Africa Broadcasting (U) Limited v Uganda Revenue Authority (Civil Appeal 52 of 2020) [2024] UGCommC 326 (17 October 2024)

### 5 **THE REPUBLIC OF UGANDA**

### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

### **(COMMERCIAL DIVISION)**

#### **CIVIL APPEAL No. 0052 OF 2020**

### **(ARISING FROM TAX APPEALS TRIBUNAL APPLICATION No. 044 OF 2018)**

**AFRICA BROADCASTING (U) LTD ................................................. APPELLANT**

**VERSUS**

**UGANDA REVENUE AUTHORITY ..................................................... RESPONDENT**

#### 15 **BEFORE: HON. LADY JUSTICE SUSAN ABINYO**

### **JUDGMENT**

#### Introduction

This is an appeal from the ruling of the Tax Appeals Tribunal in respect of an application by the Applicant (Appellant herein) for review of an assessment by 20 the Respondent of UGX 1,233,307,049 as Value Added Tax on imported services,

in which the Tribunal found in favour of the Respondent on 21st September 2020.

#### Background

The Appellant, a company incorporated in Uganda, deals with broadcasting and is duly registered with Uganda Communications Communication(UCC). The 25 Appellant entered into a contract with local suppliers to procure content such as programs, songs, and movies, and a contract with foreign suppliers to procure programs, which are sent on hard disks as the Appellant's preferred mode of delivery for the programs in Uganda and was declared at customs as goods. The Respondent conducted an audit on the Appellant's tax affairs for the period 2013

- 30 to 2017, from which the Respondent reviewed the Appellant's VAT declarations and ASCYUDA data on imports, which revealed among other things that the Appellant's agents would declare and pay tax on the value of the carrier medium (hard discs) only, and neither declarations nor payments were made at customs in relation to the License Agreements entered into between the Appellant and - 35 the foreign film producers.

- 5 The Respondent then informed the Appellant that pursuant to the said License Agreements, the Appellant procured exclusive rights and or licenses to broadcast imported programs in Uganda, which constituted an imported service, and thus the Appellant was liable to pay VAT on the imported services. The Appellant objected to the VAT assessment on the ground that the programs were part and - 10 parcel of the career medium on which customs duties including VAT were paid however, the Respondent maintained that the transactions amount to the provision of services from foreign suppliers to the Appellant and thus subject to VAT as per section 4(c) of the Value Added Tax Act, and Regulation 13 thereof.

The Tribunal delivered its ruling on 21st September 2020 and agreed with the 15 decision of the Respondent. The Appellant being dissatisfied with the said ruling filed this appeal on the following grounds:

- 1. The Honourable Members of the Tribunal erred in law by misinterpreting the TATA case and thus coming to a wrong conclusion. - 2. The Honourable Members of the Tribunal erred in law when they failed to 20 evaluate the evidence based on the Copyright laws of Uganda. - 3. The Honourable Members of the Tribunal erred in law when they failed to evaluate the evidence on record and thus coming to the wrong conclusion that programs are subject to VAT on imported services. - 4. The Honourable Members of the Tribunal erred in law when they failed to 25 evaluate the evidence on record and thus mixed up transactions. - 5. The Honourable Members of the Tribunal erred in law by ignoring the rules of interpretation to section 16(2) (e).

## Representation

The Appellant was represented by Ms. Belinda Nakiganda of M/s Birungyi, Barata 30 & Associates while the Respondent was represented by Mr. Aliddeki Ssali Alex, Ms. Ndagire Patricia, and Ms. Barbara Nahore of the Legal Services and Board Affairs Department, Uganda Revenue Authority.

## The Duty of this Court

The Court derives its powers from section 28(3) of the Tax Appeals Tribunals Act, 35 Cap. 341 *(Revised Laws of Uganda, 2023 Edition, hereinafter referred to as the "TAT Act")* to hear and determine this appeal, which arises from the decision of the Tax Appeals Tribunal, and shall make orders as it thinks appropriate by reason of its decision, including an order affirming or setting aside the decision of the Tribunal or an order remitting the case to the Tribunal for reconsideration.

