Uganda Crop Industries Ltd v Commissioner General URA (Miscellaneous Application No. 750 of 2011)

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The court granted a temporary injunction restraining the respondent from levying enforcement measures against the applicant pending resolution of the main suit. The court held that where a taxpayer has objected to a tax assessment and agreed to pay 30% of the assessed tax pursuant to section 103(2) of the Income Tax Act and a consent order, payment of that 30% is a statutory condition for staying enforcement procedures, and no further enforcement measures should be taken pending final resolution of the tax dispute.

Outcome

Temporary injunction granted restraining enforcement measures pending resolution of main suit, subject to applicant depositing any balance outstanding on the 30% statutory deposit after reconciliation of refunds

Facts

The applicant filed a suit challenging corporate income tax assessments raised by the respondent for the years 2002 and 2003. Pursuant to a consent order dated 8 August 2011, a previous assessment of approximately 1.9 billion shillings was vacated and replaced with a new assessment of 125,043,281 shillings. The applicant exercised its right to object to the new assessment and was required under the consent order and section 103(2) of the Income Tax Act to pay 30% of the new assessment. The respondent offset some refunds due to the applicant and demanded payment of a balance of approximately 11 million shillings. The applicant disputed the amount owed and contended that the respondent held additional refunds. On 2 December 2011, the respondent issued a third-party agency notice to seize funds despite the ongoing dispute. The applicant applied for a temporary injunction to restrain the respondent from taking enforcement measures pending final determination of the main suit.

Issues

1. Whether the applicant satisfied the conditions for grant of a temporary injunction to restrain the respondent from taking enforcement measures for tax collection pending final determination of the main suit.
2. Whether the applicant should be required to pay the balance of the 30% statutory deposit under the consent order and section 103(2) of the Income Tax Act as a condition for the temporary injunction.

Orders

• The respondent shall audit its state of affairs with the applicant to establish how much of the balance of 11 million shillings on the 30% deposit is due, if at all.
• If the audit is not acceptable, the parties may agree on an independent auditor and meet costs on a 50-50 basis to reconcile the applicant's entitlement to refunds vis-a-vis its obligation to pay the outstanding balance.
• Subject to reconciliation by auditors of any refunds due to the applicant, the applicant shall deposit with the respondent any balance outstanding on the 30% under the consent order dated 8 August 2011.
• A temporary injunction issues, restraining the respondent, its servants or agents, from levying any enforcement measures against the applicant pending resolution of the main suit.
• Costs of the application shall abide the outcome of the main suit.

Rules and key headnotes

Legislation cited (3)

• Income Tax Act s.103(2)
• Income Tax Act s.136(2)
• Income Tax Act s.38

Cases cited (3)

• Ketan Marjoria Vs URA
• Kiyimba Kaggwa v Katende [1985] HCB 43
• Project Implementation and Management Centre v Uganda Revenue Authority (Constitutional Appeal No. 2 of 2009)

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