Court upholds TRAT decision for Total TZ to pay 436m/- RDL

DAR ES SALAAM: THE Court of Appeal has dismissed with costs the appeal lodged by Total Tanzania Limited to oppose a decision requiring the company to pay over 436m/- as Railway Development Levy (RDL) following importation of JET A1 aviation fuel for home consumption.

Justices Stella Mugasha, Ignas Kitusi and Gerson Mdemu ruled against Total Tanzania Limited, the appellant, which deals in marketing and distribution of petroleum products, after holding that grounds of appeal lodged to fault decision of Tax Revenue Appeals Tribunals (TRAT), lacked merits.

“In all therefore we find the appeal is devoid of merits and we accordingly dismiss it with costs,” they declared in their judgment delivered in Dar es Salaam recently.

During hearing of the appeal, the counsel for the appellant had submitted that the Tribunal erred in law in holding that the respondent was correct in law to impose Railway Development Levy on the appellant for the period 2015 to 2017.

He argued that the Tribunal erred in law in holding that the fuel imported by the appellant was consumed in Tanzania in terms of the Law and erred by failing to hold that in terms of the World Customs Organisation Protocol of 2008, the fuel imported was not for home consumption.

In their decision, however, the justices noted that the appellant imported JET A1 in Tanzania; declared the consignment for home consumption and sold to international aircrafts of various destinations commencing their trips from Tanzania Mainland, thus had to pay imposed RDL of 436,459,459/-.

Due to such declaration, they said that Section 20A of the Railways Act is clear that such goods are RDL taxable and it was a correct interpretation by the Tribunal and they could not have sounding reasons to question otherwise.

“We are saying so because the appellant declared JET A1 for home consumption thus complying with the dictates of section 20A (2)(b) of the Railways Act. With respect, we do not find the appellant’s counsel’s explanation plausible.

“That he was forced to declare JET A1 for home consumption out of the available tax declarations mechanisms because the Tanzania Customs Integration System (TANCIS) was not configured to charge RDL. We found this wanting. The appellant made a choice out of available options, he is estopped to decline,” the justices said.

They pointed out further that the fact that JET A1 was pumped to international aircrafts thus consumed in international airspace, meaning that it was consumed outside the Tanzanian airspace, in itself does not connote that such fuel was for export.

“If we go by the appellant’s interpretation that fuel consumed by international aircrafts in Tanzania is not for home consumption so as to attract RDL, then, JET A1 would not be subjected to tax,” the justices said.

They had such observation because the appellant has not stated besides RDL which tax the consignment was subjected to and JET A1 will not be the subject of RDL or any tax in the international airspace the plane is flying or even at the international destination.

The justices said reasons for not choosing other available tax declaration options are not apparent on the record and as international aircrafts commencing their journey in Tanzania Mainland, it is obvious that fuel pumped into them would be those declared for home consumption, no more no less.

Facts show that Total Tanzania Limited imported aviation fuel JET A1 and declared it to be for home consumption. The said aviation fuel was consumed by international airlines fuelled in Tanzania.

Following that declaration, on November 15, 2015, the Commissioner General of the Tanzania Revenue Authority (TRA) issued a demand note requiring the appellant to pay RDL amounting to 436, 459, 459.00.

The demand was in terms of the provisions of section 20A of the Railways Act The appellant appealed to the Tax Revenue Appeals Board (TRAB), resisting such tax liability by the TRA’s final decision. Such appeal was, however, dismissed, so was a further appeal to the Tribunal.

In both TRAT and TRAB, the main thrust hinged on one major concern on whether the declared aviation fuel attracts RDL. Aggrieved further by the judgment and decree of TRAT, the appellant preferred the appeal to the Court of Appeal.

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