Functions of the Central Bank and Quasi-Fiscal Operations

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

Evidence for the Plaintiff Kevin Graham Cooke is a tobacco farmer and President of the Zimbabwe Tobacco Association. He explained the operational modalities of the Tobacco Retention Scheme declared by the Reserve Bank of Zimbabwe in 2007. In short, applications by tobacco growers for foreign currency retention were to be forwarded, through their banks, to the Reserve ...

HH77-13 : ZIMBABWE TOBACCO ASSOCIATION vs THE RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

The Tobacco Retention Scheme was a national scheme put in place by Government to assist tobacco farmers. It did not create a binding contract between the applicant and the respondent, who…, was a mere agent of Government. The scheme was put in a place by Government at a time when the issue of foreign ...

SC03-21 : AFRITRADE INTERNATIONAL LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: PATEL JA, BHUNU JA and BERE JA

This is an appeal against the judgment of the Fiscal Appeal Court dismissing an appeal against the determination of the respondent requiring the appellant to pay value added tax (VAT) on the importation of certain goods into Zimbabwe.BackgroundThe appellant is a foreign company incorporated in the British Virgin Islands and ...

Background

The appellant is a foreign company incorporated in the British Virgin Islands and operating from Guernsey in the Channel Islands. The respondent is a body corporate responsible for the collection of VAT and other imposts in Zimbabwe.

The appellant was a supplier of basic commodities to local companies, including the West Group of Companies (West Group). In 1992, it concluded an agency agreement with Douglas and Tate (Pvt) Ltd (Douglas & Tate), a subsidiary of West Group. By 1999, it was supplying basic commodities to West Group and other local customers under a US$10 million line of credit registered with the Reserve Bank of Zimbabwe (the RBZ).

On 1 October 2007, the Reserve Bank of Zimbabwe (RBZ) unveiled the Basic Commodities Supply Side Intervention (BACOSSI), a facility designed to end the chronic shortages of basic commodities in Zimbabwe. After negotiations between the appellant and the RBZ, the latter purchased certain non-BACOSSI goods, valued at US$7,987,207=54, that were in the Douglas & Tate warehouse. The appellant also supplied BACOSSI goods, valued at US$11,698,174, to the RBZ in 2008.

After conducting investigations, the respondent raised taxation schedules against the appellant for outstanding value added tax (VAT), on both BACOSSI and non-BACOSSI transactions, initially on 17 March 2009 and later on 15 July 2009. The total charge raised was US$6,302,712=13, inclusive of interest and penalties. This was subsequently corrected, on 13 October 2009, by reducing the charge to US$6,249,496=70.

The appellant lodged an objection to the assessment on 25 September 2009. It also applied for condonation for the late filing of the objection.

The respondent dismissed the application for condonation and disallowed the objection.

The appellant appealed against both decisions to the Fiscal Appeal Court on 12 October 2009. The respondent filed its reply on 12 November 2009. At a pre-trial hearing on 17 September 2014, the delay by the appellant in filing its Notice of Objection as well as the failure by the respondent to file its documents timeously were both condoned by consent.

Judgment of the Fiscal Appeal Court

At the hearing of the matter, the appellant called the evidence of one Kenneth Sharpe, who was the founder and Chairman of West Group and a director of Douglas & Tate.

He confirmed the foreign status of the appellant. His evidence was that West Group, Douglas & Tate, and the appellant were not related companies.

The court a quo found that he was not a credible or reliable witness. This was because he contradicted material parts of his evidence-in-chief under cross-examination. Furthermore, his evidence left gaps that could only be filled by the directors, employees, officials, or agents of the appellant itself.

On the merits, the court a quo relied on the documentary evidence, i.e. the unsigned agreement between the appellant and the Reserve Bank of Zimbabwe (RBZ) and the relevant documents generated in South Africa, to find that it was the appellant that imported the goods in question into Zimbabwe. It was the appellant who beneficially owned and possessed the goods before they entered Zimbabwe and brought or caused them to be brought into the country.

It was accordingly held that the appellant was the importer of both the BACOSSI and non-BACOSSI goods.

The court further found that the activities of the appellant in Zimbabwe, from 2004 onwards, which were carried on continuously and regularly, constituted trading in the country for the purposes of VAT liability. The appellant was not a registered operator, but, every trader is liable to be registered for VAT purposes and is deemed to be a registered operator as the principal for goods supplied or imported on its behalf by its agent.

The appellant was carrying on the business of supplying goods through the agency of Douglas & Tate, which released the goods only on the instructions of the appellant after the latter had received payment in accordance with the relevant waybills and invoices.

The court held that the appellant was the importer of the goods in question and was therefore liable for the payment of VAT in both the pre-BACOSSI and BACOSSI eras when it supplied goods in furtherance of its business activities.

Furthermore, the appellant was required to be registered and had to be treated as a registered operator. Its failure to charge or receive VAT did not exonerate the appellant as VAT is deemed to be included in the purchase price. Additionally, it bore the obligation to remit VAT in foreign currency in accordance with the legislation in force at the relevant time.

As regards the appointment of the Chief Executive Officer (CEO) of West Group as the public officer of the appellant, the court found that this was above board. In terms of the governing provisions, the respondent was allowed to compulsorily appoint the CEO of West Group, the holding company of Douglas & Tate, which was the agent of the appellant in Zimbabwe, as its public officer and representative registered operator for the collection of VAT.

With respect to the appellant's argument that the respondent had used an arbitrary exchange rate to convert Rand denominated transactions to United States dollar values, the respondent averred that the relevant invoice values, together with the appropriate conversions, were supplied by the appellant's own agents.

The court found that the onus was on the appellant to establish that the conversions were arbitrary. However, it did not lead any evidence in this regard and the respondent's averments were not denied.

In the event, the court held that the appeal before it was not sustainable in its entirety. However, the appellant's objections raised important legal points and its grounds of appeal were not frivolous. The appeal was accordingly dismissed with no order as to costs.

Grounds of Appeal and Relief Sought

There are six grounds of appeal in casu. They impugn the judgment of the court a quo in the following respects:

(i) Rejecting the evidence given on behalf of the appellant as being unreliable.

(ii) Holding that the appellant, and not the Reserve Bank of Zimbabwe (RBZ), was the importer of the goods in question.

(iii) Holding that the respondent was entitled to go behind the contents of the bills of lading which it had processed and approved to find that the appellant was the importer of the goods into Zimbabwe.

(iv) Finding that the appellant operated a business in Zimbabwe.

(v) Holding that the appellant was to be treated as a registered operator and finding that the appellant was liable to pay VAT on the imported goods.

(vi) Considering the issue of whether or not any company had been lawfully appointed as an agent to pay any tax due by the appellant, and in finding that such an appointment had in fact been lawfully made.

The appellant prays that the appeal be allowed with costs and that the judgment of the court a quo be set aside and substituted with an order allowing the appeal a quo with costs and directing the respondent to withdraw the contested VAT assessments issued by it against the appellant in this matter....,.

Identity of Importer: Zimtrade or Reserve Bank of Zimbabwe (RBZ)

The second and third grounds of appeal pertain to the identity of the importer of the goods in question. Was it the Reserve Bank of Zimbabwe (RBZ), as is contended by the appellant, or was it the appellant itself?

Also relevant in this context are the contents of the bills of entry that had been submitted for processing and approval by the respondent's Department of Customs and Excise.

Counsel for the appellant submits that a bill of entry is a document that is filed by the importer.

In casu, one such bill of entry filed and approved in August 2008 identifies the appellant as the exporter/consignor, based in Guernsey. The importer/consignee is identified as the Reserve Bank of Zimbabwe (RBZ). All the other relevant bills of entry in this case contain the same information as to the identities of the exporter and the importer.

The bills of entry were issued in terms of the Customs and Excise Act.

Counsel for the appellant relies on the provisions of sections 37(1)(e), 39(1) and 40(1) of the Customs and Excise Act in support of his submission that the entries in question were made by the Reserve Bank of Zimbabwe (RBZ) as the importer.

The respondent incorrectly took the position that the appellant was the importer of the goods concerned because it owned the goods before they entered into Zimbabwe from South Africa.

The respondent, which bore the evidentiary burden in this respect, did not place any evidence before the court a quo to disprove the correctness of the bills of entry.

Counsel for the appellant also relies on other documentary evidence to buttress the appellant's position.

In particular, he refers to an opinion by the Reserve Bank of Zimbabwe's lawyer, dated 17 June 2009, a letter of 1 July 2009 from the Reserve Bank of Zimbabwe (RBZ) to the appellant's lawyers, and the minutes of a meeting held on 7 October 2009 between the RBZ and representatives of West Group. These documents, so he submits, make it clear that the Reserve Bank of Zimbabwe (RBZ) was the importer, the only unresolved issue being the currency in which VAT was to be paid.

Turning to the unsigned draft agreement between the parties, counsel for the appellant submits that the court a quo wrongly relied on this draft to counter the bills of entry.

The respondent itself indicated, in its reply, that it did not know whether or not the agreement was reduced to writing. It further confirmed, through its counsel, that it was not relying on the drafts as conclusive evidence of the agreement between the appellant and the Reserve Bank of Zimbabwe (RBZ). Consequently, so it is submitted, the unsigned agreement had no validity and could not be used as an antidote to the bills of entry, as the court a quo purported to do.

Counsel for the respondent submits that the provisions of the Customs and Excise Act that are relied upon by the appellant do not address the question at hand. What is more relevant are the definitions that appear in section 2 of the Customs and Excise Act relating to the meaning of the terms “import”, “importer” and “entry”.

The court a quo, so he submits, correctly applied these definitions to find that the appellant was the owner and importer of the goods in question before they crossed the borders of Zimbabwe. Thus, the respondent was entitled to pursue the party that was statutorily liable to pay VAT as the importer, i.e. the appellant, and not the Reserve Bank of Zimbabwe (RBZ) which was not the importer.

As regards the bills of entry, counsel for the respondent points to the definition of “entry” in section 2 of the Customs and Excise Act which makes it clear that the information contained in a bill of entry must be correct.

Most of the declarants on the bills in casu were employees of Mitchell Cotts Freight Zimbabwe, a freighting company. Therefore, so he submits, it was not the Reserve Bank of Zimbabwe (RBZ) but the freighting agent that completed the bills of entry.

The evidence indicates that the freighting agent was paid by the subsidiary of West Group, i.e. Douglas & Tate, which acted for the appellant.

Counsel for the respondent further submits that the bills of entry were not prepared by the respondent or the Reserve Bank of Zimbabwe (RBZ) or by any other official. Consequently, no presumption of regularity could attach to them and their designation of the RBZ as the importer is therefore not reliable or conclusive.

With reference to the alleged admissions of liability by the Reserve Bank of Zimbabwe (RBZ), counsel for the respondent argues that the opinion tendered by its lawyer on 17 June 2009 is not binding. Again, the letter from the RBZ, dated 1 July 2009, was rejected by the Advisor to the RBZ Governor at a meeting held with the respondent's officials on 20 August 2009. Furthermore, the RBZ's expression of its willingness to pay the VAT invoices in Zimbabwe dollars, at its meeting with West Group, on 7 October 2009, was conditional on seeking legal opinions on the matter.

Finally, counsel for the respondent submits that the draft agreement between the appellant and the Reserve Bank of Zimbabwe (RBZ) affords evidence of the negotiations between and intention of the parties at some point. The terms contained in an unsigned agreement can be relied upon unless they are disproved by the party who asserts that the agreement was not intended to be binding. The court a quo was therefore correct in relying upon the contents of the draft agreement in casu.

In response, counsel for the appellant submits that the contents of the bills of entry are crucial because they were officially accepted for the purposes of importation and the liability to pay tax. They show that the Reserve Bank of Zimbabwe (RBZ), which had a beneficial interest in the goods at the time when entry was made, was the importer of those goods. There was no evidence to rebut the contents of the bills of entry. In this respect, the fact that the freighting agents signed them as the declarants is irrelevant.

In terms of section 12 of the Civil Evidence Act, a bill of entry, being a public document, does not have to be made exclusively by a public officer. The bills of entry in casu were made on ZIMRA forms and their contents were accepted by ZIMRA officials. Furthermore, copies of any documents kept by a public official can be used in evidence.

Lastly, counsel for the appellant submits that the opinion of the Reserve Bank of Zimbabwe's lawyer, dated 17 June 2009, were based upon facts given to him by the RBZ itself. The Reserve Bank of Zimbabwe (RBZ) clearly relied upon that opinion in order to accept liability to pay the VAT claimed in Zimbabwe dollars.

There is a total number of 12 bills of entry on record, covering the period from 20 June 2008 to 26 August 2008. All of these bills identify the appellant as the exporter and the Reserve Bank of Zimbabwe (RBZ) as the importer. The declarants on the first seven (7) bills were representatives of Big Star Cargo Services, while the declarants on the next five (5) bills were representatives of Mitchell Cotts Freight Zimbabwe.

