He sold his school to Dr Lawrence Mulindwa for Shs 11.2bn. URA wanted him to pay Shs 4bn as tax

Uganda Revenue Authority acted unfairly and highhandedly when it impounded an armoured land cruiser belonging to Dr Jaala Higenyi, the former owner of Ntinda View College, following a tax assessment dispute, the High Court has ruled.

In a strongly worded judgment delivered on April 30, Justice Susan Odongo overturned an earlier decision of the Tax Appeals Tribunal (TAT) that had dismissed Higenyi’s case over non-payment of 30% of the disputed tax.

The dispute traces its roots to the collapse and eventual sale of Ntinda View College, a once prominent elite secondary school founded by Higenyi in 1997.

The school expanded rapidly over the years, but later sank into serious financial difficulties and mounting debts. The board of the school resolved to sell the institution as a going concern.

On January 8, 2018, the school was sold to Dr. Lawrence Mulindwa, the owner of St Mary’s Kitende, for Shs 11.02 billion.

The court heard that Shs 7 billion from the transaction was used to clear accumulated debts, while the remaining Shs 4.02 billion was settled through a property swap. Higenyi took over Mulindwa’s commercial building, Namuswa Plaza, in Wandegeya.

A classroom block at Ntinga View College, an elite school that Higenyi sold to Lawrence Mulindwa for Shs 11.2bn in 2018

These transactions later attracted the attention of URA auditors.

Following an audit conducted in 2021, URA issued an additional income tax assessment against Higenyi personally, demanding capital gains tax amounting to Shs 4.3 billion, including interest.

Higenyi objected to the assessment, arguing that the transaction involved a company and that he should not personally shoulder the tax burden.

URA rejected his objection on October 25, 2022, and immediately began recovery proceedings.

The tax body instructed Quickway Auctioneers and Court Bailiffs to impound Higenyi’s armoured Toyota Land Cruiser bearing the personalised number plate “NAMUSWA”.

The vehicle was valued by Higenyi at more than Shs 1 billion.

Seeking to challenge the assessment, Higenyi filed an application before the Tax Appeals Tribunal in 2023.

However, the tribunal dismissed his case after finding that he had failed to pay the mandatory 30% of the disputed tax required under Section 15 of the Tax Appeals Tribunal Act.

The tribunal ruled that the law required cash payment and that the impounded vehicle could not count toward the mandatory deposit.

At the hearing of the appeal before the High Court, Higenyi was represented by Joseph Angura of Angura & Co Advocates, while URA was represented by Rodney Mishambi Amanya and Eva Kakuuma from the authority’s legal department.

Angura argued that URA had already exercised its recovery powers by seizing the vehicle and could not legally ignore the value of the same property when demanding the statutory 30% deposit.

He also argued that forcing his client to pay fresh cash while URA retained possession of a billion-shilling vehicle amounted to oppressive tax administration and violated the constitutional right to a fair hearing.

URA, on the other hand, defended the tribunal’s decision and insisted that the law specifically required payment of 30% before a taxpayer could access the tribunal.

Justice Odongo disagreed with the tribunal’s rigid interpretation of the law.

She said the tribunal had failed to balance the government’s interest in tax collection with the constitutional right to justice.

“The core of this dispute is whether the tribunal’s rigid insistence on a fresh cash payment while [URA] already held a high-value distrained motor vehicle, constituted a failure to balance the state’s interest in revenue with the individual’s right to state their case,” the judge wrote.

She criticised the tribunal for treating the seized vehicle as though it had no legal value for the mandatory tax deposit.

Justice Odongo said the law should not be interpreted mechanically.

“The commissioner has the discretion to take any other thing instead of the deposit of cash. This discretion is a vital safety valve in tax administration, ensuring that the 30% requirement remains a security for revenue rather than an insurmountable wall blocking the temple of justice,” Justice Odongo ruled.

Justice Odongo further held that once URA had seized the vehicle under distress proceedings, it became security for the tax debt.

“To hold a man’s car and simultaneously bar him from the courtroom for non-payment is not merely a technicality. It is an unfair and unjust act that mocks the spirit of the law,” she said.

Justice Odongo also faulted the tribunal for dismissing the case outright even after acknowledging that Higenyi’s vehicle’s estimated value of about Shs 1.011 billion fell short of the required Shs 1.305 billion deposit by approximately UGX293 million.

She said the proper course would have been to order Higenyi to top up the balance instead of shutting him out completely.

“Justice is not a game of all-or-nothing when a substantial effort to comply has been made,” she ruled.

She added that the tribunal should have facilitated compliance rather than searching for technical grounds to deny a hearing.

Ultimately, all three grounds of Higenyi’s appeal succeeded.

The High Court set aside the tribunal’s ruling and ordered the Tax Appeals Tribunal to hear Higenyi’s application on its merits.

The court directed that the tribunal should first take into account the verified value of the impounded vehicle and only require payment of any remaining balance needed to satisfy the 30% threshold.