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    Muhakanizi Pressure Causes Nita To Cut Price



    By Grapevine 

    NITA-Uganda which has been selling expensive internet to government ministries has been forced to tell the truth and reduce the internet bandwidth cost they have been levying for many years.

    This comes after Ministry of finance permanent secretary Keith Muhakanizi got bitter and directed all ministries to stop buying NITA expensive data charged at USD190 for each Mbps. Muhakanizi gave the deal to Utl which will now be in trouble because the USD70/Mbps which NITA has come up with is still lower than the USD100 at which UTL is selling to ministries Mbps. NITA’s new price list means what Muhakanizi has been saying that Ugandans can enjoy internet at USD20/Mbps is possible and UTL which Muhakanizi supervises has already made that promise to sell at USD20/Mbps in the three years time depending on the benefits of having many govt ministries buying from UTL; the economies of scale. The internet price wars which UTL and NITA have started will force the internet cost down in the whole country which is good for the poor people in Uganda to have cheap internet. But this will reduce the abnormal profits companies like MTN, Airtel and Africell have been making and some of them might close business in Uganda because its now going to become less profitable.

    NITA-U reduces cost of Internet Bandwidth for Government Institutions


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    How Rujoki’s URA Floored Airtel In Shs1.5bn Tax Debt Legal War…



    URA boss John Musinguzi Rujoki (L) and Aitrel's Manoj Murali (R)

    In a unanimous judgment, five justices of the Supreme Court lead by Chief Justice Alofonse Owiny-Dollo, and other justices on the panel who included; justice Faith Mwondha, Justice Mike Chibita, Justice Elizabeth Musoke and Justice Stephen Musota, court allowed the Shs1.5bn appeal filed by John Musinguzi Rujoki’s Uganda Revenue Authority (URA) against Airtel Uganda.

    In the lead judgment, Justice Musoke declared that it was wrong for the Court of Appeal justices to refund Shs1.5bn collected as taxes from Airtel which resulted from an overturned judgment at the Commercial Division of the High Court which dismissed Airtel’s petition.

    Justice Musoke agreed with URA lawyers led by Ronald Masamba Baluku, Barbra Ajambo Nahone, Aliddeki Ssali Alex and Agaba Edmond that Celtel Uganda, which Airtel Uganda bought in 2010 defaulted their tax obligation which led to the Shs1.5bn Court battle.

    It all started on 26th February, 2004, when URA served Celtel tax assessment consisting of excise duty, Value Added Tax (VAT) and penal tax amounting to Shs.1,024,209,566. The outstanding tax had been arrived at following an audit by URA into Celtel’s tax affairs.

    Celtel accepted liability in relation to only part of the tax debt and disputed the other part. The disputed tax debt consisted of VAT in amounts of Shs.358,652,4581 and penal tax of Shs.253, 61,6601 which led to a total of Shs.611,814,118.

    According to Court records, Celtel lodged objections against the tax debt in the Tax Appeals Tribunal.

    The record further reveals that before filing of the suit, Celtel, in accordance with the law, paid 300% of the tax debt, in the amount of Shs.183,544,2351 which was dismissed.

    Celtel filed another appeal in the Commercial Division of the High Court which was also dismissed by Justice Geoffrey Kiryabwire.

    In 2010, Airtel acquired the assets and assumed the liabilities of Celtel including the tax debt which was under Court contestation and opted to pay the unpaid balance left by Celtel  which amounted to Shs. 428,269,883.

    However, URA informed Airtel that during the pendency of the tax objection proceedings, the unpaid tax had been accruing interest and that its tax liability had increased to Shs. 1,555,836,915 which Airtel protested.

    Airtel however paid the amount as assessed by URA but reserved its right to challenge the validity of the assessment in Courts of law.

    They lost at the High Court but won at the Court of Appeal.

    URA challenged the decision of the Court of Appeal at the Supreme Court insisting that Justices of the Court of Appeal erred in law and facts and they wanted the Supreme Court justices to answer the key question of whether the Court of Appeal gave the correct import of Section 65 (3) of the Value Added Act, Cap. 349 (VATA) and other applicable provisions in so far as they applied to the penal tax assessed on Airtel.

