By Faustine Kapama-Judiciary
THE Tanzania Revenue Authority (TRA) has won its
appeal against resistance by London-based giant gold mine company, African
Barrick Gold Plc, to pay tax of 21,336,931 US dollar on investment income
accrued on sale of interest in Nyanzaga Gold Exploration (Nyanzaga Project).
In a judgment delivered recently in Dar es Salaam,
the Court of Appeal nullified the proceedings and judgments issued by Tax
Revenue Appeals Board and Tax Revenue Appeals Board Tribunal, which had
endorsed the position by the Gold Company, the respondent, over tax demand of
TRA, the appellant.
“The the second ground is merited, the appeal is
allowed with costs. Since this ground suffices to dispose the appeal we shall
not determine the remaining grounds considering that all what transpired stem
on null proceedings,” the Justices Stella Mugasha, Lucia Kairo and Othman
Makungu declared.
During hearing of the appeal, the counsel for the
appellant had contended in the second ground of appeal that the Tax Revenue
Tribunal erred both in law and fact in holding that the notice issued by the
appellant under section 35 of the Income Act constituted an appealable decision
or act.
When determining the appeal, the justices had to
consider whether the Board was clothed with jurisdiction to entertain and
decide on the respondent's appeal against the appellant's notice on existence
of tax liability.
Having considering the submissions by the parties
and the Tax Revenue Appeals Board Rules, 2001, they came to the conclusion that
the notice on existence of tax liability by the Commissioner General is
certainly not among the decision envisaged to be appealable to the Board.
It was their considered view that the exclusion was
deliberate so as to enable the tax payer before invoking the remedy of an
appeal, to exhaust the available remedy of lodging an objection to the
Commissioner General or forward the matter to the Board by way of reference.
“Therefore, in the absence of an objection decision
of the Commissioner General, no appeal could lie to the Board,” the justices
said, adding that the Tribunal faulted and went beyond what is not prescribed
under the law to hold that the notice on existence of liability to pay tax was
appealable to the Board.
Thus, they said, as the Board had no jurisdiction to
entertain the appeal against the existence of tax liability, it embarked on a
nullity and its proceedings and judgment cannot be spared. “A similar fate befalls
the proceedings and judgment of the Tribunal which arose from a nullity,” the
justices concluded.
The respondent is a company incorporated in the
United Kingdoms (UK) and registered to carry on mining and exploration business
in Tanzania.
Through its subsidiaries among them being the
Nyanzaga Gold Exploration (Nyanzaga Project) located in Sengerema District,
Mwanza Region operated by Nyanzaga Exploration Company Limited.
The project was initially jointly owned by Tusker
Gold Limited incorporated in Australia through its subsidiary company,
Sub-Sahara Resources Limited, registered in Tanzania, on one hand and
respondent through Barrick Exploration African Limited, a company registered in
Tanzania, on the other hand.
Tusker Gold Limited owned 49 percent interest in the
Nyanzaga Project, whereas, the respondent owned the remaining 51 percent
interest in the project.
Sometimes in 2010, the respondent through its
subsidiary company registered in UK named BUK Holdco Limited acquired 49
percent interest owned by Tusker Gold Limited on Australian Stock Exchange
under a compulsory acquisition scheme.
Following the acquisition, the Nyanzaga Project
became wholly owned by the respondent through BUK Holdco Limited.
Having gathered that the transaction involved
acquisition of interest in Nyanzaga Project located in Tanzania and it
attracted tax in Tanzania, the appellant drew this to the attention of the
respondent who in return, disputed the tax liability.
The respondent contended that the share sale
transaction was between the companies registered outside the United Republic of
Tanzania.
Thus, the appellant invoked the provisions of
section 35 of the Income Tax Act and notified the respondent that, the share
sale transaction was a tax avoidance arrangement and required her to settle the
unpaid tax immediately upon receipt of the notice.
It is the said letter which prompted the respondent
to lodge an appeal to the Board. Before the Board, the appeal was confronted
with a notice of preliminary objection premised on one ground that the appeal
was bad in law for being instituted prematurely before issuance of a Tax
Assessment.
The preliminary objection was heard alongside the
substantive appeal. Ultimately, the Board was satisfied that the notice of the
appellant was appealable having being couched in a manner constituting an
assessment and imposed tax liability on the respondent.
As to the substantive appeal, the Board held that,
since the share sale transaction took place outside Tanzania involving two
foreign companies registered abroad, it was not subject to tax under the laws
of Tanzania.
Undaunted, the appellant unsuccessfully lodged an
appeal to the Tribunal which sustained the decision of the Board and this is
what prompted the appellant to take the matter to the Court of Appeal for
further determination.
Hakuna maoni:
Chapisha Maoni