HARARE - The Constitutional Court will today hear Gokwe-Nembudziya legislator Justice Wadyajena’s urgent chamber application seeking to stop the taxman from bankrupting his business.
Wadyajena’s Mayor Logistics (Pvt) Limited, a company in the business of fuel and transport operations in Zimbabwe, has been sequestrated over a $2,6million Vat bill.
Wadyajena operates a fuel service station in Kwekwe that purchases fuel from Sakunda and pays for the fuel in kind through the provision of fuel transportation services, and at times, in cash.
Mayor Logistics also provides fuel transportation services to Sakunda for a fee.
Zimra’s letter to Wadyajena’s firm said revenue from his fuel transportation business was not subjected to Vat, and was also not included as income to the business.
According to information at hand, Wadyajena has not only been ordered to pay the full and outstanding amounts immediately, but owed as much as $2,6 million — broken down as $900 600 in principal income tax debt, a similar amount in penalties and VAT arrears of $809 580. As such, the likes of Sakunda — 100 percent owned by Kuda Tagwirei and his wife — have been appointed “agent(s) for the debtor under the provisions of the Income Tax Act Chapter 23:06 and Value Added Tax Act Chapter 23:12, and are required to remit… the total amount due.”
Although the Zanu PF Member of Parliament argues that his tax bills have been overstated and his company could not be charged Vat for “services paid in kind”, the revenue authority says that taxes are due since the transactions have a monetary value or are dollar-based.
Under an arrangement with Tagwirei’s Sakunda, Wadyajena’s company provides fuel transportation services for the successful petroleum distribution firm and is often paid through product supplies.
Apart from running a service station in Kwekwe, the latter has 22 trucks in his fleet — built on the back of the transportation arrangement with Sakunda.
The parliamentary portfolio committee chairperson on Indigenisation has rushed to the Constitutional Court to bar Zimra from garnishing its accounts and disprove the 2011-2012 tax assessments The matter has been set down for today.
“Take notice that the above urgent chamber application will be heard before Deputy Chief Justice, in chambers on Wednesday the 2nd day of July 2014 at 10:00am or so soon thereafter as counsel may be heard," said a letter from the Con-Court registrar to Zimra and Wadyajena’s lawyers.
In his Constitutional Court appeal, Wadyajena said the arbitrary powers that Zimra were using were “invasive, harmful and destructive.”
“The ‘pay now argue later’ approach to the collection of taxes will be very harmful to applicant’s business as the amounts involved are colossal in nature and not remotely related to the minuscule profit margins that applicant makes in any given trading year,” Wadyajena’s Con-Court appeal says. “Applicant will not make that sort of money in 10 years.”
Wadyajena insists he has been paying his taxes religiously and was up to date with his taxes.
He said Zimra was keen to take “summary action without paying any apparent regard to appellant’s compliance history as a tax payer, the amount of tax involved, the risk of dissipation of assets by the taxpayer during any payment suspension period, whether the taxpayer is able to provide adequate security and whether payment of the amount would result in irreparable financial hardship to the taxpayer.”
He said he risked losing his fuel transportation business because Zimra was acting with reckless disregard and that he was the victim of a very serious and prolonged injustice.