engen petroleum t limited vs tanzania revenue authority 2001 tzhc 35 1 december 2001

IN THE H IGH COURT OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT PA R ES SALAAM C IV IL CASE NO.36 OF 2001 ENGEN PETRO LEU M (T) L IM IT E D ........PL A IN T IFF Versus TANZANIA REVENUE A U T H O R IT Y ..... DEFENDANT RULING C H IPETA , J.: The applicant Com pany in this suit, Engen Petroleum (T) Limited, is suing the defendant/respondent, Tanzania Revenue Authority, for, inter alia, a declaration that the defendant’s act of demanding payment of Shs.35,372,903 as Value Added Tax is unreasonable and illegal. After filing the suit, the applicant filed an application, which is the subject-matter of this Ruling, for a temporary injunction restrainingt the respondent by itself, its agents, servants and/or workmen from attaching$the; money in its account it Stanbic Bank (T) Limited “on the p retex t,of recovering VAT” pending the final determination of the main suit. ^By an order o f this court, the parties learned advocates filed written submissions.Hi i I have carefully considered the written submissions. Following decisions in the cases o f (to name but a few) Giiella v. Cass man Brown Co. (1973) E.A. 339, CPC International v. Zainabu Grain Millers, (C.A.T Civil Appeal no.49 o f 1995), and Attilio v. Mbowe, (1969) H.C.D. ri.284^\t is now well settled that in order for an application for a temporary injunction to succeed, the applicant must show that there is a prim a facie case with'a probability of success and that if the application is not granted, the^ applicant- might suffer irreparable loss which would not adequately be compensated byj an award of damages. In the instant case, the first question is whether the applicant has shown a printa facie case with a probability of success in the main suit. The pleadings disclose that the respondent has demanded from the plaintiff payment o f Value Added Tax and was apparently in the process o f attaching the applicant’s Bank Account to collect the sum due. The applicant claims that it is not liable to pay such tax by reason o f its Certificate o f Incentives issued by the Tanzania investment Centre on 2nd March, 1998. The respondent’s argument is that the Certificate relied upon by the applicant did not include exemption from payment of Value Added Tax. In other words, the matter is about collection of Value Added Tax. Without in any way trying to prejudge the issue in dispute, the Certificate relied on by the applicant was issued in accordance with the Financial Laws (Miscellaneous Amendments) Act, 1997. The Certificate makes no reference to VAT which is regulated by a different Act altogether. As my learned sister Judge, Bubeshi, J. pointed out in the case of AGIP (T) Ltd. V. Commissioner For Value Added Tax and Another, High Court (J)ar es Salaam) Civil Case No. 472 o f 1999: “Import duty is different from Value Added Tax. In terms o f section 3 (l)-o f the Value Added Tax Act No.24 o f 1997 which came into effect on 1st July, 1998, VA T shall he charged on supply o f goods or services made after 1/7/98. There is no mention o f Value Added Tax (in the letter o f exemption). VA T is indeed an animal o f its own creation — the Value Added Tax A ct”. That is the situation in the instant case. The Certificate o f Incentives issued to the applicant has no mention of VAT. That being the position, I think that it would be overzealous to hold that the applicant has shown a prima facie case with a probability o f success. As to the question o f irreparable loss, I do not think that there can be envisaged such loss to the applicant as would not be compensated by an award o f damages. It is also not impertinent to add here that in addition to the principles enunciated above, when temporary injunctions are sought to be made against public authorities charged with the duty of collecting public revenue, such application must not be lightly granted by the courts. While the courts are duty-bound to protect the innocent public against abuse o f power by tax authorities, the courts must not be oblivious of public policy. My learned brother Judge, Katiti, ./. expressed a similar view, if not even more candidly, in the case of Mufindi Tea Co.'JAmited v. Tanzania Revenue Authority, (Dar es Salaam Miscellaneous Civil Cause No. 139 o f 1999 - as yet unreported) in which he said: “ Tax collection, even i f mistaken, being a statutory duty, mandated to be done by the respondent differences emerging from differing interpretations, I cannot see any wrong, that would attract a temporary injunction. I am also o f the view, that, where the issue o f public revenue is involved, the Court o f Law should be extremely circumspect, to interfere unduly, with the collection o f the same, as so doing might not only be disastrous to essential services being rendered by the Government, but too, might effect the security (o f the) State”. Regarding the question o f balance o f inconvenience, I think that that should be determined by considering the nature of the injury anticipated to be caused. In the instant case, as I have pointed out above, the applicant cannot be said to be likely to suffer irreparable injury since the injury can adequately be compensated by an award o f damages and/or costs, for neither of the parties can be said to be, if I may use the expression, a man o f straw. " The sum o f money involved is by no means colossal. For these reasons, this application fails and so is hereby dismissed with costs. B. D. CHIPETA JUDGE