Ahmed Said Ali v Uganda Revenue Authority (TAT Application 241 of 2022) [2023] UGTAT 9 (22 March 2023)

## THE REPUBLIC OF UGANDA IN THE TAX APPEALS TRIBUNAL OF UGANDA AT KAMPALA APPLICATION NO. 241 OF 2022

AHMED SAID ALI ...................................

## **VERSUS**

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UGANDA REVENUE AUTHORITY RESPONDENT

BEFORE: DR. ASA MUGENYI, MR. GEORGE MUGERWA, MS. CHRISTINE KATWE.

## **RULING**

This ruling is in respect of two preliminary objections raised by the respondent that this application is time barred and that thirty percent of the tax in dispute was not paid by the applicant.

The applicant deals in international money transfer and wholesale. The respondent conducted a compliance review on the applicant. On 9<sup>th</sup> May 2022, the respondent issued the applicant with an additional assessment of Shs. 4,985,900 for the period 2019 to 2021. On 25<sup>th</sup> May 2022, the applicant lodged an objection. On 19<sup>th</sup> August 2022, the respondent issued an objection decision disallowing the objection. On 21<sup>st</sup> October 2022, the applicant lodged this application in the tax appeals tribunal.

The respondent raised two preliminary objections to this application which are.

1. The application was filed out of time.

2. The applicant has not yet paid the 30% of the tax in dispute or that part not in dispute, whichever is greater nor made a commitment to pay the tax.

## Issues.

1. Whether this application was filed out of time?

2. Whether the applicant has paid the 30% of the tax in dispute or that part not in dispute, whichever is greater?

$\mathbf{1}$

The applicant was represented by Mr. David Kityo while the respondent by Mr. Edmond Agaba

The respondent submitted that S. 25 (1) of the Tax Procedures Code Act provides that a person dissatisfied with an objection decision may, within 30 days after being served with a notice of the objection decision, lodge an application with the Tax Appeals Tribunal for review of it. S. 16(1)(c) of the Tax Appeals Tribunal Act provides that an application to the Tribunal for review of a tax decision shall be made within 30 days of being served with notice of the decision. S. 16(7) of the Tax Appeals Tribunal Act provides that:an application for review of a taxation decision shall be made within six months after the date of the taxation decision.

The respondent submitted that the applicant objected on 25<sup>th</sup> May 2022. On 19<sup>th</sup> August 2022, the respondent issued its objection decision. On 21<sup>st</sup> October 2022, the application for review was filed in the Tax Appeals Tribunal, 63 days after the objection decision was communicated. The applicant had up to 19<sup>th</sup> September 2022 to lodge an application for review of the objection decision. However, this was not done. The respondent submitted that S. 16(2) of the Tax Procedures Code Act grants the Tribunal discretion to extend time within which to file an application for review. The respondent submitted that after 19th September 2022, the applicant could have obtained leave to file an application out of time which was not done. The respondent submitted that in *Uganda Revenue Authority v.* Uganda Consolidated Properties Ltd Civil Appeal 31 of 2000, the Court of Appeal held that: Timelines set by statutes are matters of substantive law and not mere technicalities and must be strictly complied with. It also cited MC DE-AM (U) Ltd v Uganda Revenue Authority, Application 2 of 2009, where the Tax Appeals Tribunal held that an application was time barred because it was lodged after 30 days from service of the notice of the decision on the applicant. The respondent cited Green MR in Hilton Sutton Steam Landry (1946) 1 KB 61 at Pg.81 where he stated that.

"But the Statute of limitations is not concerned with merits. Once the axe falls, it falls and a Defendant who is fortunate enough to have acquired the benefit of the statute of limitation is entitled to insist on his strict rights."

$\overline{2}$

The respondent submitted that S. 15 of the Tax Appeals Tribunal Act provides that a taxpayer who has lodged a notice of objection pending final resolution of the objection must pay 30 percent of the tax assessed or that part not in dispute, whichever is greater. It cited Uganda Projects Implementation and Management Centre v Uganda Revenue Authority Constitutional Appeal 2 of 1999 where the Supreme Court ruled that "The requirement to pay 30% of the tax assessed, or that which is not in dispute, whichever is greater, is constitutional and did not infringe on the right to a fair hearing". It also cited Metchash Trading Co. Ltd. v Commissioner for South African Revenue Services and another where it was held that "A taxpayer has to pay his taxes and argue later". The respondent submitted in Commissioner General Uganda Revenue Authority v Meera Investments Ltd. Civil Appeal 22 of 2007 Justice Kanyehamba stated that "The government needs taxes paid expeditiously, in national interest." In Elgon Electronic $v$ Uganda Revenue Authority HCCA 11 of 2007, Justice Geoffrey Kiryabwire held that the provisions of S. 15(1) of the Tax Appeals Tribunal Act are mandatory. In Samuel Mayanja v Uganda Revenue Authority HCT 0017 of 2005, Justice Egonda Ntende held that "Once a taxpayer has lodged an application for review under S. 15 of the Tax Appeals Tribunal Act he is obliged to deposit at least 30% of the tax assessed". The respondent submitted that the tax assessed is Shs. 4,985,900 the applicant ought to have paid 30% which is Shs. 1,495,770. There is no proof of payment of the 30% as required by law. The respondent prayed that the Tribunal dismisses this application with costs to the respondent.

