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Embassy Supermarket (U) Limited v Uganda Revenue Authority (TAT Application 114 of 2021)

Tribunal · [2023] UGTAT 21 · 2023 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging penal tax assessments for failure to issue EFRIS invoices
Decision
Penal tax assessment reduced from Shs. 84,000,000 to Shs. 6,000,000

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the applicant was liable to pay penal tax for failure to issue EFRIS invoices, but the statutory provisions did not permit penalties to be calculated per invoice or per day. Applying the rule of thumb and the principle that ambiguous tax provisions favour the taxpayer, the Tribunal interpreted the penalty as applying per tax period (one calendar month under the VAT Act). The assessment of Shs. 84,000,000 was set aside and replaced with Shs. 6,000,000 (300 currency points for one tax period).

Outcome

Penal tax assessment reduced from Shs. 84,000,000 to Shs. 6,000,000

Facts

Embassy Supermarket (U) Limited operates a supermarket. In November 2021, Uganda Revenue Authority issued two penal tax assessments totaling Shs. 84,000,000 for the applicant's failure to issue Electronic Fiscal Receipting and Invoicing Solution (EFRIS) invoices to customers between 1 and 14 November 2021. The applicant objected, arguing it faced challenges implementing EFRIS including product coding system corruption, software incompatibility, and complexity of the respondent's coding system. The respondent had issued a gazette notice in June 2020 making EFRIS mandatory for VAT-registered taxpayers, with multiple postponements of the implementation date. The respondent wrote to the applicant on 20 September 2021 requiring compliance by 1 October 2021. The applicant admitted it did not issue e-invoices during the relevant period but contended the penalty was excessive and the respondent failed to exercise discretion fairly.

Issues

  1. Whether the applicant issued EFRIS invoices?
  2. If not, whether the applicant is liable to pay the penal tax assessed?
  3. Whether the respondent exercised its discretion properly in imposing the penalty?
  4. Whether the penalty was erroneously determined and applied?
  5. What remedies are available?

Orders

  • The applicant is liable to pay penal tax of Shs. 6,000,000.
  • The assessment of Shs. 84,000,000 by the respondent is set aside.
  • The applicant is to pay half the costs of this application.

Rules and key headnotes

Tax Law — Penal Tax — Strict Liability — EFRIS Implementation
The penalty for failure to issue e-invoices or e-receipts under section 73B of the Tax Procedure Code Act is one of strict liability, requiring no proof of mens rea, where the statute creates a regulatory offence of social concern with clear wording indicating strict liability.
Statutory Interpretation — Tax Statutes — Strict Construction — Ambiguity
In interpreting tax statutes, nothing is to be read in, nothing to be implied; one can only look fairly at the language used. Where the law is ambiguous, the benefit of doubt is given to the taxpayer.
Tax Law — Penal Tax — Calculation — Per Invoice vs Per Tax Period
Where sections 73B(1) and 73B(2) of the Tax Procedure Code Act do not specify whether penal tax for failure to issue e-invoices is charged per invoice, per day, or per tax period, and applying the penalty per invoice or per day would result in unconscionable and disproportionate penalties, the penalty must be interpreted as applying per tax period (one calendar month under the VAT Act).
Administrative Law — Discretion — Judicial Review — Illegality, Irrationality, Procedural Impropriety
The discretion of a statutory body must be exercised according to law, guided by relevant considerations and not by irrelevant ones. Discretion can only be challenged if it is applied illegally, irrationally, or with procedural impropriety.
Tax Law — Implementation of Tax Law — Postponement by Public Notice — Legal Effect
Where a statute provides that the Commissioner shall specify taxpayers by notice in the Gazette, postponements of implementation by public notice in newspapers have no legal effect as they are not provided for in the law. The effective date of implementation is the date the gazette notice is issued.
Tax Law — Tax Appeals — New Grounds — Legality of Assessment
While a tribunal is limited to the grounds stated in the objection under section 16(4) of the Tax Appeals Tribunal Act, it cannot ignore legal arguments raised by a party as it would create a miscarriage of justice. There is a difference between a ground stated in an objection and a legal argument raised.

Legislation cited (12)

  • Tax Procedure Code Act s.73
  • Tax Procedure Code Act s.73A(1)
  • Tax Procedure Code Act s.73A(2)
  • Tax Procedure Code Act s.73A(3)
  • Tax Procedure Code Act s.73B(1)
  • Tax Procedure Code Act s.73B(2)
  • Tax Procedures Code (e-invoicing and e-receipting) Regulations 2020 reg.3
  • Tax Procedures Code (e-invoicing and e-receipting) Regulations 2020 reg.4
  • Tax Procedures Code (e-invoicing and e-receipting) Regulations 2020 reg.6
  • Tax Procedures Code (e-invoicing and e-receipting) Regulations 2020 reg.6(2)
  • Tax Appeals Tribunal Act s.16(4)
  • VAT Act

Cases cited (10)

  • Farid Meghan v Uganda Revenue Authority (Civil Appeal No. 6 of 2022)
  • Cape Brandy Syndicate v IRC [1921] 1 KB 64
  • Uganda Revenue Authority v Hassan Kajura (Civil Appeal No. 9 of 2015)
  • Kampala Nissan v Uganda Revenue Authority (High Court Civil Appeal No. 7 of 2009)
  • Radio Pacis Ltd v Uganda Revenue Authority (HCCS No. 8 of 2013)
  • Makula International Ltd v His Eminence Emmanuel Cardinal Nansubuga & Rev. Fr. Dr. Kyeyune [1982] HCB 11
  • ICEA General Co. Limited v Uganda Revenue Authority (TAT Application No. 100 of 2019)
  • Breen v Amalgamated Engineering Union [1971] 2 QB 1
  • Twinomuhangi Pastoli v Kabale District Local Government Council [2006] HCB Vol. 1 p. 30
  • Cape Brandy Syndicate v IRC [1921] 1 KB 64

Full judgment

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

Embassy Supermarket (U) Limited v Uganda Revenue Authority (TAT Application 114 of 2021) 2023 UGTAT 21 (5 May 2023)
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.