Wakilii

Akiiki Rwaheru & 13945 Others v Uganda Revenue Authority (Civil Appeal No. 98 of 2015)

Court of Appeal · [2020] UGCA 2124 · 2020 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a partial judgment of the High Court on a question of law concerning the legality of Domestic VAT
Decision
Appeal allowed on grounds 1–4 and dismissed on ground 5; Domestic VAT declared illegal and refund with interest ordered

Observed later treatment

No later-treatment classification is recorded for this judgment.

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.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The Court of Appeal held that there is no VAT known as 'Domestic VAT' provided for under the Value Added Tax Act, and that levying a 15% Domestic VAT on imports in addition to the 18% VAT had no basis in law and was illegal, not a mere irregularity, being contrary to Article 152(1) of the Constitution which requires taxes to be imposed under an Act of Parliament. Section 32(1)(c) of the VAT Act could only be invoked against one taxpayer at a time and could not justify a general mark-up on all importers. The appeal succeeded on grounds 1–4, the illegally collected tax was ordered refunded with interest, but failed on ground 5 concerning the form of judgment.

Outcome

Appeal allowed on grounds 1–4 and dismissed on ground 5; Domestic VAT declared illegal and refund with interest ordered

Facts

Between 2002 and 2013 the appellants imported goods and paid import duty, Excise duty, VAT, Domestic VAT and Withholding tax to the respondent, Uganda Revenue Authority. They brought a representative suit challenging the imposition of a 15% 'Domestic VAT' on imports, arguing it was not provided for under the East African Customs Management Act, the Value Added Tax Act or any Ugandan law. The respondent had, invoking section 32 of the VAT Act, added a 15% mark-up to import value to cater for value added between importation and final sale, describing it as Domestic VAT for administrative convenience. The parties agreed to have the question of law—whether URA was mandated to collect Domestic VAT—determined first. The trial judge held there was no statutory category of Domestic VAT but that charging VAT on anticipated taxable supplies before the supply was made was merely an irregularity, not an illegality, and ordered the suit fixed for hearing to establish whether taxable supplies had been made.

Issues

  1. Whether the VAT Act Cap 349 provided for the levy of Domestic VAT at 15% on imports in addition to the 18% VAT provided by law.
  2. Whether charging Domestic VAT was a mere irregularity or an illegality.
  3. Whether imposing additional Domestic VAT before a taxable supply is made was irregular or illegal.
  4. Whether the trial court erred in ordering that the suit be fixed for hearing to ascertain whether taxable supplies were made where the prayers were for declarations.
  5. Whether the trial judge erred by not indicating in whose favour the judgment was delivered.

Orders

  • The Appeal succeeds on grounds 1, 2, 3 and 4 and fails on ground 5.
  • Domestic Value Added Tax charged on imported goods of the appellants was illegal.
  • The appellants are entitled to refund of the illegally collected taxes with interest at court rate from date of collection up to date of refund.
  • The appellants are entitled to 4/5 of the costs here and in the court below.

Rules and key headnotes

Value Added Tax — Domestic VAT — Absence of statutory basis
A 15% 'Domestic VAT' levied on imported goods in addition to the 18% VAT prescribed by the Value Added Tax Act has no basis in law and is illegal, since the Value Added Tax Act recognises no category of tax described as 'Domestic VAT'.
Taxation — Article 152(1) — No tax without an Act of Parliament
A tax levied without the authority of an Act of Parliament contravenes Article 152(1) of the Constitution and is illegal, not merely irregular; administrative convenience cannot justify a breach of this requirement.
Taxing statutes — Strict construction — No room for intendment
In a taxing statute clear words are required to impose a tax; the subject is not to be taxed unless the words of the statute unambiguously impose the tax on him, and there is no room for intendment, presumption or implication.
VAT Act s.32(1)(c) — Individual assessment — No general category
Section 32(1)(c) of the Value Added Tax Act can only be invoked against one taxpayer at a time where that person is liable but unlikely to pay; it cannot be used to impose a general mark-up assessment on an entire category of importers.
VAT — Timing of assessment — Charging before taxable supply made
Charging VAT on an importer for taxable supplies before any taxable supply has been made is premature and illegal, not merely irregular, since VAT on a taxable supply is levied only when the supply is made at the applicable rate of 18%.
Refund of illegally collected tax — Interest
Where tax has been unlawfully levied and collected, the authority must refund the collected sums to the persons from whom it was taken, together with interest at court rate from the date of collection until the date of refund.

Legislation cited (15)

Cases cited (7)

  • Selle and Another v Associated Motor Boat Company Ltd and Others (1968) EA 123
  • Russell v Scott (1948) 2 All ER 1
  • Cape Brandy Syndicate v IRC (1921) 1 KB 64
  • Standard Chartered Bank (U) Ltd and 6 Others v Uganda Revenue Authority (HCCS No. 63 of 2011)
  • Joint (Inspector of Taxes) v Bracken Developments Ltd (1994) STC 300
  • CIT V Elphinstone Spg & Wug Mills Co. Ltd. 40 ITR 142 (SC)
  • CIT V Motors & General Stores Ltd. 66 ITR 692, 699-700 (SC)

Full judgment

↓ Download PDF

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

Akiiki Rwaheru & 13945 Others v Uganda Revenue Authority (Civil Appeal No. 98 of 2015) [2020] UGCA 2124 (9 November 2020)
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.