Finality and the Fiscal Chasm: Lessons from National Foods Limited v. ZIMRA

The landscape of Zimbabwean tax law is built upon the bedrock of certainty. For both the state and the taxpayer, the “lifeblood” of the system is the principle that once a tax liability is determined, that determination must be final and compliant with strict statutory procedures. This principle was recently put to the test in the Special Court for Income Tax Appeals in the matter of National Foods Limited (NFL) versus Zimbabwe Revenue Authority (ZIMRA) (Case heard by Chilimbe J, Harare, November 2024 & July 2025).

The judgment serves as a stern reminder to the tax authority that the power to assess is not a license for indecision, and that procedural shortcuts can render multi-million dollar claims “null and void.”

1. The Core Dispute: Two Bites at the Apple?

The conflict originated from a tax audit conducted by ZIMRA covering the period from 2014 to 2021. National Foods, a major food manufacturer, had submitted self-assessments and paid substantial taxes. Following an audit, ZIMRA identified inconsistencies regarding management fees, technical agreements with Tiger Brands, and foreign currency trading revenues.

The legal “fireworks” began when ZIMRA issued a set of assessments in September 2021. However, rather than concluding the matter there, ZIMRA issued a second set of assessments in March 2022, claiming additional taxes, including:

• Income tax exceeding US$3.3 million and ZWL 592 million.

• Various withholding taxes (Non-resident tax on fees and shareholder tax).

• A 20% penalty.

NFL raised a point in limine (a preliminary legal objection), arguing that the March 2022 assessments were invalid because ZIMRA had already “spoken” in September 2021.

2. The Principle of Finality: Functus Officio

The crux of NFL’s argument, articulated by Mr. Tshuma, relied on the legal doctrine of functus officio. Once a public official (like the Commissioner General of ZIMRA) performs a specific legal function—such as issuing an assessment—they cannot simply “do it again” or change their mind unless the law specifically allows for it.

The 3-Month Window

Under Section 62(4) of the Income Tax Act, once a taxpayer lodges an objection, the Commissioner has three months to respond. If they fail to do so, the objection is deemed disallowed, and the assessment becomes final. NFL argued that by issuing the September assessments and failing to formally resolve the subsequent disputes within the statutory timeframe, ZIMRA was barred from issuing a fresh “March batch” for the same period.

3. Major Key Takeaways from the Court’s Analysis

A. “Taking Two Leaps Per Chasm”

Chilimbe J opened the judgment by citing the Supreme Court’s guidance in Nestle Zimbabwe v ZIMRA: “Taking two leaps per chasm is untenable.” This metaphor highlights that a tax assessment cannot be “conditional” or subject to further audit. It must be a definitive determination of liability. If ZIMRA issues an assessment, it must be the result of a completed process, not a “placeholder” while they continue to look for more errors.

B. Requirements of a Valid Assessment

The court reinforced that for an assessment to be valid, it must strictly comply with Sections 2 and 51 of the Income Tax Act. As established in Delta v ZIMRA and Barclays Bank v ZIMRA, a notice must contain:

1. The taxpayer’s taxable income.

2. The credits the taxpayer is entitled to.

3. The specific tax payable.

4. A notice that objections must be lodged within 30 days.

In this case, NFL argued the March assessments were “insufficiently worded” and failed to state the empowering provisions of the Act under which they were issued.

C. The Section 47 Hurdle (Additional Assessments)

ZIMRA’s defense rested on Section 47, which allows the Commissioner to issue “additional assessments” if they later discover income was omitted. However, the court noted that this power is not absolute. It is limited by Section 62(4): the Commissioner cannot use Section 47 to bypass the finality of an objection process that has already run its course.

4. What We Learned from Chilimbe J’s Observations

1. Certainty Over Equity

Tax law is famously “harsh.” As cited in ZIMRA v Triangle Ltd, there is “no room for any intendment” or “equity” in a taxing Act. If the law says an assessment is final after three months, it is final—even if ZIMRA later discovers they missed a million dollars. The state must be right the first time, or follow the rigorous statutory path to amend its mistake.

2. The Danger of “Schedules” vs. “Assessments”

ZIMRA attempted to use “schedules” for withholding taxes instead of formal assessments. The court examined whether these informal documents satisfied the legal definition of an “assessment.” The takeaway for taxpayers is clear: Check the form. If ZIMRA issues a document that doesn’t meet the statutory definition of an assessment, it may not create a legal obligation to pay.

3. Mutual Engagement Does Not Pause the Law

ZIMRA argued that the parties had “mutually agreed” to consult rather than follow the strict objection timeline. The court’s scrutiny suggests that informal consultations cannot override the mandatory timelines set by the Income Tax Act. Statutory deadlines are “peremptory”—they must be followed regardless of the “spirit” of cooperation between the parties.

5. Summary Table: The Battle of Arguments

Conclusion: A Victory for Procedural Integrity

The National Foods Limited v ZIMRA case underscores that the validity of an assessment is the gatekeeper of the court’s jurisdiction. If the assessment is a nullity because ZIMRA jumped the gun or failed to respect the finality of previous notices, there is no “proper appeal” for the court to hear—the tax obligation simply vanishes.

For corporate entities in Zimbabwe, this case is a blueprint for defensive tax strategies: always scrutinize the process of the audit as closely as the math of the tax. For ZIMRA, it is a reminder that in the “chasm” of fiscal legislation, you only get one leap.