Wednesday, May 30, 2018

TANZANIA: Court - Resolute Mines to Pay TZS 9bn/-

TANZANIA DAILY NEWS - The Court of Appeal has ordered the premiere mining firm Resolute Tanzania Limited to pay back over 9.12bn/- to the Tanzania Revenue Authority (TRA) which the company previously received as a 'refund' on excise duty, road and fuel tolls.

Justices Kipenka Mussa, Stella Mugasha and Rehema Mkuye ruled in favour of the TRA Commissioner General after dismissing with costs the appeal the mining company, as appellant had lodged to fault findings of the Tax Revenue Appeals Tribunal.

"The appeal is not merited. We uphold the decision of the Tribunal, order the appellant to pay the demanded tax of 9,115,741,238.27 and accordingly dismiss the appeal with costs," they declared in their judgment delivered recently.

During the hearing, the appellants had contended that in terms of two Government Notices issued in 2002 and 2005, she enjoyed remission which entitles her to un-refunded the sum in respect of the remitted fuel supplied to contractors and subcontractors employed to carry out mining activities.

However, the TRA Commissioner General, as the respondent, had challenged the appellant's claims, arguing that she violated the Government Notices having supplied the remitted fuel to contractors and subcontractors, who were not entitled to enjoy remission fuel tolls.

In their judgment dated May 18, 2018, the justices said that given the circumstances, they were satisfied that the appellant breached the remission orders having supplied the remitted fuel to un-entitled persons, who were neither granted nor subject to the specified remission contrary to the GNs.

"With the said breach, the remission ceased to exist. In a nutshell, since the remission orders ceased to exist, the appellant is not entitled to a refund of excise duty in respect of remitted fuel supplied to the contractors and the subcontractors," they declared.

The justices pointed out that the language used in the GNs was unambiguous having clearly permitted solely the appellant to use the remitted fuel and oil for mining, subject to a strictly condition that where the remitted fuel is used by those not entitled, the remission order shall cease to have effect.

"Remission under the GNs solely covered the appellant and not her agents and contractors. Besides, those agents and contractors ought to have sought own arrangements on the remission in order to enjoy use of remitted fuel as was the case for the appellant," they said.

Facts show that Resolute Tanzania Limited is a licensed Mining Company operating at Nzega District, Tabora Region in Tanzania. She was granted remission on excise duty on fuel, road and fuel tolls exclusively used in carrying out mining activities.

This was pursuant to Excise Tariff (Remission) (Fuel Imported by Mining Companies) Order, 2002 Government Notice 480 of October 25,2002 and the Road and Fuel Tolls (Remission) (Holders of Mining Licence for Gold) Order, 2005, Government Notice No. 99 of April 15, 2005.

According to the GNs, the remission was subject to conditions limiting coverage to the appellant's use of remitted fuel upon which the excise duty, road fuel tolls were refundable to her.

However, the remission ceased to apply where the fuel was used for other purposes, transferred, sold or disposed of in any way to other person. Between 2007 and 2008, the respondent conducted a post clearance audit on the appellant's fuel usage for the purpose of verifying if the remission granted to the appellant was in accordance with the law and if she was entitled to any refund.

The respondent observed that the appellant had supplied the remitted fuel to its contractors and subcontractors including Ms LTA Construction Tanzania (Pty) Limited (Moolsman) at a charge, contrary to the GNs. As the appellant did not make any disclosure, the respondent was misled into making refunds claimed by the appellant.

Thus, the respondent demanded from the appellant repayment of the said 9.115bn/- being sum previously refunded as excise duty and road and fuel tolls.

The appellant successfully challenged the said demand have lodged in the Tax Revenue Appeals Board, where she did not deny to have supplied the remitted fuel to the contractors and subcontractors. The respondent later took the matter before the Tribunal, which overturned the Board's decision.

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