UGANDA REVENUE AUTHORITY
V
UGANDA
CONSOLIDATED PROPERTIES LTD
COURT OF APPEAL OF UGANDA AT KAMPALA
CIVIL APPEAL NO.31 OF 2000
(ON APPEAL FROM HIGH COURT CIVIL APPEAL
75 OF 1999 )
BEFORE:
HON. LADY JUSTICE L.E.MUKASA KIKONYOGO, DCJ
HON. MR. JUSTICE A. TWINOMUJUNI, JA
HON. LADY JUSTICE C.N.B. KITUMBA, J.A
August 8, 2000
JUDGMENT
JUDGMENT TWINOMUJUNI J.A.: This is an appeal against the
decision of the High Court of Uganda (Okumu Wengi, J) dated March 24, 2000 in
which The Tax Appeals
Tribunal was ordered to hear the Respondent’s
application which it had refused to entertain on the grounds that it was time
barred.
The facts of this case and issues involved as found by the
learned High Court judge are as follows:
“The Uganda Revenue Authority (the Respondent) levied a tax of
shs.504,152,054 on the Appellant by a notice of February 1,
1999 on the basis of
incomes from sales of houses by the Appellant in the years 1992 to 1997. An
objection was made by the taxpayer
and a decision on this objection was made on
March 23, 1999. On June 14, 1999, the Respondent moved to collect the
taxes by directly reaching the Respondent’s Bank accounts. A meeting
between
the parties resulted in a 30% deposit on the assessed tax and this was
reduced into writing by a letter of the Respondent to the
Appellant dated June
17, 1999. By this letter the Respondent made a final declaration that the taxes
were payable as assessed. The
Appellant then filed two applications for review
before the Tax Appeals Tribunal. The first one was filed on July 6, 1999. On
August
9, 1999 another application was filed. According to the counsel for the
Appellant the first application was not served upon the Respondent
within the
requisite period of five days. The Tribunal in its rendition of the first facts
of this appeal did not refer to this application.
The issue before the Tribunal
and in this Appeal is the date of the Taxation decision from when the limitation
period began to run.
If the date of March 23, 1999 was the material date then,
and this is what the Tribunal found, the application for review would be
time
barred. If on the other hand the 15th or June 17, 1999 when a
“final” decision was communicated then as the Appellant argues he
was within time to prefer his
application. There is also the issue of which
limit is to be observed under section 17 of the Tax Appeals Tribunal Act;
whether it
is 30 days or whether six months are the time limits.”
The learned judge held that the date of the Taxation decision
was June 17, 1999, and that the Respondent was within the time limit
of 30 days
when he filed the application on July 6, 1999. He ordered the Tax Appeals
Tribunal to hear the application on its merits,
hence this appeal. There are
five grounds of appeal, namely:
1. The Honourable Judge erred in law and in fact in holding that the agency
notice was a taxation decision.
2. The Honourable Judge erred in law and in fact in holding that an application
which was not stamped or sealed and endorsed by the
Tribunal, was a valid
application.
3. The Honourable Judge erred in law and in fact in holding that the Appellant's
subsequent correspondences revived the dates of
the objection decision.
4. The Honourable Judge erred in law and in fact in holding that the Respondent
filed its application within the statutory time.
5. The Honourable Judge erred in law and in fact in allowing the appeal with
costs.
In my judgment, these grounds of appeal raise the
same three issues that were before the learned trial judge namely:
(a) Whether the trial judge was right to hold that the date of the Taxation
Decision in question was June 17,1999.
(b) Whether he was right to hold that the Respondent filed a valid application
before the Tax Appeals Tribunal on July 6, 1999.
(c) Whether the applicable time limit under section 17 of the Tax Appeals
Tribunal Act is 30 days or six months.
In
arriving at the conclusions that follow, I have had the benefit of perusing
detailed written submissions submitted by counsel in
the High Court and lengthy
oral submissions made before this court. I do not detail the arguments in this
judgment but they are taken
into account in arriving at answers to the above
three issues posed.
