Great Dyke Investments (Pvt) Ltd v Zimbabwe Revenue Authority

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HH567-25
Case No FA05-23
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GREAT DYKE INVESTMENTS [PVT] LTD

versus

ZIMBABWE REVENUE AUTHORITY

FISCAL APPEAL COURT

MAFUSIRE J

HARARE, 19 May 2025

Date of judgment: 3 October 2025

Fiscal appeal

Assessor:	Ms G. Kangai

T. Magwaliba, for the appellant

S. Bhebhe, for the respondent

MAFUSIRE J

a 	Introduction

[1]	The appellant has appealed to this court in terms of s 33 of the Value Added Tax Act [Chapter 23:12] [“the Act”].

[2]	The appeal is against a certain decision by the respondent on 18 July 2023, disallowing the appellant’s claim for a refund of input tax for the tax period September 2020 to October 2020.

[3]	The respondent disallowed the appellant’s claims aforesaid on the basis that the appellant had failed to comply with the requirements of s 20 of the Act. Section 20 of the Act is the provision that deals with the issuing of tax invoices to registered operators by suppliers of goods and services and what information those invoices must carry. The invoices then form the basis for the registered operator’s entitlement to claim input tax.

[4]	In this court, the matter was heard as a stated case. Among other things, the parties filed a statement of agreed facts and then made oral submissions afterwards.

b	Background facts

[5]	The appellant is a registered private company in Zimbabwe. It is involved in platinum mining. The respondent is the collector of revenue for central government.

[6]	In January 2017, the appellant was compulsorily registered for value added tax [VAT]. However, it was subsequently deregistered because at the time, its turnover consistently failed to meet the minimum threshold required for registration.

[7]	In January 2019, the appellant entered into a special mining lease with central government. Subsequently, it commenced development on the mining site.

[8]	On 1 January 2021, s 23[3] of the Act was amended to include a proviso which deemed holders of special mining leases to have met the requirements for VAT registration. The amendment was to apply retrospectively from 1 January 2020.

[9]	Following the above amendment, the appellant, as a holder of a special mining lease, promptly applied for VAT registration. Although it had been registered only in March 2021, the registration was with retrospective effect from 1 January 2020.

[10]	Following its VAT registration as aforesaid, the appellant submitted refund claims to the respondent for input tax incurred during the period 1 January 2020 to 28 February 2021.

[11]	Specifically, the refund claims related to the following tax periods:

January 2020 – February 2020, reference 20B1,

March 2020 – April 2020, reference 20B2,

May 2020 – June 2020, reference 20B3,

July 2020 – August 2020, reference 20B4,

September 2020 – October 2020, reference 20B5, and

November 202 – December 2020, reference 20B6.

[12]	The respondent duly processed the appellant’s refund claims 20B1 to 20B4. However, it flagged the claim 20B5 as high risk, prompting an audit by its officers, after which it disallowed the claim.

[13]	In its communication to the appellant, the respondent advised that it had disallowed claim 20B5 on the grounds that it generally did not comply with s 20 of the Act in that, among other things, there were duplication of invoices and that there was no VAT registration number on the invoices. There were further concerns relating to the appellant’s VAT registration status.

[14]	In April 2023, the appellant lodged a formal objection. The respondent dismissed it in its entirety.

[15]	The present appeal is against the respondent’s decision to disallow the appellant’s input tax refund claim 20B5.

[16]	By agreement, the appellant’s VAT registration status is no longer in dispute.

c	Appellant’s case

[17]	The appellant contends that it qualifies for the input tax refund 20B5 because the amendment aforesaid applied retrospectively. As such, holders of special mining leases were deemed to be registered for VAT with effect from 1 January 2020.

[18]	The appellant further contends that the deeming provision constitutes a legal fiction, expressly designed to override the factual reality that disqualified it as at 1 January 2020 and that any invoices issued during that period should be evaluated in the context of this fiction.

[19]	The appellant further submits that the respondent previously accepted and paid out input tax refunds 20B1 to 20B4 under identical circumstances, including accepting invoices without VAT numbers, thereby creating an expectation by the appellant for consistent treatment by the respondent.

