Chinese-owned AfroChine Smelting has failed to stop the Zimbabwe Revenue Authority (Zimra) from garnishing its bank account after it failed to pay US$2 million tax royalties.
AfroChine Smelting had filed an urgent chamber application before High Court judge Justice Emilia Muchawa for an interim interdict to stop the tax authority from raiding its accounts.
It wanted the court to declare that mining royalties owed in terms of the Mines and Minerals Act cannot be enforced by a garnishee order in terms of some sections of the Income Tax Act.
The miner also wanted the court to declare the garnishee order null, void and set aside.
Muchawa, however, ruled that the application by the Chinese miner was improperly before the courts.
“An interdict is inappropriate in the circumstances,” she ruled.
"Having already found that I cannot interdict what has already occurred there is no need for me to detain myself on the lawfulness or otherwise of the conduct by respondent.”
The judge said the application for interim relief was without merit.
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“The issue of the lawfulness or otherwise of the Ziimra conduct does not now fall for determination, the interim relief being unsustainable. I will not detain myself on it,” she said.
Zimra argued that AfroChine Smelting had under-declared royalties as shown in their sales schedule from 2019 to 2021.
After hearing the arguments, Justice Muchawa dismissed the matter after finding that AfroChine had indeed erred in declaring royalties.
She found that the deduction of 10 cents from the gross fair market value of the cost of freight is proscribed by section 37 (9) of the Finance Act.
AfroChine lodged an appeal, but it was struck off the roll.
Thereafter, AfroChine filed a chamber application for condonation and extension of time within which to appeal.
AfroChine was challenging the tax assessment for unpaid royalties plus penalty levied against it by the respondent which totalled US $2 million.
However, Zimra penned a letter dated May 16 advising AfroChine that it had garnished certain funds held by it which were due to AfroChine as Vat refunds to settle the mining royalties in terms of the Mines and Minerals Act.
In response, AfroChine advised on May 17, 2024 that it had no outstanding tax obligations under the Income Tax Act and therefore Zimra could not use the garnishee remedy under the same act.
AfroChine then requested that Zimra retract the garnishee order by May 20, 2024 but this was not done.
However, this led to AfroChine approaching the High Court.
