This
is an application for a declaratory order.
The
applicant is ZETDC Company (Pvt) Ltd, a corporate body whose mandate
is the transmission of electricity in Zimbabwe. The respondents are
the sixty
(60)
Rural District Councils dotted across Zimbabwe.
The
applicant is in the business of transmission and distribution of
electricity services. The applicant has various transmission lines
that cut across ...
This
is an application for a declaratory order.
The
applicant is ZETDC Company (Pvt) Ltd, a corporate body whose mandate
is the transmission of electricity in Zimbabwe. The respondents are
the sixty
(60)
Rural District Councils dotted across Zimbabwe.
The
applicant is in the business of transmission and distribution of
electricity services. The applicant has various transmission lines
that cut across the length and breadth of the country. It also has
various substations located across the country. Some of these lines
and substations are located in the areas that fall under the
jurisdiction of the respondent rural district councils. The rural
district councils charge the applicant a 'unit tax' or 'way
leave tax' and a 'development levy' in consequence of the
applicant's transmission lines and sub-stations that pass through
or are in the various areas of the district councils concerned. The
charges range from $20,000= to $50,000=. The applicant avers that the
charges levied against it are unsustainable and constitute a threat
to the applicant's ability to service the country and are arbitrary
and have no lawful foundation….,.
It
maintains that the declaration will assist the parties in the future
and settle a cogent and topical issue.
At
the hearing of this matter, counsel for the applicant raised concern
over the taxes being levied against the applicant which include unit
taxes, and way leave charges, and a land development levy. He
submitted that the taxes cannot be competently charged as they do not
apply to the applicant. He contended that if the taxes are being
charged, the question of their legality arises. He urged the court,
if it finds that the charging is unlawful, to grant the declaratur.
Counsel
for the applicant then proceeded to demonstrate that the taxes are
actually being charged. He drew the court's attention to paragraph
6(e) of the thirteenth respondent's affidavit where it accepts that
way leave charges are being levied by the respondent council. In
paragraph 6(a) and 7(a), the thirteenth respondent also accepts that
it charges a development levy.
The
eleventh respondent, in paragraph 8 of its opposing affidavit,
concedes charging unit taxes for each unit of land. The forty-second
respondent, in paragraph 14, accepts that it charges unit tax. In
paragraph 15 it accepts that it charges way leave charges.
The
thirty-fourth respondent, in paragraph 14 of its opposing affidavit,
concedes that the respondent charges a specified business levy which
is a land development levy. In paragraph 15 it concedes that it
charges way leave charges.
The
fifty-sixth respondent, in paragraph 11.2, admits to charging way
leave charges.
Counsel
for the applicant submitted that all these charges are not lawful. He
submitted that unit tax can only be charged on A1 and A2 farmers as
set out in section 97A of the Rural District Councils Act [Chapter
29:13] (hereinafter referred to as the Act). The applicant contended
that unit tax cannot be charged on the applicant. He also submitted
that way leave charges are not supported. That the Rural District
Councils Act does not give the respondent the power to charge way
leave charges.
Counsel
for the applicant conceded that the land development tax is charged
on a person carrying on a specified business or owners of rural land.
He contended, however, that the term specified business, as set out
under section 95 of the of
the Rural District Councils Act [Chapter 29:13] excludes
the applicant's business; that the land development levy is
unlawful and cannot be levied on the applicant.
The
applicant contends that the levying of the taxes is unlawful and must
be declared so. The terms of the order sought are as follows:-
TERMS
OF THE ORDER SOUGHT
“IT
IS DECLARED THAT:
1.1
The levying by the respondents on applicant of “Unit Tax” and
“Way Leave charges” is outside the provisions of the Rural
District Councils Act or any other law and is therefore unlawful.
FURTHER
THAT:
1.2
Respondents can only lawfully charge such tax or levies as is set out
under the provisions of the Rural District Councils Act or any other
law for the time being in force in the republic and have no power to
raise any charges which are not supported by any statutory provision.
IT
IS CONSEQUENTLY ORDERED THAT:
(a)
Any tax or levies charged by respondent and which have not been the
subject of a judicial determination are unlawful and cannot be
enforced in any court of law.
