20091015 TZCA Dar es Salaam

I • IN THE·COURT OF APPEAL OF TANZANIA , I ' AT DAR ES SALAAM . ,· ..., • -· : •. ·• .... -.- . -. . I -, . .- ., .._:. _.... '\,, • I .. ,,., "---, . (CORAM: ·MUNUO, J.A.~ RUTAKANGWA, J.A., Arid MASSATI,J.A.) v~·i' . "' / CIVIL APPEAL NO. 12 OF 2009. . .. l . ·' i \. . .... • " I j • TANZANIA REVENUE AUTHORITY .L.~ ..... - .:_ .......... :: ... APPELLANT . ::.' 1 • * '.I , , . . . -·- .... ·~ •· ~(. ✓ I • ( . .. VERSUS ./ . ,....., KOTRA C.OMPANY LIMITED ..............1~ ......................... ~ RESPONDENT .. ~, . ., ' . . ,.,, , .i -: • I { ~ · .....,1 r .. , · (Appeal from the Ju~gment and Decr~e of the High Court'of Tan~ania''i. . •.. at Mwan za ·. · . ·.""•.'.·,,,; { ' \,._,, • ' l 1 ! t ... · ":-- '. (Mackanja, J.) · .- ··\, . :. ~ r· -,r,---..r -- ' ~ dated 21 st November, 2008 , • I • I mi. Civil Case No • 1I of 2007 -------L. I . . I JUDGMENT OF THE COURT , .. 8th September, & 15 October, 2009 RUTAKANGWA, J.A.: Before us is an appeal and cros?~appeal fror:n the judgment and . . i decree of the High Court of ianzania at Mwanza, dated 21 st I . . • 'I I November,. 2008, irLCJyiLCase No 1 d>f 2007. The Appellant w~5 .~he.~. -·.. Defendant in the suit. (· 0 . i . . The essential background to the two appeals is as follows:- , i The Respondent -dJm- Cross-Appellant is a limited liability company r: b (,/ • •·" C .I having its registered offices· in Musor:ha. It deals prlmarily in the ' . .. ,.. . ' •...: ! ,... . :... importation, distribution and sale of petroleum .products. The 11 i :1 i I Appellant or the T:R;A. in short, is :~ body corpdrat:e established I : under the Tanzania Revenue Authority Act, Cap. 379 R.E. 2002, ' !j . . i henceforth the T.R.A. Act. One of its main functions as spelt out in I section 5 (l)(a) of the T.R.A. Act is, "~o administer and give effect to th~ ·11i I i' :; laws or the specified provisions of the laws ~et out in the first ischedule to this Act and for this purpose, to assess, collect J,nd account for all r(!venue to which . I j I those laws apply, ... " The word "revenue' i~ defined in section 3 to mean I "taxes, duties, fees, fines or other monies rmposed by or poll~cted under the , 11 I : I, laws or the specified provisions of the laws set out in the First Schedule." i Sometime in July, 1997, the re~pondent was granted a two- I I i year licence authorising it to import, !i market and dis~ribute refined petroleum products in the cou~-~~- ~1.Ii · the stre~gth of ts licence, it ! · imported into the country, from Kenya, cons1gnmef')ts of refined I ' petroleum products. 2 As the respondent carried out this business, the appellant ,. .. ,. assessed and collected various government revenues from it. All the same,· in December, 1999 the respondent vide · ietter Ref: No. TRA/CTI/P.9 claimed from the respondent an additional Tshs.579,943,808/= being unpaid balance in taxes (windfall profit), as well as TIPPER and TPDC dues on account of the imported petroleum products between January, 1997 and January, 1999. The respondent disputed the liability to pay· the demanded revenues. Negotiations followed in order to reach a compromise. Eventually the appellant reduced the amount to Tshs.455,256,821/=, which included TIPER and TPDC dues amounting to Tshs.308,522,179/=. As the respondent refused to pay this sum, the appellant issued a distress warrant against the properties of the respondent. It ,:- .,., commissioned M/5 Spider Auction Mart and Court Brokers to auction ... 1-. ...,~.,•·,7. •· - ,.,. ..