Civil Appeal No. 107 of 2018
African Barrick Gold PLC (ABG), a company incorporated in the United Kingdom, conducted mining and exploration activities in Tanzania through subsidiaries. One of its projects was the Nyanzaga Gold Project in Sengerema District, Mwanza.
Initially, the project was jointly owned by ABG, through Barrick Exploration African Limited, with a 51% interest, and Tusker Gold Limited of Australia, through Sub-Sahara Resources Limited, with a 49% interest.
In 2010, ABG, through its UK subsidiary BUK Holdco Limited, acquired Tusker Gold Limited's 49% interest through a compulsory acquisition process on the Australian Stock Exchange. The result was that ABG indirectly obtained 100% ownership of the Nyanzaga Project.
The Tanzania Revenue Authority (TRA) took the position that, although the formal share transaction occurred between companies incorporated outside Tanzania, the substance of the transaction was the acquisition of an interest in property situated in Tanzania. TRA therefore invoked section 35 of the Income Tax Act, Cap. 332 and issued ABG a notice asserting tax liability.
TRA's notice stated that the transaction had been structured through an offshore subsidiary so that it appeared to be an offshore share transaction, whereas, in substance, the property acquired was the Nyanzaga project in Tanzania. TRA indicated an intended tax liability of USD 21,336,931, calculated at 30% of USD 71,123,103.
ABG challenged the TRA notice before the Tax Revenue Appeals Board (TRAB). The Board held that the notice amounted to an appealable decision and, on the substantive question, found that the transaction was not taxable in Tanzania because the share sale occurred outside Tanzania between foreign companies. The Tax Revenue Appeals Tribunal subsequently upheld the Board's decision.
TRA then appealed to the Court of Appeal.
The Court identified three grounds of appeal:
Whether the Tribunal erred in refusing to admit documentary evidence tendered by TRA.
Whether the TRA notice issued under section 35 of the Income Tax Act constituted an appealable decision or act, giving the Tax Revenue Appeals Board jurisdiction under section 6 of the Tanzania Revenue Authority Act and section 14(2) of the Tax Revenue Appeals Act.
Whether the transaction involving the Nyanzaga Project was taxable under the Income Tax Act.
However, the Court considered the second issue to be determinative, because it concerned the jurisdiction of the Board and the validity of the proceedings themselves.
The Court examined the wording of TRA's letter. Although the letter initially stated that TRA intended to issue an assessment, it simultaneously required ABG to settle the unpaid tax immediately.
The Court therefore agreed with the Board that the letter was effectively a notice establishing liability to pay tax. It specifically held that the notice concerned liability amounting to USD 21,336,931. to the Commissioner General Tanzania Revenue Authority.
This was the decisive point.
The Court held that section 6 of the Tanzania Revenue Authority Act could not be read in isolation. The right of appeal had to be read together with the Tax Revenue Appeals Act, which prescribed the procedure governing tax disputes.
Under the law applicable at the time, an ordinary appeal to the Board was principally available against a final determination/objection decision of the Commissioner General. The statutory framework required a taxpayer disputing a tax assessment to first pursue the objection process.
More importantly, section 14(2) of the TRAA provided a distinct remedy where the taxpayer objected to a notice concerning the existence of liability to pay tax:
the objection could be referred to the Board for determination.
The Court distinguished this from an appeal. Commissioner General Tanzania Revenue Authority.
The Court relied heavily on its earlier decision in Commissioner General TRA v JSC Atomredmetzolo (ARMZ).
It confirmed the principle that:
A taxpayer objecting to a notice concerning the existence of tax liability must approach the Board by way of reference, not by way of an ordinary appeal. Commissioner General Tanzania R…
The Court rejected the argument that the absence of a detailed procedural mechanism for making a reference meant that the statutory remedy could be ignored. The Court held that the statutory jurisdiction existed notwithstanding the alleged procedural gap. Commissioner General Tanzania Revenue Authority.
The Court emphasized that jurisdiction is conferred by statute and goes to the root of proceedings.
Because ABG had lodged an appeal instead of a reference, the Board had no jurisdiction to entertain the matter in the manner presented.
Consequently:
the proceedings before the Tax Revenue Appeals Board were a nullity;
the Board's decision was quashed and set aside;
the subsequent proceedings before the Tax Revenue Appeals Tribunal were also a nullity, because they arose from invalid proceedings;
the Tribunal's judgment and subsequent orders were quashed and set aside. Commissioner General Tanzania R… Commissioner General Tanzania Revenue Authority.
The appeal by the Commissioner General was therefore allowed with costs.
Crucially, the Court did not determine the substantive taxability of the Nyanzaga transaction, because the jurisdictional issue disposed of the appeal. Commissioner General Tanzania Revenue Authority.
The case is principally a jurisdiction and tax-procedure decision, rather than a final determination of whether the offshore Nyanzaga share transaction was taxable.
The Court reaffirmed that a tribunal must first establish that proceedings before it were competently instituted before determining the substantive merits. A judgment arising from proceedings that were themselves a nullity is also a nullity. Commissioner General Tanzania R…
The decision provides an important procedural distinction under the former TRAA framework:
Appeal → generally follows a final assessment/objection decision falling within the statutory appeal mechanism.
Reference → appropriate where a taxpayer objects to a notice concerning the existence of tax liability under section 14(2).
This distinction was expressly reaffirmed from CGTRA v JSC Atomredmetzolo (ARMZ). Commissioner General Tanzania R…
The taxpayer argued, in substance, that the appeal route was appropriate because there was no prescribed procedure for making a reference and that TRA had suffered no prejudice.
The Court rejected that approach. Jurisdiction is statutory; procedural convenience or established practice cannot create jurisdiction where the statute does not provide it.
The Court applied the principle that where statutory language is clear and unambiguous, effect should be given to its ordinary meaning rather than attempting to reconstruct an alternative legislative intention. Commissioner General Tanzania R…
This is significant in tax litigation because tax dispute mechanisms are highly procedural: the availability of a remedy and the manner in which it must be invoked are determined principally by statute.
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