There can be no doubt that, prima facie, the entries on these bills of entry support the appellant's contention that it was not the importer of the goods in question.

The draft agreement relied upon by the respondent appears to have been drafted at some stage in 2008. It identifies the appellant as a company duly incorporated in Zimbabwe and whose principal place of business is situated in Harare.

The appellant is designated as the seller of specified goods, valued at US$12,759,114, while the Reserve Bank of Zimbabwe (RBZ) is designated as the buyer of those goods.

The agreement was not signed by either of the parties.

In its reply, the respondent intimated that it had “no knowledge of whether the agreement in respect of the supply of goods was reduced to writing or not.” However, the respondent annexed to its reply the minutes of a meeting held on 13 February 2009 between officials of the Reserve Bank of Zimbabwe (RBZ) and various other named but un-identified persons. The purpose of the meeting was to explain “the operations of BACOSSI project.”

According to the officials of the Reserve Bank of Zimbabwe (RBZ), the appellant “was responsible for importation of basic commodities.” They further explained that the appellant “is not duly incorporated in Zimbabwe and does not have offices in Zimbabwe as indicated on the contract of agreement in ZIMRA's possession.” Furthermore, “only a verbal agreement was reached between the Governor and Tania, the Ukranian representing Afritrade International. There is no written agreement between Afritrade International and RBZ.”

The learned judge a quo highlighted the principal terms of the agreement and reasoned that “the onus to establish that the terms and conditions in their agreement were different from those captured in the unsigned agreement was on the appellant. The appellant did not lead any evidence on this aspect.”

Furthermore, “the unsigned agreement placed the duty to import the goods into Zimbabwe on the appellant. Again, the delivery of the goods, cost, insurance and freight Harare strongly suggests that the appellant imported the goods into Zimbabwe. It would not make sense for the RBZ to undertake to expeditiously facilitate the quick clearance of its imports. The obligatory cost, insurance and freight Chitungwiza bonded warehouse delivery clause and the expeditious clearance clause suggests [sic] that the appellant was the importer.”

In principle, an unsigned agreement cannot ordinarily be relied upon as creating a valid and binding contract. However, the surrounding circumstances, including prior dealings between the parties concerned, may give rise to the prima facie presumption that the terms and conditions embodied in an unsigned agreement represent the true intention of the parties. The burden then shifts to the party disputing the authenticity of the agreement to show that it was not intended to be binding.

This position was affirmed by this Court in Associated Printing and Packaging (Pvt) Ltd & Ors v Lavin & Anor 1996 (1) ZLR 82 (S)…,.

“One must mention the fact that the written document, Annexure F, was not signed. The seller apparently declined to sign it. The law on this point is set out in Christie op cit at p122:

'This principle, that the burden of proof is on the party who asserts that an informal contract was not intended to be binding until reduced to writing and signed, was adopted by the Appellate Division in Goldblatt v Fremantle 1920 AD 123...'

In Woods v Walters 1921 AD 303 at 305, INNES CJ referred to the above passage and added:

'It follows, of course, that where the parties are shown to have been ad idem as to the material conditions of the contract, the onus of proving an agreement that legal validity should be postponed until the due execution of a written document lies upon the party who alleges it.'

In this context, it is of significance that Mr Morris, the seller, declined to give evidence on oath, or to call any witnesses.”

It is common cause that there was an agreement between the appellant and the Reserve Bank of Zimbabwe (RBZ) governing the importation and supply of the BACOSSI goods. This agreement was reduced to writing but was not signed by the parties, ostensibly because the appellant was unhappy with the description of its country of incorporation and principal place of business in the preamble to the draft agreement.

In any event, the BACOSSI goods were imported into Zimbabwe and delivered to the Reserve Bank of Zimbabwe (RBZ) in Harare as specified in the unsigned agreement.

Given this background, it seems to me that the court a quo was correct in finding that the contract between the appellant and the Reserve Bank of Zimbabwe (RBZ) was on the terms and conditions stipulated in the draft unsigned agreement - unless the appellant was able to prove that its contract with the RBZ was on some other terms and conditions.

Inasmuch as the appellant did not adduce evidence of any other agreement between the parties, the learned judge a quo correctly concluded that the appellant was bound by the terms of the draft agreement.

It follows that those terms must be taken as being correct in their designation of the appellant as the seller and importer of the goods in question.

The next issue concerns the legal opinion submitted to the Reserve Bank of Zimbabwe (RBZ) and its subsequent stance relating to the payment of VAT claimed by the respondent.

In their letter to the Reserve Bank of Zimbabwe (RBZ), dated 17 June 2009, its lawyers took the following position:

“From the documentation we were shown, the Reserve Bank imported the Bacossi goods. The imported goods are VAT taxable and the tax is charged on the importer (RBZ in this case)…,. The VAT payable on the importation of goods into Zimbabwe is payable by the importer and not by the supplier of those goods. Accordingly, if ZIMRA were to rely on the provisions dealing with imports, the Reserve Bank would have to pay the VAT….,. We therefore advise the Reserve Bank to urgently pay Zimra in local currency. This should be done before Parliament resume [sic] and pass the Finance Bill which may have changes on the currency to be paid on all outstanding taxes….,. Government departments cannot take each other to court…,. We do not therefore believe that ZIMRA can go to court against the Reserve Bank.”

Three things emerge from the legal advice contained in this letter:

(i) The first, based on the importation documents, presumably the relevant bills of entry, is that the Reserve Bank of Zimbabwe (RBZ) was the importer of the BACOSSI goods and was therefore liable for any VAT leviable on those goods;

(ii) The second is that the Reserve Bank of Zimbabwe (RBZ) should pay that tax in local currency before any legislative change was introduced; and

(iii) Thirdly, even if the Reserve Bank of Zimbabwe (RBZ) were to be levied for payment of the VAT due, ZIMRA would not be able to pursue its claim against the RBZ through the courts.

Pursuant to this opinion, its addressee (Dr Mombeshora) wrote on behalf of the Reserve Bank of Zimbabwe (RBZ) to the appellant's lawyers. The nub of this letter, dated 1 July 2009, was to confirm that the RBZ “imported BACOSSI goods” from the appellant and that the Reserve Bank of Zimbabwe (RBZ) “accepts liability to ZIMRA for this VAT.”

However, this purported admission of liability to pay the VAT was subsequently condemned and rejected at a meeting held on 20 August 2009 between officials of the Reserve Bank of Zimbabwe (RBZ) and ZIMRA.

The lead Reserve Bank of Zimbabwe (RBZ) representative (Dr Kereke) “opposed the writing of the letter by Dr Mombeshora; in fact, it was shocking to him and the Governor…,. It was not proper to write such a letter to take responsibility of payment of tax of a supplier….,. The letter was not RBZ policy….,. The Bank will revoke point number three of the letter which gave liability of Afritrade International to RBZ.”

Following this volte-face by the Reserve Bank of Zimbabwe (RBZ), a meeting was held between the RBZ and representatives of West Group.

The meeting, held on 7 October 2009, was chaired by the Reserve Bank of Zimbabwe (RBZ) Governor. It was noted that “a Bank employee erred in assuming the liability on behalf of the Bank without the express authority of the Governor.”

It was further noted that “there could perhaps be some business transactions held between Dr Mombeshora and Afritrade that he [the Governor] could not verify or vouch for.”

At any rate, “the Governor had no problem paying the VAT invoice as long as it was stated in Zimbabwe Dollars….,. However, he had asked Dr Mombeshora to seek legal opinion on the matter internally and externally.”

At the conclusion of the meeting, “the Governor suggested to West Group to obtain all the invoices and have them assessed by an accounting firm and advise on the correct VAT due. The records should cover pre-bacossi and bacossi importations.”

What is evident from all of the foregoing is that the Reserve Bank of Zimbabwe's acceptance of liability to pay the VAT due on the BACOSSI goods, albeit in Zimbabwe dollars, was not unequivocal or unqualified. It was conditional upon the re-assessment of the relevant records and the need to seek further legal opinion.

Very significantly, this qualified acceptance of liability was largely predicated on the legal advice given to the Reserve Bank of Zimbabwe (RBZ) on 17 June 2009 - not all of which advice was necessarily correct. The basic premise of that advice hinged upon the contents of the importation documents that were shown to the RBZ's lawyers.

As I have already stated, ex facie the contents of the bills of entry in casu the appellant was the exporter and the Reserve Bank of Zimbabwe (RBZ) was the importer of the goods in question. In light of the factual findings made by the court a quo, it becomes necessary to evaluate the legal correctness of those entries in the specific circumstances of this case.

Section 12(1) of the Civil Evidence Act [Chapter 8:01] defines a “public document” as a document made by a public officer for public use.

In terms of section 12(2) of the Civil Evidence Act, a copy of a public document is admissible in evidence as prima facie proof of the facts stated therein.

By virtue of section 12(3) of the Civil Evidence Act, a copy of a document, other than a public document, the original of which is in the custody of a State official, is also admissible in evidence.

In casu, there can be no doubt that the bills of entry produced in evidence are admissible documents within the contemplation of section 12(3) of the Civil Evidence Act. The fact that the entries therein were not made by a public officer or official of the State does not detract from their status as admissible evidence, for the obvious reason that their originals were, or should have been, in the custody of a State official.

The court a quo was very much alive to the presumption of regularity attaching to the bills of entry.

It accepted that those bills were “public documents whose contents are prima facie correct” and that, therefore, “the evidentiary onus to disprove the correctness of the contents of the bills of entry shifted to the respondent.”

The court a quo then proceeded to examine the definitions of the terms 'importer', 'exporter', and 'entry' in section 2 of the Customs and Excise Act [Chapter 23:02]. The learned judge found that “the business activities of the appellant fell outside the definition of 'exporter' but squarely fit the definition of 'importer'. It was a misnomer to refer to the appellant in the bill of entry as an exporter.”

He then concluded that “notwithstanding the contents of the bills of entry and other documents compiled by or at the instance of the appellant to the contrary, the appellant was the owner or possessor of the goods; who also had a beneficiary [sic] interest in them before they entered Zimbabwe; who brought them or caused them to be brought into Zimbabwe.”

He accordingly held that “the appellant was the importer of both the non-Bacossi and the Bacossi goods.”

In terms of section 37(1)(e) of the Customs and Excise Act, where goods are imported by means other than ships, aircraft, trains, or pipelines, the time of importation of goods into Zimbabwe is deemed to be the time when the goods cross the borders of Zimbabwe.

Section 39(1)(a) of the Customs and Excise Act requires every importer of goods to make entry of those goods at the point of entry at the time of importation.

Section 40(1) of the Customs and Excise Act prescribes the manner in which entry of imported goods is to be made. It requires the person making entry to, inter alia, deliver to the proper officer a bill of entry with full particulars as prescribed or required, make and subscribe to a declaration in the prescribed form as to the correctness of those particulars, pay the duty due on the goods, and produce all bills of lading, invoices, or other documents relating to the goods or their value.

Turning to the salient definitions in section 2 of the Customs and Excise Act, the term 'entry', in relation to clearance of goods for importation, means “the presentation, in accordance with this Act, of a correctly completed and signed declaration on a bill of entry in writing.”

The term 'export' means “to take goods or cause goods to be taken out of Zimbabwe”. Correspondingly, 'exporter' means “any person in Zimbabwe who takes goods or causes goods to be taken out of Zimbabwe, and includes any employee or agent of such person and the owner of such goods as are exported.”

Conversely, 'import' means “to bring goods or cause goods to be brought into Zimbabwe.” The definition of 'importer' is expanded to include “any owner of or other person possessed of or beneficially interested in any goods at any time before entry of the same has been made and the requirements of this Act fulfilled.”

Having regard to the foregoing provisions governing the entry of imported goods, and the relevant definitions cited above, as applied within the context of the dealings between the appellant and the Reserve Bank of Zimbabwe (RBZ), I am inclined to agree with the conclusion arrived at by the learned judge a quo.

The critical entries contained in the bills of entry are patently anomalous and misleading for the following reasons:

(i) Firstly, the appellant cannot conceivably be said to be the exporter of the goods in question out of Zimbabwe. It was obviously the consignor of the goods into Zimbabwe, but certainly not their exporter out of Zimbabwe.

(ii) Secondly, given the manner of and circumstances surrounding the importation and entry of the goods into Zimbabwe, the Reserve Bank of Zimbabwe (RBZ) cannot be described as the importer of those goods. It may well have been the ultimate consignee of the goods in Harare, but it was not their owner or possessor at any time before entry of the goods was made or at the time of their importation, i.e. when they crossed the borders of Zimbabwe at the port of entry in Beitbridge.

