Garnishee Order and Representative Taxpayers

HB12-11 : TRIANGLE LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: NDOU J

The applicant seeks a provisional order in the following terms: “Terms of final order sought That you show cause why a final order should not be made in the following terms: 1. That it be declared that the respondent's assessment dated 7th July 2010, for the tax payable of US$822,379=12, be and is hereby deemed to have ...

The applicant seeks a provisional order in the following terms:

“Terms of final order sought

That you show cause why a final order should not be made in the following terms:

1. That it be declared that the respondent's assessment dated 7^th July 2010, for the tax payable of US$822,379=12, be and is hereby deemed to have been received by the applicant on 25^th October 2010.

2. That the applicant's objection to the respondent dated, 28^th October 2010, be and is hereby deemed to have been filed within time.

3. It be and is hereby declared that the letter by W. Madya, dated 30^th November 2010, dismissing the applicant's objection dated 25^th October 2010 be and is hereby declared to be null and void as it was not drafted and signed by, or, on behalf of the Commissioner-General of the respondent.

4. The respondent be and is hereby ordered, through its Commissioner-General, to consider the applicant's objection dated 28^th October 2010 and to respond in detail thereto.

5. It is declared that applicant shall thereafter be entitled to file an appeal in terms of the Income Tax Act against the Commissioner-General's decision in the event the applicant will be dissatisfied with the said decision.

6. That pending the resolution of an appeal against the Commissioner-General's decision in the event such appeal is filed, the respondent shall be stopped from placing a garnishee on any of the applicant's bank accounts.

7. That in the event that the Commissioner-General does not give his written response within three months, from the 28^th October 2010, then it be and is hereby declared that the applicant's employees' tax liability on the total amount of R12,884,079= shall be deemed to be no more that R2,273,798=51 and the respondent be and is hereby ordered to refund to the applicant, within seven days of the granting of this order, the excess paid to it by the applicant.

8. That the respondent shall pay the costs of suit on the legal practitioner client scale.

Interim relief granted

Pending the return date and finalization of this matter, the applicant is granted the following interim relief:

(a) The garnishee order placed by the respondent through its Chiredzi Branch on the applicant's Standard Chartered Bank account held with the Chiredzi Branch, be and is hereby suspended and the bank officials of the aforementioned bank be and are hereby ordered to ignore the directive to garnishee the applicant's account by the respondent.

(b) In the event that the garnishee has been effected, it be and is hereby ordered that it be reversed and the respondent is hereby ordered to transfer back to the applicant's Standard Chartered account held with the Chiredzi Branch, the monies transferred to it via the garnishee, within 24 hours of the granting of this order.”

The background facts of this case are the following.

The applicant is Triangle Limited, a limited liability company carrying on business in Triangle. The respondent is the Zimbabwe Revenue Authority. In May 2010, the Zimbabwe Revenue Authority carried out a pay-as-you-earn (“PAYE”) audit on the applicant. The audit is still on-going. While conducting the audit, the Zimbabwe Revenue Authority's officers got a tip off that the applicant's Executive Management had received part of their remuneration from the applicant's parent company, Tongaat Hullet, which is based in South Africa during the period ranging from March 2008 to February 2009. These amounts did not form part of the applicant's payroll and were it not for the tip-off such remuneration would never have been discovered by the Zimbabwe Revenue Authority. The Zimbabwe Revenue Authority then wrote an e-mail to the applicant's Human Resources Director, one F.Nyangwe, on 10 May 2010, enquiring about this alleged remuneration which was not being declared. On 17 May 2010, Tongaat Hullet's Tax Manager, a Mark Sandiford, responded to the enquiry of 10 May 2010. He admitted that, indeed, certain key managers of the applicant and Hippo Valley received payments from Tongaat Hullet. He further stated that the said payments were for “required provision of services” by the said employees of the applicant and Hippo Valley to Tongaat Hullet in South Africa which is outside Zimbabwe. He then argued that since the services were performed in South Africa the affected persons were subject to tax in South Africa. A schedule was presented of the amounts paid to these individuals and the taxes paid to the South African Revenue Service in that regard. By letter dated 20 May 2010, the Zimbabwe Revenue Authority responded to the applicant advising that since the managers in question had not been resident in South Africa for a period of 183 days rendering the alleged services, the remuneration was subject to taxation only in Zimbabwe in terms of the provisions of Article 1X(2) of the Double Taxation Agreement between Zimbabwe and South Africa. In the circumstances, the Zimbabwe Revenue Authority computed the tax payable and prepared a schedule. The said letter and the schedule were presented by Ms Chasi of the Zimbabwe Revenue Authority to Mr Nyangwe of the applicant on 20 May 2010. These documents were explained to Mr Nyangwe by Ms Chasi and the former undertook to respond on behalf of the applicant in due course. By 7 July 2010, the applicant had not yet commented on the schedule and the letter. Neither had it paid the amounts due in terms of the schedule. The Zimbabwe Revenue Authority then issued out two assessments to the applicant which were again served on Mr Nyangwe on 7 July 2010. The first assessment, being number 91076005, was for withholding tax in terms of section 10(1)(a) of the 13^th Schedule of the Income Tax Act. The second assessment was number 91076115 for penalty in terms of section 10(1)(b) of the 13^th Schedule of the Income Tax Act. The applicant did not pay the tax assessed resulting in the Zimbabwe Revenue Authority resorting to garnishees to recover the tax. A garnishee was placed on the applicant's…, bankers for the full amount of tax comprising the principal amount and the penalty amount. The amount demanded was ZAR12,606,072=. Tongaat Hullet offered to pay the principal amount for the garnishee to be withdrawn on condition that the parties engage in dialogue on the issue of the penalty.

The Zimbabwe Revenue Authority withdrew the garnishee and the applicant indeed settled the principal amount.

HH68-14 : FAIRDROP TRADING (PRIVATE) LIMITED vs THE ZIMBABWE REVENUE AUTHORITY
Ruled By: MAFUSIRE J

In casu, the record shows that since 2010, the respondent has been tussling with the applicant for alleged non-payment of taxes. The respondent complained that the applicant has not provided useful information on the financial aspects of its hospital project which would enable it to make a meaningful assessment of the tax payable. The respondent ...

In casu, the record shows that since 2010, the respondent has been tussling with the applicant for alleged non-payment of taxes. The respondent complained that the applicant has not provided useful information on the financial aspects of its hospital project which would enable it to make a meaningful assessment of the tax payable. The respondent made an assessment of the tax due by the applicant for the years 2010, 2011, 2012 and 2013. Together with penalties, the total amount required from the applicant was US$3,253,646=62 (three million two hundred and fifty three thousand six hundred and forty six United States dollars and sixty two).

