Beer firm, two banks fined for disobeying Tax Tribunal order
What you need to know:
- The tribunal has also ordered Standard Chartered Bank Uganda Limited and Stanbic Bank Uganda Limited to pay Shs30 million each for failing to implement its directive.
Beer manufacturing firm, Nile Breweries Limited has been ordered to pay Shs20 million for disobeying an order issued by the Tax Appeals Tribunal (TAT).
The tribunal has also ordered Standard Chartered Bank Uganda Limited and Stanbic Bank Uganda Limited to pay Shs30 million each for failing to implement its directive.
The banks were also ordered to jointly pay Shs28 as general damages and that all the payments shall attract an interest of 2 per cent from the ruling date till full payment.
“The Tribunal will impose a fine of Shs20 million on Nile Breweries Limited for directing the 3rd respondent (Stanbic Bank Uganda Limited) not to pay the 30 per cent in civil contempt of court. The 2nd respondent (Standard Chartered Bank Uganda) is fined Shs30 million for deliberately ignoring to implement the court order which it denied it did not receive yet it acknowledged it in a letter. The 3rd respondent is also fined Shs30 million after receiving the order on March 7, 2022, and refusing to honour it,” reads the tribunal decision.
The three-member panel composed of Dr Asa Mugenyi (chairman), Dr Stephen Akabway and Ms Christine Katwe all members; ordered Uganda Revenue Authority (URA) to collect the fines and pay it to the Consolidated Fund.
The orders followed an application in which URA asked the Tax Appeals Tribunal to hold the beer company and the banks accountable for contempt of the Tax Appeals Tribunal order of March 7, 2022 and that the banks be ordered to pay to the taxman 30 percent of the amount stated in the order.
Documents show that on March 7, 2022, the Tax Appeals Tribunal issued an order restraining the applicant from collecting the said taxes.
However, the Tribunal ordered Nile Breweries Limited to pay 30 per cent of the tax in the dispute or that tax not in dispute, whichever is greater.
According to the application by URA, since the issuance of the order, Nile Breweries Limited refused to pay the 30 per cent of the tax in dispute which prompted it to issue third-party notices on its bankers.
On February 23, 2022, Nile Breweries Limited filed an application before TAT challenging an additional Local Excise Duty (LED) assessment of Shs8,093,439,724 and an additional VAT assessment of Shs6,098,292,276 issued against it.
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The tribunal heard that the three parties refused and neglected to attach and remit 30 percent of the disputed tax to the applicant without any lawful justification upon serving them with notices and the order.
The tribunal held that by holding on to the 30 per cent of the tax in dispute, the 2nd and 3rd respondents (banks) were denying the government taxes.
“Their (banks) omission to act amounted to a nonfeasance, the failure to act when a duty exists. This may result in a loss to the government as it may have put the money to other use. It is entitled to damages for the failure to act by the 2nd and 3rd respondents,” reads the tribunal decision.