There is nothing on record or in the evidence adduced to show that the Reserve Bank of Zimbabwe (RBZ) had any form of control over the goods at the time of their importation.

On the other hand, the appellant was quite evidently the party that brought the goods or caused them to be brought into Zimbabwe. It was also the only party that can accurately be described as the owner or person possessed of or beneficially interested in the goods at any time before their entry was made or at the time of their importation.

(iii) Thirdly, there is no evidence of any direct linkage between the Reserve Bank of Zimbabwe (RBZ) and the freighting agents involved, i.e. Big Star Cargo Services and Mitchell Cotts. They were clearly not the agents of the RBZ or acting on its behalf at the time when they declared themselves on the bills of entry as the importer's agents.

There is no evidence on record to show that the Reserve Bank of Zimbabwe (RBZ) itself was privy to the particulars contained in the bills of entry or that it could vouch for their correctness.

Indeed, this is abundantly clear from the meeting that was held between the Reserve Bank of Zimbabwe (RBZ) and the representatives of West Group on 7 October 2009, when it was decided that West Group was to obtain all the relevant invoices and records for assessment by an accounting firm, so as to advise the RBZ on the correct amount of VAT due.

On the other hand, there can be no doubt that it was the appellant that generated or caused to be generated the accompanying bills of lading, invoices, and other documents relating to the imported goods and their value.

Moreover, when subscribing to the particulars contained in the bills of entry, the freighting agents, as declarants, were evidently acting on the instructions and as the agents of the true “importer” of the goods in question, to wit, the appellant.

In the final analysis, I am amply satisfied that the court a quo was perfectly correct in holding that it was the appellant that was the importer of both the BACOSSI and the non-BACOSSI goods.

In the premises, the second and third grounds of appeal cannot be sustained and must accordingly be dismissed.

SC44-13 : RESERVE BANK OF ZIMBABWE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: MALABA DCJ, ZIYAMBI JA and OMEERJEE AJA

The appellant is established under the Reserve Bank of Zimbabwe Act [Chapter 22:15] for the purposes of managing the financial affairs of private banking institutions and those of the State in terms of the law. The powers which the appellant exercises in the execution of its functions are set out ...

The powers which the appellant exercises in the execution of its functions are set out in section 45 of the Banking Act [Chapter 24:20] which provides:

“45 Responsibilities of Reserve Bank

(1) Subject to this Act, the Reserve Bank shall be responsible for -

(a) Continuously monitoring and supervising banking institutions and associates of banking institutions to ensure that they comply with this Act; and

(b) Conducting investigations into any particular banking institution or class of such institutions, where the Reserve Bank considers such an investigation necessary for the purpose of preventing, investigating or detecting a contravention of this Act or any other law.”

Section 6(1)(d) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] imposed a duty on the appellant to discharge its functions with the view of advancing the general economic policies of the Government.

It was repealed by Act 1 of 2010....,.

Section 6 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] provides:

“6 Functions of Bank

(1) The functions of the Bank shall be -

(a) To regulate Zimbabwe's monetary system; and

(b) To achieve and maintain the stability of the Zimbabwe dollar; and

(d)…,.

[Paragraph repealed by Act 1 of 2010]

(e) To supervise banking institutions and to promote the smooth operation of the payment system; and

(f) Subject to Part VII, to formulate and execute the monetary policy of Zimbabwe; and

(g) To act as banker and financial adviser to, and fiscal agent of, the State; and

(h) Whenever appropriate, and subject to any written directions given to it by the Minister, to represent the interests of Zimbabwe in international or inter-Governmental meetings, multilateral agencies and other organizations in matters concerning monetary policy; and…,.”

The import of section 6(1)(d) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] was that the appellant was under a duty to advance the general economic policies of the Government of Zimbabwe by doing those things which are permitted by the law.

That would be out of monies of the State held with the appellant as section 8(1) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] requires it to act as the banker to the State.

Under section 8(1) of the Reserve Bank of Zimbabwe Act [Chapter 22:15], the respondent may be called upon to meet the settlement, by Government, of its obligations towards its debtors.

View Appeal
HH186-10 : CAFCA LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

On 29 July 2008, the plaintiff issued summons against the defendant for the following relief:-

“(a) Payment of the sum of US$750,000.

(b) Interest a tempore morae at the London Interbank rate for United States dollars, 3.5% per annum, from 1 September 2005 to date of payment.

(c) Costs of suit.”

The background to the relief sought can briefly be narrated as follows:-

The plaintiff is a manufacturer and supplier of exclusive range of cables for the transmission and distribution of energy and communications involving entities like the Zimbabwe Electricity Supply Authority, the Rural Electrification Agency, and Tel-One.

The plaintiff's business caters for both domestic and export markets. As at end of 2003, 50% of its sales volumes were largely in exports.

In October 2004, the plaintiff approached the defendant for assistance. The defendant was then operating a foreign currency auction system. Through that system, the defendant made available, each week, from 25% of export proceeds, an amount of foreign currency for which commercial banks would submit bids for their customers. On the basis of those bids, allocations would then be made to the highest bidder(s).

In line with the auction system, on 24 October 2004, the defendant, through its Governor, informed the plaintiff, that, if it (plaintiff) submitted bids to the auction, the defendant would ensure that it (plaintiff) succeeded to the extent of US$150,000 per week to enable it to pay for essential inputs in its operations.

That process was indeed put into place on a weekly basis as from 14 January 2005 up to June 2005.

This was a special arrangement where the plaintiff would, instead of placing a bid, it would merely be advised, through a telephone call, each week, from the defendant's officials, that, the said allocation of US$150,000 was ready. All the plaintiff was required to do, in turn, was to pay the Zimbabwe dollar equivalent within 24 hours. The plaintiff would then, in turn, transfer, through a Commercial Bank, the requisite Zimbabwean dollar amount and details of the foreign suppliers to be paid in foreign currency (i.e from the US$150,000 allocated to the plaintiff).

The allocation of US$150,000, was, with effect from 16 June 2005, increased to US$250,000.

Weekly allocations, at that new level, were made to the plaintiff until the end of July 2005.

The allocation system was continued in August 2005 resulting in the plaintiff making three transfers of undisputed payments in Zimbabwe dollars for the equivalent of the amount of US$750,000 - now being claimed by the plaintiff.

The payments were, in each case, accompanied by details of external creditors to be paid by the defendant.

Notwithstanding the payment of the equivalent amount in Zimbabwe dollars by the plaintiff, the defendant has, to date, not forwarded the foreign currency to the plaintiff's external creditors or refunded the plaintiff with the said amount of US$750,000. In fact, the plaintiff has already, through other sources, paid its suppliers.

The above, in brief, explains why the plaintiff has resorted to this court action claiming the said amount of US$750,000.

With both the plaintiff and the defendant having amended their pleadings at the pretrial conference, it was agreed that the issues for trial were:-

“(a) Whether defendant is contractually obliged to pay plaintiff the sum of US$750,000;

(b) Whether defendant is estopped from denying its obligation to pay plaintiff the sum of US$750,000;

(c) Whether defendant's tender to repay the sums of Zimbabwean currency paid to it by plaintiff is a proper tender which plaintiff is obliged to accept.”

At the commencement of the trial, I indicated to both parties that, given the fact that both parties were generally agreed on what transpired, my view was that the matter could be determined through merely hearing arguments from both sides.

The plaintiff was, however, opposed to that approach and preferred to lead evidence. The defendant then also adopted the same stance.

I therefore had no option but to allow the parties to lead viva voce evidence.

The plaintiff's only witness, Mr E.W. Turina (Turina) said he was the Chief Executive Officer of the plaintiff at the time of the purchase of US$750,000 from the defendant. He had, however, left the employ of the plaintiff in June 2006.

Mr Turina's evidence was, in the main, a confirmation of what was already contained in the pleadings.

He said due to the scarcity of foreign currency, the plaintiff had reached an agreement with the defendant whereby bids from the plaintiff would be given preferential treatment.

He confirmed, that, the information on the allocations was done telephonically and that once an allocation (ie the initial US$150,000 rising to $250,000) was made, the plaintiff was required to pay the equivalent in Zimbabwe dollars within twenty-four hours (24) hours.

The arrangement had worked well from January 2005 until August 2005 when the defendant failed/neglected to disburse US$750,000 to the plaintiff's customers/suppliers despite the fact that the plaintiff had paid the defendant the equivalent in Zimbabwe dollar as per the standing arrangement.

The Zimbabwe dollars had been paid in three transfers on 1, 11, and 19 August 2005. This was to cater for the increased weekly allocation of US$250,000.

He said when the first allocation was not released, after payment of the equivalent Zimbabwe dollars, the plaintiff had asked for an explanation but was promised that the money would be released.

The same had happened with respect to the two subsequent payments.

After failure by the defendant to forward payment to its suppliers, the plaintiff had then borrowed money from other sources so as to meet supplier requirements. This had led to the withdrawal of invoices from the defendant, which invoices were produced as exhibits 1, 2 and 3.

Mr. Turina confirmed, that, before he left the employ of the plaintiff, in 2006, negotiations for settlement were in progress and that the defendant had indicated that it would secure the US dollars at a later stage for the plaintiff or reimburse the plaintiff in Zimbabwe dollars.

He said some of the discussions were not directly conducted with him.

He had, however, later learnt, that, the defendant was not going to pay the US$750,000.

It was his view, that, once the plaintiff effected payment of the equivalent Zimbabwe dollar amount of the allocated foreign currency “the contract was completed.”

He said the company had opted to wait because the Zimbabwe dollar had become worthless.

Mr Turina stuck to his story under cross-examination.

The defendant also called only one witness, a Mr B. Musoso (Musoso).

The witness said he was employed by the defendant as its Head of Treasury Operations. He said the Treasury Division was responsible for settlement and payment of allocations. The auction system, he said, was run by a separate unit which was responsible for the allocations. The role of his department was to communicate with companies and advise them on foreign exchange rates.

He was aware of a list of special allotees who received payment on a weekly basis. These were companies considered key to the national economy. These included the plaintiff.

He said there were thirty-six (36) companies on the special list and the allocations were made by the auction unit. Some of these were Boc Gases, Quest Motors, Unilever, Olivine Industries, Dunlop, National Oil Company of Zimbabwe (NOCZIM) and the fertilizer companies.

Mr. Musoso said there were no formal contracts with the companies on the special list.

The role of his department was to effect payment when funds were made available.

The witness said his department dispatched foreign exchange quotations to various interested companies. The quotations were meant to enable companies to mobilize the necessary funds before allocations were made. He said payment to allotees depended on instructions from what he called “the front office” and the availability of foreign currency.

He said the non-availability of foreign currency explained why the three payments made by the plaintiff, in August, were not honoured.

Mr. Musoso said when the auction system ceased, in August 2005, there were many unpaid beneficiaries from the special list and the defendant decided to reimburse them in Zimbabwe dollars.

He said he had heard that the plaintiff wanted reimbursement in US dollars instead of the Zimbabwe dollar. It was his evidence, that, in reimbursing beneficiaries, the defendant did not take into account the devalued value of the Zimbabwe dollar because there was no financial obligation: “We were just returning whatever had been paid,” he said.

Under cross examination, Mr. Musoso maintained, that, the successful execution of the arrangement relied solely on the availability of foreign currency.

In addition to Mr. Musoso's evidence, the defendant also relied on responses by Dr G. Gono (Governor of the Reserve Bank of Zimbabwe) and Patience Aisam (Manager Compliance–Treasury Division) to the plaintiff's interrogatories filed on 29 September 2009.

Both responses to interrogatories were filed on 17 November 2009.

In his response, Dr Gono stated that he had, upon the specific request and representations from the plaintiff, advised that he would endeavour to source foreign currency for the plaintiff in the amounts mentioned (i.e initially US$150,000 rising to US$250,000).

He said this was in recognition of the strategic role played by the plaintiff in the national economy.

There was, however, no formal binding agreement.

He said he had indeed been advised that “the plaintiff had made payments totaling Z$13,535,110 being the quoted equivalent at the auction rate of US$750,000”, now being claimed by the plaintiff.

However, he said “due to many other competing and pressing national requirements, the defendant was unable to avail the foreign currency not only to the plaintiff but to many other companies in a similar situation who then accepted an offer for immediate refund. Plaintiff declined the refund.”

It was his evidence that his officers had informed him, that, during August 2005, no disbursements were made to any applicant for foreign currency under the auction system.

In response to the plaintiff's interrogatories, Miss Patience Aisam confirmed, that, from “14 January 2005 to August 2005, she would, on a weekly basis, telephone or instruct that plaintiff be telephoned advising it that its application for foreign currency allocation had been approved.”

She also confirmed, that, the approved amounts were US$150,000 per week from 14 January 2005 to mid-June 2005. Thereafter, the amount was increased to US$250,000 per week….,.

