Murowa Diamonds (Private) Limited v Zimbabwe Revenue Authority and Another

### Preamble
HH 88 -2007
HC 4771/07
MUROWA DIAMONDS (PRIVATE) LIMITED
versus
ZIMBABWE REVENUE AUTHORITY
---------


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MUROWA DIAMONDS (PRIVATE) LIMITED
versus
ZIMBABWE REVENUE AUTHORITY
and
THE MINISTER OF FINANCE

HIGH COURT OF ZIMBABWE
MAKARAU JP
Harare 28 November and 12 December 2007

Opposed application

Mr A P deBourbon for applicant
Mr A Moyo for 1st respondent
No appearance for 2nd respondent.

MAKARAU JP: As its name suggests, the applicant is a diamond mining company, carrying out its mining activities in Zvishavane. Its registered offices are in Harare.

The facts of this application are all common cause. I summarise them as follows:

The applicant maintains a foreign currency account with a local commercial bank, Barclays Bank Zimbabwe Limited. In April 2007, the applicant resolved to purchase motor vehicles for its use from outside the country, using proceeds from its foreign currency account. The question then was in which currency its liability for duty and value added tax would be in view of the provisions of Statutory Instrument 80A of 2007 which came into force on 5 April 2007. Having consulted its freight company on the matter, the applicant was advised that its liability for duty and value added tax would be in local currency. Armed with that advice, the applicant approached its bank for the necessary permission to utilize the funds in its foreign currency account for the purchase of the two motor vehicles. The necessary permission from the Central Bank was granted and the two vehicles were purchased and duly imported into the country.

Initially duty and value added tax for the two vehicles was demanded and paid for in local currency at the first respondent’s offices at the border post of Beitbridge. Subsequently, the 1st respondent insisted that payment for duty and value added tax be made in foreign currency and on that basis, refused to release the motor vehicles to the applicant.


In insisting that payment for duty and value added tax be made in foreign currency, the 1st respondent was relying on the provisions of Statutory Instrument 80A of 2007 aforesaid which provides in sections 2 and 3 as follows:

“(2) (1) Subject to section 3, the Minister of Finance designates the items of goods whose tariff codes and rates of customs duty are listed in the first and third columns of the schedule below as luxury items for the purpose of section 115 (2) of the Act.

(2) Payment of customs duty and value-added tax on the importation of any item of goods designated as luxury item under subsection (1) shall be payable in United States dollars, Euros or any other currency denominated under The Exchange Control (General) Order, 1996 (Statutory Instrument 110 of 1996).

3. The following persons shall be liable to pay duty and value added tax on luxury items in terms of section 2-

(a) every resident of Zimbabwe who imports luxury items that were purchased using funds obtained otherwise than through an authorised dealer;

(b) .................................................................

It is common cause that the vehicles imported by the applicant fall within the definition of luxury items.

The applicant contends that the two motor vehicles were purchased from funds that were obtained through an authorized dealer and thus fall outside the provisions of the statutory instrument. The applicant thus seeks an order from this court compelling the 1st respondent to release the motor vehicles, acknowledging that the payment of duty and value-added tax in local currency discharges the obligations of the applicant to the fiscus.

The 1st applicant has opposed the application mainly on the basis that the statutory instrument does not exempt residents who use proceeds from their foreign currency accounts to make purchases of luxury items from paying duty and value added tax in foreign currency. Its argument is that when one uses foreign currency in its account, it is merely accessing those funds and is not “obtaining” the funds from an authorized dealer for the purposes of the statutory instrument.

Thus, the issue that falls for determination in these proceedings becomes very easy to formulate. It is not equally easy to resolve. In my view, the narrow issue that falls for determination is to interpret the meaning of the word “obtain” as employed in section 3 of the Statutory Instrument.

It is not in dispute that the applicant is a resident of Zimbabwe and that the funds employed in the purchase of the vehicles in dispute were funds processed from a foreign currency account that it holds with its commercial bank, an authorised dealer in terms of the statutory instrument.


As I understand it, the argument by the collector of revenue is that residents who utilize funds from their foreign currency accounts with authorised dealers are not exempt from paying duty in foreign currency if they import luxury items. The argument proceeds to hold that such residents do not “obtain” the funds from their banks for the purposes of the statutory instrument but simply access such funds through the agency of their banks. Put differently, the respondents argue that section 3 of the regulations excludes funds held in a foreign currency account for to include such would be to render the provisions of the statutory instrument open to avoidance and thereby undermine the intention of the law maker.

The word “obtain” has an ordinary or every-day meaning that was judicially accepted in S v Scher 1968 (1) SA 238 (CPD). In that case VAN WINSEN J interpreted the word “obtain” in its ordinary meaning to mean to “come into possession of”; “to get” or “to acquire” following the meaning ascribed to it by Oxford English Dictionary.

This is the meaning that the applicant urges me to put on the word.

In interpreting the word as used in the section, I am enjoined to naturally look to its ordinary meaning as well as to the context in which it is used. This is the settled approach of the courts in interpreting words used in enactments.

The natural meaning of the word appears to me to be clear. It means “get” in common language. Thus a rendition of the section replacing the word “obtain” with get will be to the effect that residents of Zimbabwe who “get” funds to import a luxury item other than through an authorised dealer are liable to pay duty and value-added tax in foreign currency. Those who “get” funds through an authorised dealer are exempt. Thus, those who have such funds processed through an authorised dealer in whatever form is appropriate for the importation are in my view exempt from paying duty and tax in foreign currency. The exact nature of the process through which the funds are “gotten” is in my further view immaterial. Such funds may be gotten from funds already held to the credit of an account, they may be purchased from the bank or where appropriate and acceptable, a line of credit may be extended to the importer through arrangements made by the authorised dealer. The material issue in my view is not so much how the funds are accessed but from whom such funds are gotten.

