[2007] UGCA 77

## CORAM THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA HON. JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ. HON. JUSTICE G. M, OKELLO, JA. HON, JUSTICE A. TWINOMUJUNI, JA.

### CTVIL APPEAL NO. 03 OF 2OO7

# IO THE COMMISSIONER GENERAL OF UGANDA REVENUE AUTHORITY.. .. APPELLANT

### VERSUS

I5 MEERA INVESTMENTS LIMITED.., RESPONDENT

## JUDGMENT OF HON. JUSTICE L. E. M. MUKASA-KIKONYOGO. DCJ.

20 I read the judgment of my brother Hon. G. M. Okello in draft and I agree with the findings and orders set out in the said lead judgment. Since Hon. Justice A. Twinomujuni, JA, also agrees, the appeal is dismissed in the terms proposed by Hon. Justice Okello, JA.

For emphasis, I want to touch on a few legal points which deserve 25 mention.

The appellant argued before the High Court that since this was a tax dispute governed by the Income Tax Act, the suit could not be brought against the Appellant. Further, that the Appellant was not vicariously

30 liable for the acts of other officers of URA. These arguments by the Appellant raise three sub-issues, namely: -

- Whether the case was a tax dispute $(i)$ - Whether the Commissioner General of URA Can be sued in a $(ii)$ tax dispute. - Whether the Commissioner General is vicariously liable for $(iii)$ the acts of other officers of URA.

#### Whether this case is a tax dispute $10$

The Respondent pleaded in the plaint under paragraph 4 that:

"The third Defendant is Commissioner General of Uganda Revenue Authority (URA) sitting at URA's head office at Nakawa and is being sued for her acts and acts of her agents, servants and or officers acting on her instructions".

The acts of the Appellant upon which the suit was premised can be discerned from the plaint in the following paragraphs:

Paragraph 9 of the Plaint states that-20

> " on or about the 31^st March 2005, the 3^rd Defendant sent her agents/servants/officers to the plaintiff's office at Plot 38 Kampala Road from where the said agents/servants/officers confiscated and carried away the Plaintiff's record, files and computers for want of what was termed as reviewing the Plaintiff's level of compliance with tax laws and regulations".

Under paragraph 10 of the plaint, the respondent pleaded that—

"Pursuant to the actions of the 3^rd Defendant as 30 stipulated in paragraph 9 above, the Plaintiff was served a letter dated 15^th November 2005 altering the position of the Certificate of Incentives and in a meeting

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utlth the 3d Detendant's ogents/ofJlcer/sentants ln January 2006 at the 3'a Defendant's otJlce, the PlatnttlJ ,|/a.s lnlormed that the reason Jor the 3'd Defendant's l,nnpeaching the Cert{lcate of Incentlues ls that the 2"d DeJendant's letter ref aLIA/CSD/12O1/94 of February 2OOO (annetctttre uMIL6o aboue) ls afier all bogus/ untenable and ls therefore not tecognlzed/rellable. The 3'd de|endant u,rrs personallg lnuohted and dld dlrect the natters relatlng to the questlons ln issuez

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In paragraph 11 of the plaint, the respondent showed the consequence of the 3rd defendant's acts as being the assessment of tax liability amounting to 36,514,786,3741=. In response to the above paragraphs of the Plaint, the Appellant pleaded in paragraph B of the Written Statement of Defense that:

> "The 3'a DeJendont denies the contents of paragraph 9, 10 & 11 of the Plalnt and shall contend thdt lt legallg corrled out dn audlt of the Plalnttlf Compang for the perlod 1996-2003, held meetlngs to discuss the sald audlt and accordinglg lnJormed the Plalnt ofJ oJ its flndtngC'.

Clearly, the above extracts from the plaint show a complaint about the tortuous acts of trespass to chattels like the Respondent's computers, and the disrespect of the decision of Uganda Investment Authority on the scope of the Certificate of Incentives, a combination of which acts led to the assessment of the tax. 25

I thus hold that the complaint in the plaint is not per se a tax dispute' 30 The complaint in the suit is more about what the Respondent treated as a wrongful interference with its property [the computers and the records]

and a challenge of the Commissioner General's right to interpret and/or disregard the Certificate of Incentives, and thereby confiscating the Respondent's records which finally led to the assessment of the tax ln the case of RABO ENTERPRISES (U) LTD & Another v COMMISSIONER GENERAL & another Civil Appeal No. 55 of 2OO3 (C. Af the Court emphasized that where a suit is founded on a tort, it can not be said to be based on a taxation decision, as a tort it is not ^a taxation decision.