Counsel for the plaintiff submitted that the plaintiff's case was clear and did not warrant argument.

He submitted, that, the undisputed evidence of Mr. Turina had confirmed, that, upon approaching the Governor of the Reserve Bank, Dr Gono, for assistance in obtaining foreign currency, the plaintiff had been granted the status of a permanently successful bidder at the weekly foreign currency auctions.

The plaintiff, with that status, did not need to place bids at the auction, but, was merely telephonically advised of the agreed weekly allocations.

The practice, it was submitted, had been successfully operational from January 2005 to July 2005.

Payment(s) requirements were availed to the plaintiff who complied at all times by effecting the payment(s) of the equivalent amount of the foreign currency in Zimbabwe dollars.

The only condition was that “foreign currency will only be released after receipt of Zimbabwean dollars.”

Counsel for the plaintiff submitted, that, after the foreign currency amounts were not paid, in August 2005, the Deputy Governor, Mr Ncube, of the defendant, offered the plaintiff the choice of having the money paid by the plaintiff refunded in local currency or waiting for the foreign currency to be made available. That evidence was not contradicted.

I agree.

Counsel for the plaintiff further submitted, that, in practice, there were two initial contractual arrangements:

(i) The first was the undertaking by the defendant that the plaintiff would be allocated foreign currency without the need to make bids at the auction system.

(ii) The second was that once the plaintiff effected payment of the Zimbabwean dollars within twenty-four hours (ie equivalent of the foreign currency) the foreign currency allocated would be made available.

The plaintiff had, in all three instances in August 2005, complied with the payment requirements.

Counsel for the plaintiff said the third contractual arrangement, novating the August contracts, occurred when the defendant promised to pay the plaintiff the foreign currency when it became available.

The plaintiff had, in turn, agreed to wait for payment until it became necessary to institute these proceedings.

In support of the need for the plaintiff to institute legal proceedings, counsel for the plaintiff quoted from Asharia v Patel 1991 (2) ZLR 276 where the relevant part of the judgment of the former Chief Justice reads as follows:

“The general applicable rule is that where time for performance has not been agreed upon by the parties, performance is due immediately on conclusion of their contract or as soon as thereafter as is reasonably possible in the circumstances.

But, the debtor does not fall into mora ipso facto if he fails to perform forthwith or within a reasonable time. He must know that he has to perform.

This form or mora, known as mora ex persona, only arises if, after a demand has been made calling upon the debtor to perform by a specified date, he is still in default.

The demand or interpellatio, may be made either judicially by means of a summons or extra-judicially by means of a letter of demand or even orally; and to be valid it must allow the debtor a reasonable opportunity to perform by stipulating a period for performance which is not unreasonable. If unreasonable, the demand is ineffective….,.”

The promise to refund was made in 2005 and summons was issued on 29 July 2008.

It was counsel for the plaintiff's submission, that, the evidence of the defendant's witness (Mr. Musoso) was irrelevant since he had no direct dealings with the auction system. He said the defendant had failed to call witnesses who could have given meaningful testimony as to what actually happened.

The only credible evidence available was that of Mr Turina, he argued.

Counsel for the plaintiff concluded by submitting as follows:

“1. That, it was the uncontradicted and unchallenged evidence on plaintiff that Deputy Governor Ncube gave an undertaking to pay plaintiff US$750,000 at a future unspecified date.

2. That, this undertaking was accepted by plaintiff and formed a binding contract.

3. That, the binding contract so formed created an obligation on defendant to perform within a reasonable time.

4. That, after the lapse of a time, that defendant has never claimed is unreasonable, plaintiff made interpellation by the issue of summons, calling for the enforcement of the contract.

5. That, in the alternative, the second contractual event is binding on the parties.

6. In any event, defendant so conducted itself between January2004 and July 2005 as to cause plaintiff to believe that it had a contractual relationship on an occasion by occasion basis; that plaintiff did so believe, and, as a result of defendant's actions and words, plaintiff altered its position to its detriment.

7. That, in enforcing specific performance of a contract, the court is to treat the State like any other individual.

8. That, in the circumstances, defendant has done nothing to prevent plaintiff from being granted a judgment in terms of the summons.”

Counsel for the defendant submitted, that, due to the scarcity of foreign currency, the plaintiff and thirty-six (36) other complainants were placed on a list of companies considered as strategic in the national economy.

Depending on availability, the defendant then agreed to allocate foreign currency to these companies – which included the plaintiff.

He said no formal contracts were drawn in respect of the arrangements.

He said the plaintiff had been offered a refund of the money it had paid upon failure by the respondent to source the requisite foreign currency.

Counsel for the defendant emphasized the point, that, the arrangement between the parties was always subject to the availability of foreign currency which the defendant could disburse.

Arguing that there was no contractual obligation, on the part of the defendant, to pay the plaintiff the amount claimed, counsel for the defendant said it was never the consensus of the parties that the payment of the Zimbabwe dollars sealed the contractual arrangements.

The payment, he said, was subject to the availability of foreign currency.

The defendant, he submitted, could not have guaranteed payment because it did not know how much foreign currency would be generated from the auction system.

Counsel for the defendant said the defendant's witness had confirmed that his department had not been allocated with foreign currency for disbursement.

In the main, counsel for the defendant submitted, “the plaintiff had been favoured with an allocation that it be given foreign currency of US$250,000 per week if the same was available. There was no intention to create contractual obligations.”

He said quotations sent to the plaintiff were not offers.

Counsel for the defendant further submitted, that, the plaintiff had failed to prove that foreign currency was available at the time the allocations were made.

He blamed the plaintiff for refusing to accept a refund in Zimbabwean dollars as had been done by the other companies.

In conclusion, counsel for the defendant had this to say:

“The issue of who was a better witness between plaintiff and defendant's witness is, with respect, of no great moment.

Material facts are common cause. The court should take a holistic approach in the matter and determine what the intentions of the parties were and what relationship was created.

It is submitted, that, it could not have been within the contemplation of the parties, that, a failure by the defendant to disburse foreign currency to the plaintiff due to non-availability would ground a cause of action for specific performance.

In all the circumstances, the plaintiff's claim should be dismissed with costs and it is noted it has refused the tender of the refund in Zimbabwe dollars.”

I fully agree with counsel for the defendant, that, in casu, the material facts are common cause and I made that observation at the commencement of the hearing of this matter.

My assessment is that, apart from merely confirming what is already contained in the pleadings, nothing much turns on the oral evidence from the witnesses called by both parties.

However, my view, on the one hand, is that the evidence of the defendant's witness was totally irrelevant because he was clearly a distant player in what took place in the actual allocation process.

On the other hand, I find that Mr. Turina's evidence buttressed the respondent's responses to the interrogatories.

The responses do not deny the practice that operated smoothly from January 2005 to July 2005. The only issue highlighted is that the arrangement was anchored on the availability of foreign currency.

That is undeniable, and, indeed, no allocation could have been made without the availability of foreign currency.

However, the main issue, in my view, is whether by allocating to the plaintiff US$150,000 and later US$250,000, from the auction system, the defendant then became obligated to release the money to the plaintiff upon payment by the plaintiff, within twenty four (24) hours, of the Zimbabwe dollar equivalent at the defendant's instruction.

In interrogating that issue, one has to consider the following undisputed facts:-

(a) Every week, Patience Aisam, of the defendant, would telephone the plaintiff to advise on what had been allocated to the plaintiff and what had to be transferred through a Commercial Bank in Zimbabwe dollars - in fact, it was confirmation of the sale to the plaintiff of the allocated amount, in this case US$250,000.

(b) Upon advise from Patience Aisam, the plaintiff would, within twenty four (24) hours, transfer the Zimbabwe dollar equivalent. Indeed, in response to the interrogations, the Governor of the Reserve Bank of Zimbabwe says:

“I am advised that during the month of August 2005, plaintiff made payment totaling Z$13,535,110 being the quoted equivalent, at the auction rate, of US$750,000 which the defendant had hoped to pay to the plaintiff. Due to many other competing and pressing national requirements, the defendant was unable to avail the foreign currency, not only to plaintiff but to many other companies in a similar situation who then accepted an offer for immediate refund. Plaintiff declined the refund.”

This is supported by paragraph 4 of the defendant's plea which reads:

“The defendant admits that the sums of money, as set out in paragraph 2 of the plaintiff's further particulars, were deposited with the defendant. The amounts would have exchanged for US$750,000 once this money had been successfully sourced by the defendant. The foreign currency was not availed to the plaintiff because the defendant was unable to mobilize the same.”

It becomes crucial for the defendant to explain the reasons for Patience Aisam to set in motion the process, if foreign currency was unavailable.

My view is simply that the allocation was only made against funds that were already available from the auction.

Patience Aisam states:

“I confirm that during the period referred to, that is to say, from about the 14th January 2005 to August 2005 (the month of August included) I would, on a weekly basis, telephone or instruct that plaintiff be telephoned advising that its application for foreign currency had been approved.”

It is important to note that Patience Aisam spoke of an “approved allocation and not successful bid.” This was so because the plaintiff was on a special list that was not required to bid.

There could, in my view, be no approval or allocation of what was not already available.

Given the condition that the completion of each transaction was totally dependant upon the availability of foreign currency, the possibility of Patience Aisam confirming allocation and asking for payment of the Zimbabwe dollar equivalent, within 24 hours, when there was no foreign currency already earmarked for the plaintiff, is, in my view, very remote.

In addition to the above, it is important to determine at what stage a contract would be concluded between the parties.

The scenario in the operation was as follows:

(a) The Governor agreed to accord the plaintiff special treatment.

(b) The Governor allocated a specific amount to the plaintiff on a “permanent” basis.

(c) Patience Aisam would confirm the allocation and indicate the Zimbabwe dollar component to be paid within 24 hours; and

(d) The plaintiff would, within 24 hours, comply and then forward a list of its customers to the defendant for disbursement of funds.

The above scenario clearly fits into counsel for the plaintiff's submission, that, there were initially two contractual events (ie the Governor's undertaking and then the actual allocation accompanied by compliance on the part of the plaintiff).

I am therefore unable to accept that the above scenario did not create binding obligations on the part of the defendant.

To that end, I am of the view, that, upon compliance by the plaintiff, a binding contract was concluded and what remained was the release of the foreign currency purchased by the plaintiff.

The case of F.C. Hume (Pvt) Ltd v Minister of Natural Resources & Tourism 1989 (3) ZLR 55 indeed supports this view.

With the plaintiff having complied with all the requirements, the contract was already in place and the defendant was obliged to meet its obligation.

The existence of the contract is further strengthened by the fact, that, the defendant admits, that, in August 2005, the plaintiff bought from it US$750,000 for a sum of Z$13,535,110.

However, what the defendant is now saying is simply this:-

“Yes, you bought US$750,000 but give us time to mobilise it. We seem to have sold you what we did not have at the time.”

The defendant then places before the plaintiff two choices, namely, reimbursement in the actual amount paid in Zimbabwe dollars or waiting until it mobilizes the amount of foreign currency already purchased by the plaintiff.

That, in my view, is not to deny contractual obligation.

The plaintiff elected to wait until litigation became the only option.

The plaintiff's election is based on the basis that devaluation has rendered the Zimbabwe dollar worthless.

The defendant's witness confirmed, that, the refund was to be the actual Zimbabwe dollar paid without taking into account the issue of inflation and devaluation.

It would, in the circumstances, be unreasonable to fault the plaintiff's election to await payment of what it actually purchased.

The promise made by the Deputy Governor of the defendant was not disputed in evidence.

It was, in my view, not a novation of the earlier arrangements - but a confirmation of same.

In his submissions, counsel for the defendant merely stated:

“(vii) He believed that foreign currency was available for the simple reason that quotations for payment of Zimbabwe dollars were sent to plaintiff and the plaintiff paid on them.”

The above is in line with paragraph 5(b) of the plea which reads:-

“(c) The defendant denies that it has refused to compensate the plaintiff and avers that it has offered to refund the defendant what it paid as has been done with other companies who faced the same fate. The plaintiff has refused to be compensated in local currency and insisted on payment of US$750,000.

Wherefore, the plaintiff tendering to refund the defendant the amount it paid, with interest at the prescribed rate of 30% per annum, otherwise prays for the dismissal of the plaintiff's claim with costs.”

Having determined that the defendant was contractually obliged to pay the plaintiff the sum of US$750,000 which the plaintiff purchased, as agreed between the parties, it would be unreasonable to allow the defendant to dictate to the plaintiff the form of settlement the plaintiff should accept.

That being the case, the plaintiff's claim for specific performance is unassailable.

The defendant accepted the plaintiff's election for specific performance ie by giving the plaintiff two choices – whereby the plaintiff elected to await payment of the purchased foreign currency.

That position has not changed.

The fact that other companies accepted refunds in Zimbabwe dollars has no bearing on the agreement between the parties herein.

