BURS prevails in tax appeal case
Court of appeal sets aside lower court decision and okays P81 million Tax assessment for Prevailing Securities
The Court of Appeal has struck out with cost an application for Judicial review in a legal tussle between Botswana Unified Revenue Service ( BURS) and Prevailing Securities over the P81 million Tax bill.
The appeals court has set aside the decision of the High Court where the company through its Judicial Manager, had launched a review application, seeking an order reviewing and setting aside the assessment issued on the 31st January 2019 and penalties imposed thereon, on the ground that such assessments and penalties were irrational and unreasonable. Gaborone High Court Judge, Michael Leburu had ruled in favour of Prevailing Securities in a case in which the company through its Judicial Manager Danny Julius Guduli petitioned the Court, seeking assessment review in its alleged BURS P81 million VAT and Income tax bill.
Prevailing Securities sparked controversy when BURS fingered the company for tax investigation on the 17th August 2018. The company Managing Director Shadrack Baaitse, a close associate of former President Ian Khama has always maintained that the P81 million Tax bill was politically motivated. Prevailing Securities was forced into Judicial Management on the 2nd September 2019. The company then contested the hefty tax bill from the taxman.
Delivering the judgement, Justice Isaac Lesetedi stated that it is not alleged by the Respondent ( Guduli) that there was any fundamental irregularity in the procedure followed in the assessment reached in January 2019 to assess the tax payer’s tax liability, a fundamental irregularity in procedure which could be remedied by the internal domestic remedies available. He said had that been the case, the respondent, would not have challenged the tax assessment by way of an objection to the commissioner under the tax legislation but would have filed an application for judicial at that stage.
“The Respondent’s reason for launching application in the court a quo was that there had been a long delay by the Commissioner dealing with the objection to the tax assessment and that this delay showed a settled mindset not to determine the objection lodged with her thus, frustrating the utilisation of the domestic remedies. Nothing is said about the higher authorities to the commissioner in domestic appeal process provided by the legislature that is the Board of Adjudicators and subsequently the High Court and this Court in their respective appellate jurisdictions.
The taint of the brush is limited to the Commissioner. It is no doubt that, on the face of it, the Commissioner indeed took a long time to consider the objections lodged by the Respondent,” said Justice Lesetedi, adding that the answer by the Commissioner to the applicant’s concern was that she had a lot of other tax assessment objections before her which she had to deal with before that of the Respondent.
He explained that there was no evidence before the lower court upon which the reasonableness of that explanation could be tested, let alone disputed. He added, “there is no doubt that the Board of Adjudicators are better placed to call for such evidence if need be. But first, a way had to be found for the appeal to reach that body. The main question however, is whether the conduct by the Commissioner, who was merely an early intermediary decision- maker in a multi stage domestic appeal process, did by her delay, create a fundamental breach of the Respondent’s administrative rights to have his challenge to the tax assessment meaningfully dealt with by the relevant domestic remedy bodies.”
He explained that the question that arises is whether the High Court should, in light of all, have held that the Respondent had established exceptional circumstances for it to intervene by way of judicial review when the decision it was being sought to review was itself subject to a pending objection and when less radical remedies, for instance an order to compel the commissioner to deal with and determine the objection one way or the other, was available to unblock the delay in the utilisation of domestic remedies.
In April 2021, Justice Leburu said he was satisfied that the Applicant had made out a case for review and succeeded in showing that the decision of the Commissioner General to include non- income receipts, as part of its taxable income, and receipts that did not constitute a taxable supply, was irrational and unreasonable.
“Consequently, the re- assessment by the Respondents is hereby set aside, including the consequent penalties imposed. It is accordingly ordered that the Respondents’
additional VAT assessment of P7, 179, 977.92 against Prevailing Securities ( Pty) Ltd for the period January 2013 to December 2017, be reviewed and set aside; that the Respondents’ imposed penalties of 200 percent against Prevailing Securities in the sum of P14, 359, 955.85 be reviewed and set aside; that the Respondents’ income Tax Assessment of P56, 703, 834.34 inclusive of penalty of 200 percent against Prevailing Securities be reviewed and set aside; and that the Respondents are ordered to carry out a re- assessment of the company’s tax liability ( income Tax and Value Added Tax) within 60 days from the date hereof,” said Justice Leburu.
The Applicants had argued that upon receipt of notice of assessment in the total sum of P81, 766, 882, 46 ( VAT and Income Tax inclusive), they submitted detailed list and/ or account of matters which were not taken into consideration when they ought to have been at the time of assessment.