    “A person who  fails to pay tax imposed under this Act on or before the due date is liable to pay a penal tax on the unpaid tax at a rate specified in the Fifth Schedule for the tax which is outstanding,” the URA lawyers stated in their submissions.

    They added that the Fifth Schedule to the VATA stipulates that the penal tax payable under Section 65 (3) shall take the form of interest, and the rate of interest chargeable as penalty shall be 2% per month.

    The lawyers added that Section 65 (3) of the VATA is applicable whenever a person fails to pay VAT tax, by the due date which under Section 34A of the VATA and is what they applied in the matter which was before the court.

    He noted that the provision is aimed at penalizing a person who fails to remit VAT tax by the due date insisting that the Justices of the Court of Appeal erred when they declared that the penal tax imposed under Section 65 (3) is suspended once Airtel objects to the assessment.

    Lawyers further noted that the Justices of the Court of Appeal erred by carrying out a constitutional interpretation exercise in its judgment yet it was not sitting as a Constitutional Court but it was sitting as a Court of Appeal and was determining an ordinary appeal thus they ought not to have based on Article 44 (c) to read a meaning into Section 65 (3) of the Constitution.

    The lawyers accused the justices of the Court of Appeal of erring when they disclosed that Article 44 (c) insulated the defaulting tax payer from the penal tax under Section 65 (3) and emphasized that Article 44 (c) which provides for access to courts had no bearing on the matter before court as imposition of a penal tax did not prevent access to courts which is the right guaranteed under Article 44 (c).

    However, Airtel lawyers led by Counsel Albert Byamugisha supported the decision of the Court of Appeal noting that they gave the correct view on the position of the law which is that a person who objects to a tax assessment is not liable to penal tax under Section 65 (3) of the VATA.

    He added that Section 65 (3) imposes criminal liability on a person who fails to pay VAT by the due date explaining that a person who lodges an objection in the Tax Appeals Tribunal (TAT) does not attract such liability.

    He explained that proceedings in the TAT are permitted under Section 14 and 15 (1) of the Tax Appeals Tribunal Act, Cap. 345 (TAT Act) in connection to Section 14 which states, “Any person who is aggrieved by a decision made under a taxing Act by the URA may apply to the tribunal for a review of the decision. A taxpayer who has lodged a notice of objection to an assessment shall, pending final resolution of the objection, pay 30 percent of the tax assessed or that part of the tax assessed not in dispute, whichever is greater.”

    In her assessment, Justice Musoke noted that the tax in issue before the Supreme Court fell under Section 34 (1) (b) because it was assessed on Celtel in accordance with the provision of the law and the tax was assessed following a tax audit by URA in which it was discovered that Celtel had not been remitting VAT in relation to certain taxable supplies for the period April 2000 to July 2003.

    She added that in the first place, a taxpayer is, under Section 31 of the VATA, obliged to lodge a tax return with the Commissioner General for each tax period within fifteen days after the end of the period.

    It is only after the taxpayer has defaulted on voluntarily lodging a tax return that the Commissioner General is, under Section 32 of the VATA, empowered to make and serve an assessment on the taxpayer.

    She found out that Celtel defaulted on its obligation to timely file tax returns in relation to the VAT, and as a result, the Commissioner General made and served a tax assessment on it in accordance with the law.

    She explained that in those circumstances, Celtel was already a tax defaulter for failing to file tax returns in accordance with the law and Celtel failed to pay the tax on the date of 26th February, 2004 when it was filed with an assessment, it was also a defaulter from that date.

    “It therefore follows that the Court of Appeal erred when it ordered a refund of Shs 1,555,836,915 paid by the respondent as unpaid VAT and penal tax thereon that accrued during the pendency of tax objection proceedings instituted by the respondent. The respondent is not entitled to a refund of the said money. It will be noted that the VATA imposes a penal tax where a taxpayer defaults in paying tax on or before the due date,” she ruled.

    She further dismissed Airtel’s cross appeal challenging the decision of the Court of Appeal directing URA to return the said Shs1.5bn with interest.


    By Sengooba Alirabaki


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    Smile Communication Suffers Setback In Shs7.86bn Court Battle Against America’s ATC…



    Smile Communications has suffered a setback in the Shs7.86bn court battle against American Tower Corporation (ATC).

