[2025] UGCommC 102

# 5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA COMMERCIAL DIVISION MISCELLANEOUS APPLICATION NO 1024 OF 2025 [ARISING FROM CIVIL APPEAL NO.53 OF 2025] 10 [ARISING FROM TAT APPLICATION NO.273 OF 2022]

## WANANCHI GROUP UGANDA LIMITED .................... APPLICANT

#### VERSUS

UGANDA REVENUE AUTHORITY ....................... RESPONDENT

## BEFORE: HON. LADY JUSTICE SUSAN ODONGO

## 20 RULING

This application is instituted by Notice of Motion under section 31(1) of the Tax Appeals Tribunal Act, Cap 341 and Order 52 rules 1 & 2 of the Civil Procedure Rules, S. I. 71-1.

#### 25 Background

The Applicant, a limited liability company duly licensed in Uganda, instituted Application No. 273 of 2022, Wananchi Group Uganda Limited v Uganda Revenue Authority before the Tax Appeal Tribunal, contesting the Uganda Revenue Authority's (URA) classification of its CAM cards as components of

30 television apparatus under HS code 8529.90.00. This classification subjected the

5 CAM cards to an import duty of 25%, resulting in a tax assessment of UGX 814,142,369 (Uganda Shillings Eight Hundred Fourteen Million One Hundred Forty-Two Thousand Three Hundred Sixty-Nine only). The Applicant had deposited 30% before filing the application before the Tax Appeals Tribunal. The URA is claiming 70% amounting to UGX 525,421,092/= (Uganda 10 Shillings Five Hundred Twenty-Five Million Four Hundred Twenty-Two Thousand Ninety-Two only).

On 25th April 2025, the Tax Appeal Tribunal rendered a decision in favour of Uganda Revenue Authority, upholding both the reclassification of the 15 Applicant's CAM cards and the corresponding tax assessment. Dissatisfied with the Tribunal's ruling, the Applicant lodged *Civil Appeal No. 53 of 2025* before this Honourable Court. Consequently, the Applicant now seeks an order for stay of execution pending the determination of the appeal.

# 20 The Application and Affidavit in support.

The provisions of the law under which this application is commenced and the orders sought under the application, have already been set out at the preamble of this ruling.

The grounds of this application are that; following the Tribunal's ruling of 25th

25 April 2025 in favour of Uganda Revenue Authority, and being aggrieved thereby, the Applicant filed *Civil Appeal No. 53 of 2025*, challenging the decision on substantive points of law.

The application was supported by an affidavit deponed by Nalumansi Sharifah that the Applicant filed an application *No. 273 of 2022 Wananchi Group Uganda*

30 *limited v Uganda Revenue Authority* in the Tax Appeal Tribunal challenging


- 5 Uganda Revenue Authority's classification of its CAM cards as parts of television apparatus under HS code 8529.90.00,thereby attracting import duty at a rate of 25% and the resultant import duty tax assessment of a tune of UGX 814,142,369= (Uganda shillings Eight hundred fourteen million one hundred forty two thousand three hundred sixty nine only). - That on 25 10 th April 2025, the Tax Appeal Tribunal delivered a ruling in favour of Uganda Revenue Authority wherein it upheld URA's reclassification of the Applicant's CAM cards and the attendant tax assessment. The Applicant being aggrieved by the ruling of the tribunal, filed an appeal to this Honourable court in Civil Appeal no. 53 of 2025 challenging the ruling and raising meritorious - 15 and substantial questions of law for consideration. That this application be granted.

## Affidavit in Reply

The Respondent, through an affidavit sworn by Donald Bakashaba, Acting 20 Supervisor, Litigation in the Respondent's department of Legal Service and Board Affairs, contends that the Applicant failed to act diligently by not seeking a stay of execution or interim relief within 7 days of the final demand. The Respondent further asserts that the issuance and extension of an administrative order occurred after a third party agency notice had already been issued, and 25 that the stay of execution requires the third party agency notice to remain effective.

## Affidavit in Rejoinder.

The Applicant avers that the Respondent's affidavit in reply is replete with 30 material inconsistencies and deliberate falsehoods, intended to mislead this

5 Honourable Court into the erroneous conclusion that the applicant's application for a stay of execution is time-barred, which assertion is unfounded.

