CLOSING TANDOORI JUSTIFIED - SRA

MBABANE – Eswatini Revenue Authority (SRA) has said its decision to close down popular Mbabane eatery, Plaza Tandoori Restaurant was justified.

The restaurant, which is situated at Swazi Plaza in Mbabane has not been operational since March 13, 2020 and SRA demanding a sum of E3 466 355 .85 from the eatery.

According to the authority, the eatery allegedly under declared its sales by the sum of E2 396 076 .07 for the four- month period from April to December 2012.
In closing the restaurant, the SRA Commissioner General invoked Section 44(1) of the VAT Act 2011.   The Act allows the commissioner general to close a business unit where a person has failed to remit an amount taxable within the prescribed period.

Liable

Section 44(1) provides that: “Where a person liable for tax has failed to remit the amount payable by that person within the prescribed time, the commissioner general may lock up and seal the business premises of that person and thereafter the goods in their business premises shall be deemed to be attached and at the disposal of the commissioner general.’’

Through its lawyer Kenneth Simelane, the restaurant has filed an urgent application at the High Court where it is, inter alia, seeking an order directing the respondent (SRA) to uplift the freeze on its (Plaza Tandoori Restaurant) bank account number 020000661709 held with Nedbank (Swaziland) Limited.
The applicant (Plaza Tandoori Restaurant) is further praying for an order directing the respondent to open its business situated at Shop No.2, Swazi Plaza, Mbabane.

Suspicious

In his opposing affidavit, SRA Commissioner General Dumisani Masilela averred that the invoices that were brought by the applicant were highly suspicious and they did not suffice.  He told the court that the audit was carried out based on information that was received from the applicant’s premises.

“The amount was assessed in 2013. The amount due is now including interest and penalties. The applicant should have challenged the respondent as far back as 2015,” contended Masilela.  He also alleged that SRA’s officials came to the business premises of the applicant and its management was non-cooperative.

Refused

According to Masilela, the applicant’s employees refused with documentation and only later stated that the documents were not available due to the absence of one of the directors.

“This was after a lot of haggling with the applicant. In terms of the law, the documents should have been present for presentation at the given point. The inspection was not unreasonable,” he argued.

The commissioner general also denied that the figure was arrived at through estimates. He contended that the methodology that was used by the SRA officers during the inspection was used internationally.  He told the court that the applicant was not a special case.
“The respondent’s officials took note of the cash float. The issue of the petty cash being the cash register was strange and unique but nonetheless, it was taken into account,” submitted Masilale.

He also argued that the matter was not urgent as the eatery was closed down on March 6, 2020 and the present application was instituted after 20 days.
According to Masilela, the respondent was only given 48 hours to respond to the urgent application.  He pointed out that the matter dated back to 2013 and there had never been a reason for the applicant to believe that the audit had been set aside.

Appeal

He submitted that the fact of the matter was that the respondent advised the applicant of its position as far back as April 2015.  “In the event that the applicant had any objections or if it wanted to appeal, then it should have utilised the provisions of the Income Tax Order,” averred the commissioner general. 
Meanwhile, in its application, the eatery also wants the court to declare that the respondent did not assess it to tax for the VAT periods April 2012 to December 2012.   The applicant is further seeking an order directing that it was not liable for any tax liability for the VAT period April to December 2012.

Mohammed Asraful Chowdhury who is the director of the applicant, submitted that the Act, promulgated in 2011, came into effect in April 2012. According to Chowdhury, the promulgation of the Act coincided with the establishment of the SRA.  He alleged that at its introductory stages, there were challenges in understanding of its processes and procedures, both by the taxable persons, businesses charging and being charged VAT and the officers of the respondent in the implementation of the provisions of the Act.

He highlighted that Chowdhury Investments (PTY) Limited had a number of business entities, which traded as stand- alone business.   He alleged that each of the business entity was a separated taxable person with a separate TIN number allocated.

Compliance

Chowdhury averred that Plaza Tandoori Restaurant, in compliance with its obligations under the Act, submitted VAT returns for 2012.
“This matter is urgent as the respondent has already made a demand of E3 466 355.85 and has already closed the applicant’s business.  The applicant’s account was frozen on March 6, 2020,” averred Chowdhury.

He contended that SRA had allegedly invoked its alleged draconian powers in terms of the Act, in circumstances where there is no tax liability due, owing and payable to the respondent.  The matter is still pending at the High Court and appearing for SRA is senior lawyer Sidumo Mdladla while appearing for the respondent is Kenneth Simelane.

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