The record also shows that initial assessments by the respondent had subsequently been revised considerably downwards - sometimes even to the point of carrying over zero balances into the next assessment year. The respondent explained that this happened following the receipt of further information from the applicant.

The respondent had, at one time or other, appointed representative taxpayers in respect of the applicant and had imposed garnishees for the attachment of moneys due to the applicant. The representative taxpayers were some medical aid societies, apparently the main revenue streams for the applicant. It appears that despite the tussles, the parties remained in constant dialogue to find an amicable solution and a workable plan. However, it is apparent that mutual mistrust remained. Matters deteriorated from July 2013 when the respondent started reinstating the garnishees. In November 2013, the applicant lodged a comprehensive objection to the tax assessments for all the years from 2010 to 2013. The respondent treated the objection as one made in terms of section 62 of the Income Tax Act [Chapter 23:06]. The relevant portions of that section read:

“62 Time and manner of lodging objections

(1) Any taxpayer who is aggrieved by –

(a) Any assessment made upon him under this Act;

(b) …,.

may, unless it is otherwise provided in this Act, object to such assessment, …, within thirty days after the date of the assessment…, in the manner and under the terms prescribed by this Act;

(2) …,.

(3) …,.

(4) On receipt of a notice of objection to an assessment…, the Commissioner –

(a) May reduce or alter the assessment…, or may disallow the objection, and

(b) Shall send the person upon whom the assessment has been made…, notice of the …, alteration or disallowance.

Provided that, if the Commissioner has not notified the person who lodged the objection of his decision on it within three months after receiving the notice of objection, or within such longer period as the Commissioner and that person may agree, the objection shall be deemed to have been disallowed.”

Upon receipt of the applicant's objection aforesaid, the respondent invoked the provisions of section 69 of the Income Tax Act [Chapter 23:06]. Section 69 of the Income Tax Act [Chapter 23:06] reads:

“69 Payment of tax pending decision on objection and appeal

(1) The obligation to pay and the right to receive any tax chargeable under this Act shall not, unless the Commissioner otherwise directs and subject to such terms and conditions as he may impose, be suspended pending a decision on any objection or appeal which may be lodged in terms of this Act.

(2) If any assessment or decision is altered on appeal, a due adjustment shall be made, for which purpose amounts paid in excess shall be refunded and amounts short paid shall be recoverable.”

On 16 January 2014, the respondent appointed the applicant's bank, Stanbic Bank Zimbabwe, as the applicant's agent in terms of section 58 of the Income Tax Act [Chapter 23:06]. It imposed the last of the garnishees.

That stung the applicant.

On 4 February 2014, it filed the urgent chamber application. Through its deponent, Dr Munyaradzi Kereke, the Chairman of the Board of Trustees for the Rockfoundation Family Trust, the applicant's holding entity, the applicant went on the attack. It condemned the garnishees as a hatchet job. The respondent was said to have been heavy-handed, vindictive, dishonest, malicious, cold-hearted and it was accused of an abuse of power in that, inter alia, it generated false and gargantuan tax liabilities to collapse the applicant….,.

As final relief, the applicant sought an order of mandamus to compel the Commissioner General to hear and determine the applicant's appeal filed on 21 November 2013 within seven days of the order. For interim relief, the applicant sought the suspension of the garnishees pending the determination of the applicant's appeal on 21 November 2013, including any appeal to the Fiscal Appeal Court.

At the hearing, the respondent went on the attack. It took some points in limine.

Appealed
HH328-14 : PACKERS INTERNATIONAL (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: CHIGUMBA J

This case concerns a taxpayer who has approached the court for relief, after its bank accounts were garnished by the revenue authority, on the basis that the effect of the garnishee is to force it into liquidation….,.The applicant is a private limited company, duly registered and operating in terms of the law of Zimbabwe. ...

The applicant is a private limited company, duly registered and operating in terms of the law of Zimbabwe. The respondent is the Zimbabwe Revenue Authority, an administrative authority established in terms of section 3 of the Revenue Authority Act [Chapter 23:11] and tasked with collecting revenues due in terms of the Value Added Tax Act [Chapter 23:12]. The Finance Minister is mandated to administer the Value Added Tax Act [Chapter 23:12].

The applicant is a registered operator in terms of the Value Added Tax Act [Chapter 23:12]. The country's value added tax system is embodied in the Value Added Tax Act [Chapter 23:12]. The system involves the imposition of value added tax at each step in the chain of manufacture and distribution of goods and services that are supplied to the country in the course of business; and it is calculated on the value that will have been added at each step of the supply process at a specified rate. The revenue collection system is based on a self-assessment system by registered operators. The Value Added Tax Act [Chapter 23:12] provides a detailed mechanism for vendors to keep certain kinds of records and to calculate, account, and pay value added tax to the Taxing Commissioner. The respondent does not have the capacity, or manpower, to effectively monitor every transaction liable to value added tax that is why registered operators have to assess themselves. In order to ensure compliance, the respondent carries out periodic investigations and audits the operators to ensure full compliance by the operators of the obligation to declare and remit in full any value added tax that will be due.

The applicant has approached this court because sometime at the end of April in 2014, the respondent carried out a tax investigation and audit of its affairs. It is common cause that the respondent's officers removed and took possession of certain documents from the applicant's operations in terms of section 60 of the Value Added Tax Act [Chapter 23:12]. In its founding affidavit, the applicant avers that the respondent advised it to make a voluntary declaration to enable tax which was due to be assessed. It was alleged that the voluntary declarations were done under duress and extortion; an allegation which was vigorously denied by the respondent's Chief Investigations Officer, Oppah Zinhumwe. The applicant complied with the request and attached copies of the voluntarily declared figures, to its founding affidavit. The applicant attached a schedule which stated that it opened its branches as follows; Mvuma in September 2010; Angwa in May 2013; Slice Groceries in December 2012; and Speke in December 2013. According to annexure 1 to the founding affidavit, in 2010 the applicant's total sum of declared tax was US$522,012=95, in 2011 it was USD$2,323,234=06, in 2012 it was USD$3,510,189=01, and in 2013 it was USD$6,952,536=43.

On realising that there were some significant discrepancies between its self assessed figures and those of the respondent, the applicant wrote to the respondent on 4 April 2014, (annexure B), and confirmed that, in terms of its proposal to the respondent, it was paying USD$2,000= per day, to the respondent, as a compromise and as a sign of its intention to cooperate fully with the respondent's investigations. Copies of the tax assessment schedules are attached to the notice of opposition as E1 to E4. For the period January to June 2013, the VAT due was assessed at USD$1,856,837=14, for the period January to December 2012, the VAT due was assessed at USD$3,489,955=17, for the period January to December 2011, the VAT due was assessed at USD$1,585,356=69, for the period February to December 2010, the VAT due was assessed at USD$321,441=92. It appeared that the assessments were a result of calculating the VAT which was deemed to be due, subtracting the VAT which was paid, and then imposing a 100% penalty.

