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Kampala Hospitality Development Limited v Uganda Revenue Authority [2025] UGTAT 1

Tribunal · 2025 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for review of objection decision challenging VAT assessments as time-barred under Tax Procedure Code Act s.25
Decision
Application dismissed; Applicant liable to pay assessed VAT

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the Applicant's failure to account for VAT on imported services while accounting for withholding tax on the same transactions constituted willful neglect under section 25(2)(a) of the Tax Procedure Code Act. The Respondent did not discover new information, as the withholding tax returns had been in its possession since 2015. However, the exception for willful neglect applied, permitting assessment beyond the three-year limitation period. Application dismissed with costs.

Outcome

Application dismissed; Applicant liable to pay assessed VAT

Facts

The Applicant, a hospitality company, consumed imported services from non-resident persons during hotel construction in 2015. It accounted for 15% withholding tax but failed to account for 18% VAT on those services. In January 2023, the Respondent issued VAT assessments totaling Shs. 1,347,704,955 for the period May 2015 to August 2021. After objection, the Respondent maintained assessments of Shs. 306,960,700 for May 2015 to December 2019, claiming discovery of new information from the Applicant's withholding tax returns. The Applicant challenged the assessments as time-barred under the three-year limitation in section 25(2) of the Tax Procedure Code Act. The Respondent argued the assessments fell within exceptions for discovery of new information or willful neglect.

Issues

  1. Whether the Respondent's VAT assessments for the period May 2015 to December 2019 are time-barred under section 25 of the Tax Procedure Code Act.
  2. Whether the Respondent discovered 'new information' within the meaning of section 25(2)(a) of the Tax Procedure Code Act.
  3. Whether the Applicant's failure to account for VAT on imported services while accounting for withholding tax constituted gross or willful neglect under section 25(2)(a) of the Tax Procedure Code Act.

Orders

  • Application dismissed.
  • Costs awarded to the Respondent.
  • Applicant liable to pay the tax assessed.

Rules and key headnotes

Tax Law — Limitation Periods — Purpose and Application of Statutory Time Limits
Statutes of limitation in tax law serve to balance the equities between taxpayers and the public by restricting the period within which a tax authority may assert claims against taxpayers who in good faith believed they owed no tax, while preventing taxpayers from receiving windfalls at public expense when valid claims are barred.
Tax Law — Additional Assessments — Discovery of New Information
The phrase 'discovery of new information' in section 25(2)(a) of the Tax Procedure Code Act means the finding of facts about a situation for the first time. Information that has been in the possession of the tax authority since the taxpayer filed returns cannot constitute 'new information' merely because the authority conducted an audit years later.
Tax Law — Additional Assessments — Duty of Tax Authority to Review Returns Promptly
Section 25 of the Tax Procedure Code Act places a duty on the tax authority to review taxpayers' returns in a timely and efficient manner. Where taxpayers have filed returns and provided all necessary information, the authority must review those returns within the three-year limitation period and cannot later claim to have 'discovered' information that was apparent on filed returns.
Tax Law — Self-Assessment Regime — Willful Neglect
Under Uganda's self-assessment regime, willful neglect is a deliberate or intentional failure to perform a legal duty. Where a taxpayer making a significant investment accounts for withholding tax on payments to non-residents but fails to account for the corresponding VAT on imported services, such omission constitutes willful neglect, particularly where the tax impact is substantial and the taxpayer cannot credibly claim ignorance.
Statutory Interpretation — Tax Statutes — Strict Construction
Tax statutes must be strictly interpreted. One must look clearly at what is said in the statute and there is no room for intendment or assumptions. Statutory time limits in tax matters must be strictly adhered to.
Tax Law — Legislative Intent — Protection of Diligent Taxpayers
The legislative intent of section 25(2) of the Tax Procedure Code Act is threefold: to enable the tax authority to raise claims against taxpayers who withhold information or are negligent or fraudulent; to protect diligent taxpayers who have filed returns and provided necessary information by capping the assessment period at three years; and to place a duty on the tax authority to review returns in a timely and efficient manner.

Legislation cited (5)

  • Tax Procedure Code Act s.25(2)
  • Tax Procedure Code Act s.25(2)(a)
  • Tax Procedure Code Act s.25(2)(b)
  • Tax Procedure Code Act s.25(2)(c)
  • Tax Procedure Code Act s.23(2)(b)

Cases cited (10)

  • Cable Corporation v Commissioner General & Uganda Revenue Authority (Civil Appeal No. 1 of 2017)
  • Langham v Veltema [2004] STC 544
  • Megha Industries Uganda Ltd v Uganda Revenue Authority (Application No. 32 of 2022)
  • Uganda Electricity Transmission Co. Ltd v Uganda Revenue Authority (Civil Suit No. 423 of 2010)
  • Michael Ndichu v Commissioner, Domestic Taxes, [2023] KEHC 2594
  • Van Boeckel v Customs and Excise Commissioners [1981] STC 290
  • Crane Bank v Uganda Revenue Authority
  • Cape Brandy Syndicates v CIR 12 TC 366
  • Commissioner of Domestic Taxes v Airtel Networks Kenya Limited (Income Tax Appeal E062 of 2022) [2023] KEHC 25059
  • Michael Ndichu v Commissioner of Domestic Taxes, (Income Tax Appeal E064 of 2021) [2023] KEHC 2594 (KLR)

Full judgment

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Kampala Hospitality Development Limited v Uganda Revenue Authority 2025 UGTAT 1 (13 February 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.