
applicant ignored this provision at his own peril. The primary
objective of the provision is provision of timely opportunity to the
Zimbabwe Revenue Authority (ZIMRA) to know, and, therefore, to
investigate the material facts upon which its actions are challenged
and to afford ZIMRA opportunity of protecting itself against the
consequences of possible wrongful conduct by tendering early amends
as envisaged by the Act.”
In
Ebrahim
v Controller of Customs and Excise
1985 (2) ZLR 1 (S), this court had to consider the purpose of section
178 of the Customs and Excise Act [Chapter
177],
the precursor to the current Customs and Excise Act [Chapter
23:11].
After considering various authorities from the South African courts,
the court said…,.:
“In
Administrator, Transvaal v Husband 1959 (1) SA 392 (AD), MALAN JA,
when considering a section similar to our s178(2), said, at 394A-D:
'In
considering whether this letter is a compliance with sec 99(a), it
should be borne in mind that the primary object of the provision is
to ensure that the Administration shall be apprised, within
reasonable time, of an intention to hold it liable in damages
sustained as a result of the default or negligence of any officer
acting in the course of the execution of his duty in circumstances
described in the sub-section. The Administration will thus be able to
investigate the circumstances and be placed in a position to
determine whether it should settle the claim or prepare to resist it.
The
approach to the interpretation of the sub-section ought,
consequently, not to be technical and a notice should be held not to
be a compliance with the sub-section only if it fails to set out a
cause of action or if it is so wanting in particularity that it is
deficient in essentials and, as a consequence, hampers the
Administration in a proper investigation of the complaint. While it
may be desirable to have a more or less full statement of the facts
relied upon, a bald statement of the essentials, in my opinion,
suffices provided, however, that there has been substantial
compliance with the requirements of the sub-section.'
That
approach has my complete approval.”
From
the above authorities, it becomes clear that it is not just the
failure to give notice that a court can take cognizance of. The
failure to provide sufficient detail on the cause of action in
compliance with the requirements of provision may also result in the
court declining to hear the plaintiff or applicant as the case may
be. This is primarily to do with the purpose underlying the need for
notice; which is to give the revenue collector sufficient facts to
allow an investigation, within reasonable time, to make a decision on
whether to settle the matter or defend the claim.
In
terms of the Customs and Excise Act, the responsibility for the
assessment, collection and enforcement of duties is that of the
Zimbabwe Revenue Authority. It stands to reason, therefore, that it
is the party upon whom the required notice should be served. Any
other construction would lead to an absurdity. It is the party in
terms of the Act with the power to sue and be sued. In
Tregers
Industries (Pvt) Ltd v Zimbabwe Revenue Authority
2006
(2) ZLR 62 (H)
GARWE JP…, said…,:
“See
also Maradze
v Crmn, PSC & Anor
HH223-98. In the case, SMITH J remarked at pp7-8 that it was not
appropriate to cite the Chairman of the Public Service Commission as
a party unless the allegation is that he personally acted in a manner
which necessitated recourse to the courts.
I
agree with the sentiments expressed in the cases cited above.
Ordinarily there is no basis for citing the Commissioner-General as a
party in a matter handled by employees of the authority. I am
fortified in this view by the provisions of the Value Added Tax Act
[Chapter
23:12]
as well as the Revenue Authority Act [Chapter
23:11].
The latter Act provides, in s5, that the operations of the Zimbabwe
Revenue Authority (ZRA) shall, subject to the Act, be controlled and
managed by a Board which shall consist of the Secretary for Finance,
the Commissioner-General of ZRA and other members appointed by the
Minister after consultation with the President.”
The
fact that it is the Zimbabwe
Revenue Authority itself
that has been empowered to sue and to be sued will also justify why a
finding that it enjoys the same protection as afforded to individuals
is a correct finding.
The
State collects revenue through the agency of the first respondent.
The agency relationship between the State and the first respondent is
sui
generis,
and, by virtue of the provisions of section 3 of the Revenue
Authority Act [Chapter
23:11],
the first respondent is accorded the status of a legal persona. Thus,
despite acting as an agent for the State it is capable of suing and
being sued in its own name. Its existence as a corporate entity does
not detract from the need for due compliance with the provisions of
the statutes which govern its operations….,.
In
Ebrahim
v Controller of Customs and Excise
1985 (2) ZLR 1 (S), DUMBUTSHENA CJ concurred with Osler
v Johannesburg City Council
1948 (1) SA 1027, that the primary purpose of notice was to give the
defendant an opportunity to avoid litigation….,.
In
casu,
the first respondent is the body which is now conferred with the
assessment, collection and enforcement of taxes which include customs
duties. In the light of the purpose of section 196 of the Customs and
Excise Act, it would be remiss of this court to find that the
provision applies to the State and not to the first respondent, which
is the appointed agent for the collection of taxes. Such an
interpretation would be absurd due to the fact that, under the law,
the State is not the responsible entity for collection of taxes. It
does so through an agent. It therefore follows that the right the
State derives from the provision is conferred upon the first
respondent.
I
find no misdirection on the part of the High Court. There is no
reason to interfere with its decision.
Accordingly,
the appeal be and is hereby dismissed with costs.
