[2024] UGCommC 211

## 5 **THE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA**

# **(COMMERCIAL DIVISION)**

## **MISCELLANEOUS APPLICATION NO. 2084 OF 2023**

### **(Arising out of Civil Appeal No. 0053 of 2022)**

## 10 **UGANDA REVENUE AUTHORITY ::::::::::::::::::::::::::::::::::::: APPLICANT**

#### **VERSUS**

# **TATA UGANDA LTD :::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

## **BEFORE: HON. LADY JUSTICE HARRIET GRACE MAGALA**

#### **RULING**

#### 15 **Background**

The Respondent in 2017 imported short alkyd resin from El Obour Paints and Chemical Industries based in Egypt for manufacture of oil paint. The Certificate of Origin No. 153252 under item No.8, the criterion origin was classified as "P" thereby making the imports entitled to preferential treatment under the 20 COMESA Protocol on Rules of Origin.

In or about 2020, the Applicant carried out post review on the Respondent's imports and established that several certificates of origin for the period of 2016 to 2018 from Egypt were defective and were wrongly conferring COMESA preferential tariff treatment on the imported goods.

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- 5 The Applicant assessed the goods and the import duty liable to be paid was *UGX 200,115,987/- (Uganda Shillings Two Hundred Million One Hundred Fifteen Thousand Nine Hundred Eighty-Seven only)*, which the Respondent contested. The Respondent dissatisfied with the assessment filed *Tax Application No. 111 of 2020* before the Tax Appeals Tribunal and obtained a Ruling in its favor. - 10 The Applicant has appealed this ruling vide *Civil Appeal No. 0053 of 2022*. This Appeal was in its advanced stages in as far as the Parties had filed their submissions and it was on the day they were called to highlight their submissions that Court was notified of this application seeking to adduce additional evidence in Appeal No. 0053 of 2022.

# 15 **The Application**

This Application seeks orders that leave be granted to the Applicant to adduce additional evidence (being a verification of the origin criteria of the goods from the Designated Issuing Authority Egypt) in Civil Appeal No. 0053 of 2022, which is pending before this honorable court, and costs of this Application be provided 20 for.

## **Grounds supporting this Application**

The Application is based on the following grounds;

- a) The Applicant has discovered new and important matters of evidence which after the exercise of due diligence, could not have been produced - 25 at the time of hearing in the Tax Appeals Tribunal. - b) The evidence relates to the issues in the Appeal. - c) The evidence is credible and capable of being believed.

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- 5 d) The admission of the new evidence does not in any way prejudice the Respondent. - e) The evidence, if admitted, would have an influence on the result of the appeal. - f) It is in the interest of justice that the Applicant be permitted to adduce - 10 additional evidence.

# **Affidavit in support of the Application**

Mr. Andrew H. Okello swore the affidavit supporting this Application and deposed that:

- i) The Applicant has discovered new and important matters of evidence 15 which after the exercise of due diligence, could not have been produced at the time of hearing in the Tax Appeals Tribunal. - ii) The evidence relates to the issues in the Appeal. - iii) The evidence is credible and thus capable of being believed. - iv) The admission of the new evidence does not in any way prejudice the 20 Respondent. - v) The evidence, if admitted would have an influence on the result of the Appeal. - vi) It is in the interest of justice that the Applicant be permitted to adduce additional evidence. - 25 vii) The Applicant carried out a post import review of the Respondent's imports and established that a number of certificates of origin for the period 2016 to 2018 from Egypt were defective and were wrongly conferring COMESA preferential tariff treatment to the Applicant's imported goods.

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- 5 viii) In 2017, the Respondent had imported short alkayd resin classified under HS Code 3907.50 imported from Elabour Paint and Chemical Industries in Egypt. - ix) On June 8th2020, the Respondent demanded for the taxes amounting to Ugx. 200,115,987 for the period of 2016 to December 2018 arising 10 from the Respondent's wrong conferring of the COMESA preferential tariff treatment to its imported goods, which the Respondent objected to. - x) The COMESA Certificates of origin attached on the Respondent's entries had the origin criterion declared as 'P' rather than criterion 15 "X" contrary to the East African Community Customs Management Act and the COMESA Rules of Origin. - xi) The Respondent should have used criterion "X" for changes in tariff heading because "P" is wholly produced as agreed upon among all COMESA member states on the origin criterion. - 20 xii) Subsequently, the Respondent contested the Applicant's position in the Tax Appeals Tribunal which delivered a ruling on 22nd October 2022 in the Respondent's favor. - xiii) Being dissatisfied with the said Ruling, the Applicant filed an Appeal in the honorable court vide Civil Appeal No. 0053 of 2022 that is still 25 pending before this Honorable Court. - xiv) On 18th October 2022, he received via email a verification of the origin criteria of the goods from the Designated Issuing Authority Egypt of the goods in issue and the COMESA Certificate of Origin of the Respondent's goods in issue.

