KAMPALA, Uganda | The High Court Commercial Division has revoked UGX 1,101,929,563 (one billion one million nine hundred twenty-nine thousand five hundred sixty-three shillings) in taxes that the Tax Appeals TribunalI had given to the Uganda Revenue Authority.

Karungi Estates filed a petition with the High Court after the tribunal ordered the company to pay UGX 1,101,929,563 in disputed tax prior to the return of equipment that had been impounded. This decision was based on a contested finding that Karungi Estates had failed to pay the required 30% deposit under Section 15(1) of the TAT Act for the 2015–2016 period.

Through their solicitors, Opwonya Co. & Advocates, Karungi Estates also requested that the High Court strike down the tribunal’s and the Uganda Revenue Authority’s decision to seize equipment for the primary application before the High Court could hear it. Additionally, the court should issue an interim injunction that would prevent URA from collecting taxes until the High Court’s final decision.

Additionally, Karungi Estates contended that the tribunal’s honourable members erred in law when they determined that the reaudit for the years 2015–2016 went against the terms of the consent agreement that the two parties had signed.

The applicant had paid Ugx 440,000,000 (four hundred forty million shillings), but the payment was for 2017–2022. The Tribunal and URA also noted that Karungi Estates had not paid the disputed tax. They also noted that Ugx 1,101,929,563 had been unpaid since 2019, which is now nearly six years after the tax was assessed.

The tribunal further stated that the dispute arose in 2019 when the applicant filed application 70 of 2019 and that the issue was based on a contested finding that the appellant had failed to pay the required 30%.

URA informed the court that they had re-audited Karungi Estates and upheld the previous assessment. They did not contest the re-audit and contended that they had acted appropriately in seizing the machinery and equipment of Karungi Estates in order to collect the assessed taxes.

Hon. Justice Patricia Mutesi ruled that the Tribunal had committed a legal error by going beyond the parameters of the injunction application, failing to resolve the preliminary objection definitively, and compromising the appellant’s right to a fair trial.

“This court is convinced that the tribunal significantly misdirected itself to the detriment of the appellant’s right to a fair hearing in the main application, while being mindful of the caution it must exercise before interfering with decisions made in the tribunal’s quasi-judicial discretion.” Judge Mutesi

 In addition to maintaining the injunction and awarding the appellant 75% of the appeal costs, Justice Mutesi set aside the Tribunal’s contested observations and ultra vires order and remitted the case for a proper reconsideration of the preliminary objection.