Recent Zimbabwe Court cases
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Care International- An employee causes a loss to the entity but loss also aggravated by the entity’s fault Case Name Care International In Zimbabwe v ZIMRA and ORS Summary
An employee ( one called Desmond) of Care International (Care) fraudulently declared and claimed duty rebate on importation of wire which he diverted for personal use
Desmond used Care International’s documentation to perpetrate the fraud.
The wire was recovered by ZIMRA at the premises of Survival Harward (Pvt) Ltd (an approved supplier of Care International)
ZIMRA made a demand to Care for the duty and penalty of the same amount in respect of the seized goods on the basis that the goods were not destined for consumption or use in an aid or technical co-operation project undertaken by the entity
Care made an objection on the demands made by ZIMRA 6 months later.
Jurisdiction
High Court Harare 24 March and15 April 2015. Decision
The Commissioner referred to in s 196 of the Customs & Excise Act is the Commissioner General in charge of Zimra.
There was no dispute regarding the position or authority of the Commissioner-General in relation to the transition from the former office of Director or Controller of Customs and Excise under the Act.
Zimra was an agent of the State and the Commissioner General a state employee thus s 196 of the Customs and Excise Act and s 6 of the State Liabilities Act respectively offered him the protection against proceedings unless 60 day notice has been issued
The case failed because the required 60 day notice of civil proceedings against the State was not given.
What were the issues?
Whether civil proceedings made without giving 60 days required notice in terms of s 196 (1) of the Customs and Excise Act should be allowed to stand .
What were the facts?
Care International is a non- profit making organisation engaged in humanitarian work
The entity was entitled to a rebate or refund of duty on goods or services acquired in the furtherance of its humanitarian objectives
Certain goods (wire) were fraudulently acquired by an employee of Care International (Desmond Maninimini- Procurement Supervisor) using purchase orders of Care International.
The goods were seized by Zimra on suspicion that although a rebate of duty had been applied for and granted, the goods were not destined for consumption or use in an aid or technical cooperation project in which the Care was involved.
A joint investigation was made by both Care and ZIMRA and it revealed that Desmond fraudulently raised purchase orders in the name of Care International, which were neither processed nor approved by Care International in terms of its procurement procedures. 16
Zimbabwe Revenue Authority (ZIMRA) seized the goods from the premises of Survival Harward (Pvt) Ltd the 3rd Respondent (an approved supplier of Care International )
The goods had been acquired without paying duty yet destined for personal consumption
Following the Investigations ZIMRA wrote to Care International demanding duty totalling US$219,438 and a penalty of the same amount.
Six months after Care International filled an application for an order setting aside the Zimra’s decision, but did not give notice of its intention to file a civil claim.
ZIMRA argued that Care International had failed to give 60 days’ notice of the proceedings, as required by s 196(1) of the Customs and Excise Act [Chapter 23:02], which provides that “No civil proceedings shall be instituted against the State, the Commissioner or an officer for anything done or omitted to be done by the Commissioner or an officer under this Act or any other law relating to customs and excise until 60 days’ notice has been given in terms of the State Liabilities Act [Chapter 8:14]
On that basis Zimra wanted the application of Care International to fail What are the competing arguments? Taxpayer
That Zimra’s decision directing it to pay duty in the sum of US$219 437.62 and a penalty of the same amount be and is hereby set aside.
That it’s cost of application to be borne by the Zimra and other respondents “jointly and severally one paying the other to be absolved”.
The Commissioner
That the application by Care was premature and irregular before the courts because it failed to comply with the mandatory provisions of section 196(1) of the Customs Act, which requires that before instituting proceedings against the ZIMRA one shall first give sixty days’ notice of its intention to institute civil proceedings
That Care should have first exhausted domestic remedies (this supposedly suing Desmond for the loss) and that it was approaching the courts with date hands What was the Legislation or the judicial precedence considered.
Legislation considered
Customs and Excise Act [Chapter 23:02]; Customs and Excise (General) Regulations 2001 SI 54/2001sec 122 State Liabilities Act [Chapter 8:14], s 6, s 7 Customs and Excise Act [Chapter 23:02], s 2, s 196(1) Revenue Authority Act [Chapter 23:11], s 3, s 4, s 38, s 39 Value Added Tax Act [Chapter 23:12]; Income Tax Act [Chapter 23:06];
Cases considered
Bethy Dube v ZIMRA 14-HB-002 Puwayi Chiutsi v Commissioner of Police and ZIMRA and Anor 05-HH-065 Ronald Machacha v ZIMRA 11-HB-186 Tasmine P/L v ZIMRA 09-HB-115 All dealing with application s 196 of the Customs & Excise Act
What is the Court`s reasoning and decision?
