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Uganda Revenue Authority v Shoprite Checkers (U) Ltd (HCT - 00 - CC - CA - 15 - 2008)

High Court · [2009] UGHC 258 · 2009 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from the Tax Appeals Tribunal decision dated 28 July 2008 involving VAT computation methodology and refund claims
Decision
Appeal dismissed and Tax Appeals Tribunal decision upholding respondent's use of Standard Alternative Method and entitlement to refunds confirmed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that an appeal from the Tax Appeals Tribunal is competent under Section 27(2) of the Tax Appeals Tribunal Act without a memorandum of appeal. The court ruled that the Commissioner-General's written approval for using the Standard Alternative Method is a procedural requirement that does not override a taxpayer's substantive right to use SAM where disadvantage under the Standard Method is demonstrated. The court upheld retrospective application of SAM and allowed the respondent's VAT refund of Shs. 1,695,140,719 and withholding tax refund of Shs. 1,276,900,368. The appeal was dismissed except for the preliminary objection, with three-quarters costs awarded to the respondent.

Outcome

Appeal dismissed and Tax Appeals Tribunal decision upholding respondent's use of Standard Alternative Method and entitlement to refunds confirmed

Facts

Shoprite Checkers (U) Ltd, a supermarket dealing in VAT zero-rated, standard-rated and exempt items, submitted VAT cash refund claims for March to July 2005 totaling Shs. 1,695,140,719. URA conducted a comprehensive audit for 2001 to 2005 and discovered that the respondent had been using the Standard Alternative Method (SAM) of calculating VAT since 2004 without obtaining the written approval of the Commissioner General as required by law. The respondent applied for retrospective approval on 27 February 2007 and 4 May 2007. URA approved SAM use effective 1 March 2007 only, not retrospectively. URA applied the Standard Method and assessed VAT arrears, which it offset against a separate withholding tax refund of Shs. 1,276,900,368 due to the respondent. The respondent appealed to the Tax Appeals Tribunal, which ruled in its favour, ordering retrospective application of SAM from June 2001 and refunds of both the VAT and withholding tax amounts with interest. URA appealed to the High Court.

Issues

  1. Whether the appeal from the Tax Appeals Tribunal was competent without filing a memorandum of appeal.
  2. Whether the Standard Alternative Method (SAM) can be used to compute VAT without express written approval of the Commissioner General of URA.
  3. Whether URA is estopped from denying the respondent's use of SAM for VAT input calculation.
  4. Whether retrospective application of SAM is permissible under the law.
  5. Whether the respondent is liable to pay VAT of Shs. 1,695,140,719.
  6. Whether URA is liable to refund Shs. 1,276,900,368 in withholding tax.
  7. Whether URA can compel a taxpayer to pay more than 30% of taxes assessed pending resolution of an objection.

Orders

  • Preliminary objection overruled.
  • Appeal dismissed on all substantive grounds.
  • Decision of the Tax Appeals Tribunal dated 28 July 2008 upheld.
  • Respondent entitled to refund of Shs. 1,695,140,719 for VAT input credit.
  • Respondent entitled to refund of Shs. 1,276,900,368 for withholding tax.
  • Respondent awarded three-quarters of the taxed costs.

Rules and key headnotes

Tax Law — Appeals — Competence of Tax Appeals Tribunal Appeals — Notice of Appeal Without Memorandum
An appeal from the Tax Appeals Tribunal to the High Court is competent under Section 27(2) of the Tax Appeals Tribunal Act upon lodgment of a notice of appeal stating the questions of law to be raised, without requiring a memorandum of appeal as prescribed by Order 43 of the Civil Procedure Rules. Section 27(2) of the Tax Appeals Tribunal Act constitutes a specific statutory provision that negates the general requirements of the Civil Procedure Rules for appeals from the Tax Appeals Tribunal.
Tax Law — Value Added Tax — Standard Alternative Method — Requirement for Commissioner General's Approval
The written approval of the Commissioner-General of Uganda Revenue Authority is necessary for a taxpayer to use the Standard Alternative Method of calculating VAT under Section 28(10) of the VAT Act and Regulation 15(4) of the VAT Regulations. However, the approval requirement is procedural in nature and cannot override or deprive a taxpayer of the substantive right to use the Standard Alternative Method where the taxpayer demonstrates disadvantage in using the Standard Method. The Commissioner-General's discretion to grant or refuse approval must be exercised judicially, fairly and in accordance with the legislative intention that taxpayers dealing in both taxable and exempt supplies who suffer demonstrable disadvantage by using the Standard Method should be permitted to use the Standard Alternative Method.
Administrative Law — Statutory Duties — Estoppel Against Exercise of Statutory Powers
The exercise of statutory powers and duties cannot be fettered or overridden by estoppel, agreement, lapse of time, mistake or similar circumstances. A positive duty imposed by statute cannot be defeated by estoppel. Where a statute imposes a legal discretion on an administrative officer, the officer must implement that discretion through due process with impartiality, fairness and equity.
Tax Law — Value Added Tax — Standard Alternative Method — Retrospective Application
Retrospective application of the Standard Alternative Method for VAT calculation is permissible under the VAT Act where a taxpayer has demonstrated disadvantage in using the Standard Method. The VAT Act does not prohibit retrospective application of the Standard Alternative Method. Where the Commissioner-General has approved the use of the Standard Alternative Method with a retrospective effective date, that approval is valid and binding. The Commissioner-General's discretion to approve the Standard Alternative Method extends to determining the effective date of such approval.
Tax Law — Tax Collection — Payment Pending Objection — Limits on Compulsory Payment
Under Section 15(1) of the Tax Appeals Tribunal Act, a taxpayer who has lodged a notice of objection to an assessment must pay, pending final resolution of the objection, either 30% of the tax assessed or that part of the tax assessed not in dispute, whichever is greater. The Uganda Revenue Authority cannot compel a taxpayer to pay more than 30% of the assessed tax unless the amount in excess of 30% represents tax that is not in dispute by the taxpayer.

Legislation cited (10)

Cases cited (7)

  • Uganda Revenue Authority v Toro & Mityana Tea Company Ltd (HCCA No. 4 of 2006)
  • Uganda Communications Commission v Uganda Revenue Authority (M.A. 775 of 2006)
  • Attorney General V Carlton Bank [1989] 1 KB 64 at 71
  • Inland Revenue Commissioner & Ors V Ross Minister Ltd & Ors [1980] AC 998
  • Maritime Electric Co. Ltd V Attorney General Dr Broad Ltd [1937] All ER 748
  • K.M. Enterprises and Others v Uganda Revenue Authority (HCCS No. 599 of 2001)
  • Pride Exporters v Uganda Revenue Authority (HCCS No. 563 of 2006)

Full judgment

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Uganda Revenue Authority v Shoprite Checkers (U) Ltd (HCT - 00 - CC - CA - 15 - 2008) [2009] UGHC 258 (17 September 2009)
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.