The Commercial Case Law Index is a collection of judgments from African countries on topics relating to commercial legal practice. The collection aims to provide a snapshot of commercial legal practice in a country, rather than present solely traditionally "reportable" cases. The index currently covers 400 judgments from Uganda, Tanzania, Nigeria, Ghana and South Africa.
Get started on finding judgments that are relevant to you by browsing the topic list on the left of the screen. Click the arrows next to the topic names to reveal a detailed list of sub-topics. Most judgments are accompanied by a short summary written by subject-matter expert postgraduate students from the University of Cape Town.
The dispute centered on whether the decision by the Land Disputes Tribunal (the tribunal) was marred by irregularities due to the absence of proper assessor involvement.
The first question was whether it was necessary to record the opinion of the assessors even when they were in agreement with the chairman of the tribunal. The court asserted that the ‘unclear involvement of assessors in the trial renders such trial a nullity.’ It also stated that it was mandatory for the opinion of the assessors to be on record. It therefore reasoned that there was a serious irregularity in the trial as the assessors had not given their opinion.
Regarding the effect of the change of assessors during the trial the court averred that this was in contravention of section 23(3) of the act as the provision did not contemplate a complete change of all assessors in its latitude.
The above was tied by the fact that the assessors had not been present throughout the whole trial, conduct which resulted in the tribunal not being properly constituted as required by s 23(1) and (2) of the act.
The final question therefore was whether the above could be cured. The court reasoned that the omissions went to the root of the matter and resulted in a failure of justice. It thus concluded that the trial was vitiated by the irregularities and nullified the tribunal’s proceedings.
The respondent sued the appellant for general damages and restoration of the value of certain of its properties, arising from their sale at a public auction, prompted by a warrant of distress issued under the Income Tax Act. The High Court found that the respondent bore no tax liability to the appellant at the time the warrant was issued, and consequently that the vehicles were unlawfully distrained and sold, before making an award of damages, interest and costs of suit in the respondent’s favour.
On appeal, the tax authority successfully challenged the High Court decision on the grounds of jurisdiction. It contended that the relevant tax legislation (primarily the Income Tax Act, 1973) had established fora to preside over tax disputes at the first instance. As the respondent had failed to exhaust these internal statutory remedies before launching court proceedings, the High Court lacked jurisdiction to hear and determine the matter. The court had ousted the jurisdiction of the specialised fora designed for that very purpose.
Reiterating that jurisdiction may be raised by the parties or suo moto (by the court itself) at any stage of proceedings – even on appeal – the appellate court quashed and set aside the High Court’s decision and upheld the appeal.
The appellant, a limited liability company dealing with the business of production and supply of natural gas, was involved in a tax dispute with the respondent.
The main issue for determination was whether or not the tribunal erred in upholding the board’s interpretation of s17 of the Income Tax Act (ITA) thereby agreeing with the disallowance by the respondent, of depreciation allowance sought to be deducted by the appellant from the income.
The court held that a person is entitled to depreciation allowance only upon meeting the two conditions stipulated in s17 of the ITA. The depreciable assets must be owned and employed in the production of the income in question.
The court stated that although the expenditure incurred in the production of the income from the business of natural resource prospecting, exploration and development shall be treated as if it were incurred in securing the acquisition of an asset, hence entitling the person to depreciation allowance on that asset, such an asset must have been in production of the income. The deduction of depreciation is based on capped life of the asset as from the first year of the production of the income.
In the result the appeal was dismissed as it was devoid of merit.
The court was called upon to determine the authority of the Uganda Revenue Authority to transfer tax liability and collect money from bankers holding money for alleged offenders under the VAT Act.
The court decided 2 of 5 agreed points of law. Firstly, the court considered whether the defendant's decision to impose and transfer a tax liability of Uganda Shillings 5,553,634,271/= from SureTelecom Uganda Limited to the 1st plaintiff was legal. The court held that the purported transfer of liability from SureTelecom Uganda Limited was unlawful because it infringed the right of the first Plaintiff to be charged and tried before a court of law or an independent tribunal for the offence which the penal tax was imposed. The court agreed with the defendant that it was acceptable for a director of a company to be held liable for the offences of a company in absence of proof that they lacked knowledge of the offence or had tried to stop the commission thereof. However, the court noted that the Commissioner had compounded the offence prior to court proceedings without having an admission from the first plaintiff and thus violated his fundamental right to a fair hearing as envisaged by section 28 of the Constitution. Accordingly, the court found in favour of the first plaintiff. Secondly, the court considered whether the defendant’s act of issuing agency notices to and subsequently collecting USD 800,000 from the 2nd Plaintiff’s bankers in respect of the 1st Plaintiff’s tax liability is lawful or legal. Based on the determination of the previous issue, the court found in favour of both plaintiffs in this issue.
The first issue was whether the defendant was immune from suit. The court established from legislation that protection applied against legislative and executive actions of member states and did not extend to private parties bringing a suit. It reasoned that fairness and public policy demanded for individual parties contracting with the defendant to have recourse when there is breach. Third parties could therefore sue.
