CHATUKUTA J: The applicant is a haulage company. At the time of hearing it operated a foreign
currency account with Renaissance Merchant Bank Limited. In April 2007, the applicant applied, through
its bank, to the Reserve Bank of Zimbabwe to use its foreign
currency to procure a motor vehicle, a Mercedes Benze ML 320. The application was granted and the foreign
currency was released by Renaissance Merchant Bank Limited with the approval of
the Reserve Bank. Thereafter, the
applicant procured its vehicle and imported it into the country. The respondent refused to accept import duty
in local currency. It seized the vehicle
pending payment of duty in foreign currency. Aggrieved by this decision, the
applicant filed this application.
The respondent raised a point in limine, that the applicant did not
comply with section 196 of the Customs and Excise Act [Chapter 23:02 ]. Section 196 requires a party intending to institute
proceedings against State, the Commissioner or an officer for anything done
or under the Act to give at least sixty days notice as is required in terms of
the State Liabilities Act [Chapter 8:15]. It is contended that the applicant did not
give the requisite notice.
The applicant conceded that it did not give the
requisite notice. However, it urged this
court to exercise its discretion in terms of section 6(3) of the State
Liabilities Act and condone failure to comply with section 6(1) of the same
Act. Section 6(3) empowers the court to
condone any failure to comply with that subsection where the court is satisfied
that there has been substantial compliance with the section 6(1) or that the
failure will not unduly prejudice the defendant.
The
purpose of giving notice is stated in Masenga
v Minister of Home Affairs 1998 (2) ZLR 183 (HC). In that case, the court had to consider whether
or not it would condone a departure from Rule 43 of the High Court Rules in
that the requisite notice to institute proceedings in terms of the Police Act [Chapter 11:10] had not been served upon
the Deputy Secretary (Finance and Administration) of the Ministry of Home
Affairs. MUNGWIRA J observed at p 185
A-B that:
"It is clear that this court has the
discretion to B condone failure to give
notice in terms of the rules. The purpose giving notice is to inform the
defendant of the cause of action and the intention to institute action. Thus
forewarned, the defendant is placed in a position whereby he is able to
investigate the merits of the proposed action and to collect any relevant
evidence that enables him to make a decision on whether or not to meet the
claim. This may prevent the incurrence of unnecessary legal costs."
It appears to me that the
intention of the notice in terms of section 196 of the Customs and Excise Act
is equally to enable the Commissioner General of the respondent to investigate
the merits of an action. In the present application,
the respondent has not indicated in what way it was prejudiced by the lack of
notice. As submitted by Mr Motsi, the respondent was able to file
its plea and heads of argument timeously.
This in my view is an indication it has not been unduly prejudice. In the result, I am inclined to condone the
applicant's failure to give notice to sue the respondent.
On the merits, the applicant contended that the funds used to purchase
the vehicle were obtained through an authorized dealer. It was therefore exempted from paying duty in
foreign currency as prescribed in s 3 (a) of the Customs and Excise
(Designation of Luxury Items) Notice, 2007, (SI
80A of 2007).
The respondent's demand for payment of duty in foreign currency
is premised on s 3 (a) of SI 80A of 2007. The
respondent contended that the funds used by the applicant to purchase the
vehicle belonged to the company. The
applicant did not therefore "obtain" the funds as it already had ownership of
the funds. The funds were already to the credit of the applicant. Therefore the applicant did not apply to the
bank to obtain money but sought authorization to utilise the money already to
its credit.
Section 3 (a) of SI 80A of 2007 provides that -
"3. The following persons shall be liable to pay duty and value added tax
on luxury items in terms of s2 -
(a) every resident of Zimbabwe who imports luxury items
that were purchased using funds obtained otherwise than through an authorized
dealer;"
The issue before me is therefore whether or not the funds in the
applicant's foreign currency account that were used to purchase the vehicle
were funds "obtained" through an authorized dealer. The applicant referred me to the case of Murowa Diamonds (Private) Limited v Zimbabwe
Revenue Authority & Anor HH 88/2007.
The above issue is identical to the issue that the court in that case
had to determine. In that case, Murowa
Diamonds (Private) Limited imported two vehicle using funds in its foreign currency
account. It applied to the Reserve Bank,
through its bank to utilize the funds.
The respondent refused to release the two vehicles on the basis that the
vehicles were luxury items and demanded import duty and value added tax in
foreign currency in terms of s 3(a) of SI 80A of 2007. MAKARAU JP ruled that the word "obtain" in s3
(a) should be accorded its ordinary meaning.