~ .,,-:;, _,,. ·-. the respondent's building. Public announcements were made in Musdma towri to that effect. Eventually the distress warrant was raised by the appellant without waiving the claim for the demanded revenues. The respondent thought it had been defamed by the 3 appellant's actions. Having failed . to reach a settlement, the respondent instituted civil proceedings in the High Court at Mwanza. In the said suit, the respondent was claiming the following reliefs:- ''(a) A declaratory order that the plaintiff has no any outstanding tax liability, whatsoever, which it owes the defendant on the relevant consignments of petroleum products it imported into the country during the material time. (b) Declaratory orders that the defendant's demand against the plaintiff for payment of Tshs.308,522,179/= and intention to recover the same is unlawful. (c) Perpetual injunction restraining the defendant from further demanding or recovering from or bothering the plaintiff anyhow on the said Tssh.308,522,179/=. ( d) An order that the defendant refund the plaintiff a sum of Tshs.455,256,821/= being the so-called · ··" ,7PPER' and TPDC dues, Windfall Taxes and.~dtlfer'~M,. . related charges which the defendant extorted from the p(aintiff o.n the said consignments. (e) An order that the defendant pay the plaintiff general damages at a rate to be assessed by the Court but not · less than the sum of Tshs.2,000,000,000/= for deprivation, loss of use, 4 loss of profits, inconveniences, loss of reputation as well as agony it sustained in the process. " · The resp·b'ndent also claimed compo·und interest o'n the principal sum, interest on the decretal amount, costs and ''any other order or relier.1' The appellant disputed the entire claims and prayed for the dismissal of the suit with costs. In its judgment, the High Court decreed that the respondent was liable to pay windfall taxes which amounted to Tshs.106,356,093/= but not liable to pay TPDC and TlPER dues. So on relief (d) as listed, it ordered the appellant to refund the respondent Tshs.348,900,728/=. It also ordered refund of Tshs.266,041,349 on the same basis. The claim of damages for defamation _was fouo_q ~qtto _have been proved and WqS accorqi_o9~y .,, . disallowed. Both parties were dissatisfied with the judgment and decree and hence the appeals.· 5 In · this •appeal, . as at the tri,al, the parties were legally '" ,. -·· . . represented. While Mr. Salvatory Switi, learned advocate, · · represente6the appellant, Mr. Melkisedek Lutema, learned advocate, urged for the respondent/cross-appellant. The memorandum of appeal lodged by Mr. Switi, lists four grounds of complaint against the decision of the High Court. The last ground is faulting the learned trial judge for awarding interests and costs. The first three grounds, however, are challenging the propriety of the holding that the T.R.A had no legal powers to collect T.P.D.C. and TIPER fees. The notice of cross-appeal raises also four grounds of complaint. The first two, as we found out, are pertinent to the fate of the suit instituted in _the High Court.: They are as follows:- ·~ • \< ' • • • ;.-. • • •• "1. That the learned trial Judge erred in law and in fad in holding that the Respondent's imports of petroleum and petroleum products were subject· to windfall tax under section 130 of the Income Tax Acl 1973. 6 2., That the learned trial Judge erred in law and in fact in not ordering the Appellant to refund the ·· Respondent- .. the-· sum -. of. Tshs.10~365,093/= unlawfully levied and collected as windfall tax. " When the appeal and cross-appeal were called on for hearing, it became apparent to us that these two complaints, inevitably raised the issue of whether or not the High Court was vested with jurisdiction to hear and determine a dispute over the assessment and collection by the T.R.A. from the respondent of the ~aid revenues. For this reason, we directed counsel for both sides to address us, first, on the issue of jurisdiction, although it was not one of the :, grounds of complaints in the two appeals. We did so because of this simple but crucial reason. It is now settled law that: ... r, ...,. .. •• ....,......... -· '~-- the question ofjurisdiction is fundamental in court proceedings and can be raised at any stage, even at the appeal stage. The court, suo motu, can raise ,t · In Baig and Butt ConstructiQn Ltd vs Hasmat Ali Baig, (CAT} Civil Appeal No. 9 of 1992 this Court .... raised suo motu in an appeal to it the question of the High Court not having jurisdiction to hear a 7 review case regarding an order made by the District Registrar. It said the.judge of the High Court had no jurisdiction