S T (PVT) LTD v ZIMBABWE REVENUE AUTHORITY

The appellant was a tobacco processing and cigarette manufacturing company. On 10 August 2002, its place of business was declared an export processing zone (EPZ) in terms of the Export Processing Zones Act [Chapter 14:07]. As an EPZ company, the appellant did not pay VAT on services or goods as these were regarded as supplies from outside Zimbabwe. The Export Processing Zones Act was repealed on 1 January 2007 by the Zimbabwe Investment Authority Act [Chapter 14:30]. On 17 May 2007, the appellant was granted a replacement investment licence by the Zimbabwe Investment Authority, backdated to 10 September 2002, with special conditions including accreditation as an Export Processing Zone Company. In 2008, after a meeting between the respondent and the Ministry of Finance, the respondent withdrew all tax benefits enjoyed by former EPZ companies. In 2009, the respondent rejected the appellant's VAT refund claims and directed it to claim input tax using Form VAT 7. In 2010, the respondent unilaterally registered the appellant as a VAT operator and issued VAT assessments for each month of 2009. The appellant objected, contending it remained an EPZ company and was not liable for VAT in 2009, and that the respondent was estopped from claiming such VAT.

• Whether the respondent registered the appellant for VAT retrospectively from 2007 or prospectively from 2010
• Whether the appellant retained its export processing zone status and associated VAT exemptions after the repeal of the Export Processing Zones Act on 1 January 2007
• Whether the savings provisions in sections 34(2) and 37 of the Zimbabwe Investment Authority Act preserved the VAT benefits previously enjoyed by EPZ companies
• Whether the respondent was estopped from recovering 2009 VAT from the appellant
• Whether the appellant was liable to pay VAT on local sales made in 2009

The appeal was dismissed with no order as to costs. The court found the appellant liable for VAT on its 2009 local sales.

The repeal of the Export Processing Zones Act on 1 January 2007 extinguished the definition of "export country" in section 2 of the Value Added Tax Act, which specifically incorporated zones declared under section 20(1) of the repealed Act. The savings provisions in sections 34(2) and 37 of the Zimbabwe Investment Authority Act saved only acts, decisions, licences and certificates made under the repealed Acts, but did not save or resurrect the statutory definition of "export country" or the associated VAT exemptions. The new Zimbabwe Investment Authority Act did not incorporate the concept of "export processing zone" or "export country" and therefore did not confer VAT benefits on licensed companies. The Commissioner has power under section 23(4)(b) of the VAT Act to register operators retrospectively from the date liability arose, unless equitable grounds exist for prospective registration. A revenue authority cannot waive taxes lawfully due to the State, and any representation or conduct suggesting otherwise cannot bind the fiscus or give rise to estoppel (following Commissioner of Taxes v Astra Holdings (Pvt) Ltd 2003 (1) ZLR 417).

The court observed that even if the appellant had retained its EPZ status, it would still be liable for VAT under section 6(1)(b) of the VAT Act on goods it imported into Zimbabwe from its own EPZ, as demonstrated by a bill of entry from 20 July 2006 showing the appellant paid VAT on such importation. The court noted that section 69(1) of the VAT Act deems any price charged by a registered operator to include VAT whether or not actually included, suggesting that failure to charge VAT would not constitute an equitable ground for prospective registration. The court declined to determine the issue of penalties and interest raised in oral submissions, as this was not apparent from the pleadings or documents before the court. The court also noted that no guidelines on investment incentives had been issued by the Minister under section 24 of the Zimbabwe Investment Authority Act.

This case is significant in Zimbabwean tax law as it clarifies the effect of the repeal of the Export Processing Zones Act on VAT obligations of former EPZ companies. It establishes that savings provisions in successor legislation do not automatically preserve tax benefits defined in other statutes (such as the VAT Act) unless expressly stated. The case reinforces the principle that revenue authorities cannot waive taxes lawfully due, and taxpayers cannot rely on estoppel against the fiscus. It also clarifies the Commissioner's powers under section 23(4)(b) of the VAT Act to register operators retrospectively, and the limited circumstances in which prospective registration may be granted. The judgment demonstrates the court's strict interpretation of tax exemptions and the principle that such exemptions must be clearly and unambiguously provided by statute.