Wakilii

Fuelex Uganda Limited v Uganda Revenue Authority (Constitutional Petition 3 of 2009)

Constitutional Court · [2019] UGCC 15 · 2019 Petition Granted in Part ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Reference from the Tax Appeals Tribunal for constitutional interpretation of section 15 of the Tax Appeals Tribunal Act
Decision
By majority, section 15 of the Tax Appeals Tribunal Act declared unconstitutional in so far as it requires an objector whose objection does not relate to the amount of tax payable to pre-pay 30% of the assessed tax; petitioner awarded half the costs of the reference

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Cited — treatment unverified cited in 1 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

By majority (Kakuru, Egonda-Ntende and Muhanguzi JJA/JCC; Owiny-Dollo DCJ and Obura JA/JCC dissenting), the Court held that section 15 of the Tax Appeals Tribunal Act is unconstitutional, being inconsistent with the non-derogable right to a fair hearing under Article 44(c), in so far as it compels an objector whose challenge is not about the amount of tax payable to pre-pay 30% of the assessed tax. The provision is valid where the dispute concerns only the quantum of tax assessed. The majority held the binding Supreme Court decision in the Uganda Projects case to have been reached per incuriam on this point. The petitioner was awarded half the costs of the reference.

Facts

The Uganda Revenue Authority assessed Fuelex (U) Limited UGX 160,525,530 in tax on its fuel business for the period June 2005 to September 2006. Fuelex lodged an objection with the Tax Appeals Tribunal. The question arose whether the mandatory pre-payment of 30% of the assessed tax, required by section 15 of the Tax Appeals Tribunal Act before an objection can be entertained, was constitutional. The Tribunal formed the opinion that a substantial question of constitutional interpretation had arisen and referred to the Constitutional Court the question whether section 15 contravenes Articles 21 and 126(2)(a) of the Constitution. At the hearing the petitioner sought to withdraw the reference as it was no longer interested in the interpretation, and the respondent argued the question had been overtaken by the Supreme Court's decision in the Uganda Projects case, but the Court required the legal question to be determined.

Issues

  1. Whether section 15 of the Tax Appeals Tribunal Act, in requiring a taxpayer who has lodged a notice of objection to an assessment to pay 30% of the tax assessed (or the part not in dispute, whichever is greater) pending resolution of the objection, contravenes Articles 21 and 126(2)(a) of the Constitution.
  2. Whether the 30% pre-payment requirement in section 15 contravenes the non-derogable right to a fair hearing under Article 44(c) of the Constitution.
  3. Whether the Constitutional Court was bound by the Supreme Court decision in Uganda Projects Implementation and Management Centre v URA, or whether that decision was reached per incuriam.

Orders

  • By majority (Kakuru, Egonda-Ntende, Muhanguzi JJA/JCC; Owiny-Dollo DCJ and Obura JA/JCC dissenting): Section 15 of the Tax Appeals Tribunal Act, in so far as it compels an objector to a tax assessment whose challenge is not with regard to the amount of tax payable to pay to the tax authority 30% of the tax assessed, is inconsistent with Article 44 of the Constitution and is unconstitutional.
  • By majority: The petitioner is awarded half of the costs of the reference.

