The Tanzania Revenue Authority (TRA) has won its appeal, challenging payments of over 5.7bn/- to Tango Transport Company Limited over a dispute relating to tax liabilities.
A panel comprising Chief Justice Mohamed Chande Othman and Justices Sauda Mjasiri and Ibrahim Juma ruled in favour of TRA after declaring nullity on the entire proceedings conducted by the High Court on the matter.
They took into consideration one ground of appeal TRA had advanced to the effect that the High Court had erred in law in entertaining the suit based on the tax liability without satisfying itself as to whether the company had exhausted the legal remedies available under the Tax laws and regulations.
According to the justices, the High Court erroneously crowned itself with jurisdiction that it had not possessed in entertaining and determining the suit, which was fundamentally a tax dispute.
“Accordingly, we are constrained to and hereby invoke our revisional powers under section 4 (2) of the Appellate Jurisdiction Act to declare a nullity, quash and set aside the entire proceedings, judgment and decree of the High Court,” they declared.
The justices noted that the primary case spelt out by the substance of the pleadings was fundamentally a tax dispute founded on the warrant of distress, an instrument or order issued under the Income Tax Act and the Income Tax (Distrait) Rules to cover a tax liability from the company.
“It was to say the least, fully dependent on a prior determination of the respondent’s correct taxable income, assessment and liability for the periods 1989,1996 and 1997, including TRA’s entitlement to the collection of and recovery of any due and unpaid tax,” they said.
The justices pointed out further that the High Court eclipsed its authority by entertaining and determining chief issues on tax assessment and liability that were legally outside its competence was also plainly corroborated by the issues framed. Among the issues at stake are whether the company had an existing tax liability payable to TRA at the time of the distress and how much and whether the company’s vehicles were lawfully distrained.
“With respect, these live issue were plainly and manifestly taxation in nature,” they stated. Before the High Court, Tango Transport Company Limited, which operated a transport business in Arusha, sued the TRA and two others for general damages, restoration on the value of its properties, a Scania lorry and trailer, interest and costs arising out of the sale at a public auction on August 18, 2000.
In its judgment, the High Court held that the company had no existing tax liability payable to TRA at the time of effecting warrant of distress and its vehicles were not lawfully distrained and sold. The court awarded the company 110m/- as replacement value of the vehicles.
Furthermore, TRA was ordered to pay to the company 2,704,000 US dollars as loss of business and 200m/- others as general damages, interest and costs of the suit. It was at that point in time when TRA decided to take the matter to the Court of Appeal for further adjudication.