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Commissioner General Uganda Revenue Authority v Airtel Uganda Limited [2023] UGSC 45

Supreme Court · 2023 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal and cross-appeal from a decision of the Court of Appeal
Decision
Appeal allowed; Court of Appeal decision set aside and High Court dismissal reinstated; cross-appeal dismissed; no refund to the respondent

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Holding

The Supreme Court held that penal tax under section 65(3) of the Value Added Tax Act accrues from the due date until the outstanding tax is paid in full and is not suspended by the lodging of a tax objection in the Tax Appeals Tribunal. Applying the strict-construction rule for taxing statutes, suspension could only arise from express statutory words, not by intendment; neither sections 14 and 15(1) of the Tax Appeals Tribunal Act nor Article 44(c) of the Constitution suspend penal tax. The Court of Appeal therefore erred in ordering a refund. The appeal was allowed, the Court of Appeal decision set aside and the High Court's dismissal reinstated; the cross-appeal for interest was dismissed.

Facts

Celtel Uganda Ltd was audited by the Uganda Revenue Authority, which found it had not remitted VAT on certain supplies for April 2000 to July 2003. On 26 February 2004 it was served with an assessment of UGX 1,024,209,566 in VAT, excise duty and penal tax. Celtel accepted part but disputed VAT of UGX 358,652,458 plus penal tax, lodged an objection in the Tax Appeals Tribunal and paid 30% of the disputed tax; its objection and successive appeals to the High Court and Court of Appeal were dismissed. In 2010 the respondent acquired Celtel's assets and assumed its liabilities, including the tax debt. When the respondent offered to pay the 70% balance, the appellant advised that penal tax had accrued during the objection proceedings, raising liability to UGX 1,555,836,915. The respondent paid under protest and sued for a declaration that the interest was unlawful and for a refund.

Issues

  1. Whether the Court of Appeal correctly construed section 65(3) of the Value Added Tax Act in relation to the penal tax assessed on the respondent.
  2. Whether the lodging of a tax objection under sections 14 and 15(1) of the Tax Appeals Tribunal Act suspends the accrual of penal tax during the pendency of the objection proceedings and any appeals.
  3. Whether the respondent is entitled to a refund of the interest/penal tax of UGX 1,555,836,915 paid to the appellant.
  4. Whether the respondent is entitled to statutory interest on the sum claimed as a refund (cross-appeal).

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 UGX 1,555,836,915 as the same was lawfully collected.
  • The cross-appeal is dismissed.
  • The appellant is granted the costs in the Supreme Court and the courts below.

Key headnotes

Tax Law — Penal Tax — Accrual During Tax Objection Proceedings
Penal tax imposed under section 65(3) of the Value Added Tax Act accrues from the due date until the outstanding tax is paid in full, and is not suspended by the lodging of a tax objection in the Tax Appeals Tribunal or any appeals arising from it.
Statutory Interpretation — Taxing Statutes — Strict Construction
A taxing statute must be construed strictly upon the clear words used, with nothing implied or read in; the suspension of a penal tax can be justified only where it is expressly stated in the statute and not by intendment.
Tax Law — Tax Appeals Tribunal — Payment of 30% of Disputed Tax
The requirement under section 15(1) of the Tax Appeals Tribunal Act to pay 30% of the disputed tax is a procedural condition conferring a right of audience before the Tribunal and does not suspend the operation of section 65(3) of the Value Added Tax Act.
Constitutional Law — Article 44(c) — Access to Courts and Fair Hearing
The imposition of penal tax does not, of itself, infringe the non-derogable right to a fair hearing or access to courts under Article 44(c) of the Constitution, as a taxpayer remains free to institute court proceedings notwithstanding the imposed penal tax.
Statutory Interpretation — Judicial Role — Policy Reserved to Parliament
A court conducting statutory interpretation must state the law as it is and not frame policy; however absurd a statutory position may appear, it can only be changed by Parliament through amendment of the relevant law.

Legislation cited (12)

  • Value Added Tax Act Cap. 349 s.65(3)
  • Value Added Tax Act s.66(6)
  • Value Added Tax Act s.34
  • Value Added Tax Act s.34(3)
  • Value Added Tax Act s.34A
  • Value Added Tax Act s.32
  • Value Added Tax Act s.31
  • Value Added Tax Act s.4
  • Value Added Tax Act Fifth Schedule
  • Tax Appeals Tribunal Act Cap. 345 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 (Supreme Court 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 (Supreme Court 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.