[2000] UGCommC 1

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S.}{\nofcharsws20773}{\vern24689}}{\*\userprops {\propname Editor}\proptype30{\staticval Readiris}}\margl1440\margr1440 \widowctrl\ftnbj\aenddoc\noxlattoyen\expshrtn\noultrlspc\dntblnsbdb\nospaceforul\hyphcaps0\horzdoc\dgmargin\dghspace120\dgvspace163\dghorigin1440\dgvorigin1440\dghshow0\dgvshow2\jcompress\viewkind1\viewscale100\nolnhtadjtbl\rsidroot7358029 \fet0\sectd \linex0\sectdefaultcl\sftnbj {\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}}{\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (} {\pntxta )}}{\*\pnseclvl8\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qc \li0\ri0\sl268\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 UGANDA REVENUE AUTHORITY \par }\pard \qc \li0\ri0\sl249\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 v \par }\pard \qc \li0\ri0\sl331\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 CHINA JIEFANG (U) LTD \par }\pard \qc \li0\ri0\sl297\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qc \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 HIGH COURT OF UGANDA AT KAMPALA \par (COMMERCIAL COURT) \par \par HIGH COURT CIVIL APPEAL NO. 57 OF 1999 \par }\pard \qc \li0\ri0\sl331\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qc \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\b\insrsid7358029 (BEFORE THE HON. JUSTICE RICHARD O. OKUMU WENGI) \par }{\insrsid7358029 \par February 1, 2000 \par }\pard \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard\plain \s17\ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \i\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 Taxation \endash Tax refunds \endash Refund of overpaid taxes made by Appellant to Respondent \endash No interest paid on refund \endash Appeal made by Respondent to Tax Appeals Tribunal claiming interest \endash Tribunal awarding interest \endash Whether interest payable \par }\pard\plain \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\insrsid7358029 \par Appeals \endash Appeal against decision of Tax Appeal Tribunal awarding interest on overpaid tax \endash Law applicable \endash Whether provisions of the law ambiguous \endash Whether award of interest discretionary \par }{\insrsid7358029 \par }\pard\plain \s15\qj \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 The appellant, Uganda Revenue Authority, appealed against the decision of the Tax Appeal Tribunal in which an appeal brought by the respondent seeking to claim interest on over paid tax was allowed. The facts of the case are that in April 1997 the Internal Revenue Commissioner of the Appellant issued a presumptive t ax assessment of Shs. 77.6 million payable by the Respondent for the years 1994 to 1996. In June 1997 the Respondent paid a deposit of Shs. 28.8 million and carried out a tax audit. The audit established that the respondent\rquote s liability together with a penal ty of Shs. 1.2 million was only Shs. 4.6 million. The Respondent demanded a refund for the over payment which was paid by the appellant in October 1998 without interest. The Respondent appealed to the Tribunal seeking payment of interest on the money whic h had been held by the Appellant for over 27 months. The Tribunal ruled in favour of the Respondent, and the Appellant lodged an appeal to the High Court against this decision. \par }\pard\plain \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 \par }{\b\insrsid7358029 Held: \par {\listtext\pard\plain\s15 \hich\af0\dbch\af0\loch\f0 (i)\tab}}\pard\plain \s15\qj \fi-360\li720\ri0\nowidctlpar\jclisttab\tx720\faauto\ls1\rin0\lin720\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 Interest payable under the decree may be payable by the taxpayer to the revenue in cases of delayed or unpaid tax. It may also be interest payable on a refund as adjudged by a court, \'93Interest\'94 is defined by section 2 of the }{\i\insrsid7358029 Income Tax Decree}{\insrsid7358029 as interest p ayable in any manner in respect of any loan, deposit, debt, claim or other right or obligation, and includes any premium or discount by way of interest and any commitment or service fee paid in respect of any loan or credit. \par }\pard\plain \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\insrsid7358029 \par {\listtext\pard\plain\s15 \hich\af0\dbch\af0\loch\f0 (ii)\tab}}\pard\plain \s15\qj \fi-360\li720\ri0\sl273\slmult0\nowidctlpar\jclisttab\tx720\faauto\ls1\rin0\lin720\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 According to sections 2, 99(2)(a) and 111(1) of the }{\i\insrsid7358029 Income Tax Decree}{\insrsid7358029 as amended by Statute No.1 of 1992, interest is clearly payable on the money held by the Revenue Authority directly, or