The High court has ordered the Uganda Revenue Authority (URA) to pay Shs 2.2 billion to Babaana Children of Uganda Limited for unlawfully disposing of its imported medical equipment and assorted commodities.
Court heard that Babaana Children of Uganda Limited imported a donated consignment of specialised medical equipment into Uganda, intended to support paediatric and neurological services.
Before shipment, the company applied for a tax exemption through the Ministry of Health on November 27, 2017, and URA confirmed the exemption a day later, clearing the way for importation.
The consignment included high-tech digital ultrasound machines, duplex examination equipment, electroencephalogram machines, neurological clinical tools, children’s psychiatric equipment and occupational therapy devices, some of which were not readily available in Uganda at the time.
According to the company, the goods were warehoused upon arrival, and it later sought an extension of the storage period to December 2018 because construction of the intended health facility had not been completed. URA did not object to the request.
However, when the company later moved to clear the consignment, it was informed that the goods had already been disposed of, despite earlier assurances from URA officials that the items were still available.
The company told court that several follow-ups, meetings and correspondences failed to yield recovery of the consignment, before it eventually learnt that the goods had been sold off.
In its defence, URA maintained that it handled the importation, storage and disposal of the goods lawfully and in accordance with customs regulations.
The tax body argued that the exemption applied only to specified medical items intended for use in licensed hospitals, while other goods in the consignment, including toys, shoes, milk, toilet supplies and office items, were not exempt.
URA further contended that the goods were warehoused on December 11, 2017 for the statutory maximum period of nine months, which expired on September 7, 2018, and that the company failed to clear them, pay taxes on non-exempt items or formally apply for redemption before disposal.
However, court found that URA did not prove that it issued the mandatory statutory notice prior to the sale of the goods, as required by law.
It also noted that the consignment, valued at about Shs 1.4 billion, was allegedly sold for only Shs 4 million without any satisfactory explanation or supporting valuation report.
Court further observed that the exit documentation did not account for the high-value medical equipment imported by the company and that URA failed to demonstrate proper accountability for the proceeds from the sale.
The judge ruled that these failures rendered the disposal unlawful and caused financial loss to the company.
In his judgment, Justice Bernard Namanya awarded Babaana Children of Uganda Limited special damages of Shs 1.46 billion.
Court also granted Shs 613.2 million in interest at 6 per cent per annum from December 24, 2018 until full payment, and Shs 200 million in general damages.