That point raised by Zimra regarding the 60 day notice is crucial because, all the other points can only be dealt with if Care is properly before the court.
That Care has not given any notice to ZIMRA as required by s 196 of the Customs and Excise Act as read with the State Liabilities Act [Chapter 8:14] (we outline the provisions below)
That over the years the approach of the court is that failure to give this notice renders the application fatally defective and the present case is no exception and it should be dismissed.
That no court of law has the discretion to dispense with strict compliance with the provisions of a statute and that the present application is invalid for want of compliance with s196 (1) of the Act.
That it cannot be denied that Zimra as an agent of the State, and continues to carry out the functions of the former department of Customs and Excise and that the law protecting the former officers and the former department of Customs and Excise is still in our statutes and this protection is retained also for the benefit of Zimra and its officers.
That Care was given the endorsement on the official Notice of Seizure issued on 27 September 2012 which it chose to ignore (extract of the endorsement is restated by us below) and such endorsement on the seizure notice cannot be taken lightly and requires the law to be obeyed.
That in Puwayi, supra, Bhunu J said:- “Apart from the need to exhaust domestic remedies before approaching the courts section 196 precludes the applicant from approaching the courts before observing laid down procedures …… As the laid down 60 days period has not yet expired this application is ill-conceived and premature. The section is mandatory and admits of no exception because it constitutes a prohibition without making provision for any exception”.
That there is no valid application before the court and accordingly the rest of the other issues raised by the respondents cannot be delved into and that the court is estopped from going any further and therefore the points raised by Zimra are upheld
That the application is not properly before the court and is therefore dismissed with costs. Survival Harward (Pvt) Ltd points and court reasoning and decision Survival Harward’s points in limine were that it has no authority to act on behalf of Care, that he has not given the court proof of such authority nor has it made the necessary averment that could clothe it with authority. Accordingly the application is improperly before Court.
The court’s reasoning and decision were as follows regarding these points:
That Survival Harward has wrongfully been made a party to these proceedings as no specific and substantive relief is being sought from it and has been inconvenienced and made to suffer unnecessary costs.
That Care’s application is an abuse of Court process and should be dismissed with costs.
That just like in the case against Zimra, Care has no valid application before the court, against Survival Harward. What is the Impact of the decision on your business or practice?
The case also exposes Care and its lawyers.
We extract from the case the endorsement on the official Notice of Seizure issued to the Care on 27 September 2012 which reads as follows:-
“If you wish, you may, within three months from the date of this notice, make your own written representations to the Port Manager of the Port shown on this notice, for the release of the goods. Additionally or alternatively you may, within three months from the date of this notice and subject to the submission of written notification 60 days beforehand in terms of the provisions of section 196 of the Act, institute proceedings for the recovery of the goods from the Commissioner or for the payment of compensation in respect of any dangerous or perishable goods which have been disposed of by the Commissioner. If the Commissioner does not release the goods following representations made by you or if you do not institute proceedings within the period specified, any goods declared to be forfeited will become the property of the State without compensation”.
Care International did not take heed of the above so important piece of information and what happened next, was disastrous. It made an error with its eyes wide open. Care is no exception also Zimplats and S Pvt Limited cases revealed similar gaps. S Pvt Limited case was reported by us in September 2015 MTU. We report Zimplast case in January 2016 (wait in anticipation). Information should not be taken for granted. Also, it is trite of law that ignorance of law has no defence. Better articulation and analysis of matters by those in business and those tasked with delivering value to the shareholders or stakeholders is expected.
Tax Matrix is freely distributing information after it has interpreted it for you a feat that has never happened in this country all what you need is to have a culture of reading. “Our information is not cyber bullying, but is to serve you in case of any conflict with Zimra”.