[20]	The appellant attacks the respondent’s failure or refusal to exercise its discretion as reposed in it by s 20[4] of the Act. This provision prescribes invoice content. It begins with the phrase “Except as the Commissioner may otherwise allow…” The appellant argues that this grants the respondent the discretion to accept non-compliant invoices in appropriate circumstances and that, as such, any technical defects in invoices, for example, the omission of a VAT number, would be curable under the respondent’s Commissioner’s discretion in s 20[4] aforesaid.

d	Respondent’s Case

[21]	The respondent submits that the appellant’s claim for the VAT input tax refund 20B5 was correctly disallowed on the basis that the supporting invoices failed to comply with the mandatory requirements of s 20[4] of the Act.

[22]	The respondent further submits that s 15[2][a] of the Act makes it a condition precedent for input tax deduction that a valid tax invoice, compliant with s 20, be held at the time the return is filed. Failure to meet these conditions invalidates the claim as a matter of law.

[23]	The respondent contends that the invoices submitted by the appellant were non-compliant primarily because they did not include the appellant’s VAT registration number, in contravention of s 20[4] of the Act.

[24]	The respondent rejects the appellant’s argument that the respondent could not turn down further claims after having approved previous ones. It argues that past administrative errors do not create legal entitlements.

[25]	On s 23[3] of the Act, the respondent argues that while the provision deems certain entities retrospectively registered for VAT, nevertheless, it does not waive or modify the requirement to produce valid tax invoices under s 20[4] of the Act.

[26]	In relation to the discretionary powers under s 20[4] of the Act, the respondent submits that its Commissioner was not obligated to exercise that discretion in favour of the appellant and that courts cannot compel the exercise of discretion unless that is mandatory

[27]	In regards to some two invoices by one supplier, Stewart Scott Zimbabwe, the respondent contends that they were duplicated as they allegedly bore the same number and value, in breach of s 20[1][a] of the Act. This provision prohibits the issuing of more than one tax invoice per any taxable supply.

e	Legal analysis

[28]	According to s 6 of the Act, as read with s 2, and in paraphrase, there is a tax that is chargeable on the value of, among other things, the supply by registered operators of goods or services in the course or furtherance of their trade. This tax is called ‘output tax’. On the other hand, ‘input tax’, in relation to a registered operator, is a tax charged by a supplier of goods or services to the registered operator, or the tax charged by the registered operator on the importation of goods or services.

[29]	Thus, input tax is charged and passed on by the supplier to the registered operator. Output tax is charged and passed on by the registered operator to the ultimate consumer of the goods or services. In terms of s 15 of the Act, VAT is the balance of the input tax deducted by the registered operator from the output tax which the registered operator then ultimately remits to the respondent as tax.

[30]	The right to deduct input tax from output tax is a statutory entitlement. It is not an automatic right merely by virtue of registration. The entitlement arises only where the conditions prescribed by the Act, particularly s 15[2] thereof, are complied with.

[31]	Relevant portions of s 15 of the Act read:

“2	No deduction of input tax shall be made in terms of this Act in respect of a supply or the importation of any goods or services into Zimbabwe, unless—

(a)	 a tax invoice or debit note or credit note in relation to that supply has been provided in accordance with sections twenty or twenty-one within the period the registered operator is required to furnish a return in terms of sections twenty-seven and twenty-eight or twelve months, whichever is the longer period and is held by the registered operator making that deduction at the time that any return in respect of that supply is furnished:”

[32]	The right to deduct input tax is, among other things, subject to proof that all legal requirements, most notably, the possession of a valid tax invoice, have been satisfied.

[33]	The procedural gateway to the deductibility of input tax lies in s 20 of the Act. It prescribes the form and content of a tax invoice. Without satisfying these requirements – or invoking a lawful exception thereto – the right to deduct cannot be exercised.

[34]	Relevant portions of s 20 of the Act provide:

“[1]	Except as otherwise provided in this section, a supplier, being a registered operator, making a taxable supply, other than a supply contemplated in subsection [9] of section seven, to a recipient shall provide that recipient within thirty days from the date of supply with a tax invoice containing such particulars as are specified in this section:

Provided that—

[a]	it shall not be lawful to issue more than one tax invoice for each taxable supply;

[b]	… …

[2]	 … …

[3] 	… …

[4]	Except as the Commissioner may otherwise allow, and subject to this section, a tax invoice shall contain the following particulars⎯

[a]	the words ‘fiscal tax invoice’ in a prominent place [or other word or phrase employed by the fiscalised recording regulations for the purpose of denoting an invoice of tax for the making of taxable supplies] in a prominent place;

[b]	the name, address and registration number of the supplier;

[c]	name and address of the recipient and, if the recipient is a registered operator, the registration number of the recipient;

[d]	an individual serialised number and the date upon which the tax invoice is issued;

[e]	a description of the goods or services supplied;

[f]	the quantity or volume of the goods or services supplied;

[g] … …”

[35]	Of particular relevance in this case, among other pertinent provisions of s 20, is the discretion afforded to the respondent’s Commissioner in s 20[4] of the Act.