The second question was whether interest rate revisions made without notice were unlawful and amounted to breach. The court observed there was no evidence of formal service of written notification for the revised rates. It also reasoned that the subsequent service would not amount to a retrospective application of the rates. It thus concluded that the interest rates prior to the notification were unlawful and in breach and, to compensate for the unlawful deprivation, ordered the refund of the unlawfully paid amounts plus general damages and interest costs.
Finally, the court had to decide whether the interest upon default penalty imposed on the applicant were harsh and unconscionable and therefore unlawful. From assessing legislation and case law the court found that generally interest upon penalty is considered legitimate to compensate better for pre-estimated damages from default. However, it is required that it be genuine and reasonably relative to the legitimate enforcement of the primary obligation so as to not impose a disproportionate detriment to the defaulter. Since the plaintiff had failed to prove unreasonableness and harshness of interest rates, the court could not find reason to declare them unconscionable.
The matter arose from a dispute about the detention of goods belonging to the second plaintiff by the defendant.
The first issue was whether the detention was lawful. Section 214 of the East African Community Customs Act required notice of detention to owners when known. As ownership was not clear, the court observed that notice was not necessary. It also further reasoned that the conduct of the defendant did not amount to seizure as the goods were already in their hands with the knowledge of owners before they were impounded. The court thus held lack of notice did not breach the legislation and therefore not unlawful.
On whether the goods were wrongfully detained, the court reasoned that the act of holding out representation of title by the second plaintiff and the allegations of fraud was cause for investigation by the defendants and consequent detention pending investigation of ownership. Further, the defendant was legally obliged to hold on to the goods as a lien pending the demand of payment of tax. The detention was therefore lawful.
Lastly, the court considered whether the MoU entered into by the plaintiffs and defendant was entered into by duress. Citing Pao On v Lau  3 ALL ER 65 for factors to prove duress, the court noted that the plaintiffs protested and denied indebtedness arising from the memorandum of understanding (MoU) but did not necessarily repudiate immediately or seek redress. It thus reasoned that the actions of the plaintiff did not show duress and therefore held the MoU was entered without duress.
The matter involved a dispute over the charging of taxes on the plaintiff on imports of sugar under a duty-free license.
The main issue was whether the sugar was imported after expiry of the six-month license. The court considered the definition of ‘import’ in the East African Community Customs Management Act (EACCMA) and established that since importation was allowed under East African Community Law the definition covered bringing of the goods into a Partner State. It also looked at the time of importation in the act which it gave as the point at which the goods come within the boundaries of the Partner States. Having looked at the powers that enabled the granting of the licenses to import by the Minister of Trade, Industry and Co-operatives as being sourced from East African Community law, the court thus reached that the goods had been imported within the period of granting of the license when they arrived in Mombasa in October 2011. Since the sugar in question was imported within time it was concluded to have been part of the sugar exempted from customs duty by East African Community law. Held the assessment for import duty of the plaintiff by the defendant was wrongful.
The court thus allowed for a refund of duties charged on sugar sold within Uganda with interest costs but denied all other damages arising from goods re-exported to other countries on the reasoning that the re-exports contravened the terms of the license.
The defendant had rejected a claim of a certain amount as allowable tax deductions by the plaintiff. This case reconciles the different calculations for bad debts used according to the Financial Institution Act and the 2005 regulations on the other hand the Income Tax Act (ITA) International Financial Reporting Standards (IFRS).
The court considered whether the assessment followed by the defendant was unlawful.
The court held that it was not required to determine which methodology was more consistent with the ITA section 24. The rationale for accounting methods should not depart from what is provided under the ITA, which is the parent act. Therefore, the definition of a bad debt should be based on the ITA under. The court considered the practice note which had the interpretation of the Commissioner General and held that section 160 of the ITA must be followed because the practice note is only binding on the Commissioner General and her personnel. The court held that section 24 deals with deductions of bad debts and the conditions to be fulfilled for deduction must apply. Thus, the court held that a bad debt under section is allowable as a deduction under section 24.
The court held that the plaintiff was obliged to make provision for bad debts which meet the criteria under section 24 of the ITA and the practice note issued by the Commissioner, file accounts with the Bank of Uganda and be up to standard under the IFRS.
The court also considered whether the plaintiff had to comply with the Bank of Uganda Circular that regulated deductibility of bad debts for income tax. The court held that the circular was not binding because it does not deal with whether a bad debt is an allowable deduction or not.
The court was satisfied that the above sum was a bad debt that is supposed to be an allowable deduction under section 22 and 24 of the ITA.
This was a second appeal by the appellant
against the decision of the Court of Appeal
which ruled that terminal benefits paid to the
respondents were not taxable under Section 19
of the Income Tax Act. The background is that
the respondents were retrenched and awarded
terminal benefits for which they sought from
the appellant the tax due. The appellant
reviewed and presented a sum that was
contested by the respondents and the high court
ruled that the amount given to the former
employees was akin to gratuity which was tax
exempt. The court of appeal agreed with the
trial court hence this appeal.