Sunday February 10 2013

Fuel companies sued over Shs56 billion tax

Men stand near one of the Shell filling stations in Kampala last month.

Men stand near one of the Shell filling stations in Kampala last month. Photo by Stephen Otage  

By Isaac Imaka & Chris Obore

A public interest law organisation has sued 39 fuel companies for illegally claiming Shs56 billion in excise duty from the Uganda Revenue Authority (URA).

The companies sued include Shell Uganda Limited, which, according to court documents, copies of which the Sunday Monitor obtained, received Shs15 billion and Chevron Uganda Limited which got Shs4.7 billion.

The companies claimed the money from URA after the High Court, on April, 7, 2009, ruled that the tax body, between November 1, 2007, and June 27, 2008, erroneously collected excise duty from the companies and ordered it to refund the money collected in excess of Shs450 per litre of diesel and Shs720 per litre of petrol.

The Centre for Public Interest Law, in its suit on January 13, sued URA and the 39 fuel companies claiming it is irregular for the fuel companies to claim the money because excise duty is paid by the consumer and not fuel companies.

The organisation wants court to interpret whether the refunds from URA belong to the diesel and petrol importers or the consumers who paid the tax.

“I verily believe to be true that excise duty is a tax paid indirectly by consumers and the fuel companies are agents of the first respondents (URA) only for purposes of collection and remitting of the taxes,” said Mr Zachary Lomo of Centre for Public Interest Law, in his affidavit. “The failure of the respondents (fuel companies) to remit the same to the consumers is an infringement of their right to property and amounts to unjust enrichment by the fuel companies.”

In 2009, Rock Petroleum Limited, as a representative of numerous diesel and petrol importers in Uganda, challenged URA’s authority to impose and collect the increased excise duty pursuant to the Provisional Collection Act Cap 348 after the expiry of the statutory four months provided in the said act.

Court ruling
Court ruled that URA could not legally impose the increased excise duty on diesel and petroleum imports under the Excise Tariff (Amendment) Act because during that period, the provisional collection order expired.
As a result of the court order, several importers asked URA to refund the money.

Court documents show that Hashi Empex Ltd received Shs4 billion, Hass Petroleum Ltd (Shs3 billion), Kobil (Shs1.7 billion), Petro City (Shs4.6 billion), Gapco Uganda (Shs3 billion), City Oil (Shs491 million) and Hared (Shs1.4 billion).

Mr Ivan Kyayonka, the Shell Uganda general manger, confirmed that his company “received a refund” as a consequence of URA erroneously collected excise duty.

“My lawyers have received the papers but I have not read them so I can’t say much,” he said.
Total Uganda Limited’s managing director Ada Eze said she does not have any information about the new case while Hared declined to comment on the matter.