[36]	The dispute in this matter turns on the legal significance of the deeming provision introduced under s 23[3] in 2021 but retroactively starting on 1 January 2020. The proviso reads:

“Provided that any person holding a special mining lease in terms of the Mines and Minerals Act who commences development for mining purposes in the year of assessment for income tax purposes beginning on the 1st January, 2020, shall be deemed for the purpose of this subsection to qualify for registration under this Act with effect from the 1st January, 2020.”

[37]	It is not in dispute that the appellant qualified as a registered operator for the relevant period by virtue of the deeming provision aforesaid.

[38]	It is also not in dispute that the tax invoices submitted by the appellant in support of its refund claims, including 20B5, did not comply in full with the requirements of s 20[4]. In particular, they did not bear the appellant’s VAT registration number [because the appellant had been de-registered at that time].

[39]	It is common cause that the respondent did refund claims 20B1 to 20B4 then subsequently raised a query seeing the enormity of the claims.

[40]	The crisp dispute before the court is whether the invoices submitted, though technically non-compliant, may nevertheless be accepted as sufficient for purposes of the input tax refund claimed.

[41]	The resolution of the dispute lies in reconciling statutory compliance requirements with the retrospective deeming effect introduced by the 2021 amendment to the Act.

[42]	The peripheral issue whether or not there were certain invoices that were duplicated fizzled away during oral submissions. There were no such duplications. The invoices in question reflected a single taxable event split than a repeated claim for the same supply. There is no question of double dipping.

[43]	To recap: the appellant contends that the tax invoices submitted in support of its input tax claim 20B5, though lacking its VAT registration number, and therefore, on the face of it, not being compliant with s 20[4] of the Act, should nonetheless, be accepted. To reject the claim on this basis would defeat the legislative intent. It is deemed to have been registered on 1 January 2020. The absence of a VAT number was a natural and an unavoidable consequence of the retrospective registration.

[44]	The appellant goes further to argue that deeming provisions in statutory interpretation establish a statutory truth that overrides the actual facts. Where something is ‘deemed’, it must be treated as valid and effective, even if factually untrue.

[45]	The respondent, on the other hand, maintains that non-compliance with s 20[4] of the Act cannot be cured by the retrospective deeming of registration. The statutory requirements are clear and peremptory. The absence of the appellant’s VAT number on the invoices rendered them invalid ab initio, regardless of any retrospective status as may be conferred by s 23[3]. Previous acceptance of such types of invoices did not make them valid.

[46]	The respondent rejects the appellant’s argument that the respondent could not turn down further claims after having approved previous ones. It argues that past administrative errors do not create legal entitlements. In this regard the respondent relies on Commissioner of Taxes v Astra Holdings [Pvt] Ltd 2003 (1) ZLR 417 (S) that affirmed the principle in R v Board of Inland Revenue, ep MFK Underwriting Agencies Ltd [1990] 1 All ER 9 that taxpayers must be taxed by law, not by administrative lapses.

[47]	In relation to the discretionary powers under s 20[4] of the Act, the respondent submits that the respondent’s Commissioner was not obligated to exercise that discretion in favour of the appellant and that courts cannot compel the exercise of discretion unless that is mandatory. In this regard the respondent relies on Dhege v Medical Centre 2004 [1] ZLR 352 [H] and Savanhu v Hwange Colliery SC 8-15.

[48]	During argument, Mr Bhebhe, for the respondent, stressed that registration and compliance with s 20 of the Act are distinct and separate legal requirements which ought not to be conflated.

f	Synthesis

[49]	“To be, or not to be: that is the question.” wrote WILLIAM SHAKESPEARE in the play Hamlet. The legal conundrum now before this court is whether or not invoices that are technically non-compliant with the Act may nevertheless be accepted in light of a retrospective deeming provision and the discretion reposed in the respondent’s Commissioner.

[50]	 The respondent places considerable emphasis on the principle that where statutory language is clear, it must be given effect to without resort to canons of interpretation. Of course there is a glut of case law on this point.

