20160526 TZHC Dar es Salaam2

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES-SALAAM COMMERCIAL CASE NO. 65 OF 2012 PLASCO LIMITED B llll ■■ Bllt1 ■ ••······················••111~•························ PLAINTIFF 0

VERSUS

LUQMAN CONSTRUCTION LIMITED MOROGORO URBAN WATER SUPLLY .......................... DEFENDANTS··

AND SEWAGE AUTHORITY 1J1h February & 26 th Mc1y, 2016 ·- JUDGMENT. MWAMBEGELE, J.: The plaintiff's claim against the defendants is for payment of Tshs .. 120,696,021/= being outstanding payment for the PVC pipes and_ fittings supplies which were subject to payment of Value Added Tax (VAT). The story behind it is that, the first defendant, a limited liability company, had a · · project with the second defendant Morogoro Urban Water Supply and · Sewerage Authority (MORUWASA). The first defendant ordered and obtained from the plaintiff the said pipes in respect of which it paid her a total of Tshs. 630,678,950/= exclusive of VAT on the ground that the second defendant · (MORUWASA) was _exempted to pay VAT. The plaintiff then paid ~ total of Tshs. 113,522.211/= to the Tanzania Revenue Authority (TRA) as VAT in respect of the supply, requested for clarification from TRA and was ·informed 1 . that the plaintiff was right in charging VAT whereby MORUWASA would have processed for an exemption certificate. It ls also stated that the defendant has not paid a total of Tshs. 7~173,810/= iri respect of Invofce No. TINV002311. It is said that after · fruitless demands, it instituted this suit claiming for: a) Payment of Tzs. 120,696,021/=; b) Interest on the amount stated above at. the commercial rate to the date of judgment; c) jnterest at' court rate of 7% from the date of judgment to the

date of payment; · d) General-damagesto.:be asse·ssed bythe court; e) Costs of and incidental to-the suit; and f} Any other relief(s)that the honorable court may deem fit. I note from the ·record of the court that the plaintiff was ordered to amend the plaint and include the ·second defendant (MORUWASA) as defendant. They did so. But the latter did not enter defence. Therefore on record there is only one defence that of the first defendant. In its defence, the defendant puts that the contract works being in favour of a Government Authority needed due process of VAT exemption, that as one of the terms of Agreement arrangement, for such exemption would be made, that the amount paid as VAT to· TRA can be treated as deposit since it is subject to refund once exemption certificate is obtained and therefore the suit was prematur.ely instituted. Noting the amount alleged to have been paid as VAT, the defence further states that it was·· the second defendant 2 (MORUWASA) who was supposed to process the VAT exemption, and that Government process being customarily slow the first defendant cannot be punished for mistakes not its own. Finally, disputing amount claimed of Tshs. -7,173,810/=, it states that the · total amount is pegged on assumption of VAT be·ing payable, whereby with· VAT exemption it will be found-· that the. defendant had overpaid Tshs; 14,551,474/= to the plaintiff. The

plaintiff reply thereto is to the effect that the duty to seek exemption was on the first defendant and that the suit was not premature because it was· instituted after a series of communication . including demand notice. The record has it tt1at mediation was attempted without success. It is' also. . ·,.· disclosed therein that an argument relating :to -duty bearer for .exemption .. _ process had ensued Whereby this court -(Makaramba, J.) had made an order under Order I rule 10 (2) of the Civil Procedure Code, Cap. 33 of the Revised Edition, 2002 (the CPC) to amend the pleadings and include MORUWASA. Apparently both defendants having been duly served, they had defaulted to file their defence, the court ordered the plaintiff to prove the case exparte. Hearing commenced on 02.05.2013 but before it could come to an end, an . application to have an order for exparte hearing •vacated· succeeded on· 27.05.2013. • Through the same order granting the prayer, the defendants were allowed to present their defence but only the first defendant did so. · Therefore, in the . . absence of the second defendant, issues for· determination .of thfs suit were framed by this court. These are: 3 1) Whether the plaintiff paid the said Tsh'. · 120,696,021/= as· VAT to r = TM; ~ 2) If issue No. (1) is answered in· the affirmative, whether the.~ _ plaintiff has the right .to recover the amount so

