Wakilii

Uganda Revenue Authority v Nile Breweries Limited and 2 Others (Taxation Application No 46 of 2020)

Tribunal · [2022] UGTAT 9 · 2022 Application Granted — Contempt Found AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated applications: first for contempt of tribunal order requiring payment of 30% of disputed tax; second for interpretation of Section 15 of the Tax Appeals Tribunal Act regarding payment obligations pending objection resolution
Decision
All three respondents found in civil contempt and fined; banks jointly liable for damages; fines to be paid into Consolidated Fund

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal struck off Misc. Application 61 of 2022 as an abuse of process, holding that interpretation arguments should have been raised in the contempt application. Section 15 of the Tax Appeals Tribunal Act requires payment of 30% of the tax in dispute as stated in the objection decision, not self-assessed amounts already paid. The Tribunal found all three respondents in civil contempt for failing to comply with the order of 7th March 2022, imposing fines totaling UGX 80,000,000 and awarding UGX 28,071,755 in damages against the banks jointly for denying government use of tax revenues.

Outcome

All three respondents found in civil contempt and fined; banks jointly liable for damages; fines to be paid into Consolidated Fund

Facts

URA issued additional tax assessments against Nile Breweries for Local Excise Duty (UGX 8,093,439,724) and VAT (UGX 6,098,292,276). Nile Breweries challenged the assessments and obtained a temporary injunction on 7th March 2022 restraining URA from collecting the taxes, with the Tribunal ordering Nile Breweries to pay 30% of the tax in dispute or tax not in dispute, whichever is greater. Nile Breweries did not pay the 30% and instead informed its banks (Standard Chartered and Stanbic) not to honour third party agency notices issued by URA. Nile Breweries argued it had already paid the undisputed tax through self-assessments totaling over 90% of the assessed amounts. URA brought contempt proceedings against all three respondents. Nile Breweries filed a separate application seeking interpretation of Section 15 of the Tax Appeals Tribunal Act, arguing that its self-assessed payments satisfied the statutory requirement.

Issues

  1. Whether Misc. Application 61 of 2022 seeking interpretation of Section 15 of the Tax Appeals Tribunal Act was properly brought or constituted an abuse of court process.
  2. Whether Section 15 of the Tax Appeals Tribunal Act requires payment of 30% of the tax assessed in dispute or 30% of the total tax including self-assessed amounts already paid.
  3. Whether the 1st, 2nd and 3rd respondents were in contempt of the Tribunal order of 7th March 2022 requiring payment of 30% of disputed tax.
  4. Whether the Tribunal has jurisdiction to hear contempt proceedings under Section 34 of the Tax Appeals Tribunal Act as a criminal matter or whether contempt should be treated as civil contempt under inherent powers.
  5. Whether the 2nd and 3rd respondents as banks are liable for damages for failing to comply with third party agency notices to remit 30% of disputed tax to URA.

Orders

  • Misc. Application 61 of 2022 is struck off with costs.
  • The 1st respondent is ordered to pay UGX 20,000,000 as fine for civil contempt.
  • The 2nd respondent is ordered to pay UGX 30,000,000 as fine for civil contempt.
  • The 3rd respondent is ordered to pay UGX 30,000,000 as fine for civil contempt.
  • Both 2nd and 3rd respondents are ordered to pay jointly UGX 28,071,755 as general damages.
  • Interest of 2% per annum is awarded on the above amounts from the date of this ruling until payment in full.
  • Costs of Application 58 of 2022 are to be borne by the respondents.