Sections 6 and 7 of the State Liabilities Act [Chapter 8:14] provide as follows:-
“6. Notice to be given of intention to institute proceedings against State and officials in respect of certain claims. (1) Subject to this Act, no legal proceedings in respect of any claim for:– (a) Money, whether arising out of contract, Delict or otherwise; or (b) the delivery or release of any goods; (c) and whether or not joined with or made as an alternative to any other claim, shall be instituted against:– (i) the State; or (ii) the President, a Vice-President or any Minister or Deputy Minister in his official capacity or; (iii) any officer or employee of the State in his official capacity; unless notice in writing of the intention to bring the claim has been served in accordance with subsection (2) at least sixty days before the institution of the proceedings.
Certain claims are exempted from application of section six i.e. as follows:
a claim in which the debt concerned has been admitted to the claimant, expressly and in writing;
a counter-claim; or
a claim which the court or a judge or magistrate, on application, has determined to be urgent; or
A claim in respect of which the defendant has waived, expressly and in writing, the notice required by section six”.
But not claims made under s 196 of the Customs Act
Whereas. Section 196 of the Customs and Excise Act (“the Act”) as amended by Act No. 17 of 1999 provides as follows:-
“196 Notice of action to be given to officer No civil proceedings shall be instituted against the State, the Commissioner or an officer for anything done or omitted to be done by the Commissioner or an officer under this Act or any other law relating to customs and excise until sixty days after notice has been given in term of the State Liabilities Act [Chapter 8:15]. Subject to subsection (12) of section one hundred and ninety-three, any proceedings referred to in subsection (1) shall be brought within eight months after the cause thereof arose, and if the plaintiff discontinues the action or if judgment is given against him, the defendant shall receive as costs full indemnity for all expenses incurrent by him in or in respect of the action and shall have such remedy for the same as any defendant has in other cases where costs are given by law”.
Also, s 38 and 39 of the Revenue and Authority Act are important for the transition of taxes departments and Customs department into now Zimra, with regard to the posts and roles of the employees of the departments by particular those of the Commissioner of Taxes and Directors of Customs which now vested in the Commissioner General of Zimra.
Goba T – ruling on returning resident duty rebate on motor vehicle case Case Name GOBA. NT (Appellant) v ZIMRA & Commissioner of Customs (Respondents)
Summary
Goba approached Zimra’s offices to make representations and claim the motor vehicle under the immigrants’ rebate scheme. He was denied the rebate on the basis that he was no longer a returning resident at the time of importing the vehicle.
The case dwell on the “time of arrival” for a retuning resident for a purpose of qualifying for a returning resident duty rebate
Goba had been staying in Namibia with his father who was employed there and returned to Zimbabwe first time in January 2011, before returning back to Namibia in August 2011and returned for good to Zimbabwe in September 2011.
Goba sought review of the decision of the Customs dismissing his claim under the immigrant rebate on the grounds of gross irrationality in his assessment of the evidence before him and misdirection at law in the second respondent’s application of s 105 of the Customs and Excise (General) Regulations, SI 154 of 2001.
Jurisdiction
High Court 18 February 2015 Decision
That the decision by Zimra of rejecting Goba’s claim for immigrants’ rebate be and is hereby set aside
That Zimra be and is hereby ordered to release the applicant’s motor vehicle without any conditions.
That the ZIMRA pays the costs of suit. What were the issues?
Whether the Time of arrival of a returning resident is determined automatically on the first instance the returning resident arrives in the country or when he declares his status of being a returning resident.
Whether Goba’s time of arrival for the purposes of s 105 of the Regulations was 30 January 2011 or 3 September 2011.
What were the facts?
Goba N T was a Zimbabwean citizen who had been resident in Namibia since 1998 together with his father who was employed by the Namibian government and enjoyed permission to remain in Namibia by virtue of being part of the family.
His father’s employment contract terminated on 31 December 2010 and when the contract expired, the Namibian government extended the temporary residence permit for his family Goba included, for the purposes of winding up their affairs.
Goba finally left Namibia on 3 September 2011, but he had returned to Zimbabwe on a visit in January 2011, until he returned to Namibia late in August 2011.
In August 2011 he bought a car before he returned to Zimbabwe in September 2011.
When he entered Zimbabwe he was admitted as a returning resident coming back to resume permanent residence and his passport was endorsed as such.
When the vehicle arrived in November 2011 Zimra detained it, demanding duty and other charges on the basis that he was no longer a returning resident and therefore disqualified from claiming duty rebate for returning residents.
