Misc. Civil Cause No. 33 of 2020, High Court of Tanzania at Dar es Salaam
The Court of Appeal of Tanzania held that the Tax Revenue Appeals Board lacked jurisdiction to hear an appeal against the Commissioner General's refusal to waive or reduce the statutory tax deposit. Although the Tribunal had applied the wrong law retrospectively, its ultimate conclusion on jurisdiction was correct.
Shana General Stores Limited was engaged in wholesale and retail trade in Tanzania. Following a tax audit for 2011 to 2013, the Commissioner General of the Tanzania Revenue Authority issued eleven assessments dated 5 March 2015, demanding TZS 2,757,169,591.
Shana challenged seven assessments totalling TZS 2,392,863,987.30 by filing notices of objection. Under section 12(3) of the then-applicable Tax Revenue Appeals Act (TRAA), Shana had to deposit the greater of the undisputed tax or one-third of the assessed tax. The relevant deposit was TZS 797,621,329.10.
Claiming financial difficulty, Shana applied under section 12(4) of the TRAA for waiver or reduction of the deposit. The Commissioner General refused the applications by letters dated 1 April 2015.
Shana appealed those refusals to the Tax Revenue Appeals Board on 21 April 2015. The Board consolidated and dismissed the appeals. On further appeal, the Tax Revenue Appeals Tribunal held that the Board had lacked jurisdiction because the appeals did not arise from an objection decision. It relied on Pan African Energy Tanzania Limited v Commissioner General (TRA). Shana appealed to the Court of Appeal.
The principal issue was:
Whether the Tax Revenue Appeals Board had jurisdiction, under the law in force in April 2015, to hear an appeal against the Commissioner General's refusal to waive or reduce the tax deposit.
The Court also considered:
Whether the Tribunal correctly relied on the amended section 16(1) of the TRAA and Pan African Energy I, notwithstanding that Shana's appeals predated the Tax Administration Act, 2015.
Whether the refusal of a waiver constituted a "final determination ... of the assessment of tax" under the former section 16(1) of the TRAA.
Whether the Board's general original jurisdiction under section 7 of the TRAA, or the general right of appeal under section 6 of the Tanzania Revenue Authority Act, conferred jurisdiction.
Whether Article 13(6)(a) of the Constitution independently created a right of appeal against the waiver decision.
The Court dismissed the appeal with costs and held that the Board had no jurisdiction to entertain Shana's appeals against the refusal of the tax-deposit waiver.
The Court held that the statutory right of appeal under section 16(1) was substantive, not merely procedural. A new enactment affecting substantive rights does not operate retrospectively unless the legislature clearly provides otherwise.
Shana filed its appeals on 21 April 2015, before the Tax Administration Act came into force on 1 August 2015. Because the Act did not expressly make the amended section 16(1) retrospective, the Tribunal erred in applying the amended provision and Pan African Energy I wholesale.
Under the former section 16(1), an appeal lay against:
a final determination by the Commissioner General of a tax assessment; or
a decision referred to under section 14 of the TRAA.
The Court interpreted "final determination ... of the assessment of tax" by reference to section 13. It meant the Commissioner General's final decision on an objection - namely, a decision to amend or refuse to amend the assessment.
A refusal to waive or reduce the preliminary deposit under section 12(4) was not a final determination of the tax assessment.
It was also not one of the decisions listed in section 14, which concerned matters such as refunds, repayments, drawbacks and VAT registration.
Although section 7 of the TRAA gave the Board original jurisdiction over civil disputes arising from revenue laws, section 7A restricted appeals arising from tax assessments unless the requirements of section 12 were satisfied.
Similarly, section 6 of the Tanzania Revenue Authority Act created a general right of appeal only in accordance with the TRAA. It therefore did not create an independent right to appeal a waiver refusal outside the TRAA's specific appellate scheme.
Section 12(8) allowed an appeal against the Commissioner General's refusal to admit a notice of objection, subject to payment of the prescribed deposit. It did not create a general appeal against the prior refusal to waive or reduce that deposit.
The Court also observed that a decision by the Board under section 12(8) was expressly final, so it could not ordinarily be appealed further to the Tribunal.
Article 13(6)(a) guarantees a fair hearing and a right of appeal or other legal remedy. However, relying on Athuman Kungubaya & 482 Others v Presidential Parastatal Sector Reform Commission & Another, the Court held that the right must be implemented through appropriate statutory machinery.
In the absence of a statutory provision authorising an appeal against the refusal of a tax-deposit waiver, Article 13(6)(a) could not by itself confer jurisdiction on the Board.
The decision is significant for several reasons:
Appellate jurisdiction is statutory. A taxpayer cannot appeal an administrative tax decision unless legislation expressly or necessarily authorises that appeal.
A general jurisdiction clause does not displace a specific appellate scheme. Sections 6 and 7 could not enlarge the carefully defined appeal rights in sections 12, 14 and 16 of the TRAA.
A tax-deposit waiver decision is distinct from the tax assessment. Refusing a waiver under section 12(4) was an interlocutory decision concerning access to the objection process, not a final determination of the underlying assessment.
Statutory rights of appeal are substantive rights. Amendments narrowing those rights are presumed to operate prospectively unless Parliament clearly provides otherwise.
A correct result may survive flawed reasoning. The Tribunal wrongly relied on post-2015 law, but its ultimate finding that the Board lacked jurisdiction was affirmed under the pre-2015 legislation.
Constitutional appeal rights require legislative machinery. Article 13(6)(a) does not automatically create an appeal where the governing statute provides none.
The case's central principle is that neither broad institutional jurisdiction nor a constitutional guarantee can substitute for a specific statutory right of appeal.
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