Wakilii

VEGOL Limited v Uganda Revenue Authority (Application 148 of 2020)

Tribunal · [2022] UGTAT 28 · 2022 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging respondent's decision to disallow applicant's claim of input VAT credit following partial consent order
Decision
Application dismissed with costs to the respondent

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tribunal held that the applicant failed to satisfy the requirements for input VAT credit under s.28(11) of the VAT Act. Debit notes presented by the applicant were not tax invoices as required by statute. Where tax invoices were absent, the applicant did not satisfy the Commissioner General under s.28(12) as to why it could not present them. Receipts and supplier remittances did not constitute proof of payment sufficient to establish entitlement to input tax credit. The application was dismissed with costs.

Outcome

Application dismissed with costs to the respondent

Facts

VEGOL Limited, a manufacturer and seller of edible oil, applied for a VAT refund of Shs. 804,314,114 for March 2016 to June 2018. Following an audit, Uganda Revenue Authority disallowed input VAT of Shs. 426,292,325. The applicant objected and on 18 September 2020 the respondent partially allowed the objection. On 13 November 2020 the parties entered a partial consent order allowing a refund of Shs. 611,639,033. The remaining dispute concerned disallowed input VAT of Shs. 83,003,668, comprising Shs. 30,280,112 for which the respondent claimed no proof of payment was provided, and Shs. 13,393,869 for which the applicant had over-claimed input tax on certain invoice numbers. The applicant presented debit notes, supplier remittances, and receipts as evidence of entitlement to input tax credit.

Issues

  1. Whether the decision of the respondent to disallow the applicant's VAT input tax credit was lawful?
  2. What remedies are available to the parties?

Orders

  • Application dismissed.
  • Costs awarded to the respondent against the applicant.

Rules and key headnotes

Value Added Tax — Input Tax Credit — Documentary Requirements
Under s.28(11) of the VAT Act, a claim for input tax credit must be supported by an original tax invoice for the taxable supply, a bill of entry, or another document prescribed under the East African Community Customs Management Act 2004. A debit note is not a tax invoice and does not satisfy the statutory requirement.
Value Added Tax — Input Tax Credit — Exception to Documentary Requirements
Where a taxable person does not have a tax invoice evidencing input tax paid, the Commissioner General may allow an input tax credit under s.28(12) of the VAT Act only where satisfied that the taxable person took all reasonable steps to acquire a tax invoice, the failure to acquire it was not the fault of the taxable person, and the amount of input tax claimed is correct. The burden is on the taxpayer to satisfy the Commissioner General of these conditions.
Tax Proceedings — Proof of Payment — Supplier Remittances and Receipts
A supplier remittance made by the recipient confirming receipt of goods or services is not proof of payment from the supplier who is required to remit VAT to the revenue authority. There is need for the supplier to confirm that it received payment. Receipts that do not indicate which invoices are being paid, or where invoice numbers differ from those stated in supplier remittances, do not constitute sufficient proof of payment for purposes of claiming input tax credit.
Value Added Tax — Taxpayer's Duty — Supplier's Remittance to Revenue Authority
Following Target Well Control Uganda Ltd v The Commissioner General, it does not make sense to require a taxable person to follow up a payment and find out whether the supplier has remitted the tax collected. A receipt stating the amount paid, supply, invoice number, and address of the supplier would enable the respondent to trace it and is a commitment from the supplier that it received the payment.

Legislation cited (3)

  • VAT Act s.28(11)
  • VAT Act s.28(12)
  • East African Community Customs Management Act 2004

Cases cited (2)

  • Warid Telecom Uganda Limited v Uganda Revenue Authority (Civil Appeal No. 24 of 2011)
  • Target Well Control Uganda Ltd v The Commissioner General (HCCS No. 751 of 2015)

Full judgment

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

VEGOL Limited v Uganda Revenue Authority (Application 148 of 2020) 2022 UGTAT 28 (23 September 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.