20191117 TZHC Dar es Salaam

IN THE HIGH COURT OF TANZANIA {DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL REFERENCE NO. 5 OF 2017 (Arising from the Ruling and Drawn Order in Civil Cause No. 659 of 2016 by Kitus, J. followed by the Ruling of the Taxing master dated 26 September 2017 A. A. Magutu) ISON BPO TANZANIA LIMITED ................................... APPLICANT VERSUS EQUITY BANK {T) LTD ........................................... RESPONDENT RULING Date of last order: 11/11/2019 Date of Ruling 17/12/2019 NGWALA, J. This is an application for reference against the Ruling of the Taxing Master dated 26 September, 2017 in Misc. Civil Cause No. 659 of 2016. In that Ruling the Taxing Master awarded the respondent the taxed bill of costs of grand total of Tsh.6,313,600/=(Tanzania Shillings Six Willian, Three Hundred Thirteen Thousand Six Hundred only). The application is by way of Chamber Summons taken under the provisions of Order 7(1) and 7(2) of the Advocates 1 Remuneration Order GN No. 264 of 2015 and section 95 of the Civil Procedure Code [Cap. 33 R:E 2002]. The Reference is seeking the following orders;- "!. That this Honourable Court be pleased to make a finding that there exist reasonable and sufficient causes to allow objections to the decision of the Taxing Master (Hon. A.A Magutu,Deputy Registrar) dated 26 September,2017 in Miscellaneous Civil Cause No. 659 of 2016 by way of reference and amend The Taxing Master's decision as objected. 2. Costs of this Application be provided for. 3. Any other reliefs the Court deems fit and just to grant. When the application was called for hearing, the respective counsels for the parties, Mr. Jeremiah Tarimo and Mr. Phillip Ilungu who represent the applicant and respondent respectively, prayed to argue this application by way of written submissions. Leave was granted and parties complied with the scheduled order as fixed by the court. In the submission in support of the application, drawn and filed by the applicants, it is argued that the dispute was contentious 2 but not for a liquidated sum in the original and appellate jurisdiction. For that matter, it was wrong for the Taxing Master to apply the 9th schedule of the Advocates' Remuneration Order GN No. 264 of 2015. It was further argued, the instruction fees awarded was not supported by any legal receipts. The use of Electronic Fiscal Devices Receipts (EFD receipts) which had already come into force at the time the Taxing Master rendered the decision on 26th September, 2017 was not complied with. This was not in accordance with the laws governing taxation and issue of receipts, namely the Income Tax (Electronic Fiscal Devises) Regulations, 2012 which came into operation on 14th December, 2012. The holding of this court in Taxation Reference NO.7 of 2017, between Professor Emmanuel A. Mjema v. Managing Director Dira ya Mtanzania Newspaper and 2 others (unreported) was referred in support of the argument that the claims for payment of Bill of cost must be by EFD receipts because all practicing advocates are VAT registered Tax Payers. Mugeta J. held under Page 3 of the typed Ruling that; 3 ------- "It is a matter of law that all practicing advocates are VAT registered tax payers. (See section 29(1) of the Value Added Tax Act 2014). According to section 36(1) of the Tax Administration Act 2015 a person who supplies goods renders services or receives payment in respect of goods supplied or services rendered shall issue fiscal receipts or fiscal invoice by using electrical fiscal devices. In deed the receipt attached to payment to payment of instruction fees is not an EFD receipt According to the counsel for the applicant an advocates failure to issue EFD receipt amounts to tax avoidance and in this case the Government lost revenue of TZS 1/800/000/-... since advocates are required by law to issue EFD receipt upon payment for service rendere~ claims for such payment shall be proved by submission of EFD receipt as evidence'~ In view of that authority, the applicant's counsel urged the court to quash and set aside the Taxing Master's decision. On the question of VAT inclusion in the bill of costs, the applicants alluded that the same came into force with the 4 Electronic Fiscal Device Regulation in December, 2012. Thus, the same is taxable. Regarding the Taxing Master's discretion to increase the cost claimed by the respondent, the respondent quoted the case of Mwita s/o Mhere and Ibrahim Mhere v. Republic (2005) TLR 107. It is held at page 108 that; 'judicial discretion is the exercise ofJudgment by a Judge or court based on what is fair under the circumstances and guided by the rules and principles of the law; the court has to demostrate, however briefly, how that discretion has been exercised to reach the decision it takes'~ It is in the spirit of the above cited authorities, the applicants resist the decision of the Taxing Master to tax TSH. 50 ,000/ = per each item, for want of justification on how it was reached without receipts in support of the items. On their part, in reply to the submission opposing this taxation reference, the counsel for the respondent resisted the application and submissions in support of their application. 