Fimpex Lesotho (Pty) Ltd v Commissioner of Sales Tax and Another (CIV/APN 172 of 97) [2000] LSCA 35 (4 February 2000)

C I V / A P N / 1 7 2 / 97 IN T HE H I GH C O U RT OF L E S O T HO In the matter between: F I M P EX L E S O T HO (PTY) L TD A P P L I C A NT and C O M M I S S I O N ER OF S A L ES T AX A T T O R N EY G E N E R AL 1st 2nd R E S P O N D E NT R E S P O N D E NT J U D G M E NT Delivered by the Honourable M r. Justice T. M o n a p a t hi on t he 4th d ay of F e b r u a ry 2 0 00 T h is application w h i ch w as filed on the 20th M ay 1 9 97 s o u g ht for the following orders: 1. T h at the decision of the R e s p o n d e nt dated the 15th July 1 9 9 6, that the g o o ds i m p o r t ed by the Applicant into L e s o t ho for re-export should not be regarded as t e m p o r a ry imports a nd that the Sales T ax paid thereon by the Applicant, should be reviewed be set aside. 2. T he R e s p o n d e nt should be directed to immediately p ay the a m o u nt of R 99 734.48 together with interest thereon at the rate of 1 8 . 2 5% per a n n um f r om the 15th day of July 1 9 96 to the Applicant. 3. T he R e s p o n d e nt should be directed to p ay the costs of this application. T he b a c k g r o u nd to this proceedings s h o w ed that the Applicant h ad b e en granted a licence to carry on the business of a broker on the 7th D e c e m b er 1995. T he Applicant said that its business w as to import a nd export g o o ds f r om South Africa into Lesotho a nd thereafter re-export t h em to other African countries. Applicant h ad later applied for import permit on the 21st M a r ch 1996. T he application s h o w ed the goods that the Applicant sought to import a nd re-export to African countries. It w as at page 18 of the proceedings. It w as c o m m on cause that there h ad never b e en an import/export licence in favour of the Applicant even at the time w h en this application w as launched. In its founding affidavit the Applicant said it a p p r o a c h ed the D e p a r t m e nt of C u s t o ms a nd Excise (Customs) to establish w h at w as required of it w h en goods w e re brought into Lesotho a nd w e re temporarily in Lesotho intended for re-export. In that regard a meeting w as held between C u s t o m s, the Ministry of Finance, the Sales T ax D e p a r t m e nt a nd the Applicant. C u s t o ms advised the Applicant as to w h at w as required of it for imports to be considered as temporarily held in Lesotho for export. T he annexure m a r k ed " D" to the proceedings w as a copy of a letter f r om C u s t o ms dated the 26th April 1996. I noted that as the Applicant itself said in paragraph 7 that the letter w as in response to w h at w o u ld (as a matter of procedure) be required in the future. This m e a nt that no specific goods h ad as at that time b e en imported. It w as c o m m on cause that certain goods h ad later b e en imported into Lesotho by the Applicant a nd sales tax w as charged thereon. Applicant w as claiming refund of the sales tax paid by it on the g r o u nd that the g o o ds w e re temporarily imported into Lesotho to be exported at the s a me time. T he real issue before C o u rt w as therefore m o re than whether the g o o ds w e re imported into Lesotho by the Applicant w e re e x e m p t ed f r om p a y m e nt of sales tax. It w as w h e t h er the Applicant as a v e n d or w as certified for exemption. T he Applicant stated at paragraph 8 of its founding affidavit that resulting f r om the m e e t i ng w h e re the requirements of the D e p a r t m e nt of C u s t o ms a nd Excise w e re stated the First Respondent's office b e c a me involved in the matter a nd carried out certain investigations. I noted that these investigations w e re not specified as to their nature. Applicant said that s o me meetings a nd discussions w e re held b e t w e en the First-Respondent and the Applicant as a result of w h i ch it w as ruled by the R e s p o n d e nt that the Applicant should pay Sales T ax on all the goods imported into Lesotho. Significantly it w as not stated w h en the meetings w e re held. This a s s u m ed importance in my view because the absence of a ny attempt to mention the dates u p on w h i ch certain events took place. This included the contents of all the paragraphs until the paragraph 15 in w h i ch a n n e x u re " E" dated the 15th July 1996 is spoken about a nd w h i ch letter m a ke reference to Applicant's letter dated the 29th April 1996. It m u st h a ve b e en at these meetings a b o ut which oblique reference w as at w h i ch the Applicant said that: " T he R e s p o n d e nt further held that it w a n t ed to satisfy (himself) that the goods w e re imported into Lesotho temporarily a nd that they w e re exported f r om Lesotho again." ( My underlining) So that by the Applicant's o w n ed admission leaving aside the description of the goods which the Applicant never vouchsafed, the Respondent would have wanted to satisfy itself that the goods were imported into Lesotho temporarily a nd that they were exported from Lesotho again. It was concerning the further requirement that the Applicant complained most about a nd which appeared to be found to be the g r a v a m en of its complaint. It