What is the date of the taxation decision?
Evidence on record shows that for many years before 1999, the parties had
been trying to agree on the tax liability of the Respondent.
On the February 1,
1999 the Appellant made a Tax assessment decision which it communicated to the
Respondent. By their letters dated
18th and 23rd February
1999, the Respondent, through their Auditors objected to the assessment. On
March 23, 1999 the Appellant rejected the objection
and advised the Respondent
to settle the outstanding tax as assessed. By their letter dated May 12, 1999,
the Respondent requested
the Appellant to reconsider the assessment and gave
reasons for the request. The Appellant did not reply to this letter, On June
14,
1999 the Appellant appointed the Uganda Commercial Bank Ltd. Agent under section
107 of the Income Tax 1997 to recover shs.504,
152,054/= from the Respondent's
bank accounts and pay it over to the Appellant. As a result of this order by the
Appellant, a meeting
was convened between the Appellant and the Respondent on
June 15, 1999 in which it was agreed that:
“As a Way Forward it was agreed that; Uganda Consolidated In Properties
30% pay installment as follows:
40,000,000/= by 30.6.1999
40,000,000/= by 15.07.99
40,000,000/= by 15.09.99
Commissioner, Ltd is to lift the Agency Notice upon receipt of the first
installment.
The Auditors of Ms. Pricewater House are to advise Uganda Consolidated
Properties on the next course of action.”- From Minutes
of that meeting in
Exhibit 11 on record.
It seems to me on the evidence that
though the tax assessment was made at the beginning of February 1999, the
parties continued to
disagree on the basis on which the assessment had been
made. The Appellant appeared to be willing to listen to the Respondent's reasons
for their objection until after the meeting of June 15, 1999 whose final
decision was communicated to the Respondent in a letter
dated June 17, 1999.
Under these circumstances, I would agree with the learned trial judge when he
made the following observations
in his judgment:
“Now in this case it seems that after the letter of March 23, 1999 the
Appellant disputed the tax by a letter of May 12, 1999.
As of June 15, 1999 no
reply by way of an objection decision had been communicated. It can only be
stated that the appointment of
Uganda Commercial Bank as agent under the
provisions of section 107 of the Income Tax Act 1997 became the notification of
the objection
decision. However, it did not by itself mean that that the tax
payable was not in dispute. Once this collection move was notified
to the
taxpayer an urgent meeting was called and agreement was reached for the taxpayer
to pay 30% of the assessed tax. It is the
view of this court that the collection
agency notification fulfilled the requirement of section 100(b) and section
107(3) simultaneously.
It is also the view of this court that the subsequent
meeting and notice issued thereafter revived the assessment updating it to
June
17, 1999. As a result the Appellant could lodge an application with the
Tribunal.”
My finding on these issues is that the date
of the Taxation Decision was not March 23, 1999 but the June 17, 1999. If the
Respondent
wished to apply for a review to the Tax Appeals Tribunal, time
limitation would start running on this date.
This is perhaps a
convenient point to deal with the issue whether under section 17 of the Tax
Appeals Tribunal Act, an application had to be made within 30 days or six
months from the date of the Taxation Decision. The learned trial judge handled
the issue thus:
“Now turning to the apparent discrepancy between section 17(1)(c) and
section 17(7) of the Tax Appeals Tribunals Act 1997, I do not see any
difficulty whatsoever. The one provides for a taxation decision. The thirty days
begin to run from the date when
notice of the decision has been given to the
applicant. The date of notification may not be the same as the date of the
decision
which section 17(7) deals with. The six months is the limit from the
date of the decision itself. In other words even if the date
of the taxation
decision were for arguments sake March 23, 1999 then an application to review it
may not be made after September
23, 1999. In other words the commissioner has
some duty to notify taxpayers of his decisions. But he may delay and notify the
taxpayer,
say on 21/8/1999 in which case the taxpayer may apply for review
within 30 days of notification.”
I agree entirely with
this reasoning.
