Millenium 2000 Uganda Limited v The Commissioner General Uganda Revenue Authority (Misc Cause 341 of 2021) [2025] UGHCCD 6 (23 January 2025)

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (CIVIL DIVISION) MISCELLANEOUS CAUSE NO. 341 OF 2021**

# **MILLENIUM 2000 UGANDA LTD ::::::::::::::::::::::::::::::::::::::::::: APPLICANT VERSUS THE COMMISSIOER GENERAL UGANDA REVENUE AUTHORITY ::::::::::::::::::::::::::::::::::::::: RESPONDENT**

## **BEFORE: HON. JUSTICE BONIFACE WAMALA**

#### **RULING**

### **Introduction**

[1] This application was brought by Notice of Motion under Sections 14, 33, 36 and 39 of the Judicature Act, Sections 64 & 98 of the CPA, Article 42 of the Constitution, Rules 3, 4, 5 & 6 of the Judicature (Judicial Review) (Amendment) Rules S. I No.11 of 2019 and Order 52 rules 1 & 3 of the CPR, for the following declarations and orders;

- a) A declaration that the respondent's application of the Tax Procedure Code Act to levy and collect taxes that were not assessed prior to 19th October 2014 is illegal, arbitrary and constitutes an abuse of authority. - b) A declaration that the respondent's action of demanding for taxes that have not been previously assessed or brought to the attention of the applicant is illegal, arbitrary and constitutes an abuse of authority. - c) A declaration that the respodent's failure to waive all unpaid penalties and interest as of 30th June 2020 in the computation of the applicant's tax liability is arbitrary, illegal and constitutes abuse of authority. - d) A declaration that the rejection of the applicant's request for a tax clearance certificate made on 28th October 2021 is illegal, arbitrary and constitites wrongful exercise power.

- e) A declaration that the respondent's demand notice of UGX 1,533,764,940/= dated 11th September 2021 which does not arise out of any assesment is arbitrary, illegal and constitutes abuse of authority. - f) A declaration that the respondent's appointment of Exim Bank Uganda Limited and Diamond Trust Bank Limited on 6th December 2021 as collection agents for recovery of UGX 84,000,000/= is illegal, arbitrary and constitutes abuse of authority. - g) An order of Certiorari issues to quash and set aside the demand notices issued without any tax assesments. - h) An order Certiorari issues to quash and set aside the agency notices issued to Exim Bank Uganda Limited and Diamond Trust Bank Limited. - i) The respondent be prohibited from demanding and collecting taxes where there are no prior tax assesments. - j) The respondent be prohibited from assesing and collecting taxes after the period beyond which the applicant is required to keep records. - k) An order that the respondent's tax payer ledger system be reconciled taking into account all the provisions of the law on tax assesment, record keeping and waivers of interest and penalties. - m) An order for an injunction be issued stopping the respondent, or his agents and workmen from levying interest and penalties that were unpaid by June 2020. - n) The applicant be granted general damages for the iconveniences occasioned. - o) An order that the costs of the application be provided for.

[2] The grounds upon which the application is based are summarized in the Notice of Motion and also set out in the affidavit in support of the application deposed by **Amin Manji**, the company secretary of the applicant. Briefly, the grounds are that the applicant is engaged in business as Millennium Supermarket at Kisementi in Kampala. On 20th October 2021, the applicant applied for a tax clearance certificate for the Year 2021-2022 but it was rejected by the respondent, stating that the applicant should pay VAT of UGX 819,466,010/= and Income Tax of UGX 479,637,579/= before being granted the Tax Clearance Certificate. The respondent subsequently made demand notices of tax arrears of UGX 1,533, 764,940/= which did not arise out of any assessment as required by law. The deponent stated that the respondent in its tabulation and computation of the tax payable included interest and penalties since 2009 which were waived by statute in October 2020. He further stated that the amounts arise out of a ledger system that was introduced in 2019 and was formatted to tabulate and compound all interest since 2009 which was never brought to the attention of the applicant until January 2020 when the respondent started using ledgers.

