Judgment No. CCZ 7/2014 2
Const. Application No. 41/2014
The facts which gave rise to the questions for determination are these. The
applicant is a company incorporated under the laws of Zimbabwe carrying on the business of
supplying transport services and selling of fuel. The respondent is an administrative authority
established in terms of the Revenue Authority Act [Chapter 23:11]. It is entrusted with the
responsibility of assessing taxpayers for tax liability and collecting revenue due to the fiscus in
terms of the Value Added Tax Act [Chapter 23:12](“the VAT Act”) and the Income Tax Act
[Chapter 23:06] (“the Income Tax Act”).
The applicant has been a registered operator in terms of the VAT Act since
October 2010.
As from 2010, the applicant has been supplying transport services to and
purchasing fuel for sale at its service station from an entity called Sakunda Energy. It has always
been aware of its obligation to charge value added tax on the invoices for the transport services
supplied to Sakunda Energy. Instead of submitting returns of value added tax based on the
invoices on the transport services supplied, the applicant set off the costs of fuel purchased from
Sakunda Energy against the invoices for the transport services and submitted returns for value
added tax in respect of the balance.
The respondent commenced investigations into the tax affairs of the applicant in
October 2013. Upon examination of the applicant’s books of account, the respondent concluded
that the applicant had under-declared the value added tax charged on the invoices on transport
services supplied to Sakunda Energy, as a result of the setting off of the cost of fuel purchased
against the value of the invoices for the transport services. The applicant was advised of the
under declaration on 11 December 2013. The respondent was of the view that the value added