Iliso Consulting (PTY) Limited and 2 Others v Iliso Consulting (PTY) Limited t/a Nako Incorporated in South Africa and 2 Others (Civil Suit No. 1031 of 2019) [2021] UGCommC 12 (15 March 2021)

Full Case Text

5 The Republic of Uganda

In The High Court of Uganda Holden at Kampala

Commercial Division

Civil Suit No 1031 'of 2019 " .

ILISO Consulting (Pty) Ltd

10 Eng. Dr. Anania Mbabazi

Janepher Mbabazi Plaintiffs **................................................**

## Versus

l. Iliso Consulting (Pty) Ltd *tj* a Nako Incorporated in South Africa

15 2. Uganda Revenue Authority

3. Grant Thornton Consulting Ltd :::::::::::::::::::: Defendants

## Before: Hon. Justice Dr. Henry Peter Adonyo

Ruling On a Preliminary Objection

1. Background:

20 On the 15th December 2020 this matter came up for scheduling.

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The 2nd defendant informed court that it intends to make a

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- preliminary point of law on the matter. The matter was $\mathsf{S}$ adjourned to 11th January 2021 Counsel for the second defendant to raise the preliminary point of law. On that date Counsel for the Second defendant submitted that the said suit was prematurely instituted against the $2^{nd}$ defendant on - the basis that though this court has an unlimited jurisdiction, 10 it did not have original jurisdiction to hear tax disputes given that the dispute between the plaintiffs and $2^{nd}$ defendant is a tax dispute in respect of assessment of UGX 1,469,083,334/ $=$ which the $1^{st}$ plaintiff objected to. - That being the case, counsel sought for and requested the 15 court to have this suit dismissed as the point of law substantially disposes off the whole suit.

While arguing the point of law, counsel relied on a number of provisions of the law citing Article $152(3)$ of the 1995 Constitution of the Republic of Uganda which provides for 20 establishment of the tax tribunal for purpose of setting tax dispute. And in accordance parliament enacted the Tax Appeals Tribunal Act cap 345 that established the tax Appeals Tribunal to handle tax related disputes, section $14(1)$ of the Act provides for any person aggrieved by a decision

5 made under the taxing Act by the Uganda Revenue Authority May apply to the tribunal for a review of the decision.

That, the Lawdosent confer originaljuridiction in tax matters on the High court with such jurisdiction is only exercised by . ~. the Tax Appeals tribunal and only referred to the High Court 10 on appeal from decisions of the tribunal.

Counsel also cited the case of *Kawuki Mathias V The Commissionner General URA,Misce ZZaneousCause no.14 of 2014* Justice Christopher Madrama Izama while dismissing the application held that the principle is that 15 where parliament has prescribed a procedure for reviews or appeals before another judicial or quasi judicial body, the court should not allow another process to be used ...the High Court should not usurp the powers of the tribunals prescribed by parliament for setting tax disputes. That 20 position was pointed out by the Supreme Court in *Uganda Revenue Authority Versus Rabbo Entreprises(u} Ltd Supreme Court* **in** *Civil Appeal No* **12** *of 2004.*

Furthermore, that under Order 6 Rule 29 of the Civil Procedure Rules it provides that ifin the opinion ofthe court, 25 the decision of the point of law substantially disposes of the

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5 whole suit or of any distinct cause of action, ground of defense or reply there-in, the court may there upon dismiss the suit or make such other order in the suit as may be just. Thus, with the above authorities counsel for the 2nd '.. defendant prayed that the suit against the 2nd defendant be 10 struck out with costs.

Counsel for the plaintiff opposed submissions made by the 2nd defendant in regards to the preliminary point of law arguing that:

The Tax Appeals Tribunal does not have jurisdiction to hear 15 and determine the plaintiff suit against the 2nd defendants and that the facts in the Supreme Court decision in *Uganda Revenue Authority VRabbo Entreprises (u)Ltd &Anor* are distinguishable from those in the instant case and thus the fair and just disposal of the instant point of law requires the 20 evaluation of evidence.

Counsel submitted that the tax appeal tribunal has jurisdiction to determine only purely tax disputes. That, where a dispute arises from a misrepresentation of company law and contract law provisions and principles there by 25 leading to erroneous issuance of tax assessment as was the

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5 case in the instant matter, the tax Appeals tribunal has no legal mandate to determine the same.

Furthermore, that the second defendant's interpretation of section 14(1) of the Tax Appeals Tribunal Act Cap 345 was **• 'l"** erroneous. That, it is not mandatory for a person aggrieved

10 by the 2nd defendants decision under a taxing Act to appeal to the tribunal if the full and just resolution of the dispute will involve significant consideration of questions in other bodies oflaw other than tax law. And in such circumstances, the High Court has exclusive original jurisdiction to handle 15 the disputes pursuant to Article 139 of the constitution.