as only the District Registrar could review ,i the order he had made ·earlier .. : ';··in RICHARD JULIUS RUKAMBURA vs ISSACK NTWA MWAKAJILA AND ANOTHER (CAT) MZA Civil Application No 3 of2004 ( unreported). Prior to that, this Court in FANUEL MANTIRI NG'UNDA VS HERMAN MANTIRI NG'UNDA & 20 OTHERS, (CAT) Civil Appeal No. 8 of 1995 (unreported) had held thus:- "The question of jurisdiction for any court is basic, it goes to the ve,y root of the authority of the court to adjudicate upon cases of different nature . . {T)he question of jurisdiction is so fundamental that courts must as a matter of practice on the face of it be certain and assured of their jurisdictional position at the commencement of the trial.... It is risky and unsafe for the court to proceed with ·a ,,.~ . ..._,..,. ~... - • . f, . ,..., the trial of a case on the assumption that the court has jurisdiction to adjudicate upon the case. "[Emphasis is ours.] .v We may as well add, •without any risk of being contradicted, · · that - what was said in respect of a trial court on this issue applies 8 .• with. equal force to an appellate · court. Before an appeal is ~ . ... , ~, . determined on the.· merits on issues not touching on the ··Jurisdiction(s} of the court (s) below, it' nuJst fitst .. be .. certain that the . proceedings giving rise to the appeal were competenUy before that ' court or those courts. This is because a judgement in an appeal from proceedings which were a nullity is also a nullity. Hence the emphasis by the Court in RUKAMBURA'S case that:- ''[T]here is authority, the}-efore, that on a fundamental issue like that ofjurisdiction a court can suo motu, raise it and decide the case on the ground of jurisdiction without hearing the parties." i Addressing us on this issue, the two learned advocates were divided. Mr. Switi asserted that this was purely a tax dispute case. Relying on Sections 7 and 14 (1) (b) of the Tax Revenue Appeals Act, Cap 408 R.E. 2006 -and section 6 of the T.R.A. Act, he strongly submitted that the trial High Court had_ no jurisdiction to entertain the suit. To him, the only organ or agency vested with exclusive original jurisdiction to hear and determine dispu.tes of this nature is the Tax 9 · Revenue Appeals Board (henceforth the Board) from which an appeal ~· . . .~ ~ . . ., lies to the Tax Revenue Appeals Tribunal (henceforth the Tribunal) and then thi·s Court" at the apex. He drew our attentioff ·tcf ~two unreported cases decided by the High Court on the issue. These are:- (iJ MOHSIN SOMJI vs COMMISSIONER FOR CUSTOMS AND EXCISE & ANOTHER, Commercial Case No. 287 of 2001, and {ii) TANZANIA BREWERIES LIMITED vs T.R.A., Commercial case No. 260 of 2001. He accordingly urged us to hold that the High Court lacked original jurisdiction to entertain the respondent's suit, and then pressed us to nullify the proceedings in the trial Court. He did not ask for costs in case the appeal was allowed on this ground. On his part, •Mr .. Lutema. ~renuously resisted the suggestion that the High Court lacked the necessary jurisdiction to entertain the suit. According to him, section 7 of the T.R.A Act gives sole original jurisdiction to the. Board only in respect of all disputes arising_ from . ...... \•; . . ·- . ~~ the laws administered by the appellant as set out in the First IO Schedule.· He went on· to stress· that it was pleaded that· the ·i·· respondent's claims· had no relationship with those scheduled laws :a; . these were "ext:ottions· and conversions;' by the appeilant. ·He sin·gled" out, particularly, the TIPER and T.P.D.C. dues to be revenue collected by the appellant unlawfully. He also argued that the claim for damages arising out of defamation could not be entertained by the Board. As there was a mixture of causes of action, it was not legally permissible to split them and henoe resort to the ordinary civil courts, he maintained. He said nothing on windfall taxes. As authority for his latter proposition he relied on the case of KLM ROYAL DUTCH AIRLINES vs. JOSE XAVIER FERREIRA (1994) TLR ' 230. He, therefore, urged us to