Tax relief for ZETDC

ZIMBABWE Electricity Transmission and Distribution Company will now save millions of dollars after the Supreme Court scrapped tax the power utility was paying to rural district councils for power lines that pass through the 60 districts throughout the country.

Each of the rural district councils was charging ZETDC unit tax and way leave charges in the range of $20 000 to $50 000 per year.

The unit tax was, however, scrapped last year after the High Court absolved the power company from paying the tax on the grounds that the levy was outside the confines of the councils' law.

Following the High Court ruling, ZETDC appealed to the Supreme Court against the lower court's decision allowing the RDC's to continue collecting the way leave charges. On Monday Deputy Chief Justice Luke Malaba allowed the appeal by ZETDC.

"The levy by respondents (RDCs) on applicant of way leave charges is outside provisions of Section76 of the Rural Districts Councils Act (Chapter 29:13) or any other law and is therefore unlawful," said Justice Malaba.

The councils suffered another blow after their cross appeal was rejected for lack of merit.

Advocate Thabani Mpofu, who appeared for ZETDC, submitted that the lower court erred in holding that the charging of way leave charges was competent under Section 76 of the RDC's Act and in not considering that the provision gives councils the entitlement to charge for services rendered by them and not the erection by appellant of its power lines.

It was also submitted that the lower court erred in failing to strictly construe provisions of Section 76 of the Rural Districts Councils Act and in not finding that way leave charges were not provided for in that provision.

The councils through their lawyer, Mr Charles Warara, opposed the appeal insisting that the charges were above board and that they were doing everything in terms of the Act.

By allowing ZETDC lines to pass through their areas of jurisdiction, the councils argued, they were equally offering a service to ZETDC and that the service should as well be paid for.

The Supreme Court ruling on Monday brought final relief to ZETDC, which can now save millions of dollars.

The dispute between ZETDC and all the RDCs spilled into the courts last year when the former sued all the 60 rural district councils for claiming payment of annual unit tax and way leave charges from the power distributor.

RDCs were charging ZETDC way leave charges and unit tax for power lines that pass through the 60 districts and the substations established in the areas throughout the country.

In her judgment, High Court judge Justice Mary Dube had partially allowed the application by ZETDC. Since dollarisation of the economy in 2009, ZETDC has not been paying the tariffs.

At the time of going to court, it had accumulated bills running into millions of dollars considering that each of the councils was charging ZETDC unit tax and way leave charges in the range of $20 000 to $50 000 per year.

In the lower court, ZETDC argued that the charges levied against it were unsustainable and constituted a threat to its capacity to service the country. It was also argued that the charges were arbitrary and had no lawful foundation.

Adv Mpofu was instructed by Mr Vote Muza of Muza and Nyapadi law firm.