The respondent wrote a letter, attached as annexure F1 to the opposing papers, dated 4 April 2014, in which it advised the applicant that it had been penalised for gross under declaration of sales, which had resulted in VAT underpayments, and that this information had been gleaned from the applicant's own documents. In that letter, the respondent advised that:

“…, the USD$5,000= weekly payments are not commensurate with the debt at hand and therefore not accepted.”

That letter also reminded the applicant of its as yet unassessed obligation to pay Income Tax and Pay as You Earn (PAYE) for its employees. The applicant accepted, in its founding affidavit, paragraph 5 thereof, that according to its calculations, and its voluntarily declared liability, an amount of USD$905,801=32 had not been paid to the respondent. It stated that its decision not to pay any more money was based on advice from its accountant that the respondent's tax assessments were incorrect and highly exaggerated for failure to take into account non-taxable products such as goat meat, beef, chicken, bread and other groceries.

The applicant stated that it has been advised that it does not owe the respondent anything at all, and had taken the position that it has, in fact, overpaid the respondent and will be refunded some of the monies that it alleges it has overpaid to the respondent. The applicant averred that it suspects the hidden hand of its competitors who have lost a significant market share to it, to be behind its perceived “persecution” by the respondent. The applicant alleged jealousy and malice as the cause of the threats to close it down, and to deploy the respondent's employees to man its operations. The applicant cites, as an example of mala fides and malice, the refusal by the respondent to accept its payment proposal when it had paid a total of USD$204,000= in terms of that proposal. On 2 May 2014, the applicant wrote a letter to the respondent (Annexure C) in which it raised objections to the tax assessments set out in the respondent's letter to it of 4 April 2014. The merits of the objections need not detain us. They will properly be assessed by the appropriate court. These objections were dismissed in their entirety by the respondent, and this decision was communicated to the applicant in a letter dated 12 June 2014 (Annexure D founding affidavit).

It is common cause that the applicant has appealed to the Fiscal Appeal Court. On 13 June 2014, it is alleged that the respondent's officers, without any prior notice, garnished the applicant's account held at FBC Bank for the sum of twenty million United States Dollars.

The applicant alleges that the respondent's officers have advised it that officers are due to be posted to all its branches to man them forthwith. The applicant alleges that it was told that it could no longer transact as a result of the garnishee order. The applicant alleges that this conduct on the part of the respondent is unlawful as its net effect is to close down its business by rendering it inoperable. The applicant alleges that the respondent's conduct is unconstitutional as the quantum of the garnishee order is arbitrary and was imposed without notice. The applicant alleges that the quantum of the garnishee ought to be in the amount that it admitted to owing, of about USD$900,000=, because, at law, the disputed amount is suspended by the noting of the appeal. The applicant alleges that it is facing imminent closure if it remains unable to operate; it cannot pay its suppliers or its workers, and is being force-marched into liquidation by the respondent. The welfare of its one thousand plus employees is at risk, and is being ignored by the respondent, contrary to the provisions of the Constitution. Finally, the applicant avers that it has no other remedy.

The respondent denied that it acted unlawfully, maliciously, capriciously or unconstitutionally. It averred that it was perfectly lawful for it to impose the garnishee in the manner that it did, and reiterated that the applicant ought to have exhausted its domestic remedies first by approaching the Commissioner for relief as provided for in the Value Added Tax Act [Chapter 23:12] and the Income Tax Act [Chapter 23:06]. It was submitted that this court lacked the power to consider the merits of the tax assessment that was the exclusive purview of the Fiscal Appeal Court.

The question that is exercising the court's mind is whether there are any circumstances in which this court can examine the rationality or the reasonableness of the Commissioner of Tax's decision, specifically to place a garnishee on the applicant's account, in circumstances where the effect of the garnishee order is to render the applicant incapable of funding its operations, forcing the applicant into insolvency, and ultimately shooting itself in the foot by killing the goose that lays the golden egg?

A necessary offshoot of that question is whether this matter deserves to be heard on an urgent basis.

View Appeal
SC28-16 : ZIMBABWE REVENUE AUTHORITY vs PACKERS INTERNATIONAL (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GOWORA JA and HLATSHWAYO JA

Whether ZIMRA is legally entitled to issue garnishee orders for the payment of taxes assessed as being due and owing.It was contended, on behalf of ZIMRA, that the court a quo deviated from the cause of action as pleaded by Packers and gave relief framed on alleged unreasonableness on the part of ZIMRA which was ...

Whether ZIMRA is legally entitled to issue garnishee orders for the payment of taxes assessed as being due and owing.

It was contended, on behalf of ZIMRA, that the court a quo deviated from the cause of action as pleaded by Packers and gave relief framed on alleged unreasonableness on the part of ZIMRA which was raised by the court mero motu. It was contended further that if the court a quo had confined itself to the lawfulness of the conduct of ZIMRA, it would have correctly found that the actions of the latter were lawful, and, consequently, it would have declined the prayer to issue the interdict.

The Value Added Tax Act [Chapter 23:12] provides a detailed mechanism for vendors to keep certain records and to periodically calculate, account for and pay value added tax to the Commissioner. The Value Added Tax Act [Chapter 23:12], as a whole, and, in particular, its provisions relating to assessments and the payment recovery and refund of tax provisions found in Part VII of the Value Added Tax Act [Chapter 23:12] are indispensable tools for the prompt collection of tax due. From an economic point of view, the provisions of the Value Added Tax Act [Chapter 23:12] are meant to ensure a steady, accurate and predictable stream of revenue for the fiscus.

These provisions are an embodiment of the principle “Pay Now Argue Later”, suggesting that an appeal would not have the effect of suspending payment. The principle is aimed at discouraging frivolous or spurious objections and ensures that the whole system of tax collection in the country maintains its efficacy. This serves the fundamental public purpose of ensuring that the fiscus is not prejudiced by delay in obtaining finality in any dispute. I examine hereunder the principal provisions.

Section 6 of the Value Added Tax Act [Chapter 23:12] provides:

“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 1^st January, 2004, in the furtherance of any trade carried on by him.

(b) …,. not relevant.”

Payment of tax under the relevant Act is provided for in terms of section 28 of the Value Added Tax Act [Chapter 23:12] which reads:

“28 Returns and payments of tax

(1) Every registered operator shall, within the period ending on the twenty-fifth day of the first month commencing after the end of a tax period relating to such registered operator or, where such tax period ends on or after the first day and before the last day of a month, within the period ending on such last day -

(a) Furnish the Commissioner with a return in the prescribed form reflecting such information as may be required for the purpose of the calculation of tax in terms of section 15; and

(b) Calculate the amounts of such tax in accordance with the said section and pay the tax payable to the Commissioner or calculate the amount of any refund due to the registered operator.

