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Bank of Baroda Ltd v Commissioner General Uganda Revenue Authority (Civil Suit No. 238 of 2009)

High Court · [2012] UGCOMMC 209 · 2012 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit challenging tax assessment
Decision
Plaintiff's claim dismissed. Declaration and orders sought by plaintiff denied. Plaintiff ordered to pay assessed VAT and penal tax.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that section 4(c) of the Value Added Tax Act (before the 2011 amendment) clearly charged VAT on the supply of any imported services by any person without exemption. Unlike section 4(b) which exempted certain imported goods, section 4(c) contained no exemption provision. The exemption for financial services in section 19 and the Second Schedule applied only to domestic supply of financial services, not imported services. The plaintiff's assessment of Ushs. 824,987,760/= as VAT on imported financial services was lawful.

Outcome

Plaintiff's claim dismissed. Declaration and orders sought by plaintiff denied. Plaintiff ordered to pay assessed VAT and penal tax.

Facts

The plaintiff bank entered into a management agreement with Bank of Baroda India for provision of management services and financial services for the period January 2004 to December 2007, paying USD 600,000 annually. The plaintiff deducted and remitted VAT on management services but did not remit VAT on financial services, treating them as VAT exempt under the Second Schedule to the Value Added Tax Act. During a tax audit for the period 2004 to 2007, the defendant computed VAT on all services imported by the plaintiff, including financial services, on the grounds that under section 4(c) of the VAT Act, VAT was due on any service imported by any person. The defendant assessed Ushs. 824,987,760/= as VAT on imported services and Ushs. 672,216,243/= as corporation tax. The plaintiff objected on 16 April 2009. The defendant confirmed the assessment on 8 June 2009. The parties reached a part consent settlement during mediation, leaving only the question of VAT liability on imported financial services for determination.

Issues

  1. Whether the plaintiff is liable to pay VAT of Ushs. 824,987,760/= on imported services.
  2. Whether the assessed VAT on financial services by the defendant is lawful.
  3. Whether imported financial services were exempt from VAT under the Value Added Tax Act prior to the 2011 amendment.

Orders

  • Declaration that the imported financial services were not exempt from VAT before the 2011 amendment of the VAT Act.
  • The plaintiff is liable to pay VAT on imported financial services.
  • The plaintiff to pay Ushs. 824,987,760/= assessed by the defendant.
  • The plaintiff to pay penal tax for late payment as per section 65(3) of the VAT Act.
  • Costs of this suit awarded to the defendant.

Rules and key headnotes

Value Added Tax — Imported Services — Exemptions
Section 4(c) of the Value Added Tax Act (before the 2011 amendment) charged VAT on the supply of any imported services by any person without providing for any exemption, unlike section 4(b) which provided that VAT shall be charged on every import of goods other than an exempt import.
Value Added Tax — Exemptions — Domestic versus Imported Services
The exemption for financial services under section 19 and the Second Schedule of the Value Added Tax Act (before the 2011 amendment) was intended to apply only to domestic supply of financial services, not to imported financial services, having regard to the clear wording of section 4(c) which charged VAT on any imported services without exemption.
Taxing Statutes — Strict Construction — No Intendment or Equity
In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment; there is no equity about tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied; one can only look fairly at the language used.
Ambiguity — Test for Finding Provision Ambiguous
A provision of the law is ambiguous only if it irreconcilably conflicts with another provision or when it is equally susceptible to more than one meaning.
Golden Rule — Ordinary Meaning Unless Absurdity Results
The golden rule of interpretation of statutes is that in interpreting a statute the courts must adhere to the grammatical and ordinary sense of the words unless that adherence would lead to some manifest absurdity.
Value Added Tax — Legislative Amendment as Aid to Interpretation
The amendment of section 4(c) of the Value Added Tax Act in 2011 to insert the words 'other than an exempt service' confirms that prior to the amendment all imported services, including financial services, were not exempt from VAT.

Legislation cited (15)

Cases cited (5)

  • Stanbic Bank of Uganda Ltd and 3 Others v Attorney General (HCMA No. 0645 of 2011)
  • Stephen Seruwagi Kavuma v Barclays Bank (U) Ltd (HCMA No. 634 of 2010)
  • Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 1 KB 64
  • Lafarge Midwest, Inc v City of Detroit State of Michigan Court of Appeals No. 28929
  • Crane Bank v Uganda Revenue Authority (HCCA No. 18)

Full judgment

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Bank of Baroda Ltd v Commissioner General Uganda Revenue Authority (Civil Suit No. 238 of 2009) [2012] UGCommC 209 (16 November 2012)
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.