Dar es Salaam — Technology company Star Media (Tanzania) Limited, also a branding name of StarTimes, has lost a three-year legal battle to challenge Sh8.4 billion tax bill made by the Tanzania Revenue Authority (TRA).
The tech firm is largely to blame itself for losing the dispute over failure to observe deadlines set by the law for a firm seeking to challenge tax assessment.
The company is to pay Sh8.4 billion to the taxman after its attempts to challenge the assessment hit a snag for the third time.
The Court of Appeal has confirmed decisions of the Tax Revenue Appeals Board (Trab) and the Tax Revenue Appeals Tribunal which refused to extend time for the firm to challenge the assessment.
StarTimes, a branding name of Star Media (Tanzania) Limited operates in Tanzania as a joint venture with the Tanzania Broadcasting Corporation (TBC). It offers digital services including digital television sets, digital decoders and other value-adding services.
The roots of the dispute can be traced back to a tax assessment that TRA served the technology company on March 31, 2017, raising a demand for Sah8.4 billion.
Star Media strongly objected to the assessment and had paid Sh150 million to the taxman for it to hear and determine its objection to the assessment as per legal requirements.
On June 6, 2017, TRA informed Star Media in writing it had received and determined its objection by refusing to vary the assessment of Sh8.4 billion and that it was intending to confirm the assessment.
By that time, Star Media had the right of appeal against the TRA’s rejection to amend the tax figure and was supposed to lodge a notice of appeal within 30 days under Rule 3 (1) and (2) of the Trab. However, the firm failed to do so within time stipulated by the law.
Though late, on August 25, 2017, Star Media lodged at Trab an application for extension of time to file a notice of appeal against TRA’s decision. The board dismissed the application for being lodged out to statutory time. The firm’s subsequent appeal to challenge the dismissal the Tax Revenue Appeals Tribunal (Trat) bore no fruit.
Having exhausted all the legal avenues unsuccessfully, the firm opted to go to the Court of Appeal to present its case.
It emerged at the hearing of the appeal that prior to the determination of its objection, TRA had written to Star Media requesting the firm to submit its audit reports for the years under scrutiny (2013, 2014 and 2015) within three days.
However, Star Media could not do so within time on the ground that the statements were in the office of the Controller and Auditor General (CAG). This was Star Media’s main ground before Trab when it applied for extension of time.
TRA did not dispute to have received Star Media’s letter but was categorical that the letter was received after the objection to tax assessment had already been determined. The taxman further submitted that it stipulated the procedure to be followed by the applicant in disputing the assessment.
Trab rejects appeal
At the end of the day, the board accepted TRA’s argument that Star Media had not shown reasonable cause for delay to file its notice of appeal as required by section 16 (5) of Trab Act.
The board argument was that at the time the appellant (Star Media) informed the respondent (TRA) that their audit reports were in the CAG’s office, the objection had already been determined.
Trat, Court of Appeal hear the dispute
Before the Tax Revenue Appeals Tribunal and the Court of Appeal, Star Media contended that TRA determined the objection without affording it an opportunity to be heard.
It argued that Trat erred in law by holding that TRA had given them an opportunity to be heard before confirming the assessment.
Star Media counsel Stephen Awesso based his argument under section 52 of the Tax Administration Act of 2015, saying that TRA should have responded to every aspect of their objection raised by the taxpayer upon admitting the objection.
He said instead of observing the procedure, TRA demanded audited financial statements, thereby denying them the statutory right of addressing every point as stipulated under section 52 (3) of the Tax Administration Act.
On the other hand, TRA was opposed the appeal. Through Senior State Attorney Harold Gugami, the taxman argued that the appellant did not need the audited financial statement in lodging the intended notice of appeal.
The lawyer took the Court of Appeal through the procedure that it followed and argued that it acted within the law. He submitted that section 51 (2) empowers TRA’s Commissioner General, when dealing with objection, to request for further evidence.
He said TRA’s demand for submission of audited financial statements was meant to call for further evidence under the provision.
“When the appellant did not comply with the respondent’s (TRA’s) demand, the respondent issued a letter informing her of its intention to confirm the assessment. In this letter, the appellant was given 30 days within which to make submissions against the intended confirmation. When there were no submissions by the appellant, on 10th July 2017, the respondent confirmed the assessment,” argued Mr Gugami.
Appeal court rejects Star Media Appeal
In their decision, Court of Appeal Justices–Stella Mugasha, Winfrida Korosso and Ignus Kitusi–agreed with Mr Gugami that section 52 (1) of the Tax Administration Act empowers TRA to request for more evidence.
“We have closely read section 52 of the Tax Administration Act as well as the written communications the respondent made to the appellant. It dawns on us that the respondent (TRA) acted within the law and the appellant’s insinuation of denial of a hearing is a vain attempt lacking legal support,” said the judges.
The justices were also of the view that TRA’s request for signed audited financial statements from Star Media was an opportunity for the company to substantiate her objection.
“Even when no statements were submitted, the record shows that the respondent (TRA) did not unilaterally confirm the assessments. Rather, it wrote to the appellant and gave her 30 days to make submissions in opposition to the proposed confirmation.
“While we agree with the appellant’s argument that the respondent had a legal duty to determine every aspect of the objection and the appellant had a right to submit on every aspect of the objection, our conclusion from the available material is that since the appellant made no submissions for the respondent to consider, she cannot blame anyone for the self-inflicted injury,” said the highest court in the land.