[Subsection substituted by Act 5 of 2009 and amended by Act 10 of 2009, by Act 3 of 2010, by Act 5 of 2010 and by Act 9 of 2011] (1a)…,. [Subsection repealed by Act 5 of 2009]

(2) Every registered operator who is registered in terms of Part IV shall within the period allowed by subsection (1) of this section furnish the return referred to in that subsection in respect of each tax period relating to such registered operator, whether or not tax is payable or a refund is due in respect of such period.

(3) The Commissioner may, having regard to the circumstances of any case but subject to section thirty-eight, extend the period within which such return is to be furnished or such tax is to be paid.”

Section 27 of the Value Added Tax Act [Chapter 23:12] sets out four categories of operators and tax periods for the submission of returns and payment of assessed VAT by the operator are then regulated according to the category of the respective operators. Tax periods for the four categories range from one calendar month to two, or such other period as may be approved by the Commissioner in relation to category D.

The anchor to the provisions on recovery of tax is section 36 of the Value Added Tax Act [Chapter 23:12] which excludes the suspension of payment of tax upon the noting of the appeal. Section 36 of the Value Added Tax Act [Chapter 23:12] provides, in relevant part:

“36 Payment of tax pending appeal

The obligation to pay and the right to receive and recover any tax, additional tax, penalty or interest chargeable under this Act shall not, unless the Commissioner so directs, be suspended by any appeal or pending the decision of a court of law, but if any assessment is altered on appeal or in conformity with any such decision or a decision by the Commissioner to concede the appeal to the Fiscal Appeal Court or such court of law, a due adjustment shall be made, amounts paid in excess being refunded with interest at the prescribed rate (but subject to section forty-six) and calculated from the date proved to the satisfaction of the Commissioner to be the date on which such excess was received, and amounts short-paid being recoverable with penalty and interest calculated as provided in subsection (1) of section thirty-nine.”

The learned judge construed the provision in question thus:

“My reading of s36 is that the liability to pay remains extant until the appeal is finalised or in the alternative, unless the Commissioner directs that the obligation to pay falls away until the pending appeal is finalised. Applicant in this matter has not argued that the effect of the noting of the appeal is to extinguish its obligation to pay. Section 33 of the VAT Act provides for the circumstances in which an aggrieved person can appeal to the Fiscal Appeals Court against the exercise of discretion by the Commissioner. The right to appeal against the exercise of discretion by the respondent's officers to the Commissioner is provided for in terms of s32 of the VAT Act.”…,.

Packers lodged an objection in terms of section 32 of the Value Added Tax Act [Chapter 23:12] and when the objection did not wholly succeed it filed an appeal - after the garnishee order had been placed against its account. The learned judge found that although Packers was challenging the appointment of an agent by the Commissioner to collect the VAT assessed as being due and owing, ZIMRA had acted lawfully in relation to the appointment of FBC Bank as such agent for the collection of tax. In considering this issue, the court a quo, in my view correctly, came to this conclusion:

“This obligation, on the part of the appointed agent, is not subject to any other law except s48. Section 48 overrides anything that is contrary to it which may be set out in any other law.”

In my view, the issue of the appointment of the agent and the garnishee order are intrinsically linked and the law in respect to the two is critical in the resolution of this inquiry. Section 48 of the Value Added Tax Act [Chapter 23:12] provides as follows:

“48 Power to appoint agent

(1) For the purpose of subsection (2) - “person” includes -

(a) A bank, building society or savings bank; and

(b) A partnership; and

(d) Any prescribed person in relation to a prescribed service.

(2) The Commissioner may, if he thinks it necessary, declare any person to be the agent of any other person, and the person so declared an agent shall be the agent of such other person for the purposes of this Act, and, notwithstanding anything to the contrary contained in any other law, may be required to pay any amount of tax, additional tax, penalty, or interest due from any moneys in any current account, deposit account, fixed deposit account or savings account or any other moneys -

(a) Including pensions, salary, wages or any other remuneration, which may be held by him for, or due by him to, the person whose agent he has been declared to be; or

(b) That the person so declared an agent receives as an intermediary from the other person.”

Thus, the sharp end of the VAT system is section 48 of the Value Added Tax Act [Chapter 23:12] which allows the appointment of an agent. In a proper and logical construction of the provision, payment by the agent is by means of a garnishee against any account to the taxpayer's credit held with the agent.

In any event, tax under the Value Added Tax Act [Chapter 23:12] consists of monies that have been taxed on goods and services paid by consumers for onward transmission to the Commissioner. All that is required of an operator is to calculate the amount so paid, submit a return and make payment. A refusal to pay, or failure to do so, on the part of the operator would result in the imposition of a garnishee. Therefore, once the tax assessment was made, the imposition of the garnishee was a possibility.

In my view, no other conclusion is possible. (This finding by the court ought to have put paid to the enquiry into the lawfulness of the garnishee).

Packers had alleged before the court a quo that the garnishee imposed a hardship on its operations.

In my view, section 36 of the Value Added Tax Act [Chapter 23:12] creates a remedy for the amelioration of possible financial hardship faced by an individual taxpayer and allows the Commissioner to suspend payment pending an appeal. However, the Commissioner cannot exercise the discretion mero motu. He can only do so upon consideration of facts presented to him by a taxpayer who wishes to benefit from the exercise of discretion by the Commissioner. As a consequence, the taxpayer bears the onus to place the necessary facts before the Commissioner regarding the hardships facing him should the obligation to pay not be suspended. For, as stated by the learned DEPUTY CHIEF JUSTICE in the case of Mayor Logistics (Pvt) Ltd v ZIMRA SC7/14:

“As the facts on which the Commissioner would exercise the discretion would be within the exclusive knowledge of the taxpayer he or she must place them before the Commissioner.”

It follows, therefore that, whilst section 48 of the Value Added Tax Act [Chapter 23:12] is concerned with the Commissioner's power to appoint an agent for purposes of collection or recovery of tax, section 36 of the Value Added Tax Act [Chapter 23:12] enshrines the taxpayer's duty to pay tax. The two are inextricably linked in that the decision to use one method of recovery is determined by whether or not any facts have been placed before the Commissioner on whether or not there exist hardships which would justify a suspension of the obligation to pay assessed tax by a taxpayer. What was before the court a quo was a plea for mercy as opposed to the enforcement of an existing right. Once the discretion in section 36 of the Value Added Tax Act [Chapter 23:12] is exercised in favour of the suspension of the obligation to pay tax, then by parity of reasoning, it follows that the discretion to appoint an agent in terms of section 48 of the Value Added Tax Act [Chapter 23:12] falls away.