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- 5 xv) The verification could not be adduced during the hearing of the matter in the Tax Appeals Tribunal because it was received after the matter was scheduled for ruling. - xvi) The verification indicates in Part B paragraph 7 thereof, that the goods were not wholly produced in Egypt and contains items 10 imported outside COMESA member states used in manufacture of the goods with their respective values and customs tariff headings. - xvii) The verification is evidence that the Respondent should have used criterion "X" for changes in tariff heading because "P" is for goods wholly produced in COMESA member states. - 15 xviii) The verification is similar to Exh. R05 in relation to the same goods from the same importer and the same issuing authority Egypt. - xix) The Respondent in its submissions vide paragraphs 2.18 argues that the Applicant has not adduced proof that its goods were not 100% locally manufactured in Egypt.

# 20 **Affidavit in Reply**

Dedvatta Chitalle, the Auto Head of the Respondent swore the affidavit in reply to this Application and stated that:

- i) The Applicant is attempting to reopen the hearing of the appeal yet both parties concluded filing of their submissions and await judgment 25 of this honorable court. - ii) Whereas the Applicant claims to have received the alleged report on 18th October 2022, when the matter came up for hearing on 17th May 2023, the Applicant made no mention at all of the alleged report to this honorable court. The Applicant filed their written submissions on 26th

- June 2023 and rejoinder on 2nd 5 August 2023 and made no mention of the alleged report. - iii) The Applicant in their submissions in rejoinder states that 'verification procedures are not mandatory, and it is a preserve of the issuing authority when or not to carry out a verification' thereby confirming 10 no need for verification by the Applicant. - iv) The Applicant having kept the report for almost 12 months, it is apparent that this application is brought before this court belatedly and as an afterthought and it is not in the interest of justice. - v) No application for leave to adduce additional evidence has been 15 made by the Respondent as claimed by the Applicant. - vi) The Affidavit in support is to an application to stay execution yet the Respondent has not been served with such application. - vii) He has been advised by his lawyers Birungi, Barata & Associates whose advice he verily believes that this application is an abuse of 20 court process as appeals to the honorable court are only on matters of law and appeals to this Honorable court do not provide for adducing additional evidence. - viii) He has been advised by his lawyers Birungi, Barata & Associates whose advice he verily believes that there is no evidence of an affidavit in 25 support of the application before this court as paragraph 25 of the Applicant's affidavit in support states that the affidavit is in support of an application for stay of execution, yet no such application has been filed in this court or served upon the Respondent.

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# 5 **Hearing and Representation**

The Applicant was represented by its Legal Services and Board Affairs while the Respondent was represented by M/s Birungi, Barata & Associates. Both parties filed their respective written submissions, and this court has considered these submissions in determining the Application.

## 10 **Issues**

- *a) Whether leave should be granted to the Applicant to adduce additional evidence in Civil Appeal No. 0053 of 2023 which is pending hearing before this Honorable Court.* - *b) What remedies are available to the parties.*

# 15 **Determination**

This Application is for orders to for leave be granted to the Applicant to adduce additional evidence (being a verification of the origin criteria of the goods from the Designated Issuing Authority Egypt) in Civil Appeal No. 0053 of 2023. However, under Paragraph 25 of the Affidavit in support of the Application, the

20 deponent states that he swears the affidavit in support of an application to stay execution. This statement is not accurate in respect to the Application at hand.

However, the rest of the paragraphs in the Affidavit in support truly set out the facts within the knowledge of the deponent regarding the need to adduce additional evidence. This impugned paragraph can be severed and court

25 considers the rest of the remaining paragraphs in the interest of substantive justice. My opinion is fortified by the case of *Rtd Col. Dr. Kiiza Besigye Versus Electoral Commission and another Presidential Election Petition No. 1 of 2006.*

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5 This court has no powers to grant the remedy sought. The Applicant's counsel submitted that this Application was brought under **Section 28 of the Tax Appeals Tribunal Act.** This provision of the law only allows for stay of execution not adducing additional evidence.

