Commissioner General and Another v Airtel Uganda Limited [2023] UGSC 33

Supreme Court · 2023 Appeal Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Civil appeal and cross-appeal from the Court of Appeal in a tax dispute concerning penal tax under the Value Added Tax Act

Decision

Appeal allowed and cross-appeal dismissed; Court of Appeal decision set aside; High Court dismissal of the respondent's suit reinstated; respondent not entitled to a refund

The full judgment

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Holding

The Supreme Court allowed the Commissioner General's appeal, holding that the Court of Appeal erred in finding that penal tax under section 65(3) of the Value Added Tax Act is suspended during the pendency of tax objection proceedings. Tax statutes must be strictly construed and any suspension of penal tax requires express statutory words; neither the VAT Act nor sections 14 and 15(1) of the Tax Appeals Tribunal Act provide for such suspension, and Article 44(c) of the Constitution was inapplicable as penal tax does not bar access to courts. Penal tax therefore continued to accrue until full payment. The respondent was not entitled to a refund, and the cross-appeal for interest failed.

Facts

The respondent acquired the assets and liabilities of Celtel Uganda Ltd, including a disputed tax debt. In February 2004 the Uganda Revenue Authority assessed Celtel for VAT, excise duty and penal tax after an audit revealed unremitted VAT for April 2000 to July 2003. Celtel accepted part of the debt but disputed VAT and penal tax, lodging an objection in the Tax Appeals Tribunal and paying 30% of the disputed tax as required. The Tribunal, High Court and Court of Appeal upheld the assessment. After acquiring Celtel in 2010, the respondent sought to pay the remaining balance, but the Authority informed it that interest had accrued during the objection proceedings, raising the liability to Ug. Shs. 1,555,836,915. The respondent paid under protest and sued for a declaration that the interest was unlawful and for a refund. The High Court dismissed the suit; the Court of Appeal allowed the respondent's appeal and ordered a refund, prompting this appeal.

Issues

Whether the Court of Appeal correctly interpreted Section 65(3) of the Value Added Tax Act on the imposition of penal tax.
Whether the accrual of penal tax is suspended while a taxpayer's objection is pending before the Tax Appeals Tribunal and on any subsequent appeal.
Whether the respondent was entitled to a refund of the penal tax/interest it had paid.
Whether the respondent (cross-appellant) was entitled to statutory interest on the sum it sought to have refunded.

Orders

The decision of the Court of Appeal is set aside.
The decision of the High Court dismissing the respondent's suit is reinstated.
The respondent is not entitled to a refund of Ug. Shs. 1,555,836,915 as the same was lawfully collected.
The appellant is granted the costs in this Court and the courts below.

Key headnotes

Statutory Interpretation — Taxing Statutes — Strict Construction

A taxing statute must be construed strictly by looking only at the clear words used; nothing is to be implied or read in, and any suspension of a tax liability can only be justified by what is expressly stated in the statute, not by intendment.

Tax Law — Value Added Tax — Penal Tax under Section 65(3) — Accrual

Under section 65(3) of the Value Added Tax Act a person who fails to pay tax by the due date is liable to penal tax that continues to accrue until the outstanding tax is paid in full, and the lodging of a tax objection does not suspend that accrual in the absence of an express statutory provision.

Tax Law — Tax Appeals Tribunal — Section 15(1) Deposit Requirement

The requirement under section 15(1) of the Tax Appeals Tribunal Act to pay 30% of the disputed tax is a procedural requirement conferring a right of audience before the Tribunal and does not operate to suspend the accrual of penal tax.

Constitutional Law — Article 44(c) — Right of Access to Courts

The imposition of penal tax does not infringe the right of access to courts or to a fair hearing under Article 44(c) of the Constitution, since a taxpayer remains free to institute court proceedings notwithstanding the penal tax imposed.

Statutory Interpretation — Judicial Function — Policy and Legislative Intent

In conducting statutory interpretation a court must state the law as it is and not frame policy; where Parliament has not expressly legislated for a particular outcome, however absurd that position may appear, the remedy lies in amendment by Parliament and not in the court reading in a new position by intendment.

Legislation cited (12)

Value Added Tax Act s.4
Value Added Tax Act s.31
Value Added Tax Act s.32
Value Added Tax Act s.34
Value Added Tax Act s.34(3)
Value Added Tax Act s.34A
Value Added Tax Act s.65(3)
Value Added Tax Act s.66(6)
Value Added Tax Act Fifth Schedule
Tax Appeals Tribunal Act s.14
Tax Appeals Tribunal Act s.15(1)
Constitution of Uganda 1995 Article 44(c)

Cases cited (4)

Uganda Revenue Authority v Stephen Mabosi (Civil Appeal No. 1 of 1996)
Income Tax Commissioner v Roshanali Nazeraly Merali and Another [1954] 1 EA 95
Uganda Revenue Authority v Siraje Hassan Kajura and Others (Civil Appeal No. 9 of 2015)
Cape Brandy Syndicate v IRC [1921] 2 KB 64

Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.