The obligation to pay the amount of tax assessed as being due and payable is imposed by section 38 of the Value Added Tax Act [Chapter 23:12]. In considering the VAT collection system in general the following observations emerge. Section 36 of the Value Added Tax Act [Chapter 23:12] does not serve to protect any right of the taxpayer but to preserve the right of the Commissioner to be paid and to collect the revenue. It also secures the obligation of the operator to pay unless such obligation is suspended by the Commissioner upon request. As a consequence, the discretion to suspend payment in terms of the said section is that of the Commissioner. In Mayor Logistics (Pvt) Ltd v ZIMRA SC7/14 his Lordship, MALABA DCJ, had this to say:

“Failure to fulfil an obligation [to pay tax] may be due to a variety of circumstances. The legislature decided to place responsibility for deciding whether or not the particular circumstances of a taxpayer entitle him or her to a directive suspending the obligation to pay the assessed tax on the Commissioner. A court of law would be acting unlawfully if it usurped the powers of the Commissioner and ordered a suspension of the obligation on a taxpayer to pay assessed tax pending the determination of an appeal by the Fiscal Appeals Court.”

It is not in dispute that the court a quo made a finding that the actions of ZIMRA were lawful. As a consequence, it should have been obvious that there was no legal basis upon which to grant an interdict. Section 48 of the Value Added Tax Act [Chapter 23:12] is not subject, or subservient, to any other law. This is clearly expressed in the provision itself. It is my conclusion, therefore, that in terms of the wording of the section, the Commissioner's power under section 48 of the Value Added Tax Act [Chapter 23:12] cannot be subject to section 14 of the Fiscal Appeal Court Act. Once a person is declared an agent in terms of section 48 of the Value Added Tax Act [Chapter 23:12] the person so appointed is duty bound to pay the assessed taxes notwithstanding the provisions of any other law.

As a consequence, it follows that ZIMRA is entitled not only to appoint an agent for the collection of assessed tax, it is also entitled to garnishee the taxpayer's account through the agent for the collection of tax. The decision by the court a quo to discharge the garnishee in the circumstances of this case was contrary to the law and constitutes a misdirection.

HH169-15 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY and STANBIC BANK and MNISTERS OF MINES AND MINING DEVELOPMENT and MINERALS MARKETING CORPORATION OF ZIMBABWE
Ruled By: MAKONI J

The applicant approached this court seeking a declaratur and consequential relief in the following terms:- “1. The Application for a Declaratur is hereby granted. 2. The garnishee order issued on 16 November 2011 by the 1st Respondent to the 2nd Respondent against the applicant is invalid. For the avoidance of doubt, it is specifically declared that: 2.1. The definition of taxes, ...

The applicant approached this court seeking a declaratur and consequential relief in the following terms:-

“1. The Application for a Declaratur is hereby granted.

2. The garnishee order issued on 16 November 2011 by the 1^st Respondent to the 2^nd Respondent against the applicant is invalid. For the avoidance of doubt, it is specifically declared that:

2.1. The definition of taxes, under Income Tax Act [Chapter 21:05], does not include royalties under the Mines and Minerals Act (read with Chapter VII of the Finance Act [Chapter 23:04]).

2.2. The 1^st Respondent acted ultra vires when it used the power granted unto it under section 58 of the Income Tax Act [Chapter 23:06] for enforcing payment of taxes under that Act, in an attempt to enforce payment of royalties under Part XIV Section 245 of the Mines and Minerals Act [Chapter 21:05] as read with Chapter XII Section 26, Section 37 and Section 37A of the Finance Act [Chapter 23:04].

3. Owing to the operation of Part XIV, section 243 of the Mines and Minerals Act [Chapter 21:05], the Applicant's Mining Agreement with the Government of Zimbabwe takes precedence over Part XIV section 244 and Section 245 of the Mines and Minerals Act [Chapter 21:05] and takes precedence over Chapter VII Section 36, Section 37 Section 37A and the Schedule of the Finance Act [Chapter 23:04]. For the avoidance of doubt, it is specially declared that:

3.1. The applicant is liable to pay royalty rates at 2.5% of the fair market value of all products produced from the mining area, and not 5% or any other rate appearing [in the Schedule under Chapter VII of the Finance Act [Chapter 23:04] enacted by the Mines and Minerals Act [Chapter 21:05];

3.2. The applicant overpaid royalty rates to the 1^st respondent for the period of 1 January 2004 to 30

September 2010 when it paid at the legislative rate of 3% and 3.5% instead 2.5%. The Applicant is entitled to recover the amount overpaid in the sum of US$6,057,146= (six million fifty seven thousand one hundred and forty six United States Dollars) by way of set off royalties which were due and payable for the period of 1 October 2010 to 31 March 2011.

4. Each party shall bear its own costs.”

The background to the matter is that the applicant is the holder of a Special Mining lease issued by the Minister of Mines to the applicant in terms of the Mines and Minerals Act [Chapter 21:05] (the Act). It is also a holder of a Mining Agreement (MA) signed between it and the Government of Zimbabwe (the Government). Both documents were executed on 24 August 1994. Up until December 2003, the applicant paid a flat royalty rate of 2.5% across the board for all products as per the royalty rate contained in the Mining Agreement. The payments were made quarterly. From January 2004 to 30 September 2010, the applicant paid royalties according to rates stipulated in the Mines and Minerals Act but according to dates as provided for in the Mining Agreement. The reason given by the applicant for such payments is it anticipated a substantive agreement and performance by the Government on the change of the tax regime by it. The parties had, at one point, contemplated revisiting the tax regime applicable to the applicant. A framework for the agreement contemplated was signed and executed by the parties. The actual agreement to vary the Mining Agreement never saw the light of day. When the Government failed to implement the new tax regime, the applicant reverted to the original royalty provisions as provided by the Mining Agreement. The first respondent claimed royalties from the applicant using the legislature rates. When the applicant did not pay the amounts claimed by the first respondent, the first respondent issued a garnishee to the second respondent against the applicant. The applicant then instituted the present proceedings.

It is the applicant's case that there is no legal basis for collection of royalties by the first respondent in terms of the Mines and Minerals Act as opposed to the Mining Agreement. The first respondent therefore collected in excess of the rates applicable to the applicant and has therefore been over-compensated. The applicant overpaid the first respondent in the sum total of $6,057,146=.

It also avers that the first respondent was not entitled, at law, to recover royalties falling due under the Mines and Minerals Act by way of the power conferred on it under the Income Tax Act [Chapter 23:06], namely, to attach debts owed to the debtor.

The first respondent opposed the application. It raised four points in limine. viz:-

(i) The court application is invalid and constitutes a legal nullity for want of compliance with the mandatory provisions of the State Liabilities Act [Chapter 8:14].

(ii) The applicant approached the court with dirty hands by approaching the court without complying with the requirements of the law.

