UNICOOL East Africa Limited vs Commissioner General Tanzania Revenue Authority (Civil Appeal No. 218 of 2025) [2026] TZCA 592 (20 May 2026)

IN THE COURT OF APPEAL OF TANZANIA AT ARUSHA fCORAM: LILA. J.A.. RUMANYIKA J.A. And MANSOOR. J.A.1 ) CIVIL APPEAL NO. 218 OF 2025 UNICOOL EAST AFRICA LIMITED.............................................. APPELLANT VERSUS COMMISSIONER GENERAL TANZANIA REVENUE AUTHORITY........................................ ................................. RESPONDENT (Appeal from the Judgment and decree of the Tax Revenue Appeals Tribunal of Dar es Salaam at Dar es Salaam) rMutunai, Chairperson^ dated the 30th day of June, 2025 in Tax Appeal No. 145 of 2024 JUDGMENT OF THE COURT 2n d December, 2025 & 20th May, 2026 RUMANYIKA. 3.A.: The appellant is a Limited Liability Company, incorporated under the Companies Act, Cap. 212 of the Laws of Tanzania. It engages in the industry of installation, repairing, servicing of air conditioners and the related cooling systems and hence, a tax payer. On the other hand, the respondent is the Chief tax administering authority in Tanzania. On or about 6th September, 2019 in his ordinary course of business, the respondent served the appellant with a Customs Post Clearance Audit i

Notification Letter for the period spanning from January 2014 to December, 2018, as per exhibit A1 appearing on page 1364 of the record of appeal. In compliance, the appellant facilitated the intended audit process by presenting the requested documentation. Subsequently, on 7th of August, 2020, there was issued a Post Clearance Audit Management Report with a Demand Note attached to it. It required the respondent to pay tax which was assessed at TZS. 635,113,958.14 (exhibit A4) appearing on page 1369 of the record of appeal. The amount stated comprised Import Duty, Railway Development Levy (RDL), Customs Processing Fee (CPF), and Value Added Tax (VAT) on the imported goods. However, the appellant disputed that tax liability allegedly having been raised from some discrepancies that were identified during the respective audit. Her complaint apart, the appellant was asked to settle it within thirty days from the date of service of the notice. Dissatisfied with the findings and the ensuing demand notice, the appellant objected it vide a letter dated 4th September, 2020 (exhibit A5), as appearing on page 1385 of the record of appeal. On his part, the respondent was adamant to the objection stressing payment of the tax as assessed. Further aggrieved, the appellant appealed against it to the Tax Revenue Appeals Board (the Board) yet vainly, as per decision dated 20th 2

June, 2024. Her appeal to the Tax Revenue Appeals Tribunal (the Tribunal) also was not a success. She has now fronted four grounds of appeal seeking to overturn the concurrent findings of the Board and the Tribunal. Those grounds are paraphrased thus; one, the respondent wrongly assessed and computed the tax arriving at the wrong liability. Two; the purported tax liability was arrived from a wrong footing, in total disregard of the financial support given by the appellant's shareholder, three; the impugned assessment and tax liability did not consider the variations caused by the foreign exchange rate of the day and four; the Tribunal improperly evaluated the evidence. For the appellant there was Mr. Anipas Lakam, learned counsel whereas the respondent had the services of Ms. Grace Makoa, learned Principal State Attorney together with Mses. Adeline Ngugi and Veronica Warioba/ both learned State Attorneys. Upon adopting the appellant's written submissions filed on 27/11/2025, on the first ground of appeal, Mr. Lakam expressed his feelings that he knew no law which imposes a duty to give alternative any calculations on the tax payer, should the latter dispute the one made by the respondent. In that regard, therefore, the learned counsel questioned 3

the concurrent findings of the two tribunals below who had a contrary view. He argued that, in terms of section 9 of the Value Added Tax Act (the VATA), the appellant's respective evidence was good enough. It included exhibit A4 showing that the misclassification made by the respondent of the respective imported goods was improper, just as was the subsequent tax assessment, as concurrently found and held by the tribunals below. As a way forward, it was Mr. Lakam's proposal that, the matter be remitted back for proper classification of the goods to allow re assessment and determination of the tax liability. Similarly, the learned counsel asserted that, the Tribunal erred in law in upholding the computation of Value Added Tax (VAT) wholesale as presented by the respondent arriving at the disputed sum, notwithstanding the appellant's partial success as concurrently decided by the Board and the Tribunal. Justifying, his assertion, Mr. Lakam stated that, the said tax liability was founded on misclassification of the respective goods, leave alone the improperiy included costs. Nonetheless, the Tribunal went on determining on whether there was any decisional error made by the board. It was argued that, the said mishap rendered the entire computation of VAT payable unfounded and unlawful, irrespective of the Tribunal having held that the errors complained of were 4

neither decisive of the tax dispute nor was it foundational to the computation for it to invalidate the assessment of tax liability. It is unfortunate, he added, that the Tribunal did not give any concrete and numerical reasons for its decision. Upon considering the submissions of both sides, the authorities cited and the entire record of appeal, the pivotal issues arising are; one, whether the respective goods imported by the appellant were properly classified as the basis for the disputed tax and two, whether the disputed disallowance was legally founded. We are aware of the fundamental principle of general application, among others, that, any tax liability is a statutory creature resulting from some cumulative lawful calculations. Also, it is a common ground, as held by the Tribunal, that in some isolated cases errors may not distort the overall tax due, depending on its magnitude and efficacy. Notably, it is not disputed, principally in the present case, that the imposition of the disputed tax was preceded by classification of the respective goods, despite its alleged impropriety or otherwise. Similarly, it is undeniable fact that, the classification made was wrong, as appreciated by the tribunal in its judgment. In this regard, at page 1344 of the record of appeal it was observed as follows: 5

