Uganda Revenue Authority v Uganda Consolidated Properties Ltd (Civil Appeal No. 31 of 2000) [2000] UGCA 41 (24 March 2000)

THE REPUBLIC OF UGANDA

IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

CORAM. HON. LADY JUSTICE L. E. MIiUKASA-KIKONYOGO, DCJ HON. MR. JUSTICE A. TWINOMUJUNI, J. A HON. LADY JUSTICE C. N. B. KITUMBA, J. A

CIVIL APPEAL NO.3I OF 2OOO

I5 UGANDA REVENUE AUTHORITY APPELLANT

VERSUS

UGANDA CONSOLIDATED PROPERTIES LTD..... RESPONDENT

(Appcal from the decision of the High Court of Uganda (Okumu Wcngi, J) dated 24 13 12000 in II. C. C. S. No.75ll 999)

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JUDGMENT OF TWINOMUJUNI J. A.

This is an appeal against the decision of the High Court of Uganda in which

i0 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 the case and the issues involved as found by the leamed High Cout judge are summarised in his judgment as follows: -

"The Uganda Revenue Authority (the respondent) levied a tax of shs.504,152,054 on the appellant by ar notice of ll2ll999 on the basis of incomes from sales of houses by the Appellant in the years 1992 to I997. An objection was made by the taxpayer and a decision on this objection was made on 231311999. On 14/6/1999 the respondent moved to collect ' the taxes by directly reaching the respondent's Bank accounts. A meeting betwecn the parties resulted in a 30o/o deposit on the assessed tax and this was reduced into rvriting by a letter of the respondent to the appellant dated 171611999. By this letter thc respondent made a final declaration that the taxes were payable as assessed. The appellant then filed trvo applications for revierv before the Tax Appcals Tribunal. The first one was filed on 6th July lggg. Ol ,'n August 1999 another application was filed. According to the counsel for the appellant the first application was not served upon the respondent within the requisitc 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 231311999 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 l7'h June 1999 when a "final" decision was communicated then as the appellant argues he rvas within time to prefer his application. There is also the

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o 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 leamed judge held that the date of the Taxation decision was lTth June 1999 and that the respondent was within the time limit of 30 days when he filed the application on 6'h July 1999. He ordered the Tax Appeals Tribunal to hear the application on its merits, hence this appeal. There are five grounds ofappeal, namely: - 5 - ^I. The Honourable Judge erred in law and in fact in holding that the agency notice was a taxation decision. - 2. The Honourable Judge ened 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 ened 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 leamed trial judge namely: -

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- (a)Whether the trial judge was right to hold that the date of the Taxation Decision in question was the l7h June 1999. ^t - (b)Whether he was right to hold that the respondent filed a valid application before the Tax Appeals Tribunal on 6s July 1999. - 5 (c)Whether the applicable time limit under section l7 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 TI-IE TAXATION DECISION?

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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 I't February I 999 the appellant made a Tax assessment decision which it communicated to the respondent. By their letters dated 18th and 23'd February 1999, the respondent, through their Auditors objected to the assessment. On 23'd March 1999 the appellant rejected the objection and advised the respondent to settle the outstanding tax as assessed. By their letter dated 12th May 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 l4s June 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 15th June 1999 in which it was agreed that:

"As a Way Forward it was agreed that;

Uganda Consolidated Properties instalment as follows: pay 30o in

> 40,000,000/= by 30.61999 40,000,000/= by f 5.07.99 40,000,000/= by 15.09.99

Commissioner, Ltd is to lift the Agency Notice upon receipt of the first instalment.

The Auditors of Ms. Pricewater House are to advise Uganda Consolidated Properties on thc next course of action."

- From Minutes of that rneeting in Exhibit 11 on record.

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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 l5th June 1999 whose final decision was communicated to the respondent in a letter dated lTth June 1999. Under these circumstances, I

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(1 would agree with the leamed trial judge when he made the following observations in his judgment: ^r

> "Now in this case it seems that after the letter of ^231311999 the appellant disputed the tax by a letter of l2th May 1999. As of 15/6/1999 no reply by way ofan objection dccision 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 Inconre 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 lvas notified to thc taxpayer an urgent meeting rvas called and agrecment lyas reached for the taxpayer to pay 307o of the assessed tax. It is the vierv of this court that the collection agency notificatibn fulfilled the requirement of section 100(b) and section 107(3) simultaneously. It is also the vicw of this court that the subsequent meeting and notice issued thereafter revived the assessment updating it to 17th June 1999. As a result thc appcllant could lodge an application with the Tribunal."

