Uganda: URA Must Pay for Goods Lost or Damaged in Custody, Court Rules

20 December 2019

The Court of Appeal has ruled that the tax body, Uganda Revenue Authority (URA) will have to pay for goods lost or damaged in its possession.

The ruling was made following a case involving a phone importer, Robert Bagala, against the tax body after the latter confiscated his goods in April 2011 at Entebbe airport on suspicion that he hadn't paid tax.

However, when he returned a day later after paying tax, URA could not produce the goods and could not offer an explanation on what had happened to them.

Justices Kenneth Kakuru and Ezekiel Muhanguzi ruled on a 2:1 decision that URA was under duty to take care of the goods it had confiscated. The two justices said URA had assumed a position of "constructive bailee' when it confiscated the goods and that it must show there was no negligence for the goods to lost or damaged.

On the other hand, justice Percy Night Tuhaise dissented with the two justices, saying the owner of the goods "need to prove negligence on the part of [URA] and that the degree of care given to the plaintiff's goods was less than that given to the other valuables kept under [URA] custody."

The ruling creates precedence for companies and individuals whose goods are damaged or stolen from the custody of the tax body.

Paul Lakuma, a tax researcher at the Makerere University-based Economic Policy Research Center (EPRC), said the ruling was good and that it creates goods between taxpayers and the authority to know that their goods will enjoy high security and protection whenever they are in the hands of tax body.

Bagala has been awarded Shs 10.5 million in special damages and Shs 1 million in general damages for 35 pieces of phones he was importing into the country.

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