recorded from · the defendant; _3) Whether there is an outstanding payment in respect of invoice No. · TIN V-0023/11 as per para 8 of the plaint; and _ 4) To what reliefs are the parties entitled. To testify for the plaintiff th~ first witness was Ms. Samira Sumari PWl who introduced- herself as plaintiff's employee. in the capacity of credit controller.· She told the· court that she knows the defendant as being the plaintiff's customer owing large sums•· of moneys. She said that through the proforma_: __ invoice the first defendant·had ordered .goods which they supplied ·for the ;""'· .~> total amount of Tshs. -778, 119;616/=_ VAT inclusive but the first-defendant _- '--: ', paid the principal amount w·ithout VAT. It was her averment that according -- to the procedure, if the first defendant was to be excluded from paying VAT it·; was supposed to present the exemption documents from TM but did not do ; ,. so and the plaintiff was forced to pay VAT to TRA for the goods the plaintiff 1 had supplied to the first defendant; It was her further averments that tlie said_ tax invoices comprised the total amount payable being· the purchase price for the item supplied plus VAT payable thereon. To corroborate her testimony she tendered a total of five documentary exhibits namely a Court order in Commercial Case No. 65 of 2012, (Exh. Pl), a Proforma Invoice (Exh. P2), a letter: dated

04.11.2010 from. Luqman Construction, a Tax Invoice .and •a Delivery Notes (collectively Exh._ P4). 4 Having described each and every invoice tendered as well as calculating in ·Sc court, PWl went on to _tell the _court . that the invoice - amount was : 630,678.950/= whereas the VAT amount was 113,522.211. It was her -- further testimony that the first defendant paid for the invoice amount without the VAT, and that there was· also outstanding amount in respect of invoice No. TINV002311 which was the total amount plus VAT for the respective goods supplied. To prove that the first defendant had not paid the said outstanding amount in respect of that invoice, and instead paid only the invoice amount without VAT; · · she tendered the said invoice TINV0023ll (Exh. PS), as well as statements of 1• _ • account for Luqman construction for ·payment_ from 01:01.2012 to - _-. 26.11.2012, 0L0l.2011 to 31.12.2011 and. 01.01.2010 to 31.12.2010 which:··.:=·; _- !' :~ .,. • .....--.. , :. : ..::.. ~. :·' 1- were collectively admitted as Exh. P6. She -went on to tender the TRA VAT - returns for December, 2010, November 2010 :and January· 2011 which were collectively admitted as Exh .. P7 in order to prove that the plaintiff had paid - ·- , --,. _· the said VAT to TRA in respect of the goods supplied to the first defendant •cs. She went on to tell the court that the plaintiff tried to •demand

the said. payments without success whereby it decided to write to TRA to request for clarification regarding payment of VAT in respect of the supplies to the first defendant. It was her statement that the reply from TRA was to the effect that the plaintiff was correct to charge VAT from the first -defendant in absence of valid tax exemption and therealter the plaintiff, orice again, wrote the first defendant attaching the said letter demanding for the payment of that amount she had already paid to_TRA as VAT. To this, she tendered the· said two letters from TRA and that to the first defendant which were collectively admitted as Exh. PS. She went on to tell the court that the - 5 plaintiff sent a demand note to the first defendant which she tendered in court as Exh. P9. In cross-examination, it was her testimony that .indeed they sent a delivery note for every tax invoice in respect of any supply but for the ~aid invoice in Exh. PS, the respective delivery note had slipped or went missing. It yvas her averrnent that that notwithstanding there . was an expression ·o·n the said delivery notes to show that the first defendant had collected the goods. She· went on to say that the plaintiff had paid the said VAT returns to TRA in cash - at TRA and further that though the.re might have been receipts, TRA stamped the documents which she had tendered in court. She also told this court