The Applicant further avers that it exercised all due diligence in instituting an appeal within the prescribed time frame and in duly fixing and serving hearing notices for both its interim and substantive applications for a stay of execution

10 of the Tribunal's order vide *TAT Application No. 273 of 2022*, all within 7 days following the respondent's final demand. It is therefore disingenuous for the Respondent to contend otherwise.

More so, the Applicant adduces fresh evidence demonstrating that its banker, M/S NCBA Bank Uganda Limited, has not disbursed any monies to the

15 Respondent pursuant to the third-party agency notice served. The current status quo is that no monies have been transferred by the Applicant's bankers to the Respondent, and the Applicant respectfully seeks to maintain this status quo pending the hearing and final determination of its appeal.

# 20 Representation and hearing:

at the hearing, the applicant was represented by Mr. Noah Opindeni and the respondent by Mr. Tony Kalungi. Both counsels filed written submissions to argue the application. I have fully studied the submissions, the law and authorities cited therein and all other materials on the record in deciding this 25 application.

## Issues for determination

The main issue in an application of this nature is whether the application for stay of execution should be allowed.


#### 5 Applicant's submission

The Applicant submitted that the four established criteria for the grant of an application for stay of execution have been satisfied, that is (i) the lodging of a notice of appeal; (ii) the risk of substantial loss to the applicant unless a stay is granted; (iii) the application being made without undue delay; and (iv) the 10 balance of convenience favoring the grant of the stay.

- It is further submitted that the Applicant duly instituted a notice of appeal within the prescribed time frame, demonstrating a prima facie likelihood of success on appeal, and concurrently filed the application for stay of execution on the same day. - 15 The Applicant is a going concern engaged in an extensive business portfolio dealing in television and broadcasting services, specifically the provision of cable television to both residential and corporate clients. The execution of the ruling and orders of the Tax Appeal Tribunal by the Respondent, if not stayed, will cause severe and irreparable harm to the applicant's business operations and its - 20 customers.

Moreover, the Applicant will suffer greater prejudice than the Respondent should the stay not be granted. The Respondent is a governmental authority, whereas the Applicant is a private limited liability company conducting business in the provision of television and broadcasting services within Uganda. 25 Accordingly, that the balance of convenience clearly favors the Applicant.

## Respondent's submission

The Respondent concurs with the grounds for the grant of a stay of execution. However, its objection pertains to the delay in instituting the application, 30 asserting that such delay disrupts the status quo. The Respondent further

5 contends that the application was filed subsequent to the issuance of a thirdparty agency notice by the Respondent, aimed at recovering the tax.

#### Court's Analysis and Determination

According to Order 43 rule 4 (3) of the Civil Procedure Rules, an application of 10 this nature must be made after notice of appeal has been filed and the applicant should be prepared to meet the conditions set out in that Order including; furnishing proof of the fact that substantial loss may result to the applicant unless the stay of execution is granted; that the application has been made without unreasonable delay; and that the applicant has given security for due 15 performance of the decree or order as may ultimately be binding upon him *(see*

- *Lawrence Musiitwa Kyazze v. Eunice Businge, S. C. Civil Application No 18 of 1990).* The Court of Appeal in *Kyambogo University v. Prof. Isaiah Omolo Ndiege, C. A. Misc. Civil Application No 341 of 2013* expanded the considerations to include the following:- existence of serious or imminent threat of execution of the decree or - 20 order and if the application is not granted, the appeal would be rendered nugatory; that the appeal is not frivolous and has a likelihood of success; that refusal to grant the stay would inflict more hardship than it would avoid.

The rationale for granting a stay of execution pending appeal is to preserve the 25 fruits of a potentially successful appeal otherwise, execution may render the appeal nugatory if irreversible acts occur. Section 98 of the Civil Procedure Act empowers the High Court to make orders necessary for the attainment of justice, including orders for stay of execution.

I concur with the authorities cited by both counsels including *Ssekikubo and Ors* 30 *VS. The Attorney General and Ors Constitutional Petition Application No. 003 of 2014*

5 regarding the conditions to be met for grant of an application for a stay of execution pending appeal as thus;

1) The applicant must have lodged a notice of appeal.

