November 28, 2022

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Court rejects URA plea to strike down digital tax stamp case

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The Commercial court yesterday rejected pleas by Uganda Revenue Authority (URA) to strike down an injunction lodged by one Sylvester Kamuli that stopped URA from implementing the February 1, 2020 deadline for all excisable goods to bear Digital Tax Stamps (DTS).

A team of fifteen lawyers from the URA legal team, led by Assistant Commissioner for Litigation, George Okello, took pains to argue that the case should be transferred to the Tax Appeals Tribunal as it is a tax dispute, and that Kamuli’s fears were unfounded as URA had no plans to arrest or penalize consumers.

Kamuli, in his plaint, argued that as a consumer, he risked being arrested under the DTS law that state any person found with a bottle not bearing a tax stamp could be penalized up to Shs 50 million.

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Appearing before the head of the Commercial court, Justice Henry Peter Adonyo, the URA lawyers argued that the penalties would not apply to consumers but the argument was rejected unless it was put on record as substantive.
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RA lawyers were asked to confirm on record that consumers found with unstamped goods would not be arrested or penalized but they declined to do so in court.

Justice Adonyo ordered for mediation between URA and Kamuli and adjourned the hearing to Monday, February 10 on the matter of penalties.

Justice Adonyo also did not entertain the URA plea for the case to be transferred to the Tax Appeals Tribunal as Kamuli’s plaint was not instituted as a taxpayer but as a consumer of goods regulated by URA.

“The parties are directed to go and sit to discuss and clarify the notice issued by the respondent in The Observer dated 29th January -4th February 2020 and other media. In respect of the meaning of the words ‘any person’ in relation to the possession of any gazette products not bearing the Digital Tax Stamps to be liable to pay Penal Tax equivalent to double the tax due on the goods or 50,000,000/= whichever is higher,” Justice Adonyo ordered.

The Court also heard that the Private Sector Foundation of Uganda (PSFU) and Kampala City Traders Association (KACITA) had applied to join Sylvester Kamuli’s case as interested parties.

The case will be heard by the Commercial Court until the matters raised are resolved.

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