Pil Tanzania Limited vs Commissioner General Tanzania Revenue Authority (Civil Application No. 203/20 of 2024) [2024] TZCA 884 (12 September 2024)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM CIVIL APPLICATION NO. 203/20 OF 2024 PIL TANZANIA LIMITED ................ ............................................... APPLICANT VERSUS COMMISSIONER GENERAL TANZANIA REVENUE AUTHORITY............................................. RESPONDENT (Application for Stay of Execution from the decision of the Tax Revenue Appeals Tribunal at Dar es Salaam) (Kamuzora. J) dated 31st day of October, 2023 in Tax Appeal No. 18 of 2022 RULING 11th & 12th September, 2024 MGEYEKWA, 3.A.: The applicant, PIL Tanzania Limited has by notice of motion lodged on 27th March ,2024 moved the Court to issue an order staying execution of the decree of Tax Revenue Appeals Tribunal in Tax Appeal No. 18 of 2022 pending the hearing of the Civil Appeal No.99 of 2024 dated 31s t October, 2023. The application is predicted under rule 11 (3), (4), (5), (6), (7) and 48 (1) of the Rules and supported by an affidavit affirmed by Mr. Ibrahim Josephat Msusa, the Principal Finance Officer of the applicant. The affidavit is accompanied by a copy of the notice of appeal lodged on 13th day of

November, 2023, the impugned judgment and decree and the agency notice from TRA to the applicant company for immediate payment of contested debt of TZS. 3,451,187,222.26 in the pending Civil Appeal No.99 of 2024. According to the averments in the affidavit supporting the notice of motion, the notice from TRA directs the applicant for immediate payment of contested tax amount and failure of which will attract further recovery measures is in effect a notice of intention to execute the impugned Decree. A brief background leading to the present application can be summarized as follows: the applicant was a limited company incorporated under the laws of Tanzania and engaged in a business of providing shipping agency services to Pacific International Lines (Private) Limited referred as "PIL- Singapore", a shipping line which is registered and located in Singapore. The respondent is a Chief Executive Officer of the Tanzania Revenue Authority (TRA) an authority established under the Tanzania Revenue Authority Act Cap 399 mandated among other powers, to administer tax laws and enforce revenue collection. In 2016, the respondent conducted a tax audit for the years of income 2012 to 2015 and issued its preliminary audit findings and Assessment dated 1s t November,2016. In its findings, the respondent found that, the applicant had under declared income tax in VAT returns for various periods from 2012 to 2014 which after

parties dialogue, correspondences and reviews on the bill on various taxes, the respondent confirmed and imposed a total tax liability of TZS 3,451,187,222.26 comprising of principal tax of TZS 1,779,881,138 and interest of TZS 1,671,386,084. Aggrieved, the applicant by the notice of confirmation of assessment, filed an appeal to the Tax Revenue Appeals Board but in vain. Unperturbed, the applicant unsuccessfully appealed to the Tax Revenue Appeal Tribunal. Still aggrieved, the applicant initiated the appeal process to this Court by lodging a notice of appeal against the impugned decision of the Tax Revenue Appeal Tribunal, Hence, he lodged the instant application. The application is opposed by the respondent through an affidavit in reply lodged on 21s t May, 2024 and deposed by Grace Makoa, the respondent's legal counsel. At the hearing of the application, the applicant had the service of Mr. Brayson Shayo, learned counsel while the respondent was represented by Ms. Grace Makoa, learned Principal State Attorney. In his submission, the applicant's counsel adopted the notice of motion, the accompanying affidavit and a written submission he had earlier on filed in this Court. The learned counsel made a brief oral submission 3

amplifying what the applicant had submitted in written submission and deposed in the applicant's affidavit. In elaborating the application, he contended that, the applicant is ready to give security for the remaining unpaid taxes since the respondent intended to recover the whole amount while the applicant has already paid substantial amount as stated in paragraphs four and six of the applicant's affidavit. He contended that the respondent in his affidavit in reply stated that the paid amount was in respect to different taxes liability without disclosing the said other taxes. In reply, the respondent's counsel has no qualm that the applicant has so complied with the legal requirement. Ms. Makoa however argued by reiterating to what she had earlier deposed in his affidavit in reply that the applicant's allegation under paragraph four of his affidavit is not supported by any document and the alleged amount deponed under paragraph six of his affidavit were in respect of different tax liability. The learned Principal State Attorney continued to argue that the applicant has failed to state good reasons for stay of execution as stipulated under rule 11 (3) of the Rules. She argued that the applicant has not meet the requirement stated under rule 11 (5) (a) of the Rules. Elaborating, she submitted that the applicant under paragraphs 11 and 12 of his affidavit said that he has already paid the respondent a total amount of TZS 3,554,131,097 4

