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East African Marine Transport Company Limited v Uganda Revenue Limited (TAT Application 16 of 2024)

Tribunal · [2025] UGTAT 7 · 2025 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to the Tax Appeals Tribunal seeking a declaration that the supply of a ferry is exempt from VAT under the VAT Act
Decision
Application allowed; VAT exemption confirmed; VAT refund ordered

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that a roll-on, roll-off freight ferry qualifies as machinery or equipment under Paragraph 1(ae) of Schedule 3 to the VAT Act. The ferry comprises fixed and moving parts working together to perform a transport function and is essential to the applicant's marine logistics business. The Tribunal found that the applicant satisfied all statutory conditions for VAT exemption: the ferry is machinery or equipment; the business operates outside an industrial park; the investment exceeded USD 10 million; and marine cargo transportation constitutes logistics and warehousing. The Respondent's artificial splitting of the contract into design, building, and delivery services was rejected.

Outcome

Application allowed; VAT exemption confirmed; VAT refund ordered

Facts

The Applicant, a marine transport company operating on Lake Victoria, contracted Seco Marine (U) Ltd to design, build, and deliver a roll-on, roll-off freight ferry for USD 14,997,762 for use between Mwanza (Tanzania) and Port Bell (Uganda). On 6 July 2023, the Applicant sought confirmation of VAT exemption under Paragraph 1(ae) of Schedule 3 to the VAT Act. The Respondent confirmed income tax exemption but denied VAT exemption, arguing the ferry was neither machinery nor equipment. Following objection, the Respondent partially allowed the objection on 29 December 2023, confirming VAT exemption for design services only but denying it for building and delivery services. The Applicant challenged this decision, contending the ferry qualifies as machinery or equipment essential to its logistics operations and that the contract should not be artificially fragmented.

Issues

  1. Whether the ferry qualifies as machinery or equipment under Paragraph 1(ae) of the Third Schedule to the VAT Act.
  2. Whether the Respondent's decision to deny VAT exemption was lawful.
  3. Whether the Applicant is entitled to a refund of the VAT that was paid.

Orders

  • The supply of services of design, building, and delivery of a ferry is exempt from VAT under paragraph 1(ae) of Schedule 3 of the VAT Act.
  • The Respondent should duly refund the VAT that was paid by the Applicant.
  • Costs are awarded to the Applicant.

Rules and key headnotes

VAT Exemptions — Machinery or Equipment — Interpretation
A ferry used in marine cargo transportation qualifies as machinery or equipment under Paragraph 1(ae) of Schedule 3 to the VAT Act where it comprises fixed or moving parts that work together to perform a transport function and is essential to the taxpayer's business operations.
Tax Statutes — Plain Language Rule — Undefined Terms
Where a tax statute does not define a term, the term must be given its ordinary and literal meaning as found in standard dictionaries, and courts should not add to or subtract from the statutory text.
VAT Exemptions — Locally Produced Materials — Disjunctive Conditions
Under Paragraph 1(ae) of Schedule 3 to the VAT Act, the use of the conjunction 'OR' between 'locally produced raw materials and inputs' and 'machinery or equipment' creates alternative conditions; there is no requirement that machinery or equipment must be made from locally produced raw materials.
VAT Exemptions — Logistics and Warehousing — Definition
The business of transporting cargo across Lake Victoria constitutes 'logistics and warehousing' within the meaning of Paragraph 1(ae) of Schedule 3 to the VAT Act, as logistics encompasses the organized movement and delivery of goods and does not require a separate warehousing facility.
VAT — Single Supply — Artificial Splitting of Contracts
Where a contract is for the supply of a ferry, the artificial splitting of that contract into separate components of design, building, and delivery for VAT purposes is impermissible; the principal purpose of the contract determines the VAT treatment and incidental services form part of the principal supply.
Tax Administration — Consistency — Income Tax and VAT
Where the conditions for exemption under the Income Tax Act and the VAT Act are identical, a tax authority's decision to grant exemption under one statute but deny it under the other is inconsistent and arbitrary; symmetrical application of both statutes is required.

Legislation cited (9)

Cases cited (11)

  • Kakira Sugar Works v Uganda Revenue Authority (TAT Application No. 11 of 2006)
  • VIVO Energy Uganda Limited v Uganda Revenue Authority (TAT Application No. 131 of 2019)
  • Bidco Uganda Ltd v Uganda Revenue Authority (TAT Application No. 16 of 2017)
  • Uganda Revenue Authority v Total Uganda Limited (Civil Appeal No. 11 of 2012)
  • Card Protection Plan Ltd V Commissioners of Customs and Excise [2001] UKHL 4
  • Uganda Electricity Transmission Company Limited v Uganda Revenue Authority (TAT Application No. 46 of 2018)
  • Multi-Consults Limited v Uganda Revenue Authority (TAT Application No. 72 of 2019)
  • Luyimbazi Sulaiman v Stanbic Bank (Supreme Court Civil Appeal No. 2 of 2019)
  • Williamson Diamonds Ltd V. Commissioner General [2008] 4 TTLR 167
  • Cape Brandy Syndicate V. Inland Revenue Commissioners (1920) KB 64
  • Calcutta Kitwas (2014) 362 ITR 673

Full judgment

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

East African Marine Transport Company Limited v Uganda Revenue Limited (TAT Application 16 of 2024) 2025 UGTAT 7 (30 April 2025)
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.