### **Section 28 of the Tax Appeals Tribunal Act (supra)** states that:

10 *"Where an application for review of a taxation decision has been lodged with a tribunal or an appeal against a decision of a tribunal has been lodged with the High Court, the reviewing body may make an order staying or otherwise affecting the operation or implementation of the decision under review or appeal, or a part of the decision, as the reviewing body considers* 15 *appropriate for the purposes of securing the effectiveness of the proceeding*

The reading of this section establishes that the powers granted to this Court include to *'make an order staying or otherwise affecting the operation or implementation of the decision under appeal.'* There is no authority derived

*and determination of the application or appeal."* (Emphasis added)

- 20 herein by this Court to grant an order to allow adducing additional evidence in the appeal pending before the Court. Clearly this Application was brought under wrong law. However, it is now established that where an application omits to cite any law or cites the wrong law, but jurisdiction to grant the order sought exists, then the irregularity or omission can be ignored and correct law - 25 inserted. *See. Saggu Versus Road Masters Cycles (2002) E. A 258.*

The Applicant relied on **Order 43 Rule 22 (1) (b) of the Civil Procedure Rules S. I 71-1 as amended** that allows adducing of additional evidence by in an appellate court.

Page **8** of **15** 5 The Respondent objected to this application on the ground that appeals from the Tax Appeals Tribunal are solely on matters of law and therefore this Application contravenes the law.

## **Section 27(2) of the Tax Appeals Tribunal Act (supra)** states that:

*"An appeal to the High Court may be made on questions of law only, and the* 10 *notice of appeal shall state the question or questions of law that will be raised on the appeal."*

In the case of *Lubanga Jamada Versus Dr. Ddumba Edward CACA No. 10 of 2011,* **Hon. Remmy Kasule JJA (Rtd)** observed that:

*"An appeal on a point of law arises when the Court, whose decision is* 15 *being appealed against, made a finding on the case before it, but got the relevant law wrong or applied it wrongly in arriving at that finding. The Court reaches a conclusion on the facts, which is outside the range that the said Court would have arrived at, had that Court properly directed itself as to the applicable law."* (Emphasis added)

20 Appeals on question(s) of law are about the application of the legal test or the law. They are not based on the contested facts between the parties.

The **Evidence Act Cap 8** defines evidence under **Section 2**, as the means by which any alleged matter of fact, the truth of which is submitted to investigation, is proved or disapproved. A fact includes anything, state of

25 things, or relation of things, capable of being perceived by the senses. Can Court therefore allow adducing of additional evidence on appeal where the contest should only be on questions of only law?

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- 5 Several decisions by the **Supreme Court of Uganda** including *Attorney General Versus Paul K. Semwogerere and two others Civil Application No. 02 of 2004* and *Attorney General & Inspector General of Government Versus Afric Cooperative Society Ltd Misc. Application No.06 of 2012***,** have held that allowing a party to adduce additional evidence on appeal is at the exercise of 10 the discretion of the Court, only in exceptional circumstances which include: - *i. Discovery of new and important matters of evidence which, after the exercise of due diligence, was not within the knowledge of, or could not have been produced at the time of the suit or petition by, the party seeking to adduce the additional evidence;* - 15 *ii. It must be evidence relevant to the issues;* - *iii. It must be evidence which is credible in the sense that it is capable of belief;* - *iv. The evidence must be such that, if given, it would probably have influence on the result of the case, although it need not be decisive;* - *v. The affidavit in support of an application to admit additional evidence* 20 *should have attached to it, proof of the evidence sought to be given; and* - *vi. The application to admit additional evidence must be brought without undue delay.*

The decision in *AG Versus Paul Semwogerere and others (supra)* concerned appeal of matters of both law and fact while the one in *AG and IGG Versus*

25 *Afric Coopertaive Society Ltd (supra)* was a third appeal and hence on matters of law only, but nonetheless, the Supreme Court exercised its discretion to allow adducing additional evidence on the basis that the evidence was necessary.

5 What can be deduced from the above decisions is that court has to exercise its discretion to either allow or reject additional evidence on appeal, irrespective of the nature of the appeal in question, as long as the exceptional circumstances have been established.

I have studied the exceptional circumstances as guided by the Supreme Court 10 decision that must be established by the Applicant.

- *i) Discovery of new and important matters of evidence which, after the exercise of due diligence, was not within the knowledge of, or could not have been produced at the time of the suit or petition by, the party seeking to adduce the additional evidence;* - 15 From the affidavit in support of the Application, under paragraph 16, the deponent states that that he received the evidence sought to be adduced on 18th October 2022. It is not disputed that the hearing of the matter before the Tribunal closed on 12th September 2022. That the respondent/now Applicant was to file its submissions on 3rd October 2022 and the Ruling was delivered on 28th 20 October 2022. My understanding is that the Applicant was aware of the Verification Request to the Egyptian Issuing Authority in respect of the COMESA Certificate of Origin for the disputed goods by virtue of the fact that it had applied for the same. The Verification was received on 18th October 2022 before Ruling was delivered in Tax Application No. 111 of 2020; ten days after the 25 Applicant had received the Verification. Had the Applicant exercised due diligence, it could have produced the evidence at the time of the application i.e. applied to the Tribunal to reopen the case and adduce this evidence, but it did not. The Applicant also had the option of informing the Tribunal that it had applied for the verification and prayed for more time to present the same to the 30 Tribunal before the decision could be delivered.

