The Supreme Court has ruled in a landmark case that the Tax Appeals Tribunal (“TAT”) has original jurisdiction to hear tax disputes, and the High Court only has appellate jurisdiction. Until now, the long-established position was that the High Court and the TAT had concurrent jurisdiction and a litigant had discretion to lodge an application with the TAT or file the dispute in the High Court.
In Uganda Revenue Authority v Rabbo Enterprises (U) Ltd and Mt. Elgon Hardwares Ltd, the central issue was whether the High Court had original jurisdiction to hear a tax dispute.
The High Court held that it was not a tax tribunal and the dispute should first have been presented before the TAT. The High Court deals with tax appeals from the tribunal. The respondents appealed to the Court of Appeal, which held that article 139(1) of the Constitution and the Judicature Act (Cap. 13) give the High Court unlimited original jurisdiction to hear all matters and, therefore, the High Court and the TAT enjoyed concurrent jurisdiction. The appellant appealed to the Supreme Court.
The Supreme Court overturned the Court of Appeal’s decision and reinstated the decision of the High Court. It held that article 139(1) of the Constitution gives the High Court original unlimited jurisdiction and is subject to other provisions of the Constitution which must be read together. This article states that “the High Court shall, subject to the provisions of the Constitution, have unlimited original jurisdiction in all matters and such appellate and other jurisdiction as may be conferred on it by the Constitution or other law.” One of the provisions envisaged is article 152(3) of the Constitution, which states that Parliament must make laws to establish tax tribunals for the purpose of settling tax disputes. The court concluded that it would be inappropriate for the legal regime to give the High Court dual jurisdiction as a court with original and appellate jurisdiction in tax matters.
The Supreme Court also distinguished the case from URA v Meera Investment/s Ltd Civil Appeal, in which it had earlier ruled that there was concurrent jurisdiction of the High Court and the TAT over a tax dispute. The Supreme Court held that the earlier decision had not fully considered the interpretation of article 139(1), read together with article 152(3), of the Constitution and was distinguishable in terms of both context and facts. The judgment, in this 16-year-old case, fully settles the question as to original jurisdiction in tax disputes. All tax disputes must now first be filed before the TAT and appeals made from there to the High Court.
Significance of the decision
It should follow that, having established that the High Court lacks original jurisdiction over tax disputes, all pending matters in the court will be referred to the TAT. While the TAT offers a more specialised forum for resolving tax disputes, as it comprises accountants, lawyers and economists, there is apprehension as to possible delays arising from the heavy workload. If the current case took 16 years to reach finality, having started at the High Court, the requirement to start in the TAT is worrisome, especially since the members of the TAT are employed on a part-time basis.
Filing matters in the TAT also comes with a requirement for payment of 30% of the tax assessed or that part of the tax assessed not in dispute, whichever is greater, before the disposal of the case. However, a waiver may be applied for. The 30% payment was not required where the dispute was filed in the High Court.
It appears that for those tribunals that are not prescribed in the Constitution but are created by Acts of Parliament, such as the Uganda Communications Act, 2013, which sets up the Uganda Communications Tribunal; the Labour Disputes (Arbitration and Settlement) Act, 2006, which sets up the Industrial Court; and the Public Procurement and Disposal of Public Assets Act, 2003, which sets up the Public Procurement and Disposal of Public Assets Appeals Tribunal, the concurrent jurisdiction of the High Court arises. In the absence of any constitutional provision creating a limitation, the unlimited jurisdiction of the High Court reigns. There is bound to be some confusion when parties elect to go to the High Court.
Following this decision, the fate of cases that have already commenced and progressed in the High Court is still unclear. It is likely that an administrative decision will be given to transfer these cases to the TAT.