(b)
Respondents shall jointly and severally, the one paying the others to
be absolved meet the costs of this application.”
The
following respondents defended the application; the first, eighth,
ninth, eleventh, twenty-eighth, thirty-first, thirty-eighth,
fortieth, forty-fifth, forty-seventh, thirteenth and thirty-forth….,.
Counsel
for the first, eighth, ninth, eleventh, twenty-eighth, thirty-first,
thirty-eighth, fortieth, forty-fifth and forty-seventh respondents
acknowledged that his client charges way leave charges. He submitted
that way leave charges are not a tax and that not every charge raised
by the respondent is a tax. He referred the court to section 76 of
the Rural and Urban Planning Act for the proposition. He argued that
section 76 of the Rural and Urban Planning Act is wide and does not
restrict charges to taxes; that councils can impose once-off charges.
He contended that way leave charges are raised after a service has
been rendered and that it cannot be a tax and that way leave charges
are a once off charge. He further submitted that the land development
levy charged is a tax which is charged on any allottee of rural land
for a specified business in terms of section 95. That the charge is
raised for a permit. He submitted that the permit charge for a power
station is a once-off payment. He conceded that a unit tax is a
charge for a specific piece of agricultural land and is reserved for
farmers. He contended that the applicant is not being charged unit
tax by his clients and that the applicant has not shown that it is
paying unit tax.
Counsel
for the thirteenth respondent
stood by his heads and adopted the submissions of counsel for the
first, eighth, ninth, eleventh, twenty-eighth, thirty-first,
thirty-eighth, fortieth, forty-fifth and forty-seventh respondents.
He
briefly submitted that the hardship related to the excessiveness of
the charges and taxes allegedly charged, that the applicant complains
about, has no place in Tax Law. He conceded that his client charges
way leave charges as a once off payment.
Counsel
for the fifty-sixth respondent did not make any oral submissions and
elected to associate himself with the arguments of counsel for the
thirteenth respondent
and counsel for the first, eighth, ninth, eleventh, twenty-eighth,
thirty-first, thirty-eighth, fortieth, forty-fifth and forty-seventh
respondents….,.
Counsel
for the thirty-fourth
respondent
contented that the draft order which deals with unit charges and a
development charge cannot be granted without the court being
satisfied that every respondent council is charging those taxes. That
as some of the respondents are not charging those taxes, the court
can have an order dismissing the claim against a council not charging
the particular tax. That it was inappropriate to lump together
councils with different offences and seek a blanket order against
them. She gave an example of the thirty-fourth respondent which
denies charging unit tax and the first, eighth, ninth, eleventh,
twenty-eighth, thirty-first, thirty-eighth, fortieth, forty-fifth and
forty-seventh respondents which denied charging unit tax.
She
submitted that paragraph 1 of the draft order deals with unit charges
and way leave charges. Development charges come in another paragraph.
She urged the court not to grant the order sought without being
satisfied that every other council is charging these taxes. She urged
the court to dismiss the claim against a council if it is shown that
it is not charging a particular tax.
Counsel
for the thirty-fourth
respondent
also submitted that the applicant's allegation that the councils'
charges are unlawful and excessive is misplaced as this is not a
review. She submitted that there is no point of seeking a declaratory
order when some cases that have already resolved the dispute. She
contended that this application won't overturn the orders already
granted against the applicant. That is not an appeal. She insisted
that the preliminary points raised dispose of the application and
urged the court to dismiss the application.
On
the merits, the thirty-fourth respondent denies charging unreasonable
sums and contends that it is not doing what is alleged. It contends
that it is levying the land development levy because council owns the
land on which the substation is. Counsel criticised the applicant for
failure to specify the type of land it is referring to. She contended
that the respondent is entitled to charge a land development levy on
land owned by the applicant. She submitted that council can charge
for permits in terms of section 59 of the Communal Lands Act, and, by
resolution, in terms of section 8 of the Rural District Councils Act.
She contended, further, that way leave charges are not taxes as the
applicant is given use of the land and is given a permit. She
contended that the application has no merit and she urged the court
to dismiss the application…..,.