My finding on these issues is that the date of the Taxation Decision was not 23'd March 1999 but the lTth June 1999. If the respondent wished to apply for a review to the Tax Appeals Tribunal, time limitation would start running on this date.

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o This is perhaps a convenient point to deal with the issue whether under section l7 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: -

> ttNorv turning to the apparent discrepancy between section 17(l)(c) and section 17(7) of the Tax Appeals Tribunals Act 1997,, I do not see any difficulty whatsoever. The one providcs for a taxation decision. The thirty days begin to run from the date rvhen 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 rvith. The six months is the limit from the date of the decision itself. In other rvords even if the date of the taxation decision werc for arguments sake 2313/1999 then an application to review it may not be made after 23.9.1999. In other words the commissioner has somc duty to notify taxpayers of his decisions. But he may delay and notify the taxpayer, say on 2ll8/1999 in rvhich case the taxpayer may apply for revierv within 30 days of notification."

I agree entirely with this reasoning.

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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: -

,l "........., in the absence of any information regarding the status of the appellant's apptication of 6th July 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. I0l 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 rvas competently nrade is another mattcr but it cannot be ignored, as it scems to be pending. The respondent in its submissions did not addrcss this mattcr in any rvay."

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: l5

> "23. (l) In any proceedings beforc thc Tribunal the procedure of the Tribunal, subiect to this Act' rvithin 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."

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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 thereunder 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 1 7( I )(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 l7 of the Tax Appeals Tribunal Act. One is dated 6th July 1999 and the other 1218/1999. The document dated 6'h 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, l1 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 leamed trial judge that there is "absence of ....... Information regarding the status of the annellants annlication of 6th July 1999, namelv whether it was dismissed or iust abandoned." 20 25

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There is evidence on record that the application was actually abandoned because it did not conform to the rules and had not bedn served on the appellant. That is why the respondent filed a second application dated 12th August 1999 which was thrown out by the Tribunal for being time barred. Clearly, that application was filed after over 50 days from the l Tth June 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 leamed judge in the High Court. They are: l0 - 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 2313199 wd 1716199. l5 - 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 l7(1)(c) and section I7(7) of the Tax Appeals Tribunals Act are not in conflict with each other. 20 - 5. The members of the Tribunal erred in law in ordering the Respondent to pay Ushs.504,152,054 as taxes to the Appellant plus interest thereon when the Respondent's Application had not been heard and determined on its merits.

o 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, leamed 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 Imrrex (U) Ltd vs. Usanda Revenue Authori8 TAT 10/99 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 r. 15 Civil Procedure Rules which was adapted to the rules of procedures of the Tribunal by Rule 30 TAT 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.

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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 justifi 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 lTth June 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.

Dated tl.ris {b day ^o 200r.

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lno unl JUSTICE APPEAL.

THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

CORAM: HON. LADY JUSTICE L. E. M. MUKASA-KIKONYOGO,DCJ. HON. MR. JUSTICE A. TWINOMUJUNI, JA. HON. LADY JUSTICE C. N. B. KITUMBA, JA.

CIVIL APPEAL NO.31 OF 2000

UGANDA REVENUE AUTHORITY ::::::::::::::::::::::::::::::::::::

VERSUS

UGANDA CONSOLIDATED PROPERTIES LTD. EXAMPLE 21 RESPONDENT

(Appeal from the decision of the High Court of Uganda (Okumu-Wengi, J.) Dated 24/3/2000 I HCCS No.75/99)

JUDGMENT OF KITUMBA, J. A.

I have had 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.

8^th day of Angr/2001-08-03 Dated at Kampala this

$\Lambda$ $\Gamma$ , $\sigma$ C. N. B. Kitumba JUSTICE OF APPEAL.

THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL NO. 31 OF 2000

CORAM: LADY JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ HON. MR. JUSTICE A. TWINOMUJUNI, JA HON. LADY JUSTICE C. N. B. KITUMBA, JA

UGANDA REVENUE AUTHORITY....................................

VERSUS

UGANDA CONSOLIDATED PROPERTIES LTD.

......................................

(Appeal from the decision of the High Court of Uganda at Kampala in Civil Appeal No.75/1999 dated 24/3/2000 before Ag. Justice Okumu Wengi)

JUDGMENT OF 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, J. A. also holds a similar view this appeal is allowed with costs here, in the High Court and the Tax Appeals Tribunal to the appellant.

Dated at Kampala this .... day of Aug 2001

L. E. M. MUKAS SA-KIKONYOGO DEPUTY CHIEF JUSTICE