THE Commercial Court has stopped the Uganda Revenue Authority (URA) from imposing over sh17b in tax against Jacobsen Uganda Power Plant Company Limited until it determines its case.
The thermal power supplying firm sued URA on December 17, challenging the tax assessment. It argued that tax liability against it was unlawful.
â€œAn interim order is issued restraining the commissioner general of URA or her servants or agents from demanding payment or enforcing any tax collection enforcement measures of assessments for sh17.6b until the hearing and final determination of the case,â€ the order by the registrar, Gladys Nakibuule-Kisekka, read.
The court also stopped the commissioner general from ordering Stanbic Bank or any other bank from paying URA from the thermal power companyâ€™s account.
â€œIt is hereby ordered that the implementation and enforcement of the third party agency notice issued to Stanbic Bank or any other bank be stayed,â€ the order read.
Oscar Kambona, the companyâ€™s lawyer, told the court that in June 2009, the firm was involved in several reconciliation meetings with URA over the disputed tax assessment, which the tax body objected to it.
He said the firm had been misinformed by the Uganda Electricity Transmission Company Limited (UETCL), which had insisted that part of the sales should be exempt from taxes.
â€œURA had accepted the companyâ€™s Value Added Tax (VAT) with effect from November 2008 without challenging the exempt sales declared although it was known that the supply was electricity.
URA applied apportionment to the companyâ€™s input tax rather than informing the company that the supplies should be standard rated, which demonstrated that part of the sales was exempt,â€ Kambona argued.
He added that several meetings were held involving the firm, the Ministry of Finance, UETCL and URA with a view to resolve the issues raised by UETCL and the implications for other thermal power suppliers.
Kambona, who made the application exparte (without the opposing party), argued that after accepting VAT that showed significant exempt supplies and apportioning the input tax that re-enforced the companyâ€™ belief that the output was declared correctly, URA should not have insisted on the wrong and illegal assessment of the tax.
He contended that it was just for the court to stop URA from enforcing the tax collection against the firm until the court heard and resolved the dispute.
High Court stops sh17b tax recovery