hold: that the High Court had the necessary jurisdiction to entertain the suit. In a short rejoinder, Mr. Switi defended his earlier stance and ,· . ... pressed us to invoke the revisional jurisdiction of the Court under section 4 (2) of the Appellate Jurisdiction Act, <:ap 111 to nullify, quash and set aside the proceedings before the High Court. .... . •.'f• :.,.... ,. ,( 11 Having gone through the pleadings and proceedings in the High Court and the judgment therefrom as well as the submissions of both - a· ~counsel before us, · we ·are · of the·· firm· ~view that the bon·e of· contention between the two parties is a dispute over the exercise by the appellant of its powers, be they actual and/or otherwise, to assess and levy the disputed revenue from the respondent. It is accordingly a revenue levy dispute. The claim for damages arising out of the alleged defamation, in our respectful opinion, was merely collatera I. We have no flicker of doubt in our minds on the fact that the suit in the High Court was instituted under the provisions of the Civil Procedure Code, Cap 33. R.E. 2002, the C.P.C. hereinafter. That being the case, the most convenient starting point in resolving the jurisdiction issue is section 7 (1) of the C.P.C. This provision provides as follows:- "The Courts shall {subject to the provisions herein contained) have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred." 12 The immediate germane question we have to address ourselves is to . ' whether or not the respondent's suit in the High Court was so barred. · In his widely acclaimed treatise entitled, PRINCLPLES OF STATUTORY INTERPRETATION, 8th edition (2001) at page 581, Justice G.P Singh, states:- "There is a strong presumption that civil courts have jurisdiction to decide all questions of civil nature. The exclusion of jurisdiction of civil courts is not to be readily inferred and such exclusion must either be explicitly expressed or clearly implied. " The learned author goes on to cite the case of RAM SINGH vs. GRAM PANCHAYAT (1986) 4 sec 364; AIR 1986 Sc 2197 wherein the Supreme Court of India, held that in cases where the civil court's jurisdiction is excluded, the plaintiff cannot be · allowed to circumvent the bar by the clever drafting of the plaint. We=• • ,. ,::, r,... ~,.,,..,..,. . • ... -.-!• fully subscribe to this holding and adopt it. In urging us to hold that the respondent's suit in the High Court --:- was expressly b'arred by the law, Mr. Switi invoked Sectiorf"6 of the 13 .• I . T.R.A. Act and sections- 7 and 14 ( 1) o~ the Tax Revenue Appeals Act; (the Act hereinafter.) Section· 6·of theT.R.A. Act reads-as follows:- ''6. Any person who is aggrieved by the decision of the Commissioner- General in relation to any act or omission in the course of the discharge of any function conferred upon him under the law set i out in the First Schedule to this Act; may ;appeal to the Board in accordance with the provisions of the Tax ; Revenue Appeals Act "[Emphasis is ours.] ' ! i Section 7 of the Act reads:- "7. The Board shall subject to section 1Z have sole jurisdiction in all proceedings of a civil nature in respect of disputes arising from · ; revenue laws administered by the Tanzania Revenue Authority." [Emphpsis is ours.] Section 12 deals with objections to notices of objection to assessments carried out by the Commissioner - General. Section 14 provides as follows in sub-sections (1) and (2):- -• ~· ... ,,.~ . i - "14-(1) Any person aggrieved by: 14 ,. i I I I - (a) the calculation.by the Commissioner I . - General of the amount due for rJfund, drawback or .. i repayment of any tax, duty, Jevy or charge; - - (b) a refund-by the Commission;er- General to make any refund or repayment; of: . i (c) Omitted under [R.E 2006]; : ( d) a determination by the c4mmissioner-General I under Section 24 of the Income I Tax Act; I (e) the decision by the Commissioner - General to ; register, or refusal to register any trader for the purpose of the Value Added: Tax Act may appeal therefrom to the Boifrd. ''(2) Notwithstanding subsection {l} a person who