" . .. The Tribunal notes that the Board found certain misciassifications ofgoods by the respondent and improper inclusions of costs such as air freight and software instafiation costs, which the Board rightly held were notpermissible additions under paragraph 9(4) of the Fourth Schedule to the EACCMA..." (Emphasis added) However, the Tribunal, in the same breath made a U-turn against the appellant, as appearing at page 1345 of the record of appeal, as follows: . .It is not sufficient for the appeiiant to merely point to the existence of errors in classification or valuation. The appellant was required to demonstrate, with clarity and precision, how those errors translated into an inaccurate VAT assessment...the burden lies on the taxpayer who challenges an assessment to show the precise extent of the error as demonstrated in the case of Insignia Limited v . Commissioner General TRA, CiviiAppeal No. 14 o f2007, CAT" ...no detailed recalculation or alternative VAT 6

figure was presented for the Tribunal's consideration The previous positive observation apart, the Tribunal did not find the resultant assessment and tax liability to be unlawful and incorrect in the circumstances of the case. As such, it blew hot and cold upholding the Board's findings at the same time whilst convinced that there was misclassification of the corresponding goods. Notably, the Tribunal discounted the otherwise confessed misclassification of the goods for three main reasons; one, the appellant's failure to present any alternative version of calculations, two, the appellant's failure to demonstrate it as being fatal and three, effects of the misclassification being found negligible with less serious effectiveness and hence, inconsequential. With respect, the said holding is inconsistent with the reality on the ground. As such, the Tribunal ought to have invalidated the purported tax liability for being wrongly founded and direct a fresh classification all over again, which was not done. It cannot be overemphasized that from its inception the said classification of goods adversely affected the prospective assessment and tax liability much as the Tribunal should have held as such. 7

We want to warn ourselves that, as regards the rule of burden of proof stressed in Insignia case (supra) about incorrectness or otherwise of any tax assessment being on the tax payer is not a panacea. It was even not intended that in every case the evidence of a tax officer is necessarily a gospel truth. Therefore, if, at times, subject to the peculiarity of the case, as it is here, the burden of proof can shift to the adverse party for the interest of justice so much the better. Needless to say, classification of any taxable supplies precedes everything. Therefore, the effect of any wrong footing, in this case misclassification of the goods resulting into wrong computation and assessment resulting into improper tax liability cannot be overstated. As such, categories of improper/illegal taxes are never closed. In this regard, therefore, whether or not that classification was made by the tax payer himself or by the tax administrator is immaterial. Therefore, we find the first ground of appeal merited. The fourth ground of appeal concerns the Tribunal being faulted, allegedly for having evaluated the evidence improperly. Here, the arising issue would be whether this complaint rises a point of law tenable before the Court at this stage. It is worth noting and a trite law that, this Court 8

is precluded from entertaining factual findings or points of fact and points of law combined, for which we do not have jurisdiction. However, but for the sake of arguments, we note that, in reaching at its decision, the Tribunal had undertaken such a detailed examination of the evidence on record including exhibits A-16, A-18, and the corresponding bank vouchers, as observed earlier on. Therefore, upon reviewing the impugned judgment, particularly what appears on pages 1343-1352 of the record of appeal, we are satisfied that, the Tribunal clearly identified the key issues for its determination. As such, the issue is mainly whether the appellant had discharged the burden of proof on the alleged misclassification of the goods, leading to a wrong assessment and tax liability. We note that, all formed the basis of the tribunal's decision save for the misclassification of the goods, as alluded to before. Therefore, all things being equal, which is not the case, the issue of the Tribunal's failure to evaluate the evidence is neither here nor there. It is for these reasons, therefore that, we found the two complaints sufficient enough to dispose of this appeal in favor of the appellant. Flowing from the observations above, mostly on account of misclassification of the goods resulting into the wrong tax assessment, therefore, the decision and orders of the Tribunal are hereby quashed and 9

set aside, respectively. Meanwhile, we direct for a fresh classification of the appellant's goods for a just assessment of tax liability. The appeal is allowed to the extent shown above with costs. DATED at DODOMA this 31st day of March, 2026. S. A. LILA JUSTICE OF APPEAL S. M. RUMANYIKA JUSTICE OF APPEAL L. A. MANSOOR JUSTICE OF APPEAL The Judgment delivered this 20th day of May, 2026 virtually in the presence of Mr. Paschal Kamala, 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.