w as what w as to be found in paragraph 10 of the founding affidavit which read: " T he Respondent agreed with the Applicant that in the event of (he) being satisfied that the goods being imported were regarded by customs as being temporary imports under the provision of the Act then sales tax would be refunded." So that it b e c a me clear as early as the t i me contemplated by the Applicant that C u s t o ms would have to be satisfied that the goods were temporary imports. In order for the First Respondent to form an opinion and m a ke its o wn decision he would have m a de investigations from the C u s t o ms department. It h ad been already decided that the goods were not exempted. It m ay have not been clear w h at the reason put forward by the Customs people were. It w as said that the First Respondent failed to exercise her decision judicially and it in fact erred. T he difficulty that one immediately c a me across w as that in paragraph 8 of the founding affidavit me Applicant said that it h ad already been ruled by the Respondent that the Applicant should pay sales tax on all the goods imported into Lesotho. Applicant did not tell the Court w hy it had then agreed to pay a nd w h at the reasons were. It could be the reasons were different from these that it later complained of or it could be the circumstances were different. O ne of the things that could have influenced the Applicant would be that: If the returns could s h ow that all the goods imported were thereafter exported, it would end up not paying tax as imports are exempted from tax." (See paragraph 8.3 of M a m p ho Hlaoli's affidavit). M e a n i ng that the Applicant remained to prove that the goods were in fact exported then it would claim. It c a me from the m o u th of the Applicant itself that there w as agreement between the parties that in event of the C u s t o ms Department being satisfied that the goods being imported were temporary imports under the provision of the Act, then sales tax would be refunded. T he Applicant seeks to base its reasons for review on "this agreement alone. It sought to narrow the compass by saying it should remain the only issue for consideration. By so saying it sought that any other reasons for refusal to refund the Applicant should be disregarded. This 1 found difficult to accept. A n n e x u re " E" to which the Court w as referred to which w as dated the 15th July 1996. It w as addressed to the Applicant. It w as a detailed response to a letter from the Applicant dated the 29th April 1996 (the discovered document). It was that annexure " E" which provided a basis for which the decision of the Respondent was being attacked. Annexure " E" contains m a ny things other than whether there was in fact re-exporting of the goods out of Lesotho or not. T he latter had been what I considered to be the m a in reason or defence to the Applicant's claim. It said goods are accepted if the vendor was registered with the Commissioner of Sales l a x. In that regard it was recorded that the Applicant w as not registered. T he background to annexure " E" can only be fairly understood by culling the very salient aspects f r om the discovered d o c u m e n t. Firstly the discovered d o c u m e n ts w h i ch w as written by M rs M ia Pereira records that the C u s t o ms office h ad registered an exception to the Applicant's g o o ds being "regarded as temporary imports." Applicant a p p r o a c h ed the Sales T ax D e p a r t m e nt d ue to the fact that it did not resell its products in Lesotho a nd w o u ld therefore have no w ay of recovery to 10% sales tax paid. Secondly t wo meetings w e re held with M r. Z w a ne a nd L e p h c a ne a nd again with M rs Hlaoli at M a s e ru section of the Respondent's department. T he Applicant w as urged to have its c o m p a ny registered for sales tax (certificate) purposes. It said it duly submitted all documentation after getting a trading licence f r om the D e p a r t m e nt of T r a de a nd Industry. T he Applicant w as issued with a brokers licence because it h ad b e en alleged that o ne M o n a h e ng h ad said that: " T h e re are no import/export licence facilities in Lesotho d ue to the fact that we only import/export, we have no n e ed for wholesalers licence " Applicant w as told that it could not register for sales tax with a broker's licence. An application w as submitted to M r. M a p e t la of the R e s p o n d e n t. He said he w o u ld review the application with M r. Jesse a nd w o u ld respond later. It b e c a me clear that as at the time the Applicant h ad not b e en issued with a certificate. A g a in in the discovered d o c u m e nt it w as slated that in February 1996 a second a nd third loads of goods were imported into Lesotho by Applicant. Sales tax w as paid therefor. M r. M a p e t la w as fortunately m et along with M r. Jesse a nd M r. D o n e g an at M a s e ru Hotel. 