In reply, the applicant submitted that under Rule 11(c) of the Tax Appeals Tribunal Procedure Rules, the Tribunal may extend time if it is satisfied that the taxpayer was unable to file its application because of illness, absence from Uganda or any other reasonable cause. The applicant submitted that the time he received the objection decision he was unconsciously hospitalized and scheduled to travel to India for an operation. He only regained his health when he returned. He reached his office on 27<sup>th</sup> September 2022. He received the letter and was able to file his application for review. The applicant contended that his being hospitalized was good cause. He cited Boney Katatumba v Waheed Karim SCCA 27 of 2007 where it was stated that "it follows that

$\overline{3}$

where it is not shown that the enforcement limitation of time would result in manifest denial of justice, extension of time is not justified." The applicant contended that the denial of its application would result in denial of justice.

The applicant submitted that it paid 30% of the tax in dispute of Shs. 1,495,770 which is shown in receipt PRN 223000104333717 as required under S.15 of the Tax Appeals Tribunal Act. The said receipt was attached to the submissions.

Having read the submissions of the parties, this is the ruling of the tribunal.

The respondent raised two preliminary objections to this application. The first one was that the application was filed out of time. The second one was that the applicant has not paid the 30% of the tax in dispute or that part not in dispute, whichever is greater nor made a commitment to pay the tax.

The law relating to preliminary objection is provided for under Order 6 Rule 28 of the Civil Procedure Rules which is to the effect that.

"Any party shall be entitled to raise by his or her pleadings any point of law, and any point so raised shall be disposed of by the court at or after the hearing; except that by consent of the parties, or by order of court on the application of either party, a point of law may be set down for hearing and disposed of at any time before the hearing".

In Yaya v Obur and Others Civil Appeal 81 of 2018 [2020] the court stated that.

"It is always in the interest of justice to hear such objections on dispositive points of law at the earliest so as to save time and costs and to avoid a trial in nullity. Court has discretion to dispose of the preliminary objection immediately or defer its ruling until after hearing the whole case such a deferment may be made where it is necessary to hear some or the entire evidence to enable the Court to decide whether the objection raised is dispositive of the suit or not".

In Mukisa Biscuit Manufacturing Company Limited v West End Distributors Ltd [1969] EA 696, Sir Charles Newbold stated that.

$\overline{4}$

"A preliminary objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit".

The Tribunal will proceed to resolve the preliminary objections.

In respect of time, in Uganda Revenue Authority v Uganda Consolidated Properties Limited, Civil Appeal 31 of 2000 the Court of Appeal held that "Timelines set by statutes are matters of substantive law and not mere technicalities and must be strictly complied with". Therefore, the Tribunal has to ask itself whether the applicant complied with the statutory timelines.

S. 25(1) of the Tax Procedures Code Act provides that "A person dissatisfied with an objection decision may, within 30 days after being served with a notice of objection, lodge an application with the Tax Appeals Tribunal for review of the objection decision". S.16(1)(c) of the Tax Appeals Tribunal Act provides that "An application to the Tribunal for review of a tax decision shall be made within 30 days of being served with notice of the decision". S.16(2) of the Act provides that "A tribunal may, upon application in writing, extend the time for the making of an application to the tribunal for a review of a taxation decision". Rule 11(2)(6) of the Tax Appeals Tribunal (Procedure) Rules provides that; "An application for extension of time shall be in writing supported by an affidavit stating reasons why the applicant was unable to file an application against the Commissioner General in time. Under Rule 11(6) The Tribunal may grant the extension of time if it is satisfied that the taxpayer was unable to file the application for the following reasons—

- a. absence from Uganda. - b. illness; or

$\epsilon = z^{2i}$

c. Any other reasonable cause".

The applicant did not file his application before the expiry of the 30 days. He stated that he was ill. He had to go outside for an operation. The applicant had the option of applying for extension of time to file the main application out of time and give reasons

as to why the said application was not filed in time. He did not do so.

The applicant objected on 25<sup>th</sup> May 2022. The objection decision was issued on 19<sup>th</sup> August 2022. He filed his application on 21<sup>st</sup> October 2022. His application is time barred and the applicant was not vigilant enough to seek leave of the tribunal to extend time to file this application. This right was not exercised by the applicant. On this ground, the first preliminary objection is sustained.

On the second preliminary objection, in respect of the payment of the 30% of the tax in dispute or that part not in dispute, whichever neither is greater, the applicant submitted that it paid the 30% of the tax in dispute and attached a pay in slip or receipt. PRN 223000104333717. The said 30% was paid after the applicant had filed its application and the respondent had raised its preliminary objection. The respondent did not respond to the payment. Nevertheless, the Tribunal will hold that the applicant has paid 30% of the tax in dispute. The second preliminary objection is overruled. However, since the applicant paid the 30% after the application was filed and a preliminary objection had been raised, the costs of the objection shall be awarded against it.

Since the first preliminary objection was sustained, the main application is dismissed with costs to the respondent.

Dated at Kampala this day of Merry 2023. $\mathbf{L}$ DR. ASA MUGENYI GEORGE MUGERWA MR. **MS. CHRISTINE KATWE CHAIRMAN MEMBER MEMBER**