Matovu & Matovu Co Advocates v Uganda Revenue Authority (HCT-00-CC-CA 7 of 2006) [2006] UGCommC 33 (27 September 2006)

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\fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\insrsid2195259 \chftnsep \par }}{\*\aftnsepc \pard\plain \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\insrsid2195259 \chftnsepc \par }}\sectd \linex0\headery708\footery708\colsx708\endnhere\sectlinegrid360\sectdefaultcl\sftnbj {\footer \pard\plain \s15\ql \li0\ri0\widctlpar \tqc\tx4320\tqr\tx8640\pvpara\phmrg\posxc\posy0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8472850 \fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\field{\*\fldinst {\cs16\insrsid329557 PAGE }}{\fldrslt { \cs16\lang1024\langfe1024\noproof\insrsid13662959 1}}}{\cs16\insrsid329557 \par }\pard \s15\ql \li0\ri0\widctlpar\tqc\tx4320\tqr\tx8640\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\insrsid329557 \par }}{\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}} {\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\insrsid1578782 THE REPUBLIC OF UGANDA \par \par IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA}{\insrsid15861250 \par }{\insrsid1578782 \par COMMERCIAL COURT DIVISION \par \par HCT-00-CC-CA-0007-2006 \par \par (Appeal from a ruling of the Tax Appeals Tribunal in Civil Application No. 26 of 2006) \par \par MATOVU AND MATOVU ADVOCATES }{\insrsid1446100 }{\insrsid1578782 APPELLANT \par \par VERSUS \par \par UGANDA REVENUE AUTHORITY RESPONDENT \par \par \par }{\b\ul\insrsid1578782\charrsid5595610 BEFORE: THE HONOURABLE MR. JUSTICE FMS EGONDA-NTENDE \par \par JUDGMENT \par }{\insrsid1578782 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid7545463 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid5595610 { \insrsid7545463 The appellants were the applicants before the Tax Appeals Trib unal. They went to the tax appeals tribunal to contest the issuance of a third party agency notice by the respondent, dated 22 September 2005, to the Uganda Electricity Board seeking to collect the sum of Shs.260,194,312.00 being VAT tax arrears that the firm of Matovu and Kimanje Advocates acknowledged as due and owing in earlier proceedings before the Tax Appeals Tribunal. The appellants contended that this money claimed was due from Matovu and Kimanje Advocates and not Matovu and Matovu}{ \insrsid937385 Advocates}{\insrsid7545463 . }{\insrsid11563086 Since the tax liability arose and was admitted by the firm of Matovu and Kimanje }{\insrsid937385 Nsibambi }{\insrsid11563086 Advocates, the said firm has ceased to exist, with the partnership business dissolved.}{\insrsid1578782 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid11563086 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\insrsid11563086 Mr. John Matovu was a partner in the firm of Matovu and Kimanje Advocates, and is now a partner in the firm of Matovu and Matovu Advocates. Uganda Revenue Authority has turned to Mr. John Matovu, and in particular to his new firm, Matovu and Matovu to pay the outstanding vat arrears that were adjudged by consent of the parties, including Matovu and Kimanje Advocates, before the }{\insrsid937385 Tax Appeals Tribunal,}{\insrsid11563086 to be due and owing to the Uganda Revenue Authority. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid11563086 \hich\af0\dbch\af0\loch\f0 3.\tab}The complaint before the TAT was in effect that Mr. John Matovu is being compelled to pay the tax liability of Mr. Kimanje, his former partn er in Matovu and Kimanje}{\insrsid937385 Nsibambi }{\insrsid11563086 Advocates. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid10908300 \hich\af0\dbch\af0\loch\f0 4.\tab}}{\insrsid10908300 The Tax Appeals Tribunal h}{\insrsid13961218 e}{\insrsid10908300 a}{\insrsid13961218 r}{\insrsid10908300 d both parties and found that the third party agency notice issued}{\insrsid937385 by}{\insrsid10908300 the Uganda Revenue was properly issued, and that Mr. John Matovu, or Matovu and Matovu Advocates can be compell ed to pay the tax liability of the Matovu and Kimanje Advocates. The tribunal dismissed the application with costs. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid10908300 \hich\af0\dbch\af0\loch\f0 5.\tab}The appellant appeals against that decision and has set forth two grounds of appeal. Firstly that the tribunal erred in law and in fact whe n they held that the respondent properly issued a Third Party Agency Notice against the appellant for the recovery of taxes due to the partners in M/S Matovu & Kimanje Nsibambi Advocates under S. 71 of the VAT Act. Secondly that the tribunal erred in fact when they held that the Applicant guaranteed the Tax Liability (debt) of M/S Matovu & Kimanje Nsibambi Advocates by issuing post dated cheques which bounced. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid3095074 \hich\af0\dbch\af0\loch\f0 6.