Wakilii

Nile Breweries Limited v Uganda Revenue Authority (Application 100 of 2022 Application 110 of 2022 Application 46 of 2022)

Tribunal · [2023] UGTAT 47 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging VAT and Local Excise Duty assessments raised by URA in respect of purported exports
Decision
Application dismissed with costs to the respondent; VAT and LED assessments upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that Nile Breweries Limited made local sales of beer to Ituri Investments Limited and Kabaco (U) Limited at its premises in Uganda, where title passed to the agents. These were not exports by the applicant but local supplies subject to VAT at 18% and Local Excise Duty. Section 13 of the VAT Act, which deems an agent's supply to be that of the principal, does not apply to exports. The applicant failed to provide documentary proof acceptable to the Commissioner General that goods were delivered to an address outside Uganda. The application was dismissed and the assessments of UGX 7,537,585,897 for VAT and UGX 11,025,779,590.98 for LED were upheld.

Outcome

Application dismissed with costs to the respondent; VAT and LED assessments upheld

Facts

Nile Breweries Limited manufactures alcoholic beverages sold locally and exported to DRC and South Sudan. Goods for export are marked 'for export'. The applicant contracted Ituri Investments Limited and Kabaco (U) Limited as agents to export beverages. URA audited the applicant for periods between January and December 2021 and issued additional assessments totaling UGX 11,025,779,590.98 for LED and UGX 7,537,585,897 for VAT. URA contended that the applicant misclassified local sales to the agents as zero-rated exports. The applicant issued invoices to the agents, who paid in full. Under the export agreements, products were delivered Ex Works from the applicant's premises in Jinja or Mbarara, whereupon title passed to the agents. The applicant did not charge VAT or LED on these transactions, treating them as zero-rated exports. URA argued that delivery and payment occurred in Uganda, constituting local sales subject to VAT and LED.

Issues

  1. Whether the applicant is liable to pay VAT assessed.
  2. Whether the applicant is liable to pay Local Excise Duty assessed.
  3. What remedies are available.

Orders

  • Application dismissed.
  • Applicant liable to pay VAT of UGX 7,537,585,897.
  • Applicant liable to pay Local Excise Duty of UGX 11,025,779,590.98.
  • Costs awarded to the respondent.

Rules and key headnotes

VAT — Zero-Rating — Exports — Documentary Proof Requirement
For goods to qualify as zero-rated exports under the VAT Act Third Schedule paragraph 2(a), the goods must be delivered to or made available at an address outside Uganda as evidenced by documentary proof acceptable to the Commissioner General. Where goods are delivered at the manufacturer's premises in Uganda and title passes to the purchaser in Uganda, the transaction is a local supply subject to VAT at 18%, not a zero-rated export.
VAT — Agency — Section 13 VAT Act — Inapplicability to Exports
Section 13 of the VAT Act, which provides that a supply of goods by an agent is deemed to be a supply by the principal, does not apply to exports. The VAT Act differentiates between supply of goods and services on the one hand, and import or export of goods and services on the other. Where an agent exports goods in its own name, the agent, not the principal, is the exporter for VAT purposes.
VAT — Time and Place of Supply — Delivery in Uganda
Under Section 15 of the VAT Act, a supply of goods takes place in Uganda if the goods are delivered or made available in Uganda by the supplier. Where goods are delivered at the supplier's premises in Uganda and title passes to the purchaser in Uganda, the supply occurs in Uganda and is subject to VAT, regardless of whether the purchaser subsequently exports the goods.
Local Excise Duty — Taxing Point — Removal from Manufacturer's Premises
Under Section 4(3) of the Excise Duty Act 2014, a manufacturer becomes liable to pay excise duty on manufactured excisable goods when the goods are removed from the manufacturer's premises. Where goods are delivered to a purchaser at the manufacturer's premises in Uganda, excise duty is due unless the manufacturer provides evidence acceptable to the Commissioner that the goods have been exported.
Statutory Interpretation — Tax Statutes — No Room for Intendment
In interpreting tax statutes, there is no room for intendment, no equity about a tax, and no presumption as to tax. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language used. The Act must be read as a whole.
VAT — Burden of Proof — Exports
The burden of proving that goods were exported lies with the exporter. The exporter must establish that the goods exited the country and must provide documentary proof acceptable to the Commissioner General, including bills of entry certified by customs, invoices to foreign purchasers showing zero-rated tax, and transport documentation identifying the goods.

Legislation cited (22)

Cases cited (14)

  • Republic v Kenya Revenue Authority Exparte United Millers Limited (JR Case No. 323 of 2013)
  • Commissioner for Investigations and Enforcement v Menengai Oils Limited (Tax Appeal No. 40 of 2020)
  • Celtel Uganda Limited v Uganda Revenue Authority (CACA No. 22 of 2006)
  • Faagorg-Gelting Linien Vs A/S Finanzamt Flensburg (1996) ALL ER 656
  • Customs and Excise Commissioners v Oliver (1980) 1 ALL ER 1353
  • Uganda Revenue Authority v Total Uganda Limited (HCCA No. 8 of 2010)
  • Aviation Hangar Services Ltd v URA (Application No. 21 of 2019)
  • Intertek Services v Uganda Revenue Authority (HCCA No. 5 of 2002)
  • Placer Dome Inc v Canada [1992] 2 CTC 98
  • Dominion Taxicab Association v MNR, [1954] SCR 82
  • Hampton and Sons v George (1939) 3 ALLER 627
  • MTN Uganda Ltd v Uganda Revenue Authority (Application No. 8 of 2019)
  • Commissioner of Domestic Taxes v W.E.C. Lines K. Limited (Tax Appeal No. E084 of 2020)
  • Cape Brandy Syndicate v CIR (1921) 1 KB 64

Full judgment

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

Nile Breweries Limited v Uganda Revenue Authority (Application 100 of 2022 Application 110 of 2022 Application 46 of 2022) 2023 UGTAT 47 (28 November 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.