Court quashes sh1.2b tax assessment against Britania

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It is a major relief for Britania Allied Industries Limited after the court quashed a sh1.2b tax assessment levied by the Uganda Revenue Authority (URA) on its imported mango and guava fruit pulp.

In a judgment dated December 30 last year, Commercial Court judge Susan Odongo nullified the assessment on grounds that URA had issued retrospective tax demands, which the court found to be erroneous.

“The demand notices/assessments issued by URA dated June 28, 2021, and October 18, 2021, in respect of short-levied taxes of sh221m and sh1b are declared unlawful and are hereby set aside,” Justice Odongo ruled.

The judge faulted the Tax Appeals Tribunal, saying it erred in law by failing to apply the principle that a public authority cannot retrospectively depart from an established position once a taxpayer has relied on it in good faith.

The judgment arises from an appeal by Britania Allied Industries Limited against a decision of the Tax Appeals Tribunal, which had upheld URA’s retrospective tax assessment on imported mango and guava fruit pulp amounting to more than sh1.2b for the period between 2017 and June 15, 2021.

Justice Odongo ruled that Britania is not liable to pay the assessed sh1.2b tax. However, she upheld the classification of imported mango and guava fruit pulp under a harmonised system that attracts a 10 percent duty rate.

She underscored the importance of obtaining an expert classification opinion from the World Customs Organisation on whether mango or guava pulp qualifies as juice, a raw material or another product, in order to conclusively settle the matter.

This means that, for the time being, URA may continue imposing tax on the products.

In common usage, mango pulp is not considered juice. According to Codex Alimentarius Standards, which are widely referenced in global trade and food regulation, fruit puree or pulp is an unfermented but fermentable product obtained from the edible part of whole or peeled fruit without removing the juice.

Britania uses the imported mango and guava fruit pulp as raw materials in its manufacturing process.

The company is among the leading manufacturers of biscuits, confectionery, fruit juices and sauces in the country.

URA had argued that mango pulp is not covered under the gazetted subheadings, which mainly address orange and apple juice of specified brix values.