\tab}}{\insrsid3095074 Mr. John Matovu, learned counsel for the appellant, submitted that he relied on the submissions ma de in the tribunal. He argued that Section 71 of the VAT Act does not authorise recovering of money due from one partner from another partner without the consent of such partner. He argued that there was some ambiguity in this section with regard to the q u estion of discharge of a partnership tax liability, and that this ambiguity ought to be resolved in favour of the tax payer. With regard to ground 2 he stated that the cheques in question were signed by both partners at the time, and were not only signed by him. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid856578 \hich\af0\dbch\af0\loch\f0 7.\tab}}{\insrsid856578 Ms Ann Bitature, learned counsel for the respondent opposed the appeal, arguing that there was no ambiguity in Section 71 of the VAT Act. Secondly that this section imposed joint and several liability on the partners in a firm for the tax liability of that firm, and the tax authority could proceed against a partner either jointly or severally for the tax liability of the firm. This is what occurred in this situation. With regard to ground 2 she submitted that this was raised as an issue of fact, a m atter that was not }{\insrsid10583970 appealable}{\insrsid856578 . She prayed that this appeal be dismissed.}{\insrsid3095074 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid10583970 \hich\af0\dbch\af0\loch\f0 8.\tab}}{\insrsid10583970 The Tribunal resolved the issues in question stating in part, }{\insrsid937385 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid937385 {\insrsid10583970 \lquote The Tribunal agrees with the Applicant that the discretion in 71(1) (a) is exercisable by the partner, and not the respo ndent to determine which partner. The Tribunal further agrees with the applicant that according to Section 71(1) (b) each partner has the obligation to meet his burden of the partnership depending on the Partnership Deed.\rquote }{\insrsid856578 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid10583970 \hich\af0\dbch\af0\loch\f0 9.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid5595610 { \insrsid10583970 The Tribunal, however, went on to }{\insrsid1604324 state}{\insrsid10583970 , after }{\insrsid1604324 drawing a connection between Mr. John Matovu and the previous proceedings, the post dated cheques issued in relation thereto, and the partnership deed of Matovu & Kimanje Nsibambi Advocates, }{\insrsid793375 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid793375 {\insrsid1604324 \lquote The Tribunal assumes that this Article of the Par tnership was followed to the letter when dissolving the partnership. The Tribunal further presumes that the person who undertook/guaranteed payment of tax by signing post dat}{\insrsid1257618 ed }{\insrsid1604324 cheques in settlement of the outstanding tax obligations must have taken intere st in ensuring that the tax is paid. The Tribunal therefore finds that in the Third Party Agency Notice, the Respondent was reminding Mr. John Matovu, now of Matovu & Matovu Advocates for the outstanding taxes he had undertaken to bear.\rquote }{ \insrsid10583970 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid937385 \hich\af0\dbch\af0\loch\f0 10.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13573683 { \insrsid937385 I must point out, at this stage, that this last finding is erroneous. }{\insrsid793375 The purpose of a third party agency notice is to collect monies in the hands of a third party belonging to the person liable to pay the tax, and not to remind the taxpayer that the liability is still outstanding. See Section 40 of the VAT Act. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid793375 \hich\af0\dbch\af0\loch\f0 11.\tab} }{\insrsid1604324 The Tribunal went on to hold that as Mr. John Matovu guaranteed/undertook to pay the outstanding tax which he knew he is liable to pay the said such tax.}{\insrsid1257618 To found against the appellants the Tribunal rested its fin ding on a ground, not advanced by any of the parties. It was not definitely advanced by the respondent}{\insrsid6896834 . The result is that the Tribunal rested its decision on a matter both of law and fact that had not been argued before it. Whereas it is possible for a co urt or tribunal to decide thus, this is an undesirable practice, unless such issue or matter be brought to the attention of the parties for their views to be known.}{\insrsid1604324 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid6896834 \hich\af0\dbch\af0\loch\f0 12.\tab}}{\insrsid6896834 In the instant the cheques that the tribunal treated as a guarantee by Mr. Matovu to pay th e tax were actually issued by the firm of Matovu & K Nsibambi Advocates on their clients account. This is evident from a reading of the cheque lea}{\insrsid793375 f}{\insrsid6896834 s on record. The cheques were firm cheques and not individual cheques of Mr. John Matovu. It is therefore surprising that the Tribunal holds that because Mr. John Matovu signed the cheques it must be taken that he guaranteed the payment of taxes due.

