Court orders organization to pay 4bn/- over tax diversion

DAR ES SALAAM: LAKAIRO Investment Limited, one of the biggest and most dynamic organizations in Tanzania, is to pay to the Tanzania Revenue Authority (TRA) over 4bn/- being taxes and duties on exit goods alleged to have been illegally diverted into domestic market.

This follows a decision of the Court of Appeal to dismiss the appeal in which Lakairo Investment Limited, the appellant, lodged against the Commissioner General of TRA, the respondent, against the payments.

Justices Augustine Mwarija, Panterine Kente and Zainab Mruke found without merits the grounds of appeal lodged by the appellant to fault the decision of the Tax Revenue Appeals Tribunal, which reversed the findings of the Tax Revenue Appeals Board on the matter.

“In our considered view, the Tribunal was right in its finding that the Board erred in proceeding to entertain the application for review after having found it to be time barred. In the event, we dismiss the appeal with costs” they declared in their judgment delivered recently.

During hearing of the appeal, the appellant counsel had contended, among others, that Tribunal erred in law by upholding the respondent’s appeal which was predicated on a preliminary objection, which was not purely based on a point of law.

They submitted that Tribunal erred for failing to properly address and consider section 50 (3) (c) (ii) of the Tax Administration Act, as they relate to determination of time limit for lodging an application for review under section 229 (1) of the East Africa Community Customs Management Act, 2004.

The appellant argued further that the by holding that the application for review was time barred and that there was no valid application for review before the Commissioner to be considered in terms of section 229 (1) of the East Africa Community Customs Management Act 2004.

In their judgment delivered in Dar es Salaam recently, the justices of the appeal court found the contention that the finding of the Tribunal that the application for review was time barred is erroneous.

They noted in its decision that the Board found that, the appellant had lodged his application for review outside the period of 30 days prescribed under section 229 (1) of the East Africa Community Customs Management Act 2004.

The justices noted, however that, contrary to that finding, the Board went on to state differently and finding the appellant’s appeal before it competent for the respondent’s failure to respond to the demand letter presented in respect of the payments in question.

“With respect, we find that the Tribunal was justified to disagree with the reasoning of the Board. This is because, as is well known, two wrongs do not make a right. The fact that the respondent had delayed to respond to the appellant’s application for review did not have the effect of condoning the delay on the part of the appellant…

“Section 299 (4) of the East African Community Customs Management Act applies only where an application-for review is filed within time. It does not, as held by the Tribunal, apply to an incompetent application,” they said.

Of course, the justices agreed that, as matter of good practice and as a responsible Authority, notwithstanding the fact that the appellant’s letter of application for review was time barred, the respondent ought to have replied to it promptly.

However, they said, his failure to do so did not have the effect of regularizing the defects of the appellant’s application and the available remedy was to apply for extension of time.

Facts show that the appellant was dissatisfied with the demand by the respondent for payment of taxes and duties amounting to a total of 4,067,711,188/- on exit goods alleged to have been illegally diverted by into domestic market without payment of taxes and duties   .

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