Uganda’s Commercial Court Head Faces Tribunal Challenge Over Tax Case Precedent

Hon. Justice Stephen Mubiru, renowned for his meticulous and comprehensive judgments, has long been a guiding force in Uganda’s Commercial Court. His rulings are often treated as authoritative resources for legal scholars and practitioners alike, making it almost inconceivable to label any of his decisions as per incuriam—decided in ignorance of the law. However, the Tax Appeals Tribunal has done just that in a surprising turn of events.

A Precedent Reversed in the Black COB Case

The Tribunal’s decision stems from Black COB v Uganda Revenue Authority (URA), a case focused on whether the Tribunal had jurisdiction over an informant’s complaint. URA contended that this was a contractual matter to be heard by ordinary courts, while the Tribunal rejected this argument, claiming its own jurisdiction and setting a new legal precedent.

In the case, Black COB provided URA with critical information about tax evasion by prominent brewers, East African Breweries and Uganda Breweries. URA collected taxes based on this information but did not fully compensate Black COB, claiming that some taxes were unrelated to the informant’s contributions.

URA argued that the Tax Procedures Code Act (TPCA) was not a taxing statute, and thus the Tribunal lacked jurisdiction over disputes arising from it. Black COB, on the other hand, maintained that URA’s discretion on whether to reward informers fell within the Tribunal’s authority.

The Tribunal’s Decision and Its Departure from Mubiru’s Ruling

The Tribunal ruled that penal taxes under the TPCA were indeed taxes, thereby classifying the TPCA as a taxing act. This interpretation contradicted a prior decision by Justice Mubiru, who had previously ruled in Bank of India v NC Beverages and URA that the TPCA was a procedural act, not a taxing one. The Tribunal’s reversal of Mubiru’s earlier ruling has sparked significant debate.

While the Tribunal’s interpretation adhered strictly to the language of the TPCA, critics argue that Mubiru’s approach—considering the broader context and purpose of the TPCA—provided a more nuanced understanding.

A Broader Implication for Tax Jurisdiction

The Tribunal’s ruling could significantly expand its scope, allowing it to hear a wide range of disputes involving tax procedures. As URA prepares to appeal, the case will likely be reviewed by none other than Justice Mubiru himself, adding yet another layer to this evolving legal saga.