by deduction, or in excess of amount payable which is due to the taxpayer. In this case Cou rt found that the payment of interest on the refund of overpaid taxes was not a discretionary decision by the Commissioner but was mandatory from the wording of sections 111(1) and 99(2) of the Decree; \par }\pard \s15\qj \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard\plain \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\insrsid7358029 \par Cases referred to: \par }\pard \ql \fi720\li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\i\insrsid7358029 Allibhai v Commissioner Income Tax }{\insrsid7358029 (1961) E. A 610 \par }{\i\insrsid7358029 B v Commissioner Income Tax}{\insrsid7358029 Misc. (Tanganyika) Appeal No, 1 of 1954 \par }{\i\insrsid7358029 Cape Brandy Syndicate v Commissioner Inland Revenue}{\insrsid7358029 IRC (1921) IKB 64 at 71 \par }{\i\insrsid7358029 Dupot Steels Ltd}{\insrsid7358029 case (1980) 1 AER at 529 \par }{\i\insrsid7358029 Morgan Properties Ltd v City of Winnipeg}{\insrsid7358029 (1982) 2 DLR 1 493}{\b\insrsid7358029 \par }{\i\insrsid7358029 Seaford Hot Esates Ltd v Asher}{\insrsid7358029 (1949) 2 AER \par }{\i\insrsid7358029 The Queen v Mclaren }{\insrsid7358029 (1991) IFC 468 \par }\pard \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\b\insrsid7358029 \par Legislation referred to:}{\insrsid7358029 \par }\pard \ql \fi720\li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Civil Procedure Act Section 26 o \par Income Tax Decree 1974: \par Income Tax Decree 1997 Section 111(1) \par }\pard \ql \li720\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin720\itap0 {\insrsid7358029 Income Tax Decree as amended by statute No.1 of 1992: Sections 2, 99(2), 100, and 111(1) \par }\pard \ql \fi720\li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Tax Appeals Tribunals Act No. 12 of 1997, Sections 29(2), 43 \par \par }\pard \ql \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\i\insrsid7358029 Counsel for Appellant}{\insrsid7358029 : Ms Kagwa Kasule \par }{\i\insrsid7358029 Counsel for Respondent}{\insrsid7358029 : Professor Sempebwa \par \par }{\b\insrsid7358029 \par }\pard\plain \s1\qc \li0\ri0\sl307\slmult0\keepn\nowidctlpar\faauto\outlinelevel0\rin0\lin0\itap0 \b\fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 JUDGMENT \par }\pard\plain \qj \li0\ri0\sl307\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl273\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\b\insrsid7358029 OKUMU WENGI, J:}{\insrsid7358029 This is a taxation appeal brought by the Uganda Revenue Authority against the respondent a taxpayer. It arises from a decision of the Tax Appeals Tribunal made on July 9, 1999 by which the Tribunal allowed an appeal brought by the taxpayer to claim inter e st on over paid tax. The facts of the case are sufficiently described by the Tribunal ruling and award. Briefly they are as follows: In April 1997 the Internal Revenue Commissioner of the Uganda Revenue Authority issued a presumptive tax assessment by whi c h a sum of Shs. 77.6 million was payable by the tax payer for 1994 through 1996. To avert a distress order accompanying the tax burden the taxpayer in June 1997 deposited Shs. 28.8 million pending an audit carried out at the instance of the Revenue Author i ty. The audit established that the tax payers liability together with a penalty of Shs. 1.2 million having been imposed on the tax payer was only Shs. 4.6 million. The tax payer demanded a refund for the over payment which was not forthcoming until Octobe r 1998 when the appellant paid it to the tax payer. However no interest was paid on this money which had been held by the Revenue Authority for over 27 months. The taxpayer insists that it was entitled to interest on this sum and this was the thrust of the

appeal to the Tax Appeals Tribunal which found for the taxpayer. The Revenue Authority is dissatisfied with the ruling and award of the Tax Appeals Tribunal by which the taxpayer would collect Shs. 7.5 million payable as interest. From this ruling the Rev enue Authority has appealed to this court. \par }\pard \qj \fi734\li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Five grounds of appeal were set out in the amended memorandum of appeal filed on October 14, 1999 though only three grounds were substantially argued. These are firstly that the Tax Appeals Tribunal had erred in holding that the }{\i\insrsid7358029 Income Tax Act 1997}{\insrsid7358029 was applicable to this matter. The second ground of appeal was that the Tax Appeals Tribunal erred in holding that the taxpayer was entitled to interest payment under section 100 and 111 of the }{\i\insrsid7358029 Income Tax Decree 1974}{\insrsid7358029 . Finally it