- 5 I am therefore convinced that the Applicant failed to exercise due diligence in adducing the evidence it deemed relevant to its case during the trial at the Tribunal. - *ii) It must be evidence relevant to the issues;* - *iii) It must be evidence which is credible in the sense that it is capable* 10 *of belief;* - *iv) The evidence must be such that, if given, it would probably have influence on the result of the case, although it need not be decisive;* - *v) The affidavit in support of an application to admit additional evidence should have attached to it, proof of the evidence sought to* 15 *be given;*

The exceptional circumstances (ii), (iii), (iv) and (v) above shall be handled concurrently because I find them inter-related.

The evidence sought to be adduced is a verification of the certificate of origin of the goods from the Designated Issuing Authority Egypt and has been attached 20 to the Affidavit in support of the Application as annexture A, B and C. This evidence was availed to the Applicant by a one Walied El Said via an e-mail communication dated the 18th October 2022.

The ground of appeal in Civil Appeal No. 0053 of 2022 is to the effect that the Tribunal erred in law when it held that the short alkalyd resin imports originated 25 from Egypt and were therefore entitled to preferential treatment under the COMESA Protocol on Rules of Origin. This therefore meant that the Applicant was wrong in finding the Respondent liable to pay taxes to the tune of Ugx. 200,115,987/=.

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5 The evidence which the Applicant seeks to adduce is a question of fact which proves the origin of the goods and thereby determining as to whether taxes as assessed were due to be paid or not. In the e-mail dated 18th October 2022 from Egypt to Andrew H. Okello, an officer of the Applicant, Mr. Walied stated in part and I quote:

10 "*Dear Andrew,*

*Hope you are doing well, with reference to the query for COMESA certificate of origin NO. 153252 our issuing authority confirmed the authorization of the stamps and signatures.*

*On the other hand, the Egyptian exporting company indicated that the* 15 *origin criteria P inserted by mistake in box no. 8 and the correct criteria is X, attached is form V with the correct".*

I therefore find that the Applicant has established the exceptional circumstances (ii), (iii), (iv) and (v) as laid out above.

## *(vi) The application to admit additional evidence must be brought* 20 *without undue delay.*

The Applicant received the Verification via mail on 18th October 2022. The Ruling was delivered on 28th October 2022. The Applicant then filed Notice of this Appeal on 28th November 2022. The Appeal No. 0053 of 2022 was heard before this Honorable Court on 17th May 2023. The Appellant filed its written submissions on 26th June 2023 and its submissions in rejoinder on 1st 25 August 2023 but no mention of the Verification Report was made.

It is on 7th September 2023, about eleven months from receipt of the verification and, after both Parties had filed their submissions, that the

- 5 Applicant seeks to adduce additional evidence. The Applicant's behavior is dilatory and cannot be condoned by this Court. There is need for an end to litigation. This test therefore not been passed by the Applicant. That notwithstanding, the negligence of counsel or failure to act diligently should not be visited on the Applicant. There has been a plethora of decisions to this - 10 effect. In the case of **Banco Arabe Espanol vs Bank of Uganda SCCA No. 8 of 1998**, court held that:

*"A mistake, negligence, oversight or error on the part of counsel should not be visited on the litigant. Such mistake, or as the case may be, constitutes just cause entitling the trial judge to use his discretion so that* 15 *the matter is considered on its merits."*

Likewise, in the case of **Nicholas Roussos –vs Ghulam Hussein Habib Virani & Anor. SCCA 9 of 1993,** where the Court stated that:

*"…the courts have attempted to lay down some of the grounds or circumstances which may amount to sufficient cause. A mistake by an*

20 *advocate though negligent may be accepted as sufficient cause*".

Lastly, in the case of **FL Kaderbhai & Anor versus Shamsherali & Ors. S. C Civil Application No. 20 of 2008**, where it was held that:

"*It would be a grave injustice to deny an applicant such as this one, to pursue his rights. Simply because of the negligence of his lawyers when it*

25 *is fairly well settled now, that an error of counsel should not be necessarily visited on his client".*

In conclusion, in accordance with section 98 of the Civil Procedure Act and section 33 of the Judicature Act, the Applicant is hereby allowed to adduce the additional evidence in respect of the origin of the short alkalyd resin imported

30 by the Respondent from Egypt.

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5 The costs of the Application shall abide the outcome of Civil Appeal No. 0053 of 2022.

I so find.

**Signed and dated at Kampala this 31st day of July 2024.**

10 **Harriet Grace MAGALA**

**Judge**

**Delivered online (ECCMIS) this 31st day of July 2024.**