while there is no any proof of the same. She went on to submit that the attached exchequer receipts are not related to the tax liability demand notice and there is nowhere shown if the said amount are in respect to the tax assessment mentioned in the demand notice. She stressed that the applicant has failed to show how the recovery measures will impair his operation. It was her further submission that the applicant will not suffer irreparable loss since the respondent is in position to refund the applicant in case the Court will determine the appeal in his favour. In conclusion, she urged the Court to dismiss the applicant's application. In his rejoinder, Mr. Shayo submitted that, the applicant alleged under paragraph six that the respondent issued an agency notice against the bank accounts of the applicant and he agreed with the respondent to pay T7S 2, 731, 841, 683.70 being value added tax for the year of income 2012 - 2015. He referred me to annexure PIL-2 and argued that the two exchequer receipts shows that the applicant had already paid in total TZS 2,731,841,683.70. With respect to irreparable loss, Mr. Shayo referred me to paragraphs 12,13 and 14 of the affidavit and contended that the amount of taxes which intended to be collected is colossal sum which will impair the operations of the applicant and amount to double payment. It was his submission that, 5

the applicant has raised good reasons for stay of execution and that there is a pending appeal before the Court. He urged me to grant the order of stay of execution pending hearing and determination of the appeal. I have given due consideration to the parties' submissions and after perusing the record of the application, I find that the issue for determination is whether the applicant has satisfied the conditions for grant of an order for stay of execution. It is the position of the law that the applicant is enjoined to comply with all the conditions set out under Rule 11 (4) (5) (a) -(b) and (7) (a) - (d) of the Rules. The Court would decline to grant the application for stay of execution where an applicant fails to cumulatively meet all the conditions. This position has been restated by this Court in Joseph Soares @ Goha v. Hussein Omary/ Civil Application No. 12 of 2012, Ahmed Abdallah v. Maulid Athuman, Civil Application No. 16 of 2012 and Hai District Council & Another v. Kilempu Kinoka Laizer & 15 Others, Civil Application No. 10/05 of 2017 (all unreported). In this application, I propose to start by ironing out undisputed matters. From the submissions, the counsel for the parties are at one that the applicant has fully satisfied the demands of sub rule 4 to rule 11 of the Rules. The application was filed within the prescribed period of fourteen days. 6

Likewise, there is no dispute that the applicant complied with the requirements stipulated under Rule 11 (7) (a), (b), (c), and (d) of the Rules. The contentious issue is on the two conditions stipulated under Rule 11 (5) of the Rules that provides: "No order for stay o f execution shall be made under this rule unless the Court is satisfied that: (a) substantial loss may result to the party applying for stay of execution unless the order is made; (b) security has been given by the applicant for the due performance o f such decree or order as may ultimately be binding upon him." In the affidavit supporting the application and the oral submission by the applicant's counsel, the applicant in paragraphs 13 and 14 of the affidavit, insisted that in case stay of execution is not granted, he will suffer irreparable loss and subject the applicant to double payment of taxes. I respectfully disagree with the submission by the learned Principal State Attorney that the applicant failed to meet the condition under Rule 11 (3) and (5) (a) of the Rules. In the present application, the applicant deposed in the affidavit and the notice of motion the nature and extent of loss. On paragraph 13 of affidavit, he has deposed that the amount of taxes which is TZS. 3,451,187,222.26 being intended to be collected will impair the 7

operation of the applicant. He has also stated on paragraph 12 that the respondent intends to recover part of already paid taxes and subject him to double payment of taxes. In the circumstances, from the nature of the anticipated loss, I am satisfied that the applicant satisfied this condition. In respect of furnishing security for due performance of the decree as may ultimately be binding upon them, the applicant deposed in paragraph 15 of the affidavit that the applicant is ready, able and willing to provide security and Mr. Shayo in his submission made it clear that the applicant is ready to give security for the remaining unpaid tax as stated in paragraph 6 and annexure PIL-2, a total sum of TZS 2,731,841,683.70. In that regard, I am settled that the declaration made by the applicant's counsel that the security should cover the unpaid taxes only is correct. In the upshot, I am satisfied that the applicant has shown good cause to warrant the grant of the order for stay of execution. The application is therefore, allowed and it is hereby ordered that execution of the decree in Tax Appeal No. 18 of 2022 dated 31s t October, 2022 is stayed pending the hearing and final determination of the Civil Appeal No. 99 of 2024. This order is conditional upon the applicant depositing a bank's guarantee of TZS 719,345,538.56 as a security for the due performance of the decree within 8

two months to be reckoned from the date of delivery of this ruling. I make no order as to costs. Order accordingly. DATED at DAR ES SALAAM this 12thday of September, 2024. A. Z. MGEYEKWA JUSTICE OF APPEAL The Ruling delivered this 12th day of September, 2024 in the presence of Mr. Braysoni Shayo, learned counsel for the applicant and Ms. Grace Makoa, Principal Attorney for the Respondent, via teleconferencing is hereby certified as a true copy of the original. 9