- 5 The procedure for filing the appeal is by a Notice of Appeal, which shall state the question or questions of law that form the basis of the appeal. I will not delve into the discussion as to whether this Court is a first or second appellate Court on appeals from the Tax Appeals Tribunal; what is relevant is that the jurisdiction of this Court is restricted to try questions of law only. *(See section 28(2) of TAT Act;* - 10 *Uganda Revenue Authority Vs Toro Mityana Tea Company Ltd, HCCA No.4 of 2006, and Uganda Revenue Authority Vs Shoprite Checkers(U) Ltd, HCCA No. 15 of 2008)*

This Court will consider grounds 1, 3, and 4 together, and grounds 2 and 5 separately as below.

# **Ground 1: The Honourable Members of the Tribunal erred in law by misinterpreting** 15 **the TATA case and thus coming to a wrong conclusion.**

**Ground 3: The Honourable Members of the Tribunal erred in law when they failed to evaluate the evidence on record and thus coming to the wrong conclusion that programs are subject to VAT on imported services.**

# **Ground 4: The Honourable Members of the Tribunal erred in law when they failed** 20 **to evaluate the evidence on record and thus mixed up transactions.**

## Submissions of Counsel for the Appellant

The Tax Appeals Tribunal cited *Tata Consultancy Services Vs State of Andhra Pradesh Case No. 2582 of I992*, in which the Court held that:

25 "a *computer program may be copyrightable as intellectual property does not alter the fact that once in the form of a floppy disc or other medium, the program is tangible, movable, and available in the market."*

The Appellant relied on the above excerpt of TATA's case to argue that although the programs are on a hard disc, it still retains the character of a good because

30 the Appellant has the right to access the programs on the hard disc in order to broadcast therefore, the Appellant did not import a service.

## Submissions in reply by Counsel for the Respondent

Counsel submitted that in the instant appeal, the Appellant merely acquired a license and was required to pay a license fee for permission to broadcast (the 35 films) which were later encoded onto the DVDs. That the Tribunal relying on the TATA case(supra) makes a distinction between giving permission to use a copyright and purchasing the copyright and held that what the Appellant purchased was the right to broadcast the films in Uganda which constitute a supply of services that is entertainment.

- 5 Counsel further submitted that the Tribunal rightly interpreted the TATA case in finding that the Appellant upon acquisition of the software encoded on the DVDs acquired a bundle of rights that did not amount to transfer of property hence the Tribunal was right in its finding that what the Appellant acquired did not amount to goods as the Appellant erroneously submits. - 10 Counsel contended that the issue in the instant case is about the imposition of VAT on the rights that are due to the Appellant that come with the License Agreements between the Appellant and the International Service Providers. That the DVDs shipped and imported into Uganda by the Appellant is merely a medium of delivery of the service to the Appellant to be able to broadcast the - 15 content, which means they are a secondary step to delivery of the service that the Respondent sought to impose the tax.

## Decision

TATA's case(supra) is an appeal from the High Court to the Supreme Court of India, which arises from the judgment and order passed by the Andhra Pradesh

20 High Court dated 12th December 1996. The question on appeal was whether intellectual property contained in floppy disks or CD-ROMs would be 'goods' within the meaning of the Andhra Pradesh General Sales Tax Act, 1957.

It is interesting to note that reference by Counsel for the Appellant to the above excerpt as the decision of the Supreme Court in TATA's case is incorrect, as will be 25 expounded hereunder however, the applicability of the principles therein to the instant appeal will be considered.