The defendant is estopped from abandoning its obligation.

In International Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1) ZLR 21 (H) the late ROBINSON J, in dealing with the issue of specific performance, had this to say:-

“I would wind up by saying, that, if the right of specific performance is to be shown to have real meaning to businessmen; then, the loud and clear message to go out from the courts is: businessmen beware. If you fail to honour your contracts, then, don't start crying if, because of your failure, the other party comes to court and obtains an order compelling you to perform what you undertook to do under your contract.

In other words, businessmen who wrongfully break their contracts must not think they can count on the courts, when the matter eventually comes before them, simply to make an award of damages in money, the value of which has probably fallen drastically compared to its value at the time of the breach.

Businessmen at fault will therefore, in the absence of good grounds showing why specific performance should not be decreed, find themselves ordered to perform their side of the bargain - no matter how costly that may turn out to be for them…,.”

I agree with the above.

Accordingly, the sanctity of contractual arrangements should continue to be protected by courts of law.

In view of the foregoing, I find in favour of the plaintiff and order as follows:-

1. The defendant be and is hereby ordered to pay the plaintiff the sum of US$750,000 together with interest a tempore morae at the London Interbank rate for United States dollars, 3.5% per annum, from 1 September 2005 to date of payment; and

2. The defendant be and is hereby ordered to pay costs of suit.

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

This is an appeal against the judgment of the High Court granting with costs a claim by the respondent for:

(i) Payment of the sum of US$750,000.

(ii) Interest tempore morae at the London Interbank rate for United States dollars, at 3.5% per annum, from 1 September 2005 to the date of payment.

(iii) Costs of suit.

The factual background to this dispute, which is largely common cause, may be summarised as follows:

The appellant is a financial institution. The respondent is a manufacturer and supplier of an exclusive range of cables for the transmission of communication and distribution of energy used by such entities like the Zimbabwe Electricity Supply Authority, the Rural Electrification Agency, and Tel One.

The respondent's business caters for both domestic and export markets. As at end of 2003, 50% of its sales volumes were largely in exports.

In 2004, the respondent's business experienced slow growth due to inflation and the scarcity of foreign currency. During that year, the respondent's representatives met with the appellant's Governor, Dr. Gideon Gono, with a view of securing foreign currency to purchase imported inputs in order to sustain its business.

Dr Gono gave an oral undertaking to avail US$150.000 per week, to the respondent, from the foreign currency auction system.

In January 2005, the respondent began to receive the said sums of foreign currency against payment of a Zimbabwean dollar equivalent to the appellant via a commercial bank.

The special arrangement was extended to thirty-five (35) other companies selected as the recipients of foreign currency.

This allocation of US$150,000 was, with effect from 16 June 2005, increased to US$250,000.

Weekly allocations, at that new level, were made to the respondent until the end of July 2005.

In August 2005, the respondent made three transfers of money, in Zimbabwe dollars, to the appellant, for the equivalent of the amount of US$750,000. The payments were accompanied by details of external creditors to be paid by the defendant.

The appellant did not pay the foreign currency.

Its position, at the trial, was that foreign currency could not be paid because it was not available.

The respondent's witness, Mr. Turina, confirmed, in evidence, that, the appellant indicated that it did not have foreign currency for disbursement.

On 2, 11 and 19 August, respectively, the respondent made payments, in Zimbabwe dollars, equivalent to US$750,000.

In respect of these three payments, the respondent would receive a phone call from the appellant before making payment.

On 1 August, it received a call from the appellant before depositing a sum of Z$4,438,294,052=45 with the appellant the following day.

With regard to the second transaction, the respondent received a phone call on 5 August. In response thereto, it deposited the sum of Z$4,511,254,261=47 with the appellant on 11 August.

On the third occasion, the telephone call was made on 17 August. The respondent deposited an amount of Z$4,587,562,920=90 with the appellant on 19 August.

Bigboy Masoso, who was the Division Chief Treasury Officer testified on behalf of the appellant to the effect, that, the disbursement of foreign currency could only be made if the front office of the appellant made the funds available. He also stated that the telephone calls made to the respondent, and other companies, were meant to provide quotations to secure constance of the exchange rate.

In the affidavit filed of record, Dr Gono stated as follows at paragraph four thereof as follows:

“I advised them that the Bank would endeavour to source foreign currency for the plaintiff to the tune of USD$150,000 per week in recognition of the plaintiff company's strategic role in the national economy. No formal binding agreement was concluded in this regard and it was never the common understanding of the parties that we were concluding a formal agreement.”

At paragraph six of the affidavit, he stated as follows:

“As a result of further representations made by the plaintiff, the defendant increased the weekly allocation of foreign currency to the plaintiff to USD250,000 from or about the 8th June 2005. Again, it was never the common understanding and contemplation of the parties that they were entering into a formal binding transaction, hence no formal contractual documentation was executed.”

Again, at paragraph seven of his affidavit, he stated as follows:

“I am advised, that, during the month of August 2005, plaintiff made payments totalling Z$13,535,110 being the quoted equivalent at the auction rate of USD750,000 which the defendant had hoped to pay to the plaintiff. Due to many other competing and pressing national requirements, the defendant was unable to avail the foreign currency, not only to plaintiff but to many other companies in a similar situation who then accepted an offer for immediate refund. Plaintiff declined the refund.”

Following a trial, the learned Judge found as follows at p8 of the judgment:

“However, the main issue, in my view, is whether, by allocating to the plaintiff US$150,000 and later US$250,000 from the auction system, the defendant then became obligated to release the money to the plaintiff upon payment by the plaintiff, within twenty-four hours, of the Zimbabwe dollar equivalent at the defendant's instruction.”

At p9 of the judgement, the court a quo stated as follows:

“It becomes crucial for the defendant to explain the reasons for Patience Aisam to set in motion the process, if foreign currency was unavailable. My view is simply that the allocation was only made against funds that were already available from the auction.

It is important to note that Patience Aisam spoke of 'an approved allocation and not successful bid.'

This was so because the plaintiff was on a special list that was not required to bid.

There could, in my view, be no approval or allocation of what was not already available.

Given the condition that the completion of each transaction was totally dependant upon the availability of foreign currency, the possibility of Aisam confirming allocation and asking for payment of the Zimbabwe dollar equivalent, within 24 hours, when there was no foreign currency already earmarked for the plaintiff is, in my view, very remote.”

The learned Judge, at p9, made the following finding:

“I am therefore unable to accept that the above scenario did not create binding obligations on the part of the defendant.

To that end, I am of the view, that, upon compliance by the plaintiff, a binding contract was concluded and what remained was the release of the foreign currency purchased by the plaintiff.

The case of F.C. Hume (Pvt) Ltd v Minister of Natural Resources & Tourism 1989 (3) ZLR 55 indeed supports this view.

With the plaintiff having complied with all the requirements, the contract was already in place and the defendant was obliged to meet its obligation.”

The gist of the court a quo's reasoning was that, at the time the phone calls were made to the respondent, the foreign currency to which the call related was available and the call was an offer which the respondent accepted by depositing the money, in Zimbabwean dollars, with the appellant thereby giving rise to a binding contract.

The court a quo gave judgment in favour of the respondent as sought in the summons. It is against this judgment that the appellant now appealed to this Court.

In the grounds of appeal, the appellant contends that:

1. The court a quo erred in law and fact in not making a finding that the payment by the respondent of the Zimbabwe dollars, as directed by the appellant, did not create a binding contract which was an end itself but that performance was always subject to foreign currency being available.

2. The court a quo erred in law and fact in making a finding that the communications made by Patience Aisam, on behalf of the appellant, calling upon the defendant to pay the Zimbabwe dollars, meant or was evidence that the foreign currency being allocated was available for disbursement to the respondent.

3. The court a quo erred in fact and law in not making a finding that non-availability of foreign currency made performance impossible and that the appellant was entitled to refund the respondent the money it had paid as the suspensive condition, viz, the availability of foreign currency had failed to be met.

4. The court erred in law in allowing the claim for interest and in ordering the interest to run from 1 September 2005.

The primary question to be decided by this Court is: whether or not there existed a binding contract for the disbursement of a sum of foreign currency to the respondent's creditors upon payment by the respondent of an equivalent sum in Zimbabwean currency.

The following are undisputed facts:

As a result of an approach to the appellant's Governor, Dr Gono, on 27 October 2004, for assistance in obtaining foreign currency, the respondent was granted the status of a successful bidder at the weekly foreign currency auction.

Several other companies were on this special list.

The respondent was not required to place bids at the auction but was merely telephonically advised of the agreed weekly allocations.

The practice had been successfully operational from January 2005 to July 2005.

Payment requirements were availed to the respondent who complied by effecting payment of the equivalent amount of the foreign currency in Zimbabwe dollars.

There was no formal contract between the appellant and the respondent.

The respondent was amongst a list of thirty five (35) companies on this special list who had been identified as preferential recipients of foreign currency under the arrangement.

The court a quo correctly found, that, the arrangement between the parties was premised on the availability of foreign currency. As such, no allocation could be made without the availability of foreign currency.

Indeed, both parties were aware that the arrangement for the disbursement of foreign currency was subject always to a condition that foreign currency had to be available in the first instance.

Mr Turina stated, that, due to the scarcity of foreign currency, the respondent had reached an agreement with the appellant whereby bids from the respondent would be given preferential treatment.

He confirmed that the information on the allocations was done telephonically and that once an allocation (i.e. the initial US$150,000 rising to US$250,000) was made, the respondent was required to pay the equivalent in Zimbabwean dollars.

The arrangement had worked well from January 2005 until July 2005.

In August 2005, the appellant failed to disburse US$750,000 to the respondent's customers and suppliers after the respondent had deposited with the appellant an equivalent sum, in Zimbabwe dollars, in three separate tranches.

In this regard, the import of the affidavit of Patience Aisam was that a telephone call would be made to advise of an approved application and not allocation. In effect, the approval and the actual allocation of foreign currency were distinct processes - premised on the availability of foreign currency.

It was the evidence of Patience Aisam's superior, Bigboy Masoso that payments in foreign currency would only occur if the front office availed such funds.

This testimony accords with logic and probability.

Patience Aisam was not employed in the Front Office which was responsible for the allocation of foreign currency.

The court a quo found that there existed a binding contract between the parties.

When regard is had to Dr Gono's affidavit, it is clear that he advised the respondent that the appellant would “endeavour” to source foreign currency for the respondent.

Such assertion does not suggest that the appellant was binding itself to provide the respondent with foreign currency on an ongoing or permanent basis.

It is not in dispute that no allocation of foreign currency was made in August 2005. According to Bigboy Masoso, the system was discontinued because there was no foreign currency.

The 24 hours notice of payment of Zimbabwe dollars was not in fact adhered to by the respondent in August 2005.

The finding by the court a quo, that, upon payment by the respondent, a binding contract was concluded, is not borne out by the evidence with regard to the payments made following telephone calls of 5 and 17 August 2005.

It is to be noted, that, there was no formal contract between the parties.

Dr Gono offered to prioritise the respondent, and other companies, in the allocation and disbursement of foreign currency.

The Court finds that when Dr Gono put in place the special arrangement, there was no intention to create a binding contract to avail foreign currency to the respondent and the other companies on the special list.

The facility was put in place, at the time, because of the acute shortage of foreign currency.

It is highly unlikely, that, given that state of affairs, Dr Gono would seek to bind the appellant to avail foreign currency to the respondent, upon payment of the local currency, when the volume of inflows of foreign currency were unpredictable.

In the circumstances, it would not be logical for Dr Gono to enter into a binding contract to supply foreign currency to the respondent on the terms suggested.

It is not without significance that 35 other companies on the special list subsequently accepted refunds of Zimbabwe dollars deposited with the appellant in August 2005.

This fact is consistent with the position that the allocation of foreign currency was conditional upon its availability at any given time.

The effect of the evidence is that the agreement for the disbursement of foreign currency was predicated upon availability of foreign currency.

It was the respondent's testimony, that, the condition that foreign currency would be availed to the respondent, subject to availability, was expressed orally by the appellant's Governor when he entertained the respondent's request to be allocated foreign currency.

The agreement to accord the respondent preferential treatment, in the disbursement of foreign currency, together with 35 other companies, did not create a binding and enforceable contract between the parties.

The performance of the appellant's obligation, to provide foreign currency, was always qualified or conditional upon its availability.

Reliance by the respondent on previous dealings did not, in the circumstances, give rise to binding contractual obligations between the parties.

The parties understood, that, in the absence of foreign currency, there was no contract between them.

The Court is satisfied, that, the evidence does not establish that a binding contract existed between the parties regarding the disbursement of foreign currency, either formally or on past practice, upon payment by the respondent of the local currency equivalent.

