Wakilii

Living Goods Limited v Uganda Revenue Authority (Application 85 of 2021)

Tribunal · [2023] UGTAT 38 · 2023 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging VAT assessments following partial settlement of tax dispute
Decision
VAT assessments for December 2016 and January 2017 set aside; applicant not liable for VAT for the disputed period.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the applicant was not a taxable person for the period December 2016 to January 2017. The respondent rejected the applicant's VAT registration application in 2014 on grounds that it was not a fit and proper person. When the respondent later registered the applicant effective 1 June 2019, it could not retrospectively backdate the registration to 2016 without showing that the 2014 rejection was based on incorrect information. The VAT assessments for December 2016 and January 2017 were set aside.

Outcome

VAT assessments for December 2016 and January 2017 set aside; applicant not liable for VAT for the disputed period.

Facts

Living Goods Limited, a non-governmental organization empowering community health workers, applied for VAT registration in August 2014, disclosing taxable supplies of Shs. 450,000,000 over the past 3 months and Shs. 600,000,000 over the past 12 months. The Uganda Revenue Authority rejected the application on the ground that the applicant's activities were those of an NGO buying and selling to the disadvantaged at reduced prices, and that while input VAT was noticeable, the output was not clear. In February 2019, the applicant submitted a fresh VAT application which was approved with an effective date of 1 June 2019. The respondent subsequently audited the applicant for the period January 2016 to March 2021 and issued VAT assessments totaling Shs. 4,072,547,208. The parties reached a partial settlement, but the dispute over VAT assessments of Shs. 40,263,077 for December 2016 and Shs. 8,071,479 for January 2017 was referred to the Tribunal. During the proceedings, the respondent produced an amended certificate of registration backdating the applicant's VAT registration to 1 January 2016, which the applicant challenged as a fabrication.

Issues

  1. Whether the applicant is liable to pay the tax assessed for December 2016 and January 2017.
  2. What remedies are available to the parties.

Orders

  • Application in respect of the assessments of Shs. 10,263,077 and Shs. 8,071,479 allowed.
  • The said assessments are set aside.
  • Costs for the portion of the settlement sent to the Tribunal for determination are awarded to the applicant.

Rules and key headnotes

VAT Registration — Effective Date — Certificate of Registration
A taxable person becomes VAT liable from the date specified in the certificate of registration, and the effective date of registration is the date from which the taxpayer is deemed to become a taxable person.
VAT Registration — Commissioner's Powers — Rejection of Application
Where the Commissioner General rejects a VAT registration application under section 8(2) of the VAT Act on the ground that the applicant is not a fit and proper person to be registered, the Commissioner cannot subsequently backdate registration to the period during which the applicant was found unfit, even if the applicant was making taxable supplies during that period.
VAT Registration — Backdating — Burden of Proof
Where a tax authority seeks to backdate a VAT registration certificate, it must demonstrate that the earlier rejection of the application was based on incorrect or insufficient information provided by the applicant, and cannot do so arbitrarily or by wishful thinking.
Taxation Principles — Certainty
One of the canon principles of taxation is certainty: a taxpayer should know when taxes are due, and collection of taxes should be done systematically according to law, not at the whims of the tax authority.

Legislation cited (13)

Cases cited (15)

  • Tamale and Co. Advocates v Uganda Revenue Authority (Application 48 of 2008)
  • Post Bank (U) Limited v URA (supra)
  • Tullow Uganda Limited and Anor v Commissioner General, Uganda Revenue Authority (HCCS 445 of 2012)
  • Kampala Nissan v Uganda Revenue Authority (Civil Appeal No. 7 of 2009)
  • Income Tax Commissioner v A.K [1964] EA 648
  • Keroche Industries Limited v Kenya Revenue Authority & 5 others 2007 eKLR
  • R (Bibi) v Newham London Borough Council
  • Republic v Kenya Revenue Authority ex parte Shake Distributors Limited (2012) EKLR
  • Rawal v Judicial Service Commission & 3 others (2016) eKLR
  • Commonwealth Commission of Kenya & 5 others, SC Petition Nos. 14,14A,14B & 14C of 2014
  • South African Veterinary Council v. Szymanski 2003 ZASCA 11
  • R.v.D ex parte Kebilele Wainanina Kigathi Mungal, HC J.R Misc. 356 of 2013
  • Hauptleisch v. Caledon Divisional Council (1963) (4) SA53
  • Rowland v. Environment Agency (2003) EWCA Civ. 1885
  • Republic v. Kenya Revenue Authority ex-parte Aberdare Freight Services Ltd (2004) KLR 530

Full judgment

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Living Goods Limited v Uganda Revenue Authority (Application 85 of 2021) 2023 UGTAT 38 (5 October 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.