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Fidelis Munyoro Chief Court Reporter
THE High Court has ordered RMC Hospital, which is owned by Bikita West legislator Dr Munyaradzi Kereke, to pay the Zimbabwe Revenue Authority close to US$4 million in taxes for the last three years.
The ruling follows an urgent application by RMC seeking to lift garnishee orders imposed on his hospital’s trade debtors to recover the arrears.
Zimra has blocked cash-flows due to RMC by issuing garnishee orders to the hospital’s major trade debtors – Cimas, Premier Service Medical Aid Society and Stanbic Bank, to collect tax liability to the tune of US$3 297 103, 62.
The taxes include Pay As You Earn, income tax and withholding tax.
Zimra acted in terms of the law in effecting the garnishees after invoking Section 69 of the Income Tax Act, which allows the revenue authority to directly recover payment from a taxpayer’s debtors.
Yesterday Justice Joseph Martin Mafusire threw out the RMC application saying Zimra’s conduct was above board and Dr Kereke has to comply with the law requiring him to pay taxes.
The judge said Zimra has enormous powers to levy and collect taxes.
“It is a policy that revenue inflows to Government should not be interrupted. Government functions must not grind to halt,” Justice Mafusire said.
Zimra accused RMC of evading paying tax since its inception in 2010 while Dr Kereke was accused of being uncooperative when he refused to provide useful information on the financial aspects of the hospital project to enable the tax collector make a proper assessment of tax payable.
In his ruling, Justice Mafusire accepted an argument by Zimra lawyer Advocate Thembinkosi Magwaliba that RMC simply failed to prudently manage its affairs and should not cry foul when the tax collector swooped on it.
“The applicant (RMC) has made a very strong and persuasive moral argument for the hardships it is facing. But one should not be dazzled by that. The argument is short on law. The respondent (Zimra) has the law on its side,” said the judge.
Justice Mafusire also found nothing peculiar in the situation of RMC to warrant a treatment different from the rest of the other tax payers that may find themselves with objectionable tax assessments against which they would have to appeal.
“The garnishees may worsen the applicant’s bad situation. But regrettably, those are some of the natural consequences of the application of the law,” he said.
“I have found nothing outrageous or grossly unreasonable in the respondents’ conduct.”
RMC was given a chance to avert the garnishees by offering an acceptable plan but failed. It further defaulted on a previous payment plan.
“I am unable to find fault with the respondent’s conduct, let alone anything that would amount to conduct so grossly outrageous in its defiance of logic…as to be liable to impeachment by court. In the premises the application is dismissed with costs,” ruled Justice Mafusire.
Zimra, which has already started serving garnishee orders on RMC Hospital’s debtors to recover the money, is allegedly owed around US$3,2 million, and the rest is made up of penalties for non-payment of taxes.
Through his lawyer Adv Lewis Uriri, Dr Kereke feels the move by Zimra to swoop on RMC was malicious and a ploy to drive the health institution into liquidation.
He wanted the garnishee orders suspended until a separate appeal against the tax assessment is finalised.
Dr Kereke lodged an appeal with Zimra against the tax assessment on the same day the garnishee orders were issued. The appeal was still pending.
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