THE
MERITS
The
dispute is over rural land where the applicant's substations are
located and that which its power lines traverse. The papers disclose
that the various councils charge the following charges; way leave
charges, unit tax on land, business development levy or land
development levies. The issue that this court is being called upon to
determine is whether the applicant is required, in terms of the law,
to pay the taxes or levies or charges in issue. Whether the
applicants pay these amounts annually or periodically is not the
issue.
WAY
LEAVE CHARGES
A
number of rural district councils concerned stated that they charge
way leave charges. This charge is usually charged as a once off
payment. They averred that these charges are in respect of power
lines in the rural district area and sub-stations erected in their
respective areas. They contended that this is a practice that has
been in existence over time and has been accepted by both the
councils and the applicant. Other councils argued that councils are
entitled to charge a land levy in respect of its land occupied by the
applicant and for services rendered and do so by charging this levy
or charge. They contended that councils are entitled to grant
authority for the establishment of the electricity transmission lines
and that this constitutes a service as contemplated by section 76(1)
of the Rural District Councils Act [Chapter 29:13]. That the issue is
not about the name or label attached to a particular levy or charge
but rather whether the respondent councils are entitled to levy the
applicant in a particular instance. Section 76(1) of the Rural
District Councils Act [Chapter 29:13] only permits the fixing of
charges, levies or taxes by resolution where it is empowered in terms
of the Act to do so. Section 76(1) of the Rural District Councils Act
[Chapter 29:13] reads as follows;
“Charges,
rents and deposits by resolution
(1)
A council may, by resolution passed by a majority of the total
membership of the council -
(a)
Fix charges and tariffs of charges payable in respect of
certificates, licences or permits issued, inspections carried out,
services rendered or any act, matter or thing done by the council in
terms of this Act;
(b)
Fix rents and other charges payable in respect of property let by the
council;
(c)
Fix deposits payable in connection with any services provided by the
council in terms of this Act:
Provided
that, in any specified area or in such other part of the council area
as may be prescribed or as may be notified to the council by the
Minister -
(d)
No charges, rents or deposits of any kind, other than those in
connection with the supply of electricity, may be fixed by a council
in respect of residential accommodation or services provided
specifically to or in connection with such accommodation, otherwise
than by by-laws made or in force in terms of this Act;
(e)
A
council may, subject to the approval of the Minister, fix in any
lease or agreement entered into by it the charges, rents or deposits
which shall be payable by the lessee in respect of the occupation of
any premises.”
Where
a rural district council has issued a certificate, licence, permit,
carried out inspections, rendered services, or let out a property, it
is entitled to raise a charge or tariff in respect thereof in terms
of section 76 of
the Rural District Councils Act [Chapter 29:13].
This section empowers council, by way of resolutions, to fix charges
or tariffs of charges payable in terms of
the Rural District Councils Act.
It
is common cause that the applicant is in occupation of parts of rural
land in the different district councils through occupation of its
substations and transmission lines that cut across the different
council areas. There were suggestions that the applicant had entered
into agreements or been given permits by the various councils for the
erection of the power lines and sub-stations. In any case, where a
rural district council has let its property, fixed a rental on it,
issued a licence, certificate, permit or inspected or rendered any
services on such land, it is entitled to levy or charge the holder of
such rights in terms of section 76 of
the Rural District Councils Act [Chapter 29:13].The
respondents are entitled to do so as long as there is a contract to
use or pass through their areas.
The
respondents have been levying the applicant for services rendered and
where they have granted the applicant a permit to use its land. The
charge which they levy under section 76 of the Rural District
Councils Act is understood as a way leave charge. The English
Collins Dictionary
defines
“way leave” as 'access to property granted by a landowner for
payment'.
There
is no mystery over this charge.
What
the respondents are charging for is the right of way over their land
or property. They do so by charging way leave charges. The fact
remains that they are entitled to charge for such rights or access in
terms of the Rural
District Councils Act.
They are charging for a right of way over their property in respect
of the power lines. In the case of substations, the respondents are
entitled to charge if they can show that the landowner has been
granted access to their property. The fact that they have labelled
charges they levy in terms of section 76 of
the Rural District Councils Act [Chapter 29:13] as
way leave charges, does not defeat the charge.