\par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid6896834 \hich\af0\dbch\af0\loch\f0 13.\tab}Guarantee is an agreement whereby one party agrees to pay the debts of another in case of default by that other pa rty to pay the debt. There was no evidence before the tribunal in these proceedings of the existence of an agreement of guarantee, and the tribunal erred in law, to presume the existence of such an agreement, and find}{\insrsid793375 ,}{\insrsid6896834 } {\insrsid10302510 albeit obliquely}{\insrsid793375 ,}{\insrsid10302510 that it formed sufficient basis for the issue of }{\insrsid793375 a }{\insrsid10302510 third party agency notice in respect of proceeds due to a former partner of a partnership liable to pay the tax in question.}{\insrsid6896834 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid10302510 \hich\af0\dbch\af0\loch\f0 14.\tab}}{\insrsid10302510 The tribunal having agreed with Mr. John Matovu\rquote s interpretation of Section 71 of the VAT Act, and found that that Act, read together with }{\insrsid937385 the }{\insrsid10302510 partnership deed of Matovu & Kimanje Nsibambi Advocates, imposed on each partner the obligation to meet his}{\insrsid937385 share of the}{\insrsid10302510 burden of }{ \insrsid937385 the }{\insrsid10302510 tax obligation, it had no}{\insrsid5389976 logical}{\insrsid10302510 basis to find that Mr. John Matovu was then liable to pay the tax obligation of the partnership of Matovu & Kimanje Nsibambi Advocates, apart from his share of that tax burden.}{\insrsid5389976 However}{\insrsid13963440 ,}{\insrsid5389976 on my part, and with respect to the tribunal, I do not share the conclusions of the tr}{\insrsid937385 ibunal with regard to application}{\insrsid5389976 of Section 71 of the VAT Act}{\insrsid937385 to the facts of this case}{\insrsid5389976 .}{ \insrsid10302510 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid5389976 \hich\af0\dbch\af0\loch\f0 15.\tab}}{\insrsid5389976 Both parties provided different views on the application of Section 71 of the VAT Act, providing reasons }{\insrsid13963440 for }{ \insrsid5389976 each particular view}{\insrsid13963440 or position}{\insrsid5389976 , together with authorities to support their content ions. The tribunal merely agreed with the appellant, without an analysis of both the reasons for and against that position, and choice of what reasons were acceptable and why such reasons were acceptable and why the reasons for the adverse party were not acceptable to the tribunal. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid5389976 \hich\af0\dbch\af0\loch\f0 16.\tab} The tribunal had an obligation to provide a reasoned decision on that issue rather than merely adopting one position and proceeding on to other matters. Section 19 (2) of The Tax Appeals Tribunal Act, }{\insrsid13963440 which imposes this obligati on, states, }{\insrsid5595610 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5595610 {\insrsid13963440 \lquote The tribunal shall give reasons in writing for its decision, including its findings on material questions of fact and reference to the evidence or other material on which those findings are based.\rquote }{\insrsid5389976 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13963440 \hich\af0\dbch\af0\loch\f0 17.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13573683 { \insrsid13963440 The tribunal in its decision }{\insrsid5595610 under}{\insrsid13963440 the section entitled \lquote Findings, Ruling and Award of The Tribunal\rquote started with this statement. }{\insrsid5595610 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5595610 {\insrsid13963440 \lquote The tribunal has carefully considered the submissions by Counsel for the Applicant. The Tribunal however finds that there is , in principle, an agreement by both partie s that the matter falls squarely within the provisions of Section of section 71 (1) (a) and (b) of the VAT Act.\rquote \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13963440 \hich\af0\dbch\af0\loch\f0 18.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13573683 { \insrsid13963440 The Tribunal then set out the }{\insrsid5595610 provisions of the s}{\insrsid13963440 ection. }{\insrsid5595610 T}{\insrsid13963440 he }{\insrsid5595610 T}{\insrsid13963440 ribunal then concluded that it agreed with the applicant\rquote s position. It is clear that the position of the respondent was never examined before accepting the position of the applicant.}{\insrsid11427746 The tribunal was obliged to examine the same, and was entitled, if it was so minded}{\insrsid937385 ,}{ \insrsid11427746 to reject the position, but providing reasons for that rejection. It was an error not to do so.}{\insrsid8879435 }{\insrsid13963440 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid8879435 \hich\af0\dbch\af0\loch\f0 19.