that .... despite various letters to the first defendant there was no response with · regard to the matter:. In re-examination, it wa~ her statement that they had written. to the first . defendant regarding the amount including that on Exh. PS but the latter did not. respond and further that in som_e circumstances due to_ urgency of the need of the goods supplied and where the same are delivered ex-factory sometimes the client would pick all the documents or would leave a copy with them and or. there would be human. error involved in delivery note documents. The second witness for the plaintiff was one Herbert Kabyemela PW2 who introduced himself as an employee of TRA in the Large Tax Payers . Department and whose duties were to survey d~bt collection, voluntary tax payment and approving t_ax exemptions. PW2 told this court that for a tax exemption to be .approved, the applicant was su·pposed to be one of those re~ognized under the Value Added Tax Act, Cap. 148 of the Revised Edition, 6 2002. He said that, upon such person seeking service or goods, he could be is·sued with a proforma invoice which shows the price and the VAT for the particular service or goods, whereby the_ applicant would .be required to fill special forms and attach with the -proforma invoice and submit the same. to TRA for approval. He said _that with regard to the plaintiff and first defendant, there was ·

no one who was _tax exempt and that is why upon being .. - approached by the plaintiff for clarification they responded that none of them was VAT exempt. PW2 went on to testify that despite the fact that MORUWASA was one of the tax exempt institutions, -the. first ,md second defendants_· were supposed to,, ;.. ·.· pay the VAT unless the exemption procedure was followed.by the- person. who was buying th_e goods or_ services; This is - because, said .PW2, the· said. invoices. indicated Luqrnan. and _PLASCO; MORUWASA was not there and therefore none. between them could claim. exemption. - He said that if they· wished to enjoy such ex.emption procedurally, .Luqma:n should have ,invoiced >;:.:_ MORUWASA with total costs of the .projects'.including VAT; then MORUWASA· -.- could present the same to TRA indicating such· amount charged by· the Contractor (Luqman) whereby TRA would approve the exemption so that none between Luqman and PLASCO could be forced to charge the VAT on the said supplied goods. He added that the beneficiary of the goods/services; that is MORUWASA, was the. one supposed to initiate the exemption process. in cross examination, it was his statement that the VAT is paid through filing . the returns and when asked as to whether the plaintiff had paid the said VAT to TRA his response was that so far TRA had no any claim against the plaintiff. He also stated that even_

where a person has . tax relief, he is · supposed to fill the specic1l -forms together with the proforma invoices for the 7 goods or services to be supplied to him whereafter TRA would approve the same and issue him exemption. It was his testimony that MORUWASA was tax exempt per the law and further evidence that the supplier of the goods or services i$ the one required to collect the VAT and pay the same to TRA at the end of each month of sales. As to the fact that exemption was processed but delayed by TRA, he said that he could not know who was responsible. In re-examination, he told this court that on the face of the invoices sent to . Luqman by PLASCO, there could be no exemption because none between them is a tax:exempt. He went on to say if Luqman had been charged VAT for the services rendered to MORUWASA who is exempt, the latter had the right to clairn for refun6 frorn.the TRA or upon completion of the exemption · . •,.) . process, the tax assessment for Luqman would have .been zero and as such.. .... ,. he could not have paid any tax in that regard. With regard to the VAT payment procedure to TRA, his testimony was that the VAT collections for the whole montt1 of all sales· made were supposed to be returned to TRA within .. 30 days after the month of sales. He said that the forms should describe the amount collected as VAT for the services rendered and goods sold as

well as amounts paid as VAT for the services obtained as well as goods purchased whereby the difference was the amount payable. Therefore, said PW2, there was no way that returns could be of a single transaction but a -representation of various transactions within a month. On being examined by this court, he· said that he had appeared to testify in •regard of the tax payment system and not confirming as to whether the plaintiff had paid the VAT to TRA or not. To testify for the defendant, the sole witness was one Deus Lyapembile DW1 who introduced himself as Operations Director of the first defendant. He said that in that capacity he had participated in securing the plaintiff as their 8 supplier and that.it was agreed that the plaintiff could be paid after supplying ~· · the goods whereby MORUWASA had.a duty to process'the VAT relief .. He said : · that the plaintiff then issued the .proforma . invoice in September 2009, ~ November 2010 and July 2011 for the same supply. It was his testimony that there were problems with regard to issuance of proforma invoice~ and processing of the relief at Procurement Unit of the. = second defendant because the latter told the first defendant that the same • • ~ :_ • I : • was supposed to be· brought within five days whereby the former could · process for the relief. It was his averment: that they were being forced to go back to the plaintiff