2) That substantial loss may result to the applicant unless a stay of execution is granted.

10 3) That the application has been brought without unreasonable delay.

4) That the applicant has given security for the due performance of the decree or order as may ultimately be binding upon him.

As such an applicant seeking a stay of execution must meet the conditions as set in the above provisions of the law.

# 1. The applicant must have lodged a notice of appeal.

In this application, there is no doubt that the Applicant lodged an appeal in this court vide *Civil appeal No.53 of 2025 Wananchi Group Uganda Limited V Uganda Revenue Authority* seeking to set aside the ruling and orders of the Tax Appeal

20 Tribunal in TAT *Application No.273 of 2022*. The Applicant attached a copy of a notice of appeal to the affidavit in support of this application as annexure A2 and the same was duly served on the Respondent. This condition is sufficiently proved by the applicant.

## 25 2. The appeal is not frivolous and has a likelihood of success;

It is trite that the lodging of an appeal does not, by its mere existence, stay proceedings or execution under the decree or order appealed from; a stay must be specifically sought and granted by the court. (see Order 43 rule 4 of *The Civil Procedure Rules* and Rule 6 (2) of *The Judicature (Court of Appeal Rules) Directions*).

30 In other words, the ordinary rule is that an execution of the decree need not be stayed pending an appeal unless the appellant shows good cause. It must be 5 shown that the appeal has a realistic prospect of success, not merely a speculative or remote chance. The threshold is higher than demonstrating a mere possibility of success; the applicant must establish that the appeal is arguable and has reasonable prospects.

The appeal will be considered frivolous if *prima facie* the grounds intended to be 10 raised are without any reasonable basis in law or equity and cannot be supported by a good faith argument. The prior litigation or procedural history can be used to establish the lack of merit in the present appeal or the bad faith of the applicant in filing the present appeal.

The applicant has provided court with a filed copy of the notice of appeal, 15 indicating their intention to challenge the tribunal's determination that the respondent properly classified the products in question, and applied the correct import duty rate.

Upon reviewing the decision of the Tribunal and the grounds of appeal stated in the notice of appeal, I am of the view that the appeal raises issues with 20 reasonable foundation in law, capable of being sustained by bonafide arguments. The appeal is, therefore, not frivolous.

## 3. Serious or imminent threat of execution of the decree or order

Imminent threat means a condition that is reasonably certain to place the 25 applicant's interests in direct peril and is immediate and impending and not merely remote, uncertain, or contingent. An order of stay will issue only if there is actual or presently threatened execution. There must be a direct and immediate danger of execution of the decree. There should be unequivocal evidence showing that unconditional steps as to convey a gravity of purpose and 30 imminent prospect of execution of the decree, have been taken by the respondent. Steps that demonstrate a serious expression of an intent include; 5 extracting the decree, presenting and having a bill of costs taxed, applying for issuance of a warrant of execution and issuing a notice to show cause why execution should not issue.

The applicant has adduced evidence of a third party agency notice issued by the respondent to the applicant's bankers, demonstrating that there exists serious or 10 imminent threat of execution of the decree or order- one that is likely to materialise if the application is not granted. Although the bank has not yet complied with the third party agency notice, such compliance appears imminent

and cannot be ruled out. I am therefore convinced that serious or imminent threat of execution of the decree or order exists.

4. Substantial loss may result to the applicant unless the stay of execution is granted.

The term "substantial loss" is not confined to a particular monetary value; it encompasses any loss of real and appreciable worth, as distinguished from 20 trivial or nominal loss.

