Dar es Salaam — The Court of Appeal has rejected Pan African Energy Tanzania Limited (PAETL)'s efforts to challenge a Sh84.2 billion tax demanded by the Tanzania Revenue Authority (TRA).
The highest court has confirmed decisions of the Tax Revenue Appeals Board (Trab) and the Tax Revenue Appeals Tribunal (Trat) which had refused to hear the company's objection against the assessment.
PAETL attempts to challenge the tax demand crashed for the third time recently after the court sided with the quasi-judicial bodies to rule that the natural gas producer's appeal could not be entertained because it was preferred against a non-appealable decision.
Pan African sought interpretation of the top court on what could be taxpayer's remedy in the event TRA refuse to grant waiver to deposit one third of the assessed tax in order to validate the notice of objection.
Under Tanzanian tax laws, a taxpayer who has lodged a notice of objection against tax assessment has to deposit 30 percent of the assessed tax before the objection could be heard and determined by TRA's Commissioner General.
The legal battle pitting Pan African Energy against taxman's decision started in 2016 after TRA conducted an audit on the company's tax affairs.
Following the audit, TRA issued in March, 2016 issued a notice of assessment to the appellant for the years of income 2014 which imposed a Sh84.2 billion tax burden.
The natural gas producer has consistently opposed the assessment. The company lodged notices of objection to the assessment and subsequently applied for a waiver to deposit one third of the required tax for its objection to be admitted.
TRA said it could not grant waiver because the reasons advanced by the energy company to apply waiver were also pleaded in the notices of objection and as such, could not be dealt with before determination of the objection.
Aggrieved with the refusal of waiver, PAETL took the matter before Trab which dismissed the appeal, saying TRA was justified to refuse the grant of waiver.
That was not the end of it for PAETL.
The company took the case before the Trat which also struck out the appeal for being incompetent.
Trat rejected the appeal on the ground that it was not the result of an objection decision of the commissioner general.
After losing the second bid to have its complaint heard, Pan African Energy, which produces and supplies gas for power generation at the Ubungo power plant, Dar es Salaam, resorted to the Court of Appeal.
At the top court, the company argued that Trat erred in holding that its appeal was incompetent for being against a non-appealable decision.
AETL also argued that Trat wronged when it failed to consider its arguments that TRA's decision of refusing to grant them one-third waiver was appealable decision.
What was in dispute was the interpretation of the of the Tax Administration Act (TAA) and the Tax Revenue Appeals Act (TRAA) on the taxpayer's remedy if it happens that TRA refuses to grant waiver to deposit one third of the assessed tax.
Mr Fayaz Bhojani who represented PAETL in the appeal argued that under section 50 (1) of the TAA, TRA's commissioner general has discretion to make any tax decision including 'assessment' or 'other decision' or 'omission' in case of a grievance.
It was his further contention that the law mandates the commissioner general to reduce or waive the amount to be paid upon being moved by the taxpayer.
In case the waiver is refused, he argued, that was among the contemplated "other decisions" or "omission" which are appealable to the board in terms of section 53 (1) of the TAA.
Pan African Energy faulted the tribunal by focusing solely on the provision of section 16 (1) of the Tax Revenue Appeals Act instead of considering it together with the extensive right of appeal which was articulated under section 53 (1) of the TAA.
He argued that Trat's decision to strike out its appeal was irregular because their right to appeal against refusal to grant the waiver was embraced in 'other decisions' or 'omission' of the commissioner general.
It was also the argument of Mr Fayaz that there was no clarity as to how a taxpayer can invoke a remedy of an appeal to the board against 'other decisions 'or 'omission' of the respondent.
TRA oppose appeal
TRA strongly opposed the appeal and supported decision of the tribunal in striking out the appeal for being preferred against a non-appealable decision before the board.
Its lawyers pointed out that in terms of section 16 (1) of the TRAA, what was appealable to the Trab was solely an objection decision arising from a tax decision made by the commissioner general.
Court of appeal dismisses appeal
The Court of Appeal was left to decide whether or not the refusal to grant waiver to deposit one third of the assessed tax was a tax decision which is appealable to Trab in terms of section 16 (1) of the TRAA.
"In the light of the unambiguous and plain language used in section 50 (1) of what is a tax decision, we are satisfied that refusal to grant the waiver is excluded in the realm of what constitutes a tax decision and neither is it an objection decision," said Justices Stella Mugasha, Rehema Kerefu and Issa Maige.
On whether commissioner general's refusal to waiver was among the appealable decisions envisaged by Rule 6 of the Tax Appeals Board Rules, the court said it was clear that refusal to grant waiver was not among the envisaged appealable decisions.
The court also declined PAETL's call for it to interpret the refusal to grant waiver as a tax decision because the language used in the TRAA and TAA was plain.
"The legislative intent was vivid and to do otherwise as suggested by the appellant, was to embark on interpolations which is not giving effect the clear meaning of the statutes in question," said the judges.