Zimra argued that Gobat’s “time of arrival” in terms of s 105(1) (b) of the Customs and Excise (General) Regulations 2001 (SI 154 of 2001) was 30 January 2011. 20 What are the competing arguments?
Taxpayer
That the respondents (Zimra and Customs) cannot, after granting him the returning resident status, turn around and claim that he was illegally staying elsewhere so as to disqualify him of the rebate.
That by endorsing “RR” in his passport on 3 September 2011 this denotes that the respondents accepted him as a permanent returning resident on that date.
That the decision by the Commissioner of Customs denying the claim for rebate was gross irrationality. The Commissioner Zimra and Customs
That Goba came back as a returning resident and was accepted as such by Zimbabwe immigration authorities and not as a visitor when he came on 30 January 2011 and hence his lengthy stay in Zimbabwe from that date until he returned to Namibia on 22 August 2011 and was accepted as a “visitor” in Namibia and given until 5 September 2011 to remain there.
That if he had been a visitor in Zimbabwe, his passport would have been so endorsed and he would have been allowed up to a maximum of 30 days but his passport did not bear such endorsement.
That Goba came back to Zimbabwe on 30th of January 2011 because his residence permit in Namibia had expired and was not “legally resident” in Namibia after that date and that his father’s work permit expired on 30 December 2010, that became the date on which his residence permit expired in that country
That the fact that Goba re-entered Namibia on the 22nd of August 2011 on a ‘visitor’ permit underlines the fact that he was no longer a legal resident of Namibia and his time of arrival he remains a fugitive of January 2011 which was ‘the first occasion’ he returned to Zimbabwe after the expiry of the fathers contract of employment which was tied to the appellants resident permit.
That after the expiry of the permanent resident permit in Namibia, Goba naturally reverted to his Zimbabwe permanent resident status and this occurred on the 30th of January 2011, when immigration correctly endorsed the “RR” in his passport
That section 105(1) (b) of the Customs and Excise (General) Regulations in SI 154 of 2001 defines ‘time of arrival’ for a returning resident as the first occasion on which he returns to Zimbabwe after the expiry of such contract or if he has been on an extended absence for any other reason, the first occasion on which he returns to Zimbabwe.
What was the legislation or Judicial precedents considered
Legislation Considered
Customs and Excise (General) Regulations, 2001 (the Regulations) Cases considered Affretair (Pvt) Ltd v M K Airlines (Pvt) Ltd 1996 (2) ZLR 15 Council of Civil Service Unions (CCSU) & Ors v Minister for the Civil Service [1984] 3 All ER 935 (HL) Metsola v Chairman of the PSC & Anor 1989 (3) ZLR 147. Patriotic Front-ZAPU v Minister of Justice, Legal & Parliamentary Affairs 1985 (1) ZLR 305 (SC) R (Bhatt Murphy) v Secretary of State for the Home Department [2008] EWCA Civ 755d
What is the Court`s reasoning and decision?
That final date of return could only be ascertained from the returning resident himself and the immigration official should ask a returning resident whether he has come back for good or not.
That if this is done the person would naturally indicates this and can then be interviewed for the purpose of determining whether he wishes to exercise his right the rebate there or at some later stage when his household goods arrive in the country.
That the general expectation is that the immigration official will ask the returning resident whether he has come back for good or not and interview the person whether he wishes to exercise the right to the rebate there and then or at some later stage when his household goods arrive in the country
That even if Goba had gone back to Namibia as a visitor in August 2011, that would not detract him from his status in Zimbabwe on 3 September 2011 when he was interviewed and accepted as a returning resident.
That Goba was resident in Namibia by virtue of him staying with his parents and was absent in Zimbabwe for an extended period as contemplated by para (b) (iii) of s 105 of the Regulations.
That his status in another jurisdiction was not relevant for the purpose of determining whether Goba met the criteria set out in s 105 of the Regulations
That the court cannot be asked to consider Goba`s status in Namibia in order to establish applicable regulations in Zimbabwe and that Goba’s passport was endorsed “Acc R/R” upon his return to Zimbabwe on 3 September 2011.
That the rebate was meant to encourage migration back into Zimbabwe by benefitting qualifying immigrants and that to give an interpretation that fettered or oppressed that class of people would be to frustrate the object, purpose and intention of the legislature.