5 I ' ' It was stated that the matter was contentious as held in the case of Tanzania Motors Services Ltd and Presidential Parastal Sector Reform Commission v. Meha"r Singh, Civil Appeal No.115 at page 8 Nsekela J .A stated that; llThe term ''suit" is a very comprehensive one and is said to apply to any proceeding in a court of justice by which individual pursues a remedy which the law affords him. The modes of proceedings may be various; but if the right is litigated between the parties in the court ofjustice the proceedings in (sic) is a suit" The counsel argued, as the respondent challenged the application and the parties argued in opposition to each other; that proves the matter was contentiuos. So, the Honourable Deputy Registrar was justified to use the 9th Schedule to the Order. Regarding inclusion of VAT in the Bill of costs, it was submitted that, VAT was included as expenses of the suit. The respondent incurred 18% VAT in her tax invoice. Thus, it was correct for the Taxing Master to tax VAT. On the other hand, the respondent argued that the use of EFD receipts is a case made law which has currently been established. 6 At the time of entertaining the matter, invoices were sufficient to evidence the charges. That being the case, the matter which was acceptable at that time, cannot turn to be unacceptable today after development of law. In his view the Taxing Master was correct on taxing the bill of costs accordingly. Responding on the claim that the Taxing Master increased the cost claimed by the Respondent contrary to the law, the respondent supported the decision of Taxing Master that it is in accordance with the law. Reference was made to Order 12(1) of the Advocates Remuneration Order, GN NO. 264 of 2015 which is to the effect that:- "{1) The taxing master may allow such cost~ charges and expenses as authorised in this Order or appear to him to be necessary or proper for the attainment ofJustice ✓, It is the Respondent's averment that the Taxing master discretion has been exercised and also demonstrated on how the decision to tax Tsh. 50,000/= per each item was reached. Finally, the Respondent had a wish to the caution and weight this court have had on the issue of reviewing decisions of Taxing Officers. Mwambegele, J. (as he then 7 '' ' was) in the case of National Bank of Commerce Limited v. MM Worldwide Trading Co. Ltd and 2 others Misc. Commercial Cause No.217 of 2015, at page 10 held that:- ".. .I am aware of the warning .. .on question of quantum/ the decision of taxing officer is✓ generally speaking final. It must be very exceptional case in which the court will even listen to an application to review his decision'~ In rejoinder submission, the Applicant's Counsel insisted on the grounds of reference by reiterating what was submitted in submission in chief. I have closely considered the rival submissions and read between the lines of authorities cited to me by both learned counsel. The basic issue for determination is whether the Applicants have advanced suffiecient reasons to allow objections to the decision by the Taxing Master. In the course of composing this Ruling, upon perusal of Court's records, I noted the issue of EFD receipt was neither raised nor argued anywhere in the original Taxation Proceedings. Thus, this being a new fact not raised on the original proceedings cannot be raised at this stage of reference. This position of law has been 8 . '. discussed in a number of authorities. In the circumstance like this, the court in the case of Hotel Travertine Limited & 2 others v. National Bank of' Commerce Limited [2006] TLR 133 that an issue which was not raised and argued at the trial cannot legally be raised on appeal. Also, in the case of James Funke Gwagilo v. Attorney Genera/[2004] TLR 161 the Court of Appeal of Tanzania held at page 141: "The issue of acceptance by conduct if at all available/ should have been pleaded and argued before the learned trial Judge. As a matter of general principle/ an appellate Court cannot allow matters not taken or pleaded in the Court belo~ to be raised on appeal". In the view of the above authorities where I find the argument of EFD receipt was the cornerstone of this reference, there is no need for me to be detained on this matter. In deciding this matter I am guided by these two principles that, the court cannot entertain a matter which was not determined or heard on trial; and the principle that, it is under exceptional circumstances, courts do interfere with the award of costs made by a Taxing Master, since the award of costs is within the discretional powers of a Taxing Master, unless he has failed to 9 exercise his discretion judiciously or acted upon a wrong principle or consideration, in arriving at that decision. In this reference, the Taxing Master has demostrated how the decision was reached in accordance with the law. In my settled view, costs are awarded to a party in a case for purpose of restituting him to his original position by compensating him the expenses used in prosecuting or defending a case according to the law. In the circumstances of this case, I do not see any justification to interfere with the decision of the Taxing Master. It is my finding that the Taxing Master exercised her discretion judiciously by awarding Tshs.6,313,600/= (Tanzania Shillings Six Million, Three Hundred Thousand Thirteen Thousand Six Hundred Only). In the upshot, this applicati its entirety. la 16/12/2019 10 ----- ----- 17/11/2019 Coram: Hon. A. F. Ngwala, J. For Applicant - Mr. Nicholaus Edwin Kashililika, advocate For the Respondent - Mr. David Mganga (Advocate) B/C Miss Lulu. Court: Ruling delivered in the presence of the above respective counsels for the parties. - Court: Right of _Appeal to Court of Appeal of Tanzania explained. ~' F. Ngwala JUDGE 7/11/2019 11