TPC Limited, a company incorporated in Tanzania and principally engaged in sugarcane growing and sugar production in Moshi, was subjected to a tax audit by the Tanzania Revenue Authority (TRA) in 2022 covering the years of income 2020 and 2021.
Following the audit, TRA established that TPC Limited had made payments for services rendered by South African entities without withholding tax. TRA consequently assessed withholding tax on those payments.
TPC Limited objected to the assessment, arguing that the payments were exempt from taxation in Tanzania under Article 7 of the Double Taxation Agreement (DTA) between Tanzania and South Africa, which governs business profits. The company also relied on section 128(1) of the Income Tax Act, 2004.
TRA rejected the objection, maintaining that the payments were subject to withholding tax under section 83(1)(c) of the Income Tax Act, 2004, because they constituted service fees paid by a Tanzanian resident to non-residents for services sourced in Tanzania.
The Tax Revenue Appeals Board upheld TRA's assessment, including the interest imposed for late payment. TPC Limited subsequently appealed to the Tax Revenue Appeals Tribunal, which dismissed its appeal.
Dissatisfied, TPC Limited appealed to the Court of Appeal. Although the original grounds of appeal were abandoned, the appellant obtained leave to argue an additional ground concerning the Tribunal's failure to make a specific finding on whether the service fees constituted business profits.
The central issue before the Court of Appeal was:
Whether the Tax Revenue Appeals Tribunal's decision, which failed to analyse and make specific findings on the grounds of appeal, constituted a valid judgment in law.
In addressing this question, the Court considered:
Whether the Tribunal had discharged its judicial duty to consider and determine the grounds of appeal presented before it.
Whether merely reproducing the respondent's submissions without independent analysis and reasons amounted to a valid judicial determination.
Whether the Court of Appeal could invoke its revisional jurisdiction to nullify the Tribunal's decision and remit the matter for a fresh judgment.
The Court of Appeal allowed the appeal and held that the Tribunal's judgment was fundamentally defective and could not be recognized as a valid judgment in the eyes of the law.
The Court observed that the Tribunal had merely reproduced TRA's submissions without undertaking its own analysis, addressing the appellant's arguments or providing reasons supporting its conclusion.
The Court emphasized that Rule 22 of the Tax Revenue Appeals Rules, 2018 expressly requires a Tribunal decision to contain:
A brief description of the nature of the appeal.
An affirmation, variation or setting aside of the Board's decision.
Reasons for the decision.
The relief or remedy to which the parties are entitled.
An order as to costs.
The Court found that the Tribunal had failed to satisfy these mandatory requirements, particularly the obligation to provide reasons and make findings on the issues before it.
It further held that the statement that the first ground of appeal lacked merit was unsupported because the Tribunal had not actually determined that ground through independent judicial reasoning.
Consequently, the Court invoked its revisional powers under section 6(2) of the Appellate Jurisdiction Act, nullified the Tribunal's judgment and set aside the orders made therein.
The record was remitted to the Tribunal for preparation of a fresh judgment in accordance with the law, by the same Vice Chairperson or, in the event of changed circumstances, a successor.
Each party was ordered to bear its own costs.
Important clarification: The Court did not determine the substantive tax dispute concerning the applicability of Article 7 of the Tanzania–South Africa DTA or whether the service fees constituted business profits. That question remained for determination by the Tribunal.
The decision reinforces the principle that judicial and quasi-judicial bodies must provide reasons for their decisions. It is not sufficient for a tribunal to announce a conclusion without demonstrating how it arrived at that conclusion.
The reasoning process is an essential component of a valid judicial decision.
The Court condemned the mechanical reproduction of one party's submissions as a substitute for judicial analysis.
A tribunal must independently evaluate the competing arguments and demonstrate why it accepts or rejects the positions advanced by the parties. Merely adopting the respondent's submissions does not amount to a proper determination.
The decision underscores that the requirements of Rule 22 are mandatory rather than merely procedural formalities.
A judgment that fails to provide reasons and determine the controversy before the Tribunal is fundamentally defective and liable to be nullified.
The Court drew inspiration from Pettitt v Duckley [1971] 1 NSWLR 381, emphasising that failure to provide findings and reasons undermines the statutory right of appeal.
Without knowing the reasoning behind a decision, an aggrieved party cannot effectively challenge it, and an appellate court cannot properly exercise its supervisory jurisdiction.
The judgment demonstrates the Court of Appeal's willingness to invoke its revisional jurisdiction under section 6(2) of the Appellate Jurisdiction Act to correct fundamental irregularities in decisions of subordinate adjudicating bodies.
Rather than determining the substantive tax dispute itself, the Court restored procedural and judicial integrity by directing the Tribunal to prepare a proper judgment.
1. Malmo Montagekonsult AB Branch v Margret Gama [2007] TZCA – An appellate court must address the grounds of appeal before it, although it need not necessarily address each ground separately.
2. Joseph Ndyamukama v N.I.C Bank Tanzania Limited and Others [2020] TZCA 1889 – Failure to determine issues framed and agreed upon by parties constitutes an error.
3. Mwenga Hydro Limited v Commissioner General, Tanzania Revenue Authority [2022] TZCA 590 – Supports the Court's intervention where a Tribunal's decision is uncertain or fails to determine an appeal to finality.
4. GA Insurance Tanzania Limited v Commissioner General, Tanzania Revenue Authority [2025] TZCA 846 – Failure by a Tribunal to consider and pronounce itself on the appellant's grounds of appeal constitutes a fundamental irregularity.
5. Willy John v R [1956] EA 509 – Authority supporting the requirement that judicial decisions provide reasons.
The central principle established by this decision:
A tribunal's decision must demonstrate independent judicial reasoning, consideration of the parties' arguments and findings supported by reasons. Merely reproducing one party's submissions and declaring the appeal unsuccessful does not constitute a valid judgment in law.
This is an important procedural tax jurisprudence decision in Tanzania. Although the dispute originated from the interpretation of Article 7 of the Tanzania–South Africa Double Taxation Agreement and the withholding tax obligations under the Income Tax Act, the Court deliberately refrained from determining the substantive tax question.
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