Airtel Uganda Limited v Commissioner General Uganda Revenue Authority (Civil Appeal No. 40 of 2013)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Court of Appeal held that a taxpayer who objects to a tax assessment through the Tax Appeals Tribunal and pays 30 percent of the assessed tax under section 15(1) of the Tax Appeals Tribunal Act cannot be treated as a defaulter liable to penal tax under section 65(3) of the Value Added Tax Act on the disputed balance during the dispute resolution period. Reading the VAT Act and the Tax Appeals Tribunal Act together with the Constitution, the requirement to pay the full sum is suspended pending the objection. Penalising a person for seeking redress would create an absurdity. The appeal was allowed, the interest of UGX 1,555,836,915 declared without legal basis, and a refund with interest ordered.

Outcome

Appeal allowed; High Court judgment set aside; interest declared without legal basis and refund with interest ordered to the appellant.

Facts

The appellant company was assessed for tax and lodged an objection with the Tax Appeals Tribunal on 19 May 2004, paying 30 percent of the disputed tax as required under section 15(1) of the Tax Appeals Tribunal Act. The Tribunal upheld the assessment, as did the High Court on appeal and the Court of Appeal on further appeal. The appellant then paid the whole outstanding assessed tax of UGX 428,269,883. After payment, the respondent demanded interest on the previously unpaid 70 percent, amounting to UGX 1,555,836,915. The appellant paid the interest without prejudice and filed suit in the High Court seeking declarations that the interest was unlawful and unjust. The trial Judge found for the respondent and dismissed the suit with costs, prompting this appeal.

Issues

1. Whether a taxpayer who contests a tax assessment through the Tax Appeals Tribunal may be subjected to penal tax (interest) where the objection is subsequently dismissed.
2. Whether payment of 30 percent of the assessed tax under section 15 of the Tax Appeals Tribunal Act absolves a taxpayer from penalties on the disputed balance where the tax is ultimately found payable.
3. Whether the trial Judge erred in dismissing the suit with costs.

Orders

• Appeal allowed.
• Judgment and orders of the High Court set aside and substituted.
• Declaration that the interest of UGX 1,555,836,915 imposed on the appellant had no legal basis and is not due or owing to the respondent.
• Order that any interest or penalty paid by the appellant in respect of the period during which the dispute was pending before the Tax Appeals Tribunal be refunded to the appellant with interest at 15 percent per annum from the date payment was made.
• The respondent shall pay costs in this Court and the Court below.

Rules and key headnotes

Legislation cited (11)

• Tax Appeals Tribunal Act Cap. 343 s.14
• Tax Appeals Tribunal Act Cap. 343 s.15(1)
• Value Added Tax Act Cap. 349 s.34
• Value Added Tax Act Cap. 349 s.65
• Value Added Tax Act Cap. 349 s.65(3)
• Value Added Tax Act Cap. 349 s.66
• Constitution of Uganda 1995 art.17(1)(g)
• Constitution of Uganda 1995 art.44(c)
• Constitution of Uganda 1995 art.152(1)
• Constitution of Uganda 1995 art.152(3)
• Rules of the Court of Appeal r.30

Cases cited (2)

• Fr. Narcensio Begumisa and others v Eric Tibebaaga (Civil Appeal No. 17 of 2002)
• Uganda Breweries v Uganda Railways Corporation (Civil Appeal No. 6 of 2001)

Cases citing this judgment (6)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Commissioner General Uganda Revenue Authority v Airtel Uganda Limited [2023] UGSC 45
• Commissioner General, Uganda Revenue Authority v Airtel (U) Limited (Civil Appeal 32 of 2020)
• Commissioner General and Another v Airtel Uganda Limited [2023] UGSC 33
• Kwasa Logistics Limited v Uganda Revenue Authority (Application 151 of 2022)
• Independent Publication v Uganda Revenue Authority (Taxation Application No 55 of 2018)
• Airtel Uganda v Uganda Revenue Authority (Application No TAT 43 of 2020)

The original judgment as reported. Read the original PDF before relying on any passage.