Scanad Tanzania Limited, a company engaged in advertising, communications strategy and marketing consultancy, was audited by the Tanzania Revenue Authority (TRA) in respect of its tax affairs for the years 2016, 2017 and 2018.
Following the audit, TRA alleged that Scanad had underdeclared sales, claimed unverified purchases, double-claimed input VAT credits and claimed input tax credits without valid tax invoices. On 3 June 2021, TRA issued additional VAT assessments totalling TZS 1,627,384,591.
Scanad lodged notices of objection on 2 July 2021. During the audit, TRA had requested sample invoices for verification. The parties exchanged emails and notes of discussion concerning the number of invoices required and the possibility of reducing the sample. TRA maintained that the requested invoices had not been properly submitted during the audit.
When lodging its objections, Scanad attached the disputed invoices as Appendices 1–3. TRA rejected the documents, relying on section 53(6) of the Tax Administration Act (TAA), which restricts the use of information or documents not submitted within the prescribed time during the audit process.
The Tax Revenue Appeals Board upheld TRA's position on 16 October 2023. The Tax Revenue Appeals Tribunal subsequently dismissed Scanad's appeal on 6 March 2025.
Scanad appealed to the Court of Appeal, challenging the interpretation and application of sections 53, 62 and 63 of the TAA, particularly the rejection of its documentary evidence.
The Court identified three principal issues:
1. Validity of the notice: Whether TRA's email correspondence and notes of discussion constituted a valid notice in writing under section 53(1) of the TAA.
2. Admissibility of evidence: Whether TRA was legally justified in rejecting invoices submitted with the notices of objection under section 53(6), despite sections 62 and 63 of the TAA providing for the submission and consideration of evidence during objection proceedings.
3. Validity of the VAT assessments: Whether the Tribunal was correct to uphold the assessments for 2016, 2017 and 2018 after affirming the rejection of Scanad's evidence.
The Court also considered a preliminary objection by TRA that the appeal raised questions of fact rather than law, contrary to section 26(2) of the Tax Revenue Appeals Act. The Court overruled that objection, holding that the interpretation and application of the statutory provisions, as well as compliance with the right to be heard, raised questions of law.
The Court held that the emails and notes of discussion constituted valid notices in writing under section 53(1) of the TAA.
The Act did not prescribe a particular format for such notices. Section 53(3) permitted service through other means determined by the Commissioner General. The Court found that Scanad had received the emails, acknowledged them and actively requested a reduction in the number of invoices required.
Having accepted and acted upon that mode of communication during the audit, Scanad was estopped from subsequently challenging its validity.
Holding: TRA had validly requested the relevant documents in writing.
This was the central issue in the appeal.
The Court distinguished between the statutory procedures governing tax audits and assessments under Parts VI and VII of the TAA and those governing tax dispute resolution under Part VIII.
Although section 53(6) restricts reliance on documents not submitted within the prescribed period during the information-gathering process, sections 62(5) and 62(6) expressly permit taxpayers to submit relevant documents and information in support of their objections. Section 63 also empowers the Commissioner General to call for evidence and provides a mechanism for seeking additional time to submit documents.
The Court reasoned that Part VIII establishes a distinct, self-contained procedure for determining tax disputes. The Commissioner General, when determining an objection, performs a quasi-judicial function and must comply with the principles of natural justice.
Consequently, TRA could not simply reject relevant evidence submitted with the notice of objection by relying on section 53(6), without properly considering the taxpayer's statutory right to present its case.
The Court further held that the correctness of a tax assessment must be established through appropriate evidence, rather than unsupported assumptions that shift the evidential burden unfairly to the taxpayer. It referred to Insignia Limited v Commissioner General, Tanzania Revenue Authority [2011] TZCA 246 and Tanga Cement Public Limited Company v Commissioner General, Tanzania Revenue Authority [2025] TZCA 1183.
Holding: The rejection of Scanad's evidence was erroneous and contrary to sections 62 and 63 of the TAA and the principles of natural justice.
Because the disputed evidence had been improperly rejected, the Court found that the assessments were affected by substantial procedural and substantive errors.
However, the Court did not finally determine the correct amount of VAT payable or declare that Scanad owed no tax. Instead, it directed TRA to reconsider the objections together with all the evidence submitted.
Holding: The appeal was allowed, the Tribunal's decision was quashed and its orders were set aside. TRA was directed to determine Scanad's objections against the VAT assessments for 2016–2018, considering all the evidence submitted. Each party was ordered to bear its own costs.
The decision reinforces the principle that tax administration must comply with natural justice. A taxpayer must receive a meaningful opportunity to present relevant evidence before an objection is determined.
The fact that a document was not produced during an audit does not, in the Court's reasoning, automatically justify excluding it from consideration during objection proceedings where the statutory objection framework permits its submission.
The judgment clarifies the different functions of Parts VI, VII and VIII of the TAA:
Part VI: Information gathering, audits and investigations.
Part VII: Tax assessments and related assessment procedures.
Part VIII: Objections and resolution of tax disputes.
This distinction is important because procedural restrictions governing the audit stage should not be applied in isolation from the separate statutory framework governing objections.
The Court addressed the apparent tension between section 53(6), which restricts the use of late-produced documents, and sections 62 and 63, which govern the submission and consideration of evidence during objections.
Its approach was to read these provisions within the broader statutory scheme, rather than allowing section 53(6) to override the evidentiary rights provided under Part VIII.
The Court confirmed that email correspondence may constitute a valid notice in writing under section 53(1), where the statutory requirements are satisfied. The absence of a prescribed format did not invalidate the notices in this case.
The judgment also demonstrates the practical importance of consistent conduct: a taxpayer that acknowledges and acts upon official email requests may be estopped from later challenging the communication method.
By referring to Insignia Limited, the Court emphasized that tax assessments should be supported by appropriate evidence. TRA must properly evaluate the material presented rather than rely on assumptions that unfairly impose an evidential burden on the taxpayer.
This is particularly relevant in disputes involving input VAT credits, invoices, business expenses and alleged underdeclaration of sales.
For taxpayers and tax advisers in Tanzania, the decision supports the following practical measures:
1. Preserve audit correspondence. Keep emails, notes of discussion, document requests and responses, as they may determine whether a valid notice was issued and served.
2. Comply with audit requests promptly. The judgment does not remove the obligation to cooperate with TRA during an audit or eliminate the restrictions in section 53(6).
3. Submit comprehensive objection evidence. Attach relevant invoices, tax records, reconciliations and supporting documents when lodging the objection, in accordance with section 62.
4. Challenge blanket exclusions of evidence. Where TRA refuses to consider relevant documents, assess whether the decision is consistent with sections 62 and 63 and the requirements of natural justice.
5. Distinguish procedural success from substantive tax liability. A successful challenge to the handling of evidence does not necessarily extinguish the underlying tax liability. TRA may reconsider the objection and determine the assessment after evaluating the evidence lawfully.
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