That 30 January 2011 cannot be date of Goba’s date of return because the respondents did not establish then whether, by his return on the date, Goba wished to be treated as harbouring intent to settle permanently or only wished to visit and that had this been established Goba’s passport would have carried the endorsement one way or the other.
That the fact that Goba was not accepted as a visitor does not imply that he was accepted as a returning resident.
That even if there was an endorsement the phrase “the first occasion on which he returns to Zimbabwe” meant that when a Zimbabwean citizen abroad returns to the country by reason of say a vacation, holiday bereavement etc i.e. once he sets foot into the country and this would imply forfeiture of his returning resident`s rebate, which cannot be said to be the intended object of the Regulations (underlined words represent our own emphasis).
That the right to benefit from the provisions of the Regulations has created a substantive legitimate expectation for permanent returning residents to enjoy the associated benefits which flow from the Regulations.
That a denial of a legitimate expectation in a given case amounts to denial of a right guaranteed and that this is discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice.
That it is irrational, and therefore unreasonable, irregular and unfair to deprive Goba a right which accrued to him as a returning resident under the circumstances and that authorities administering the regulations must do so rationally, fairly, non-arbitrarily and in an unbiased manner.
That in R (Bhatt Murphy) v Secretary of State for the Home Department [2008] EWCA Civ 755 LORD JUSTICE LAWS expressed how, arising from the doctrine of legitimate expectation, an abuse of power may be established:- “… The power of public authorities to change policy is constrained by the legal duty to be fair (and other constraints which the law imposes). A change of policy which would otherwise be legally unexceptionable may be held unfair by reason of prior action, or inaction, by the authority. If it has distinctly promised to consult those affected or potentially affected, then ordinarily it must consult (the paradigm case of procedural expectation). If it has distinctly promised to preserve existing policy for a specific person or group who would be substantially affected by the change, then ordinarily it must keep its promise (substantive expectation). If, without any promise, it has established a policy distinctly and substantially affecting a specific person or group who in the circumstances was in reason entitled to rely on its continuance and did so, then ordinarily it must consult before effecting any change (the secondary case of procedural expectation). To do otherwise, in any of these instances, would be to act so unfairly as to perpetrate an abuse of power.”
That time of arrival for a former resident who enters Zimbabwe as a visitor and does not depart from Zimbabwe shall be deemed to be the first occasion on which he imports any personal and household effects and other goods in terms of s 105 within three months from the grant of his permanent returning resident status.
That the time of arrival rules places the burden to declare a status on the returning resident and must without being warned of the consequences elect the status under which his papers upon reentry into Zimbabwe ought to be processed.
That even if that interpretation were correct, the fact that Goba was interviewed on 3 September 2011 and accepted as a returning resident meant the suggestion of 30 January 2011 falls away because there was no history of such an interview prior to this one and if the interview existed then the respondents would have had a strong case.
That the date of ownership of vehicle was 29 August 2011, i.e. the date he fully paid for it as reflected by the FNB invoice and was entitled to claim an immigrant’s rebate at the time of arrival on 3 September 2011.
That Goba’s status is as it presented itself on 3 September 2011 and that there was no legal impediment to his claim for an immigrant’s rebate.
That the refusal to accede to his claim for a rebate in terms of the Regulations, seen in this light, is unreasonable and therefore irrational.
That the decision to reject Goba’s claim for rebate is set aside and Zimra is hereby ordered to release Goba’s motor vehicle without any conditions and Zimra pays the costs of suit. What is the Impact of the decision on your business or practice? General comments It never crossed Zimra’ mind that it is possible to have stateless persons when it suggested that once the Namibian residence was terminated then Goba automatically reverted to be Zimbabwe by default.
Under tax treaties for instance there are residence tie breaker rules. According to these rules where the person is Stateless the contracting states have to agree who should take that person (see tie breaker rules in M. Tapera & A Majachani – Unpacking Tax Law & Practice in Zimbabwe). This implies that if a person is not resident of one state then he could be resident of another, he could be Stateless person or could even be resident of a third State. Immigrant’s duty rebate- s 105 of the Customs and Excise Regulations, 2001 Section 105 of the Customs and Excise Regulation, 2001 allows an immigrant to access duty rebate upon importation of personal effects and household goods (including 1 passenger motor vehicle), and not commercial goods.
