Africa-Press – Tanzania. GEITA Gold Mine (GGM) Limited has lost a bid to oppose payments of over 6bn/- in Value Added Tax (VAT) on fuel supplied to the contractor in the course of carrying out mining activities in Geita region to the Tanzania Revenue Authority (TRA).
The Court of Appeal dismissed with costs the tax appeal under which the GGM, the appellant, had lodged to challenge a decision of the Tax Revenue Appeals Tribunal, which had ruled in favour of TRA, the respondent.
In their judgment delivered recently, Justices Gerald Ndika, Lugano Mwandambo and Lucia Kairo agreed with the Tribunal and the Tax Revenue Appeals Board that there was no dispute that the appellant supplied fuel to Geita Power Limited (GPL) in the furtherance of the business.
They noted further that the appellant supplied fuel to GCL in pursuance of an agreement in which the firm was not privy, the supply amounted to a vatable supply evidenced by an invoice and thus the appellant was not exempted from payment of VAT in terms of sections 4 (1) and 58 of the VAT Act.
“The appellant supplied fuel to the contractors who had no similar exemption, we are therefore in agreement with the Tribunal that the special relief by way of exemption from payment of VAT on imported fuel did not cover the appellant’s contractors,” they said.
According to the justices, the supply of fuel to the appellant’s contractors constituted a taxable supply for which the appellant was bound by section 58 of the VAT.
The appellant is a holder of a mining licence for operation of a gold mine in Geita region. As part of incentives to holders of mining licenses, the Value Added Tax Act granted some tax reliefs.
One of such reliefs was exemption from payment of VAT on fuel imported for exclusive use in their mining activities. Besides, the appellant had entered into a Mining Development Agreement (MDA) with the Government of Tanzania, granting some tax reliefs in her favour for the purpose of the mining activities.
Acting under the tax reliefs, the appellant imported fuel for the intended purpose. In the course of her operations of the gold mine, the appellant outsourced some of the activities to contractors, including Geita Power Limited (GPL) who was contracted to operate an electricity power station.
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