[3] The deponent also stated that the respondent wrongly applied payments made on the principle tax in 2017, 2018, 2019 and 2020 to the interest for earlier years which was neve assessed. He averred that in calculating the tax due, the respondent omitted to include UGX 133,219,404/= that the applicant had paid in 2014 and the applicant was not given an opportunity to object to the taxes by levying unassessed taxes. He further averred that the applicant tried to put all the anomalies to the respondent's officers but they declined and the applicant's ledger has never been reconciled. He stated that in December 2021, the respondent appointed Exim Bank (U) Ltd to act as its appointed agent to recover UGX 84,000,000/= from the applicant's bank accounts. He concluded that the respondent's refusal to grant the tax clearance certificate was arbitrary, unlawful and unjustified and has adversely affected the applicant's business.

[4] The respondent opposed the application through an affidavit in reply deposed by **Donald Bakashaba**, an Officer Litigation, in the department of Legal Services and Board Affairs of the respondent. He stated that this Court has no jurisdiction since the applicant is challenging the respondent's tax decision made pursuant to the Tax Procedure Code Act, 2014. He further stated that the dispute between the parties is not a fit and proper case for judicial review since the applicant had not exhausted the existing remedies under the law. He stated that the applicant had unpaid taxes of VAT and Income Tax that resulted from their own ledger; the taxes were self-assessed and calculated basing on the tax payer's filings and ledger; and the applicant knew at all times that it owed taxes to the respondent and there was no need for a default notice.

### **Representation and Hearing**

[5] At the hearing, the applicant was represented by **Mr. Karigyenda Robert** of Joe R. Karigyenda & Co. Advocates. The respondent's counsel did not appear at the hearing. The Court directed counsel for the parties to make and file written submissions; which were duly filed by both counsel. I have adopted the submissions and taken them into consideration in the course of determination of the matter. In their submissions, Counsel for the respondent raised some preliminary points of objection to the effect that this Court is not vested with jurisdiction to entertain this matter and that the application is prematurely before the Court for failure to exhaust existing remedies under the law. I will begin by considering the preliminary objections.

### **Consideration of the Preliminary Points of Objection**

[6] Counsel for the respondent submitted that Sections 24 and 25 of the Tax Procedure Code Act (as amended) provide for remedial hierarchy to be resorted to by a dissatisfied tax payer. Counsel also cited the case of *Uganda Revenue Authority v Rabbo Enterprises (U) Ltd & Anor, SCCA No. 12 of 2004* where it was held that the proper procedure is that all tax disputes must first be lodged with the Tax Appeals Tribunal and only taken before the High Court on appeal. Counsel submitted that the instant application was prematurely filed as this Honorable Court does not have original jurisdiction in tax disputes. Counsel stated that there is no evidence that the applicant objected to the additional assessments and neither had they sought intervention from the tax appeals tribunal.

[7] In response, Counsel for the applicant submitted that the objection raised by Counsel for the respondent is unfounded since the dispute in the matter is not merely a tax dispute after a tax decision. Counsel argued that the dispute is not about the amount of tax as assessed or about unfairness of the tax assessment; which circumstances would make the Tax Appeals Tribunal a forum of first instance. Counsel argued that the present application was based on purely legal questions, and not a tax dispute. Counsel further submitted that the applicant could not take the legal route provided for under Sections 24 and 25 of the Tax Procedure Code Act since there was no assessment made by the respondent which the applicant could object to. Counsel thus argued that in absence of an assessment, there was no tax decision to which the applicant could object to. Counsel concluded that the best option available to the applicant was to bring the present application for judicial review and prayed to the Court to find that the application was amenable for judicial review.