I
find that the respondents are entitled to charge way leave charges in
terms of section 76 of
the Rural District Councils Act [Chapter 29:13].
THE
UNIT TAX
This
tax is levied in terms of section 97A of
the Rural District Councils Act [Chapter 29:13].
The section reads as follows;
“97A
(2) Every council shall impose a special unit tax which all persons
who on or after the 1st
of January 2011 are or become owners of farms or leases or holders of
offer
letters or land settlement permits.”
This
tax is capable of being levied in respect of owners of farms or
leases or holders of offer letters or land settlement permits. The
applicant is not a farmer nor does it hold an offer letter, lease
agreement or settlement permit.
A
unit tax cannot be levied against the applicant in the circumstances
of this case.
LAND
DEVELOPMENT LEVY
This
levy is provided for in section 96 of
the Rural District Councils Act.
It is a levy that is levied on persons who are owners of rural land
within council area or licensed dealers who carry on a specified
business on rural land within council area in terms of section 96(e).
Section 96 of
the Rural District Councils Act [Chapter 29:13] reads
as follows;
“96
Levies in rural areas
(1)
Subject to this Part, a council may impose a land development levy
upon all persons who, on the fixed date, are or who, at any time
during the period of twelve months next following the fixed date,
become -
(a)
Owners of rural land within the council area:
Provided
that -
(i)…,.
(ii)…,.;
or
(b)…,.;
or
(c)
Licensed dealers who carry on the business in respect of which their
licences are issued on rural land within the council area; or
(d)
Owners of land which is deemed to be rural land by virtue of a
resolution of the council in terms of section one hundred and two; or
(e)
Either persons who carry on a specified business on rural land within
the council area or the owners of rural land within the council area
on which a specified business is carried on:
Provided
that a land development levy may be imposed in respect of any
particular specified business upon either the owner of the rural land
concerned or upon the person who carries on the specified business
but not upon both such owner and such person; or
(f)
Holders of permits issued in terms of section 9 of the Communal Land
Act [Chapter
20:04]
authorising the occupation and use of any portion of rural land
within a communal ward of the council.”
This
section permits the levying of charges on operators of specified
businesses or owners of rural land. The applicant is not an owner of
rural land within council area as envisaged by section 96 but may
only be required to pay the levy if it carries on a ''specified
business'' in terms of section 96(1)(e). 'Specified business'
is defined, in section 95 of
the Rural District Councils Act,
as follows;
“'Specified
business' means the business of -
(a)
Extracting sand; or
(b)
Extracting gravel; or
(c)
Extracting clay or making bricks or clay products or some or all of
them; or
(d)
Extracting and additionally, or alternatively, crushing stone; or
(e)
Operating a saw-mill;
whether
carried on as a principal business or incidentally to or in
connection with any other business:
Provided
that the carrying on of any such business by -
(a)
The owner of a mining location for the purpose of using all of the
products of such business on his mining location; or
(b)
A farmer, for the purpose of using all of the products of such
business on any farm on which he conducts farming operations;
shall
not be regarded as the carrying on of a specified business;”
The
applicant does not carry out any of the specified activities falling
under the definition of 'specified business'.It business is not
specified in terms of
the Rural District Councils Act.
It
is not competent to levy, on the applicant, a land development levy.
The
fact that council may have passed a resolution authorising the
levying of charges does not imply that the applicant is required to
pay such levy because it is not empowered to do so in terms of
the Rural District Councils Act [Chapter 29:13].
The
applicant is partly entitled to the declaratur
sought.
I am unable to accede to the request to bar the respondents from
levying any other charge or levy which was not the subject of this
judicial determination. Paragraph 1.2 of the draft is superfluous. I
do not consider it necessary to deal with the applicant's argument
that the charges are too excessive as not sufficient detail was made
available for me to make an informed decision….,.
In
the result, it is declared as follows;
1.
The levying by the respondents on the applicant of “Unit Tax” is
outside the provisions of the Rural District Councils Act [Chapter
29:13]
or any other law and is therefore unlawful.
2.
The levying by the respondents on the applicant of “Way leave
charges”, under section 76 of the Rural District Councils Act
[Chapter
29:13]
is intra
vires
the Act and is lawful.