This piece of legislation is particularly important to many of the Diasporans out there and should they contemplate coming home for good they need to acquaint themselves with these rules so as not to be deprived of their rightful benefit. In addition to the above facts, we explain this fully below for your benefit:
Who is an immigrant?
An immigrant is a person who enters Zimbabwe, to take up employment or permanent residence; or as a visitor but remains to take up employment or permanent residence, or as a diplomat but remains to take up employment or permanent residence or to attend any educational institution or for the purpose of attending any educational institution, including their spouses. It does not include any person who has previously resided or been employed in Zimbabwe, unless such a person is returning to Zimbabwe after having resided outside Zimbabwe for a period of not less than 2 years or any shorter period as may be approved by the Minister. This definition covers non-residents, returning residents and former diplomats. Time of arrival rules 23 Any person contemplating to import personal effects and household goods (including a passenger motor vehicle) should be aware of the time of arrival rules because they are central to qualification of the rebate. We outline below the time of arrival rules (s 105 of the Customs & Excise, Regulation, 2001):
a) Immigrant non-resident – The first occasion on which he enters Zimbabwe, the first occasion on which he enters Zimbabwe after the grant of his employment or residence permit: If the person enters Zimbabwe as a visitor, but remains to take up employment or permanent residence and does not depart from Zimbabwe, time of arrival shall be deemed to be the first occasion he imports any personal and household effects and other goods ranking for rebate within three months from the date of grant of his employment or residence permit
b) Returning residents- If the person has been on a course of study the first occasion on which he returns to Zimbabwe after successfully completing such course of study. If the person has been on a contract of employment the first occasion on which he returns to Zimbabwe after the expiry of such contract. If the person has been on an extended absence for any other reason, the first occasion on which he returns to Zimbabwe. If former resident enters Zimbabwe as a visitor and does not depart from Zimbabwe his time of arrival shall be the first occasion on which he imports any personal and household effects or other goods ranking for rebate within three months from the grant of his permanent returning resident status.
c) Former diplomat Returning residents- For a former diplomat who remains in Zimbabwe to take up employment or permanent residence, the first occasion he imports any personal and household effects and other goods in terms of this section within three months from the date of grant of his new employment permit or residence permit. Conditions for qualification To qualify for the rebate, the goods must be in physical existence and fully paid for by the immigrant before the time of his arrival. As stated above, it is granted in respect of personal and household effects and other goods, imported by an immigrant if such effects and other goods are in the opinion of the Commissioner to have been owned by the person at the time of his arrival and at the time of their importation or at the time the Commissioner in his discretion may approve and are intended for personal use in Zimbabwe by the person but not for trade or commercial purposes; The rebate is not given in respect of any motor-vehicle imported by an immigrant who is, at the time of his arrival is under the age of 16 years. An immigrant is entitled to rebate only on 1 motor-vehicle imported. And cannot be given in respect goods imported for commercial or trade purposes. The rebate shall be granted not more than once during any period of 4 years. Items that qualified for the rebate cannot be sold, offered or displayed for sale, leased, hired, lent, pledged or in any manner whatsoever, whether gratuitously or otherwise, disposed of to any other person within 24 months of the date of their entry under rebate. When this happens, a prior written permission of the Commissioner is required and duty that should have been paid at the time of their entry is required, otherwise they will be liable to seizure. The Commissioner may however ask for the payment of a lesser amount of duty than one which should have been paid at the time of entry, this is in consideration of the monthly depreciation of the goods in question on a pro-rata basis since the date on which they were entered under rebate. But if no reduction is made the goods are to be sold or disposed of within 12 months of the date their entry. Duty can also be reduced on accident damaged vehicles. . If an immigrant subsequently emigrates or departs from Zimbabwe after getting the rebate for a period of more than 6 months within 24 months from the date of entry of the items he/she should remove the 24 items from Zimbabwe on his departure or should pay the duty he/she should have at the time of entry of the items or else the items are liable to seizure. Documentation requirement The documentation required to be given to the Zimra official when seeking to claim the rebate includes:
Employment or residence permit or
For a student proof that he has completed such course of study
For a person was on employment contract, proof that he has terminated such contract of employment;
An person who was on an extended absence from Zimbabwe, proof of such absence from Zimbabwe; and
Proof or certificate showing the items were owned by the person at the time of his arrival and at the time of their importation; and
For a motor vehicle, a certificate stating that a rebate has not been granted to him in respect of a motor vehicle during the previous 4 years; and
A certificate that such effects and other goods are intended for his own use in Zimbabwe and will not be used for trade or commercial purposes; and
A written undertaking that the items will not be disposed of that is required by the law.