    Justice Thomas Ocaya of the Commercial Division of the High Court has dismissed with no cost a suit filed by Smile Communication and ordered that their matter be handled by arbitration.

    In his ruling, the judge noted that his court cannot proceed side by side with the litigation and accordingly dismissed the suit to enable the parties to undertake arbitration.

    Justice Ocaya further directed both parties within 30 days after the delivering of his judgment to appoint an arbitrator and if they fail, Court will appoint for them one to hear their grievances.

    The Centre for Arbitration and Dispute Resolution (CADER) was appointed to handle the arbitration but it failed because Smile Communication lawyers failed to appear for the hearing.

    Smile Communications rushed to Court seeking a declaration that switching off its network on January 31, 2022 and retention of its equipment by ACT was illegal and a breach of contractual and license obligations.

    Smile further prayed to court to grant remedies of Shs7.86bn for the lost revenue during the period in which ACT switched off their network to cover for the financial loss, economic distress, diminished value of its equipment and inconveniences faced.

    However, ACT protested the prayers explaining that the Commercial Division of the High Court has no jurisdiction to hear the matter noting that there was a binding arbitral clause in the agreements signed by the parties.

    ACT insists that it is ready to release the equipment taken to America when they were switching off the Smile Communication network once they pay Shs4.5bn for the services they rendered to them.


    By Sengooba Alirabaki


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    Minister Kadaga’s Blue Eyed Boy Magoola In Tears, Bailiffs Issue Notice To Auction Covid-19 Vaccine Manufacturing Plant, Dei Industries International Empire Over Multi Billion Debt…



    The property for Mathias Magoola, the chemists that first Deputy Prime Minister and also the Minister in charge of the East African Community Rebecca Alitwala Kadaga introduced to President Yoweri Kaguta Museveni when she was still the speaker of parliament as a boy from Busoga who was set to establish a Covid-19 vaccine manufacturing plant in Uganda together with American inventor, Prof. Sarfaraz K. Niazin (the professor with a strange beard), is up for auction.

    Magoola, the chairperson of DEI Group companies since 2021 has been lobbying for a Ugx 3,500,000,000,000 government bailout to finish his factory in Matugga which once completed would also make Arthritis, cancer and malaria cures…

    After failing to get the help he wanted from government, the financial institution which extended a financial loan to establish his companies hired nonsense bailiffs to help them recover their money after he failed to servicing his loan as agreed in the agreement.

    The bailiffs have issued a notice of intended sale by public auctioning of all the assets Magoola used to secure the said loan and occupants on these properties have been given 14 days to vacate the said properties to enable the potential buyers to inspect the promises.

    The public notice of intended sale by public auction was issued by Jald Uganda, a debt recovery and investigation company after receiving instruction from a financial institution.

    According to the notice, the debt recovery company noted that they will proceed with the auctioning of Dei Industries International Limited unless the company directors or their guarantors pay their client’s outstanding loan balance with interest, their fees and disbursement costs before the date of sale.

    The notice gave the company directors and their guarantors to pay the demanding amount of money within 30 days after receiving the notice of auctioning the properties.

    Among the properties which are listed in the notice to be auctioned are; a building situated on land at LRV 3899 Folio 8 plot 2A Sixth Link Road-Luzira, KCCA 205 Folio 23 plot Six Link Road-Luzira and LRV 3899 8 PLOT 2A Sixth Road Luzira where the wheat milling plant was installed.

    Other properties set to auction include; a weigh bridge station, cyclone and silos, conditioner and cleaner, commercial building on Kibuga Block 6, Plot 491 at Katwe, factory establishment on Kyadondo Block 82 plots 988, 3325, 3326 at Matugga aprox 20.673 acres, Kyadondo Block 244 plot 1112 at Muyenga measuring 0.247 acres which also has a factory establishment.

    Others include; Kyadondo Block 266 plot 149 a commercial property land at Seguku measuring 0.10 acres which registered in the names of Dei Natural Products International Production Limited, Busiro block 383 plots 5641 and 5642 at Kitende measuring 0.457 acres.


    By Sengooba Alirabaki


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