was contended on appeal that the Tribunal wrongly held section 111 of the }{\i\insrsid7358029 Income Tax Decree 1974}{\insrsid7358029 to be ambiguous and inexplicit. In response the tax payer cross appealed on two grounds which mainly related to the effective date for accrual of inte rest which the Tribunal set at February 1998 while the tax payer sought to claim interest effective from July 1997. When this appeal came up for hearing learned counsel for the Appellant Ms Kagwa Kasule argued that since the over payment of tax related to tax years prior to July 1997 }{\i\insrsid7358029 the Income Tax Act 1997}{\insrsid7358029 did not apply to this case. She however conceded that the Tribunals view of this matter did not have any bearing on its ruling and award even if some post July 1997 taxes were recovered from the amount refunded to the taxpayer. \par \par Learned counsel then proceeded to deal with the second and third grounds of her appeal. She submitted that the Commissioner General of the Uganda Revenue Authority had a statutory duty to refund any excess amount paid by a taxpaye r together with interest if such interest payment was provided for in the Income Tax Decree. Counsel submitted further that no where in the said decree was a rate of interest on refunds of overpaid tax provided; nor was there a provision specifically stip u lating when interest should be payable to a tax payer. She contended that while there was provision for the Revenue Authority to levy interest on unpaid tax or underestimated tax there was no provision for payment of interest on tax refunds. Counsel thus argued that the law was silent on the matter as none of the numerous amendments to the Income Tax Decree addressed the issue. Learned Counsel cited }{\fs22\insrsid7358029 MAXWELL ON INTERPRETATION OF STATUTES }{\insrsid7358029 11}{\super\insrsid7358029 th }{\insrsid7358029 Edition at page 4 and cases }{\i\insrsid7358029 Cape Brandy Syndicate v Commissioner Inland Revenue}{\insrsid7358029 IRC (1921) IKB 64 at 71; }{\i\insrsid7358029 B v Commissioner Income Tax}{\insrsid7358029 Misc. (Tanganyika) Appeal No, 1 of 1954 and }{\i\insrsid7358029 Allibhai v Commissioner Income Tax }{\insrsid7358029 (1961) E. A 610 to support the literal and strict rule of interpreting statutes. She contended that a taxpayer making a claim for relief under a taxing statute must be able to fit it within the four covers of the statute and contended that the Tax Appeals Tribunal was not justified in referring to the authorities as rather old. Counsel contended that the dichotomo u s situation where the Revenue recovers interest on unpaid, or underpaid taxes while the tax payers do not earn interest on overpaid taxes must only be addressed by the Tax Appeals Tribunal or this court, in the face of a tax statute which was silent on th e matter. She further contended that the Commissioner General while implementing a tax statute could not unilaterally pursue an equitable angle by authorising interest where the law did not provide for it. This she argued was not the case under the new Inc ome Tax Act whose provisions specifically and clearly mandate payments of interest on refunds of overpaid tax. \par }\pard \qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par Learned Counsel for the Appellant then submitted that Section 111(1) of the }{\i\insrsid7358029 Income Tax Decree}{\insrsid7358029 was not in any way ambiguous as found by the Tax Ap peals Tribunal. She contended that if there was any ambiguity this perhaps related to the silence in the law on interest claims on refunds of overpaid tax. As such it did not amount to ambiguity, as a law may be silent but not necessarily ambiguous. She c ited }{\i\insrsid7358029 Dupot Steels Ltd}{\insrsid7358029 case (1980) 1 AER at 529 to support this view and argued that the circumstances in }{\i\insrsid7358029 Morgan Properties Ltd v City of Winnipeg}{\insrsid7358029 (1982) 2 DLR 1 493 relied on by the Tribunal were different since there was an ambiguity there unlike in the Ta x provision in this case. She then prayed that the appeal be allowed as no incident or rate for interest payments to a taxpayer existed in the Income Tax Decree. Alternatively counsel asked this court to find that the law only gave a discretion to the Com m issioner General of the appellant to determine when interest may be payable. Such a discretion was thus only questionable when exercised unjudiciously. With respect this contention is not only misconceived but untenable and I reject it as it will become c lear in the course of this judgment. \par }\pard \qj \fi753\li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 In reply, Professor Sempebwa Learned Counsel for the