\tab}}{\insrsid8879435 Basically the case for the appellant is that under Section 71 (1) (a) of the VAT Act, the tax liability for a partnership is imposed on all the partners though this liability may be discharged by one or the other of the partne rs. The discharging of the tax by the partners or any one of them would be a choice made by the partners or partner. It is then argued that though under Section 71 (1) (b) this tax liability is joint and}{\insrsid2755457 / or }{\insrsid8879435 several, if it is enforced severally, it would render Section 71(1) (a) meaningless.}{\insrsid2755457 Each partner should therefore meet his or her part of the tax burden incurred by the defunct partnership. The tax burden of the partnership cannot be imposed upon one former partner.}{\insrsid11427746 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid8879435 \hich\af0\dbch\af0\loch\f0 20.\tab}}{\insrsid8879435 The case for the respondent was that Section 71 of the VAT Act had to be read as a whole, and if it was read as whole, it is then clear that whereas under Section 71(1) (a) one partner may choose to discharge all tax liability of all the partners and partnership, under Section 71(1) (b) of the same Act, all partners were jointly and severally liable, and thus liability could be enforced severally against one or each of the partners. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid2755457 \hich\af0\dbch\af0\loch\f0 21.\tab}}{\insrsid2755457 I will set out Section 71 (1) of the VAT Act. It states, }{\insrsid4396017 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid4396017 {\insrsid2755457 \lquote }{\b\insrsid2755457\charrsid5595610 Application of Act to partnerships and unincorporated associations. }{ \b\insrsid4396017\charrsid5595610 }{\insrsid2755457 (1) This Act applies to a partnership as if the partnership were a person, but with the following changes\emdash }{ \insrsid4396017 }{\insrsid2755457 (a) }{\b\insrsid2755457\charrsid12679735 obligations that would be imposed on the partnership are imposed on each partner}{\insrsid2755457 , but may be discharged by any of the partners; }{ \insrsid4396017 }{\insrsid2755457 (b) the }{\b\insrsid2755457\charrsid12679735 partners are jointly and severally liable}{\insrsid2755457 to pay any amount that would be payable by the partnership,\rquote \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid7342712 \hich\af0\dbch\af0\loch\f0 22.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13573683 { \insrsid7342712 There is no ambiguity in the provisions of this section. They provide firstly in Section 71 (1) (a) that the obligations of the partnership are imposed on each partner. Each partner}{\insrsid5595610 ,}{\insrsid7342712 in my view}{ \insrsid5595610 ,}{\insrsid7342712 is made to carry the burden of the partnership. Each partner carries this liability singly. There is no suggestion that the burden is divided up between the part}{\insrsid3354837 ners}{\insrsid7342712 in any manner or proportion. Secondly one partner may choose to discharge the tax liability though all the partners bear the burden singly.}{\insrsid2755457 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid7342712 \hich\af0\dbch\af0\loch\f0 23.\tab}}{\insrsid7342712 Section 71 (1) (b) then provides that the partners are jointly and severally liable to pay any amount that would be payable by the partnership. }{\insrsid4396017 I reject the claim by the appellant made in the tribunal that, }{\insrsid5595610 \par }\pard \ql \li1440\ri1440\widctlpar\aspalpha\aspnum\faauto\adjustright\rin1440\lin1440\itap0\pararsid5595610 {\insrsid4396017 \lquote Further Section 71 (1) (b) f Cap. 349 states that the partners are jointly and severally liable to pay any amount that would be payable by the partnership. A literal interpretation of this would be that, each partner is entitled to meet his part of the obligation. In th e circumstances therefore; each partner should meet his part of the obligation that accrued fro the defunct firm and or partnership. To state otherwise, would render section 71(a) irrelevant and of}{\insrsid16190040 no}{\insrsid4396017 legal effect. \rquote }{\insrsid7342712 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid4396017 \hich\af0\dbch\af0\loch\f0 24.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13573683 { \insrsid4396017 I am unable to point to any part of the provisions referred to by counsel for the appellant which would suggest that that the provisions of Section 71 (1) (a) of the VAT Act, }{\insrsid3354837 say}{\insrsid4396017 that each partner is entitled to }{\insrsid3354837 pay only such partner\rquote s share}{\insrsid4396017 of the obligation of the tax burden }{\insrsid3354837 of the partnership }{\insrsid4396017 only. The provisions do not attempt to divide up proportionally or in any other manner whatsoever}{\insrsid12679735 }{\insrsid4396017 the tax burden of the partnership other than to make all the partners and }{\insrsid12679735 or }{\insrsid4396017 any one of them liable for the whole tax burden of the partnership.}{\insrsid12679735 There is no way, \lquote stating otherwise\rquote renders Section 71 (1) (a) of the VAT Act, irrelevant and of no legal effect.}{\insrsid4396017 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid12679735 \hich\af0\dbch\af0\loch\f0 25.