She therefore dismissed the submissions by the respondent that the
applicant already had the foreign currency at its disposal and only sought
authority from the Reserve Bank to use the funds.
The respondents appealed
against MAKARU JP's judgment. At the
time of hearing of this application the appeal was pending before the
Supreme. Judgment in this matter was
reserved pending the determination of the appeal. I considered it brutum futum to make a determination when the same issue was
already before the Supreme Court. The appeal was decided on 28 september 2009 in
favour of Murowa Diamonds (Private) Limited in Zimbabwe Revenue Authority
& Anor v Murowa Diamonds (Pvt) Ltd SC 41 /09. GARWE JA
observed that funds in a foreign currency account do not belong to the account
holder. He decided that the word
"obtain" would be accorded its literal meaning.
He cited with approval on p8 the remarks of MAJARAU JP at p3 that:
"The natural meaning of the word appears to me to be
clear. It means get in common
language. .......................................
[I cannot read into the language
of the subsidiary legislation] anything that would [grant their wish and] expand
the meaning of the word "obtain" to exclude obtaining fund from a foreign currency
account lawfully held with an authorized dealer. It is trite that the law maker speaks through
the language used in an enactment and the court can only read the law maker's
intention from that language. I see
nothing in the language used by the law maker in the statutory instrument or
the context of the legislation to justify an expansion of the word as urged
upon me by the respondents. In my view,
if the intention of the law maker was to exclude funds from foreign accounts (sic) lawfully held, the language used in
the subsidiary legislation would have expressly said so. Alternatively, if it was the intention of the
law maker to use the word "obtain", to mean to "purchase", then the law maker
would have so defined the word for the purposes of the subsidiary legislation
to make it clear that it only exempted those funds purchased from the
authorized dealer."
The respondent conceded that it was bound by the decision in Zimbabwe Revenue Authority & Anor v Murowa
Diamonds (Pvt) Ltd (supra). It appears to me that the concession was
proper, as it is the decision of a superior court.
Mr Moyo, for the respondent, however argued that the
case was distinguishable from the present application in that in the present
application, the applicant had not yet paid any duty to the respondent. In Zimbabwe Revenue Authority & Anor v Murowa
Diamonds (Pvt) Ltd, Murowa Diamonds (Pvt) Ltd had already paid duty in
Zimbabwean dollars. All that was left in
that case was for the Zimbabwe Revenue Authority to release the vehicle in issue to Murowa Diamonds (Pvt) Ltd. He
submitted that in the present application, the applicant would be required to
pay duty in United States
dollars as opposed to Zimbabwean dollars.
He conceded that although the country now operates on a multicurrency
regime, the Zimbabwe
dollar is still legal tender. He,
however, argued that it did not make economic sense for the applicant to pay
duty in Zimbabwean dollars considering that the economy is currently using United States
dollars. He further referred me to section
19 of the Finance Act, 2009 (No 2 of 2009) (SI 5 of 2009) arguing that the Act
provides for collection of duty in United States dollars.
Mr Mosti, for the applicant, contended that the
applicant had tendered payment in local currency at the relevant time which
tender the respondent refused to accept at its own peril. He further contended that the Finance Act
referred to by My Moyo relates to
taxable income from trade or investment and not from duty payable.
Section 19 of the Finance Act is a transitional provision. It provides that, for all accounting and
taxation purposes, taxable income from trade or investment which was received
or accrued in whole or in part in Zimbabwean currency in the previous financial
year whose balance is denominated in Zimbabwean currency shall be expressed in
United State dollars at a rate of exchange to be approved by the
Commissioner-General. As rightly
submitted by the applicant the provision relates to "taxable income from trade
or investment". Duty on imported items
does not, in my view, constitute income from trade or investment. The provision relied upon by the respondent
in support of calculation of duty in United States dollars therefore does
not apply to the applicant.
It is not in issue that the applicant tendered payment of duty in
Zimbabwean dollars which tender was refused by the respondent. It is also not in issue that the Zimbabwean
dollar is still legal tender. It
therefore appears to me that the respondent cannot under the circumstances
demand payment of duty in United
States dollars merely because it is
expedient to do so under the current economic environment. The loss, it seems, lies where it falls.
In the result, I make the
following order:
1. The first respondent be and is hereby
ordered to release the Mercedes Benze ML 320, chassis number WDC 1631542A086385,
Engine No. 1129430346067 upon payment by the applicant of duty assessed by the
respondent in Zimbabwean dollars.
2. The first respondent shall bear the
costs of this application.
Mabulala & Motsi, applicant's legal
practitioners.
Zimra Legal Corporate Services , first respondent's legal practitioners.