The Supreme Court in TATA's case(supra) cited several decisions in analyzing the above question on appeal and in *Advent Systems Ltd Vs Unisys Corp, 925 F.2d 670 (3rd Cir.1991)*, where the impugned excerpt by Counsel for the Appellant was 30 extracted, the Court was concerned with the interpretation of Uniform Commercial Code which "applied to transactions in goods". The goods therein were defined as "all things (including specially manufactured goods) which are movable at the time of the identification of sale". It held that:

"… *that* a *computer program may be copyrightable as intellectual* 35 *property does not alter the fact that once in the form of a floppy disc or other medium, the program is tangible, movable, and available in the marketplace. The fact that some programs may be tailored for specific purposes need not alter their status as "goods" because the Code definition includes "specially manufactured goods"*

40 The Supreme Court further observed as follows:

5 *"The topic has stimulated academic commentary with the majority espousing the view that software fits within the definition of a" good" in the U. C. C. Applying the U. C. C. to computer software transactions offers substantial benefits to litigants and the Courts. The Code offers a uniform body of law on a wide range of questions likely to arise in computer* 10 *software disputes: implied warranties, consequential damages, disclaimers of liability, the statute of limitations, to name a few. The importance of software to the commercial world and the advantages to be gained by the uniformity inherent in the U. C. C. are strong polity arguments favoring inclusion. The contrary arguments are not persuasive, and we hold that* 15 *software is a "good" within the definition in the code… We in this case are not concerned with the technical meaning of computer and computer programme as in the fiscal statute plain meaning rule is applied. [See Partington Vs Attorney General (1869) LR4 HL 100, P.122] In interpreting an expression used in a legal sense, the Courts are required to ascertain the* 20 *precise connotation which it possesses in law. It is furthermore trite that a Court should not be over zealous in searching ambiguities or obscurities in words which are plain. [See Inland Revenue Commissioner Vs Rossminster Ltd. (1980) 1ALLER 80, p.90] It is now well-settled that when an expression is capable of more than one meaning, the Court would attempt to resolve* 25 *that ambiguity in a manner consistent with the purpose of the provisions and with regard to the consequences of the alternative constructions [See Clark & Tokeley Ltd (t/a Spellbrook) Vs Oakes [1998] (4) ALLER 353]."*

In summary, the propositions of law in TATA's case(supra) are that: Firstly, in the application of rules of statutory interpretation, the Courts should consider the plain 30 meaning of words in a statute unless the words and or language used are unclear and ambiguous. Secondly, when an expression is capable of more than one meaning, the Court would attempt to resolve that ambiguity in favor of the taxpayer. Thirdly, in interpreting an expression used in a legal sense, the Courts are required to ascertain the precise connotation which it possesses in law.

35 Section 1 of the Value Added Tax Act, Cap. 344 *(Revised Laws of Uganda, 2023 Edition, hereinafter referred to as the "VAT Act")* defines the following terms as follows: -

**"Goods"** includes all kinds of movable and immovable property, but does not include money.

40 **"Import"** means to bring, or cause to be brought, into Uganda from a foreign country or place.

5 **"Tax"** means the value added tax chargeable under this Act.

**"Taxable transaction"** means a taxable supply or an import of goods or services, that is subject to tax under this Act.

**"Taxable supply"** is defined under section 18(1) to mean a supply of goods or services, other than an exempt supply, made in Uganda by a taxable person for 10 consideration as part of his or her business activities.

A supply is made as part of a person's business activities if the supply is made by the person as part of, or incidental to, any independent economic activity the person conducts, whatever the purposes or results of that activity, as provided under section 18(2) of the VAT Act.