- Besides the above legal provisions as pointed out in Hon. Justice Okello's lead judgment, it is evident that the Commissioner General of URA was sued in RABO ENTERPRISES lul LTD & Another v COMMISSIONER GENERAL & another Civil Appeal HCCS No. 517 of 2OO2' This case was cited with approval in the ruling of the Constitutional Court, in the l0 - case of INSPECTOR GENERAL OF GOVERNMENT v KIKONDA BUTEMA FARM LTD & ATTORNEY GENERAL Constitutional Application No. 13 of 2010,6 (Arising out of Constitutional Petition No, 18 of 2OO6f whereby it had been argued by the Respondents that the Inspector General of Government being a department of Government, had to be represented in court by the Attorney General, as the IGG had l5 20

no capacity to sue.

The court held at page 5 of the Ruling of the Court, that:

" There ls no dlspute that the appllcant has been appearing in courts of laut,.. In all these cases the issue oif cdpacitg to sue or be sued wa,s not ralsed, Be that a''s lt mdg, we thlnk that there are legal provlslons on the Constlttttlon thot set up the Inspectorate of Goaentment and the Act that operatlonallzed those provlslons tndicate to us that the appllcont has co;po.cltg to slu.e and be sued'.

At page 6 of the said Ruling, the Court stated that:

" The Inspector Generdl ol Gorrernment co;n be likened to the Reglstrar of Titles under the Registratlon of T-ltles Act. Although the post is held bg a tradltlonal clvll seradnt, the holder can be dragged to court from tlmc to time to defend and explaln declsions he/she takes ln the performance of his/her dutieC'.

l0 From the above analysis and finding of the court, it is my finding that the Commissioner General of URA can be likened to the Registrar of Titles and the Inspector General of Govemment who are bound to explain and defend in any forum, the decisions they take in the performance of their duties.

l5 Suffice to note that the Respondent pleaded in paragraph 10 of the Plaint, that-

" Pursuant to the a.ctlons of the 3'a Defendant as stipulated ln paragraph 9 abooe, the Platnttff was seraed a letter dated 75th Nouember 2OOS olterlng the posltion of the Certtficate of Incentiaes and ln a meetlng wlth the 3"d Defendant's agents/offlcer/sentants ln 20 Januaru 2006 at the 3.d Defendant's ^o the Plalnttff uas Tnforrned that the reason for the 3'd Defendant's lmpeach lng the Ce flcate of Incentlues is that the 2"4 ²⁵ Defendant's letter ref UrA/csD/l201/94 of Februaru ²⁰⁰⁰ dnnexate "MIL6" aboue) is after all boqus/ untenable and is therefore not recoqnlzed/rellable. The 3'd defendant uas personallg lnaolaed and dld dlrect the matters relatlng to the questlons in lssud' [Emphasis 30 addedl

The 2"d Defendant [Uganda Investment Authority] pleaded in its written statement of Defence under paragraph 6 that:

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"ln response to paragraphs 10, 11 & 13 of the Plaint, the 2"d Defendant shall aver as follows:

- (a) The 2"d Defendant dld on the 37't Mag 1995 lssue to the Platnttff a Cert{lcate oJ Incentlues No. MSD/O12O1/2OO66 exempting the PlaintlfJ Jrom corporatlon tdx, utlthholdlng tax and tax on dluidends for a perlod of 6 gears from the 7't January 7995 to 37't Decenber 2OOO. - (b) The exemptlon utcrc stated to coaer the Platnttlfs propertles located at Plot 38 Kampala Road and others ln KamPala. - (c) The 2"it Defendant dld bg lts letters oI the 28th February 2OOO (albelt mlstakenlg dated the 77h Febntary 2OO) and tllle 27"t Julg 2OOS whlch letters uere addressed to the Commlssloner Tax Pollcg and on the 3'a Defendant respectloelg, clarifg that the Platnttffs Certlficate of Incentlaes couered "'corporation tax, utlthholdlng tox and tax on dluidends, on lncomes from all real estate propertles of the compang deueloped slnce the 7@h October 7994' ttll the exPiry of the Certlficate oJ Incentlues in December 2OOO. - (d) The 2na DeJendant had prevlouslg and erroneouslg on the 7 lth February 1999 adolsed the Commissloner Tax Pollcg that the CertlfTcate of Incentlaes uas llmited to fiae (5) named propertles oJ the Pldinttff but this letter uas corrected and expresslg superseded bg the subsequent letters mentloned ln paragraph 6(c) aboae. 25 i0

(e) The 2nd defendant shall ouer that tt is the entltg empowered bg statute to tssze CertlJicates of Incentiaes and that the CertlJicate oJ Incentlaes issued bg lt to the Platntlff and the subsequent clar{lcatlons were issued Pursud.nt to Part IV of the Inuestment Code Act, Cap 92 and are aalld and blndlng.

