Wakilii

Total (U) Limited v Uganda Revenue Authority (TAT Application No 9 of 2010)

Tribunal · [2011] UGTAT 7 · 2011 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging a taxation decision imposing Value Added Tax on closed fuel cards
Decision
VAT assessment on closed fuel cards set aside; applicant's position upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the supply of management services in respect of closed fuel cards is incidental to the supply of petroleum fuel, which is VAT exempt. The closed cards cannot be used without fuel and provide convenience that is less important than the principal supply of fuel. The supply of convenience through closed cards is a means of customers better enjoying the principal service of fuel supply. Accordingly, the applicant makes one supply—that of fuel—and the VAT assessment on closed cards was set aside.

Outcome

VAT assessment on closed fuel cards set aside; applicant's position upheld

Facts

Total (U) Limited markets petroleum products and issues two types of fuel cards to customers: open cards (for fuel and groceries) and closed cards (for fuel only). Customers pay Shs. 11,800 for cards (Shs. 10,000 plus VAT). The applicant charges dealers a management fee of 5-7 shillings per litre to recover IT, communication, maintenance, and licensing costs. Uganda Revenue Authority assessed VAT of Shs. 891,807,827 on fuel card issuance. The applicant paid VAT of Shs. 202,406,581 for open cards but disputed the Shs. 689,401,245 assessment for closed cards, arguing that since petroleum fuel is VAT exempt under the Second Schedule to the VAT Act, and closed cards can only be used to purchase fuel, the management services are incidental to the exempt supply of fuel.

Issues

  1. Whether the issuance of closed fuel cards attracts Value Added Tax
  2. Whether management services provided in respect of closed fuel cards are incidental to the supply of petroleum products and therefore VAT exempt

Orders

  • Application allowed.
  • Assessment of Shs. 689,401,245/= being VAT assessed set aside.
  • Costs of the application awarded to the applicant.

Rules and key headnotes

Value Added Tax — Mixed Supplies — Incidental Services
A supply of services incidental to the supply of goods is part of the supply of goods under section 12(1) of the VAT Act. A service is incidental if it happens in connection with something else but is less important, and does not constitute an aim in itself but a means of better enjoying the principal service supplied.
Value Added Tax — Exempt Supplies — Petroleum Products
Where closed fuel cards can only be used to purchase petroleum fuel which is VAT exempt under the Second Schedule to the VAT Act, and the cards would be irrelevant without the supply of fuel, the management services provided in respect of such cards are incidental to the exempt supply of fuel and do not attract VAT.
Value Added Tax — Single Supply Test
The test for determining whether services are incidental to an exempt supply is whether the provision of services can be independent of the exempted supply. If there is no fuel being purchased, there would be no need for a closed fuel card, indicating that the card service is incidental to the fuel supply.
Taxation Statutes — Ordinary Meaning
Acts of Parliament including taxation law should be given their ordinary meaning. Where the VAT Act does not define a term such as 'incidental', the court should apply the ordinary dictionary meaning of the word.
Value Added Tax — Factual Assessment
No single factor or set of factors can determine whether a supply is incidental to a principal supply. The court should take into account all the circumstances of each case in determining whether there is a single supply or multiple supplies for VAT purposes.

Legislation cited (6)

Cases cited (13)

  • Commissioners of Customs and Excise v Madgett and Baldwin (1998) ECR 6229
  • Card Protection Plan Limited v Commissioners of Customs and Excise (Case C-349/96)
  • Commissioners of Customs and Excise v British Telecommunications PLC (1999) UKHL 3
  • Dr Beynon and Partners v C & E Commissioners (2004) UKHL 53
  • Card Protection Plan Limited v Customs and Excise Commissioners [1999] STC 199
  • Customs and Excise Commissioners v British Telecommunications [1997] STC 475
  • Customs and Excise Commissioners v Leighton Ltd [1995] STC 4548
  • Bophuthatswana National Commercial Corp Ltd v Customs and Excise Commissioners [1993] STC 702
  • C & E Commissioners v Leightons [1995] STC 463
  • British Airways PLC v Customs and Excise Commissioners [1990] STC 643
  • Customs and Excise Commissioners v Welling Private Hospital Ltd [1997] STC 445
  • UTODA Branch Limited v Uganda Revenue Authority (TAT Application No. 8 of 2009)
  • Diamond Shipping v Uganda Revenue Authority (TAT Application No. 21 of 2008)

Full judgment

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

Total (U) Limited v Uganda Revenue Authority (TAT Application No 9 of 2010) 2011 UGTAT 7 (24 May 2011)
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.