objects a notice issued byr the Commissioner- General with regards to the existence of I liability to pay any i tax, fees, levy or i charge may refer his qbJection to the Board for determination. [Emphasis is ours.] i I Section 11 of the Act, vests the Tribunal with:- I ''. .. sole jurisdiction in all !ppea/s arising from I decisions of the Board on cfisP,utes on_~Vf.hi~IJ,. or(ginal Jurisdiction is conferred on the Board. " ; It is clear •from the above statutory provisions, therefore, that I - ! the TRA Act and the Act provide an~ alternative procedure for the .,- -- l,_- reSOIUtiOn and deter.mination of all dis~utes in relation to any act or 15 • omission by the Commissioner - General in the discharge of ·his I ,.-· - - .,. ·' - r powers and functions under the revenue laws. We understand that respondent-cum-cross appellant has all along been claiming that the appellant :is not authorized to collect the ! TIPER and T.P.D.C. dues by any of the scheduled revenue laws. It· was, therefore, praying for a refund of the monies collected from it by the appellant under this head amounting to Tshs.308,522,179/= and a perpetual injunctive order against the appellant restraining it I from "further demanding or recovering the same'~ On the other hand, the appellant has been adamant in its a~sertion that it is empowered i I under the revenue laws to collect the isame i on behalf of TIPER and T.P.D.C. Furthermore, in relief (a) the respondent was seeking a decl~ratory order to the effect that it ''has no outstanding tax liability whatsoever'~ contrary to the persistent claims of the appellant in respect of its imports from Kenya. In our considered: opinion, this denial of liability to pay the. assessed taxes and the asserti<?n that liability exists, is a tax dispute between the two parties, pure and simpleL ~ 16 • Fortunately, the respondent does not dispute the fact that the ;- .- •. i Income Tax Act is one of the scheduled revenue laws. In fact in the First·Scheduie, it is topping the list appearing as item Nd'. 1. There is also no dispute that the windfall profit taxes were levied under the provisions of the Income Tax Act. Yet, in the suit before the High Court, the respondent was claiming a refund of Tshs. 106,356,093/= under this head. The High Court, as already shown above, found and held that the respondent's ''imports of petroleum and petroleum products were subjected to" these taxes and it dismissed this particular claim. The respondent was aggrieved and hence the cross- appeal as already shown. In view of this clear state of affairs can it be held without demur that the High Court was vested with the necessary jurisdiction to entertain the respondent's suit? Our considered answer to this question should be in the negative. These are our reasons. One, there is no dispute that the Act sets up the Board and Tribunal and vests the former with sole original jurisdiction in all • •• • • • <" • proceedings of a civil nature in respect of disputes arising from the 17 f' revenue ·laws administered by the appellant. Such laws, as -we have· · . . shown immediately above, include the Income Tax Act. For this reason we· have "found ourselves in full agreement·- With ·the observations of this Court in ATTORNEY-GENERAL V. LOHA Y AKONAA Y & ANOTHER {1995} TLR 80. The Court aptly observed thus at page 92:- •~-- courts would not normally entertain a matter for which a special forum has been established unless the aggrieved party can satisfy the court that no appropriate remedy is available in the special forum ... " There is no proof here to the effect that no appropriate remedy could be obtained from the Board and/or Tribunal, from whose decisions a final appeal lies to this court, in respect of all the claims but the claim for damages based on the alleged defamation. It is, therefore, our holding that the disputes between the parties herein ~ . ·., ,: . ... . regarding the respondent's liability to pay revenue tax due to the .. government and· the amounts due, must be dealt with under the procedure prescribed under the T.R.A. Act and the Act. 18