Wakilii

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

Tribunal · [2010] UGTAT 3 · 2010 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 liability for that assessment removed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that management services provided in respect of closed fuel cards are incidental to the supply of petroleum fuel, which is VAT-exempt under the Second Schedule to the VAT Act. Applying section 12 of the VAT Act and the principle that a service is ancillary if it does not constitute an aim in itself but a means of better enjoying the principal service, the Tribunal found that closed cards cannot be used without fuel and the convenience they provide is less important than the fuel supply itself. The supply of fuel and the card service constitute a single exempt supply.

Outcome

VAT assessment on closed fuel cards set aside; applicant's liability for that assessment removed

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 Shs. 1,800 VAT). Total charges dealers a management fee of 5-7 shillings per litre to recover IT, communication, maintenance, and licensing costs. Uganda Revenue Authority assessed Total VAT of Shs. 891,807,827 for fuel card issuance. Total paid 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 card service is incidental to the exempt fuel supply and should not attract VAT.

Issues

  1. Whether the issuance of closed fuel cards attracts Value Added Tax.
  2. What remedies are available to the parties.

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
Under section 12 of the Value Added Tax Act, a supply of services incidental to the supply of goods is part of the supply of goods and shares the tax treatment of the principal supply.
Tax Law — Meaning of 'Incidental'
Where a statute does not define a term, it should be given its ordinary meaning. 'Incidental' means something that happens in connection with something else but is less important than the principal supply.
Value Added Tax — Test for Ancillary Services
A service is ancillary to a principal service if it does not constitute an aim in itself for the customer but is a means of better enjoying the principal service supplied. The test is whether the provision of the service can be independent of the exempt supply.
Value Added Tax — Closed Fuel Cards as Incidental to Fuel Supply
Where fuel cards can only be used to purchase VAT-exempt petroleum products and provide convenience to customers in accessing fuel, the management services and convenience provided by the cards are incidental to the supply of fuel. Without fuel, the closed card would be irrelevant. The supply of fuel and the card service constitute a single exempt supply.
Value Added Tax — Single Supply versus Multiple Supplies
In determining whether there is a single supply or multiple supplies, the court must consider all circumstances of the transaction. A supply which from an economic point of view is a single service should not be artificially split into separate services. No single factor or set of factors can determine whether a supply is incidental; each case must be assessed on its own facts.

Legislation cited (6)

Cases cited (13)

  • Commissioners of Customs and Excise v Madgett and Baldwin (1998) ECR 6229
  • Card Protection Plan Ltd 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 Ltd 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 Ltd 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) Ltd v Uganda Revenue Authority (Application No TAT 9 of 2010) 2010 UGTAT 3 (18 March 2010)
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.