1 noted that: "All these agreed to a meeting in which we could sit d o wn with all the documentation and a decision would then be taken." It was not clear whether a meeting w as held following this other than the one of 22nd M a r ch 1996. It appeared before the said "chance" meeting the Applicant had already told that: " we could not register for sales tax with a broker is licence." It meant that the Applicant was still without a sales tax certificate. According to the discovered d o c u m e nt on the 22nd M a r ch 1996 there w as yet another meeting at the office of the Respondent. T h en there seems to have been a verbal agreement, that the goods were in fact exported to Malawi, with all proper documents then sales tax would be refunded. Thereafter a letter exempting Applicants from p a y m e nt of sales tax in the future would be issued. T he Applicant said it w as able on the 24th M ay 1996 in the presence of Customs officials from the State W a r e h o u se to hand over all documentation proving exports to Malawi with all the copies of receipts for sales tax paid to the Respondent's office. Still the Applicants were advised to pay sales lax on the two loads that were currently in Lesotho and to return to the Sales T ax Department for the compliance with set procedures. According to M ia Pereira of the Applicant C o m p a ny still on the 21st M ay 1996 no refund had been m a d e, despite the presentation of the documentation, brought to the attention of the Respondent. This was despite proof that the goods were exported to Malawi. M r. Mapetla of the Respondent's office was reminded of the agreement of the previous meeting. His response was that according to n ew legislation, there w as no ways that a refund could be claimed. T he situation b e c a me that no refund w as ever m a de because there w as no legislation for one exceptional case. I noted (see annexure "E") chat Applicant had not been registered for sales tax purposes because the explanation of the Respondent was that contrary to section 11(2) of the Sales T ax Act. 1982 (as a m e n d e d) the Applicant w as found to have no fixed place of abode or business and had not established a presence in Lesotho a nd ensure that: "the business is actually being conducted in Lesotho as this does not appear to be the case as at present." T he Respondent therefore persisted in refusing to have Applicant refunded tax that it had already paid. I did not understand w hy the case before me had to be complicated at all. It w as a simple case. I m ay have had to decide whether as a matter of fact the Applicant's goods were exported. I m ay have had to m a ke a finding that: "Applicant has not taken the Court into its confidence by telling the Court whether the goods were actually imported into Lesotho to decide whether the goods fall under the category of exception as provided under Section 7 of the Act and the schedule thereon." T he latter aspect being the nature of or type of goods allegedly imported. It w as submitted that there w as nothing in the papers to assist the Court in c o m i ng to a proper decision in the matter. I m ay have even decided then in favour of the Applicant on a balance of probabilities. B ut I did not h a ve to decide that. R e s p o n d e nt itself m ay h a ve unfairly caused confusion a nd misled the Applicant. It is because a continuous thread is to be found w h e re the R e s p o n d e nt said there w as to be proof that the goods w e re in fact exported. Applicant m ay h a ve actually b e en misled by the Respondents in seeking for decision of C u s t o ms whether the g o o ds w e re temporary imports u n d er the provisions of the C u s t o ms A ct 1982 "or whether tax paid w o u ld be refunded." It m ay perhaps be that the decision of C u s t o ms w as not necessary w h e re the only necessary and relevant discretion w as that of the R e s p o n d e n t. I h a ve already said that on strict interpretation it m ay be that the Sales T ax A ct does not in respect of imported goods provide for a p a y m e nt of tax a nd a refund. It w as submitted that the goods w e re exports having b e en temporarily brought into Lesotho. As has clearly b e en s h o wn the g r a v a m en of the Applicant's complaint w as that there h ad been no fairness in the exercise of its discretion by the R e s p o n d e nt in having relied on the advice of the C u s t o ms D e p a r t m e nt w h o se grounds w e re not divulged. T h at furthermore it w as not disclosed w hy a nd in w h i ch w ay the d o c u m e nt h a n d ed to the Respondents to prove that there h ad b e en exports alleged did not satisfy the Respondent. This a r g u m e nt w as a m e re red herring . It w as intended to d o w n p l ay the real issue w h i ch w as whether the Applicant qualified in terms of Section 11 of the Sales T ax A ct as a registered v e n d or with the R e s p o n d e nt for exemption from paying tax u p on goods entering Lesotho. It having been c o m m on cause that the Applicant w as not registered a nd certified for exemption as such, it w as not therefore exempted. It w as not entitled to a refund. It w o u ld have been arguable if the Applicant h ad questioned the g r o u n ds u p on w h i ch it w as n ot registered as an e x e m p t ed v e n d or or w hy it w as n ot granted an exporters licence. T he application w as dismissed with costs. T M O N A P A T HI J U D GE 4th February 2000 For the Applicant : M r. B u ys - Du Preez, Liebetrau & Co For Respondents : M r. Putsoane - Office of the Attorney General