Wakilii

Roraima Uganda Limited v Uganda Revenue Authority (Application 68 of 2021)

Tribunal · [2022] UGTAT 22 · 2022 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to the Tax Appeals Tribunal challenging URA's partial disallowance of a VAT refund claim
Decision
Application partly allowed; UGX 195,784,535 remitted to URA for verification and payment; remaining claims dismissed

Observed later treatment

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Holding

The Tribunal held that input tax credit cannot be claimed for services supplied six months prior to registration under s.28(3) of the VAT Act, which applies only to goods on hand at registration. VAT paid in error where it was deemed paid under s.24(5) may be refunded to the applicant after verification that contractors have not claimed it. A deregistered taxpayer cannot claim input tax credit for the period of deregistration, regardless of whether the deregistration was wrongful. Unverified input tax claims fail where the taxpayer does not discharge the burden of proof.

Outcome

Application partly allowed; UGX 195,784,535 remitted to URA for verification and payment; remaining claims dismissed

Facts

Roraima Uganda Limited, a mining and quarrying company, registered for VAT on 18 December 2014 and was deregistered on 31 July 2015. It was re-registered on 18 January 2018. In January 2019, the applicant applied for a VAT refund of UGX 1,456,698,093.64. URA conducted a refund audit and rejected the claim. Following an objection, URA partially allowed input tax of UGX 538,873,108 but disallowed UGX 917,824,985. The disallowed amounts comprised: UGX 187,103,135 for services supplied six months prior to registration; UGX 195,784,535 for VAT deemed paid under s.24(5) of the VAT Act but actually paid to contractors; UGX 531,784,535 for supplies received during the period of deregistration (1 August 2015 to 31 December 2017); UGX 13,864,226 for supplies that could not be verified; and UGX 24,152,119 for imports, part of which was incurred during deregistration. The applicant challenged the disallowances, arguing it was wrongfully deregistered and entitled to all claimed refunds.

Issues

  1. Whether the applicant is entitled to input tax credit of UGX 187,103,135 for supplies of services made six months prior to VAT registration.
  2. Whether the applicant is entitled to a refund of UGX 195,784,535 for VAT paid in error where VAT was deemed to have been paid under s.24(5) of the VAT Act.
  3. Whether the applicant is entitled to input tax credit of UGX 531,784,535 for supplies received during the period when its VAT registration was cancelled.
  4. Whether the applicant is entitled to input tax credit of UGX 13,864,226 for supplies that could not be verified from records.

Orders

  • Application dismissed save for the claim of UGX 195,784,535.
  • Matter of UGX 195,784,535 remitted to the respondent to pay the applicant after verifying that the contractors did not claim the said amount.
  • Applicant to present a letter from the contractors applying for a refund of the VAT paid in error.
  • Interest chargeable only after the respondent has verified that the amount is due.
  • Applicant ordered to pay half the costs of the application.

Rules and key headnotes

VAT — Input Tax Credit — Services Supplied Prior to Registration
Section 28(3) of the VAT Act allows input tax credit for taxable supplies of goods made not more than six months prior to registration, provided the goods are on hand at the date of registration. This provision does not extend to services supplied prior to registration, as services cannot be 'on hand' at the date of registration. A supply of drilling services, though performed using equipment, remains a supply of services and not goods.
VAT — Deemed Payment — Refund of VAT Paid in Error
Where VAT is deemed to have been paid under s.24(5) of the VAT Act but was actually paid by the licensee to the contractor in error, the licensee may reclaim the overpayment. However, the Tribunal must verify that the contractor who declared and remitted the VAT has not already claimed a refund, to avoid double recovery. The applicant must present evidence from the contractors confirming they have not claimed the amount.
VAT — Registration and Deregistration — Effect on Input Tax Credit
A person registered under s.7 of the VAT Act is a taxable person from the time the registration takes effect, as specified in the certificate of registration. When a taxpayer is deregistered, it ceases to be a taxable person and cannot claim input tax credit for the period of deregistration. The effect of deregistration is to remove the person from the application of the VAT Act and its benefits. A taxpayer aggrieved by deregistration must object or appeal against the decision, or fulfil the conditions for reactivation.
VAT — Burden of Proof — Verification of Input Tax Claims
Under s.26 of the Tax Procedure Code Act and s.18 of the Tax Appeals Tribunal Act, the burden of proof in tax disputes lies on the taxpayer to prove that the tax assessment is excessive, unfair, or incorrect. Where a taxpayer claims input tax credit but fails to produce invoices or other proof of supplies received, the claim must fail for want of evidence.
Tax Statutes — Strict Construction
Tax statutes are to be strictly construed. If the intention of Parliament can be discerned from the wording of the statute, there is no need to look beyond the wording of the section. Where a provision refers to 'taxable supplies of goods', it does not extend to services, which are defined in the VAT Act as anything that is not goods or money.

Legislation cited (32)

Cases cited (7)

  • Enviroserve (U) Ltd v Uganda Revenue Authority (Application No. 24 of 2017)
  • East Africa Property v URA
  • Margaret Rwaheru Akiiki & 13,945 Others v Uganda Revenue Authority (Civil Suit No. 117 of 2013)
  • Kinyara Sugar Ltd v Commissioner General Uganda Revenue Authority (High Court Civil Suit No. 73 of 2011)
  • Tullow Uganda Ltd & Tullow Uganda Operations Pty Ltd v Commissioner General, Uganda Revenue Authority (Civil Suit No. 445 of 2012)
  • Manilla North Tollways Corporation v Commissioner of Internal Revenue C-T. AED No. 812 of 2012
  • Post Bank (U) Uganda Ltd v Uganda Revenue Authority (TAT No. 18 of 2008)

Full judgment

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

Roraima Uganda Limited v Uganda Revenue Authority (Application 68 of 2021) 2022 UGTAT 22 (25 July 2022)
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.