Zimra ordered to refund Zimplats $9,5m

ZIMBABWE Revenue Authority (ZIMRA) has been caught on the wrong side of the law in collecting revenue and the High Court has ordered it to pay back $9,5 million it unlawfully garnished from a local mining giant.

The taxman, in violation of the law, imposed fines to the tune of $9 554 215 on Zimbabwe Platinum Mines (Pvt) Ltd for alleged Customs and Excise Act infractions.

This was despite the fact that the company was contesting the charges.

Zimplats, through Advocate Thabani Mpofu, successfully challenged decision by ZIMRA at the High Court. Justice Esther Muremba recently nullified the fines and ruled that Zimra had no power to impose fines in cases where the alleged violation of the Customs and Excise Act have not been admitted.

"In the result, it is hereby declared that: (a) The second respondent (Zimra) has no power to impose a fine, where a contravention of the Customs and Excise Act has not been admitted. (b) The fines imposed by the second respondent are null and void. The respondents are hereby ordered to refund to the applicant all fines that were imposed and collected from it. Each party is to bear its own costs."

The judge said ZIMRA imposed fines on Zimplats when it was crystal clear that the firm was not admitting to the infractions. Facts are that Zimplats, which was involved in mine development operations between 2009 and 2013, periodically applied to be granted customs duty rebates on goods that were used in the operations.

In terms of Section 144 of the Customs and Excise Act (General) Regulations, Zimplats applied for and was granted customs duty rebates for the period stretching from 2009 to 2010. In December 2010, Section 144 was repealed.

Unaware of the development, Zimplats continued applying for rebate using the repealed piece of legislation. In 2011, the rebate application was denied by Zimra.

A meeting was held with Zimra bosses and it was agreed that the mining firm should reapply in terms of Section 138 of the Customs and Excise Act (General) Regulations.

In February 2013, ZIMRA's investigations department queried why the firm was applying for rebates under Section 138 of the regulations.

Zimra subsequently stopped processing Zimplats' applications.

"On October 14 2013 ZIMRA's investigations department wrote to the applicant saying all rebates claimed after the five-year period set out in the Mining Agreement were contrary to law and that the applicant should pay the rebated customs duty, import value added tax, interest and penalties.

"On 21 November 2014, the first respondent (ZIMRA) issued three special warrants for the recovery of the rebated customs duties," reads the summary of the case.

ZIMRA argued that the company was not entitled to be granted rebates from 2011 to 2013 because the five-year period set out in the Mining Agreement had expired. It also argued that Zimplats was not entitled to rebates between September 2009 and May 201 because its mining area was not listed in any statutory instrument during that period.

In the three warrants, ZIMRA claimed principal amount of $28 664 861 with interest in the sum of $6 898 258. In addition, three fines were imposed on the company for the customs infractions to the tune of $9 554 215.