Key headnotes

Fundamental Rights — Right to Fair Hearing — Non-derogability under Article 44(c)
The right to a fair hearing under Article 44(c) is non-derogable; no law may abridge, limit or derogate from it, and it is not subject to the limitations permitted under Article 43.
Tax Appeals Tribunal — Section 15 — Scope of the 30% Pre-payment Requirement
Section 15 of the Tax Appeals Tribunal Act requiring pre-payment of 30% of the assessed tax applies only where the objection concerns the amount of tax payable; it does not apply where the objector contends that it is not liable to the tax at all or where the dispute is purely legal or technical.
Access to Justice — Pre-payment to the Adverse Party as a Bar to Being Heard
A statutory requirement compelling one party to a dispute to pay a portion of the disputed sum to the adverse party before the dispute can be heard places the objector at a disadvantage, denies equal protection of the law, and offends the right of access to court and to a fair hearing.
Golden Rule — Avoiding Absurdity and Injustice
Where the grammatical and ordinary meaning of statutory words leads to absurdity, repugnance or an unreasonable result, the court may modify that meaning so far as is necessary to give effect to the manifest intention of the legislature, but no further.
Precedent — Binding Effect of Supreme Court Decisions — Per Incuriam (Article 132(4))
Decisions of the Supreme Court bind the Constitutional Court under Article 132(4), but the Constitutional Court is not required to follow such a decision where the facts before it differ or where the decision was reached per incuriam.
Separation of Powers — Limits on Judicial Power to Strike Down Legislation
Courts have no power to strike down an Act of Parliament merely because it is unjust, oppressive or unconscionable; they may intervene only where the legislation is inconsistent with or in contravention of the Constitution.

Legislation cited (17)

  • Tax Appeals Tribunal Act s.15
  • Value Added Tax Act (Cap 349) s.34C(3)
  • Finance Act 2001
  • Police Act s.24
  • Government Proceedings Act
  • Constitution of Uganda 1995 art.21
  • Constitution of Uganda 1995 art.44(c)
  • Constitution of Uganda 1995 art.126(2)(a)
  • Constitution of Uganda 1995 art.20
  • Constitution of Uganda 1995 art.26(2)
  • Constitution of Uganda 1995 art.28(1)
  • Constitution of Uganda 1995 art.43
  • Constitution of Uganda 1995 art.45
  • Constitution of Uganda 1995 art.50
  • Constitution of Uganda 1995 art.132(4)
  • Constitution of Uganda 1995 art.137(5)
  • Constitution of Uganda 1995 art.23

Cases cited (26)

  • Uganda Projects Implementation and Management Centre v Uganda Revenue Authority (Constitutional Appeal No. 2 of 2009)
  • Commissioner General URA v Zain International BV (Civil Appeal No. 11 of 2012)
  • Foundation for Human Rights Initiative v Attorney General (Constitutional Petition No. 53 of 2011)
  • Charles Onyango Obbo and Andrew Mwenda v Attorney General (Constitutional Appeal No. 2 of 2002)
  • R v Oakes [1987] LRC 477
  • Pumbun & Anor v Attorney General & Anor [1993] LRC 317
  • Jaundoo v Attorney General of Guyana (1971) AC 972
  • Olive Casey Jaundoo v Attorney General of Guyana [1971] 1 WLR 13
  • Attorney General v Ali & Ors [1989] LRC 474
  • In Re Rivas and the Belize Advisory Council [1993] 3 LRC 261
  • In Re: President's Reference of the Constitution of Vanuatu and the Broadcasting and Television Bill 1992, [1993] ILRC / Law Reports of the Commonwealth 141
  • Howe Yoon Chong v Chief Assessor [1991] LRC (Const) 243
  • Sunday Lake Iron Co. v Township of Wakefield 247 U.S. 350 (1919)
  • Twinpy Ltd. & NBN Ltd. vs The State 1988 1 (Const) LRC 333
  • Duport Steels Ltd v Sirs (1980) 1 WLR 142
  • Warburton v Loveland (1929) 1 Hud & Br 623
  • Grey v Pearson (1857) 6 HL Cas 61
  • Vacher v London Society of Compositors [1913] AC 107
  • Cooke v Charles A Vageler [1901] AC 102
  • Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014
  • Luke v IRC [1963] AC 557
  • Gill v Donald Humberstone & Co. Ltd [1963] 1 WLR 929
  • Collector of Customs, Baroda v Digvijayasinhji Mills AIR 1961 SC 1549
  • Shri Ram v State of Maharashtra AIR 1961 SC 674
  • Markandey Singh v ML Bhanot (1988) 3 SCC 539
  • Metcash Trading Co. Ltd case
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