Respondent submitted that from the wording of Section 111 (1) of the }{\i\insrsid7358029 Income Tax Decree}{ \insrsid7358029 there was no discretion on the Commissioner General but that the section made it mandatory for him to pay interest and the excess of tax paid. Counsel contended that the argument about discretion went counter to the rules of interpretation in that the words wer e clear and could not be overstretched to mean that the Commissioner General could determine interest. He further argued that the context of the statute was to give justice to the taxpayer by refunding excess and that it was only rational that interest is p aid on money that is held by another. Learned Counsel then contended that there was nothing ambiguous in the Decree and any such ambiguity had to be construed in favour of the taxpayer. That where silence became ambiguity then it should not be construed a gainst the taxpayer. He cited }{\i\insrsid7358029 Seaford Hot Esates Ltd v Asher}{\insrsid7358029 (1949) 2 AER to argue that a court faced with such a situation need not lament but should enforce the tax payers right to property (interest) in money held by the Revenue for so long no matter whe ther the tax payer was a defaulting one. In this case counsel argued that the Tribunal or the Court could intervene to provide the interest rate payable. \par }\pard \qj \fi758\li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard\plain \s15\qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 Learned counsel then urged this court to set aside the order of the Tribunal fixing February 1998 as the date when interest became payable as the determination did not flow from evidence. However in reply to this point raised in Cross Appeal Ms. Kagwa learned counsel for the Appellant submitted that it was a question of facts only which could not be canv assed on appeal to this court which must be on questions of law only. \par }\pard\plain \qj \li0\ri0\sb216\sl172\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Before going into the merits of this case it will be useful to set out the provisions of the law that have become the bone of contention. Section 100 of the }{ \i\insrsid7358029 Income Tax Decree}{\insrsid7358029 as amended by statute No.1 of 1992 reads: \par }\pard \qj \li0\ri0\sl163\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li720\ri720\sl316\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'93 100 (1) where any amount of tax remains unpaid after the due date, an interest of ten percent higher than the rates of interest of the ruling Commercial Bank lending rate applicable to Commerce shall become due and payable on the tax due. \par (2) Any interest charged under sub section (1) shall be deemed to be a tax for the purpose of collection.\'94 \par }\pard \qj \li0\ri0\sb177\sl96\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl321\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Section 101 of the Decree then provides for interest collection on underestimated tax. While section 111 (1) provides \- \par \par }\pard \qj \li720\ri720\sl312\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'93111 (1) If it is proved to the satisfaction of the Commissioner that in respect of any year of income, any tax has been paid by or on behalf of any person, whether directly or by deduction or otherwise, which is in excess of the amount payable by that person as fin ally determined in respect of that year of income, }{\i\insrsid7358029 the Commissioner shall refund the amount of such excess, together with any interest which may be payable thereon under this decree to the person}{\insrsid7358029 entitled to such refund \'94(emphasis added). \par }\pard \qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl278\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 In the decree "interest" is defined in section 2 as follows :\- \par \par }\pard \qj \li720\ri720\sl316\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'93interest\'94 (other than interest charged on tax) means interest payable in any manner in respect of any loan, deposit, debt, claim or other right or obligation, and includes any premium or disc ount by way of interest and any commitment or service fee paid in respect of any loan or credit.