Delta, Zimra row rages on
ZIMBABWE’S largest beverage maker, Delta Corporation’s legal battle to get interest of close to $700 000 on charges of underestimated taxes from state revenue collector Zimra rages on with the High Court expected to hear the matter this week.
According to court documents our Harare Bureau is in possession of, the legal fight dates back as far as 2012 when the payments were made. It will be heard by the High Court tomorrow.
Delta in 2015 approached the court seeking a declaration that the provisions of the proviso to section 72 (7) of the Income tax Act (chapter 23:06) prior to the repeal of that provision by section 3 (a) of the Finance Act 2012 obligated the Commissioner-General of the respondent to waive any interest due by the applicant in respect of any underestimation of its profits for the years 2009 and 2010, and in respect of any underway of provisional tax in respect of those two years.
The legal wrangle stems from a 2011 Zimra determination that Delta had underestimated its provisional tax for the tax years 2009 and 2010 and demanded that interest be paid on the said amounts in terms of section 72 (7) of the income tax Act (prior to its amendment).
Delta argued it had no liability to pay the sum of $698 864.48 demanded by the respondent in respect of interest on the underpayment of provisional tax for the tear 2009 and 2010.
“Please be advised that following the outcome of your appeal against charging of interest on (quarterly payment dates) QPDs which was disallowed and communicated to you on July 2012, you are required to pay by Friday August 24, 2012, the interest amount of $698 864,48 broken down as follows: 2009 tax year $293 665, 2010 tax year $405 198,86 and total $698 864,48. Your urgent attention to this matter will be appreciated,” read a letter written to Delta by Zimra commissioner investigations and international affairs Tafara Gumede in 2012.
Delta paid the interest amounts and then filed an application with the High Court for declaratory order declaring that the provisions of section 72 (&) of the Income tax Act obliged the commissioner to waive interest due by the applicant in respect of any underestimation of its profits for the years 2009 and 2010 and in respect of any underpayment of provisional tax in those respective years and that the applicant had no liability to pay the sum demanded by Zimra as interest on the underpayment of provisional tax for the 2009 and 2010 tax years.
In January 2015 a judgment was delivered granting the declaratory order. However, Zimra only became aware of it when Delta’s legal practitioners by letter dated 19 February 2015 served on the respondent on 2015 , demanded for the refund of the interest paid and that same be set off against the applicant’s QPD indebtedness
On March 14, the respondent refunded the sum of $698 846 in full after obtaining the same from treasury.
Delta demanded that interest be paid by the respondent on the said amount, but Zimra did not concede to the demand for interest and proceeded to file advanced counter arguments. After which Delta approached the courts for another declaratory order.