Wakilii

Uganda Revenue Authority v Total Uganda Ltd (Civil Appeal No. 8 of 2010)

High Court · [2012] UGCOMMC 170 · 2012 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Tax Appeals Tribunal ruling in Application No. TAT 05 of 2009
Decision
Tax Appeals Tribunal ruling set aside; court declared jet fuel supply to international carriers an exempt supply, not a zero rated supply; judgment entered for Uganda Revenue Authority on interpretation of VAT Act provisions.

Observed later treatment

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Holding

The court held that jet fuel supplied to international carriers at Entebbe is an exempt supply under section 19 of the Value Added Tax Act and cannot simultaneously be a zero rated supply. Section 19 defines exempt supplies and excludes them from being taxable supplies under section 18. Section 24(4) on zero rating applies only to taxable supplies for purposes of calculating VAT, not to exempt supplies. Once a supply is exempted under section 19 and the second schedule, section 24(4) and the third schedule become inapplicable. The court held section 77 is inapplicable because jet fuel is expressly exempt and not covered by both schedules.

Outcome

Tax Appeals Tribunal ruling set aside; court declared jet fuel supply to international carriers an exempt supply, not a zero rated supply; judgment entered for Uganda Revenue Authority on interpretation of VAT Act provisions.

Facts

Total Uganda Ltd supplies jet fuel to international carriers at Entebbe Airport. In 1999, Uganda Revenue Authority informed Total that jet fuel was zero rated. In 2008, URA reversed its position and stated jet fuel was an exempt supply. Total appealed to the Tax Appeals Tribunal seeking interpretation of the correct tax treatment. The Tax Appeals Tribunal ruled in favour of Total, holding that jet fuel supply was both an exempt supply under section 19 and the second schedule, and a zero rated supply under section 24(4) and the third schedule. The Tribunal applied section 77 to resolve the conflict, treating the supply as zero rated. URA appealed to the High Court arguing that jet fuel is an exempt supply only and cannot be zero rated.

Issues

  1. Whether the Tax Appeals Tribunal erred in law when it held that the supply of jet fuel to international carriers is a zero rated supply under the Value Added Tax Act Cap. 349.
  2. Whether jet fuel supplied to international carriers at Entebbe is an exempt supply under section 19 and the second schedule of the Value Added Tax Act.
  3. Whether a supply that is exempt under section 19 can also be zero rated under section 24(4) and the third schedule of the Value Added Tax Act.
  4. Whether the supply of jet fuel to international carriers constitutes an export for purposes of zero rating under paragraph 1(a) of the third schedule.

Orders

  • Appeal allowed.
  • Judgment and orders of the Tax Appeals Tribunal set aside.
  • Judgment entered for the appellant.
  • Costs of the appeal in the High Court awarded to the appellant.
  • Each party to bear its own costs before the Tax Appeals Tribunal.

Rules and key headnotes

VAT — Exempt Supplies — Relationship to Zero Rating
A supply of goods or services that is an exempt supply under section 19 and the second schedule of the Value Added Tax Act cannot simultaneously be a zero rated supply under section 24(4) and the third schedule because exempt supplies are excluded from the definition of taxable supplies and section 24 applies only to taxable supplies.
Tax Statutes — Construction Without Presumption or Implication
In the construction of taxing statutes, the court looks at what is said without any presumption or equity; nothing is to be read in and nothing is to be implied, and one can only look fairly at the language used.
VAT — Exempt Supplies — Definition and Scope
Section 19(1) of the Value Added Tax Act defines an exempt supply as a supply of goods or services specified in the second schedule. Jet fuel supplied to international carriers falls within paragraph 1(o) of the second schedule as petroleum fuel subject to excise duty and is therefore an exempt supply.
VAT — Zero Rating — Applicability Only to Taxable Supplies
Section 24(4) of the Value Added Tax Act, which provides for zero rating of supplies specified in the third schedule, applies only to taxable supplies for purposes of calculating VAT. It does not apply to exempt supplies because there is no need to calculate VAT on a supply which is not taxable.
VAT — Priority of Schedules — Section 77 Inapplicable to Express Exemptions
Section 77 of the Value Added Tax Act, which provides that where a supply may be covered by both the second and third schedules it shall be treated as falling within the third schedule, is inapplicable where goods are expressly specified as exempt under the second schedule. The provision deals with uncertainty or possibility of dual coverage, not with express exemptions.
VAT — Place and Time of Supply — Fuel Supplied at Airport Not Export
The supply of jet fuel to an international carrier at Entebbe Airport is not an export of goods. Under section 15(1) of the VAT Act, supply takes place where goods are delivered or made available by the supplier. Fuel delivered and loaded into an aircraft at Entebbe is supplied in Uganda, and the subsequent consumption in flight does not constitute export.
VAT — Nature of Tax — Value Added Not Consumption
VAT is a tax on value added to a product through transactions involved in producing the unit, not a consumption tax dependent on where the taxpayer consumes the goods. Once value is added and the supply transaction is completed, the place of subsequent consumption is irrelevant for VAT purposes.

Legislation cited (10)

Cases cited (5)

  • Attorney General v Bugisu Coffee Marketing Association [1963] EA 39
  • Uganda Revenue Authority v Golden Leafs Hotel and Resort Ltd and Apollo Hotel Corporation (High Court Civil Appeal No. 0012 of 2007)
  • Peninsular Oriental Steam Navigation Company v Customs and Excise Commissioners [2000] STC 488
  • Clifford v IRC [1896] 2 QB 187
  • Virgin Atlantic Airways Ltd v Customs and Exercise Commissioners [1995] STC 341

Full judgment

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

Uganda Revenue Authority v Total Uganda Ltd (Civil Appeal No. 8 of 2010) [2012] UGCommC 170 (21 December 2012)
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.