Finally, the only remaining issue is whether the
Respondent made an application for review within 30 days from the date of
notification
of a Taxation Decision. The Appellant disputes the holding of the
trial judge where he stated:
“...in the absence of any information regarding the status of the
Appellant's application of July 6, 1999, namely whether it
was dismissed or just
abandoned, the Appellant did lodge an application within 30 days of the notice
to him of an objection decision.
(This application appears at p.101l of the
Record of Appeal). I have not seen any order of the Tribunal discontinuing
dismissing
or otherwise disposing of this application. Whether or not it was
competently made is another matter but it cannot be ignored, as
it seems to be
pending. The Respondent in its submissions did not address this matter in any
way.”
It was submitted on behalf of the Respondent that
section 23 of the Tax Appeals Tribunal Act requires that the Tribunal
should conduct its business with as little formalities and technicality as
possible and that as such the
ruling of the Tribunal that the application was
filed out of time was contrary to the spirit of the provision. Section 23 of the
Act provides:
“23(1) In any proceedings before the Tribunal the procedure of the
Tribunal, subject to this Act, within the discretion of
the Tribunal.
(2) The proceedings before the Tribunal shall be conducted with as little
formality and technicality as possible, and the Tribunal
shall not be bound by
the rules of evidence but may inform itself on any matter in such a manner as it
thinks appropriate.”
With respect, my understanding of this provision is that the
procedure to be followed by the Tribunal is only discretionary subject
to the
Act. In other words where the Act and the Rules made there under specifically
spell out procedure to be followed on any matter,
then the discretion of the
Tribunal is limited to that extent. In my judgment section 23 of the Act does
not relieve the Tribunal
from the mandatory requirement of section
17(1)(c) of the Act which requires that applications for review to be
filed within thirty days after the person making the application has been served
with notice of a tax decision.
On the record of appeal there are two
documents purporting to be applications under section 17 of the Tax Appeals
Tribunal Act. One
is dated 6th July 1999 and the other 12/8/1999. The document
dated 6th July 1999 is not stamped by the registry of the Tribunal at
all. It is also common ground that, that document was never served on the
Appellant
by the Respondent as required by section 17 of the Act and by Rule 13
of the Tax Appeals Tribunal (Procedure) Rules 1999.
In my judgment, that
document could not have formed a basis of a valid application under section 17
of the Act unless it conformed
to the requirements of Rules 10, 11 and 13 of the
procedure rules made under the Act. Clearly the document dated 6th July 1999
falls
far short of what is required and therefore no application was filed by
the Respondent on that date. I do not agree with the learned
trial judge that
there is
“absence of Information regarding the status of the Appellants application
of July 6, 1999, namely whether it was dismissed
or just abandoned.”
There is evidence on record that the application was
actually abandoned because it did not conform to the rules and had not been
served
on the Appellant. That is why the Respondent filed a second application
dated August 12, 1999 which was thrown out by the Tribunal
for being time
barred. Clearly, that application was filed after over 50 days from the June 17,
1999 instead of within 30 days as
required by the law. Time limits set by
statutes are matters of substantive law and not mere technicalities and must be
strictly
complied with.
The Respondent filed six grounds for affirming
the decision other than those which were relied upon by the learned judge in the
High
Court. They are:
1. The members of Tax Appeals Tribunal erred in law in entertaining the
Appellant's preliminary objection when the said objection
was not brought in
conformity with the Tribunal's rules of procedure.
2. The members of the Tax Appeal erred in law in holding that time within which
the Respondent could appeal against the Taxation
decision begun to run on March
23, 1999 and June 17, 1999.
3. The members of the Tribunal erred in law in failing to grant the Respondent
an extension of time within which to file a fresh
Application.
4. The members of the Tribunal erred in law in holding that the provisions of
section 17(1)(c) and section 17(7) of the Tax Appeals Tribunals Act are
not in conflict with each other.
