AIR ZIMBABWE CORPORATION & ORS v ZIMBABWE REVENUE AUTHORITY 2003 (2) ZLR 11 (H)

Flynote

Practice and procedure — parties—company — authority to represent and to sign founding affidavit — need for evidence to show that deponent is authorised to sign — deponent having represented company in previous dealings with other party — effect

Headnote

The applicant companies had failed to pay withholding tax as required by the Income Tax Act [Chapter 23:06]. The Revenue Authority assessed that the applicants were each liable to pay penalties and interest in respect of withholding taxes which they did not pay or which they paid late. The applicants sought an order that the Authority was not entitled to charge interest because they had not been notified when the tax was due, but during the hearing the argument became that the respondent was not entitled to charge interest at all, whether under the Act because no provision is made to that effect, or under the common law. The respondent argued that the failure to give notification was irrelevant to the charging of interest and that the withholding taxes become due and payable in terms of para 2(1) of each of the relevant schedules as read with s 71(1) of the Act. After further argument, the issue turned out to be whether the respondent was entitled to charge mora interest at common law when there was no provision for him to do so under the Act. The applicants argued that the legislature, except in very specific instances, such as provided in para 8(1) of Schedule 27, imposed either a penalty only or interest only in respect of unpaid or overdue tax, but not both.

The applicants' founding affidavit was signed by a chartered accountant who was dealing with their tax affairs and who had negotiated with the Authority on those matters. The respondent challenged the accountant's authority to represent the applicants, averring that no resolution or supporting affidavit by any of the applicants was attached to the founding affidavit to show that the accountant was authorised to make the application on behalf of the applicants.

Held, that where there is nothing before the court to show that an artificial person has duly authorised the institution of a court application, the respondent may object to the agent's authority. Here, the prior dealings between the accountant's firm and the Authority provided sufficient evidence that when the accountant instituted the proceedings he was acting on the authority of the applicants.

Held, further that tax legislation in this country has since 1918 proceeded on the assumption that mora interest at common law was not payable by either the taxpayer or the Commissioner of Taxes. From that time the question of interest has been dealt with exclusively in terms of the tax legislation. The fact that interest is specifically provided for indicates that it is not otherwise due.

Held, further, that a taxpayer who defaults in paying any tax due is subjected either to a penalty or to the payment of interest but not both except in the instances specifically provided for in the Act. This general design seeks to compensate the Authority by way of interest only or, alternatively, by way of penalty only, where he has been deprived of the use of money by a defaulting taxpayer. In the case of withholding taxes in respect of dividends, and/or royalties, and or interest and/or fees the Authority is limited to compensation for the deprivation of the use of the money by way of a penalty only.