(iii) The first respondent is an agent of the Government of Zimbabwe and attracts no personal liability from the transactions subject to the claim by the applicant.

(iv) There are material disputes of fact not capable of resolution on the papers….,.

Validity of the Garnishee

The applicant had taken issue with the definition of taxes under the Income Tax Act [Chapter 23:06] in that it does not include royalties under the Mines and Minerals Act as read with Chapter VII of the Finance Act [Chapter 23:04] and that the first respondent acted ultra vires when it used the powers granted unto it under section 58 of the Income Tax Act [Chapter 23:06] for enforcing the payment of taxes under that Act.

By the time the matter was heard, section 58 of the Income Tax Act had been amended in the definition of “tax” by the Finance Act 4/12 by the repeal of paragraph (e) and the substitution of (e) any levy or sum payable in terms of the Charging Act. Act 4/2012 came into effect on 17 September 2012. The applicant decided not to pursue the issue. There will not be necessary therefore to determine the issue.

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

As regards the garnishee order made under section 58 of the Income and Tax Act [Chapter 23;06] it is contended that the provision relates to tax obligations under that Act. It is also contended that the procedure relating to the appointment of representative taxpayers does not apply to disputed tax liabilities. Even if the Income Tax Act ...

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

Section 201A of the Customs and Excise Act [Chapter 23:02] provides that: “(1) For the purpose of subsection (1) — 'person' includes — (a) The People's Own Savings Bank constituted in terms of the People's Own Savings Bank Act [Chapter 24:22] and any financial institution registered or required to be registered in terms of the Banking Act [Chapter 24:20] or the Building Societies ...

Section 201A of the Customs and Excise Act [Chapter 23:02] provides that:

“(1) For the purpose of subsection (1) —

'person' includes —

(a) The People's Own Savings Bank constituted in terms of the People's Own Savings Bank Act [Chapter 24:22] and any financial institution registered or required to be registered in terms of the Banking Act [Chapter 24:20] or the Building Societies Act [Chapter 24:02]; and

(b) A partnership or company.

(2) The Commissioner may, if he thinks it necessary, declare any person to be the agent of any importer or excise manufacturer, and the person so declared an agent shall be the agent of such importer or excise manufacturer for the purposes of paying any duty due in terms of this Act, and, notwithstanding anything to the contrary contained in any other law, may be required to pay any duty due from any moneys in any current account, deposit account, fixed deposit account or savings account or from any other moneys, including pensions, salary, wages or any other remuneration, which may be held by him for, or due by him to, the importer or excise manufacturer whose agent he has been declared to be.

(3) For the purpose of this section, the Commissioner may require any person to give him, within a specified period, information in respect of any moneys, funds or other assets which may be held by him for or due by him to, any importer or excise manufacturer.

(4) Any person who fails to comply with any provision of this section with which it is his duty to comply shall incur a penalty of five per centum of the un-recovered revenue for every day during which the default continues, and every such penalty shall be recoverable by the Commissioner by action in any court of competent jurisdiction.”

In the general definition section of the Customs and Excise Act [Chapter 23:02], duty is defined as -

“'Duty', subject to subsection (4) of section thirty-four, subsection (4) of section thirty-eight, subsection (6) of section thirty-nine, subsection (5) of section forty, subsection (6) of section forty-five, subsection (3) of section forty-six, subsection (1) of section one hundred and eighteen, subsection (2) of section one hundred and ninety-two, subsection (2) of section one hundred and ninety-three, subsection (3) of section two hundred and four and subsection (10) of section two hundred and nine, means any duty leviable under this Act or any other law relating to customs and excise and includes surtax;”

Therefore, a fine cannot be duty. A fine is a penalty. Section 201A(2) of the Customs and Excise Act relates to the appointment of an agent for collection of duty. It makes no reference to a fine. Therefore, a garnishee cannot operate in relation to a fine.

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.

Conduct of Business or Trade: Registration as Operator

The fourth and fifth grounds of appeal attack the judgment a quo in the finding of the court that the appellant operated a business in Zimbabwe, and, consequently, holding that the appellant was to be treated as a registered operator liable to pay VAT on the imported goods.

The evidence-in-chief of the Chairman of West Group (Kenneth Sharpe) was that there was no cross-holding of shares between West Group and the appellant. He further testified that none of the officers of the appellant was on any of the boards in West Group and that the appellant did not have and never had any personnel in Zimbabwe.

He also confirmed the details in his earlier written statement pertaining to the type of business that was being conducted by the appellant with Douglas & Tate, a subsidiary of West Group. This was to the effect that Douglas & Tate was holding various items which had been put in its warehouse on behalf of the appellant. The arrangement between Douglas & Tate and the appellant was that the former would act as an agent of the latter.

On the basis of this testimony, counsel for the appellant submits that there was nothing to contradict the appellant's position that it did not operate any business in Zimbabwe. The appellant is a foreign company that conducted business in South Africa to acquire goods for the Reserve Bank of Zimbabwe (RBZ). It did not undertake any gainful occupation or activity within Zimbabwe itself and it had no employees in Zimbabwe. Consequently, so it is submitted, the learned judge erred in holding that the appellant was required to be registered for VAT purposes.

Counsel for the respondent counters, that, in terms of the governing legislation, VAT is payable by any person, local or foreign, who is an importer. Whether or not that person carries on any trade in Zimbabwe is irrelevant.

The appellant, so he submits, is obliged to pay VAT as an importer.

Furthermore, it is common cause that the appellant operated in Zimbabwe through its agent, i.e. Douglas & Tate. The appellant therefore carried on business partly in Zimbabwe.

As regards registration as an operator, the law permits the respondent to deem a person to be registered from the date he becomes liable to pay VAT. Accordingly, it is argued that the respondent competently deemed the appellant to be a registered operator for VAT purposes.

In terms of section 6(1)(a) of the Value Added Tax Act [Chapter 23:12], VAT is to be charged, levied, and collected on the value of the supply by any registered operator of goods or services supplied by him in the course or furtherance of any trade carried on by him.

Additionally, by virtue of section 6(1)(b) of the Value Added Tax Act, VAT is also leviable on the value of the importation of any goods into Zimbabwe by any person.

My reading of these provisions is that they afford two separate and distinct taxing bases for the levying and payment of VAT:

(i) Under section 6(1)(a) of the Value Added Tax Act, it is the supply of goods and services in the course or furtherance of any trade that attracts liability to pay VAT;

(ii) While section 6(1)(b) of the Value Added Tax Act pertains to the payment of VAT on the importation of any goods into Zimbabwe.

By virtue of section 6(2)(a) and section 6(2)(b) of the Value Added Tax Act, the tax payable under section 6(1)(a) is to be paid by the registered operator, and the tax payable under section 6(1)(b) is to be paid by the importer of the goods in question.