to seek for another proforma· invoices Whereby for. the last time tl1e plaintiff refused to ·issue another invoicewhereupon the dispute ensued. He said that the first defendant paid the debt to .the plaintiff of ,:: ,:,\'· about 630 Million without VAT -becatJse by·then the second defendant had,'..:•. ':-: told them that the five days had expired and therefore they were. requiring'; other proforma invoices to process· the relief but the plaintiff refused to issue .· · ··· it. It was his- evidence that the problem was with MORUWASA and TRA an·d that when they were still making follow'"Lips they received: a demand note. from the plaintiff which they copied to the second defendant with a letter requesting them to respond. To this, he tendered copies of the letters· dated . 18.11.2011 and 14.6.2012 from LLiqmanto Managing Director of MORUWASA which were collectively marked as Exh. Dl. He went on to tell this court that the reply from the . second· defendant (MORUWASA) was that they should give them some time to process the relief :: but until- the date he was testifying, it was not yet processed. He went on to tell the court that he had personally served the third party notice to the.· second defendant upon an order of this court but she did not appear and that·. 9 if it happens that the first defendant is found liable, it is the second defendant who should be ordered to pay the

claimed amount as VAT because. he was the consumer of the services. Regarding the extra claims in respect of the . allegedly unpaid invoice, it was his testimony that the same amount of Tsh .. 7,100,000/= had been included in the paid 630 million. It was his averment. · that according to his understanding the government taxes were supposed to be paid and therefore MORlJWASA ·as supposed to get.the relief so that the plaintiff and defendant should not be burdened to pay the tax and for that reason MORUWASA should be ordered to pay the~ claimed amount. In cross exaniination, · h~ told this court that ·his company was not a tax exempt and therefore it was paying all Government taxes. He said that the first defendant had agreeq·to pay VAT for the supply from the plaintiff but did not and were not readyJo pay the said VAT for, the supplies from the plaintiff qecauseit was tl1e second.defendant who wa_?Jiaple. Upon bejr)g ~eferred to exhibits. P4 and PS_ it was his response that t_he second defendant was . supposed to pay the said VAT. · He went on to ,say that upon receipt of the proforma invoice from the plaintiff they were supposed to send them to the second defendant for processing the tax relief. He also said that the first defendant had issued tile second defendant with the invoices for the whole project work including the pipes that were obtained from the plaintiff but

their invoices did not include the VAT because the second defendant was tax exempt and further that in their claim to MORUWASA they never included the· plaintiff's claim for VAT .. He also told the court that normally their invoices were supposed to include VAT a:nd thereafter MORUWASA could process the relief. That is all in respect of the testimonies and evidence tendered -by the respective witnesses. · At the closure of their cases, counsel for the parties had sought for leave to file their closing· submissio-ns. They were 'accordingly allowed to do so by this court and I commend them for their compliance with ,, - the schedule; I have gone through their entire submissions and I appreciate their industry. I will now deal with the issues in the order of their sequence. However, at the outset, I note that, the requirement for payment bf VAT in respect of . · the supplies made by the plaintiff to the first defendant is not in dispute. - Accordingly, the testimori'y arid exhibits in relation to inclusion of the VAT · returns in the fees chargeable for the supplies;- that 'is, in the tax .invoice , which were admitted vide PW1 as Exh: P4 tol-lectively, is also not disputed;,: What is at the centre of controversy here as far as the 'first and second issues ·. are concerned relates to the actual payment of the said amount as VAT, as well as on whose shoulder the,same.shouldbe

placed. In my view, these questions; that is, the first and the second issues are · separate but interdependent. I say so because, upon affirming the first issue, then, in my considered view~ the second will be easily answered,-. upon . discovering as to who, between the plaintiff and the defendants is- to bear the VAT charges. But if the first issue is negated, then the second one dies a natural death. Before I delve into the testimonies of witnesses a·nd exhibits, with regard to· · the issues, suffice to lay the basic foundation in so far as VAT is concerned. As the name suggests, Value Added Tax is a tax chargeable as an added value of a taxable supply of goods or services. As such the dictates of tax 11 - laws particularly the Value Added Tax Act, have it that the said additional value tax is chargeable ori the amount of the ·consideration of a supply of goods or services - see section 13. As per sections 3 (1), 4 (1) read together with sections 17 (1) and 24, the said amount of tax is collected, accounted for and remitted to the responsible authority; the Tanzania Revenue Authority, by_ the supplier of the particular goods ·or services. · In that accord therefore, both _ business practice and law have· lt that the· consideration or -price payable in .. respect of the goods or services supplied and received includes the component of VAT - see ·regulation 9 (3) {c) of the he