5. The members of the Tribunal erred in law in ordering the Respondent to pay
shs. 504,152,054/= as taxes to the Appellant plus interest
thereon when the
Respondent’s application had not been heard and determined on it’s
merits.
6. The members of the Tribunal erred in law in holding that the additional
assessments to income tax made by the Appellant against
the Respondent in 1999
for the years 1992, 1993, 1994 and 1995 were lawful.
The
fourth ground was abandoned by learned counsel for the Respondent. Grounds 2, 4
and 5 have been adequately covered in this judgment.
On the first ground,
learned counsel for the Respondent submitted that the Tribunal entertained the
Appellant's application without
following its own rules which required that the
application be by notice of motion. He did not produce the decision in Jan
Impex (U) Ltd v. Uganda Revenue Authority TAT 10/99(Unreported) in
which he claimed the rule was made. Learned counsel for the Appellant argued
that the rule was not only made
after the ruling in this case but is also
contrary to order 6 rule 15 Civil Procedure Rules which was adapted to
the rules of procedures of the Tribunal by Rule 30 Tax Appeal Tribunal
Rules.
I have no wish to speculate whether the rule existed at the
time of the ruling of the Tribunal or not. If the Respondent wished to
rely on
the same, he had the duty to produce it. No attempt was made to produce
it.
As regards ground three, the application to extend time referred to
was made after the ruling of the Tribunal. In this appeal we are
only concerned
with the manner of dismissal of the Respondent's application by the Tribunal.
The application to extend time which
was made after that is not part of this
appeal and is therefore misconceived.
Finally, on the sixth ground, it
raises a matter that would have been entertained by the Tribunal if the
Respondent's application
for review had been properly made in time. I do
not see the alleged illegality to justify the intervention of this court. I find
no merit in any of these grounds.
For this reason, I would hold that the
application of the Respondent to the Tax Appeals Tribunal to review the Taxation
Decision made
by the Appellant on June 17, 1999 was properly rejected by the
Tribunal as time barred. I would allow this appeal, set aside the
order of the
judge and reinstate the order of the Tribunal with costs here, the High Court
and the Tax Appeals Tribunal to the Appellant.
KITUMBA JA: I have
heard the benefit of reading in draft the judgment of Twinomujuni JA, and I
agree with it and the orders proposed therein.
I have nothing useful to
add.
MUKASA KIKONYOGO, DCJ: I had the opportunity to read the
judgment in draft prepared by Twinomujuni J.A, and I agree with him that the
Appellant’s
appeal must succeed. Since Kitumba JA, also holds a similar
view, this appeal is allowed with costs here, in the High Court and the
tax
Appeals Tribunal to the
Appellant.
UGANDA CONSOLIDATED PROPERTIES
v
UGANDA REVENUE
AUTHORITY
HIGH CORT OF UGANDA AT KAMPALA
(COMMERCIAL
COURT)
CIVIL APPEAL NO. 75 OF 1999
BEFORE: THE HONOURABLE MR. JUSTICE R.O. OKUMU WENGI
March 27, 2000
JUDGMENT
OKUMU WENGI, J: This Appeal was brought to contest the
ruling of the Tax Appeals Tribunal made on 26th November 1999. In that ruling
made on a preliminary
point of law the Tribunal dismissed an application for
review of a taxation decision on grounds that it was time barred.
The
facts of the case are that the Uganda Revenue Authority (the Respondent) levied
a tax of shs. 504,152,054 on the Appellant by
a notice of February 1, 1999 on
the basis of incomes from sales of houses by the Appellant in the years 1992 to
1997. An objection
was made by the tax payer and a decision on this objection
was made on March 23, 1999. On June 14, 1999 the Respondent moved to collect
the
taxes by directly reaching the Respondents Bank accounts. A meeting between the
parties resulted in a 30% deposit on the assessed
tax and this was reduced into
writing by a letter of the Respondent to the Appellant dated June 17, 1999. By
this letter the Respondent
made a final declaration that the taxes were payable
as assessed. The Appellant then filed two applications for review before the
Tax
Appeals Tribunal. The first one was filed on 6th July 1999. On
9th August 1999 another application was filed. According to the
Counsel for the Appellant the first application was not served upon the
Respondent within the requisite period of five days. The Tribunal in its
rendition of the facts of this appeal did not refer to this
first application.
