mic t ltd vs zanzibar telecom ltd zantel 2011 tzhccomd 2100 31 may 2011

IN THE HIGH COURT (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 1 OF 2011 MIC (TANZANIA) LIMITED...................... PLAINTIFF VERSUS ZANZIBAR TELECOM LIMITED (ZANTEL)... DEFENDANT R U LIN G : MRUMA J. The plaintiff MIC (Tanzania) Ltd has instituted a suit against the defendant Zanzibar Telecoms Limited (Zantel), claiming for among other orders an order for payment of Tshs 3,419,916,523.19 being costs of the unpaid Value Added Tax (VAT) for inter connector charge services provided to the defendant by the plaintiff. The plaintiff is also praying for a declatory order that the defendant being a VAT registered is under obligation to pay Value Added Tax on the services consumed in Mainland Tanzania. Page 1 of 11 Together with its written statement of defence, the defendant has challenged the competency of this court to entertain the plaintiff's suit contending that since the plaintiff's suit arises from the defendant's liability to pay VAT established by the Value Added Tax Act, a revenue law administered under the Tanzania Revenue authority Act, then the court lacks jurisdiction to try the matter. The said preliminary objection is raised in a style. It is raised in a style because despite the fact that it is contained in paragraph 20 of the written statement of defence, it was separately filed in a piece of paper titled "Notice of Preliminary Objection." The plaintiff counsel was very quick in raising his reservations in the manner under which the objection was raised. It was and still is my view that in terms of the provisions of rule 2 of order VIII of the Civil Procedure Code [cap 33 RE 2002], the defendant is ought to raise by his pleadings all matters which show that the suit is not to be maintainable. The said law provides: "The defendant must raise by his pleading all matters which show that the suit not to be maintainable or that the transaction is either void or voidable in point o f law, and all Page 2 of 11 such grounds o f defence, as if not raised would be likely to take the opposite party by surprise, or would raise issues of fact not arising out o f the plaint as for instance fraud, limitation release, payment, performance or fact showing illegality." Following the plaintiff's counsel reservations which was supported by the court counsel for the defendant abandoned the preliminary objection contained in a piece of paper in a piece of paper filed separately and vowed to proceed to argue the preliminary objection contained in paragraph 20 of the written statement of defence. Mr. Bahebe, Counsel for the plaintiff opposed this line of argument. It is his contention that the preliminary objection raised in paragraph 20 of the written statement of defence is not properly raised because pleadings should be confined to matters of facts only. Submitting in support of his contention Mr. Bahebe stated that pleadings are governed by the provisions of Rule 3 of order VI of the Civil Procedure Code. He said that the fundamental rule of pleadings as put down by Rule 3 requires four (4) things which he mentioned as that: i. Every pleading must state facts and not law. ii. It must state materia! facts only. Page 3 of 11 Hi. It must state only the facts on which the party pleadings rely for his claim or defence and not evidence by which they are to be proved. iv. It must state such facts in a concise form. I think this argument should not detain us much. The defendant have in my view correctly invoked order VIII Rule 2 of the Civil Procedure Code by pleading a preliminary point of objection that this suit is not maintainable in law. The defendant's objection being based on lack of jurisdiction by this court to entertain the suit is properly raised in the pleadings of the defendant. In the case of Mohsin Somji Vs Commissioner for Customs and Excise Commercial Case No.287 of 2001 (unreported) Nsekela J (as he then was) stated that where the question of jurisdiction has been raised it has to be dealt with now, for if it is found that the court has in fact no jurisdiction to entertain the suit, that will b end of the matter in this court. The principle that any object to the maintainability of a suit should be raised by the defendant's pleading is embodied in the provisions of rule 2 of order VIII of the CPC quoted above and is to the effect that the defendant must raise by his pleadings all Page 4 of 11 matters which show that the suit is not maintainable. In the case of Mukisa Biscuits Manufacturing Co. Ltd Vs West End Distributors Ltd [19691 E.A at page 700 the said principle was stated in the following words: a preliminary objection consists o f a point o f law which has been pleaded or which arises by d ear implication out o f the pleadings and which if argued as a preliminary objection may disposes o f the suit." The term pleading is defined under rule 1 of order VI of the Civil Procedure Code to mean plaint or Written Statement of defence (including a written statement of defence filed by a third party) and such other subsequent pleadings as may be presented in accordance with rule 13 of order VIII. Mr. Bahebe has submitted that the preliminary objection ought to have been raised in the written statement of defence in a specific form. So far as I am aware there is no specific form designed under the civil procedure code on how to present a preliminary objection. The practice has been that it is normally raised in the front page (preamble) of the written statement of defence but GV this had never been endorsed as the rule of law. Page 5 of 11 In my view it is not fatal to raise it in the body of the written statement of defence (which is the defendant's pleading) and particularly where it is raised as an answer to the allegation in the plaint (like in this case). The next question is whether the court has