The first demanded Sh62.6 billion in underpaid Pay As You Earn (PAYE) tax, which included Sh50.7 billion as the principal amount and Sh11.8 billion in accrued interest.
Dodoma. The Court of Appeal has dismissed an application by the Tanzania Electric Supply Company Limited (Tanesco) seeking more time to challenge a multi-billion-shilling tax claim lodged by the Tanzania Revenue Authority (TRA).
At the heart of the dispute are two tax assessments issued after a 2020 TRA audit, which accused Tanesco of underpaying Pay As You Earn (PAYE) and the Skills Development Levy (SDL) between 2016 and 2019.
According to court documents, TRA’s audit led to the issuance of two debit notices.
The first demanded Sh62.6 billion in underpaid Pay As You Earn (PAYE) tax, which included Sh50.7 billion as the principal amount and Sh11.8 billion in accrued interest.
The second notice related to the Skills Development Levy (SDL), requiring Tanesco to pay Sh4.3 billion, consisting of Sh3.7 billion in principal tax and an additional Sh523 million in interest. This brings the total claim against Tanesco to a staggering Sh66.9 billion.
Tanesco’s appeal stumbles
Tanesco had contested the assessments before the Tax Revenue Appeals Board (TRAB) in 2022, but TRA later secured permission from the Tax Revenue Appeals Tribunal (TRAT) to file its case out of time.
Dissatisfied, Tanesco attempted to take the matter further by filing a notice of appeal and requesting the case record.
However, the state utility ran into procedural delays. Its lawyers argued that they were denied a fair hearing, that TRAT had relied on “non-existent evidence,” and that a defective certificate of delay issued by the Tribunal’s registrar made it impossible to appeal within the prescribed timeline.
Tanesco insisted that these errors amounted to an illegality that required correction at the highest level.
Court of Appeal ruling
Delivering the ruling, Justice B. M. A. Sehel found that Tanesco had not shown “good cause” for the Court to exercise its discretion and extend the time for appeal.
The judge noted that allegations of illegality must be “apparent on the face of the record” and not require a “long-drawn process of reasoning.”
In this case, the Court held, the issues raised by Tanesco, including whether a medical chit was properly filed to justify TRA’s late filing, did not meet that standard.
On the question of delays, the Court was unconvinced by Tanesco’s explanations.
Justice Sehel observed that the company took 25 days to follow up after receiving the Tribunal’s proceedings, and then spent weeks trying to rectify a certificate of delay instead of promptly filing for an extension of time.
“The applicant was negligent as it failed to take appropriate measures in time to avert further delay,” Justice Sehel ruled, adding that Tanesco had failed to account for each day of delay.
The application was dismissed, though the Court made no order as to costs.
The ruling effectively leaves TRA’s claim against Tanesco intact. Unless the power utility finds another legal avenue, it faces liability for nearly Sh66.9 billion in taxes and interest.
Tax experts note that the case underscores the high stakes in tax compliance for state corporations.