Value. Added Tax . ·_ (General) Regulations - GNs Nos. 177 of 1998 and 366 of 2000. Apparently, said tax is chargeable on the receiver and or beneficiary of the services and or goods supplied such as the first defendant in this case. I say the first defendant because;- the - supplies- of the said goods which is not dispu~ed was made to the first defendant. Consequently, the law requires. that, upo·n charging such VAT on the supplies made, be it of goods or services:, ·the taxable person or supplier, must issue or provide the beneficiary of the goods or services receipt of such· goods or services with· tax invoices containing information about the supply made, recipient thereof and arnounf of the VAT - see section 29. As intimated earlier, the amount collected during any accounting period must - be remitted or returned· to the responsible Authority. In terms of section 26 (1), the said tax- return is lodged or made through· a prescribed form containing information relating· to the supply of goods on services by such a person; the accounting person. 12 In my view, the abov~ background lays a foundation . . sufficient . to deal with the dispute before me. Thus, in so far as VAT is concer:r:ied, the law has it that it is payable on every supply. made by such supplier- and thaLthe said _·· . amount is indirectly payable by recipient of the goods or services as part

o_f. consideration or purchase price. Clearly therefore, the law imposes- such taxes· on. the recipient · of the ..: . services or goods and not'the. supplier, though the latter is duty bound to account for, collect, and remit the same to· the revenue collection authority vide the prescribed forms. With the totality of the foregoing as a sieve, .•I will- throw them onto,.the pleadings, testimonies and· exhibits tendered so asto establish the yeracity or · . , .·. otherwise of the claims. In respect of the ficst issue, . as to whether the plair:itiff paid a total . of Tshs. 120,696,021/= as VAT, PW1; the plaintiff's Credit Cpntroller tendered. in evidence a bundle of 12 tax invoices ·and one .delivery note which were admitted and marked· as. Exh. P4 collectively. On the face of the said invoices, indeed, they materially conform to the prescription uoder the law; that is, section 29 (1) read together with regulation 9 of the General Regulations. I have keenly studied the. same, and found that they bear a. total of Tshs. 113,532,311/= as total of VAT ~hargeable in respect of the goods· supplied by the plaintiff to the · first defendant. Let the said. invoices speak for themselves here:· 13 -· -- S/No. Date Inv. No VAT (18%) ' I 1. 29.11.2010 · TINV001540/10 · 15,513,469.92 2. 29.11.2010 TINV00l541/10 11,632,896.00 3. 2.12.2010 TINV001558/10 · 11,001;960.00 4. 2.12.2010

·TINV001S59/10 . 9,410,418.00 ·, -- 5. 3.12.2010 · DTINV001560/10 975,780.00 6. 6.12.2010 TINV00l567/10 13,444,920:00 ----· 7. 7.12.2010 TINV001571/10 9,343,080.00 - 8. 8.12.2010 TINV001576/10 · 13,367,026.08 ·-- ~ - - - · 9. 10.12..2010 :TINV001578/10 9,207,898.56 --- ·- l - - - - - - - - ·- - - 10. 13.12.2010 TINV001589/10 2,803,410.00 '----· 11. --. 13.12.2010 ·-- .TNV001587/10 10,110-;817.44 ---- - 12. 1 1T'12.2010' TINV001610/10 2,835,630.00 --- 13. 22.12:2010 1INVO0t6i6/lO. 3~874,905.00 - - . .. ' iTOTAL 113,532,311.00 ~ . PWl stated that the first defendant had ·paid the purchase price in exclusion of the VAT amount. It was her testimony that the plaintiff had made returns to the TRA and had indeed paid the.said amount as VAT. In this respect, she · tendered Bill-wise details and ledger accounts (collectively Exh. P6) to show the amount paid to the plaintiff by the defendant as well as the Tax Returns Forms accompanied by a list of invoices in respect of the payments received . . for the months of November· and December, 2010 as well as January, 2011. This witness went on to tender one tax invoice dated 11.01.2011 with No. TINV0023/11 whose VAT amount was Tshs. 1,094,310/= and the total value 14 for the supplies being 6,079,500/= making a totar of Tshs. 7,173,810 claimed t' ...· -:·,;:: to be an amount outstanding .. ~ on· being cross-examined, it was. her testimony.