A written undertaking to pay the duty if the item is disposed of as stated above
Any such evidence relating to the acquisition, ownership or purchase of such effects and other goods as may be required by the Commissioner.
Administration of justice
The case also pointed out that the courts will expect from administrative bodies decisions that are:-
Legal, in the sense that they are made within the framework of the law which empowers them to make the decision, and after the application of the appropriate criteria laid down in the statute or statutory instrument;
Rational, in the sense that they are not so wrong as to lead to the conclusion that they could only have been reached by a failure to apply the right criteria or by the application, whether deliberately or not, of the wrong criteria.
Procedurally proper, in the sense that the appropriate procedures required by the statute have been followed and that the principles of natural justice have been observed.
Justifiable, in that the administrative body will give its decision, at least when the decision is challenged, with reasons. The purpose of requiring reasons is that the Court can then more readily determine the propriety and reviewability of the decision.”
Also, s 68 (Right to administrative justice) of the Constitution provides as follows:
“(1) Every person has a right to administrative conduct that is lawful, prompt, efficient, reasonable, proportionate, impartial and both substantively and procedurally’ fair. (2) Any person whose right, freedom, interest or legitimate expectation has been adversely affected by administrative conduct has the right to be given promptly and in writing the reasons for the conduct. (3) An Act of Parliament must give effect to these rights, and must — (a) provide for the review of administrative conduct by a court or, where appropriate, by an independent and impartial tribunal; (b) impose a duty on the State to give effect to the rights in subsections (1) and (2); and (c) promote an efficient administration”.
Thus, if you are unhappy with the behaviour the Commissioner or any of his officers, so as to constitute unjust or unreasonable you can invoke s 68 and seek the audience of the court to obtain a remedy.
Appeal
Can Chicken Slice strip Zimra’s powers -Garnish order and pay now argue later rule being challenged in the ConCourt by Chicken Slice?
Packers International (Private) Limited owners of Chicken Slice, Pizza Slice and Creamy Slice has filed an application to the Constitutional Court (ConCourt) after it was compelled to settle a contested hefty $24 million debt in tax arrears by the Zimbabwe Revenue Authority (Zimra). The company is challenging the constitutional status of s 48 Value Added Tax Act which allows Zimra to unilaterally access banks accounts of clients or intercept monies of clients from debtors to recover VAT debts.
A similar provision in the Income Tax Act is s 58. Packers is arguing that Zimra should approach the courts first to get a garnishee order before raiding tax defaulter’s bank accounts. It alleges that s 48 denies the firms right to equality before the law and equal protection of the law as enshrined under s 56 (1) of the Constitution of Zimbabwe, an advantage that is not available to businesses.
Further, Zimra has the right and power to access one’s bank account and take money ‘owed to it’, while such a right does not extend to taxpayers when dealing with their creditors, stating that applicant and respondents are not equal before the law .
Section 48 of the VAT Act reads as follows:
(1) For the purpose of subsection (2) a person” includes a bank, building society or savings bank; and a partnership; and any officer in the Public Service or 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. Packers International is also challenging the constitutionality of the “pay now, argue later” rule (s 36 of the VAT Act).
The section forces taxpayers to pay tax pending a challenge of the figures owing in a court of law. Packers want sections 36 and 48 removed from the statute books, claiming that they violate the constitution i.e. they violate the right to administrative justice. Section 36 of the VAT Act Payment of tax pending appeal reads as follows:
“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”. Packers lodged the appeal following its objection to Zimra was rejected. While lodging an appeal with the Fiscal Appeal Court, Zimra placed a garnish order on its bank account held by FBC. In 2014, Packers International won a High Court case that ordered Zimra to remove a garnish order that they had imposed on the former’s bank accounts, to wait 7 days to impose a new order and to 26 desist from “unlawfully interfere with applicant’s business operations and its day to day activities, including the placing of its officers or agents at applicant’s business premises.”