The applicant should go beyond the vague and general assertions of substantial loss in the event a stay is granted. It follows from the foregoing that to amount to substantial loss, the deprivation must be over and above the ordinary loss resulting from litigation. *(see: Muhorro Town Council versus Rutalihamu Jacob*

25 *(Miscellaneous Application No. 0016 of 2022) 2022 UGHCCD 90( 6 May 2022; Tropical Commodities Supplies Ltd and Others v. International Credit Bank Ltd (in Liquidation) [2004] 2 EA 331).*

The applicant must establish other factors which show that the execution will create a state of affairs that will irreparably affect or negate the very essential 30 core of the applicant as the successful party in the appeal. The loss ought to be of a nature which cannot be undone once inflicted. This court in *Junaco (T)*

5 *Limited & 2 others V DFCU Bank Ltd (Miscellaneous Application no. 0027 of 2023),* while citing *Alice Wambui Nganga v. John Ngure Kahoro and another, ELC Case No. 482 of 2017 (at Thika); [2021] eKLR)* held that;

*"The court has to balance the interest of the applicant who is seeking to preserve the status quo pending the hearing of the appeal so that his or her appeal is not rendered nugatory*

10 *and the interest of the respondent who is seeking to enjoy the fruits of his or her judgment"* The court went on to state that for that reason, execution of a money decree is ordinarily not stayed since satisfaction of a money decree does not amount to substantial loss or irreparable injury to the applicant, where the respondent is not impecunious, as the remedy of restitution is available to the applicant in the 15 event the appeal is allowed.

In this case, the Applicant has not stated that the respondent is impecunious but expressed the substantial difficulty involved in securing a refund or recovery of any monies from the respondent should execution not be stayed. The Applicant,

20 in *paragraphs 8 and 9* of the affidavit sworn in support of this application, has established that the tax amount which the Respondents seek to enforce and recover from the Applicant, is the very same tax that is currently the subject matter of an appeal pending determination. The Applicant contends that the enforcement and collection of the said sum would not only materially impair 25 the Applicant's liquidity and cash flow but would also occasion substantial and irreparable harm by debilitating its business operations to a degree that may adversely impact its capacity to effectively prosecute the pending appeal. Furthermore, the Applicant avers at *paragraphs 9, 10 11 and 12* that it is a going concern engaged in a diverse business portfolio, inclusive of television and 30 broadcasting services delivered through cable television to both residential and corporate clients. Should the Respondent proceed with the execution of the Tax 5 Appeal Tribunal's ruling and orders, without a stay, the Applicant's customers and business operations will suffer severe and detrimental consequences.

While I acknowledge that the respondent may be capable of refunding the decretal sum if the appeal succeeds, I am persuaded that the delay in restitution 10 could significantly affect the applicant's cashflow and disrupt its operation, thereby occasioning financial hardship that may not be easily reversible. Accordingly, the Applicant has demonstrated a prima facie case that it stands to incur significant loss and prejudice if the relief sought in this application is not granted.

5. The application has been made without unreasonable delay.

On the test concerning whether there was any delay in instituting this application, counsel for the Applicant submitted that the Tax Appeal Tribunal rendered its decision on 25th April 2025, in favor of the Respondent. Dissatisfied with the said decision, the Applicant lodged *Civil Appeal No. 53 of 2025* on 12th 20 May 2025, which is currently pending before this Honourable Court, challenging the ruling of the Tribunal. On the very same date, the Applicant also filed the present Miscellaneous Application No. 1024 of 2025 seeking orders for stay of execution, as well as Miscellaneous Application No. 1025 of 2025 for 25 interim relief. Accordingly, counsel for the Applicant contends that the instant application was filed on 12th May 2025, which is within less than one month from the date of the Tribunal's ruling, and therefore, the application was instituted without any undue delay.

30 However, the Respondent objects the same arguing that the application was instituted with delay and it will interfere the status quo which is an abuse of


5 court process and is overtaken by events. Counsel in his submissions refers to *paragraphs 5,8,10,11,12,13 and 14* of the affidavit in reply and also *annexure A* attached to the affidavit in reply that there is already an issued third party agency notice.

The Respondent based his argument on the case of *Game Discount World*

- 10 *(Uganda) Vs URA Civil Appeal Application No.399 of 2021* where court stated *that "since there is an agency notice, issuing this application in favor of the applicant would mean that the agency notice should vacate which would interfere with the status quo."* Therefore, against the principles of grant of stay of execution. Counsel for the Applicant in his response to the Respondent's submissions states - 15 that issuance of a third party agency notice is not synonymous with the completion of execution under *section 34(2) of the Tax Procedure Code Act cap 343* which provision envisage that once an agency notice is issued then it ordinarily should have an additional step of payment of the sum in the agency notice. - In a scenario where a third party notice has been issued, the completion of 20 execution entails the occurrence of three essential steps namely; - i. The issuance of a third party notice; - ii. Communication and or service of the issued agency notice to the tax payer and his or her banker; and - iii. The payment of the sum stipulated in the third party agency notice to 25 URA.

