Delta in $26m tax debt storm

Source: Delta in $26m tax debt storm | The Herald December 23, 2016

Daniel Nemukuyu Senior Court Reporter
The High Court has thrown out an urgent interdict application by Delta Beverages (Pvt) Limited, paving way for the Zimbabwe Revenue Authority (Zimra) to garnish the beverage maker’s bank accounts to recover over $26 million in outstanding taxes.

The interdict sought to block the garnish order.

The country’s biggest manufacturer of alcoholic and non-alcoholic drinks, according to Zimra, owes Government $26 897 509.

The debt emanated from unpaid income tax and other dues for the period 2009 to 2014.

Zimra is empowered by the law to garnish a company’s bank accounts or to employ other relevant collection methods, even if the firm is contesting the outstanding amount or the calculations used by the taxman.

After an assessment of the debt by the taxman, Delta went to the High Court seeking to bar the collection or garnish of the money pending a determination of the firm’s appeal that is pending at the Income Tax Appeals Court.

However, High Court judge Justice Hlekani Mwayera dismissed the application for lack of urgency.

“The application is not urgent and accordingly, it is ordered that the application be and is hereby struck off the urgent roll.

“The applicant shall bear the costs,” the judge ruled.

Justice Mwayera ruled that Delta failed to treat its matter with urgency, hence the court could not be expected to treat it as an urgent case.

“It is settled that a matter is viewed as urgent if the party seeking redress treats it as urgent.

“Applicants were aware of the assessed income tax and the ultimatum as far back as 14 April 2016 but did not seek to protect their right,” said the judge.

“The facts as presented show deliberate abstention until dooms’ day,” she said.

Justice Mwayera said Delta had an opportunity to submit a payment plan to Zimra pending an appeal, but the company wasted it.

“The applicant’s failure to submit a payment plan on the basis of an opinion that the assessment has no legal basis and as such is a legal nullity is the signal of a death knoll to urgency,” the judge said.

“The assessment came first, signalling the tax obligation, and this was way before the notification of enforcement measures setting in. The circumstances of this case depict in a very vivid manner, self-created urgency occasioned by sluggard approach to a financial situation,” ruled Justice Mwayera.

On April 14 2016, Zimra confirmed a tax assessment of $30 060 623, including penalty and interest, against Delta.

Delta was duly informed of the development through a letter dated April 14.

This came after an investigation into taxes due from 2009 to 2014.

Delta, in terms of Section 62 of the Income Tax Act, objected to the assessment but Zimra did not accede to the objection.

In May, the debt came down to $26 897 509 after some payments were made.

Last month, Zimra wrote to Delta informing it of its intention to institute measures to recover the debt.

After receiving the November letter, Delta rushed to the High Court with an urgent chamber application, which was declined.