Aggreko International Projects Tanzania Branch vs Commissioner General (Tanzania Revenue Authority) (Civil Appeal No. 175 of 2025) [2026] TZCA 591 (20 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT ARUSHA (CORAM: LILA. 3.A.. RUMANYIKA 3.A. And MANSOOR, J.A/) CIVIL APPEAL NO. 175 OF 2025 AGGREKO INTERNATIONAL PROJECTS TANZANIA BRANCH ...... APPELLANT VERSUS COMMISSIONER GENERAL (TANZANIA REVENUE AUTHORITY)........................ . ..............RESPONDENT (Appeal from the Judgment and Decree of the Tax Revenue Appeals Tribunal at Dar es Salaam) fMutunqi. J.) dated the 11th day of April, 2025 in Tax Appeal No. 74 of 2023 JUDGMENT OF THE COURT 3rd December, 2025 & 20th May, 2026 RUMANYIKA. J.A.: The appellant, Aggreko International Projects Tanzania Branch, is a services provider, including supply of technical personnel to among others, the Barrick mine sites who is also a tax payer to the respondent, Tanzania Revenue Authority (TRA). In 2021, the respondent audited the appellant's tax affairs covering the period from 2010 to 2019 and issued an audit report i highlighting several issues and tax liabilities, allegedly overdue for settlement. In response, the appellant furnished such information and explanations addressing the issues raised. Consequently, the parties engaged in several meetings aimed at resolving the ensuing tax disputes, vainly. As such, on 6th June 2022, the respondent issued a formal notice stressing payment of the assessed tax. That notice showed, among others, disallowance of Input Value Added Tax (VAT) claims related to accommodation/lodging and related expenses incurred by the appellant for its technicians working at the Barrick mine sites. The appellant unsuccessfully objected it, together with the interest imposed. All this prompted the appellant to appeal to the Tax Revenue Appeals Board (the Board) vide Tax Appeal No. 49 of 2023, again, unsuccessfully. Dissatisfied with the Board decision, the appellant escalated the dispute to the Tax Revenue Appeals Tribunal (the Tribunal) vide Tax Appeal No. 74 of 2024. Too, the appellant lost the battle. Still aggrieved, now she is before this Court seeking redress on four grounds of appeal, as we shall demonstrate shortly. At the scheduled hearing of the appeal, Mr. Stephen Axwesso, learned counsel appeared for the appellant whereas Ms. Grace Makoa, learned Principal Attorney together with Ms. Hadija Senzia, learned Senior State Attorney who had with them, Mr. Andrew Kombo and Ms. Akwila Mrosso, both learned State Attorneys, all representing the respondent. To start with, Mr. Axwesso adopted the appellant's written submission filed on 03/09/2025 to form part of his oral submission. For the first, second and third grounds of appeal, Mr. Axwesso faulted the Tribunal allegedly for having interpreted section 2 of the Income Tax Act (ITA) and section 68(1) and (3) of the Value Added Tax Act (VATA) leading into a wrong conclusion. It was contended that, actually the said accommodation expenses fall under the phrase "entertainment" and the "hospitality of any kind". However, it was argued, the Tribunal, in its decision upheld disallowance of the input VAT claims with respect to the accommodation expenses incurred for the appellant's employees at the Barrick mine sites. Mr. Axwesso cited the Oxford Advanced Learner's Dictionary, New Eight Edition, page 727 stressing on section 2 of the ITA on what "entertainment" really entails. Further, it was argued that, had the legislature intended to exclude accommodation expenses from the aspect of the "hospitality of any kind" from entertainment, under section 2 of the VATA for the purposes of disallowance, it should have made it so expressly which is not the case in the present case. Also, it was argued that, on comparison, the wording of section 2(1) of the ITA defines entertainment as including food, beverages, amusement, recreation, hospitality of any kind, and, for this case accommodation. Therefore, it was asserted that, this is a fit case for ejusdem generis rule to apply. To bolster his point, he cited our decisions in Pan African Tanzania Ltd. v. Commissioner General-TRA (Civil Appeal No. 172 of 2020) [2020] TZCA 287 (9 July, 2021) and Coca Cola Kwanza Ltd. v. Commissioner General TRA (Civil Appeal No. 201 of 2023) [2025] TZCA 642 (27 June, 2025). It is so, he contended, because there existed such general words against specific words, bringing in words of a common family and specie. Much as, he added, accommodation possess such a distinct nature for the purposes of classification