Tanesco loses tax appeal, ordered to pay over 60bn/-

DODOMA: THE Tanzania Electric Supply Company (Tanesco) has been ordered to pay the Tanzania Revenue Authority (TRA) over 60bn/- in unpaid income tax and skills development levies.

The ruling, delivered in a recent decision by the Court of Appeal in Dodoma, follows the court’s dismissal of Tanesco’s application to appeal a previous ruling by the Tax Revenue Appeals Tribunal (TRAT).

Judge Barke Sehel ruled in favour of the Commissioner General of TRA after holding that TANESCO was negligent in pursuing the appeal as it failed to take appropriate measures in time to avert further delay.

“I find that the applicant has failed to advance any reason, let alone good cause to warrant the Court exercise its discretion to grant the extension of time. Consequently, the application is hereby dismissed,” the judge declared in a ruling delivered in Dodoma recently.

During hearing of the application, counsel for TANESCO, the applicant, had complained that the decision of the TRAT was tainted with illegality, thus denying it a right to be heard.

On the other hand, the counsel for TRA submitted that it is not in every situation where there is a claim of illegality, the time will be extended. There must be a clear error on record which does not require a long-drawn process of reasoning to establish it.

It follows then that an allegation of illegality must be apparent on the face of the record in order to persuade the Court to exercise its discretionary power to enlarge time to do any act authorised or required by the Court of Appeal Rules.

ALSO READ: TANESCO out to fast track TAZA Power Project

“In the instant application, with due respect to the submission of the counsel for the applicant, I am not persuaded that the illegality raised by the applicant was apparent on the face of record,” the judge said.

There was another complaint by the applicant regarding certificate of delay, a document issued by the Registrar of the High Court to certify the completeness of a court record for an appeal to the Court of Appeal, allowing for the exclusion of specific days from the appeal’s limitation period, which was belatedly issued to the applicant.

According to the applicant’s affidavit, the certificate of delay was dated  September 17th, 2024 and excluded days reckoned from the date when the applicant requested to be supplied with the copies of proceedings, ruling and drawn order.

The judge pointed out that the certificate of delay was of no use to the applicant because, by the time it was issued, the sixty days within which to lodge the memorandum and record of appeal had already lapsed.

Nonetheless, she noted, upon receipt of the certificate of delay, instead of seeking for extension of time, the applicant was busy trying to seek rectification of such document to include days up to the date when the applicant was supplied.

The judge agreed with counsel for TRA that the applicant was not diligent in pursuing the appeal, noting that the applicant deposed in his affidavit that the requested documents were supplied to TANESCO on May 31, 2024 but made a follow up on June 26, 2024.

“This means that it took 25 days to make a follow up on the certificate of delay. Furthermore, even after being supplied with the certificate of delay, the applicant did not act diligently. I also noted that the present application was filed after a lapse of two weeks from the date when the applicant was supplied with the certificate of delay…

“…It is the law that the applicant must act expeditiously and diligently after becoming aware of the fact that he is out of time and that, the application has been brought in good faith,” the judge said.

In the year 2020, the TRA conducted a comprehensive tax audit on the tax affairs of the applicant, including a review of PAYE and SDL for the years of income from 2016 to 2019.

ALSO READ: TANESCO resorts to generators to end power shortage in Lindi, Mtwara

Following the audit, the TRA issued to the applicant two tax debit notices; one claiming for underpaid PAYE amounting to 62,648,053,827/-, of which 50,788,106,891/- was the principal amount and 11,859,946,936/- was accrued interest.

Another debit notice covered underpaid SDL amounting to 4,307,058,177/-, of which 3,783,935,925/- was the principal amount and 523,122,252/- was accrued interest. The applicant was not satisfied with the assessment.