[2016] UGTAT 1

[2016] UGTAT 1

The Tribunal found that after the expiry of the tenancy agreement in August 2006, there was no renewal or agreement between the applicant and the 2nd respondent, and no rent or consideration was paid. The 2nd respondent continued to occupy the premises without the applicant's consent, making it a tenant at sufferance or trespasser. Under the VAT Act, a taxable supply requires consideration, and in the absence of payment or agreement, no VAT liability arises. The applicant did not receive any rent or consideration, and therefore could not be liable for VAT or penal tax. The Tribunal also found no evidence of a scheme by the applicant to obtain an undue tax benefit. The penal tax assessment...

Citation
[2016] UGTAT 1
Parties
Applicant: Polypack Limited; Respondent: Uganda Revenue Authority; Respondent: Multiple ICD Limited
Court
Tax Appeals Tribunal (Uganda)
Jurisdiction
Uganda
Judgment Date
14 September 2016
Case Number
Application No. 9 of 2014
Procedural Posture
Tax Application / Ruling
Outcome
penal tax assessment vacated; costs to 2nd respondent
Judges
Ali, Panel Member, Mugenyi, Chairperson
Legal Topics
Vat Assessment, Rental Income Taxation, Penal Tax Liability, Taxable Supply, Related Party Transactions
Source Language
English
Tax Law Commercial and Corporate Vat Assessment Rental Income Taxation Penal Tax Liability Taxable Supply Related Party Transactions

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Parties

Polypack Limited

Applicant

Uganda Revenue Authority

Respondent

Multiple ICD Limited

Respondent

Procedural Posture

Tax Application / Ruling

Legal Issues

  1. 1 Whether the applicant is liable to pay VAT as assessed.
  2. 2 Whether the relationship between the applicant and Multiple ICD Limited is a scheme to obtain an undue tax benefit.

Ratio Decidendi

The Tribunal found that after the expiry of the tenancy agreement in August 2006, there was no renewal or agreement between the applicant and the 2nd respondent, and no rent or consideration was paid. The 2nd respondent continued to occupy the premises without the applicant's consent, making it a tenant at sufferance or trespasser. Under the VAT Act, a taxable supply requires consideration, and in the absence of payment or agreement, no VAT liability arises. The applicant did not receive any rent or consideration, and therefore could not be liable for VAT or penal tax. The Tribunal also found no evidence of a scheme by the applicant to obtain an undue tax benefit. The penal tax assessment...

Court Disposition

penal tax assessment vacated; costs to 2nd respondent

Orders

  • The assessment of the penal tax against the applicant is vacated.
  • The 2nd respondent shall bear the costs of the application.