15 The Tribunal stated at pgs. 8-13 of the ruling that:

*"The Applicant contends that the DVDs were goods and it paid VAT. The Respondent contends that the Applicant imported services and is still liable to pay additional VAT of Shs 1,233,307,049. Did the Applicant import goods or services or was there a mixed supply? … It is not in dispute that the* 20 *Applicant imported DVDs that are deemed movable and tangible goods. Black's Law Dictionary 10th Edition p.1683 defines tangible as "having or possessing physical forms" … In TATA Consultancy Services Vs State of Andhra Pradesh(supra) the Court stated "That* a *computer program may be copyrightable as intellectual property does not alter the fact that once* 25 *in the form of a floppy disc or other medium, the program is tangible, movable, and available in the market." However, the said DVDs contained programs or software that could be converted into films. The word "intangible "is defined by Black's Law Dictionary at p.929 as "something that lacks a physical form; an abstraction, such as responsibility esp., an* 30 *asset that is corporeal, such as intellectual property" The Applicant imported DVDs that had content or software. A software program may consist of various commands which enable the computer to perform a designated task… The Applicant contended that it purchased a copyright from the licensors or the owners of foreign films. The Applicant cited s.2 of* 35 *the Copyright Act which reads that:" the owner of a copyright may, as if it were movable property – license another person to use the economic right in a copyright. We already stated that under the License Agreements, the Applicant was required to pay a licence fee. Black's Law Dictionary 10th Edition p.1059 defines a licence as a permission usually revocable, to* 40 *commit some act that would otherwise be unlawful". It is without doubt that*

- 5 *the owners of the foreign films gave permission to air their films, without which would have been an infringement of their copyrights. However, giving permission to use a copyright is not the same as purchasing the copyright. In the License Agreement the property in the license remained with the licensor. … From the License Agreements, it is apparent that what* 10 *the licensor gave the licensee is a bundle of rights which did not amount to a transfer of property. … The property in the physical DVDs and the software/ contents at all times remained with the Licensee. We already stated the copyright are movable goods but the licensor did not sell a copyright because it retained the property of the subject matter. In the* 15 *Agreement, the Licensor gave the Licensee a right to exhibit the contents in media. …The right to exhibit involves broadcasting to customers…The word "broadcast" is defined by Advanced Learners Dictionary 6th Edition p.138 as "to send out programmes on television or radio" Transmission is the process of sending signal from a system to different distributor and* 20 *eventually to the consumer. Broadcasting programs to consumers is a supply of a service. What the consumers received was not a good but a service that is entertainment. The story may have been different if the Applicant had sold DVDs and or the contents to its customers. Therefore, the right to exhibit in the media under the License Agreement was a right* 25 *to provide services… The contract between the Applicant and the producer did not constitute a complete transfer of ownership of the goods, as copyright in the films remained the property of the producer. In effect, what was supplied by the producer to the Applicant was a supply of a service and not a supply of goods"* - 30 From the above excerpt of the ruling by the Tribunal, this Court finds hereunder:

The Tribunal relied on *Celtel Uganda Vs Uganda Revenue Authority HCCA No. 22 of 2006*, which cited with approval *Faagorge – Gelting Liniemy A/S Finanzamt Elensburg (1916) ALLER 656,* where the Court held that to determine whether a transaction is a supply of goods or services regard must be had to all the 35 circumstances in which the transaction took place in order to identify its characteristic features.

In the instant appeal, the supply of DVDs was the preferred medium in which the Appellant was to broadcast the films on the terms stipulated in the License Agreement. It is not in contention that the Licensor gave the Licensee a right to

40 exhibit the contents in media; it was the right to use the DVDs to broadcast the 5 films therefore, the DVDs which are movable property constituted goods within the meaning of the term "good" as above that was imported by the Appellant.

In addition, the right to use copyright in the context of the dispute between the parties herein constitutes intangible property, which is different from the right to purchase the copyright (movable and or intangible property).

10 It is my considered view on the finding of the Tribunal that the License Agreement gave the Applicant a bundle of rights was proper however, the interpretation of those rights vis avi the taxable supply of the Appellant as a taxable person was erroneous in the given circumstances as will be analyzed hereunder.