\'94 \par }\pard \qj \fi734\li720\ri720\sl316\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \par }\pard\plain \s15\qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 This definition of course also encompasses the entire interest question in income tax, an area of tax law where many complications have arisen. Such definition was nowhere in similar English tax legislation. \par }\pard\plain \qj \li0\ri0\sl57\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 \par The decree also provides for refund of balance of overpaid tax and the due dates when taxes are payable, including in cases where an objection to assessment is made and the matter goes on appeal to the Hi gh Court Section 99 (2) then stipulates that if the High Court finally determines the assessment and it is \par }\pard \qj \fi729\li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li720\ri720\sl316\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'93(a) less than the amount paid in accordance with this subsection }{\i\insrsid7358029 then the amount overpaid shall be refunded under section 111}{ \b\i\insrsid7358029 }{\i\insrsid7358029 of this decree together with interest thereon at such rate as the court may order }{\insrsid7358029 (emphasis added). \par \par }\pard \ql \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 The issue of refund of overpaid tax is also to be found in section 98 (6)(b) of the decree. It is also to be found in Section 29(2) of the }{\i\insrsid7358029 Tax Appeals Tribunals Act}{\insrsid7358029 No. 12 of 1997 which provides \par \par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'9329\tab (l).\'85\'85\'85\'85\'85\'85\'85.. \par \par }\pard\plain \s16\qj \li1440\ri720\nowidctlpar\faauto\rin720\lin1440\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 (2) Where the decision maker is required to refund an amount of tax to a person as a result of a decision of reviewing body, the tax shall be repaid with interest at the rate specified in the relevant law on the amount of the refund for the period commenc ing from the date the person paid the tax refunded and ending on the last day of the month in which the refund is made.\'94 \par }\pard\plain \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl331\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 And Section 43 of the same act provides that \par }\pard \qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li720\ri720\sl312\slmult0\nowidctlpar\faauto\rin720\lin720\itap0 {\insrsid7358029 \'9343. This act applies to taxation decisions before the coming into operation of this act.\'94 \par }\pard \qj \li0\ri720\sl312\slmult0\nowidctlpar\faauto\rin720\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 Now it seems to this court that the appellant considered that payment of interest was a discretionary decision by the Commissioner due perhaps to the phrase "any interest which may be payable." But if it was the intention to give a discretion to the Com missioner the words giving the discretion would have been added to signify such a discretion. As it is the phrase refers to the interest itself which becomes payable on a delayed or underpaid tax or on a refund of an overpaid tax. Such interest is the int erest that accrues on a tax and is payable thereon. At best there could only be room for regarding the rate of interest to be paid, but the decree makes reference in other sections to bank rates of interest as a guide. \par \par }\pard \qj \li0\ri0\sl312\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 As it is, the law is not as ambiguous as it would appear. The interest payable under the decree may be payable by the taxpayer to the revenue in cases of delayed or unpaid tax. It may also be interest payable on a refund as adjudged by a court, and the definition of interest must be kept in mind here. \par }\pard \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\i\insrsid7358029 \par }{\insrsid7358029 As a result interest is clearly payable on the money held by the Revenue which is due to the taxpayer. The problem arose in my view due to the misunderstanding of the words in the decree which give the impression that "may be payable" was meant to describe a levy or payment that the Commissioner was empowered to decide on. However the correct interpretation is that it is the interest itself that is payable in certain circumstances. I see such interest may be payable by the taxpayer who is also e n titled under the decree to recover interest on overpaid tax from the revenue. Another way of looking at the issue seems to be that since interest charged on delayed or underpaid taxes amounts to a tax then denying a taxpayer the right to accrual of intere s t on tax deposits or money overpaid by him, refund of which is mandatory, would constitute a levy. Such a levy would equally be unsupported by the taxing legislation in like manner as the argument that the decree was silent on interest. To this extent the