The applicant submitted that it is only upon occurrence of these three essential steps that execution will be deemed to have been completed and any application for stay of execution will be overtaken by time. In the instant case, third party agency notice has been served onto the applicant's banker but no monies have


5 been remitted to the respondent authority (Refer to *paragraph 12* of the affidavit in rejoinder and *annexure A6* thereto).

In *Hwang Sung industries V Tajdin Hussein & 2 others S. C. C. A No.18 of 2008* the Supreme Court was faced with a material question as to whether execution of a

10 decree in the matter had been completed or not. The Hon. Justice G. M Okello, JSC (as he then was) analyzed the facts and evidence on record and observed as follows;

*"I find no dispute about the attachment (which in our case has not happened) having been effected in execution of the decree in question, but I accept the applicant's submission that*

15 *the attachment alone did not complete the execution*". So in execution by attachment and sale, both components must be completed in order to complete the execution process.

I hold the view that granting the application will not interfere with the status quo because issuance of the third party agency notice does not amount to completed

- 20 execution. Furthermore, it is my finding that the application was brought promptly. - 6. The applicant has given security for due performance of the decree or order

Basically, besides fulfilling a statutory or procedural requirement, the security is 25 intended to cater to several aspects including, protecting the decree holder's interest, maintaining the integrity of the decision, minimising abuse of process; preserving status quo, balance competing interests. The court has the duty to promote fairness and equity by upholding the respondent's right to be protected


5 from the risk that the appellant may not be able to satisfy the decree, with the appellant's right to access the courts.

The requirement for security should not be construed as a rigid bar to the court's discretion, but rather as a guideline to be exercised judiciously and equitably. condition to furnish security does not operate as an absolute clog on the court's 10 discretion. Courts retain the liberty to impose such terms as are just, including directing the deposit of a portion of the decretal amount or any other form of

security deemed sufficient in the circumstances, more particularly when such direction is coupled with the liberty to the decree holder to withdraw a portion thereof in part satisfaction of the decree without prejudice and subject to the 15 result of the appeal.

In this case, the Applicant, having already deposited 30% of the assessed amount as security before the Tax Appeals Tribunal, has in effect complied with the underlying objective of furnishing security for due performance. This, in my opinion, adequately satisfies the concerns that security seeks to address in 20 applications for stay.

## The appeal would be rendered nugatory;

Whether or not an Appeal will be rendered nugatory if a stay is not granted depends on whether or not what is sought to be stayed if allowed to happen will be reversible, or if it is not reversible, whether damages will reasonably 25 compensate the party aggrieved, or it is in the public interest to grant a stay. This may include all cases where it is necessary to preserve the status quo pending appeal, so that the rights involved in the appeal may not be lost or reduced by reason of an intervening execution of the judgment. In a money decree,


5 execution does not by itself render an appeal nugatory, particularly where the respondent is a solvent and financially capable entity and their capacity to make restitution is not in doubt. However gauging from the concerns raised by the applicant, possible delay in restitution may disrupt the applicant's liquidity and cause lasting financial strain.

## 10 Conclusion:

The applicant has filed a notice of appeal with reasonably substantial grounds. They have demonstrated a serious or imminent threat of execution through the issuance of a third party agency notice. Although execution has not yet been completed, the threat remains real and immediate. Furthermore, the applicant

15 has already deposited 30% of the disputed amount as security for due performance before the Tribunal, which sufficiently addresses the purpose for which security is required.

Consequently, I make the following orders:

- 20 1. Execution of the decree in Tax Appeal Tribunal Application No. 273 of 2022, is hereby stayed for a period of 6 months following which this order shall lapse automatically. - 2. The costs of this application are to abide the result of the appeal. - Dated, signed and delivered electronically this 31 st 25 day of May, 2025.


Susan Odongo 30 JUDGE