VARIETY CENTRE WRITES TO MINISTER OVER TAX DEBT

MBABANE – Tsembeka Bobhuti Investments (PTY) Limited trading as Variety Centre is requesting the Minister of Finance Neal Rijkenberg, to assist in its tax debt.

Eswatini Revenue Authority (SRA) is demanding over E6.5 million from Tsembeka Bobhuti Investments (PTY) Limited trading as Variety Centre. Tsembeka Bobhuti Investments (PTY) Limited is a company incorporated in the Kingdom of Eswatini under the directorship of Bhangubhai brothers and Patel brothers. Variety Centre is a trading name under the parent company Tsembeka Bobhuti Investments. Tsembeka Bobhuti Investments has other sister companies which they share some directors with and are in the same business. These are Inqlab Invesments trading as Chumana Cellular; Galaxy Mobile and Chicken King; as well as Labacotfo Bobhuti trading as Tsembeka Cellular. These companies sell and buy to each other. The exact amount which SRA is demanding from the company is E6 516 761.93.

SRA claims that when comparing VAT sales with income tax turnover for the periods under investigation, they found that there were large variances.  This, according to the authority, allegedly showed that the company had purportedly under declared on its income revenue.“After scrutinising purchases, we discovered that purchases were higher than VAT sales. Sales from the requested documents were also less than VAT output. This implies that goods were sold below purchase, which is not possible,” alleged SRA.

Allegations

These are allegations contained in an SRA report whose veracity is still to be tested in court. According to an investigation conducted by SRA, a tax investigation of Tsembeka Bobhuti Investments was conducted pursuant to Section 35(4) (36) of the Income Tax Order 1975 and Section 52 of the VAT Act 2011.  Section 36 (1) gives the power of inspection/authorises any officer to enter any place at which business or trade is carried on and require the taxpayer to afford him necessary facilities to inspect books of accounts and records, verify cash, stock or any valuable article as he may require. It its report the authority stated that an analyses of the purchases under both income tax and VAT returns showed that the purchases on the income tax and VAT returns were under- declared respectively. According to the report, which has been present to the court, an analysis on the requested purchases showed that the purchases were much higher than the input and purchases declared in VAT and income tax returns respectively.
“This, therefore, indicates that there were goods that were purchased and sold but were not declared. Another significant abnormality on the purchases is that imported goods on VAT returns were also higher than actual imported goods,” reads part of the report.

Imposed

Meanwhile, the company has filed an urgent application directing SRA to uplift any attachment imposed by a provisional notice that was issued by the authority’s Commissioner General on February 21, 2021 on any account of the business held with First National Bank Eswatini Limited. The applicant (company) is also praying for an order granting its directors unlimited access, control and possession of all bank accounts held with First National Bank of Eswatini Limited. It is further the applicant’s prayer that the court should direct SRA Commissioner General to produce a valid statement of account reflecting how much was due, owing and payable by the applicant and also stipulate clearly, the method that was used in such calculations. On top of the above prayers, a letter dated October 20, 2020, was written by the company requesting the Minister Rijkenberg for the waiver of interest and penalties for the tax debt payment. This letter is attached to the court papers.

In the letter, Variety Centre alleged that in 2017 they were advised through a tax report of an outstanding tax debt of over E2.6 million excluding interest and penalties. The company alleged that on February 8, 2019, it started making payments towards the settlement of the outstanding tax and by February 21, they had reportedly paid an amount of E70 000. “From March 2019, we paid an amount of E15 000 per month until March 2020. Our shop had to close down at this point due to the COVID-19 pandemic as our business was classified as non-essential. “We again resumed payments in June 2020 when we increased our monthly instalments of E39 417. These are monthly instalments that we are currently paying,” averred Variety Centre through Director Shabbir Abbas.

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