Section 23 of the VAT Act provides as follows:

## 15 **23. Taxable value of import of goods**

The taxable value of an import of goods is the sum of-

- (a)The value of the goods ascertained for the purposes of customs duty under the laws relating to customs; - (b)The amount of customs duty, excise tax and any other fiscal charge other 20 than tax payable on those goods; and - (c) The value of any services to which section 12(3) applies which is not otherwise included in the customs value under paragraph (a). [Emphasis added]

Section 12(3) of the VAT Act provides that a supply of services incidental to the 25 import of goods is part of the import of goods.

From reading sections 23 and 12(3) together, this Court finds that the right to exhibit in the media as rightly stated by the Tribunal required broadcasting, which means to send out programs on television and radio. Indeed, what the consumers received was not the DVDs(goods) but a service that is entertainment.

30 The term incidental under section 12(3) above means connected with or related to, and the term service means an intangible commodity in the form of human effort, such as labor, skill, or advice. *(See Black's Law Dictionary, 9th edition pg. 830, and pg.1491 respectively)*

This Court finds that the supply of a service(entertainment), which was incidental

35 to the import of DVDs(goods) is part of the DVDs(goods), and as provided under section 12(1) of the VAT Act, inversely the supply of services incidental to the supply of goods is part of the supply of goods.

5 For reasons stated above, this Court finds that the right to exhibit in the media, which was incidental to the supply of the DVDs is a supply of goods and not a service.

I am fortified in the above finding by the rules of statutory interpretation. Firstly, that words in a statute must be given a plain meaning unless the words and or

- 10 language used are unclear and ambiguous, and secondly, that the sections in a statute should be construed in its entirety. *(See Uganda Revenue Authority Vs Kajura, Civil Appeal No. 9 of 2015[2017] UGSC 63*, cited by Counsel for the Appellant, on the proposition that the fundamental role of the Courts is to give force and life to the interpretation of a statute having regard to the language of - 15 the statute and the particular facts of the case.

In *Inland Revenue Commissioners Vs Trustees of Sir John Aird's Settlement [1984] Ch.382* cited with approval in TATA's case above, it was stated:

*"Two methods of statutory interpretation have at times been adopted by the Court. One, sometimes called literalist, is to make a meticulous* 20 *examination of the precise words used. The other sometimes called purposive, is to consider the object of the relevant provision in the light of the other provisions of the Act, the general intendment of the provisions. They are not mutually exclusive and both have their part to play even in the interpretation of a taxing statute."* [Emphasis added]

- 25 In addition, I find that customs valuation as the mandate of the Respondent is guided by the legal framework. It was not disputed that the Appellant duly sought classification from the Customs Department on how to treat hard discs with content (programs) wherein, the Respondent replied that it is provided for under HS code 84:71.60 CPC. - 30 The East African Community(EAC) by the East African Community Customs External Tariff Act recognizes the Harmonized Commodity Description and Coding System (hereinafter referred to as "HS"), which was developed by the World Customs Organization in accordance with the International Convention on the Harmonized Commodity Description and Coding System, 1983(as amended), - in which Uganda is a signatory and it came into force on 1st 35 January 1988.

The Harmonised System(HS) is simply an international system for classification of goods for trade purposes. The use of the General Interpretative Rules(GIRs) govern the interpretation of the Harmonised System, which contains sections to indicate the broad range of goods; Chapters to show the narrow range of goods,

40 and headings, which give a more specific level of classification of goods.

- 5 In the instant case, the said DVDs were classified under Chapter 84 on Machinery, Equipment, Electrical and Electronic Appliances, and coded in the heading; 84:71 which provides for automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or - 10 included. [Emphasis added]

This Court, therefore, based on the above heading finds that the said DVDs qualify as goods within the Harmonised System of international trade in goods.

Accordingly, grounds 1, 3, and 4 of the appeal succeed.