[51]	The respondent argues that the requirements of s 20 of the Act, particularly those relating to the content of tax invoices, are couched in mandatory terms and must be strictly complied with, regardless of any retrospective deeming of registration elsewhere in the Act.

[52]	The term ‘deemed’, though not expressly defined in the Act, has long been the subject of legal debate in both case law and academic commentaries. It is a term of art frequently used in legislation to create legal fictions for specific statutory purposes.

[53]	The Oxford Dictionary of Law defines “deemed” as follows:

“In law, ‘deemed’ means something is treated as if it were true, valid, or existing, even if it isn’t actually so, for a specific legal purpose.”

[54]	This definition reinforces the position taken in judicial precedents that a deemed state of affairs must, for all legal intents and purposes under the relevant statute, be accepted as real, regardless of the factual reality to the contrary. Something which is ‘deemed’ is to be treated as if it were something else, which in the ordinary sense, it is not.

[55]	I consider that the legal construct of the legislative objective of a deeming provision is not a neutral device. It cannot be merely a cosmetic legislative formality without substantive consequence. Deeming is often employed as a deliberate legal tool designed, within defined limits – to produce tangible and binding legal consequences. In many instances, deeming serves to cure procedural gaps, address administrative limitations, or give retrospective effect to a legal status in furtherance of an identifiable legislative purpose.

[56]	In Commissioner for the South African Revenue Service v Tradehold Ltd [2012] 3 All SA 15 [SCA]; 2013 [4] SA 184 [SCA] the court held that statutory legal fictions are not to be narrowly confined unless the language of the provision compels such a limitation. It affirmed that once a legal fiction is created by statute, it must be applied fully and consistently within the framework of that statute, unless to do so would lead to an absurd or unjust result.

[57]	In the old English case of R v Norfolk County Council (1891) 60 LJ QB 379 at 380, CAVE J stated:

“Generally speaking when you talk of a thing being deemed to be something, you do not mean to say that it is that which it is deemed to be. It is rather an admission that it is not what it is deemed to be and that, notwithstanding, it is not that particular thing, nevertheless it is deemed to be that thing.”

[58]	In New Union Goldfields Limited v Commissioner for Inland Revenue 1950 [3] SA 392 [A] at 407, VAN DEN HEEVER JA declared:

“…once the Legislature ‘deems’, it departs from reality.”

[59]	One key takeaway from the case of Fowler v Commissioner for Her Majesty’s Revenue and Custom [2020] UKSC 22, para [27], is that that once Parliament has created a legal fiction, courts must not shrink from applying its full legal consequences which would inevitably flow from that fiction, unless expressly constrained by the statute itself, or if to do so would produce absurd or unjust results.

[60]	I would say, if a law tells you to pretend something is true, you should also pretend that all the things that would naturally happen because of that pretence are also true.

g	Application

[61]	In the present case, the truth or the reality is that in 2020 the appellant was not a registered VAT operator. The fiction, by virtue of the deeming provision, is that it was. We depart from that reality: New Union Goldfields Limited v CIR, supra. We cannot stop short of applying the full legal consequences Fowler v CHMRC, supra. One such legal consequence is that the appellant had the right to claim input deduction. When it did, the respondent was disentitled to concern itself with peripheries or incidentals like a VAT number which, naturally was not there.

[62]	Courts must rationally and holistically promote the object and purpose of a statute. To adopt a narrow construction as urged by the respondent would risk frustrating the legislative intent and render s 23[3] ineffectual. In Pepper v Hart [1992] 3 WLR 1032; [1993] AC 593; [1993] 1 All ER 42 GRIFFITHS LJ said:

“The days have long passed when courts adopted a strict constructionist view of interpretation which required them to adopt a literal meaning of the language. The courts now adopt a purposive approach which seeks to give effect to the true purpose of the legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted.”

[63]	Having made the above finding, this court finds no need to pronounce further on the issue of the Commissioner’s discretion under Section 20[4] of the Act. The same applies to the estoppel argument by the appellant that having accepted claims 20B1 to 20B2, the respondent was estopped or precluded from rejecting the remaining claims which had been submitted in almost identical circumstances.  These issues have become moot and inconsequential.

e	Disposition

[64]	The appellant’s ground of objection is hereby allowed in full and the respondent’s notices of assessment in respect of the period 20B5 for September 2020– October 2020 are hereby set aside. The respondent shall pay the appellant’s costs of suit.

3 October 2025

Atherstone & Cook, appellant’s legal practitioners

Kantor & Immerman, respondent’s legal practitioners