In the latter instance, it is not necessary that the importer should also be carrying on any trade in Zimbabwe for VAT to be levied.

The registration of persons making supplies in the course of any trade is governed by section 23 of the Value Added Tax Act.

Section 23(1) of the Value Added Tax Act stipulates that every person who, on or after 1 January 2004, carries on any trade and is not registered becomes liable to be registered. Subsections (2) and (3) of section 23 prescribe the procedural requirements for registration for VAT purposes.

In terms of section 23(4)(b) of the Value Added Tax Act, where any person who is liable to be registered has not applied for registration, that person is deemed to be a registered operator for the purposes of the Value Added Tax Act from the date on which he first became liable to be registered in terms of the Act.

The word 'supply' is defined in section 2 of the Value Added Tax Act to include “all forms of supply, irrespective of where the supply is effected.”

The term 'trade' is equally broadly defined to mean “in the case of a registered operator, other than a local authority, any trade or activity which is carried on continuously or regularly by any person in Zimbabwe, or partly in Zimbabwe, and in the cause or furtherance of which goods or services are supplied to any other person for a consideration, whether or not for profit…,.“

In similar vein, a 'supplier' means “in relation to any supply of goods or services…, the person supplying the goods or services.”

In casu, it is common cause, that, at all material times, it was the appellant, acting through Douglas & Tate as its agent, that supplied both the non-BACOSSI and BACOSSI goods to the Reserve Bank of Zimbabwe (RBZ).

Having regard to the definitions of 'trade', 'supply' and 'supplier' in section 2 of the Value Added Tax Act, the appellant was unquestionably the supplier of those goods; who supplied them in the course and furtherance of a trade carried on by it, within the contemplation of section 6(1)(a) of the Value Added Tax Act.

The fact that such supply might have been effected before, at the time when, or after the goods in question arrived at the Beitbridge border post is quite immaterial, as is the fact that the appellant conducted its trade only partly in Zimbabwe.

Again, it is equally irrelevant that the appellant was an entity incorporated in Guernsey, but not in Zimbabwe, or that its principal place of business might have been situated outside Zimbabwe.

It follows from the foregoing that the appellant was liable to be registered in terms of section 6(1)(a) of the Value Added Tax Act, as an entity subject to VAT, and that it was quite properly and lawfully registered for VAT purposes in terms of section 23(4)(b) of the Value Added Tax Act.

It also follows that the court a quo cannot be faulted for holding that the appellant was to be treated as a registered operator in terms of the Value Added Tax Act and that it was therefore liable to pay VAT on the goods that it supplied, as required by section 6(2)(b) of the Value Added Tax Act.

Alternatively, and in any event, in light of my earlier conclusion that the appellant was the true importer of the goods in question, it would also be liable to pay VAT on their importation in terms of section 6(1)(b) as read with section 6(2)(b) of the Value Added Tax Act.

Appointment of Agent to Pay Tax

The sixth and final ground of appeal takes issue with the findings of the court a quo in connection with the appointment of an agent to pay tax and that such an appointment had in fact been lawfully made.

As was correctly observed in argument by counsel for the appellant, this ground is only relevant if the other grounds of appeal are unsuccessful.

On 12 March 2009, the respondent appointed the Chief Executive Officer (CEO) of West Group as the public officer and representative of the appellant on the ground that West Group was the holding company of Douglas & Tate, the appellant's agent in Zimbabwe.

The Chief Executive Officer (CEO) objected to this appointment but his objection was dismissed by the respondent on 31 March 2009.

The court a quo, relying on various provisions of the Income Tax Act and the Value Added Tax Act, held that “the appointment of the Chief Executive Officer (CEO) of the holding company of Douglas & Tate, the agent of the appellant, as a public officer and representative registered operator was above board because Douglas & Tate acted as an agent of the appellant in Zimbabwe.”

Counsel for the appellant submits that the appointment of the Chief Executive Officer (CEO) of West Group was invalid, particularly as the respondent initially conceded this point by cancelling the appointment and dealing instead with the appellant's legal practitioners, but then later overrode its own concession.

Counsel for the appellant points to section 61(4) of the Income Tax Act to submit that this provision completely excludes the propriety of the appointment and that it was clearly misconceived.

Section 61(4) of the Income Tax Act makes it clear that the appointed person must be an official of the importing company and not an official of an agent company.

Counsel for the respondent submits that section 61(4) of the Income Tax Act is not the only relevant provision. Section 61(8) of the Income Tax Act is equally relevant as it allows the respondent to penalize the agent of any defaulting company.

Subsections (1), (2) and (3) of section 61 of the Income Tax Act [Chapter 23:06] provide for the appointment of a public officer, being an individual residing in Zimbabwe, to represent every company which carries on a trade or has an office or other established place of business in Zimbabwe. Such individual, who must be a person approved by the Commissioner of Taxes, must be appointed within one month of the company commencing its operations in the country.

Section 61(4) of the Income Tax Act stipulates that “in default of any such appointment, the public officer of any company shall be such managing director, director, secretary or other officer of the company as the Commissioner may designate for that purpose.”…,.

By dint of section 61(8) of the Income Tax Act, any company which fails to comply with section 61 “and every person who acts within Zimbabwe as agent or manager or representative of such company” incurs a monetary penalty for every day during which the default continues.

Additionally, section 61(9) of the Income Tax Act enables any notice, process, or proceeding under the Act to be given to, served upon, or taken against the public officer of the company, and, in his or her absence, “any officer or person acting or appearing to act in the management of the business or affairs of such company or as agent of such company.”

The word 'agent' is defined in section 2 of the Income Tax Act to include “any partnership or company…, when acting as an agent” and “any person declared by the Commissioner to be the agent of some other person for the purposes of this Act.”

Section 53 of the Income Tax Act sets out the persons who are representative taxpayers for the purposes of the Act.

In terms of section 53(1)(a) of the Income Tax Act, a “representative taxpayer…, in relation to the income of a company, means the public officer of the company.”

Section 54(1) of the Income Tax Act subjects every representative taxpayer to the same duties, responsibilities, and liabilities as if such income were received by or accruing to him or her beneficially as well as liability to assessment in his or her own name in respect of such income.

However, section 54(5) of the Income Tax Act makes it clear that any tax payable in respect of an assessment made upon a public officer is recoverable from the company itself.

Turning to the Value Added Tax Act [Chapter 23:12], the provisions relied upon by the court a quo are to be found in sections 47, 48 and 49 of Part VIII of the Value Added Tax Act, pertaining to representative registered operators.

In terms of section 47(a) of the Value Added Tax Act, the person responsible for performing the duties imposed by the Act upon any company is the public officer contemplated in section 53 of the Income Tax Act.