that the said tax returns ·. indicated ·amount of VAT paid in respect of supplies made for the first defendant and that plaintiff could not demand payment of VAT from second·> defendant because the goods were supplied to the first defendant.. The learned counsel for the defendant has all along, through his line of cross- examination and final submission, been attempting to dispute the plaintiff's payment of the said VAT in respect of the supplies to the first defendant. Contrary thereto however, . I . find.· this issue to have been, answered affirmatively through the evidence of the tax returns (exh. P4 collectively}. As · rightly stated by PVl/2 during: cross-examination, since there were ,no claims -··· ·· maintained by TRA in respect of the plaintiffs Tax responsibilities, and further in the absence of any other better evidence by the defendant to counter the said tax returns filed to TRA by the plaintiff, nothing can be affirmatively said. to disprove the fact that indeed the said amount was remitted to TRA in · - respect of the said supplies to the first defendant. Counsel for the defendant endeavored to challenge the returns on the reasons that there is no specific reference to the returns in respect of the supplies made to the first defendant and rathe.r it refers to . the. general supplies. However, there are attached lists of the. items supplied to the defendant as

well as the amount of VAT paid corresponding to the respective tax invoices. The first defendant has not in any way attempted to counter that too. That apart, as can be gathered from the written statement of defence,. the defendant, in the main, does not categorically dispute the fact 15 that the plaintiff paid the said VAT-but rather states that it was a rush to come to court· demanding for. the payment. wh_ile they were still waiting for processing the tax exempti_on by the :5ecor1d· defendant. For these reasons the first issues is answered in the affirmative. As to the second. issue, on the basis of the law as elaborated hereinabove together .with PW2's ·testimony, . the.. .. plaintiff ·~ . ,• has. the right to· recover . the amount paid to TRA from first defendant. .~his is apparently· because the first · defendant was the recipient of the. goods. Thus; despite: the· fact that the said supplies were in respect. of the· project _for the .second defendant, as rightly stated ·by PWl, the sale _contract was betw~~n the first defendant and the plaintiff and therefore there was no _possibili_ty for the plaintiff.. to demand neither purchase: price.no:r·VAT from the second defendant. In the light of the exposition above 9~q as elaborately -said by PW2, if ~he first . defendant wanted to be released from payment of the said VAT~ it-.should •.. -. : have seen to it that the

procedure for VAT exemption was complied with. Thus, in my view, de!ay or otherwise . . failure . ..~ . . . to obtain exemption, whether ,_ · - --= ; -~- - caused by MORUWASA or . TRA, . cannot .. be a basis to exonerate her and .. . instead impose the liability on· the· plaintiff. Thus, the second issue is answered in the affirmative as well. As to the third issue, the sani~ m_ust be answered in the affirmative too. The defendant endeav0ured - to. state that. the . : . . claimed amount through . invoice No. TINV0023/ll dated 11.01.2011 whose VAT amount was Tshs. 1,094,310/=: and the total value of Tshs.. 7,173,810/= . ' was included . in the. Tshs. 630 Million paid. However, despite such mere statement, there was no concrete proof to counter the said invoice which was t~ndered in court. There iS"•no detailed 16 . account of how payment was made. to the plaintiff· particularizing the said amount as incl.usive in the said 630 Million which was paid wit_hout VAT. That apart, the· first defendant admits through its pleadings as well · as the testimony of DWl that they only paid the ·purchase price of the goods. supplied without VAT. The question which they did not answer is how come _ :-• they included this amount which was· the. purchase price plus the VAT -· thereof? Or why was it not expressly stated .in its-pleadings, and or testimony·. that the said amount paid to the-

