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Hub Establishments Limited v Uganda Revenue Authority (Application 34 of 2022)

Tribunal · [2023] UGTAT 29 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging VAT and income tax assessments arising from disallowance of input VAT claim
Decision
Application dismissed with costs to the respondent

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tax Appeals Tribunal dismissed the applicant's challenge to VAT and income tax assessments arising from disallowed input VAT claims. The Tribunal held that the applicant failed to discharge its burden of proving that the queried transactions took place. A consolidated receipt issued ten months after purchase, combined with a variance between the claimed amount and amounts verifiable in the supplier's cash book, raised doubts as to authenticity. The applicant did not provide credible evidence to account for the variance of UGX 17,229,099 between the claimed purchases and amounts reflected in the supplier's records.

Outcome

Application dismissed with costs to the respondent

Facts

Hub Establishments Ltd, a supplier of electrical materials and building contractor, claimed input VAT of UGX 13,931,176 on purchases totalling UGX 77,395,423 from Suave Engineering Ltd for the period September 2019 to August 2020. In November 2021, during an audit of Suave Engineering Ltd, the Uganda Revenue Authority established that certain purchases purported to have been made by the applicant were not adequately supported by documentation. URA raised assessments of UGX 6,461,834 for income tax and UGX 3,711,325 for VAT. The applicant provided invoices totalling UGX 82,026,600 and a single consolidated receipt dated 30 June 2020 for UGX 82,026,599 covering all purchases made in 2019. URA's investigation revealed that Suave Engineering Ltd's cash book and ledger account showed only UGX 64,797,500 in payments from the applicant, creating a variance of UGX 17,229,099. The receipt was issued ten months after the first purchase and could not be traced in Suave Engineering Ltd's records. URA disallowed purchases of UGX 26,529,100 and issued revised assessments.

Issues

  1. Whether the applicant is liable to pay the taxes as assessed.
  2. What remedies are available to the parties.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Tax Law — Input VAT Credit — Requirements for Claiming Input Tax Credit
For a taxpayer to be entitled to input tax credit under the Value Added Tax Act, the taxpayer must prove that it is a taxable person, that taxable supplies have been made to the taxpayer during the tax period, and that the taxable supplies were for use in the business of the taxpayer.
Tax Law — Input VAT Credit — Burden of Proof
The burden of proof is on the applicant to prove on a balance of probability that the input tax credit claimed was due and payable by presenting invoices and proof of payment for the transactions in question.
Evidence — Documentary Evidence — Cash Receipts — Timing and Credibility
A cash receipt issued ten months after the purchase of goods raises doubts as to its authenticity and credibility, particularly where the receipt is consolidated and does not indicate the dates when individual transactions took place, making it impossible to verify when payment for particular purchases occurred.
Evidence — Burden of Proof — Variance in Records
Where there is a variance between the amount claimed by a taxpayer and the amount verifiable in the supplier's records, the taxpayer bears the burden of providing credible evidence to account for the variance and cannot rely solely on assertions of poor record-keeping by the supplier.

Legislation cited (9)

Cases cited (3)

  • Airtel Uganda Limited v Uganda Revenue Authority (Application No. 10 of 2019)
  • Rubya Investors Limited v Uganda Revenue Authority (Application No. 105 of 2020)
  • Enviroserv (U) Ltd v Uganda Revenue Authority (Application No. 24 of 2017)

Full judgment

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

Hub Establishments Limited v Uganda Revenue Authority (Application 34 of 2022) 2023 UGTAT 29 (29 June 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.