Section 48(2) of the Value Added Tax Act empowers the Commissioner to declare any person to be the agent of any other person for the purposes of the Act, including the payment of any amount of tax, additional tax, penalty, or interest due from any moneys held or received by him or her as an agent or intermediary of the other person.

In similar vein, section 49(2) of the Value Added Tax Act stipulates that every representative registered operator shall be liable for the payment of any tax, additional tax, penalty, or interest chargeable under the Act in relation to any monies controlled or transaction concluded by him or her in a representative capacity, as though such liability had been incurred personally.

The key provisions for consideration in the present context are section 61(4) of the Income Tax Act [Chapter 23:06] and section 47(a) of the Value Added Tax Act [Chapter 23:12].

The former enables the Commissioner to designate the public officer of a company in the absence of an appointment of such officer by the company itself. The latter, as read with section 53 of the Income Tax Act, identifies the public officer as the person responsible for performing the duties imposed by the Value Added Tax Act on any company.

Apart from identifying the public officer of a company as its principal representative for all tax-related purposes, the other provisions in both Acts that I have alluded to earlier also impose various responsibilities and obligations upon other specified individuals. These include any person who acts as an agent, manager, or representative of the company and anyone declared by the Commissioner to be the agent of the company.

It is trite that the provisions of a statute must be construed holistically, within the context of the statute in which they appear, as well as any statute in pari materia.

In this respect, the learned judge a quo quite properly took into account “the architectural design” of both the Income Tax Act and the Value Added Tax Act which allow the Commissioner to compulsorily appoint public officers and agents for the collection of VAT and other taxes.

On this basis, he found that the appointment of the Chief Executive Officer (CEO) of West Group as a public officer and representative registered operator of the appellant was perfectly lawful.

With great respect, the learned judge appears to have misconstrued and mis-applied the provisions that he relied upon to arrive at that conclusion.

(i) First and foremost, it is common cause that there was no corporate nexus between West Group and the appellant. The fact that Douglas & Tate, a subsidiary of West Group, acted as an agent of the appellant in Zimbabwe, did not justify the imposition of corporate responsibility upon the Chief Executive Officer (CEO) of West Group simply because the latter was the holding company of Douglas & Tate.

(ii) Secondly, and more significantly, the learned judge seems to have stretched the concept of contextual construction well beyond the permissible limits.

In terms of section 47(a) of the Value Added Tax Act, it is the public officer of a company that is responsible for performing the duties imposed by that Act. Such public officer is ordinarily appointed by the company itself or by an agent or legal practitioner vested with the authority to do so: and, in default of such appointment, section 61(4) of the Income Tax Act enables the Commissioner to designate a “managing director, director, secretary or other officer of the company” as its public officer.

Without doing critical violence to the clear and unambiguous language of this provision, it is difficult to imagine how the Chief Executive Officer (CEO) of West Group, an entity that had no managerial, directorial, or shareholding connection with the appellant, could possibly be regarded as an officer of the appellant company.

I am fortified in this position by having regard to the extremely onerous obligations imposed upon the public officer, or registered representative operator, of a company as well as the highly punitive consequences and liabilities attaching to the failure to fulfil those obligations. Amongst other things, there is the possibility of being subjected to monetary penalties, legal process, and tax assessments as well as the liability to pay, albeit in a representative capacity, taxation debts incurred by the company.

I do not think that the lawmaker would have intended the visitation of such punitive measures upon the officers of an entirely separate corporate entity.

Both at common law and by virtue of section 3 of the Administrative Justice Act [Chapter 10:28], the Commissioner of Taxes, as an administrative authority, is enjoined to act fairly, reasonably, and lawfully in the performance of his or her statutory functions and duties.

In the instant case, I am of the considered view that the compulsory appointment of the Chief Executive Officer (CEO) of West Group, as the public officer and representative registered operator of the appellant, was patently unfair, unreasonable, and unlawful.

In this respect, the court a quo clearly erred in upholding this appointment.

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Garnishee Order and Representative Taxpayers

HB12-11 : TRIANGLE LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: NDOU J

HH68-14 : FAIRDROP TRADING (PRIVATE) LIMITED vs THE ZIMBABWE REVENUE AUTHORITY
Ruled By: MAFUSIRE J

Appealed
HH328-14 : PACKERS INTERNATIONAL (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: CHIGUMBA J

View Appeal
SC28-16 : ZIMBABWE REVENUE AUTHORITY vs PACKERS INTERNATIONAL (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GOWORA JA and HLATSHWAYO JA

HH169-15 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY and STANBIC BANK and MNISTERS OF MINES AND MINING DEVELOPMENT and MINERALS MARKETING CORPORATION OF ZIMBABWE
Ruled By: MAKONI J

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

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

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Law Portal Zimbabwe

Garnishee Order and Representative Taxpayers

HB12-11 : TRIANGLE LIMITED vs ZIMBABWE REVENUE AUTHORITY Ruled By: NDOU J

HH68-14 : FAIRDROP TRADING (PRIVATE) LIMITED vs THE ZIMBABWE REVENUE AUTHORITY Ruled By: MAFUSIRE J

Appealed HH328-14 : PACKERS INTERNATIONAL (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY Ruled By: CHIGUMBA J

View Appeal SC28-16 : ZIMBABWE REVENUE AUTHORITY vs PACKERS INTERNATIONAL (PRIVATE) LIMITED Ruled By: ZIYAMBI JA, GOWORA JA and HLATSHWAYO JA

HH169-15 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY and STANBIC BANK and MNISTERS OF MINES AND MINING DEVELOPMENT and MINERALS MARKETING CORPORATION OF ZIMBABWE Ruled By: MAKONI J

View Appeal HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD Ruled By: MUSAKWA J

View Appeal HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD Ruled By: MUSAKWA J

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

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Law Portal
Zimbabwe

HB12-11 : TRIANGLE LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: NDOU J

HH68-14 : FAIRDROP TRADING (PRIVATE) LIMITED vs THE ZIMBABWE REVENUE AUTHORITY
Ruled By: MAFUSIRE J

Appealed
HH328-14 : PACKERS INTERNATIONAL (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: CHIGUMBA J

View Appeal
SC28-16 : ZIMBABWE REVENUE AUTHORITY vs PACKERS INTERNATIONAL (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GOWORA JA and HLATSHWAYO JA

HH169-15 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY and STANBIC BANK and MNISTERS OF MINES AND MINING DEVELOPMENT and MINERALS MARKETING CORPORATION OF ZIMBABWE
Ruled By: MAKONI J

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

View Appeal
HH964-15 : ECONET WIRELESS (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY and COMMISSIONER GENERAL and STEWARD BANK LTD and CBZ BANK LTD and NMB BANK LTD and STANBIC BANK LTD
Ruled By: MUSAKWA J

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