of the taxable supplies. In fine, Mr. Axwesso implored us to draw an inspiration from the Tribunal's decision in Tanzania Breweries Pic v. Commissioner General- TRA, Consolidated Tax Appeal Numbers 88 and 90 of 2023 and M & P Exploration Production Tanzania Ltd. v. Commissioner General- TRA, Tax Appeal No. 90 of 2023, to arrive at a just decision. For the fourth ground of appeal, equally put to question is the interest allegedly accrued on the long overdue payment of the disputed tax 4 assessment, in terms of section 76 of the Tax Administration Act. It was Mr. Axwesso's contention that, had the Tribunal applied the law and evaluated the evidence properly regarding the disallowed input VAT on the accommodation expenses, the appellant would not have been charged any interest and penalties for having no legal basis. It is so, he argued, the f purported principal tax was incorrectly assessed and imposed. Therefore, the Court was urged to find merit in the appeal and allow it with costs. In turn, Mr. Kombo began by adopting the respondent's written submission filed on 03/10/2025 as part of his oral submission. He contended that, whatever it is meant by section 2 of the ITA and section 68(1) and (3) of the VATA, it counts most. That, it is whether the said accommodation was used wholly and exclusively for generation of the appellant's taxable income, as the bottom line for it to be allowable. Mr. Komba also asserted that, in terms of the provisions cited above, and within the context of the present case, accommodation entails no entertainment for them to share the same class, and for the ejusdem generis rule to apply. To hold otherwise, he contended, one would be limiting the scope of section 68(1) of the VATA causing the law redundant. While citing, for inspiration the South African case in AB (PTY) Ltd v. The Commissioner s for South African Revenue Service, Case No. VAT 1015 to fortify his point, Mr. Komba urged the Court to dismiss the appeal with costs. Rejoining, Mr. Axwesso, in a nutshell contended that, disallowance of accommodation expenses for the tax payer's employees would regrettably amount to exclusion of the human resource which is such an essential and direct aspect for generation of any taxable income. He reiterated his prayer for an order allowing the appeal with costs. We have considered the contending submissions of the learned counsel for the parties, sufficiently. As such, the pivotal issue raised in the first and second grounds of appeal for our consideration is whether the Tribunal interpreted section 2 of the ITA and section 68(1) and (3)(a) of the VATA properly regarding the term "entertainment" and the phrase "hospitality of any kind". It is recalled that in its decision, the Tribunal viewed the said accommodation expenses as falling within the ambit of "hospitality of any kind", as stipulated under section 2 of the ITA justifying the disputed disallowance of input VAT claims. Whether, in holding so the Tribunal acted properly is the subject of this appeal. 6 We want to stress on a trite law that, while interpreting tax statutes, courts have to apply the plain meaning rule, without more. See- Shana General Store Ltd v. The Commissioner General Tanzania Revenue Authority (Civil Appeal No. 392 of 2020) 2021 77CA 633 (3 November 2021, TanzLII). Logically, in our considered view, section 68(3)(a) of the VATA discourages input VAT claims on expenses incurred for luxury and personal enjoyments. It extends, thus, to non-business consumption such as meals, recreation and entertainment. It is no wonder the definition of "entertainment" under section 2 of ITA includes foods, beverages, amusement, recreation or the phrase "hospitality of any kind". At any stretch of the imagination, therefore, accommodation or lodging facility expenses for any tax payer's employees cannot be entertainment within that context. In other words, unlike a mere entertainment or recreation, the said accommodation facilities served such a fundamentally different purpose towards production of such a taxable income. It implied crucial business costs enabling the employees, most importantly in remote work places such as mining sites, to comfortably and conveniently perform. It was supposed to be so in the circumstances of the present case. 7 Upon reviewing the statutory provisions under reference together with the material facts of this appeal, as done, therefore, we are unable to buy Mr. Komba's contrary proposition. We do not see how would the legislature intend that, accommodation for employees