Rules and key headnotes

Tax Appeals — Payment Pending Objection — Interpretation of Section 15 Tax Appeals Tribunal Act
Section 15 of the Tax Appeals Tribunal Act requires a taxpayer who has lodged an objection to pay 30% of the tax assessed in dispute or that part not in dispute, whichever is greater, and refers to the tax the taxpayer objected to in the assessment or objection decision, not to self-assessed amounts voluntarily paid prior to the additional assessment.
Statutory Interpretation — Tax Statutes — Plain Meaning Rule
In a taxing Act, where the words are clear and unambiguous, one has merely to look at what is clearly said and expound those words in their natural and ordinary sense without resort to extrinsic aids to interpretation.
Contempt of Court — Civil Contempt — Elements
For civil contempt to be established, four elements must be proved: (1) the existence of a lawful court order whether regular or irregular; (2) the alleged contemnor had knowledge of the order; (3) the alleged contemnor failed to comply with or disobeyed the order; and (4) the non-compliance was willful and in bad faith.
Contempt of Court — Duty to Obey Court Orders — Regular or Irregular Orders
A party who knows of a court order, whether null or valid, regular or irregular, cannot be permitted to disobey it but must apply to the court to have it discharged; as long as the order exists it must not be disobeyed, and disregard of an order of court is a matter of sufficient gravity whatever the order may be.
Tax Appeals Tribunal — Jurisdiction — Criminal Contempt
The Tax Appeals Tribunal does not have criminal jurisdiction to try contempt under Section 34 of the Tax Appeals Tribunal Act, which creates an offence punishable by conviction, but may exercise inherent powers under Section 98 of the Civil Procedure Act to punish civil contempt by way of fine or other civil remedies.
Abuse of Process — Multiple Applications — Same Issues
Filing a separate application to raise arguments that could and should have been raised in an existing application constitutes an abuse of court process, as it would entail a court making two decisions instead of one on the same matter.
Tax Collection — Third Party Agency Notices — Liability for Non-Compliance
Under Section 31(11) of the Tax Procedure Code Act, a person who does not comply with a third party agency notice is personally liable for the amount specified in the notice, which shall be treated and collected as unpaid tax, and banks holding funds may be liable in damages for denying government use of tax revenues by failing to remit amounts specified in agency notices.

Legislation cited (15)

  • Tax Appeals Tribunal Act s.15
  • Tax Appeals Tribunal Act s.22
  • Tax Appeals Tribunal Act s.23
  • Tax Appeals Tribunal Act s.34
  • Tax Appeals Tribunal Act s.14
  • Tax Appeals Tribunal Act s.21(6)
  • Tax Appeals Tribunal (Procedure) Rules r.30
  • Tax Appeals Tribunal (Procedure) Rules r.31
  • Tax Procedure Code Act s.23
  • Tax Procedure Code Act s.31(3)
  • Tax Procedure Code Act s.31(11)
  • Tax Procedure Code Act s.29
  • Civil Procedure Act s.98
  • Constitution of Uganda art.152
  • Uganda Revenue Authority Act s.2

Cases cited (19)

  • Stanbic Bank (U) Ltd & Anor v The Commissioner General URA (HCMA No. 42 of 2010)
  • Housing Finance Bank Ltd & Anor v Edward Musisi (MA No. 158 of 2010)
  • Attorney General v Male Mabirizi Kiwanuka (HCMA No. 843 of 2021)
  • Jack Erasmus Nsangiranabo v Col Kaka Bagyenda & AG (Misc. Application No. 671 of 2019)
  • Ssempebwa and others v Attorney General (2019) 1 EA 546 (SC)
  • Cape Brandy Syndicate v IRC (1921) K.B 64
  • Sussex Peerage (1844) 8 ER 1057
  • FL Kaderbhai and another v Shamsheral Zaver Virji (SCCA No. 10 of 2008)
  • Horne Coupar v Velletta and Company 2010 BCSC 483
  • Chuck v Cremer (1 Coop Tempt Cott 342)
  • Hadkinson v Hadkinson
  • Meadow Glen Homeowners Association v City of Tshwane Metropolitan Municipality (767/2013) [2014] ZASCA 209
  • Victoria Ratepayers case [2003] ZAECHC 19
  • Prof. Frederick Ssempebwa and 2 others v Attorney General (Civil Application No. 5 of 2019)
  • Uganda Super League v Attorney General (Constitutional Application No. 73 of 2013)
  • Stanbic Bank (U) Ltd and Jacobsen Uganda Power Plant Company Ltd. v The Commissioner General Uganda Revenue Authority (Misc. Application No. 0479 of 2019)
  • Walusimbi v Nakalanzi and others (Misc. Application No. 1784 of 2019)
  • Uganda Revenue Authority v Meera Investments Ltd (Civil Appeal No. 22 of 2007)
  • Haj Kaala Ibrahim v the Attorney General and Commissioner General of URA (Misc. Cause No. 23 of 2017)

Full judgment

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Uganda Revenue Authority v Nile Breweries Limited and 2 Others (Taxation Application No 46 of 2020) 2022 UGTAT 9 (6 May 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.