The High Court has ordered the Uganda Revenue Authority (URA) to pay Shs600 million to 10 companies over the illegal detention of their agricultural produce and failure to comply with a court order on withholding tax.
Justice Susan Odongo ordered URA to pay Shs50 million in general damages to each of the 10 companies for business losses, rotting agricultural produce, anguish and inconvenience arising from the detention of their goods.
The beneficiaries are Nakabira Logistics (U) Limited, Abasi Balinda Transporters Limited, Nkutu General Contractors Limited, Xtreme Uganda Limited, Nyanga Oburofa Enterprises Ltd, Harry Transporters Ltd, Rapada Ug Ltd, Tesla Technical Services Ltd, Gersa Holdings Co Ltd and Gold Coast Cargo Haulies Ltd.
The companies are involved in importing assorted rice and other agricultural produce from Tanzania. They had valid withholding tax (WHT) exemptions issued by URA but were subsequently assessed and required to pay WHT on their imports.
The companies challenged the assessments before the Tax Appeals Tribunal in 2024, arguing that URA had no enabling law to impose the disputed withholding tax.
The tribunal ruled in their favour, finding that URA had illegally charged the WHT and ordered the authority to refund taxes paid under the disputed assessments. URA, dissatisfied with the decision, appealed against the ruling and also applied for a stay of execution, which was granted.
The dispute later escalated after the companies sought the release of their goods under an interim court order requiring them to pay 30 per cent of the assessed amount.
The companies attempted to clear their consignments at Mutukula Border Post by presenting the court order and requesting assessments in accordance with the 30 per cent payment arrangement. However, URA customs officers declined to release the goods, saying they had not received instructions from management to honour the arrangement.
The companies subsequently petitioned the URA Commissioner General, Commissioner of Customs and Commissioner Legal Services, but were reportedly informed that the authority would wait for the ruling on the main stay application before implementing the interim release.
Justice Odongo found that there was a valid and subsisting court order requiring the release of the goods upon payment of 30 per cent and that the order was binding on URA from the date it was issued until it was superseded by a subsequent ruling on January 30, 2026.
“The Applicants have been put through a rigorous and unnecessary process of ploughing the road between URA offices only to be met with insolence. They are therefore entitled to the costs of this application,” the judge observed.
The court ordered URA to pay a fine of Shs100 million, which must be deposited with the court within 30 days from the date of the order.
In addition to the Shs600 million in general damages, the judge ordered URA to immediately and unconditionally release all the applicants’ agricultural produce covered by the disputed customs entries, without making any further demand for withholding tax, in accordance with the final judgment.
“The Respondent is ordered to pay general damages of Shs50 million to each of the ten applicants as pecuniary recompense for the business loss, rot of agricultural produce, and the anguish and inconvenience caused by the illegal detention of their goods,” the court ruled.
The court also awarded the applicants costs of the application, noting that costs follow the event under the Civil Procedure Act.
The ruling brings another legal setback for URA in the long-running dispute over the taxation of agricultural imports from Tanzania, while providing compensation to the affected companies for losses they said were caused by the detention of their goods.