cater for entertainment purposes, exactly the same way as foods, beverages, amusement or the "hospitality of any kind" ejusdem generis could do, in terms of section 2 of the ITA. Saying so, we want also to stress that, the law speaks the minds and languages of its makers without exception to the present case. As such, to hold otherwise, the Tribunal respectfully underpinned the input VAT restrictions regarding commercial realities of the appellant's business. It follows, therefore, that had the Tribunal interpreted the law properly, it would have not considered the accommodation expenses as falling under the "hospitality of any kind". It is so because, at any stretch of the imagination, the two do not belong to one specie of "entertainment" under section 2 of the ITA. It is stressed that, for production of any business supply to sail out, accommodation expenses for employees, especially in remote mine sites as it is in this, is never a luxury input. Unlike refreshments and beverages, it is such an essential input in the production of taxable income contrary to the Tribunal's holding, Therefore, the first and second complaints are merited. On the third ground of appeal, the Tribunal is faulted, allegedly for its failure to evaluate the evidence properly. From the very outset, we want to stress that, at a third appeal stage, as it is the case here, the duty of the Court cannot be over emphasized than is necessary. We are restricted from reviewing and examining the material as was placed before the lower court, in this case the Tribunal. We have restated this position now and again, such as in Japan International Cooperation Agency (JICA) v. Khaki Complex Ltd (Civil Appeal 107 of 2004) [2006] TZCA 80 (17 July 2006; TanzLII). However, for the sake of argument, and with respect to the legal principle above, it cannot be said that, the Tribunal did not analyze the evidence or that it did it improperly, save for its conclusion, as observed above. As such, we note that, in arriving at its decision, the Tribunal considered some relevant documentary evidence, such as copies of the audit report, invoices and finally the parties' submissions, as it is exhibited on pages 866 to 869 of the record of appeal. Therefore, the Tribunal evaluated the evidence accordingly with the view to seeing into its relevance and sufficiency to the case. Ultimately, it was held that, the said disallowance of tax was just and proper. Therefore, save for the misinterpretation of the accommodation expenses which we find to be a genuine complaint, as observed above, in the absence of any clear demonstration of the alleged improper evaluation of the evidence or, its misapprehension, as the case may be, we find this ground of appeal unmerited. Finally, is the fourth ground of appeal where the appellant assails the Tribunal's decision in upholding the imposition of interest, allegedly accrued on the unpaid tax, in terms of section 76(1) of the Tax Administration Act. On this, it was also argued that, the interest should have followed final determination of the tax dispute, instead of being charged during the pendency of the appeal. As such, the appellant's complaint needs not detain us. It is respectfully misconceived. It is so because section 76(1) of the Tax Administration Act (TAA) provides that, interest is payable on any unpaid tax after the due date. Therefore, the law automatically charges interest simply on unpaid tax and not otherwise. It is irrespective of any ongoing litigations or appeals. See, for instance, Shoprite Chackers T. Limited v. The Commissioner General, Tanzania Revenue Authority (Civil Appeal 307 No. of 2020) [2021] TZCA 622 (29 October 2021; TanzLII). 10 Nevertheless, in the circumstances of this case, as alluded to before, the interest was unfortunately charged on the accommodation expenses which was a non- taxable supply in the first place. Therefore, the 4thground of appeal is also allowed. In the light of the foregoing discussion, therefore, we find merit in the appeal which is hereby allowed to the extent shown above, with costs. DATED at DODOMA this 31s t day of March, 2026. S. A. LILA L. A. MANSOOR JUSTICE OF APPEAL The Judgment delivered this 20th day of May, 2026 virtually in the presence of Mr. Stephen Axwesso learned Counsel for the appellant, Mr. Abdillah Hussein, learned State Attorney for the respondent and Mr. John Gervas, the Court Clerk, is hereby certified as a true copy of the original. JUSTICE OF APPEAL S. M. RUMANYIKA JUSTICE OF APPEAL U- UGULU DEI ______ GISTRAR COURT OF APPEAL