It was found, by the court a quo, that, the Deputy Governor, Mr Ncube, gave an undertaking to make available the US$750,000 to the respondent as and when foreign currency became available.

The Deputy Governor's position was not part of the respondent's case on the pleadings in the court a quo.

The finding by the trial court that Mr Ncube's testimony, that he had promised the respondent that it would be paid the sum of US$750,000, was binding upon the appellant is a misdirection.

The fulfilment of the promise would still have depended upon availability of foreign currency.

By the time that promise was made, the appellant had made it clear to the respondent that it was terminating the special arrangement for all companies concerned and offered to refund the Zimbabwe dollars paid by them.

The appeal is accordingly allowed with costs.

The decision of the court a quo is set aside and is substituted with the following:

“The plaintiff's claim be and is hereby dismissed with costs.”

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MATHONSI J

It is WALLIS JA, with HARMS AJ, VAN HEERDEN JA, MALAN JA and PETSE AJA all concurring who waxed lyrical in Executive Officer of the Financial Services Board v Dynamic Wealth Ltd Ors 2012 (1) SA 543 when he said:“Ever since the bursting of the South Sea Bubble ...

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

The answer sought in this appeal is whether, the appellant, a foreign registered company is liable to pay value added tax in Zimbabwe.The appellant disputed liability for value added tax (VAT) arising from the purported importation of goods into and the carrying on of trade in Zimbabwe and appealed against ...

The answer sought in this appeal is whether, the appellant, a foreign registered company is liable to pay value added tax in Zimbabwe.

The appellant disputed liability for value added tax (VAT) arising from the purported importation of goods into and the carrying on of trade in Zimbabwe and appealed against a contrary determination of the respondent.

Introduction

The appellant is an International Business Company incorporated on 19 May 2005 in the British Virgin Islands in Guernsey in the Channel Islands but is not permitted to trade in that jurisdiction. The respondent is a body corporate responsible for the collection, amongst other imposts, of value added tax in Zimbabwe.

The Facts

The original intention of the appellant in Zimbabwe, prior to 1992, was to invest in property and participate in the construction of the Chitungwiza road…,.

Instead, the appellant became a supplier of basic commodities to local companies that included the WG (hereinafter referred to as the holding company).

It concluded an agency agreement with D & T, a subsidiary of the holding company, in 1992.

By 1999, it was supplying basic commodities under a US$10 million line of credit registered with the Reserve Bank of Zimbabwe to the holding company and other local customers…,.

On 1 October 2007, the Governor of the Reserve Bank of Zimbabwe unveiled the Basic Commodities Supply Side Intervention, BACOSSI, facility designed to end the chronic shortages of basic commodities in Zimbabwe…,.

The facility commenced in May 2008 and continued until the introduction of the multi-currency regime on 29 January 2009.

In May 2008, officials of the Reserve Bank of Zimbabwe (RBZ) amongst whom was the Governor and the Senior Division Chief Strategic Planning and Special Projects (SDC) visited the warehouse of D & T in Chitungwiza. The RBZ was referred to the appellant by D & T.

The appellant and the Reserve Bank of Zimbabwe (RBZ) commenced negotiations which culminated in the purchase of the non-Bacossi basic commodities that were in the D & T warehouse valued at US$7,987,207=54. The two parties also concluded an agreement in which the appellant supplied basic commodities to the RBZ, in Zimbabwe, the bacossi goods, valued at US$11,698,174 between July and September 2008.

The Baccossi Agreement was reduced to writing…, but was not signed by the parties apparently because the appellant was unhappy with the preamble to the agreement.

A verbal agreement, purportedly concluded between the Reserve Bank of Zimbabwe (RBZ), represented by the Governor, and the appellant, represented by a named Ukrainian lady, governed the supply relationship between them.

The respondent conducted a tax investigation of the purchases, in foreign currency, of the Reserve Bank of Zimbabwe from the appellant for the period between May 2006 and September 2008. The investigations revealed non-payment of value added tax (VAT) on the supplies made in that period…,.

They also revealed that D & T was paid commission, in terms of an agreement between them, on the invoiced supplies from 1 January 2006 to 31 January 2009.

On 9 February 2009…, the respondent made written demand on the Finance Director of the holding company, who was also the public officer of D & T, for the payment of value added tax (VAT) on the invoiced income paid to the appellant during that period.

On 13 February, a meeting was held at the Reserve Bank of Zimbabwe (RBZ) between the Senior Division Chief Strategic Planning and Special Projects, the investigators of the respondent, and the liaison officer of the appellant, who was also the Sales and Marketing Director of the holding company of D & T, the appellant's agent.

On 12 March, the respondent appointed the CEO of the holding company of D & T as the public officer for the appellant in terms of section 61 of the Taxes Act on the ground that his company was closely linked and connected to the appellant's local trading activities.

The CEO objected to the appointment on 17 and 20 March 2009 on the ground, that, he was not an agent, employee, director, or signatory to the bank account of the appellant; but, the respondent did not relent in its demand.

On 20 March 2009, at the respondent's offices, a meeting was held between three representatives of the respondent and two tax advisors from a local firm of accountants.

In reply to counsel for the respondent's oral submissions, counsel for the appellant disputed that the appellant was represented at the meeting and suggested that the tax accountants represented D & T.

The purpose of the meeting was to get the respondent's version on the value added tax (VAT) issues pertaining to both the appellant and D & T.

The VAT head from the tax advisors provided the respondent with two letters of his firm's mandate to represent the client.

It is inconceivable that he would not have received full instructions from his client, as he indicated, were that client D & T.

I am satisfied, from the heading of the minutes minuted by the tax advisors, that, they represented the appellant and not D & T.

In any event, the briefing given him by the respondent related to the alleged activities of the appellant, including the payment of 0.1% commission on the gross sales of the appellant in Zimbabwe to D & T.

On 30 March, the public officer of D & T disputed the legality of the appointment of his CEO as a public officer for the appellant. He, nonetheless, compiled and delivered the monthly breakdowns of the income received by D & T during the period from January 2006 to 31 January 2009 requested in the letter of 9 February.

On 25 March 2015…, the appellant wrote to the respondent objecting to the appointment of the public officer outside its registered place of business in Guernsey and to the tax liability claim.

The basis of the objection was that it did not maintain offices nor employ staff nor was it a value added tax (VAT) registered operator obligated to charge VAT on goods purchased from its foreign based operations and supplied to clients in Zimbabwe.

The relevant part of the letter reads:

“We object to your claim that we have a tax liability in Zimbabwe as we do not have a self-established presence in the country. Our involvement with Zimbabwe clients, and the West Group, is limited to the supply of our stock to agents who operate on a commission basis to store and handle our stock that we hold in Zimbabwe, for which we have always operated with Reserve Bank Approval.”

The objection by the appellant, of 25 March, and the further objection of its compulsorily appointed public officer, were dismissed by the respondent on 31 March 2009.

On 1 April, the respondent proceeded to appoint the holding company, and its subsidiaries, as an agent for the collection of value added tax (VAT) due from the appellant, purportedly in terms of section 48 of the Value Added Tax Act…,.

On 3 April 2009, the appellant, through its authorised signatories, wrote to the CEO of the holding company appointed as its public officer and copied the letter to the head of investigations of the respondent, and the Senior Division Chief Strategic Planning and Special Projects on the tax enquiry conducted by the respondent disputing tax liability on two grounds:

(i) The first was that it was not the importer; and

(ii) The second was that the sale to the importer, the Reserve Bank of Zimbabwe (RBZ), took place outside Zimbabwe.

I believe exhibit 2 may have been written by the compulsorily appointed public officer for the appellant between May 2009 and 17 June 2009, and not on 15 April 2008, as it is highly unlikely that the author possessed prescient powers to predict the events that were to take place between January and May 2009.

It was addressed to the prospective external legal practitioner of the Reserve Bank of Zimbabwe (RBZ).

The writer summarised the history of the relationship between the appellant and the holding company and one of its subsidiaries, D & T, before and during the bacossi period. He also dealt with the relationship between these parties and the Reserve Bank of Zimbabwe and exonerated the appellant from value added tax (VAT) liability.

In response, on 17 June 2009, the external legal practitioner of the Reserve Bank of Zimbabwe (RBZ) wrote a six page legal opinion to the Senior Division Chief on the US$4m tax dispute….,.

The legal practitioner in question had apparently held a meeting, on 21 April, with the Senior Division Chief of the central bank and two representatives of the holding company. He believed, that, his mandate to protect the interests of the Reserve Bank of Zimbabwe (RBZ) coincided with the interests of the appellant. He had engaged the lawyers of record of the appellant.

He identified the common problem to be the demand for value added tax (VAT) on the appellant in respect of the supply of Bacossi goods and its agent on commission received from the appellant.

Apparently, the appellant declined to supply him with information on its business profile, shareholders and directors, summary of significant business activities in the 12 months to the date of the letter and on the nature and extent of its business activities in Zimbabwe, its certificate of registration, any Board resolutions on Bacossi transactions, and its local call account.

In the absence of this information, he could not state, with certainty, that the appellant was not conducting local trading activities nor exclude it from value added tax (VAT) liability other than on the mere say so of its agent, D & T.

He advised that the Reserve Bank of Zimbabwe (RBZ) was liable for the payment of value added tax (VAT), in local currency, on the basis of the bills of entry that identified it as the importer.

He urged the Reserve Bank of Zimbabwe (RBZ), for strategic reasons that he set out in the opinion, to tender the duty in local currency hoping, that, if the respondent accepted the payment, the appellant would automatically be exempted from liability.

On 1 July 2009, the Senior Division Chief wrote to the appellant's legal practitioner of record. She confirmed the importation of Bacossi goods and the acceptance of liability for value added tax (VAT) by the Reserve Bank of Zimbabwe (RBZ)….,.

On 20 August 2009, three members of the respondent investigations team held a meeting with four RBZ employees at the RBZ amongst whom was the Senior Division Chief (SDC).

In that meeting, the Reserve Bank of Zimbabwe (RBZ) repudiated the concession made by the Senior Division Chief (SDC) and laid liability at the doorstep of the appellant.

However, in view of the national importance of the project and the profile of the major beneficiaries, the Reserve Bank of Zimbabwe (RBZ) resolved to seek exemption for payment of value added tax (VAT) on these goods from the Ministry of Finance by 25 August 2009.

A further meeting was held on 7 October 2009, in the Governor's boardroom at the Central Bank, between the Reserve Bank and the holding company, to discuss the appellant/RBZ value added tax (VAT) liability of US$3.2m….,.

In attendance were the Governor, his advisor, bank secretary, and a strategic planning executive for the Reserve Bank of Zimbabwe (RBZ) and the Sales and Marketing Director, indicated in exhibit 2 as the liaison officer of the appellant, and another officer of the holding company.

Notwithstanding that the respondent was not claiming value added tax (VAT) from the central bank, the Governor prevaricated on whether the Reserve Bank of Zimbabwe (RBZ) accepted liability or not. In one vein he accused the Senior Division Chief (SDC) of erroneously accepting liability for the central bank without his express authority, and, in the other, he was prepared to pay the VAT as long as it was charged in Zimbabwe dollars.

The Sales and Marketing Director for the holding company declined to answer for the appellant insisting that D & T acted as liaison for the appellant as the foreign supplier and local buyers.

The underlying suggestion from her contribution was that the appellant was not liable for value added tax (VAT).

In addition, the concluding remarks of the meeting suggested the existence of minutes of meetings between the Reserve Bank of Zimbabwe (RBZ) and the appellant.

The investigation prompted the respondent to raise against the appellant schedules for outstanding value added tax (VAT) on both the non-Bacossi and Bacossi transactions, initially on 17 March and later on 15 July 2009, in the sum of US$6,302,712=13 inclusive of interest and penalties, which it corrected by the exclusion of zero rated products on 13 October 2009 by reducing the amount to the sum of US$6,249,496=70.

The computations of the principal value added tax (VAT) due in each month for the non Bacossi commodities were in the sum of US$1,198,081=13. The respondent added an equal amount in penalties and a further amount of US$206,799=52 in interest and requested payment of US$2,602,961=79 for the non-Bacossi commodities.

In regards to the Bacossi commodities, it claimed a principal sum of US$1,754,726=10 and a penalty in an equal amount and interest from 21 July 2008 to 23 October 2009 in the sum of US$137,082=72 totalling US$3,646,534=92….,.

The appellant lodged an objection to the assessment in terms of section 32 of the Value Added Tax Act [Chapter 23:12] through its legal practitioners of record on 25 September 2009.

It also applied for condonation from the Commissioner for filing the objection outside the normal time limits. It set out four grounds for condonation and eight grounds of objection.

The respondent dismissed the condonation and disallowed the objection.

The appellant appealed both decisions to this Court on 12 October 2009. The respondent filed its reply on 12 November 2009.

