Tax Appeals Tribunal upholds URA’s decision to list sugar among the items not to be warehoused

In a move that will ensure that Ugandans are protected from the consumption of expired sugar and that the local sugar manufacturers are protected from unfair competition arising from dumping, the Tax Appeals Tribunal has held that URA’s decision to list sugar among the items not to be warehoused is lawful and within its mandate.

The decision addresses TAT application No.103 of 2019 instituted by R1 distributors and 11 other companies against the tax body in the tax appeals tribunal, on grounds that URA’s decision to publish a notice in the press on 17th October 2019, listing products which should not be eligible for customs warehousing, was unlawful.

URA on the other hand argued that under Regulation 64(k) of the East African Community Customs Management Regulations 2010, the commissioner has the discretion to gazette any other goods that are not supposed to be warehoused and that the directive was issued to protect the public from hazardous goods and to also protect local manufacturers.

The main point of contention in the tribunal therefore was whether the notice published by URA was lawful and/or proper.

TAT in its decision acknowledged that there is ample evidence to prove that the government has to protect the local industries that manufacture sugar from unfair competition arising from dumping, diversion of sugar in transit and tax evasion.

The tribunal also emphasised that courts should exercise caution before interfering with actions of administrative bodies as such interference may bring the wheel of administration to a halt.

It also noted that interference in the exercise of administrative discretion should only be done where a decision is illegal, irrational, or without procedural impropriety.

Accordingly, the tribunal found that URA’s decision was made within the precincts of the law and that the following items which were not part of the dispute but were in the notice should also not be warehoused;

i) Wines and spirits; (except for duty free shops)
ii) Building Materials;
iii) Motor vehicle tyres, and tubes;
iv) Motor cycle tyres and tubes;
v) Used Motor Vehicles of 14 years old from the date of manufacture;
vi) Dentifrices;
vii) Garments of all kinds;
viii) Footwear of all kinds.

The tribunal further ordered the commissioner customs at URA to gazette the import of all rice without any restrictions, and to grant adequate notice of 2 to 3 months before any action taken by the tax body becomes effective.

The tribunal confirmed that the directive by URA not to warehouse sugar takes immediate effect from the date of the tribunal’s ruling which is 30th September 2020.

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