The issue before the Tribunal and in this Appeal is the date of the Taxation
decision from when the limitation
period began to run. If the date of
March 23, 1999 was the material date then, and this is what the Tribunal found,
the application for review would be time
barred. If on the other hand the
15th or June 17, 1999 when a "final" decision was communicated then
as the Appellant argues he was within time to prefer his application.
There is
also the issue of which limit is to be observed under section 17 of the Tax
Appeals Tribunal Act; whether it is 30 days or whether six months are the
time limits.
Firstly I will deal with the problem of a taxation decision.
According to section 3 of the Income Tax Act 1997 "assessment" means
ascertainment of income or penal tax and includes "any decision of the
Commissioner which under this Act is subject
to objection or appeal." And
"taxation decision" is defined in section 2(1) to mean any assessment
determination decision or notice.
Now in this case it seems that after
the letter of March 23, 1999 the Appellant disputed the tax by a letter of May
12, 1999. As of
June 15, 1999 no reply by way of an objection decision had been
communicated. It can only be stated that the appointment of Uganda
Commercial
Bank as agent under the provisions of section 107 of the Income Tax Act
1997 became the notification of the objection decision. However it did not
by itself mean that the tax payable was not in dispute. Once
this collection
move was notified to the tax payer an urgent meeting was called and an agreement
was reached for the tax payer to
pay 30% of the assessed tax. It is the view of
this court that the collection agency notification fulfilled the requirement of
section
100(b) and section 107(3) simultaneously. It is also the view of this
court that the subsequent meeting and notice issued thereafter
revived the
assessment updating it to June 17, 1999.As a result the Appellant could lodge an
Application with the Tribunal.
In this regard, in the absence of any
information regarding the status of the Appellants application of July 6, 1999,
namely whether
it was dismissed or just abandoned, the Appellant did lodge an
application within 30 days of the notice to him of an objection decision
(This
application appears at page101 of the Record of Appeal). I have not seen any
order of the Tribunal discontinuing dismissing
or otherwise disposing of this
application. Whether or not it was competently made is another matter but it
cannot be ignored as
it seems to be pending. The Respondent in its submissions
did not address this matter in any way.
Now turning to the apparent
discrepancy between Section 17 (1) (c) and Section 17 (7) of the Tax
Appeals Tribunals Act 1997, I do not see any difficulty whatsoever. The one
provides for a period of 30 days within which a person may apply for
review of a taxation decision. The thirty days begin to run from the date
when notice of the decision has been given to the Applicant. The date
of notification may not be the same as the date of the decision
which Section 17 (7) deals with. The six months is the limit from the date of
the decision itself. In other words even if the date of the taxation
decision were for arguments sake March 23, 1999 then an application
to review it
may not be made after September 23, 1999. In other words the commissioner has
some duty to notify tax payers of his decisions. But he may delay and
notify the tax payer, say on September 23, 1999 in which case the tax payer may
apply for review
within 30 days of notification.
In view of
what has been stated above the date of the tax decision and or
assessment and or objection decision is mid June1999 the date having
been revived by the Respondents own communication. If the commissioner large tax
payers had not written notices at all the date would have been frozen to March
23, 1999 subject to election by the tax payer following
delay to respond to the
tax payers May 1999 letter disputing the tax payable. In the law of
Limitation, as I know it, writing letters, even those with negative content,
may have the undesired effect of reviving an otherwise stale cause. In
this case it did just that and updated the decision to mid June 1999.
In
consequence, I have to allow this appeal with costs and remit the application
for review to be heard, for and disposed of by the
Tax Appeals Tribunal. Leave
against this Judgment Appellant is entitled to if required is granted and the
Appellant is entitled to
costs of this appeal.