In the objection, the appellant denied ever doing business in Zimbabwe and indicated, that, the local transactions were imports carried out by the holding company, the Reserve Bank of Zimbabwe (RBZ), and other local companies.

It averred, that, the appellant was authorised by the Reserve Bank of Zimbabwe (RBZ) to sell the goods in foreign currency using free funds from non-resident entities.

It supplied goods in bond to its local agent, D & T, for commission.

The local buyer took delivery of the goods after paying the appellant from free funds.

On receipt of payment, the appellant instructed D & T to pay duty and value added tax (VAT) before releasing the goods.

The appellant averred, that, the value added tax (VAT) claim on non-Bacossi goods constituted a double claim for VAT already paid by D & T.

The appellant called the evidence of the founder and chairman of the holding company and director of D & T.

He confirmed the foreign status of the appellant and its relationship with D & T before the Reserve Bank of Zimbabwe came onto the scene.

The holding company, D &T, and the appellant, were not related companies.

The contact between the appellant and D & T was facilitated by his Russian partners in 1992.

The relationship between the appellant and D & T was one of principal and agent.

The Central Bank appeared on the scene in May 2008. At that time, the agent, D & T, imported the goods into Zimbabwe that were supplied by its principal, the appellant.

The Central Bank concluded two agreements with the appellant:

(a) The first related to the purchase of the goods stored in the warehouse that had been imported by D & T, referred to in the appeal as the non Bacossi goods.

(b) The second agreement concerned the Bacossi goods under which the Central Bank directly imported in excess of 400 truckloads of goods from South Africa between July and September 2008.

At Beitbridge, the goods were checked against the bill of entry before they were taken to the bonded warehouse, and, unlike direct home consumption imports, the bill of entry was not surrendered at that stage.

D &T stored the Bacossi goods for the Reserve Bank for a fee.

The relationship between the appellant and D & T was suspended during the duration of the Bacossi imports.

The goods were received and secured by the Reserve Bank of Zimbabwe (RBZ).

The Reserve Bank of Zimbabwe (RBZ) would take the goods from the warehouse once D & T received a release order from the appellant confirming receipt of the purchase price, and, after D & T had paid duty and value added tax (VAT) for the goods.

The clearing agent invoiced D & T for clearance fees; D & T, in turn, added these to the storage fees for the account of the Reserve Bank of Zimbabwe.

He identified the South African export documents and the Zimbabwean import documents encompassing pp33-90 of exhibit 1. Amongst these documents were local bills of entry that identified the importer as the Reserve Bank of Zimbabwe.

The witness confirmed his managing director's assertion, in the letter of 30 March to the respondent, that, D & T was not paid commission by the appellant during the subsistence of the Bacossi imports.

It was on the basis of this evidence, that, counsel for the appellant submitted, that, the sole witness was credible and reliable in all material respects.

I do not agree with the contention by counsel for the appellant, that, the witness was a credible and reliable witness who gave his evidence well.

Under cross examination, he contradicted material parts of his evidence-in-chief.

He abandoned his earlier version that the relationship of principal and agent between the appellant and D & T was suspended during the Bacossi imports. He categorically stated, in cross-examination, that, the relationship did not change for both the Bacossi and non Bacossi imports as the appellant continued to pay D & T, in foreign currency, commission at the rate of 1% of the value of each transaction.

The appellant maintained its grip on the goods in the warehouse and directed its agent to pay duty and value added tax (VAT), and, thereafter, release the goods after confirming receipt of the transaction value of each consignment from the Reserve Bank of Zimbabwe.

He incorrectly stated that value added tax (VAT) was paid for the non-Bacossi goods.

That VAT was never paid was demonstrated by the abandonment of the double claim ground at the hearing of this appeal.

He did not participate in the discussions that culminated in the agreement between the appellant and the Central Bank. He was not privy to the terms and conditions of the agreement. He did not interact with any of the directors and authorised signatories of the appellant.

He had met an officer of the appellant whose name appears in the last paragraph on p112 of exhibit 1 once in Harare.

He was not a director, employee, or official of the appellant or the clearing agent.

His version on the motivation of the clearing agent to invoice D & T rather than the Reserve Bank of Zimbabwe (RBZ) was not confirmed by evidence from the clearing agent or the Central Bank.

He did not produce any evidence to show that D & T included the charges of the clearing agent in the storage fees levied on the Central Bank.

The evidence of the sole witness left gaps that could only be filled by the directors, employees, officials, or agents of the appellant.

His averments preceding the incorporation of the appellant, on 19 May 2005, underscored his unreliability and the need for the testimony of the active officers or agents of the appellant.

It is simply incomprehensible how he could have dealt with the appellant before it was incorporated.

The respondent's investigation established that the Reserve Bank of Zimbabwe (RBZ) purchased non Bacossi goods between May 2006 and June 2008 contrary to his testimony that the purchase started in May 2008.

I am satisfied that he was not a credible and reliable witness.

Rule 5(c) Documents

The respondent did not file Rule 5(c) documents within 14 days of entering his reply as required by Rule 5.

The material correspondence contemplated by Rule 5(c) would consist of the notice claiming the outstanding value added tax (VAT), the letter of objection, and the Commissioner's response to the objection.

Rather, at the hearing, and soon after the appellant had closed its case, counsel for the respondent produced the purported documents from the bar.

The documents consisted of a letter of objection dated 21 October 2014, a set of original value added tax (VAT) assessments issued by the respondent against the appellant on that date for the period May 2006 to August 2008, the letter of objection of 25 September 2009, and the unsigned agreement on the supply of basic commodities between the appellant and the Reserve Bank of Zimbabwe.

It did not file the ruling dismissing the condonation sought and disallowing the objection.

In the letter of objection, the appellant refers to “assessments, the last of which are dated 15 July 2009.”

The earlier assessments of 17 March and 22 May and the letters of 24 June and 10 September 2009, referred to in the notice of appeal, were not produced in evidence nor did they form part of the Rule 5(c) documents or the pleadings.

The respondent must simply comply with the law to obviate unnecessary delays associated with his failure to abide by the law in this regard.

The documents constitute a type of record of proceedings, which helps this Court understand the real dispute between the parties and the basis on which the determination appealed against was made.

That the objection was dismissed on the ground that it was filed out of time was only disclosed in the respondent's reply to the notice and grounds of appeal.

Rule 5(c) documents are simple documents that the respondent always has in its possession - even before filing his reply. This kind of dilatoriness on its part is totally inexcusable.

The respondent is directed to comply with Rule 5(c) in all future cases.

Condonation

At the pre-trial hearing of 17 September 2014, by consent of the parties, the delay in the filing of the notice of objection by the appellant and the failure to file Rule 5(c) documents timeously by the respondent were condoned.

The Issues

The four issues referred for appeal were:

(a) Was the appellant the importer of the goods in question into Zimbabwe?

(b) Does the appellant operate a business in Zimbabwe?

(c) In terms of section 6 of the Value Added Tax Act [Chapter 23:12] who was responsible for the payment of value added tax (VAT) on the imported BACOSSI goods, and, separately, on the imported non-BACOSSI goods?

(d) Was the appellant liable to pay any outstanding value added tax (VAT) in foreign currency?

I proceed to resolve each issue in turn.

Was the appellant the importer of the goods in question into Zimbabwe?

It was common cause, that, the onus was on the appellant to establish the identity of the importer of the basic commodities in question.

Counsel for the appellant submitted, that, the evidence of the sole witness called by the appellant, and the documentation produced, established, on a balance of probabilities, that, the Reserve Bank of Zimbabwe, rather than the appellant, was the importer.

Counsel for the respondent submitted, that, the evidence and documentation showed the appellant as the importer.

The Import Documentation in Exhibit 1

The exportation of goods from South Africa is facilitated by the production of the Republic of South Africa Exchange Control Declaration F178…, also known as the foreign currency payment declaration and the South African bill of entry.

The F178 foreign currency payment declarations in exhibit 1 were marked SL15 to SL20 for ease of reference….,.

These were issued to the appellant for the basic commodities destined for Zimbabwe.

Attached to the foreign currency declarations are commercial invoices of the South African vendor, indicating both the purchaser and vendor and the purchase price….,.

The South African vendor is indicated as the exporter/consignor. The appellant is shown as the consignee.

Attached to some of the foreign currency declaration forms are customs road consignment notes/delivery notes CIF Harare and export clearing and forwarding instructions raised by the transporter.

The vendor is described as the shipper while the appellant is described as the consignee….,.

The customs road manifest placed the responsibility for customs clearance and delivery of the goods under official supervision at the destination on the appellant as consignee.

The appellant paid the South African clearing agent….,.

The customs road freight manifest…, identified the two different clearing agents in South Africa and Zimbabwe. The consignee in Zimbabwe, on one of the road manifests, was D & T.

The Zimbabwe Customs and Excise require the South African exchange control declaration and the commercial invoice of the South African vendor and their attachments for the goods to enter Zimbabwe.

Zimbabwe Revenue Authority Bills of Entry, Form 21, together with commercial invoices issued in the name of the appellant, were presented, accepted, and processed by Zimbabwe Customs at Beitbridge.

The commercial invoices, from the appellant, were generated by the appellant under its letter head….,.

The importer is shown as the Reserve Bank of Zimbabwe (RBZ), delivery CIF Harare to the agent of the appellant on condition the goods are not released unless pre-paid to the offshore account in the appellant's name with the Royal Bank of Scotland.

The local bills of entry, Form 21, are marked SL and WP in exhibit 1….,.

All the SL bills of entry were generated by the clearing agent MCFZ between 25 July and 8 August 2008 while all the WP bills of entry were generated by a different clearing agent, BCS, between 20 and 28 June 2008.

These bills identify the appellant as the exporter/consignor and the Reserve Bank of Zimbabwe as the importer/consignee.

No duty was charged for all the SL consignments while duty was demanded from the declarant/clearing agent for two (2) of the WP consignments.

The ones for which no duty was levied were released on the strength of the customs release orders attached to each bill of entry. There are invoices issued by MCFZ to D & T account Reserve Bank of Zimbabwe (RBZ) for import handling fees….,.

The invoices of 31 July and 26 August 2008 show that the clearing fees submitted to D & T were inclusive of value added tax (VAT).

It was on the basis of the bills of entry that counsel for the appellant submitted that the appellant was not liable for value added tax (VAT) as it was not the importer.

In his supplementary written heads of argument, filed with the leave of the Court on 27 January 2015, he relied on section 12 of the Civil and Evidence Act and R v Karge & Anor 1971 (3) SA 470 (T)…,.

Section 12 of the Civil Evidence Act reads:

“12 Public and Official Documents

In this section —

'public document' means a document —

(a) Which was made by a public officer pursuant to duty to ascertain the truth of the matters stated in the document and to make an accurate record thereof for public use; and

(b) To which the public have a right of access;

'public officer' means a person holding or acting in a paid office in the service of the State or a local authority.

(2) A copy of or extract from a public document which is proved to be a true copy or extract or which purports to be signed and certified as a true copy or extract by the official who has custody of the original, shall be admissible in evidence on its production by any person and shall be prima facie proof of the facts stated therein.”

In R v Karge & Anor 1971 (3) SA 470 (T)…, HIEMSTRA J stated that:

“A public document is one made by a public officer in the execution of a public duty; it must be intended for public use and the public must have a right of access to it (Northern Mounted Rifles v O'Callaghan 1909 TS 174 at pp176-177). The mere production will furnish prima facie proof of the contents, provided that it is the public duty of the person who keeps the register or the records to make entries satisfying himself of the correctness thereof.”

Counsel for the appellant submitted, that, these bills of entry were public documents that were proffered and accepted, in terms of the Customs and Excise Act, established that the Reserve Bank of Zimbabwe (RBZ), and not the appellant, was the importer.

In his response of 4 February 20105, counsel for the respondent conceded, that, the bills of entry were public documents provided by the respondent for the entry of goods into Zimbabwe.

He, however, forcefully argued, that, the other evidence led by the appellant, together with the unsigned agreement of the supply of basic commodities between the appellant and the Reserve Bank of Zimbabwe (RBZ) eclipsed all reference in the bills of entry of the RBZ as the importer.

It is indisputable that Customs officials employed by the respondent are public officers who hold paid office in the service of the State. The bills of entry are public documents whose contents are prima facie correct.

I accept, that, the evidentiary onus to disprove the correctness of the contents of the bills of entry shifted to the respondent.

The respondent used the unsigned agreement as an antidote for the bills of entry.

The preamble indicates, that, the appellant was represented by the liaison officer, who it will be recalled was also the Sales and Marketing Director of the holding company, while the Reserve Bank of Zimbabwe (RBZ) was represented by its Senior Division Chief, Strategic Planning and Special Projects.

The preamble further suggested local incorporation and a local business address for the appellant.

