Wakilii

Gakou Brothers Enterprises Limited v Uganda Revenue Authority (Civil Appeal 55 of 2021)

High Court · [2023] UGCOMMC 155 · 2023 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from the Tax Appeals Tribunal ruling dismissing the Appellant's application for review of the Respondent's tax assessment decision
Decision
Appeal dismissed with costs to the Respondent; Tax Appeals Tribunal decision upholding tax assessments against the Appellant affirmed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the appeal and upheld the Tax Appeals Tribunal's decision. The Court held that the Appellant failed to discharge the burden of proof under section 18 of the Tax Appeals Tribunal Act to show that the tax assessment was excessive. The Commissioner's use of a 24% mark-up derived from three comparable companies dealing in second hand clothes was within the Commissioner's discretion and justified in the absence of documentation from the Appellant. The Appellant was afforded a fair hearing through the scheduling process where documents were agreed and admitted. The Commissioner's exercise of discretion was not vitiated by illegality, irrationality, or procedural impropriety.

Outcome

Appeal dismissed with costs to the Respondent; Tax Appeals Tribunal decision upholding tax assessments against the Appellant affirmed

Facts

The Appellant, a company dealing in wholesale trade of second hand clothes, applied to the Respondent for a withholding tax refund of UGX 275,500,000 for the period January 2014 to December 2019. The Respondent conducted an audit and established that the Appellant was reporting a negative gross loss and undeclared sales for 2018. The Respondent requested additional documents from the Appellant, but the Appellant failed to provide them. The Respondent then issued Income Tax and Value Added Tax assessments totalling UGX 141,142,645 for the period January to December 2018. The Appellant objected, but the Respondent disallowed the objection on grounds that the Appellant did not provide supporting documents. The Appellant filed applications with the Tax Appeals Tribunal, which dismissed them on 27 October 2021. The Appellant then appealed to the High Court.

Issues

  1. Whether the Tax Appeals Tribunal erred in holding that Salabed Imports and Exports Limited was a trader dealing in second hand clothes.
  2. Whether the Tax Appeals Tribunal erred in holding that the Respondent applied a 24% mark-up to arrive at a taxable amount for the Appellant.
  3. Whether the Tax Appeals Tribunal erred in relying on untendered documents.
  4. Whether the Appellant was afforded a right to a fair hearing when it was not informed of the companies used as benchmarks for determining the industrial average.
  5. Whether the Tax Appeals Tribunal erred in upholding the assessments despite holding that the Respondent applied a procedure not sanctioned in law.
  6. Whether it is within the Commissioner's discretion to apply any procedure to charge tax on a taxpayer, whether sanctioned in law or not.
  7. Whether the Appellant was liable to tax because it provided unsigned books of accounts.
  8. Whether the decision of the Commissioner was vitiated by illegality, irrationality, and procedural impropriety.
  9. Whether the Tax Appeals Tribunal properly evaluated the evidence on record.

Orders

  • Appeal dismissed.
  • Decision of the Tax Appeals Tribunal upheld.
  • Costs awarded to the Respondent.

Rules and key headnotes

Tax Law — Tax Assessment — Burden of Proof — Appellant's Duty to Prove Assessment Excessive
In proceedings before the Tax Appeals Tribunal for review of a taxation decision, the applicant has the burden of proving that where the taxation decision is an objection decision in relation to an assessment, the assessment is excessive, or in any other case, the taxation decision should not have been made or should have been made differently.
Tax Law — Tax Assessment — Commissioner's Discretion — Use of Mark-Up Method
Where the law is silent on the method to be used by the Commissioner to assess tax liability, the Commissioner may use any method including a mark-up derived from comparable companies in the same industry, provided such method has justification on a case-by-case basis and is based on relevant materials available to the Commissioner.
Tax Law — Additional Assessment — Grounds for Issuance — Gross Neglect
Under section 23 of the Tax Procedures Code Act 2014, the Commissioner may make an additional assessment at any time if fraud or any gross or willful neglect has been committed by or on behalf of the taxpayer. The failure by a taxpayer to furnish required documents in support of an objection, which is the taxpayer's duty to furnish, amounts to gross neglect justifying an additional assessment.
Civil Procedure — Scheduling — Joint Trial Bundle — Admission of Documents
Documents filed in a joint trial bundle and marked as exhibits during scheduling proceedings are admitted as agreed documents by the parties and may be relied upon in evidence. The scheduling process affords parties an opportunity to object to documents being admitted, and failure to object constitutes agreement.
Administrative Law — Appeals — Questions of Law — Error of Law Defined
An appeal to the High Court from the Tax Appeals Tribunal may be made on questions of law only. An error of law refers to instances where there is no evidence to support a finding, or where the evidence contradicted the finding, or where the only reasonable conclusion contradicted the finding.

Legislation cited (10)

Cases cited (7)

  • Barry Edwards v The Commissioner for Her Majesty's Revenue & Customs [2019] UKUT 0131 (TCC)
  • Fredrick Zaabwe v Orient Bank Ltd (Supreme Court Civil Appeal No. 4 of 2006)
  • Sanyu Lwanga Musoke v Sam Galiwango (Supreme Court Civil Appeal No. 48 of 1995)
  • Uganda Revenue Authority v Tembo Steels Limited (Civil Appeal No. 09 of 2006)
  • Edwards v Bairstow [1956] AC 14
  • Argosy Co. Ltd v Inland Revenue Commissioner [1971] WLR 514
  • Tembo Steels (U) Ltd v Uganda Revenue Authority (Court of Appeal Civil Appeal No. 77 of 2011)

Full judgment

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

Gakou Brothers Enterprises Limited v Uganda Revenue Authority (Civil Appeal 55 of 2021) [2023] UGCommC 155 (24 March 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.