Furthermore, the Ministry of Finance, Planning and Economic Development had earlier written to the Commissioner General URA ^a letter dated 3'd March 2000 regarding the scope of the Certificate of Incentives. [See Annexture MIL6 attached to the Plaint]. The most relevant part of that letter states that: 10

3.d March, 2000

The Commissioner General, Uganda Revenue AuthoritY, P. O Box7279 Kampala

# RE: TAX INCENTIVES FOR HOTEL EOUATORIA. GRAND IMPERIAL HOTEL AND MEERA INVESTENTS LIMITED

"As regards Meera Intast runts Llmlted, the ceraflcate of lncentlues coltars corlroratlon tox, wlthholdlng tdx and tax on dlnld.ends on lncomes lrom o,ll real estate proPertles of the

compdnu deueloped since 7@h October, 1994. (See attached letter).

You dre requested to note and make adJustmcnts to gour assessments of lncome tax on the lncome of the aboae companle{.

L. K. Kiiza

### FOR PERMANENT TREASURY SECRETARY/SECRETARY TO THE t0

The Appellant pleaded in paragraph 8 of the Written Statement of Defense that:

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"The 3.d Defendant denles the contents of paragraph 9' 10 & 11 oJ the Plalnt and shall contend that lt legaltg carrled out dn audlt oJ the Plaintlff Compang for the period 1996-2003, held meetlngs to dlscuss the sald audlt and accordlnglg lnJortned the PlalntlJf oJ its JlndtngC'.

From the above extracts of pleadings and documents pertaining to this case, and the facts surrounding this case, it is clear that the Appellant was giving an interpretation of the Certificate of Incentives which was contrary to that of the Uganda Investment Authority [the issuer of the Certificate of Incentives] and that of the Ministry of Finance [at whose directions the taxes are collected]. The Appellant created an impression that she is independent, not subject to direction and control of any person or authority. This means that the Appellant must own the official decisions she made and have capacity to defend those decisions in any forum, including courts of law, if necessary. 25 30

# Whether the Commissloner General of IIRA ls vlcarTouslg llable Jor the acts of other o;fJlcers oJ IIRA

This issue is answered by the provisions of section 9(2\ of the Uganda Revenue Authority Act, Cap 196 which provides that:

"The Commissioner General shall be the chief executive of the Authority and shall be responsible for the daytoday operation of the authority, management of funds, property and business of the authority and for the administration and control of other ollicers and stalf of the authority".

Be that as it may, the Plaint pleads a cause of action for acts of the Appellant and those of the officers of URA. Still therefore, the Appellant would be a party to the suit on account of her own acts and by virtue of

the law cited above. 15

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## Whether the sult ca:n be molntalned. a,go;lnst the Appellant alone

20 Having resolved that the Commissioner General of URA can be sued in her official name, the Respondent was at liberty to sue her either jointiy with URA or alone. There is ample authority for this proposition: In BETEMUKA v ANYWAR [1984 HCB 71, Mukasa Kikonyogo J. (as she then was) held that:

"The plalnt/J ls at llbertg to sue ang bodg he thlnks he has a clalm agalnst and cannot be forced to sue some 25 bodg".

The above holding was cited with approval in the Court of Appeal in CRANE INSURANCE COMPANY v SHELTER (Ul LIMITED Civil Appeal No. 14 of 1998, where Kitumba JA held at page 5 of the lead judgment 30 that:

"A plaintiff is at liberty to sue any defendant or defendants jointly or severally against whom he has a cause of action".

From the statutory provisions and case law cited above, the finding of the $\mathsf{S}$ learned trial judge cannot be faulted. He rightly found that there was a cause of action against the appellant.

Since Twinomujuni, JA also concurs by a unanimous decision of this Court the appellant's appeal is dismissed with costs in this Court and $10$ Court below as proposed in the lead judgment.

Dated at Kampala this ....................................

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Hon. Justice L. F. M. Mukasa-Kikonyogo DEPUTY CHIEF JUSTICE.