\tab}}{\insrsid12679735 It is true as Mr. John Matovu argued in tribunal below that the word \lquote imposed\rquote refers to the power of the respondent to impose the tax and it is the taxpa yer who discharges the tax obligation. The language of Section 71(1) (a) is very clear. The obligations that would be imposed on the partnership as one person are imposed on each partner. Each partner has the responsibility to bear the burden of the partn ership.}{\insrsid13907122 The provision may be harsh in its full import. However I see no ambiguity. However}{\insrsid3354837 ,}{\insrsid13907122 if any ambiguity did exist such ambiguity is then removed by Section 71 (1) (b) of the Act, which expressly provides for joint and several liability of the partners for the tax burden of the partnership.}{\insrsid12679735 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13907122 \hich\af0\dbch\af0\loch\f0 26.\tab}}{\insrsid13907122 I would accordingly reject the position of the appellant that Section 71 (1) of the VAT Act does not impose liability on one partner. It does impose liability on each of the partners and on all the partners. Collectio n can be made from one partner or from all the partners. One partner may discharge all liability or all of the partners may discharge the liability of the partnership. \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid5595610 \hich\af0\dbch\af0\loch\f0 27.\tab}}{\insrsid5595610 The Tribunal in its decision gave consideration, in construing the provisions of Section 71 (1) of the Act, to the provisions of the partnership deed of Matovu & Kimanje Nsibambi Advocates. This was an error}{\insrsid6963235 . In determining the liability between the two partners it is, of course, relevant to consider the terms of their agreement and give effe ct to them. This would be relevant in an action between the partners. However, it is not relevant in construing the statutory powers of the respondent, provided under the VAT Act, which was the matter in issue, in these proceedings.}{\insrsid5595610

\par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13907122 \hich\af0\dbch\af0\loch\f0 28.\tab}}{\insrsid13907122 It is not in dispute th at the subject matter of the third party agency notice was tax liability of the defunct Matovu & Kimanje Nsibambi Advocates. Mr. John Matovu was a partner in that firm. All the partners in that firm were liable to pay the tax liability of the firm and one of the partners could opt to discharge the liability of the firm. }{\insrsid793375 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13907122 \hich\af0\dbch\af0\loch\f0 29.\tab}}{\insrsid13907122 At the same time the respondent was authorised under Section 71 (1) }{\insrsid3354837 (b) }{\insrsid13907122 of the Act, to collect the tax from any one of the partners whether jointly or severally. The issuance of the third party agency notice in respect of }{\insrsid793375 liability of the partnership}{\insrsid13907122 to }{\insrsid793375 a third party, in respect of monies due from that third party to }{\insrsid13907122 one partner, Mr. John Matovu, under the name and style of Matovu and Matovu, was therefore lawful.}{\insrsid793375 }{\insrsid13907122 I would accordingly reject ground number one of the appeal}{\insrsid793375 .}{\insrsid13907122 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid793375 \hich\af0\dbch\af0\loch\f0 30.\tab}}{\insrsid793375 Given what I have already expressed in paragraphs 11 to 14 herein above, I agree that the tribunal erred to find that }{ \insrsid13573683 the appellant had guaranteed the tax liability of Ms Matovu & Kimanje Nsibambi Advocates by issuing the post dated cheques in question in a previous proceeding. Those cheques were not issued by Mr. John Matovu as such}{\insrsid6963235 ,}{ \insrsid13573683 but by the firm, Matovu & Kimanje Nsibambi Advocates. Secondly}{\insrsid6963235 ,}{\insrsid13573683 issuing a cheque to a person may create some liability based on that cheque as a bill of exchange but not}{\insrsid6963235 ,}{ \insrsid13573683 necessarily}{\insrsid6963235 ,}{\insrsid13573683 liability as a guarantee. I am aware of no law that creates liability based on guarantee, merely on the issuance of a cheque.}{\insrsid793375 \par {\listtext\pard\plain\lang2057\langfe1033\langfenp1033\insrsid13573683 \hich\af0\dbch\af0\loch\f0 31.\tab}}{\insrsid13573683 I would allow ground no.2 to succeed but this is inconsequential to the substance of the dispute discussed in relation to ground no1 of the appeal. In the result I would dismiss this appeal with costs here and below. \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13573683 {\insrsid13573683 Signed, dated and delivered at Kampala this 28}{\super\insrsid13573683\charrsid13573683 th}{\insrsid13573683 day of September 2006 \par \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13573683 {\insrsid13573683 \par \par \par \par FMS Egonda-Ntende \par Judge \par }\pard \ql \li360\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid793375 {\insrsid793375 \par }}