## 15 **Ground 2: The Honourable Members of the Tribunal erred in law when they failed to evaluate the evidence based on the Copyright Laws of Uganda.**

Submissions of Counsel for the Appellant

Counsel cited section 38 of the Copyright and Neighbouring Rights Act, 2006, which provides for broadcasting contracts and states that;

- 20 "the author, performer, successor in title or agent shall, in a broadcasting contract, transfer to a company involved in radio or television broadcasting, or the supplier of audiovisual communication services or other form of broadcast, the right to broadcast his or her literary dramatic, dramatic-musical or musical work against payment of remuneration." - 25 Counsel submitted that the above provision summarizes the nature of the transaction in dispute as a transaction in the ambit of intellectual property, specifically copyright. That the right in regard to the program amounts to a right to use a copyright (intangible/ movable property), which is a good per the VAT Act. - 30 Counsel relied on the definition of "movable property" as property that can be moved or displaced, such as personal goods, a tangible or intangible thing in which an interest constitutes personal property, specifically anything that is not attached to land; and "intangible goods" as something that lacks a physical form, an abstraction such as responsibility, especially an asset that is not corporeal - 35 such as intellectual property, as per *Black's Law Dictionary*, and *Mukwano Industries (U) Ltd Vs Uganda Revenue Authority, HCCA No. 001 of 2008*, to support the above submissions.

## 5 Submissions in reply by Counsel for the Respondent

Counsel submitted that although, copyright or any other form of intellectual property is a good, the right to use the copyright(good) is a service, as per section 11(b) of the VAT Act, which defines a supply of service to include, the making available of any facility or advantage.

- 10 Counsel further submitted that where the creator of Intellectual Property Rights (IPR)temporarily transfers the right to use any IPR, it is a supply of services. That the Appellant seems to rely on the word" transfer" provided for under section 38 of the Copyright and Neighbouring Rights Act, 2006 as the basis for its erroneous interpretation of the crux of the nature of the transaction in dispute. - 15 Counsel contended that its trite law that in rules of statutory interpretation, the Act touching the particular subject takes precedence over a provision in another Act. That in the instant case, the subject in dispute is VAT which is a tax therefore, the Act of Parliament which is of primary consideration has the definitions as laid out in the taxing Act, the other provisions defining any other word can be - 20 considered only if the taxing Act does not have the definition. That the Tribunal, therefore, rightly relied on the definitions as provided in the VAT Act.

#### Decision

Copyright is the exclusive right to do and, to authorize others to do, certain acts in relation to literary, dramatic and musical works, artistic works, sound recordings, films, broadcasts, cable programmes, and published editions of works.[1](#page-10-0) 25

- The dispute between the parties herein is not about copyright but the right to use the copyright of the DVDs (intangible property) supplied by a foreign producer to the Appellant, who carries on the business of broadcasting in Uganda, in which the said DVDs according to the Appellants amount to goods, from which they - 30 paid VAT however, the Respondent contends that broadcasting the films from the DVDs amounts to a service and not a good and that the Appellant is liable to additional VAT tax on the service as per the VAT Act.

Notably, VAT is a tax payable by the consumer of the good or service. In circumstances, where there is a supply of both a good or service, such as in the 35 instant dispute, the law under section 23 of the VAT Act above should be construed, which is the specific law on VAT and not the Copyright and Neighbouring Rights Act, 2006, which the Appellant wants this Court to believe.

<span id="page-10-0"></span><sup>1</sup> *Halsbury's Laws of England (Vol. 9), 4th Edition para. 3 pg. 10.*

5 It's trite law that it is not permissible to interpret a word in accordance with its definition in another statute and more so when the same is not dealing with the cognate subject. *(See TATA's case(supra)*

I agree with the submission of Counsel for the Respondent that the Tribunal rightly relied on the definitions as provided in the VAT Act, which is the taxing Act except

10 on the interpretation of those provisions by the Tribunal as analyzed above on grounds 1, 3, and 4 of this appeal.

Accordingly, this ground fails.

# **Ground 5: The Honourable Members of the Tribunal erred in law by ignoring the rules of interpretation to section 16(2) (e).**

15 Submissions of Counsel for the Appellant

Counsel for the Appellant cited the provision of section 16(1) of the VAT Act, that a supply shall take place in Uganda if the business of the supplier from which the services are supplied is in Uganda to submit that this section is not applicable in this case.