taxpayer would be right to question the legal or for that matter the Constitutional basis for the levy or imposition of such a burden on him which amounts to deprivation of property or simply an unlawful tax. The court is in any way entitled to pronounce on interest in exercise of its inherent powers, and by virtue of interpreting the interest provisions in the Income Tax Decree that have been cited herein above. The Court would also invoke section 26 of the }{\i\insrsid7358029 Civil Procedure Act}{ \insrsid7358029 . On interest all these considerations are also remedial to the taxpayer in the context of democratising the tax regime. This is a point that is advanced by the Canadian Authority of }{\i\insrsid7358029 Morgan Properties v City of Winnipeg }{\insrsid7358029 }{\i\insrsid7358029 (1982)}{\insrsid7358029 (Supra) and }{\i\insrsid7358029 The Queen v Mclaren }{\insrsid7358029 (1991) IFC 468 cited by the Tax Appeals Tribunal. But even without going into the jurisprudence enunciated in these cases it is my opinion that the clear words of the decree are that a reference to "any interest" includes interest payable by either the Revenue Authority to the taxp a yer or by the taxpayer to the Revenue which forms part of or arises out of an excess or deficit in the tax paid or payable. This is found in sections 2, 99(2)(a) and 111(1) themselves. A reading of those sections given their purposive interpretation rule o ut any ambiguity or inexplicity that has been argued to exist in them. \par }\pard \ql \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }\pard \qj \li0\ri0\sl57\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 The payment of the excess tax was made in June 1997. The tax burden was then finally established after an audit, adjustments and penalty (which is a form of interest) and a refund for o verpayment was made in October 1998. There is no explanation for the delay or indeed the torment of an exhorbitant assessment that became reduced from Shs. 77 million to a mere Shs. 4.6 million. Even the deposit of Shs. 28 million was exorbitant in the ci r cumstances, in which the actual liability is established at about 15% of the negotiated collection. Perhaps the Revenue could exercise restraint and professional discretion to avoid the accusations of being extortionist in its collection practices even wh e n dealing with notorious avoiders and defaulters. In this way it would be creating credibility in the tax regime. The lesson taught to the Respondent in this case apart, a balance ought to be found between the ingenious and stubborn taxpayers on the one h a nd and the tax authority on the other. This is the clear dispensation in the Constitution of Uganda and the Tax Laws in place today. Timely action by the taxpayer, the tax authority and the Appeals Tribunals is no longer an issue of open ended discretion but professional and speedy action. \par }\pard \qj \li0\ri0\sl316\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par The Cross Appeal sought to extend backwards the due date for interest accruals in order to collect more from the revenue. But I think under the old law the due date would coincide with the date when the final liability was established. Probably this is why the Tribunal set February 1998 for accrual of interest. In this respect I notice that in the Tax Appeals Tribunal ruling and award there was a serious error stating a fact that the taxpayer paid t o the Revenue a deposit of Shs. 28 million on June 2, 1999; and that the refund to the taxpayer was effected on October 2, 1998}{\i\insrsid7358029 . }{\insrsid7358029 This could not have been the case. But given the sequence of events, I would disallow the Cross Appeal. For the reasons I have a lso given above I do also not allow this appeal by the Appellant. The decision of the Tribunal is accordingly upheld without adhering to the perspectives it advanced to arrive at it. Accordingly both the Appeal and Cross Appeal are dismissed. No orders to

costs are made for a number of reasons. Firstly each party can bear the costs of this Appeal and Cross Appeal both of which have been dismissed. Secondly this appeal related to a tax decision reached under a repealed law and issues raised only bear a hist o rical interest. Thirdly it cannot be said that the appellant was not innocent in its conviction that the law bent towards its own interpretation of it. The issues are also of Landmark significance in the cross cut between taxpayer rights and collection pr a ctices of the Appellant in the context of democratisation of the tax regime in the twilight to the millennium. As such an important question of public interest regarding the interpretation of a statute regarding the taxing powers of the state has arisen. For these reasons this court would order that each party bears its own costs. \par }\pard \ql \li0\ri0\sl321\slmult0\nowidctlpar\faauto\rin0\lin0\itap0 {\insrsid7358029 \par }}