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If Packers succeeded in its appeal this will be a landmark win to be celebrated not only in Zimbabwe, but in a number of jurisdictions because of similarity in the legislation in many jurisdictions. Whether s 48 should be scraped to allow equality at law between Zimra and other citizens, it’s a matter to be decided by the courts but Tax Matrix is legally incapable of giving a correct comment. Equally applying is the scrapping of s 36. It is prima facie that these sections violate a taxpayer’s right of access to courts and the right not to be arbitrarily deprived of one’s property.
We outline below previous precedents home and aboard regarding on the two matters and odds seems to be against taxpayers:
Section 48 of the VAT
Section 71 of the Constitution states that no person may be compulsorily deprived of their property except when the deprivation is in terms of a law of general application, or is necessary in the interests of defence, public safety, public order, public morality, public health or town and country planning or in order to develop or use that or any other property for a purpose beneficial to the community. There is no doubt tax deprives a person of his property, but it is permitted by the same Constitution but the person whose property is being acquired is however entitled to notice. Also, the rule of natural justice must be considered and prior notice should be given to the taxpayer (decision of the court in Ferucci and Others v C: SARS and Another).
See the case of Mpande Foodliner CC v C: SARS and Others (63 SATC 46), where the court stressed on the requirement for notice. It held generally that the denial of the audi alteram partem rule before issuing the agency notices, infringed the right to just administrative action (but the taxpayer was in good standing and had properly laid out his grounds, also the decision was referred to the “lone voice” in the case Smartphone SP (Pty) Ltd v Absa Bank Ltd and Another (66 SATC 241))
True, Zimra is the only entity with power to dispense judgment on his own behalf and this is on the basis of statutory authority
Held in Hindry v Nedcor Bank Ltd and Another, appointment of agent is constitutional. It does not violate the right of the taxpayer not to be arbitrarily deprived of his property and that the provision was extrajudicial and summary in nature. On requirement for notification before a garnish order can be effected- the court held that there was no need for a prior hearing as the taxpayer knew from the correspondence that SARS wanted the money repaid
Held in Contract Support Services (Pty) Ltd And Others v C:SARS and Others (61 SATC 338), “not all administrative acts require the application of the audi alteram partem rule before they are effective, especially where a prior hearing would defeat the very purpose of the notice or render the proposed act nugatory”. This was in reference to requirement of prior before garnish order can be effected
The court justified the government’s power to create liability on the basis of “the need of the government promptly to secure its revenues (Canadian Tax Journal /Revue Fiscale Canadienne (2002) vol. 50, no 5.”)
The case of The Queen v. Lambert, [1974] 1 FC 693, at 705 (TD) (reported in Canadian Tax Journal) held that that no notice or registration of garnish order is required before it can be effected (see also Sorenson v. MNR, 82 DTC 6246 (FCA)) Section 36 of the VAT
True also that s36 is meant to disarm and discourage taxpayers from appealing. It is a draconian provision and does not afford taxpayers the opportunity to challenge the assessment in a court before making the tax payment to Zimra.
In Metcash Trading Ltd v CSARS, the Constitutional Court held the “pay now, argue later” rule in terms of section 36 to be constitutional (but this case the taxpayer had dirty hands because it was involved in fraud).
That even if there is such an infringement, the quick, reliable and predictable recovery of VAT is of vital national importance and that the relevant provisions are saved from invalidity by section 36 of the Constitution, which permits limitations of the rights, protected in the Bill of Rights in particular circumstances.
In Bindura Nickel Corporation ltd v. The Zimbabwe Revenue Authority HH 30-08 a closely related matter the judge said that tax is raised for the good of the public. It is inconceivable to imagine what would happen to the fiscus if taxpayers were to be given the comfort that they can hold onto their money until interest due on overdue tax is equal to the capital amount and they can precede holding onto their money thereafter until the Commissioner sues for what is due.
In Singh v C:SARS (65 SATC 203), an innocent” taxpayer was rescued by the court from the application of from the pay-now-argue-later provisions of the Value-Added Tax Act based on natural justice principles and thus an indirect application of the founding values of the Constitution, that he was not in default for the payment of his taxes. So it is possible for clean taxpayer to be served from this draconian rule the courts.
