Home » Industry » Zimbabwe: TM Supermarket Loses Tax Case

LEADING retail group, TM Supermarket, is embroiled in a dispute with the taxman after being penalised for trying to evade tax when it imported refrigeration units in 2012.

According to court documents, TM Supermarket dragged the Zimbabwe Revenue Authority (ZIMRA) to court challenging a US$135 000 fine imposed on it for dishonesty after it imported refrigeration units from South Africa and allegedly misrepresented that the consignment had cabinets for use in making fridges in order to pay less duty.

However, upon physical inspection of the goods, ZIMRA officials are said to have discovered that the retail chain had imported complete refrigeration units which attracted import duty of 60 percent.

The units the company had declared attracted duty of just five percent.

This resulted in ZIMRA calculating duty due at US$134 798. The taxman then imposed a 100 percent fine on the amount due.

TM lodged an appeal against the penalty on the grounds that it was a first offender but that appeal was rejected.

"ZIMRA's argument is that the goods had the essential character of complete goods as the pipes already contained gas. It says that TM's clearing representative, Speedlink Cargo, conceded in a letter to it that the goods had been wrongly classified, particularly as the cabinets had refrigeration tubes. Furthermore, in another letter written by TM's managing director to ZIMRA, it is said he agreed with the tariff determination and what TM asked for was a reduction in the penalty as first offenders," read the court papers.

TM Supermarkets is contesting the fine in the High Court.

ZIMRA successfully argued that proper procedures had not been followed in bringing the case before the court as a State agent, the tax collector, could only be sued after being served with a 60-day notice.

Justice Amy Tsanga concurred that the procedures had not been followed and threw away TM's application.

"ZIMRA is a State entity. It is in my view an organ of government through which it collects revenue," she said.

She said what could be logically and legally deduced from the law was that the State, as represented by ZIMRA as a state entity, and the ZIMRA Commissioner, being the person responsible for the department within ZIMRA which collects revenue, as well as an officer of the relevant department within ZIMRA which collects revenue, could be sued in civil proceedings.

"It would make little, if any sense, to exclude the entity that the officer works for, from being given the requisite notice. Furthermore, the word 'State,' all too frequently used in legislative enactments, must be read contextually, and in general refers to the relevant branches of government institutions that operate under the broad rubric of the umbrella State.

"It is also clear from the above provisions that all parties involved cannot be sued without proper notice. The requirements must be followed. It is only after the time period has expired without any result that any claim or action may be brought," ruled Justice Tsanga.

Source: Financial Gazette.