On the other hand, the respondents urge me to put a different meaning on the word “obtain” to bring into the taxman’s net all residents who import luxury items using proceeds from their foreign currency accounts with authorised dealers. To achieve this, I am urged to take into account that holders of foreign currency accounts already have foreign currency at their disposal from which they can afford to pay duty and value-added tax. I am also urged to take into account that holders of foreign currency do not purchase foreign currency from their banks but simply apply for permission to access funds from these accounts and in that sense, cannot be said to “obtain” funds from their banks for the purposes of the law. In that sense, the word “obtain” as used in the law can only refer to instances where the resident purchases foreign currency from the authorised dealer.

In my view, the meaning that the respondents would want me to put on the word “obtain” is clearly a departure from its primary and ordinary meaning. I see no scope for me to ascribe a secondary meaning to the word “obtain” in the face of a clear primary meaning of the word. In this respect, I am guided by the remarks of the Chief Justice in *Registrar-General of Elections v Others v Tsvangirai* 2002 (1) ZLR 204 (S) at page 213 G, where the learned judge was not persuaded to adopt a secondary meaning of a phrase in the Zimbabwean Constitution when the primary meaning is clear.

Mr *Moyo* for the first respondent has strenuously argued that the word “obtain” cannot be given its ordinary meaning for the purposes of the statutory instrument as holders of foreign currency own and possess the funds in their respective funds. Thus, they cannot obtain what in essence they already have in their possession. In this regard, he referred me to the provisions of section 7 of the Exchange Control Regulations of 1996 which restricts the persons who may deal with the money held in a foreign currency account to the holder of that account or his duly authorised agent. While accepting the general principle that money deposited with a bank becomes the property of the bank and not of the depositor, Mr *Moyo* submitted that the principle was not of application to foreign currency accounts.

With respect, I find the submission startling in its consequences if I were to uphold it. Deposits into foreign currency accounts are in my view no different from deposits into local currency accounts. Hardly ever do depositors haul into the bank bags of foreign money for safe-keeping with the bank such that they can retain ownership of that “particular” money they deposit. In some cases, where there is an electronic transfer of the funds, all that is done is to debit the account making the payment and credit the receiving account. The physical money in the form of coins and notes hardly ever moves between banks or from one corner of the bank to the other. To then allege that one owns the foreign money deposited with a bank (and presumably be able to identify one’s foreign money), in such circumstances is conceptually nonsensical and may cast such a burden on banks as to destroy the economical concept of money that has so eased commerce over the years. It is the value of and not the physical notes and coins that one owns when they say they have money in a bank.


In deciding to interpret the word “obtain” in its primary sense, I am keenly aware of the wish on the part of the respondents to boost their revenue collection base by attempting to bring into the net all importers of luxury items who use proceeds from their foreign currency accounts. In view of the depressed foreign currency inflows into the fiscus, the wish on the parts of the respondents to urge the expanded meaning of the word on the court is appreciated. However, I cannot read into the language of the subsidiary legislation anything that would grant their wish and expand the meaning of the word “obtain” to exclude obtaining funds from a foreign currency account lawfully held with an authorised dealer. It is trite that the law maker speaks through the language used in an enactment and the court can only read the law maker’s intention from that language. I see nothing in the language used by the law maker in the statutory instrument or the context of the legislation to justify an expansion of the word as urged upon me by the respondents. In my view, if the intention of the law maker was to exclude funds from foreign accounts lawfully held, the language used in the subsidiary legislation would have expressly said so. Alternatively, if it was the intention of the law maker to use the word “obtain” to mean “purchase”, then the law maker would have so defined the word for the purposes of the subsidiary legislation to make it clear that it only exempted those funds purchased from an authorised dealer.

If I have erred in my interpretation the intention of the law maker, it is because in my view, the law maker did not use clear language to express its intention. I firmly hold that it is not my place or role to make law by giving the expanded meaning of the word that the respondents seek in this matter. The duty remains that of the law maker to express itself in clear language that admits of no ambiguity lest its intentions be misread by the courts. If the law maker’s intention was to enable the respondents to collect revenue in foreign currency on all imports purchased from funds held in foreign currency accounts, it should have said so in clear language. It clearly was not the intention of the legislature to give room to the courts to make law in this regard for the doctrine of the separation of powers between the three pillars of state is firmly entrenched in our system.

As was stated in 1949 by Lord NORMAND, in the case of Vesty’s (Lord) Executors and Another v. Inland Revenue Commissioners, (1949) 1 All E.R. 1108 at p. 1120,

“Parliament in its attempts to keep pace with the ingenuity devoted to tax avoidance may fall short of its purpose. That is a misfortune for the taxpayers who do not try to avoid their share of the burden, and it is disappointing to the Inland Revenue. But the Court will not stretch the terms of taxing Acts in order to improve on the efforts of Parliament and to stop gaps which are left open by the statutes. Tax avoidance is an evil, but it would be the beginning of much greater evils if the Courts were to overstretch the language of the statute in order to subject to taxation people of whom they disapproved.”

I would rather guard against the greater evil.


In the result, I make the following order:

1. The first respondent is hereby ordered to release the 2007 Toyota Hilux Double Cab and a Jetta VW to the applicant upon service of this order.
2. The first respondent shall bear the costs of this application.

*Gill, Godlonton & Gerrans*, applicant’s legal practitioners.

*Kantor & Immerman*, first respondent’s legal practitioners.

*Civil Division of the Attorney-Generals’ Office*, second respondent’s legal practitioners.
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