The main body of the agreement identified the products, their quantities and transactional values.

The main features were that the appellant was responsible for delivering the goods CIF Harare or any other destination in Zimbabwe and was to be paid cash on delivery weekly for three (3) months. It was also responsible for weighing, inspection, and packaging at loading sites outside Zimbabwe where the Reserve Bank of Zimbabwe (RBZ) could conduct random inspections at the appellant's expense. The RBZ undertook to facilitate expeditious clearance of the goods at the Zimbabwe ports of entry.

While the respondent had the duty to disprove that the importer was the Reserve Bank of Zimbabwe (RBZ), the true, overall, and unchanging onus to prove the correct terms and conditions in the agreement reached between the appellant and the RBZ lay on the appellant.

In other words, the onus to establish that the terms and conditions in their agreement were different from those captured in the unsigned agreement was on the appellant.

The appellant did not lead any evidence on this aspect.

The evidence placed before the court, by the appellant, was that the agreement was not signed because of what counsel termed “erroneous information in the preamble.”

The erroneous information related to its place of incorporation and business address.

I agree with counsel for the respondent, that, the unsigned agreement placed the duty to import the goods into Zimbabwe on the appellant.

Again, the delivery of the goods, cost insurance and freight Harare, strongly suggests that the appellant imported the goods into Zimbabwe.

It would not make sense for the Reserve Bank of Zimbabwe (RBZ) to undertake to expeditiously facilitate the quick clearance of its imports.

The obligatory cost, insurance and freight Chitungwiza bonded warehouse delivery clause and the expeditious clearance clause suggests that the appellant was the importer.

The strategic planner for the Reserve Bank of Zimbabwe (RBZ) stated, in the minutes of 13 February 2009, that, the appellant was responsible for the importation of basic commodities under the bacossi project and that the goods in the Chitungwiza bonded warehouse belonged to the appellant from where they were received, secured, and dispatched by the RBZ.

She also stated that D & T was a representative of the appellant that looked after all the interests of the appellant in Zimbabwe.

She was supported by other officials of the Reserve Bank of Zimbabwe (RBZ) such as the Special Advisor to the Governor, in the minutes of 20 August 2009, and the Governor on 20 October 2009.

She even intimated the existence of cross-shareholding between the appellant and D & T preceding the bacossi project.

She, however, subsequently confirmed, that, the Reserve Bank of Zimbabwe (RBZ) imported the Bacossi goods from the appellant and accepted liability for value added tax (VAT) in her letter of 1 July 2009.

The concession reinforced the assertions of the public officer for D & T in his letter to the respondent of 30 March 2009, the testimony of the sole witness, the letter of the appellant of 3 April 2009 to the purported public officer and copied to both the Reserve Bank of Zimbabwe (RBZ) and the respondent, the purported public officer's letter to the prospective external legal advisor of the RBZ, erroneously dated 15 April 2008, and that legal advisor's letter to the RBZ of 17 June 2009.

The onus to call evidence to establish what the correct factual position of the Reserve Bank of Zimbabwe (RBZ) was lay on the appellant.

This much was admitted by counsel for the appellant, in his heads of argument, by reference to Commissioner of Taxes v 'A' Company 1979 (1) RLR 29 (A)…,; 1979 (2) SA 409 (RAD)…,; 41 SATC 59 (RAD)…,.

The appellant did not produce the bill of entry from South Africa which would have shown who the exporter of the goods from South Africa was.

The sole witness stated, that, the importer of the non-bacossi goods was D & T.

The definition of 'export' and 'exporter' in section 2 of the Customs and Excise Act [Chapter 23:02] and 'exported' and 'export country' in section 2 of the Value Added Tax Act denote the removal of goods from Zimbabwe.

Exporter is defined in the Customs and Excise Act as “any person in Zimbabwe who takes goods or causes goods to be taken out of Zimbabwe and includes any employee or agent of such person and the owner of such goods as are exported.”

On the other hand, to import is “to bring goods or cause goods to be brought into Zimbabwe” and an “importer in relation to goods includes any owner of or other person possessed of or beneficially interested in any goods at any time before entry of the same has been made and the requirements of this Act fulfilled.”

In my view, the business activities of the appellant fell outside the definition of “exporter” but squarely fit the definition of “importer.”

It was a misnomer to refer the appellant, in the bill of entry, as an exporter.

An importer is identified with ownership or possession of the goods or beneficial interest in the goods before entry and the fulfilment of the requirements of the Customs Act.

Entry is defined, in section 2 of the Customs Act “in relation to clearance of goods for importation, means the presentation in accordance with this Act of a correctly completed and signed declaration on a bill of entry in writing.”

The documents generated in South Africa show that the Reserve Bank of Zimbabwe (RBZ) was not the owner nor possessor nor beneficiary of the goods before the correctly filled and signed bills of entry were presented to customs officials of the respondent.

Rather, these South African derived documents show, beyond even a shadow of doubt, that, the goods were for the benefit of the appellant who owned and possessed them before any of the bills of entry were presented to customs officials.

Even though the sole witness stated that D & T was the importer of the non-bacossi goods, it was clear that it was operating as an appendage of the appellant.

There was preponderance of evidence establishing that D & T acted at all times as an agent importer on behalf of the appellant.

I am satisfied, that, notwithstanding the contents of the bills of entry and other documents complied by or at the instance of the appellant to the contrary, the appellant was the owner or possessor of the goods; who also had a beneficiary interest in them before they entered Zimbabwe; who brought them or caused them to be brought into Zimbabwe.

I hold, that, the appellant was the importer of both the non-Bacossi and the Bacossi goods....,.

In terms of section 6 of the Value Added Tax Act [Chapter 23:12] (VAT Act) who was responsible for the payment of VAT on the imported BACCOSSI goods and separately on the imported non-BACCOSSI goods?

Both counsel were agreed, that, the obligation to pay duty and value added tax (VAT) rested with the importer.

Counsel for the appellant contended, that, the Reserve Bank of Zimbabwe was the importer and submitted that it had the obligation to pay value added tax (VAT). Counsel for the respondent, on the other hand, identified the appellant as the importer who had the duty to pay VAT.

Section 6(1) and (2) of the Value Added Tax Act state:

“6 Value Added Tax

(1) Subject to this Act, there shall be charged, levied and collected, for the benefit of the Consolidated Revenue Fund a tax at such rate as may be fixed by the Charging Act on the value of —

(a) The supply by any registered operator of goods or services supplied by him on or after the 1st January 2004, in the course or furtherance of any trade carried on by him; and

(b) The importation of any goods into Zimbabwe by any person on or after the 1st January 2004; and

(c) The supply of any imported services by any person on or after the 1st January 2004; and

(d) Goods and services sold through an auctioneer (as defined in section 56(6)) by persons who are not registered operators.

(2) Except as otherwise provided in this Act, the tax payable in terms of -

(a) Paragraph (a) of subsection (1) shall be paid by the registered operator referred to in that paragraph; and

(b) Paragraph (b) of subsection (1) shall be paid by the person referred to in that paragraph; and

(c) Paragraph (c) of subsection (1) shall be paid by the recipient of the imported services; and…,.”

I have already found, that, the appellant was the importer.

It was liable for payment of value added tax (VAT) in the pre-Bacossi and during the Bacossi era.

Whether value added tax (VAT) was due on entry or on release of the goods from the bonded warehouse, for home consumption, does not exonerate the appellant from payment of VAT.

Again, on the basis of my findings in regards to registration, I am also satisfied, that, it was liable even under section 6(1)(a) of the Value Added Tax Act. It supplied goods after 1 January 2004 in the course or furtherance of its business activities.

I am satisfied, that, the appellant was liable to pay value added tax (VAT).

Was the appellant liable to pay any outstanding Value Added Tax (VAT) in foreign currency?

It was common cause, that, the appellant received payment for the goods that it supplied in foreign currency.

Counsel for the appellant contended, that, the provisions of section 38(4) of the Value Added Tax Act, promulgated by section 16 of the Finance Act 2006 (No.6 of 2006), rather than the present section 38(4) of the Value Added Tax Act, substituted by section 29 of the Finance Act (Act 3 of 2009), is applicable in determining the appropriate currency of payment for value added tax (VAT).

The 2006 section 38(4) of the Value Added Tax Act reads:

“(4) Notwithstanding section 41 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] and the Exchange Control Act [Chapter 22:05]; where a registered operator receives payment of any amount of tax in foreign currency in respect of the supply of goods or services, that operator shall pay that amount to the Commissioner in foreign currency.

In this subsection 'foreign currency' means United States dollars, Euros or any other currency denominated under the Exchange Control (General) Order, 1996, published in Statutory Instrument 110 of 1996, or any other enactment that may be substituted for the same.”

The 2009 amendment introduced a new paragraph (b) and extended the definition of foreign currency to include the British pound, South African rand, and Botswana pula.

Section 38(4) of the Value Added Tax Act presently reads:

“(4) Notwithstanding section 41 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] and the Exchange Control Act [Chapter 22:05]; where a registered operator —

(a) Receives payment of any amount of tax in foreign currency in respect of the supply of goods or services, that operator shall pay that amount to the Commissioner in foreign currency;

(b) Imports or is deemed, in terms of section 12(1), to have imported goods into Zimbabwe, that operator shall pay any tax thereon to the Commissioner in foreign currency.

In this subsection 'foreign currency' means the euro, British pound, United States dollar, South African Rand, Botswana Pula or any other currency denominated under the Exchange Control (General) Order 1996, published in Statutory Instrument 110 of 1996, or any other enactment that may be substituted for the same.”

Counsel for the appellant submitted, that, the appellant was not obliged to pay value added tax (VAT) in foreign currency as it was not a registered operator and did not receive payment of any tax.

I have already determined, that, the appellant was required to be registered under section 23(1) and (3) and (4)(b) as read with section 56(1) and (3) of the Value Added Tax Act and can be treated as would a registered operator.

In my view, in terms of section 69(1) of the Value Added Tax Act, the failure to charge or receive value added tax (VAT) does not exonerate the appellant from liability as VAT is deemed to be included in the purchase price.

Section 69(1) of the Value Added Tax Act reads:

“69 Prices deemed to include tax

(1) Any price charged by any registered operator in respect of any taxable supply of goods or services, shall, for the purposes of this Act, be deemed to include any tax payable in terms of paragraph (a) of subsection (1) of section six in respect of such supply, whether or not the registered operator has included tax in such price.”

I have already found that section 6(1)(a) of the Value Added Tax Act applies with equal force to the appellant.

Value added tax (VAT) is deemed to be included in the purchase price.

The appellant bears the obligation to remit value added tax (VAT), in foreign currency, to the respondent.

Thus, even if section 38(4)(b) of the Value Added Tax Act is held to have come into force on 30 January 2009, after the non-bacossi and bacossi importations, the appellant remained liable for payment of value added tax (VAT) in foreign currency under the 2006 amendment.

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Zimbabwe

Functions of the Central Bank and Quasi-Fiscal Operations

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

HH77-13 : ZIMBABWE TOBACCO ASSOCIATION vs THE RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

SC03-21 : AFRITRADE INTERNATIONAL LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: PATEL JA, BHUNU JA and BERE JA

SC44-13 : RESERVE BANK OF ZIMBABWE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: MALABA DCJ, ZIYAMBI JA and OMEERJEE AJA

View Appeal
HH186-10 : CAFCA LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MATHONSI J

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

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Law Portal Zimbabwe

Functions of the Central Bank and Quasi-Fiscal Operations

View Appeal HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED Ruled By: PATEL J

HH77-13 : ZIMBABWE TOBACCO ASSOCIATION vs THE RESERVE BANK OF ZIMBABWE Ruled By: MTSHIYA J

SC03-21 : AFRITRADE INTERNATIONAL LIMITED vs ZIMBABWE REVENUE AUTHORITY Ruled By: PATEL JA, BHUNU JA and BERE JA

SC44-13 : RESERVE BANK OF ZIMBABWE vs ZIMBABWE REVENUE AUTHORITY Ruled By: MALABA DCJ, ZIYAMBI JA and OMEERJEE AJA

View Appeal HH186-10 : CAFCA LIMITED vs RESERVE BANK OF ZIMBABWE Ruled By: MTSHIYA J

Appealed SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE Ruled By: MATHONSI J

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

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Law Portal
Zimbabwe

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

HH77-13 : ZIMBABWE TOBACCO ASSOCIATION vs THE RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

SC03-21 : AFRITRADE INTERNATIONAL LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: PATEL JA, BHUNU JA and BERE JA

SC44-13 : RESERVE BANK OF ZIMBABWE vs ZIMBABWE REVENUE AUTHORITY
Ruled By: MALABA DCJ, ZIYAMBI JA and OMEERJEE AJA

View Appeal
HH186-10 : CAFCA LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MTSHIYA J

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MATHONSI J

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J