Curverid Tobacco Private Limited v Zimbabwe Revenue Authority

Curverid Tobacco (taxpayer) is a locally registered tobacco company. Zimbabwe Revenue Authority (ZIMRA/taxman) issued notices of assessments for tax years 2013-2017 on 20 December 2020 and 22 January 2021. These notices bore remarks "Assessment issued subject to audit" and "A detailed assessment can be made available on request." The taxpayer objected under s 62(1) of the Income Tax Act. The taxman disallowed the objection, and the taxpayer appealed to the Special Court (ITC 6/21). Following the first Nestle Zimbabwe judgment (SC 148/21), which held similar notices invalid, the taxman conceded on 28 January 2022 that the assessments were void ab initio. The taxpayer withdrew its appeal. On 13 December 2022, the taxpayer sought a refund of tax paid on the invalid assessments. On 21 December 2022, ZIMRA declined and issued fresh "Manual Notice(s) of Assessment" for the same tax years. The taxpayer objected, arguing ZIMRA was functus officio, that the fresh assessments were ultra vires, and that the void assessments remained extant until set aside by a court. The High Court dismissed the application for declarator and upheld the validity of the fresh assessments. The taxpayer appealed to the Supreme Court.

• Whether ZIMRA had statutory power under s 47(1) of the Income Tax Act to issue fresh assessments after conceding that previous assessments were void ab initio
• Whether the distinction exists between an 'assessment' and a 'notice of assessment' and the implications of that distinction
• Whether void assessments remain extant and final until set aside by a competent court (the Oudekraal principle)
• Whether the principle of functus officio prevented ZIMRA from issuing fresh assessments
• Whether issue estoppel applied to prevent ZIMRA from issuing fresh assessments
• Whether an assessment is a process/mental act or a document

Appeal dismissed with costs. The High Court order dismissing the application for declarator and declaring the fresh assessments valid and enforceable was upheld.

An assessment under the Income Tax Act is a process of determination or calculation of taxable income and tax payable, not a document, though it must be embodied in a notice of assessment which is a document. A void tax assessment or notice of assessment is a nullity by operation of law and does not require a court order to set it aside. Such nullities cannot be final and conclusive under s 62(5)-(6) of the Income Tax Act, and ZIMRA is not functus officio in respect of them. The Oudekraal principle does not apply in Zimbabwean tax law - void tax acts have no legal consequences and do not remain extant until judicially set aside. Section 47(1) of the Income Tax Act empowers and obliges ZIMRA to issue fresh additional assessments following void assessments to ensure correct tax is collected. Issue estoppel does not prevent ZIMRA from performing its statutory duty to assess and collect tax, and concessions or errors by ZIMRA that would result in undertaxing are not binding. The principle that "one should be taxed by law, and not be untaxed by concession" applies. Where assessments are void ab initio, the position reverts to the self-assessment and ZIMRA may exercise its powers under s 47(1) afresh to issue compliant additional assessments.

The Court observed that: (1) The practice of impugning assessments as documents requiring particular wording is based on a misapprehension of the definition of assessment in s 2 of the Act. (2) Self-assessment returns are documents, but only the portion dealing with taxable income and tax payable (not the whole document) is deemed to be the Commissioner's assessment under s 37A(10)-(11). (3) The finality provisions in s 62(5)-(6) apply only to valid assessments, not void ones. (4) In tax matters, justice and equity have little significance - courts must give effect to plain statutory language even if harsh to the taxpayer. (5) The schedule of computations prepared by ZIMRA mirrors information in the self-assessment return and represents the full assessment, whereas the assessment in the notice is an abridged version containing minimum key requirements. (6) An assessment formula is: Gross Income minus Exemptions = Income minus Allowable Deductions = Taxable Income divided by prescribed tax rates = Tax payable. (7) It would be improper for a taxpayer to approbate by demanding a refund based on void assessments while simultaneously reprobating by arguing void assessments remain valid until set aside. (8) The Court noted that technological developments mean assessments need not be captured on paper but can be recorded electronically.

This judgment is significant in Zimbabwean tax law for several reasons: (1) It clarifies the crucial distinction between an 'assessment' (a process/determination) and a 'notice of assessment' (a document), settling uncertainty in local jurisprudence. (2) It establishes that the Oudekraal principle (that invalid administrative acts remain effective until set aside by a court) does not apply in Zimbabwean tax law. (3) It confirms that void tax assessments are automatically null and void by operation of law without need for court invalidation (McFoy principle applies). (4) It affirms that ZIMRA has both the power and duty under s 47(1) Income Tax Act to issue fresh compliant assessments following void assessments, and is not functus officio. (5) It establishes that issue estoppel and concessions do not prevent ZIMRA from fulfilling its statutory duty to collect correct tax (Astra Holdings principle applies). (6) It prevents taxpayers from relying on defective assessments to escape proper tax liability. (7) It provides comprehensive analysis of ss 2, 37A, 47, 51, 62 and 79 of the Income Tax Act. The judgment balances administrative law principles with the special nature of revenue collection and the public interest in proper tax collection.