Wakilii

AON Uganda Ltd v URA (HCT-00-CC-OS 4 of 2008)

High Court · [2009] UGCOMMC 39 · 2009 Judicial Review Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Judicial review application by originating summons challenging a tax assessment decision
Decision
URA assessment quashed insofar as it related to VAT on insurance brokerage services; insurance brokers declared exempt from VAT

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Insurance brokerage services constitute 'insurance services' within the meaning of the Value Added Tax Act and are therefore exempt supplies. The court held that looking fairly at the language of Section 19(1) of the VAT Act and paragraph 1(d) of its Second Schedule, insurance services include services provided by both insurance companies and insurance brokerage firms. The court quashed the URA assessment insofar as it related to VAT on insurance brokerage commissions.

Outcome

URA assessment quashed insofar as it related to VAT on insurance brokerage services; insurance brokers declared exempt from VAT

Facts

AON Uganda Limited is an insurance brokerage company licensed by the Uganda Insurance Commission. In 2008, the Uganda Revenue Authority conducted a special audit of AON covering January 2003 to December 2007. URA assessed AON as owing UGX 4,339,273,566 in unpaid VAT, on the basis that insurance brokerage commissions were not tax exempt. AON objected, arguing that insurance brokerage services had always been treated as exempt supplies under the VAT Act since its enactment. The Commissioner General upheld the assessment by letter dated 22 August 2008, finding that insurance brokerage services were distinct from insurance services and not exempt from VAT. AON sought judicial review by way of originating summons, seeking declarations that insurance brokerage services are insurance services and are exempt supplies under the VAT Act.

Issues

  1. Whether the services of the Plaintiff as insurance brokers are 'insurance services' within the meaning of the Value Added Tax Act.
  2. Whether the Plaintiff's insurance brokerage services are standard rated or exempt supplies within the Value Added Tax Act.
  3. Whether the application is properly before the court given procedural citation errors.
  4. Whether the Plaintiff should have pursued an alternative remedy by way of appeal to the Tax Appeals Tribunal under Section 33 of the VAT Act.

Orders

  • A declaration that the services offered by insurance brokers are insurance services within the meaning of the Value Added Tax Act Cap 349.
  • A declaration that insurance brokerage services are exempt supplies within the meaning of the Value Added Tax Act Cap 349.
  • An order of certiorari quashing the decision and assessment No. KC/VAT/272/06/08 of the URA insofar as the VAT relates to insurance and not other services.
  • Each party to bear its own costs.

Rules and key headnotes

VAT — Interpretation of 'Insurance Services' — Insurance Brokerage
The term 'insurance services' in Section 19(1) of the Value Added Tax Act and paragraph 1(d) of its Second Schedule includes services provided by both insurance companies and insurance brokerage firms.
Tax Statutes — Definitional Lacuna — Technical and Practical Interpretation
Where a tax statute does not define a technical term such as 'insurance services', the court may derive the definition from how insurance and insurance contracts operate as a matter of law and practice.
Tax Statutes — Fair Language Approach — Strict Interpretation Qualified
While tax statutes should generally be given a strict and literal interpretation, one must look fairly at the language used and may not adopt an interpretation that is unfair or inconsistent with the practical operation of the subject matter.
Judicial Review — Procedural Irregularity — Substantive Justice
A procedural irregularity in citing the wrong rule for judicial review does not go to the root of the application and is curable where it causes no prejudice to the respondent or abuse of court process, consistent with Article 126(1) of the Constitution which directs courts to apply substantive justice without undue regard to technicalities.
VAT — Exempt Supplies — Insurance Brokerage Services
Insurance brokerage services are exempt supplies under the Value Added Tax Act because insurance brokers, as intermediaries who solicit and negotiate insurance business on behalf of insureds, provide specialized services that form part of the overall insurance service.

Legislation cited (16)

Cases cited (10)

  • Stockton v Mason & The Vehicle & General Insurance Co Ltd [1978] 2 Lloyd's Rep 430
  • Punjab National Bank v De Boinville [1992] 2 Lloyd's Rep 7 (CA)
  • Mandavia v CIT EATC 426
  • Housing Finance Company of Uganda Ltd v Commissioner General of Uganda Revenue Authority (Misc. Application No. 722 of 2005)
  • Raso Enterprises (U) Ltd v Commissioner General of Uganda Revenue Authority (Civil Appeal No. 55 of 2003)
  • Commissioner General of Uganda Revenue Authority v Meera Investments Ltd (Civil Appeal No. 3 of 2007)
  • Sagu v Road Master Cycles (U) Ltd (2002) 1 EA 256
  • Cape Brandy Syndicate v IRC [1921] 1 KB 403
  • Card Protection Plan Ltd v Customs and Excise Commissioners [1999] STC 270
  • Re Forsakringsaktiebolaget Skandia (Publ) [2001] STC 754

Full judgment

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

AON Uganda Ltd v URA (HCT-00-CC-OS 4 of 2008) [2009] UGCommC 39 (23 September 2009)
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.