# **Determination by the Court**

[8] Rule 5 of the Judicature (Judicial Review) (Amendment) Rules, No. 32 of 2019 introduces Rule 7A into the principal rules, which lays out the factors to be considered by the court when handling applications for judicial review. It provides as follows;

*"7A. Factors to consider in handling applications for judicial review.*

- *(1) The court shall, in considering an application for judicial review, satisfy itself of the following –* - *(a) That the application is amenable for judicial review;*

- *(b) That the aggrieved person has exhausted the existing remedies available within the public body or under the law; and* - *(c) That the matter involves an administrative public body or official"*.

[9] Regarding the requirement that the aggrieved person has exhausted the existing remedies available within the public body or under the law, it was submitted by Counsel for the respondent that under Sections 24 and 25 of the Tax Procedure Code Act 2014 (as amended), a person dissatisfied with an assessment has a right to lodge an objection with the respondent who shall make an objection decision. Where the tax payer is dissatisfied with the objection decision, they have a right to apply for review of the objection decision to the Tax Appeals Tribunal. Counsel argued that without following the above said procedure which is clearly provided for under the law, the matter was improperly brought before the Court, both for want of jurisdiction and for being prematurely before the Court. For the applicant, it is argued that the matters raised in the application do not amount to a tax dispute. Secondly, that there was no assessment upon which the applicant could have based to lodge an objection to the respondent.

[10] The position of the law, in line with Rule 7A(1)(b) of the Judicature (Judicial Review) (Amendment) Rules 2019, is that where an alternative remedy exists through statutory law or within an institutional framework, it is desirable that such alternative remedy is pursued first and exhausted. A court's inherent jurisdiction should not be invoked where there is a specific statutory provision which would meet the necessities of the case. See: *Sewanyana Jimmy v Kampala International University, HCMC No. 207 of 2016.* It is also the law that for such a position to apply, the alternative remedy must be shown to be in existence and effective enough to the applicant before taking out judicial review. See: *Leads Insurance Company Ltd v Insurance Regulatory Authority, CACA No. 237 of 17*.

[11] In the instant case, Sections 26 and 27 of the Tax Procedures Code Act Cap 343 (then Sections 24 and 25) provide for remedies to a person aggrieved with a tax assessment. An assessment may arise out of self-assessment by a tax payer in accordance with Section 22 of the Tax Procedures Code Act; by default-assessment under Section 23 of the Act; by advance assessment under Section 24 of the Act; or by additional assessment under Section 25 of the Act. According to Section 2 of the Act (Cap 343), "tax assessment" means a selfassessment, default assessment, advance assessment, or additional assessment".

[12] In this case, it was averred for the respondent that the tax demanded from the applicant arose out of self-assessment by the applicant based on the tax returns filed by the applicant and reflected in the applicant's tax ledger. It follows, therefore, that there was an assessment available to the applicant against which they were in position to lodge an objection to the respondent. In case the respondent returned an unfavourable objection decision, the applicant had a right to seek review of the decision before the Tax Appeals Tribunal. The applicant did not exhaust the above stated remedies before resorting to this Court.

[13] It is argued for the applicant that the reason they opted for judicial review was because the matter raised herein is not a tax dispute. I am unable to agree with this argument by the applicant's counsel. This is because I am aware that a dispute concerning a grievance towards a tax decision would constitute a tax dispute. Under Section 2 of the Act (Cap 343), a "tax decision" means — (a) a tax assessment; or (b) a decision on any matter left to the discretion, judgment, direction, opinion, approval, satisfaction or determination of the Commissioner, other than a decision made in relation to a tax assessment. In the present case, there was an assessment, which under the law amounts to a tax decision. Any challenge raised against the said tax decision constituted a tax dispute.

[14] Upon the above premises, therefore, I am in agreement with learned Counsel for the respondent that the applicant ought to have taken the route provided for under the Tax Procedures Code Act before seeking the assistance of this Court. The present application is, therefore, incompetent before the Court on account of having improperly invoked the Court's jurisdiction and for having been brought without exhausting the existing remedies provided for under the law; which makes the application premature. The application is accordingly dismissed with costs to the respondent.

It is so ordered.

*Dated, signed and delivered by email this 23rd day of January, 2025.*

**Boniface Wamala JUDGE**