20 Counsel further submitted that section 16(2)(e)then provides that notwithstanding subsection (1), a supply of services shall take place in Uganda if the recipient of the supply is not a taxable person and the supply is a transfer, assignment or grant of a right to use a copyright, patent, trademark or similar right in Uganda.

Counsel contended that in this matter, the recipient of the supply is a taxable 25 person and since the Appellant was a taxable person, the grant to use a copyright of Telemundo is not a supply in Uganda hence there was no importation of services from Telemundo by the Appellant.

#### Submissions in reply by Counsel for the Respondent

Counsel submitted that the Tribunal at pg.14 of its ruling citing section 16(2)(e) of

30 the VAT Act, held that:

*"Section 16(2) provides that the recipient of the supply should not be a taxable person. This section is equivocal because VAT is actually paid by the recipient of the supply, who are taxable. If read as it is, it would mean there would be no supplies in Uganda"*

35 Counsel submitted further that the Tribunal further held:

*"To give effect to the term, 'non-taxable person', it refers to one who is not collecting VAT in the VAT chain. It is not concerned with an intermediary* 5 *but the final consumer. The section is interested with the consumers as recipients and not the broadcasters."*

Counsel contended that the Tribunal correctly applied the rules governing statutory interpretation in interpreting and giving the intended effect and purpose of the legislature to section 16(2) of the VAT Act and holding that the use of the

10 term 'non-taxable person' refers to final consumers and not intermediaries in the VAT collecting chain.

Counsel cited the case of *Republic Vs Commissioner Domestic Taxes & Sony Holdings Limited*, *Misc. Applic. No. 363 of 2018* of Kenya High Court in support of their submissions, on the proposition that the purpose of a statute plays an 15 important role in establishing a context that clarifies the scope and intended effect of a law.

Decision

#### Section 16(2) e provides as follows:

"Notwithstanding subsection (1), a supply of services by a person who carries on 20 business outside Uganda and who does not have a place of business in Uganda shall take place in Uganda, if the recipient of the supply is not a taxable person and the supply is a transfer, assignment, or grant of a right to use a copyright, patent, trademark or similar right in Uganda.

It is my understanding that the term 'non-taxable person' implies a person who is 25 not registered under section 7 of the VAT Act but has been given a right to use a copyright, patent, trademark, or similar right in Uganda by a transfer, assignment, or grant and therefore, may apply to the Commissioner General to be considered for registration as a taxable person and or the Commissioner General may register a person if there are reasonable grounds for believing that the person is required 30 to apply for registration but has failed to do so.

It is my considered view that this is to ensure that a person who is eligible to register does so, and those who fail to do so, and the Commissioner General is satisfied that they are eligible for registration, are then registered to reduce tax evasion.

The finding of the Tribunal as above *"*that to give effect to the term, 'non-taxable 35 person', it refers to one who is not collecting VAT in the VAT chain. It is not concerned with an intermediary but the final consumer. The section is interested with the consumers as recipients and not the broadcasters" is erroneous for reasons that the rules governing statutory interpretation allow the interpretation of sections in a statute in its entirety, and for the Court to determine whether a 5 transaction is a supply of goods or services regard must be had to all the circumstances in which the transaction took place to identify its characteristic features, which this Court faults the Tribunal as above.

For the foregoing reason, this ground of appeal succeeds.

Accordingly, this Court finds that the appeal succeeds on grounds 1, 3, 4, and 5.

- 10 This Court therefore makes the following orders that: - 1. The appeal is allowed. - 2. The ruling of the Tribunal is set aside. - 3. Costs in this Court and the Tribunal are awarded to the Appellant.

Dated and delivered electronically on this 17th day of October, 2024.

SUSAN ABINYO **JUDGE 17/10/2024**

20