Prevailing Securities’ Judicial Manager has filed a suit against Botswana Unified Revenue Service (BURS) and its Commissioner General over imposed tax penalties in the range of P81, 766, 882.46.
The Judicial Manager, Danny Julius Guduli approached High Court to review and set aside the tax assessment in the sum of P81, 766, 882.46 (VAT and Income Tax inclusive), which BURS slapped Prevailing Securities with early 2019.
In February 2019, BURS impounded vehicles belonging to Prevailing Securities owner, Shadrack Baaitse for tax-related issues.
The matter followed a tax investigation launched by BURS on the company in September 17, 2018, which subsequently led to issuance of assessment of P 7, 179, 977.92 for the period January 2013 to December 2017 and punitive 200% punitive penalty for Value Added Tax.
BURS also imposed on the company an amount of P56 703 834.34, including 200% penalty related its Income Tax Assessment.
Now, Guduli through his attorneys, wants the court to review and set aside BURS’ decision and order a fresh tax assessment of Prevailing Securities taking into account the company’s running costs and expenses within 30 days of the Court order.
In his founding affidavit, Guduli wants the court to overturn BURS’ additional VAT assessment of P7, 179, 977.92 against Prevailing Securities for the period January 2013 to December 2017, imposed penalties of 200% in the sum of P14, 359, 955.85, and the imposed Income Tax Assessment in the sum of P56, 703, 834.34 inclusive of a penalty 200%.
Guduli said he finds the assessment and penalties excessive and shockingly punitive.
He argued that the company had provided the necessary documents to BURS despite the latter stating to the contrary.
In the notice of assessment, BURS had indicated that Prevailing Securities understated output tax although bank statements reflected that the company had received more ‘income’ than what was declared as turnover in the submitted returns.
According to the Judicial Manager, the VAT Assessment did include some of the payments made to BURS.
“For instance, the sum of P119, 982.83 paid on March 1, 2014 was not reflected on the assessment schedule, with the result being that Prevailing Securities had underpaid tax, when this was not
Guduli further argued that it is not true that Prevailing Securities understated its income as it had two types of income, with the first arising from its own ordinary course of business while the other source came from Non-Income Activities, which were not tired to the contractual income with different customers.
He argued that although not all of the company’s customers paid for services rendered on time or in full, BURS however levied tax for services rendered as if the customers had paid the contract sums.
He said this was not only wrongful but also irrational and amounts to abuse of authority by BURS.
Concerning Income Tax Assessment, the Judicial Manager argued that BURS erroneously treated deposits in Prevailing Securities bank accounts as income.
“In fact, the Respondents states that in its that the deposits were treated as “business turn-over” as they were from the “company’s customers”. The Respondents total amount levied, as outstanding assessment was P56 703 834.34. This amount included a penalty of P200%,” he said.
He said the total amount assessed for both VAT and Income Tax far exceed any amount that has been received by the company from its customers in the whole assessment period.
The Judicial Manager said BURS has failed to address some of the objections he has raised through letters, with its conduct in the end forcing Prevailing Securities into judicial management.
“The objections remain unattended to such that Prevailing Securities has no remedy at its disposal for the wrongful conduct of the Respondent.
The statutory remedies in the Income Tax Act that would be naturally available to Prevailing Securities have been rendered nugatory by the conduct of the Respondent.
Its conduct is patently unlawful and has left me with no option but to approach this court for relief,” he added. The case is before Justice Michael Leburu.