Counsel argued that 2nddefendants reliance on the decision in *Kawuki Mathias V the commissioner General, URAHC no.14 0/2014* is also erroneous and misconceived. That, the case is distinguishable in material particulars since it 20 involved purely a tax dispute that is, quantum of customs ' duties due from the applicant therein. In the instant facts, this court has to deal with a significantly distinct dispute involving a myriad of contract and company law questions whose resolution will determine whether tax was properly 25 assessed. That in the case of*Mathias Kawuki,* the court was

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dealing with the mandatory language of section 229(1) of the East African Community Customs Management Act, 2004, which demands that a person aggrieved by decision of the commissioner or any officer of URA relating to customs shall lodge an application for review or omission.

#### Decision of Court: 10

$\mathsf{S}$

$20$

I have taken into account the submissions of both parties on the preliminary objection.

Article 139 (1) of the Constitution of the Republic of **Uganda** confers upon the High Court, original jurisdiction in all matters; it provides thus: 15

### Article 139 (1):

The High Court shall, subject to the provisions of this Constitution, have unlimited original jurisdiction in all matters and such appellate and other jurisdiction as may be conferred on it by this Constitution or other law.

This means that the High Court is clothed with jurisdiction and powers of a court of law and equity. That jurisdiction is

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5 general and thus the High Court can hear in the first instance, any suit that is not specifically assigned to another court or tribunal under the law.

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Article 129 of the Constitution, which provides for the 10 hierarchy of courts also provides for the establishment of subordinate courts as follows;

## **Article 129**

**(1) The judicial power of Uganda shall be exercised by the courts of**

15 **judicature which shall consist of-**

- (a) **the Supreme Court of Uganda;** - (b) **the Court of Appeal** of Uganda; - (c) **the High Court of Uganda; and**

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(d) **such subordinate courts as Parliament may by law**

20 **establish, including qadhis' courts for marriage, divorce, inheritance of property and guardianship, as may be prescribed by Parliament.**

Like article 129 above, Article 152 (3)of the Constitution also grants powers to the parliament to establish tax tribunals to

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5 hear and determine tax disputes:

# **Article 152**

1) .

2) .

3) Parliament shall make laws to establish tax 10 tribunals for the purposes of settling tax disputes.

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The Tax Appeals Tribunals was established by the Tax Appeals Tribunals Act Cap 345 and under part IV,section 14 ofthe Act, one ofthe its functions is to review decisions where *'any person* **is** *aggrieved by* **a** *decision of the Uganda 15 Revenue Authority made under* **a** *taxing act.*

Additionally, Section 27 ofthe Tax Appeal Tribunal Act allows a party proceeding before the tribunal to lodge a notice of appeal with the High Court, thus granting the High Court appellate jurisdiction in such matters.

20 Having given that background, it is important to note that though the tribunal was not given exclusive jurisdiction over tax matters, however, the reading of the provisions above, and in an effort to give meaning to the intentions of the legislature or draftsman, this honourable court has on

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several occasions asked itself whether it was the intention of $\mathsf{S}$ the legislature that the High Court should have both the original and appellate jurisdiction in tax disputes and it has invariably held that though the position of the constitution was clear, the best interest of justice would be better served when a court with particular and specialized jurisdiction is 10 available thus underlying the intention of the draftsman that upon the creation of the Tax Appeals Tribunal, such would, in the first instance hear and determine such matters as relating tax disputes, with such matters only coming to the High Court on appeal or review. 15 Antica E

Given the above position, I would thus agree with counsel of the $2^{nd}$ defendant and the decision in **Kawuki** (above) that where parliament has prescribed a procedure for reviews or appeals before another judicial or quasi judicial body, the court should not allow another process to be used to attack the decision.

I note that this matter also touches other causes of action in contract law and company law but since the matter primarily is grounded on a tax dispute then in the interest of justice, It is my opinion that given the position above on the jurisdiction

5 ofthe High Court and Tax Appeal Tribunal, I would order this case to be referred to the Tax Appeals Tribunal for adjudication over the tax dispute then the other residual issues in regard to company law and contract may, where ", . neccessary, be referred back to the High Court.

#### 10 **Order**

- 1. This suit is referred to the Tax Appeals tribunal for handling and disposal. - 11. Any costs so far incurred by any party in respect of this suit shall be in the cause.

15 I so order.

Dr. Henry Peter Adonyo

Judge

20 15th March 2021

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