plaintiff included partly the VAJ in respect of that invoice? The learned counsel for the defe □ dant attempted to dis,credit this piece of evidence on the. basis that there was no corresponding delivery· · note. However, the testimony by DW1 to the effect that the said amount was. included in the already paid amount withoutVAJ ar:,d further lack of evidence to prove non-delivery of the materials in respect of the s.aid. invoice ~uffice tq vindicate my affirmative answer to this third issue. In sum. therefore, it can be put thus, on the basis of.the,pleadings,··testimony, . · exhibits and in the light of the law, it is- evident that: 1) The plaintiff paid a total of Tshs. 120,696,021/= as VAT for the goods it supplied to the first Defendant; 2) The Plaintiff has a·· right· to recover the said amount from the first defendant as_ a beneficiary/receiver of the goods supplied in terms of the Value Added Tax Act; and· 3) There is an outstanding payment iri respect· of TINV-0023/11 for:Tshs." . · · 7,173,810 Which is the purchase price including VAT thereof .. Coming to the last issue, the plaintiff has put up a total of six prayers in his·· plaint. At the outset, the 6th one was a mere chorus, for in my view~ there is 17 no any other relief I deem fit to grant. However, having affirmatively found, r- -. as I have hereinabove for the first, second and third issues, the plaintiff is.

:- entitled to costs of this suit. Therefore the plaintiff fifth prayer is granted as :::.· prayed. That notwithstanding, I am. alive to the principle that general• damages are awardable at the discretion· of the Court. In this case, the fact that the ::: plaintiff had to utilize its monies which was ·obviously part of her proceeds to discharge the first defendant's statutory obligations, the consequent failure to re-cycle. such proceed is ·lucid; :it is a ground sufficient for this court to exercise its discretion to award .general damages. I find an amount of Tshs. 5,000,000/= to be adequate for that matter. The rest of the prayers are also granted· as. prayed;· thaL is; the.· plaintiff is entitled to recover the Tshs .. . 120,696,021/= from the first defendant as well as interest thereon at the · . commercial rate of- l 9% .from the date of. filing th.is suit to the date of,. judgment and at court rate of 7% from the date. of this judgment to the date full and-final satisfaction1both interests being on the. principal sum and the · · decretal sum respectively.-· The first defendant through DWl has stated that should it be found liable as I have found hereinabove, then it is the. second defendant that should be ordered to pay the said amount. I refrain from entertaining such a rather afterthought request for the very reason that the sale contract was between the plaintiff and

the first defendant and as such, the latter was duty bound to pay the VAT as required by the law. Any further arrangements as between _ the second defendant and its client in so far as statutory obligations are concerned remained a matter in their undertaking which has nothing to do 18 ., · with the plaintiff's obligations to collect, account for and remit the taxes lie- . charged for the supplies made within a month. Tt1at apart, it is clear from the testimony by DWl that the first defendant · . · .': knew it was duty bound to pay the VAT in respect of the purchases from the. plaintiff .. Despite being so aware, it was the testimony of DW1 that they have never invoiced their client; the second defendant including the VAT charges -' · on the goods supplied by the· plaintiff despite the invoices sent including aIL criarges of the contract .works. His response was that they did· not include the·: VAT because they knew that the second defendant was VAT exempt. The.·· question would be that if they so··knew, thenJrom .whence can the same be.·.> .. ; . subjected to payment of the;claimed amount to the plaintiff. - . As elaborated by P'vV2,. rf at: all the. first.defendant is-desirous· ·of recouping ·• ... \. •;'_ such amount,· it has.· a right to· claim the same from them as a refund upon fulfilling the· requirements for.•tax exemption in· respect of ,the service that it.:::,.:

. had rendered to the second defendant. . Otherwise,. as the matter stands, it iS · liable to the plaintiff's claim to the extent explained tlereinabove. In fine therefore, I proceed to enter judgment for the plaintiff and pronounce thus: 1. The first defendant shall pay the plaintiff a total of Tshs. 120,696,021/= as an amount paid to TRA as VAT plus an amount outstanding for the invoice numberTINV-0023/11; .

2. The first defendant shall pay the plaintiff interest on the principal sum above at the rate of 19% per annum from the date of finng this suit tq the date of judgment; . 19 3. The first defendant shall pay the plaintiff a further interest on the decretal sum at the court rate of 7% from the date of this judgment till final and full satisfaction; 4. The first defendant shall pay the plaintiff Tshs. 5,000,000/= as general damages; and 5. The first defendant shall 'pay the plaintiff costs of this suit. Order accordingly. DATED at DAR ES SALAAM this 26 th day of May, 2016. , J, C. M. MWAMBEGELE JUDGE , - . •f•tf'.: ~ ~. l 20