Court has ruled that URA is not liable to pay sh2.6b to Hima Cement after it was compelled to breach contract with Kampala international University.
By Edward Anyoli
THE commercial court has ruled that Uganda Revenue Authority (URA) is not liable to pay sh2.6b to Hima Cement after it was compelled to breach contract with Kampala international University.
The Commercial Court ruled in favour of Uganda Revenue Authority in a tax dispute of over sh2.6b involving KIU Ltd and Hima Cement Limited .
Justice Hellen Obura Tuesday overturned an earlier ruling by Justice Anup Singh Choudry, who had directed that URA pays sh2.6b to Hima Cement Limited in compensation.
Justice Obura in her ruling agreed with George Okello the lawyer who represented URA, that Justice Choudry had misdirected himself in making an order of indemnity against URA, in favour of Hima Cement Ltd because URA was not sued in respect of the dispute between KIU Ltd and Hima Cement Ltd.
Obura said in her ruling that Justice, Choudry made the order of compensation in violation of the Constitutional right of URA to be heard.
The case arose out of the dispute between KIU Ltd and Hima Cement Ltd in which, KIU sued Hima Cement for breach of contract to supply 50,000 tons of cement to KIU teaching hospital at Ishaka in Bushenyi.
Kampala International University had been given Value Added Tax(VAT) exemption to supply cement by Hima Cement Ltd, to enable KIU finish the building project in Ishaka. However, when URA discovered that the cement was being diverted by KIU and sold in open market in in Kampala, the supply was stopped.
The tax body said act caused loss of VAT revenue which prompted the government to later withdraw the facility from KIU Ltd.
KIU sued Hima Cement Ltd in 2006 and Justice Anuph Singh Choudry ruled in favour of KIU in 2011, ordering Hima Cement Ltd and URA to pay compensation. URA appealed against the ruling to compensate Hima Cement.
URA wins sh2.6b dispute