jurisdiction to entertain the suit. The defendant's counsel has submitted that the issues raised in the plaint and the defence will require this court to determine whether the defendant is obliged to pay VAT or not. According to the defendant's counsel this will require the court's interpretation of the VAT Act and its regulations which will amount to enforcing the VAT Act as tax laws which is excluded by section 7 of the Tax Revenue Appeals Act. The question that I now pose is; does section 7 of the Tax Revenue Appeals Act oust the jurisdiction of this court in entertaining any matter touching VAT? The answer to this self posed question will depend on the correct interpretation of sections 3,7,12 and 14 of the Tax Revenue Appeals Act. Section 3 defines the Board as the Tax Revenue Appeal Board and section 7 provides that: Page 6 of 11 "The Board shall, subject to section 12 have sole original jurisdiction in all proceedings of civil nature in respect of disputes arising from revenue laws administered by the Tanzania Revenue Authority." It is clear that reading sections 3 and 7 together the Board is a specific forum hat has been designated by the Act to deal with all original civil proceedings in respect of disputes arising from revenue laws administered by the Tanzania Revenue Authority. Laws administered by the Tanzania Revenue Authority are contained in the first schedule to the Tanzania Revenue Authority Act, 1995 [RE 2002]. VAT is among those Laws. The question that follows is whether the claim by plaintiff is a dispute arising from the, VAT Act which is a law administered by The Tanzania Revenue Authority. In the case of Firm of Hiuri Subbaya Chetty and Sons Vs State of Andra Pradesh AIR [1964] SC 322, the Supreme Court of India stated as follows: "In dealing with the question whether Civil Court's jurisdiction to entertain a suit is barred or not, it is necessary to bear in mind the fact that there is a general presumption that there must be a remedy in the ordinary civil courts to a Page 7 of 11 citizen claiming that an amount has been recovered from him illegally and that such remedy can be held to be barred only on very d e a r and unmistakable indications to the contrary. The exclusion o f the jurisdiction o f civil courts to entertain civil causes will not be assumed unless the relevant statutes contains an express provisions to that effect or leads to a necessary inevitable implication o f that nature. The mere fact that a special statutes provides for certain remedies m ay not be itself necessarily exclude the jurisdiction o f the civil courts to deal with a case brought before it in respect o f som e o f the m atters covered b y the statute." In the present suit there can be no dispute that VAT is covered by xj the statutes, and that under section 7 of the Tax Revenue Appeals Act, it is the Tax Appeals Board which has sole original jurisdiction in all proceedings of a civil nature in respect of disputes arising from revenue laws administered by the Tanzania Revenue Authority. But I entirely disagree with the Advocate for the defendant that the plaintiff's claims are purely issues of chargeability to VAT. Page 8 of 11 Paragraphs 4,5,6, and 7 of the plaint stipulate clearly that there was an agreement between the parties to facilitate their respective operations, the interconnection of the defendant's telecommunication networks etc. The amount claimed constitutes inter- alia the monies paid to the Revenue Authority on behalf of the defendant allegedly under the said agreement. Interpretation and enforcement of the contracts are among the avenues of this court. la lso disagree with the defendant's counsel that this court has no power to interprete the VAT Act. Interpretation of the provisions of the VAT Act or any other tax law does not necessarily involve determining dispute arising from revenue laws. This court does not have jurisdiction to determine disputes arising from the revenue laws as per section 7 of the Tax Revenues Appeals Act [Cap 408 RE 2002]. But reading section 7 together with sections 4, and 12 & 14 of the Tax Revenue appeals Act it is very clear that the sole jurisdiction of the Board is by way of appeals originating from the regions (S.4 (1) and (2) (c)), a dispute on assessment made upon an aggrieved party by the commissioner - General (section 12 (1)) and the calculation by the Commissioner- General of the amount due for refund draw back Page 9 of 11 or repayment of any tax, duty levy or charge....... (section 14 (1) (a) - (e)) of the Tax Revenue Appeals Act. It would appear to me that the tax laws are geared towards solving disputes arising between tax payers and collecting agents no wonder the preambles to the Tanzania Revenue Authority Act states clearly that it is: "ZI/7 Act to establish the Tanzania Revenue Authority as a central body for assessment and collection o f specified revenue, to administer and enforce the laws relating to such revenue and to provide for related matters." And that of Tax Revenue Appeals Act states that: it is "an Act to provide for the establishment o f the Tax Revenue Appeals Board and Tax Revenue Appeals Tribunal and to provide for related matters." The Law does not provide for a forum for an individual who alleges to be aggrieved by the decision of another individual who refuses to refund him the tax he paid on that other's behalf and under a certain arrangement. In a circumstance like this and as it was held in Mukisa's case (supra), there must be a remedy in the ordinary civil court. Page 10 of 11 In the premises I find that the preliminary objection is misconceived and I accordingly dismiss it with costs. JUDGE 31/5/2011 31/5/2011 Coram: Hon. A. R. Mruma, Judge. For the Plaintiff - Mrs Mosha for Plaintiff. For the Defendant - absent. CC: J. Grison. COURT: Ruling delivered. — A.R.MRIJMA JUDGE 31/5/2011 2,087 words Page 11 o f 11